Karnataka High Court
H.N. Narayanaswamy Naidu vs Deveeramma on 26 September, 1980
Equivalent citations: AIR 1981 Kant 93, 1981 (1) KarLJ 259
Bench: G Sabhahit
1. This appeal by defendant 3 is directed against the judgment and decree dated 24-10-1973 passed by the Civil Judge, Hassan, in Regular Appeal No. 176 of 1972, on his file, dismissing the appeal by the present appellant before him, on confirming the judgment and decree dated 10-10-1972 passed by the Additional Munsiff, Hassan, in Original Suit No. 271 of 1969, on his file, decreeing the suit of the plaintiff for specific performance of an agreement under Exhibit P-1 dated 1-10-1967.
2. The plaintiff averred that defendant I and his mother sold the suit properties in her favour on 21-3-1966 as per Exhibit P-2; but, that they obtained an agreement to reconvey as per Exhibit P-3 on the same day under which the plaintiff agreed to reconvey the properties to the vendors in case they pay the entire amount of consideration after six years and within six months thereafter. Sub, subsequently, however, since the vendors were in need of money, they further executed an agreement that they would release the agreement of reconveyance under Exhibit P-1. It is for that purpose that the present suit was instituted by the plaintiff in Original Suit No. 271 of 1969 calling upon them to execute the registered release deed as assured under Exhibit P-1.
3. Defendants 1 and 2 filed their written statement denying the execution of Ext P-1. Defendant 3 contended that he had purchased the right to obtain reconveyance from defendants 1 and 2 under Ext. D-1 dated 29-5-1969. He further contended that he obtained the right bona fide and without knowledge of Ext. P-1 for consideration and, hence, the said Ext. P-1 was not binding on him.
4. The trial Court raised the following issues as arising from the pleadings:
(1) Is the agreement dated 4-8-1968 true?
(2) Is the agreement dated 1-10-1967 true and enforceable ?
(3) Was there a registered agreement to reconvey on the same date as the sale deed and is the plaintiff still bound by it 7 (4) Is there no cause of action for the suit and is the suit not maintainable? (5) Has defendant 3 acquired the right of reconveyance from defendants 1 and 2? (6) Whether defendant 3 is a bona fide purchaser for value and whether the plaintiff cannot enforce the agreement even it proved against him? (7) To what reliefs are the parties entitled?
5. The learned Munsiff, appreciating the evidence on record, answered all the material issues in favour of the plaintiff and, in that view, decreed the suit of the plaintiff as prayed for. Aggrieved by the said judgment and decree, defendant 3 went up in appeal before the Civil Judge, Hassan, in Regular Appeal No. 176 of 1972, as stated above. The learned Civil Judge raised the following points as arising for his consideration in the course of his judgment:
(1) Has the appellant acquired the right of reconveyance from defendants 1 and 2?
(2) Is the appellant a bona fide purchaser for value?
(3) Is it shown by the appellant that the plaintiff cannot enforce the agreement against him, even if proved?
(4) What Order?
6. The learned Civil Judge, reassessing the evidence on record in the light of the arguments addressed before him, held in the negative under Points 1, 2 and 3 and, in that view, he dismissed the appeal, on confirming the judgment and decree of the trial Court. Aggrieved by the same, defendant 3 has come up in second appeal before this Court.
7. The learned Advocate appearing for the appellant vehemently contended that the Courts below were not justified in coming to the conclusion that defendant 3 had notice of the agreement Exhibit P-1 entered into by his vendors with the plaintiff and that therefore, he was not a bona fide purchases for value without notice.
8. As against that, the learned Advocate appearing for the respondent/plaintiff argued supporting the judgment and decree of the trial Court, confirmed by the first appellate Court.
9. The sole point, therefore, that arises for my consideration in this appeal is: Whether defendant 3 was a bona fide purchaser for value without notice of the right to get the reconveyance from defendants 1 and 2?
