R.K. MOHAMMED UBAIDULLAH AND ORS.versusHAJEE C. ABDUL WAHAB (DEAD) BY LRS.

A                  R.K,. MOHAMMED UBAIDULLAH AND ORS.
                                    v.
                   HAJEE C. ARDUL WAHAB (DEAD) BY LRS.
                                  '1


                                       JULY 18, 2000

B               [D.P. MOHAPATRA AND SHIVARAJ V. PATIL,JJ.]


            Specific Relief Act, 1963:

          Section J9(b)-Prior agreement to sell the suit premises between
C   Defendant No. I and plaintiff after taking advance payment-Sale deed to
    be executed within 90 days after payment of entire sale consideration-Later
    same suit premises was sold to Defendant Nos. 2 to 5 by Defendant No. /-
    Suit for specific performance by plaintiff-Decreed by the trial court and
    upheld by the High Court-On appeal, held, Section /9(b) protects the bona
D   fide purchaser in good faith without notice of the original contract-In view
    of Section 19(b) and definition of "notice" under Transfer of Property Act,
    it is rightly held by the trial court as well as by the High Court that
    Defendants 2 to 5 were not bona fide purchasers in good faith for value
    without notice of the original contact-Pena/ Code, 1860, Section 52-
    General Clauses Act, 1897-Transfer of Property Act, 1882, Section 3
E   Explanation 11.

            Words and Phrases:

         Notice-meaning of-In the context of Section 3, Explanation 11 ofthe
    Transfer of Property Act, 1882.
F
            Good faith-Meaning of-Section 3 (22) of the General Clauses Act,
    1897.

          Defendant No. 1 (D-1) agreed to sell the suit property to the plaintiff
    for a sum of Rs. SS,000 i!nd accordingly D-1 executed an agreement dated
G   27.07.1971 having received a sum of Rs. 10,000. It was agreed that D-1 would
    execute the sale deed witl\in 90 days from the date of the agreement after
    receiving the balance of s~e price of Rs. 45,000. The Plaintiff was always
    ready and willing to perform bis part of the contract, but D-1 refused to execute
    the sale deed even after receiving notice from the plaintiff taking a stand that
H   the plaintiff had issued a notice to execute the sale deed before the expiry of
                                          524
             R.K. MOHAMMED UBAIDULLAH v. HAJEE C. ABDUL WAHAB               525
90 days fixed under the agreement only to create litigation. D-1 dishonestly A
sold the suit property to defendants 2 to 4 and the husband of the defendant
No. S by way of a registered sale deed executed on 09.11.1971. The plaintiff
thus filed a suit against D-1 to D-S for specific performance and other reliefs.

       The trial court decreed the suit in favour of the plaintiff on the ground
that plaintiff was always ready and willing to perform his part of the contract;   B
and that D-1 to D-S were not entitled to claim title to the suit property on the
ground that they were bona fide purchasers for value without notice of the
prior agreement However, trial court also held that until the plaintiff acquired
the title by means of a document, he is not entitled to seek for a decree for
mesne profits and damages. D-1 to D-S filed an appeal before the High Court        C
and cross objections were also filed by the plaintiff. However, the appeal as
well as the cross-objection were dismissed by the High Court. Hence this
appeal by D-2 to D-S. The D-1 who was Respondent No. 2. in the appeal was
deleted as respondent on the appellants giving up.

      It was contended by D-2 to D-S that they were uonafide purchaser of D
the suit property for value without notice of the prior agreement executed in
favour of the plaintiff; that the courts below failed to see that the plaintiff was
not ready and willing to perform his part of the agreement; that no notice was
issued by the plaintiff to defendants 2 to S not to purchase the suit property
on the ground that there was prior agreement to sell the property in his favour;
and that the courts below committed an error in concluding that defendants 2 E
to Shad notice of the prior agreement on the basis that they had overheard
telephonic conversation between the plaintiff and the husband of defendant
No.I

      Dismissing the appeal with costs, this Court
                                                                                   F
       HELD : 1.1. It is not uncommon that where a tenant is in possession of
the property, that too for a long time, using it for business purpose, he would
always like to purchase the property getting all advantages if it is offered for
sale. Normally the landlord or owner of the property would also be interested
in selling the property to a person in possession if a reasonable price is given G
to avoid litigation and to have smooth transaction. In such a situation the
appellant purchasers would have made an inquiry with the respondent-plaintiff
about the nature of his possession and title under which he is in possession
on the date of sale deed executed in their favour. If they had made an inquiry
the plaintiff would have certainly revealed the prior agreement in his favour.
If such inquiry was not made it only means that the appellant wilfully abstained H
    526                     SUPREME COURT REPORTS [2000) SUPP. I S.C.R.

