MANJIT SINGH & ANR.versusDARSHANA DEVI & ORS.

         [2024] 11 S.C.R. 876 : 2024 INSC 895

                    Manjit Singh & Anr.
                             v.
                   Darshana Devi & Ors.
               (Civil Appeal No. 13066 of 2024)
                      21 November 2024
       [J.B. Pardiwala and R. Mahadevan, JJ.]


                    Issue for Consideration

High Court held that the appellants-subsequent purchasers could
not be said to be bona fide purchasers in accordance with Section
19 (b) of the Specific Relief Act, 1963 and decreed the suit of the
plaintiff granting specific performance of oral agreement of sale
between the plaintiff and the original defendant (owner of the suit
property).

                           Headnotes†

Specific Relief Act, 1963 – s.19(b) – General Clauses Act –
s.3(22) – Bhartiya Nyaya Sanhita, 2023 – s.2(11) – “good faith” –
Oral agreement for sale of the suit property between plaintiff
and defendant (owner of the property) – However, despite the
said agreement, the defendant transferred the suit property in
favour of the appellants-subsequent purchasers – In Second
Appeal filed by the plaintiff, High Court decreed the plaintiff’s
suit granting specific performance of oral agreement of sale
holding that the appellants could not be said to be bona fide
purchasers u/s.19(b) – Correctness:

Held: Correct – Section 19 (b) of the Act, 1963 is an exception
from the general rule and the onus is on the subsequent purchaser
to prove that he purchased the property in good faith and also
bona fide purchaser for value – For an act to have been done in
good faith it must have been done with due care and attention
and there should not be any negligence or dishonesty – Each
aspect is a complement to the other and not an exclusion of the
other – The definition of the Penal Code, 1860 emphasises due
care and attention whereas General Clauses Act emphasises
honesty – High Court committed no error in passing the impugned
Judgment. [Paras 12, 15, 20]
[2024] 11 S.C.R.                                                             877

              Manjit Singh & Anr. v. Darshana Devi & Ors.


                               Case Law Cited
     R.K. Mohammed Ubaidullah v. Hajee C. Abdul Wahab [2000] Supp.
     1 SCR 524 : (2000) 6 SCC 402; Ram Niwas v. Bano [2000] Supp.
     2 SCR 39 : (2000) 6 SCC 685 – relied on.
     Kailas Etc., Works v. Munlity, B. & N., 1968 Bombay Law Reporter
     554; The Municipality of Bhiwandi and Nizampur v. Kailash Sizing
     Works [1975] 2 SCR 123 : (1974) 2 SCC 596 – referred to.
     Daniels v. Davison' [(1809) 16 Ves Jun 249 : 33 ER 978] – referred to.

                                 List of Acts
     Specific Relief Act, 1963; General Clauses Act; Bhartiya Nyaya
     Sanhita, 2023; Penal Code, 1860.

                              List of Keywords
     Section 19 (b) of Specific Relief Act, 1963; Oral agreement for sale
     of the suit property; Specific performance of oral agreement of sale;
     “good faith”; Subsequent purchasers; Exception from general rule;
     Onus on subsequent purchaser to prove that the property was
     purchased in good faith; bona fide purchaser for value; Due care
     and attention; Negligence or dishonesty; Honesty.

                             Case Arising From
     CIVIL APPELLATE JURISDICTION: Civil Appeal No. 13066 of 2024
     From the Judgment and Order dated 22.01.2019 of the High Court
     of Punjab & Haryana at Chandigarh in RSA No. 1145 of 1992

                          Appearances for Parties
     Vishal Mahajan, Anil Kumar, Ms. Reena Devi, Vinod Sharma,
     Advs. for the Appellants.
     M.L. Saggar, Sr. Adv., Mrs. Tanuj Bagga Sharma, Ms. Armaan
     Saggar, Dr. M.K. Ravi, Sudarshan Singh Rawat, Sskhaira, Sunny
     Sachin Rawat, Advs. for the Respondents.

                 Judgment / Order of the Supreme Court
                                    Order
1.   Leave granted.
2.   This appeal arises from the judgment and order passed by the
     High Court of Punjab and Haryana at Chandigarh dated 22-1-2019
878                                                            [2024] 11 S.C.R.

