Property Law Exam Notes (Compiled from various sources) Section 3. Interpretation clause.— In this Act, unless there is something repugnant in the subject or context,— “immoveable property” does not include standing timber, growing crops or grass; ‘‘instrument” means a non-testamentary instrument; 1[“attested”, in relation to an instrument, means and shall be deemed always to have meant attested by two or more witnesses each of whom has seen the executant sign or affix his mark to the instrument, or has seen some other person sign the instrument in the presence and by the direction of the executant, or has received from the executant a personal acknowledgement of his signature or mark, or of the signature of such other person, and each of whom has signed the instrument in the presence of the executant; but it shall not be necessary that more than one of such witnesses shall have been present at the same time, and no particular form of attestation shall be necessary;] “registered” means registered in 2[3[any part of the territories] to which this Act extends] under the law4 for the time being in force regulating the registration of documents; “attached to the earth” means— (a) rooted in the earth, as in the case of trees and shrubs; (b) imbedded in the earth, as in the case of walls or buildings; or (c) attached to what is so imbedded for the permanent beneficial enjoyment of that to which it is attached; 5[“actionable claim” means a claim to any debt, other than a debt secured by mortgage of immoveable property or by hypothecation or pledge of moveable property, or to any beneficial interest in moveable property not in the possession, either actual or constructive, of the claimant, which the Civil Courts recognise as affording grounds for relief, whether such debt or beneficial interest be existent, accruing, conditional or contingent;] 6[“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 I.—Where any transaction relating to immoveable 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:] Property Law Exam Notes
Indian Property Law - notes for refresher. Written by Saurabh Chopra.
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Property Law Exam Notes
(Compiled from various sources)
Section 3. Interpretation clause.—
In this Act, unless there is something repugnant in the subject or context,—
“immoveable property” does not include standing timber, growing crops or grass;
‘‘instrument” means a non-testamentary instrument;
1[“attested”, in relation to an instrument, means and shall be deemed always to have meant attested
by two or more witnesses each of whom has seen the executant sign or affix his mark to the
instrument, or has seen some other person sign the instrument in the presence and by the direction
of the executant, or has received from the executant a personal acknowledgement of his signature or
mark, or of the signature of such other person, and each of whom has signed the instrument in the
presence of the executant; but it shall not be necessary that more than one of such witnesses shall
have been present at the same time, and no particular form of attestation shall be necessary;]
“registered” means registered in 2[3[any part of the territories] to which this Act extends] under the
law4 for the time being in force regulating the registration of documents;
“attached to the earth” means—
(a) rooted in the earth, as in the case of trees and shrubs;
(b) imbedded in the earth, as in the case of walls or buildings; or
(c) attached to what is so imbedded for the permanent beneficial enjoyment of that to which it is
attached;
5[“actionable claim” means a claim to any debt, other than a debt secured by mortgage of
immoveable property or by hypothecation or pledge of moveable property, or to any beneficial
interest in moveable property not in the possession, either actual or constructive, of the claimant,
which the Civil Courts recognise as affording grounds for relief, whether such debt or beneficial
interest be existent, accruing, conditional or contingent;]
6[“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 I.—Where any transaction relating to immoveable 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:]
Property Law Exam Notes
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 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.
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.
COMMENTS
Constructive notice of the suit agreement
The defendants failed to make necessary inquiry in respect of possession of the suit land by going
to the site or from neighbouring land owners. Therefore, it has been held that constructive notice of
the suit agreement shall have to be imputed to defendants in view of actual possession of the suit
land being with the plaintiffs; Murlidhar Bapuji Valve v. Yallappa Lalu Chaugle, AIR 1994 Bom 358.
Meaning of word "Immovable"
The word "immovable" means permanent, fixed, not liable to be removed and the property must be
attached to immovable property permanently; Shree Arcee Steel P. Ltd. v. Bharat Overseas Bank
Ltd., AIR 2005 Kant 287.
1. Movable/Immovable Property ( Sec 3 )
Concept of property;
The term ‘property’ has not been defined in the Act. When Section 6 of the Act says ‘property of any
kind’ it implies every possible interest or right that can be possessed and is a subject of ownership.