A   from making such inquiry or that they grossly neglected to do so. The defence
    of appellant-Defendants 2 and 4 is not consistent with regard to contacting
    the plaintiff and informing him of their intention to purchase the property.
                                                               [532-G-H; 533-A)

           1.2. Section 19(b) of the Specific Relief Act, 1963 protects the bona
B   fide purchaser in good faith for value without notice of the original contract.
    This protection is in the nature of an 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 Indian Penal Code
C   emphasises due care and attention in relation to good faith. In the General
    Clauses Act emphasis is laid on honesty. [533-G-H)

          2.1. "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 to have notice of a fact when he actually knows that fact, or
D   when, but for wilful abstention from an inquiry or search which he ought to
    have made, or gross negligence, he would have known it. The definition has
    been amended and supplemented by three explanations, which settle the law
    in several matters of great importance. Explanation II states that actual
    possessions is notice of the title of the person in possession. A person may
    enter the property in one capacity and having one kind of interest. But
E   subsequently while continuing in possession of the property his capacity or
    interest may change. A person entering the property as a tenant later may
    become usufructuary mortgagees or may be an agreement holder to purchase
    the same property or some other interest may be created in his favour
    subsequently. Hence it is essential that the subsequent purchaser make an
    inquiry as to the title or interest of the person in actual possession as on the
F   date when the sale transaction was made in his favour. (534-8-E)

           2.2. In view of Section l(b) of the Specific Relief Act and definition of
    "notice" given in Section 3 of the Transfer of Property act read along with
    Explanation II, it is rightly held by the trial Court as well as by the High Court
    that the appellants were not bona fide purchasers in good faith for value without
G   notice of the original contract. [534-H; 535-A)

         Mummidi Reddi Papanagari Ye/la Reddy v. Sal/a Subbi Reddy, AIR
    (1954) AP 20 and Veeramalai Vanniar v. Thadikara Vanniar, AIR (1969)
    Madras 383, approved.

H         Dr. Govinddas v. Shantibai, (1973) 3 SCC 418, relied on.
  R.K. MOHAMMED UBAIDULLAH v. HAJEE C. ABDUL WAHAB [SHIVARAJ V. PATIL, J.)   527
      CIVIL APPELLATE JURISDICTION : Civil Appeal No. 5182 of 1993.                A
      From the Judgment and Order dated 14.6.90 of the Madras High Court
in A. No. 509of1981.

      A.T.M. Sampath and V. Balaji for the Appellants.
                                                                                   B
     K. Parsaran, Krishnamurthi Swami and Mrs. Prabha Swami for the
Respondents.

      The Judgment of the Court was delivered by

        SHIV ARAJ V. PATIL, J. The unsuccessful Defendants 2 to 5 in both C
 the courts below in a suit for specific perfonnance are the appellants herein.
 Hereinafter the parties will be referred to as arrayed in the original suit No.
 241/71. Briefly stated the facts leading to filing of this appeal are: The Plaintiff
 filed the original suit in the Court of the Principal Subordinate Judge, Vellore
 for specific perfonnance of the contract and other reliefs. According to the
 plaintiff, the suit scheduled property belonged to the defendant No. I. He is D
 carrying on business in hardware in the premises Door No. 39, Long Bazar,
 Vellore, the property belonging to the brother of the first defendant. He is in
 exclusive occupation and possession of the suit property Door No. 36 as a
tenant of the first defendant from about 1962 on a monthly rent of Rs. 200
 using it as godown for his business purpose. The Defendants 2-4 and the E
husband of the 5th defendant are also hardware merchants carrying on similar
business in adjoining shop Door No. 38. The first defendant intended to sell
the suit property and intimated the plaintiff about the same and requested him
to permit intending purchasers and brokers to inspect the property. The first
defendant offered to sell the property to the Plaintiff also. The plaintiff
intimated Shri Yousuf Sharif, the husband of the I st defendant by letter dated F
8. l.1971 that he was interested in purchasing it. In July, 1971 one Tangvelli
Chetty, the broker of the first defendant infonned the plaintiff that the first
defendant was prepared to sell the property to him. Therefore, the plaintiff
and his son went to the house of the first defendant at Madras and negotiated.
The first defendant agreed to sell the suit property to the Plaintiff for a sum G
of Rs. 55,000. Accordingly, the first defendant executed the agreement on
27. 7.1971 having received a sum of Rs. 10,000 as advance. It was agreed that
the first defendant should execute the sale deed within 90 days from the date
of the agreement after receiving the balance of sale price of Rs. 45,000. The
plaintiff was always ready and willing to perfonn his part of the contract The
first defendant refused to execute the sale deed even after receiving notice H
    528                     SUPREME COURT REPORTS [2000] SUPP. 1 S.C.R.

