The judgment emphasizes the importance of due diligence and reasonable care in property transactions, highlighting the principle that a transferee must act in good faith and take reasonable care to ascertain the transferor's power to make the transfer, as per Section 41 of the Transfer of Property Act.

Hemant Gupta, J.

1. Defendants No. 3 to 6 are in second appeal aggrieved against the judgment and decree passed by the courts below arising out of a suit for recovery of Rs. 1,01,616.90 paise filed by respondent No. 1 herein.

2. Defendant No. 2 Ajit Singh sought loan from the plaintiff bank on 13.12.1966. The plaintiff bank agreed to grant certain credit facilities and thereafter defendant Nos. 1 and 2 received a sum of Rs. 40,000/- on 24.1.1967. The said defendants also availed cash credit facility against the stock from Patel Nagar Branch of the bank from 27.1.1967 and a cash credit facility against bills w.e.f. 11.1.1967. Thus, three different accounts regarding 3 facilities were opened by defendants No. 1 and 2 at Patel Nagar Branch of the plaintiff bank. Said defendants were granted loan on their offering security of immovable property by deposit of title deeds. The documents were deposited with the plaintiff bank with intent to create a security on the said immovable property for the repayment of the loan sanctioned by the plaintiff bank. A memorandum to that effect was also executed by defendant No. 2 Ajit Singh on 24.1.1967. The accounts of defendants No. 1 and 2 were subsequently transferred to Kirti Nagar Branch of the plaintiff bank where the defendants No. 1 and 2 further availed cash credit facilities by hypothecation of stock to the extent of Rs. 30,000/- and also executed additional documents, but the defendants No. 1 and 2 failed to honour their commitments and to repay the amount due in their respective accounts.

3. It was further pointed out that a registered lease deed dated 30.1.1970 was executed by defendants No. 1 and 2 in favour of defendant No. 3 in contravention of the terms of agreement between defendants No. 1 and 2 and the plaintiff bank. The said defendants also executed a registered sale deed dated 30.1.1970 in favour of defendant No. 4. The lease hold rights were further sold by defendant No. 3 in favour of defendant No. 5 on 21.8.1970 whereas defendant No. 4 executed sale deed in respect of the said land in favour of defendant No. 6. It is, thus, pleaded that the plaintiff bank has charge on the said property of defendants No. 1 and 2 and the transactions of lease and sale would not effect the rights of the Bank.

4. Both the courts have decreed the suit holding that the property which was the subject-matter of the sale and lease is liable for the payment of amount outstanding due against Ajit Singh. Still aggrieved, the defendants are in second appeal wherein the plaintiff has raised the following substantial question of in the grounds of appeal:

Whether the vendee accepting transfer of agricultural land on faith of entries in favour of his transferor in the records of rights is protected under Section 41 of the Transfer of Property Act?

5. Before adverting to the contention raised by the learned Counsel for the appellants in the second appeal, a brief resume of the evidence relevant for the arguments raised by the learned Counsel for the appellants be noticed. Defendant No. 3 has examined himself as D.W.I and relied upon the sale deeds. Ex.D. 1 and Ex.D. 2, he deposed that he visited the land in dispute before the purchase and found that there was no communication in the forms of board or otherwise showing that the said land is hypothecated with anyone. It is also stated by him that he has not personally verified about the title of Ajit Singh but inquiry was made on his behalf by Sukh Ram from village lamberdar and also from the office of the Sub-Registrar.

6. Learned Counsel for the appellants relied upon recitals in the sale deed Ex.D2 dated 30.1.1970 wherein it is recited that the sale deed in favour of Ajit Singh has been lost and a copy thereof would be given to the vendee. Subhash Sahni. the purchaser of the lease hold rights from Ved Parkash defendant No. 3 has appeared as DW2 and relied upon the documents of purchase of the lease holding rights.

7. The plaintiff has produced doc