It can be tangible or intangible. It can be a physical object or something abstract. Property of
different kinds is dealt with differently. The movable property is dealt with under the Sales of Goods
Act, 1930 while the major chunk of the Transfer of Property Act, 1882 deals with immovable
property. Section 3 of the Transfer of the Property Act, 1882 is called the Interpretation clause for it
explains the following terms.
Movable and Immovable property definitions
DEFINITION OF IMMOVABLE PROPERTY
Immovable property is a species of property. Whenever we speak about immovable property, we
always use the ready reference of ‘attached to the earth’. Whether a thing is permanently attached
to the earth, whether it is capable of separation or not and what is the intention behind the
construction or promoted growth of the property are a few of the points that need to be looked into.
The definition of immovable property as per the Transfer of Property Act is a negative definition. The
Section 3 reads that “immovable property” does not include standing timber, growing crops or grass”.
Standing timber refers to trees that are fit for usage in building or repairs. Growing crop includes all
such vegetables, etc that are solely grown only for their produce. Grass is referred to as fodder.
Section 3(26) of the GENERAL CLAUSES ACT, 1897 is not an exhaustive definition. It says that
“Immovable property shall include land, benefits arising out of land and things attached to the earth,
or permanently fastened to anything attached to the earth.” It specifies the following as immovable
property.
a) LAND. It encompasses the upper as well as the lower surface of the earth. Any interest in the
same will be treated as that of immovable property. It would include wells, streams etc.
b) BENEFITS ARISING OUT OF LAND. This category includes everything dealing with rights and
interests in land as defined above. Right to collect rent or zamindari rights are two examples.
c) THINGS ATTACHED TO EARTH. The nature of attachment is important.
This clause is explained with reference to the following three points:
a) Things rooted in the earth like trees, shrubs but not including standing timber, growing crops and
grass. Jamun trees are treated as immovable properties.
b) Things embedded in the earth like buildings, minerals etc. By ‘embedded’ we refer to things that
have their foundations laid well below the surface of the earth. An anchor of a ship is not immovable
property in its normal usage.
c) Things that have been permanently fastened to anything embedded in the earth for the purpose of
permanent enjoyment. For example, ceiling fans, doors and windows. If the objects that have been
attached are merely transitory or not permanent and do not contribute to the value and purpose of
the thing attached to, they are not immovable properties.
To determine whether a fixture is permanent or not, the following points need to be considered:
a) Mode of Annexation: Temporary, standing on its own weight or dug in to the earth, etc.
b) Purpose or Object of Annexation:
Trade fixtures are to be treated in association with the business and not the land as the fixtures are
attached in connection with the business. Such fixtures are to be treated as accessory to the
business and not as annexation. The position is different if the person attaching the fixtures in a
business place is the owner himself.
When it is a machinery in the factory, the court has to see the object and purpose of such
installation. The beneficial enjoyment of the machinery itself, the degree and the manner of
attachment or annexation on to the earth are other points for consideration.
The Section 2(9) of the INDIAN REGISTRATION ACT, 1908 gives out the physical aspects of
property in the definition present in the said Act. The definition under the Act is as follows,
“Immovable Property includes land, buildings, hereditary allowances, rights of ways, lights, ferries,
fisheries or any other benefit arising out of land and things attached to the earth but not standing
timber, standing crops or grass.”
CONCLUSION OF VARIOUS DEFINITIONS OF IMMOVABLE PROPERTY
All the definitions read together can give us a clear idea what is included or excluded from being an
immovable property. They do not define immovable property per Se. A clear idea can be obtained by
creating a common definition by mixing these three.
Immovable Property means lands, benefits arising of the lands and the things attached to the earth
or permanently fastened to anything attached to the earth. Other than the physical aspect, every
benefit arising from and every interest in the property is also included in the definition. It excludes
three things, namely, standing timber, growing crops and grass.
STANDING TIMBER, GROWING CROPS AND GRASS
Whether a tree is timber or not depends on the category of the tree and the common purpose of
such category. All the statutory definitions have excluded standing timber, growing crops and grass
from the purview of an immovable property. Here the intention is of great importance. If the
transaction is the immediate, the objects will be movable. But if the contract regarding such objects
extends to many a year or if the owner of the trees is interested in further vegetative growth, then
they will be treated as immovable property. The transfer of trees standing on land does not amount
to the transfer of the land also.