A   from the plaintiff for completing the sale transaction taking a stand that the
    plaintiff had issued a notice asking her to execute the sale deed before the
    expiry of the 90 days fixed under the agreement. According to the first
    defendant, the notice was issued by the plaintiff before the expiry of 90 days
    only to create litigation. While the correspondence was going on between the
    plaintiff and the first defendant, the defendants 2 to 4 and the husband of
B   the 5th defendant brought into existence a sale deed executed and registered
    on 9.11.1971 for a SUll] of Rs. 50,000 at Madras. The first defendant dishonestly
    sold the suit property to the defendants 2-5 who had knowledge of the prior
    agreement dated 27. 7. 71 executed in favour of the plaintiff. The subsequent
    transaction of sale by the defendant No. 1 in favour of defendants 2 to 5 was
C   not bona fide. Hence the plaintiff filed the suit for specific performance and
    other reliefs against the defendants 1 to 5.

          The first defendant filed the written statement resisting the suit among
    others that the plaintiff was not ready and willing to purchase the property
    as per the conditions 'in the agreement within the specified time of 90 days.
D   However, the defence set up by the first defendant was struck off as per order
    dated 23.7.1974 of the trial court passed in I.A.No. 1050of1973.

          The defendants 2 to 4 filed the written statement stating that the
    plaintiff be put to strict proof of everyone of the allegations made in the plaint
E   in regard to the execution of the suit agreement. They also claimed that they
    were bona fide purchasers of the suit property for value without notice of the
    prior agreement of sale executed in favour of the plaintiff. The 5th defendant
    remained absent and ex-parte in the suit.

           The trial court on the basis of the evidence and material placed on
F   record held in favour of the plaintiff that he had been always ready and willing
    to perform his part of the contract; suit agreement was subsisting to specifically
    enforce it; the defendants 2 to 5 were not entitled to claim title to the suit
    property on the ground that they were bona fide purchasers for value without
    notice of the prior agreement. The trial court also held that until the plaintiff
G   acquired title by means of a document, he was not entitled to seek for a decree
    for mesne profits and damages. In view of the findings so recorded and taking
    into consideration all aspects, the trial court found that the plaintiff was
    entitled for the relief of specific performance. Hence a decree for specific
    performance was granted in favour of the plaintiff directing the defendant I
    to 5 to execute and register the sale deed in respect of the suit property at
H   the plaintiffs expenses and receive the balance of the sale consideration of
  R.K. MOHAMMED UBAIDULLAH 1•. HAJEE C. ABDUL WAHAB [SHIVARAJ V. PATIL, J.]   529
Rs.45,000/- deposited in the court. The defendants 1 to 5 were also directed         A
to deliver fonnal possession of the suit property and to pay Rs. 500 as
compensation in addition to pay the cost of the suit.

       The defendants 2 to 5 filed an appeal No. 509/81 in the High Court of
Madras challenging the judgment and decree passed by the trial court. Cross-
objections were also filed by the plaintiff in the said appeal. During the           B
pendency of the appeal, the plaintiff died. His legal representatives (respondent
nos. 3 to I0 herein) were brought on record. The appeal was dismissed
con finning the judgment and decree of the trial court. The cross-objections
filed by the plaintiff were also dismissed. Hence the defendants 2 to 5 have
brought this appeal to this court. The !st defendant (the respondent No. 2           C
in this appeal) was deleted as ordered on 3.3.1992 on the appellants giving
up.