                        Digital Supreme Court Reports


       in Regular Second Appeal No.1145/1992 by which the High Court
       allowed the Second Appeal filed by the original plaintiff and thereby
       decreed the suit of the plaintiff granting specific performance of oral
       agreement of sale of the year 1986.
3.     The facts giving rise to this appeal may be summarized as under.
4.     The Respondent No.1 – herein (original plaintiff) instituted suit for
       specific performance of contract based on an unregistered sale deed
       dated 12-02-1986 with respect to the suit property.
5.     It appears from the materials on record that the original defendant
       No.1, i.e., the owner of the suit property after entering into an
       agreement with the plaintiff transferred the suit property in favour of
       the defendants Nos.2 and 3 respectively i.e., the appellants before
       us by way of a sale deed dated 29-8-1986.
6.     In such circumstances, the Respondent No.1 - herein (original
       plaintiff) had to institute the Civil Suit No.27/1987 praying for specific
       performance.
7.     The Trial Court allowed the suit in favour of the plaintiff. The subsequent
       purchasers, i.e., the petitioners – herein (original defendant Nos.2
       & 3) preferred first appeal before the District Court. The first appeal
       came to be allowed and the decree passed by the Trial Court was
       quashed and set aside.
8.     In such circumstances, the plaintiff went before the High Court by
       way of Second Appeal under Section 100 of the Civil Procedure
       Code, 1908.
9.     The High Court framed the following substantial question of law for
       its consideration:-
            “Whether the judgment passed by the First Appellate Court
            is the result of misreading and non-reading of evidence
            while returning a finding that the defendant Nos.2 and
            3 are bona fide purchasers as per Section 19(b) of the
            Specific Relief Act, 1963.”
10. The High Court after due consideration of all the relevant aspects
    of the matter recorded a categorical finding that the subsequent
    purchasers, i.e., the appellants – herein could not be said to be
    bona fide purchasers in accordance with Section 19 (b) of the Act,
    1963 for the reasons assigned as under.
[2024] 11 S.C.R.                                                            879

                Manjit Singh & Anr. v. Darshana Devi & Ors.


          “1.    Manjit Singh-defendant No.2 in his oral evidence
                 admitted that defendant No.1 i.e. owner-Bishan Singh
                 is his uncle. It is father and the father of Manjit Singh
                 are co-sharers in one Khata/Khewat of land.
          2.     It is undisputed that husband of the plaintiff Kishan
                 Singh was mortgagee in possession of the property.
                 Defendant Nos.2 and 3 made no inquiry from Kishan
                 Singh with regard to title of the property which was
                 normal unless there was collusion between defendant
                 No.1 on the one hand and defendants No.2 and 3
                 on the other hand.
          3.     From plain reading of sale deed dated 29.08.1986
                 in favour of defendant Nos.2 and 3 respectively, it
                 is apparent that out of total sale consideration of
                 Rs.25,000/-, Rs.10,000/- is alleged to have already
                 been paid at home whereas Rs.5,000/- was paid
                 in cash before the Sub-Registrar and the balance
                 amount of Rs.10,000/- was kept as a mortgage
                 amount for redemption. No evidence has come on
                 record that there was any prior agreement to sell in
                 favour of the defendant Nos.2 and 3.
          4.     As per defendant Nos.2 and 3, they paid the amount
                 of Rs.10,000/- at home and Rs.5,000/- at the time of
                 registration. However, no evidence has been adduced
                 to establish that this amount was withdrawn from any
                 bank or from any other source.”
11. Section 19 of the Specific Relief Act upon which strong reliance
    is sought to be placed has been interpreted by this Court in
    “R.K. Mohammed Ubaidullah v. Hajee C. Abdul Wahab 2000 (6)
    SCC 402 wherein this Court held as follows:-
          “14. Section 19 of the Specific Relief Act, 1963, to the
          extent it is relevant, reads:
          “19. Relief against parties and persons claiming under
          them by subsequent title. - Except as otherwise provided
          by this Chapter, specific performance of a contract may
          be enforced against-
880                                                    [2024] 11 S.C.R.