For example, mangoes are treated as movable property for the intention is to pluck them seasonally
and sell them. On the other hand, when a person has a right to fish from a particular lake, it is a
benefit arising of an immovable property, namely, the lake. Hence, it will be an immovable property.
MARSHALL vs. GREEN — It was held that if only a right to cut and enjoy the tress as timber was
sold, it is an interest in a movable property. If such a right is to extend over many years, it will be
treated as an interest in immovable property.
The real test if whether a property is immovable or immovable is the intention behind the transfer and
the transferability of the property. For example, generally a mango tree will be treated as an
immovable property but it will be treated as movable property if it is to be cut and used to build a
house.
Movable and Immovable property differences
MOVABLE PROPERTY
It can be transferred from one place to another.
Registration is optional as per the Indian Registration Act, 1908.
The Sales and Central Sales taxes are applied,
IMMOVABLE PROPERTY
It cannot be transferred without causing extensive damage to the property. The damage relates to
the nature of the
property
Registration is compulsory under the Indian Registration Act, 1908 if the value of the property is
more than Rs. 100.
The property needs to be registered at the Sub-Registrar’s office.
The appropriate stamp duty and the registration fee have to be paid.
WHAT IS INCLUDED IN IMMOVABLE PROPERTY WHAT IS NOT INCLUDED IN IMMOVABLE
PROPERTY
What is included
1) A right to collect rent from an immovable property;
2) A right to receive future rents and profits of land;
3) A tenancy right;
4) Coal mines;
5) A borewell that has been fastened in a permanent way to the earth;
6) Hereditary Offices; and
7) Right to use water of a perennial stream.
What is not included
1) A right to worship;
2) A copyright;
3) The interest of a partner in a partnership firm;
4) A right to get maintenance;
5) A right to obtain the specific performance of an agreement to sell;
6) Government promissory notes; and
7) A machinery that is not permanently attached to the earth and can be shifted from one place to
another.
Meaning of "things attached to earth"
Concept of "Doctrine of fixtures"
A fixture is something fixed. In Transfer of Property Act, a fixture is a chattel which is affixed to the
soil or land. But a chattel by merely being affixed to the land will not become an immovable property.
There are two things which has to be considered for arriving at the point whether a chattel is an
immovable property. This can be called the doctrine of fixtures.
(1) Mode of annexation
If the chattel remains on the land by its own weight and is not affixed to the land there is a
presumption that it is only a movable property. Here the criteria is the intention to make whether it a
fixture or not. If the intention was to make it part of the land it is treated as a fixture.
If the chattel is fixed to the land by means of nails or such things the presumption is that it is a
fixture and become an immovable property.
(2) The Purpose for Annexing
The tenure of beneficial enjoyment of the land is a necessary criterion to hold whether the chattel is
an immovable property.
If the purpose of annexation is the permanent beneficial enjoyment of the land the presumption is
that it is a fixture.
(1) Shantabai vs St of Bom, AIR 1958 SC 532: (1959) SCR 265
[ A right to enter upon the land of anothr & carry a part of the produce is an instance of profits a
pendre i.e. benefit arising out of land, & thrfr a grant in immovable property.]
