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Report No. 70

9.7. First Explanation.-

Actual notice does not raise problems. Constructive notice requires to be discussed at length. According to the first Explanation, 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, 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.

This Explanation, however, applies only if three conditions mentioned in the Proviso thereto are fulfilled, namely-

(1) the instrument has been registered and its registration completed in the manner prescribed by the Indian Registration Act, 1908, and the rules made thereunder,

(2) the instrument or 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.

If these conditions are satisfied, registration is given the effect of notice by a construction of law.

It is aptly described in the text books as constructive notice.

9.8. In England, under section 197 of the Law of Property Act, 1925, registration is notice in the two counties of Middle sex and Yorkshire where the system of local deed Registries prevails, and, under section 198, in the case of instruments which are registered under the Land Charges Act, 1925, it is provided that registration shall be deemed to constitute actual notice of such instrument to all persons and for all purposes connected with the land affected.

9.9. Second Explanation.-

The solemnity of legal transactions has been given recognition in the First Explanation. The reality of de facto enjoyment is next dealt with in the Second Explanation which is concerned with actual possession as a source of constructive notice. 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 the person who is for the time being in actual possession thereof.

9.10. Third Explanation.-

The third Explanation deals with agency as a source of notice. This category of notice is usually described as imputed notice. 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. This is, however, subject to a qualification contained in the proviso. Under the proviso, 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.

9.11. Whether constructive notice attributable to principal.-

Does the notice of the agent, that could be fictionally attributed to the principal under the third Explanation, have to be actual notice, or it is enough if it is constructive notice? The use of the word "acquires" would, at first sight, seem to support the first view, since "acquisition", in ordinary language, implies something positive and actual, or at least some effort. However, it should be noted that there is at least one judicial decision taking the opposite view.1 This also seems to be the English concept of notice.2 It would, thus, appear that when the constructive notice of an agent is imputed to the principal, there is a double fiction.

1. Renukabai v. Bheoson, AIR 1931 Nag 132.

2. Suett Enquiry, (1966), p. 60, para. 3(a).

9.12. In other words, the principal is liable not only on the actual notice received by the agent, but also on the basis of constructive notice received by the agent. Of course, in every case, the important condition must be satisfied, namely, that the agent was acting on behalf of the principal in the course of business to which the fact is material and that there was no fraudulent concealment on the part of the agent.

9.13. Limits.-

The discussion so far has dealt with width of the definition of notice as read with the Explanations. The limits of the definition must also be noted. There may be such wilful negligence in abstaining from inquiry into facts which would convey actual notice, as may property be held to have the consequences of notice actually obtained. But if there is no actual notice, and no wilful or fraudulent turning away from an inquiry into, and consequent knowledge, of facts which the circumstances would suggest to a prudent mind, then the doctrine of constructive notice ought not to be applied.1

1. Doorga Narain v. Baney Madhub, ILR 7 Cal 199; following Agra Bank v. Barry, LR 7 HL 135; and Ramcoomar v. McQueen, 11 BLR 53; see also Khushalchand v. Trimbak, 48 Born LR 586.

9.14. The above discussion calls for no amendment of the definition.

The Transfer of Property Act, 1882 Back

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