                 Digital Supreme Court Reports


       (a) either party thereto;
       (b) any other person claiming under him by a title arising
       subsequently to the contract, except a transferee for value
       who has paid his money in good faith and without notice
       of the original contract;
       (c)-(e) … … …
       As can be seen from Sections 19(a) and (b) extracted above
       specific performance of a contract can be enforced against
       (a) either party thereto; and (b) any person claiming under
       him by a title arising subsequent to the contract, except a
       transferee for value who has paid his money in good faith
       and without notice of the original contract. Section 19(b)
       protects the bona fide purchaser in good faith for value
       without notice of the original contract. This protection is
       in the nature of exception to the general rule. Hence, the
       onus of proof of good faith is on the purchaser who takes
       the plea that he is an innocent purchaser. Good faith is a
       question of fact to be considered and decided on the facts
       of each case. Section 52 of the Penal Code emphasises
       due care and attention in relation to good faith. In the
       General Clauses Act emphasis is laid on honesty.
       15. Notice is defined in Section 3 of the Transfer of
       Property Act. It may be actual where the party has actual
       knowledge of the fact or constructive. “A person is said
       not have notice” of a fact when he actually knows that
       fact, or when, but for wilful abstention from an inquiry or
       search which he ought to have made, or gross negligence,
       he would have known it. Explanation II of said Section
       3 reads:
       “Explanation II-Any person acquiring any immovable
       property or any share or interest in any such property shall
       be deemed to have notice of the title if any, of any person
       who is for the time being in actual possession thereof.”
       Section 3 was amended by the Amendment Act of 1929
       in relation to the definition of “notice”. The definition has
       been amended and supplemented by three explanations,
       which settle the law in several matters of great importance.
[2024] 11 S.C.R.                                                          881

              Manjit Singh & Anr. v. Darshana Devi & Ors.


          For the immediate purpose Explanation II is relevant. It
          states that actual possession is notice of the title of the
          person in possession. Prior to the amendment there
          had been some uncertainty because of divergent views
          expressed by various High Courts in relation to the actual
          possession as notice of title. A person may enter the
          property in one capacity and having a kind of interest. But
          subsequently while continuing in possession of the property
          his capacity or interest may change. A person entering
          the property as Tenant later may become usufructuary
          mortgagee or may be agreement holder to purchase the
          same property or may be some other interest is created
          in his favour subsequently. Hence, with reference to
          subsequent purchaser it is essential that he should make
          an inquiry as to the title or interest of the person in actual
          possession as on the date when the sale transaction was
          made in his favour. The actual possession of a person
          itself is deemed or constructive notice of the title if any,
          of a person who is for the time being in actual possession
          thereof. A subsequent purchaser has to make inquiry as
          to further interest, nature of possession and title under
          which the person was continuing in possession on the
          date of purchase of the property.”
12. The aforesaid decision of this Court makes it clear that Section 19
    (b) of the Act, 1963 is an exception from the general rule and the
    onus is on the subsequent purchaser to prove that he purchased
    the property in good faith and also bona fide purchaser for value.
13. Section 3(2) of the General Clauses Act defines ‘good faith’ as
    follows:—
          “3(22). A thing shall be deemed to be done in good
          faith where it is in fact done honestly whether it is done
          negligently or not.”
14. Section 2(11) of the Bhartiya Nyaya Sanhita, 2023 defines “good
    faith”, as follows:—
          “2(11). “Good faith- Nothing is said to be done or believed
          in “good faith” which is done or believed without due care
          and attention;”
882                                                          [2024] 11 S.C.R.

                     Digital Supreme Court Reports


15. The abovesaid definitions and the meaning of the term ‘good faith”
    indicate that in order to come to a conclusion that an act was done
    in good faith it must have been done with due care and attention
    and there should not be any negligence or dishonesty. Each aspect
    is a complement to the other and not an exclusion of the other. The
    definition of the Penal Code, 1860 emphasises due care and attention
    whereas General Clauses Act emphasises honesty.
16. The effect of abstention on the part of a subsequent purchaser,
    to make enquiries with regard to the possession of a tenant, was
    considered in Ram Niwas v. Bano, 2000 (6) SCC 685. It was held
    in paragraphs 16 and 18 therein as follows:
          “16. The purchasers have acquired a legal right under Sale
          Deed (Ext.4). The right of the tenant under Ext.1, if it is
          true and valid, though earlier in time, is only an equitable
          right and it does not affect the purchasers if they are bona
          fide purchasers for valuable consideration without notice
          of that equitable right.
          ***
          18. …If the purchasers have relied upon the assertion of
          the vendor or on their own knowledge and abstained from
          making inquiry into the real nature of the possession of
          the tenant, they cannot escape from the consequences
          of the deemed notice under Explanation II to Section 3 of
          the Transfer of Property Act.”
          The wilful abstention of the Defendants 4 and 5 to make
          an enquiry or search, is writ large on the fact of the records
          due to —
          (i) their failure to demand the production of the original title
          deeds before going ahead with the registration,
          (ii) the knowledge that they admittedly had at least about
          the other encumbrances existing in the property, and
          (iii) their retention of an amount of Rs. 2.5 crores from out of
          the total sale consideration of Rs. 4,11,08,000/=, specially
          for the purpose of settling the claim of the Plaintiffs.
          Since all the payments under Exx.A-29 to 34 to the tune
          of Rs. 55 lakhs, Rs. 35 lakhs, Rs. 60 lakhs, Rs. 130
[2024] 11 S.C.R.                                                         883