Facts n Issue:- Lease doc - 12n a 1/2 yrs executed by a Zamindar in the favour of his wife. 'right to
cut & appropriate wood frm the Zamindar's forest(estate fr a consideration of Rs 26,000. A rt ws
confrrd upon her to cut & take bamboo, fuel wood & teak but thr ws prohibition fr cutting teak plants
under the height of one and a half feet - the moment the teak trees reaches tht girth they cud be
felled but within 12 years - when the MP abolition of proprietary rights (estate, mahals, alienated
lands) Act, 1950 ws passed, all proprietary rights in the land became vested in the State & she ws
stopped fr cutting any more trees. She filed a petition in the court contending tht as the right granted
to her ws a right in standing timber (movable property), she ws entitled to compensation. - Issue ws
whtr it is trnsfr of movable or immovable property. Trees r rgdd as immovable property becoz it is
benefit tht arises out of the land & also becoz they are attached to the earth. But standing timber is
movable property
Obsrvtn & Decision - exclusion of TP Act is only fr standing timber & nt of timber trees - standing
timber must be a tree tht is in a state fit for use fr building or industrial purposes, & lukd upon as a
timber even though it is still standing. If nt, it is still a tree becoz unlike timber, it will continue to
draw sustenance frm the soil. But the amt of nourishment it takes, if felled at a reasonably early
date, it is so neglible & to be ignored. - Prsnt case duration of the grant is 12 yrs, it is evident tht
trees tht will be fit fr cutting 12 yrs hence will nt be fit fr felling new. thrfr it is nt a mere sale of the
trees as wood. it is more. it is nt just a wish to cut a tree but also to derive a profit frm the soil itself,
in the shape of the nourishment in the soil tht goes into the tree & makes it grow till it is of a size &
age fit fr felling as timber & if already of tht size, in order to enable it to continue to live till the
petitioner choose to fell it. - grnt ws nt only fr standing timber but also fr trees tht were to fell
gradually as they grow to attain reqd height ( & these trees r immovable property ) . Moreover in
case of standing timber, it is left to petitioner's choice to fell them - tht means they are nt to be
converted into timber at a reasonably early date & tht the intention is tht they shld continue to live, in
othr words, they r to be rgdd as trees & nt as timber tht is standing & is abt to be cut & used fr
purposes fr which timber is meant. It is clear becoz the right ws spread fr a period of 12 yrs & the
intent ws nt to cut the trees at a reasonably early time period - thfr lease doc is nt a trnsfr of trees as
wood(movable) but a trnsfr of benefit arising out of immovable property - right to fell trees fr a term of
years, so tht the transferee derives a benefit frm further growth of trees.
(2) St of Orrisa vs Titaghur Paper Mills Company Ltd, AIR 1985 SC 1293: (1985) Supp SCC 280
[ The contract shld be examined as a whole with reference to all its terms & all the rights conferred
by it & nt wid ref to only a few terms or with just one of the rights flowing thr frm - 'bamboo contract'
(right to cut & remove bamboos with several ancillary rights) is related to immovable property as a
benefit to arise out of land & did nt relate to a contract of movable property. ]
Facts n Issue - In this case a contract of the petitioner company with State of Orissa fr the purpose
of felling, cutting & removing bamboos frm forest areas fr the purpose of converting the bamboos in
paper pulp, or fr the purposes connected with the manufacture of paper, etc have been held to be
profit a pendre or benefits arising frm land, & thus an immovable property.
Court overruled St of MP vs Orient paper mills
Othr cases which court relied on:- Ananda Behera vs St of Orissa - right to fish -> right in immovable
property
(3) Bamdev Panigrahi vs Monorama Raj, AIR 1974 AP 226
[ Cinema equipments like projector, diesel engine etc, installed on the tenanted land temporarily,
and nt attached to the earth, but also nt permanently fastened to anything to the earth, are movable
properties. ] touring talkie installed on land - nt attached to earth but ws on a temporary shed on the
land - name 'touring talkies shows tht aim & intent of installation ws fr temporary period
(4) Duncans Industries Lts vs St of UP, (2000) 1 SCC 633
Whether a machinery embedded in the earth can be treated as moveable or immovable property
depends on the intention of the parties which embedded the machinery & also the intention of the
parties who intend alienating tht machinery]
Trnsfr of fertilizer plant - machinery trnfrd as movable property - escaped stamp duty - HC obsrvd &
SC confirmed tht machinery relating to manufacture of fertilizer in a sale of fertilizer plant is
immovable property
--------------------------------
2. Attestation ( Sec 3 )
Importance of Attestation;
The Transfer of Property Act, 1882, hereinafter referred to as TPA, lays down the law to regulate the
transfer of property between living persons.
[1] The TPA regulates transfer of property by providing for certain kinds of transfers-sale, mortgage,
lease, exchange, gift and also provides for attestation of the instruments, by which these transfers
take place. To attest is to bear witness to a fact.
[2] By providing for attestation, the TPA seeks to ensure that witness is borne to the fact that the
transfer instrument is signed without any element of “force, fraud or undue influence”.
[3] The TPA while making a provision for attestation, makes attestation mandatory only in case of
certain kinds of transfers-gifts and mortgages, to the exclusion of all other kinds of transfers.