       It was contended on behalf of defendants 2 to 5 that they were bona
fide purchasers of the suit property for value without notice of the prior
agreement executed in favour of the plaintiff; the trial court as well as the High   D
Court failed to see that the plaintiff was not ready and willing to perfonn his
 part of the contract; no notice was issued by the plaintiff to the defendants
2 to 5 not to purchase the suit property on the ground that there was a prior
agreement to sell the property in his favour; and that trial court as well as
the High court committed an error in concluding that defendants 2 to 5 had
notice of the prior agreement on the basis that they had overheard telephonic        E
conversation between the plaintiff and the husband of the defendant No. 1.

      Per contra, submissions were made on behalf of the L.Rs. of the plaintiff
in support of and justifying the impugned judgment and decree.

       Before proceeding to appreciate the contentions urged and the                 F
submissions made on behalf of the parties it is considered appropriate to state
the facts, which are either admitced or clearly established. The plaint scheduled
property is the godown premises bearing No. 36 in Long Bazaar, Vellore,
belonged to the first defendant. The plaintiff is carrying on hard-ware business
in the premises bearing No. 39 in Long Bazar, Vellore. The suit property is          G
situate on the rear side of the said premises No. 39. The plaintiff is storing
hardware material in the said premises, using it as a godown having direct
access from the shop, as a tenant under the first defendant for about 20 years
prior to the filing of the suit. The defendants 2 to 4 and the husband of the
fifth defendant are also carrying on similar hardware business in the adjoining
premises bearing No. 38. The plaintiff filed the suit for specific perfonnance       H
     530                     SUPREME COURT REPORTS [2000] SUPP. I S.C.R.

A directing the defendants to execute the sale deed in respect of the suit
   property on the basis of the agreement of sale dated 27.7.1971, marked as
   Exhibit A-3, executed by the first defendant for a sum of Rs.50,000 after
   receiving Rs. I 0,000 as advance for the same. It was agri:ed between the
   plaintiff and the first defendant that the sale should be completed within 90
   days from the date of the agreement. After exchange of notices and on the
B first defendant refusing to perform her part of the contract within the stipulated
  time in the agreement and she having sold the very suit property to the
  defendants 2 to 5 for a sum of Rs. 50,000 under Exhibit B-1, the sale deed
  dated 9.11.1971, the plaintiff was constrained to file the suit. The defendant
  No. I admitted the execution of agreement of sale but contended in a written
C statement that the plaintiff had never been ready and willing to perform his
  part of contract. The plaintiff had issued a notice - Exhibit A-1 dated 19.9.1971
  - much before the expiry of 90 days stipulated in the agreement stating that
  he was ready to perform his part of the contract and calling upon the defendant
  No. 1 to execute the sale deed after receiving the balance consideration of
  Rs.45,000. It is to be noticed that the defence of the first defendant was struck
D off by the order dated 23.7.1974, passed by the trial court in IA No. 1050/1973.
  The plaintiff proved the due execution of Exhibit A-3. The learned counsel
  appearing for defendants 2 to 4 in the trial court did not advance any
  argument touching the validity or enforceability of Exhibit A-3, the suit
  agreement, as against the first defendant. The defendants 2 to 4 resisted the
E suit on the ground that they were the bona fide purchasers for the value
  without notice of the agreement.

          After the ful1-fled1~ed trial, on the basis of the evidence and material
    placed before it and having due regard to the circumstances, the trial court
    concluded that the suit agreement was subsisting, the plaintiff was always
F   ready and willing to perform his part of the agreement, time was not the
    essence of the suit agreement and the plaintiff could specifica11y enforce it.
    The learned trial Judge he Id that the defendants 2 to 5 were not the bona fide
    purchasers for value without notice of the suit agreement and that the plaintiff
    was entitled for the relief of specific performance. The High court in the
G   appeal preferred against the judgment and decree of the trial court did not find
    any good or valid ground either to differ or disagree with the findings
    recorded and conclusions reached by the trial court. Consequently the appeal
    filed by the defendants 2 to 5 as well as the cross-objections filed by the
    plaintiff were dismissed by the judgment and decree under appeal.

