Notice: Concept and its kinds under Transfer of Property Act

“NOTICE: CONCEPT AND ITS KINDS UNDER TRANSFER OF PROPERTY LAW”

NOTICE

According to Section 3 of Transfer of Property Act, “a person is said 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.

TYPES OF NOTICE

A notice can be of following two types:

  1. Express or Actual Notice: A notice whereby a person acquires actual knowledge of the fact said to be an express or actual notice of a fact. Definite information must be given in the course of negotiations by a person interested in the property. A person is not to attend vague rumors. In other word, a party imputing notice must show that the other party had knowledge which would operate upon the mind of any rational man, and make him act with reference to the knowledge he has so acquired.
  2. Constructive Notice: Constructive Notice is roughly defined as the knowledge which the court imputes to a person upon a presumption so strong that it cannot be allowed to be rebutted hat the knowledge must have been obtained. This legal presumption arises under this section:
  3. In relation to a fact-
  4. When but for willful abstention from an enquiry or search which a person ought to have made would have known the fact.
  5. When but for gross negligence he would have known it.
  6. In relation to a document compulsorily registrable
  • In relation to actual possession
  1. In relation to a notice to an agent

2.I.a. WILLFUL ABSTENSTION FROM AN ENQUIRY OR SEARCH

The term ‘willful abstention’ is said to be such abstention from inquiry or search as would show want to bona fide in respect of an articular transaction. The following are some instances where the courts have held that a person is said to fixed with constructive notice for having abstained from making an inquiry which he ought to have made.

  1. In Rai Chand v. Dattatraya, A.I.R. 1964, A proposes to sell his property to B, who at the same time knows that rents due in respect to the property are paid by the tenants to a third person X, B will be fixed with notice of rights of X.
  2. A mortgage his house to B, who omits to investigate the title deeds relating to the house. The charge of the property mortgaged was with C. It will be presumed that B has the notice of the charge.
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It should be marked that the abstention from inquiry must be with some purpose or design and due to a desire to avoid an inquiry would lead to ultimate knowledge. This sometimes happens when a person thinks that a stuck a good bargain and wants to purchase the property quickly lest other persons might come forward and compete with him.

2.I.b. GROSS NEGLIGENCE

In the words of Eve, J., in Hudston v. Viney:

“Gross Negligence does not mean more carelessness of so aggravated a nature as to indicate an attitude of mental indifference to obvious risks.”

It is necessary to show that the person has been guilty of fraud or negligence amounting to fraud. Fraud is quite different from negligence. The former connotes active dishonesty, the later simply implies indolence. Gross Negligence is “a degree of negligence so gross that a court of justice may treat it as an evidence of fraud, impute a fraudulent motive to it and visit it with the consequences of fraud, although, morally speaking, the party charged may be perfectly innocent”.

2.II. REGISTRATION AS NOTICE

In case of documents which are required by law to be registered, the doctrine of constructive notice applies. The registration amounts to notice only in those cases where the instrument is required by law to be registered. That is to say where the registration of a transaction is optional, the fact of the registration does not amount to notice. The registration of a document is notice to subsequent transferees only. A prior transferee is not affected by notice of subsequent transactions from the fact of registration of the same. For example, ‘A’ mortgage his property to ‘B’ who grants a sub-mortgage to ‘C’. A in ignorance of the sub-mortgage, pays the mortgage debt to B. The fact that sub-mortgage is registered does not amount to notice of the sub-mortgage to A.

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Finally, it must be noted that the instrument must have been registered in the manner prescribed by the Indian Registration Act, 1908.

2.III. ACTUAL POSSESSION AS NOTICE

Any person acquiring any immovable property shall be deemed to have notice of the title, if any, of any person who is in actual possession thereof.

For instance, ‘A’ contracts to sell land to ‘B’ for Rs 6,000. B takes possession of the land. Later, A sells it to ‘C’ for Rs 7,000. No inquiry of B relating to his interest in the land was made by C. To affect C with B’s possession is sufficient to notice of his interest, and he may enforce specific performance of the contract against C.

In Daniels v. Davison, A.I.R., 1980, A leased a public house and a garden to B and later agreed to sell his property to B. A then sold the property to C. It was held that the constructive notice of B’s rights with respect to the property affected C. The court held that when the land is in the occupation of someone other than the vendor, the fact of the occupation gives the purchaser constructive notice of any right of the occupying tenant.

In order to operate constructive notice, the possession must be an actual possession. Thus, a tenant needs to be in an actual occupation of the land.

For instance, ‘A’ contracts to sell land to ‘B’, who in pursuance of the contract puts his tenant in possession. ‘A’ sells the land to ‘C’. C is not affected with the notice of B’s interest.

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2.IV. NOTICE TO AGENT

Explanation III of Section 3 states that:

“A person shall be deemed to have had notice of any if his agent acquires notice thereof whilst acting or 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 changed with notice thereof as against any person who was a party or otherwise cognizant of the fraud.”

The relevance of notice to an agent being an imputed notice to the principal rests on the following conditions:

  • The notice should be obtained by the agent in his capacity being an agent.
  • The agent appointed should be for that specific transaction to which the notice relates to.
  • The notice must be acquired by the agent in the course of his employment as an agent to the principal.
  • The notice acquired by the agent must be relevant to that particular transaction for which the agent is appointed.
  • Any fraudulent concealment of facts must not have been from the principal by the agent.

Author: APURVA .,
3rd Year, Fairfield Institute of Management and Technology, GGSIPU

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