              Manjit Singh & Anr. v. Darshana Devi & Ors.


          lakhs, Rs. 130 lakhs and Rs. 1.08 lakhs (totalling to Rs.
          4,11,08,000/-) were admittedly only cash payments and
          also since DW-1 categorically admitted that a sum of Rs.
          2.5 crores, out of the above amount was retained by the
          Defendants 4 and 5 for settling the claim of the second
          Plaintiff, the Defendants 4 and 5 had a duty cast upon
          them to make a search or enquiry about the nature of
          such a claim. Their failure to do so, amounted to wilful
          abstention leading to constructive notice.”
                                                (Emphasis supplied)

17. In the case reported in Kailas Etc., Works v. Munlity, B. & N.,
    reported in 1968 Bombay Law Reporter 554, the Bombay High
    Court observed as follows: —
          “A person cannot be said to act honestly unless he acts
          with fairness and uprightness. A person who acts in a
          particular manner in the discharge of his duties in spite of
          the knowledge and consciousness that injury to someone or
          group of persons is likely to result from his act or omission
          or acts with wanton or wilful negligence in spite of such
          knowledge or consciousness cannot be said to act with
          fairness or uprightness and, therefore, he cannot be said
          to act with honesty or in good faith. Whether in a particular
          case a person acted with honesty or not will depend on
          the facts of each case.
          Good faith implies upright mental attitude and clear
          conscience. It contemplates an honest effort to ascertain
          the facts upon which the exercise of the power must
          rest. It is an honest determination from ascertained facts.
          Good faith precludes pretence, deceit or lack of fairness
          and uprightness and also precludes wanton or wilful
          negligence.”
                                                (Emphasis supplied)

18. The decision of the Bombay High Court referred to above was taken
    on Appeal to this Court in The Municipality of Bhiwandi and Nizampur
    v. Kailash Sizing Works, 1974 (2) SCC 596. While approving the
    decision of the Bombay High Court, this Court held as follows:
884                                                      [2024] 11 S.C.R.

                   Digital Supreme Court Reports


         “15. In Jones v. Gordon, Lord Blackburn pointed out the
         distinction between the case of a person who was honestly
         blundering and careless, and the case of a person who
         has acted not honestly. An authority is not acting honestly
         where an authority has a suspicion that there is something
         wrong and does not make further enquiries. Being aware
         of possible harm to others, and acting in spite thereof,
         is acting with reckless disregard of consequences. It is
         worse than negligence, for negligent action is that, the
         consequences of which, the law presumes to be present
         in the mind of the negligent person, whether actually it
         was there or not. This legal presumption is drawn through
         the well- known hypothetical reasonable man. Reckless
         disregard of consequences and mala fides stand equal,
         where the actual state of mind of the actor is relevant. This
         is so in the eye of law, even if there might be variations in
         the degree of moral reproach deserved by recklessness
         and mala fides.
         16. The Bombay, as also, the Central, General Clauses
         Acts, help only in so far as they lay down that negligence
         does not necessarily mean mala fides. Something more
         than negligence is necessary. But these Acts say “honestly”
         and so, for the interpretation of that word, we have
         explained the legal meanings above.”
                                               (Emphasis supplied)

19. The leading case on the subject, relied on in a number of Indian
    decisions is — ‘Daniels v. Davison’ [(1809) 16 Ves Jun 249: 33 ER
    978]. The Lord Chancellor held that:
         “where there is a tenant in possession under a lease, or
         an agreement, a person purchasing part of the estate
         must be bound to inquire on what terms that person is
         in possession … that a tenant being in possession under
         a lease, with an agreement in his pocket to become the
         purchaser, those circumstances altogether give him an
         equity repelling the claim of a subsequent purchaser
         who made no inquiry as to the nature of his possession.”
                                               (Emphasis supplied)
[2024] 11 S.C.R.                                                      885

                 Manjit Singh & Anr. v. Darshana Devi & Ors.


20. In our opinion, no error not to speak of any error of law could be said
    to have been committed by the High Court in passing the impugned
    Judgment and order.
21. In the result, this appeal fails and is hereby dismissed.
22. The plaintiff may now go for the execution of the decree passed by
    the Civil Court.
23. Pending applications, if any, also stand disposed of.

     Result of the case: Appeal Dismissed



     †
         Headnotes prepared by: Divya Pandey