H          The trial court has considered the contentions of the parties in the light
  R.K. MOHAMMED UBAIDULLAH 1•. HAJEE C. ABDUL WAHAB [SHIVARAJ V. PATIL, l.)   531

of the pleadings and the evidence elaborately. The High Court, in the appeal,       A
having re-appreciated the evidence and the submissions keeping in view the
legal position, has dismissed the appeal by a well-reasoned order. Thus the
concurrent findings of fact are recorded. Added to this we do not find on the
facts and circumstances of the case that the conclusions arrived at by the
courts below are unsustainable.
                                                                                    B
      However, in the light of the submissions made on behalf o:·:,he defendants
2 to 5 before us, we have to consider: 1) whether the defendants 2 to 5 are
bona fide purchasers of the suit property in good faith for value without
notice of original contract and 2) whether they were not required to make any
inquiry as to the equitable or further interest the plaintiff had in the suit       C
property at the time of execution of sale deed (Exhibit B-1) in their favour, on
the ground that they were already aware of the nature of the possession of
the plaintiff as a tenant.

       It is not disputed that the plaintiff and defendants 2 to 4 carry on
 business in hardware in adjoining premises; only a common wall separates D
 them. The suit property adjoins the premises bearing No. 39 where the plaintiff
 is carrying on his business; he can directly reach the suit property. He is
using the suit property advantageously as godown for the last 20 years prior
to the filing of suit, as a tenant. The plaintiff and defendants are neighbours
not only in business premises but also in the residence in E
 Ramanayakanpalayam of the same town as stated in the SLP itself. Agreement
(Exhibit A-3) was executed on 21.7.1971 in favour of the plaintiff and sale deed
(Exhibit B-1) was executed on 9.11.1971 in favour of the defendants 2 to 5.
Husband of the defendant No. I was dealing with sale transactions of the suit
property. He signed Exhibit A-3 as well as Exhibit B-1, the suit agreement and
the sale deed respectively. Similarly Thangavelu Chetty, a broker, was a~o in F
know of Exhibit A-3 And exhibit B-1. Exhibit B-1 having come into existence
much later to Exhibit A-3, husband of defendant No. I and said Thangavelu
Chetty in all probability might have mentioned about Exhibit A-3, the
agreement, to defendants 2 to 5. The plaintiff and defendants 2 to 4 carry on
business in adjoining premises and the suit property adjoins the premises G
Door No. 39 on the rear side and that they are also neighbours in residential
locality. In the ordinary course the defendants 2 to 4 would have known about
the prior agreement of sale made in favour of the plaintiff. It is the case of
the defendants 2 to 4 that they were aware of the fact that the plaintiff was
in possession of the suit property occupying it as a tenant for the last several
years. The defendants 2 to 4 did not make any inquiry if the plaintiff had any H
    532                     SUPREME COURT REPORTS [2000] SUPP. I S.C.R.