10. Section 19(b) of the Specific Relief Act, 1963, reads:
“19. Except as otherwise provided by this Chapter, specific performance of a contract may be enforced against-
a) xx xx xx
(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.
xx xx xx xx”
11. Hence, it is obvious that defendant 3 who comes to the Court with the pleading that he was a transferee for value. Who has paid the money in good faith and without notice of the original contract Ext. P-11 shall have to prove that he was a transferee for value, that he paid his money in good faith and that he paid so without notice of the original contract.
12. It is in this context that the learned Advocate for the respondent/plaintiff invited my attention to the definition of the term ‘Notice’ as defined in Section 3 of the T. P. Act, 1882, which reads.
” ‘a person is said to have notice’ of a fact when he actually knows that fact, or when, but for wilful abstention from an enquiry or search which he ought to have made, or gross negligence, he would have known it”
Explanation II to the said definition reads:
“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 actual possession thereof.”
13. Relying on these, the learned Advocate appearing for the respondent plaintiff submitted that defendant 3 not only had actual notice but also constructive notice as contemplated in Explanation II to the definition of the term ‘Notice’ contained in S. 3 of the Transfer of Property Act, 1882.
14. The learned Advocate appearing for the appellant however, tried to meet this submission by inviting my ‘attention to a decision of the Patna High Court in the case of Shankar Prasad v. Mt. Muneshwari , wherein their Lordships have made it clear that on the facts of that case, it was not necessary for the defendant to further enquire with the occupant of the premises.
15. The facts of that case and the facts of the present case are entirely different. As rightly pointed out by the learned Civil Judge, the facts of the present case are such as would induce any average prudent man to go and enquire with the person viz., the plaintiff, who was in actual possession of the premises. In Exhibit P-3, it is stated that before the properties are reconveyed, the costs for major repairs shall be paid to the plaintiff. In Ext. D-1, it is stated that then was some litigation against defendants 1 and 2 in which the right in question was attached. In this background, any average prudent man ought to have enquired about the rights of the plaintiff, whether reconveyance was still subsisting or whether he bad spent any amount further for major repairs or what was the nature of his rights etc. Thus, it is obvious that but for the wilful abstention from enquiry, defendant 3 would have come to know the entire facts and, hence, he should be deemed to have the notice of the rights of the plaintiff. Further, even under Explanation 11 to the definition of the term ‘Notice’ contained in Section 3 of the Transfer of Property Act, 1882, since the plaintiff was in actual possession, practically as owner but for the reconveyance deed, it was the duty of defendant 3 to enquire with the plaintiff about her rights. Even under the said provision, he should be deemed to have the notice of the rights of the plaintiff.
16. Both the Courts below have held that defendant 3 had notice. The trial Court says that defendant 3 had actual notice, appreciating the evidence on record, as he was residing very near to the suit premises within a furlong and that in all probability, he was aware of all the dealings between the parties. In addition, the first appellate Court has held that defendant 3 shall also be deemed to have notice of the rights of the plaintiff. In my considered view, both the Courts below are right in holding that defendant 3 did have notice of the rights of the plaintiff and of the agreement entered into under Exhibit P-1. That is further made probable by the fact that in Ext. D-1, defendant 3 has taken care to see that the vendors are made liable for damages and return of purchase money in case the sale falls through for any reason, on the charge of their other properties – movable and immovable. Therefore, he cannot resist the suit instituted by the plaintiff for specific performance on the ground that he is a bona fide purchaser for value without notice. The appeal, without more, is liable to be dismissed.
17. In addition, it was submitted at the Bar that this defendant 3 has not taken any action for getting the properties reconveyed within the time stipulated. It is settled law that reconveyance is a concession given by the vendee. It has to be strictly observed by him; time is the essence of the contract. Since defendant 3 has not taken any action in the matter, his rights, even if any, are obviously barred, that is only by the way.
18. In the result, therefore, the appeal fails and is dismissed.
19. Appeal dismissed.