Notice Under Transfer of Property Act, 1882

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Notice

Literally the term “notice’ means intimation, intelligence or warning.

Legal meaning of notice is knowledge of a fact or the information about a fact.

It means that when a person has a notice of something, he has knowledge or information about a fact. And in law, if is established before court that a person has a notice of some fact or transaction, the knowledge of that fact is binding on that person. Hence, if person has knowledge or notice of some fact, he cannot deny the knowledge or notice of the fact if the same goes against him.

First, understand the interpretation of notice as per bare act:

Section 3 interprets notice as, “a person to have notice” of a fact when he actually knows that fact, or when but for willful abstention from an enquiry or search which he ought to have made, or gross negligence, he would have known it.

Explanation I : Where any transaction relating to immovable property is required by law to be and has been effected by a registered instrument, any person acquiring such property or any part of, or share or interest in, such property shall be deemed to have notice of such instrument as from the date of registration or, where the property is not all situated in one sub-district, or where the registered instrument has been registered under sub-section (2) of section 30 of the Indian Registration Act, 1908 (16 of 1908), from the earliest date on which any memorandum of such registered instrument has been filed by any Sub-Registrar within whose sub-district any part of the property which is being acquired, or of the property wherein a share or interest is being acquired, is situated:

Provided that –

(1)   The instrument has been registered and its registration completed in the manner prescribed by the Indian Registration Act, 1908 (16 of 1908), and the rules made there under,

(2)   The instrument  of memorandum has been duly entered or filed, as the case may be, in books kept under section 51 of that Act, and

(3)   The particulars regarding the transaction to which the instrument relates have been correctly entered in the indexes kept under section 55 of that Act.

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.

Explanation III: A person shall be deemed to have had notice of any fact if his agent acquires notice thereof whilst acting on his behalf in the course of business to which that fact is material:

Provided that, if the agent fraudulently conceals the fact, the principal shall not be charged with notice thereof as against any person who was a party to or otherwise cognizant of the fraud.

 

Hence, notice can be:

1.      Actual (express), or

2.      Constructive

1.      Actual or Express Notice: This is a notice which is direct in nature and notice of fact. It is a matter of fact or can be proved with the help of other facts. It is binding on the person under following conditions:

(i)                 The knowledge or information must be direct and not the hearsay or rumor. It should be of the nature on which a person determines the certain action to do or not to do. It is being said that every knowledge is of a fact cannot be treated as notice while notice means knowledge of a fact.

(ii)               This knowledge or information should be regarding the parties of transaction and not the information of any third person.

(iii)             Further it should be relevant or related to the transfer in question.

2.      Constructive Notice: Doctrine of Constructive Notice is very important and it is based on equity. It states that a person actually does not have notice of the fact directly but court treats that under certain circumstances, he must have known the things. Or in other words, it seems that because of certain circumstances, it is clear that he is having the knowledge about the things.

The following circumstances can be the reason of the presumption of the court:

(i)                 Wilful abstention from an inquiry or search: It means a person deliberately avoiding to take a notice of fact which a reasonable man would have taken in the normal course of life. For example, if a person refuses to accept a registered post addressed to him, it states that somehow he knows the contents of envelop and that’s the reason he is avoiding to take it. So, it will be treated as willful abstention. This willful abstention is “constructive notice”. Now the person cannot take the plea that he does not know the contents of notice.

(ii)               Gross Negligence: Negligence is carelessness or an attitude of mental indifference to obvious risks. Gross negligence is different from fraud as fraud necessarily implies bad intention. Hence gross negligence is without any mala fide or bad motive.

(iii)             Registration as Notice: If a document has been registered, it is presumed that all the concerned persons have constructive notice of the facts. And all the material facts affecting the property in the deed which are evident and can reasonably incidental from its contents. To treat a notice as constructive notice, following conditions are necessary:

a)      Documents are compulsory registerable under Indian Registration Act, 1908.

b)      All the formalities prescribed under the Registration Act are duly completed.

c)      It a notice only for a subsequent transferee. It means that constructive notice is not for transferees prior to the registration of that transaction.

(iv)             Actual Possession as Notice of Title: Notice of Actual possession of such immovable property which the person has in possession will be regarded as constructive notice of such property.

For example; Mr. Y contracts to sell a house to Mr. X for Rs. 10,000/-. Mr. X takes possession of the house. And then Mr. Y sells it to Mr. W for Rs. 15,000/-. Mr. W makes no inquiry of Mr. X relating to his interest in land. Mr. X’s possession is sufficient to affect Mr. W with notice of his interest and Mr. X may enforce specific performance of the contract against Mr. W. Consequently, Mr. W cannot say that he has no notice of Mr. X’s interest in the land.

Mr. X was in actual possession of the land. Therefore, Mr. W was not entitled to get possession.

(v)               Notice to Agent is Notice to Principal: Notice or knowledge of a fact to any agent is being considered as constructive notice to his principal. Further, the principal cannot deny that the notice of the fact was agent and not to him. Moreover, Notice to an agent is also called as imputed notice. Conditions necessary for the applicability of the rule that notice to agent is imputed notice to principal:

(a)    Notice must have been acquired by a person as an agent, not in other capacity.

(b)   Notice to an agent is imputed notice to principal with regard to that particular business or transaction for which the agent has been appointed.

(c)    This notice must be acquired during the time period of the agency of the notice and it will not be considered as notice if it was received before the appointment of the agent or received after the termination of the agency.

(d)   Furthermore, this notice must be relevant or material to the transaction.

(e)    Notice must not have been fraudulently concealed from the principal or communicated with dishonest intention.

(vi)             Notice to a partner is notice to the firm.

Significance of Doctrine of Notice: It is based on law of equity. Hence it protects the interests of a transferee for value without notice. The importance of this doctrine lies in the fact that if there are some legal defects and due to this, the transfer is void, transferee cannot get any interest. But, if it could be proved that transferee was a transferee for value and he had no notice of legal defects of the title, so there comes equity to protect his person’s interest.

Case Laws are:

Constructive Notice

Bipin v. Priyabrata AIR 1921 Cal 730: The court observed "constructive notice is the knowledge which the courts imputed to a party upon a presumption so strong that it cannot be allowed to be rebutted that knowledge must have been communicated."

 Bank of Bombay v. Sulaiman, 33 Bom1 (PC): The court held that the constructive notice with the bank and charge prevailed over the mortgage to the Bank.

Willful Abstention

Kausalsi Ammal v. Shankaramthiar AIR 1941 Mad 707: The court held that the use of the word "willful" in the interpretation shows that the abstention from inquiry should be designed and due to a desire to avoid an inquiry which would led him ultimate knowledge.

Jogendra v. Dwarkar 15 Cal 681 : A person refused to receive a registered letter sent by post, it was deemed to have constructive notice of the contents.

Gross Negligence

Hudston V. Vincy (1921) 1 ch 98 Gross negligence was presumed of so provoked nature as to signify an attitude of mental indifference to obvious risk. And a court of justice may treat as evidence of fraud.

Imperial Bank of India v. U. Raj Gyaw 1923 50 IA 283: It was held that purchaser was guilty of gross negligence and was deemed to have notice of the rights of the bank which had the custody of the deeds.

Actual Possession

Deniels v. Davinson (1809) 16 Ves 240 : Possession with other party must be inquired.

Notice to Agent

Mohori Bibee v. D. Gliosh (1903) 30 Cal 539: Notice to agent is notice to principal.

Raja Gokul Das v. Eastern Morgage and Agency Co., 10 C.W.N. 216: Court held that knowledge or information by a solicitor or Muktear, in any case, will bind his client.