A    further or other interest in the suit property on the date of execution of sale
    deed in their favour apart from that he was iii possession of the property as
    a tenant. The trial court took note of telephonic conversation between the
    plaintiff and the husband of the first defendant on the basis of Exhibits A-
    4 to A-8 - the trunk call bills for the period 16.7.1971 to 15.11.1971 and was
B   of the view that the defendants came to know of the prior agreement from the
    eve drop of conversation as the plaintiff and defendants carry on business
    in adjoining premises and only a common wall separates the premises. The
    learned counsel for the defendants commented on this aspect and contended
    that the learned trial Judge was not right in drawing such inference as to the
    knowledge of the defendants 2 to 4 in relation to the prior agreement Exhibit
C   A-3. The trial court did not solely rely on this circumstance as can be seen
    from the judgment. Several circumstances, oral evidence and documents were
    taken into consideration for imputing knowledge of suit agreement to defendants
    2 to 5. The trunk call bills during the relevant period, in the given situation
    probablised the case of the plaintiff that defendants were aware of Exhibit A-
    3.
D
           In paragraph 6 of the written statement defendants 2 to 4 stated that
    they had purchased the prop1:rty only after contacting the plaintiff; they
    sought the permission of the plaintiff to inspect the suit godown informing
    him of their intention to purchase the same from the first defendant. The trial
E   court did not accept this contention and rightly so in our opinion. In the
    ordinary course a reasonable prudent person placed in the position of the
    plaintiff would not have failed to mention about the existence of the prior
    agreement in his favour particularly when he is using the very same godown
    as a tenant under the first defendant for the last 20 years prior to the filing
    of the suit. Similarly the defendants 2 to 4 intending to purchase the property
F   in p'Ossession of a tenant would not have failed to make inquiry as to any
    further interest in relation to possession or title of the plaintiff over the suit
    property. It is not uncommon that where a tenant is in possession of the
    property, that too for a long time, using it for business purpose would always
    like to purchase the property getting all advantages if offered for sale. Normally
G   the landlord or owner of the property would also be interested in selling the
    property to a person in possession if a reasonable price is given to avoid
    litigation and to have smooth transaction. In certain statutes even provisions
    are made to give first option to a tenant to purchase the property. In such
    situation the defendants 2 to 4 would have made inquiry with the plaintiff
    about the nature of his possession and title under which he is in possession
H   on the date of sale deed (Exhibit B-1) executetf in their favour. If they had
      R.K. MOHAMMED UBA!DULLAH v. HAJEE C. ABDUL WAHAB [SHIVARAJ V. PATIL, J.]     533
    made inquiry plaintiff would have certainly revealed about Exhibit A-3 the            A
    prior agreement in his favour. If such inquiry was not made it only means that
    the defendants 2 to 5 willfully abstained from making such inquiry or they
    grossly neglected to do so. The defence of defendants 2 and 4 is not
    consistent with regard to contacting the plaintiff and informing of their intention
                                                                •
    to purchase the property. Once they took a stand that they directly contacted
    the plaintiff seeking his permission to inspect the suit property and in the          B
    evidence of DW-1 it is stated that they sent their clerk to the plaintiff seeking
    permission to inspect the suit property. Neither the name of that clerk was
    given nor he was examined nor it is stated about the same in the written
    statement.

             Section 19 of the Specific Relief Act, 1963, to the extent it is relevant,
                                                                                          c
    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 -                D
               (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;
                                                                                          E
              (c)..........

              (d)......... .

              (e) .........."

              As can be seen from Section 19 (a) and (b) extracted above specific F
              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 I 9(b) protects the bona fide purchaser in good faith for value G
              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
              emphasizes due care and attention in relation to the good faith. In the H


1
     534                    SUPREME COURT REPORTS [2000) SUPP. I S.C.R.

A            General Clauses Act emphasis is laid on honesty.

         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 to have notice" of a fact when he actually knows that fact,
  or when, but for wiHful abstention from an inquiry or search which he ought
B to have made, or gross negligence, he would have known it. Explanation II
  of said Section 3 reads:

             "Explanation II - Any person acquiring any immoveable 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
c            actual possession thereof."
   Section 3 was amended by the Amendment Act of 1929 in relation to the
   definition of 'notice'. The di:finition has been amended and supplemented by
  three explanations, which settle the law in several matters of great importance.
   For the immediate purpose Explanation-II is relevant. It states that actual
D 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 po$Session of the
E property his capacity or inti:rest 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 ess'!ntial that he should make an inquiry as to title or interest of the person
  in actual possession as on the date when sale transaction was made in his
F 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. In the case on hand
G defendants 2 to 4 contended that they were already aware of the nature of
  possession of the plaintiff over the suit property as a tenant and as such
  there was no need to make any inquiry. At one stage they also contended
  that they purchased the property after contacting the plaintiff, of course,
  which contention was negatived by the learned trial court as well as the High
  court. Even otherwise the said contention is self-contradictory. In view of
H Section I9(b) of the Specific Relief Act and definition of 'notice' given in
  R.K. MOHAMMED UBAIDULLAH "· HAJEE C. ABDUL WAHAB (SHIVARAJ V. PATIL, J.]   535
Section 3 of the Transfer of Property Act read along with explanation II, it       A
is rightly held by the trial court as well as by the High Court that the
defendants 2 to 5 were not bona fide purchasers in good faith for value
without notice of the original contract.

