Report No. 70
Chapter 9
Definition of Notice
Section 3
9.1. Introductory.-
The last of the definitions contained in section 3 is concerned with notice. 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. This is the gist of the main part of the definition. But the Explanations are equally important, or perhaps more important than the main part.
9.2. Scheme.-
In the scheme of the clause, notice falls into three separate sub-divisions-(a) actual notice-this is called, in the English law, express notice; (b) constructive or "implied" notice, when, but for wilful abstention from an inquiry or search which he ought to have made, or gross negligence, he would have known; (c) imputed notice, when notice is acquired by an agent. The last mentioned category is sometimes described as a species of constructive notice, but deserves special treatment.
9.3. Some important sections.-
In order that the importance of the definition of 'notice' may be appreciated. It would be useful to refer to a few important sections wherein the expression occurs. Under section 39, where a third person has a right to receive maintenance or a provision for advancement or marriage from the profits of immovable property and such property is transferred, the right to receive such maintenance or provision may be enforced against the transferee if the transferee has notice of the right or if the transfer is gratuitous. But the right cannot be enforced against a transferee for consideration and without notice of the right, nor against such property in his hands.
Again, under section 40, when one person has, for the more beneficial enjoyment of his own immovable property, a right to restrain the enjoyment in a particular manner of the immovable property of another person or where a third person is entitled to the benefit of an obligation arising out of contract and annexed to the ownership of immovable property, such right or obligation may be enforced against a transferee with notice, but not against a transferee for consideration and without notice of the right or obligation, nor against such property in his hands.
A familiar example is the case where there is a contract for the sale of immovable property and the prospective vendor, in breach of the contract, sells the property to a third person who has a notice of the contract. The prospective purchaser may enforce the contract against a transferee with notice to the same extent as he could have enforced against the prospective vendor.
Then, under section 43, where there is a transfer of immovable property by an unauthorised person who subsequently acquires an interest in the property which he professes to transfer and the transfer is for consideration, such transfer shall, at the option of the transferee, operate on such subsequently acquired interest while the contract of transfer subsists, but this shall not impair the rights of transferees in good faith for consideration without notice of the existence of the said option. All these provisions illustrate the importance attached to notice or its absence. We need not give an exhaustive list. Many of the provisions, as we have pointed out in the first chapter, are derived from rules of equity.
9.4. Principle of notice.-
The doctrine of notice as affecting priorities is founded upon the rule which discountenances ladies and frauds of all kinds.1 As such, its principle is widely applicable, and stated generally, it is an exception to the general maxim qui prior est tempore, potior est jure (He who is first in point of time is more powerful in law). Correctly understood, however, it is rather an explanation than an exception to it, for the true meaning of the maxim is that, as between persons having only equitable interests, if such equities are in all other respects equal, then only would the rule apply.2
1. Gour.
2. Rice v. Rice, 2 Drew 73; Cordon v. James, 30 Ch D 249; National Provincial Bank v. Jackson, 33 Ch D 1; Farrand v. Yorkshire Bank, 40 Ch D 182.
9.5. History.-
The definition of the word 'notice' in the Act correctly codifies the law which existed prior to the passing of the Act so far as notice to the principal is concerned.1 Thus, it was held in a case decided in 18812 that when a person is proved to have had knowledge of certain facts, or to have been in a position, the reasonable consequences of which knowledge or position would be, that he would have been led to make further enquiry, which would have disclosed a particular fact, the law fixes him with having himself had notice of that particular fact.
1. Churaman v. Balli, ILR 9 All 591.
2. Doorga Narain v. Bailey Madhub, 1881 LLR 7 Cal 199.
9.6. It is to be noted that the definition of 'notice' was adopted by the Law Commissioners of 18791 from Bill which led to the Indian Trusts Act, 1882, section 3. In the Act as subsequently passed, however, the words "or search" were added after the words "from an enquiry", at the instance of the Select Committee,2 in order to make the defirtition3 apply expressly to a case where a person wilfully abstains from a search in a register, which he ought to have made.
This raised the question whether registration should, of itself, be deemed to be legal notice. On this point, the High Courts of Bombay and Allahabad had been, for some time, at variance with those of Calcutta and Madras, where registration was held to be no notice-a view afterwards confirmed by the Privy Council.4
The law was altered in 1929. The Amending Act has not accepted the ruling of the Privy Council, on the ground that it inevitably led to such perjury and litigation. In America5, registration of conveyance is held to operate as constructive notice to all subsequent purchasers of any estate, legal or equitable, in the same property.6 "The reasoning, upon which this doctrine is founded, is the obvious policy of the Registry Acts, the duty of the party purchasing under such circumstances to search for prior encumbrances, the means of which search are within his power, and the danger of letting in parol proof of notice or want of notice of the actual existence of the conveyance."7
1. Report, dated 15th November, 1879, section 29.
2. Third Report, dated 11th March, 1881, section 3.
3. Gour.
4. Tilakdhari v. Khedan Lal, 1921 LLR 48 Cal 12 (PC).
5. Notes on clauses.
6. Gour.
7. Story's Equity, section 534, pp. 510, 511, cited in Notes on clauses (Not traceables in 3rd Eng. Edn.)