      The High Court of Andhra Pradesh in Mummidi Reddi Papannagari
Ye/la Reddy v. Sal/a Subbi Reddy and others referring to various decisions         B
in paragraph 8 has stated thus:

        "It may be mentioned here that an Explanation was introduced into the
        Transfer of Property Act by the Amending Act 21 of 1929. Even prior
        to this amendment, the law, as declared in decided cases, was that,        C
        when a person purchased property from the owner knowing that it
        is in the possession of another, he is under a duty to ii •uire into the
        nature of that possession, and, in the absence of such inquiry,
        knowledge of title under which possession is held, should be attributed
        to the purchaser. The leading case on the subject, relied on in a
        number of Indian decisions is -'Daniels v. Davision', (1809) 16 Yes        D
        Jun 249 (B). 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        E
        the purchaser, those circumstances a/together give him an equity
        repelling the claim of a subsequent purchaser who made no inquiry
        as to the nature of his possession". "              (Emphasis supplied)

      Relying on the decision of this Court a Division Bench of the High
court of Madras in Veeramalai Vanniar (died) and Ors. v. Thadikara Vanniar         F
and Ors. 1 has held that it is also the duty of the subsequent purchaser to
inquire from the persons in possession as to the precise character in which
he was in possession at the time when subsequent sale transaction was
entered into. If there be a tenant in possession of land a purchaser is bound
by all the equities which the tenant could enforce against the vendor and          G
such equity extends not only to the interest connected with the tenancy but
also to interests under the actual agreement.

      In Dr. Govinddas and another v. Shrimati Shantibai and Ors..' this
l. AIR 1969 Madras 383.
2. AtR (1973) 3 sec 418.                                                           H
    536                     SUPREME COURT REPORTS (2000) SUPP. I S.C.R.

A   Court in para 14 has held:

            "14. It will be noticed that the evidence is contradictory and we have
             to decide whose version is more acceptable. The learned counsel for
            the appellants contended that the onus of proof was very light on the
            appellants and they had discharged it by entering the witness-box and
B           stating that they had no knowledge. We are unable to agree with him
            that in the circumstances of this case the onus was light on the
            appellants. The circumstances that tell heavily against the version of
            the appellants are these. First, all the parties are residents or have
            shops in the same vicinity and in places like this it is not probable

c           that the appellants wou Id not come to know of the execution of the
            agreement (Souda-Chitthi) of the plaintiff. Secondly, the haste with
            which the sale-deed in favour of the appellants was executed was
            unusual. It is more usual for an agreement to be executed in such
            cases rather than arrive at an oral agreement on one day and have the
            sale-deed executed the next day and registered the following day. For
D           some reason the appellants were in a hurry to get the deed registered.
            What was the reason? In view of all the circumstances we are inclined
            to accept the evidence Hem Raj Chauhan, and corroborated by Haya!,
            that Goverdhandas knew of the execution of the agreement with the
            plaintiff on March I, 1960."

E   As can be seen from th1: paragraph, extracted above, that in case of
    contradictory evidence the circumstances have to be kept in view in deciding
    whose version is more acceptable. One of the circumstances that was held
    against the subsequent pur<:hasers was that the parties were residents or had
    shops in the same vicinity and it was not probable that the subsequent
F   purchasers would not have come to know of the execution of the agreement.
    In the case on hand the trial court as well as the High Court have given
    reasons based on evidence and have indicated several circumstances for not
    accepting the version of defendants 2 to 4 that they had no knowledge of
    the prior agreement A-3; one of the circumstances being that the parties are
    neighbours in place of business as well as in residential locality. We have also
G   already referred to that bridly.

          In view of what is stated above, it is clear that the defendants 2 to 5
    were not bona fide purchasers for value without prior notice of the original
    contract and that they were required to make inquiry as to the nature of
    possession or title or further interest if any of the plaintiff over the suit
H   property at the time when they entered into sale transaction notwithstanding
 R.K. MOHAMMED UBAIDULLAH •. HAJEE C. ABDUL WAHAB (SHIVARAJ V. PATIL, J.] 537

they were already aware that the plaintiff was in possession of the property A
as the tenant. What is material is the inquiry at the time when subsequent
sale transaction was entered into.

     Thus having regard to all aspects, we do not find any good or valid .
ground to disturb or interfere with the judgment and decree under appeal.
Hence we confirm them. Consequently the appeal is dismissed with costs. B

RK.S.                                                     Appeal dismissed.