To attest is to bear witness to a fact.
[4] To attest an instrument is to bear witness to the fact of verity of that instrument.
[5] Thus, under the TPA, which provides for various kinds of transfers, to attest a transfer instrument,
is to bear witness to the fact of variety of the transfer instrument, which is being executed by the
transferor in favour of the transferee. Section 3 of the TPA, defines attestation in its verb form —
“attested”.
Section 3, the part of which defines “attested”, reads as follows —
“Attested”, in relation to an instrument, means and shall be always deemed to have meant, attested
by two or more witnesses each of whom has seen the executant sign or affix his mark on the
instrument, or has seen some other person sign the instrument in his presence and by direction of
the executant, or has received from the executant personal acknowledgement of his signature or
mark, or of signature of such other persons, and each of whom, has signed the instrument in the
presence of the executant, but it shall not be necessary that more than one of such witnesses shall
be present at the same time, and no particular form of attestation shall be necessary.
Section 3 in laying down the meaning of attestation, enumerates three conditions for a valid
attestation under the TPA
-Firstly, there must be at least two attesting witnesses.
-Secondly, each of the attesting witnesses must see the transferor (or executant) sign the
instrument or affix his mark or see some other person sign the instrument or affix his mark under the
direction of the transferor, otherwise each of the witnesses must at least receive a personal
acknowledgement, from the transferor, that the signature or the mark is his.
-Thirdly, the attesting witness must attest with an intention of bearing witness to the instrument
being signed and with no other intention. [6] Not following the above three conditions would make
the attestation invalid and an instrument invalidly attested, cannot be executed in a Court of Law.
[7] Since, attestation is done in order to bear witness to the fact of verity of the transfer instrument,
which is being executed by the transferor in favour of the transferee, it naturally follows that the
transferor, the transferee, or any other person, who is party to the instrument, cannot be an attesting
witness to the transfer instrument.
In Harish Chandra v. Bansidhar Mohanty,[8] a mortgage instrument was executed by the appellant in
favour of the second respondent, but it was the first respondent who had advanced the money and
had also attested the mortgage instrument.
[9] On the first respondent filing a suit to enforce the mortgage, it was contended that the first
respondent was a party to the instrument and hence, the attestation is invalid. The Supreme Court,
while holding that attestation by a party to the instrument would make the attestation invalid, ruled
that in the present case, the first respondent is not a party to the instrument but is a party to the
transaction and being so, can attest the mortgage instrument.
[10 ] Thus, for a valid attestation, it is necessary that any person, other than a person who is party
to the instrument, is the attesting witness.
Object :
The object of attestation in the TPA, was held out by the Supreme Court, again in, Harish Chandra v.
Bansidhar Mohanty.
[11] In arriving at its decision that a party to a transaction, as opposed to a party to an instrument
can be an attesting witness, the Supreme Court, stated the object of providing for attestation in the
TPA is to — “protect the executant from being required to execute a document by the other party
thereto by force, fraud, or undue influence”.
[12] Thus, the purpose, with which attestation, has been provided for in the TPA, is to ensure that
the transfer of property takes place voluntarily i.e. without any element-whether fraud, fraud or undue
element — vitiating the free consent of the transferor. As such, providing for attestation, the TPA
seeks to ensure that witness is borne to the fact of verity of the transfer instrument in the sense of it
being signed by the transferor voluntarily.
Scope :
The TPA, while it provides for transfers such as — sale, mortgage, lease, exchange, gift, makes
attestation mandatory only for certain kinds of transfers by mortgage and gift. Section 59[13] of the
TPA lays down that for every transfer by mortgage to be effected, where the principle amount is Rs.
100/- or upwards, and where the mortgage is not by way of deposit of title deeds, attestation is
mandatory. In case of mortgages, where the principle amount is less than Rs. 100/- a mortgage can
be effected either, by registration and attestation, or mere delivery of property. Hence, for mortgages
where the principle amount is less than Rs. 100/-, attestation is not mandatory. Similarly, Section
123[14] of the TPA, lays down that, for transfer by gift involving immovable property, attestation is
mandatory for the transfer of gift to be effected, a transfer by gift involving movable property can be
effected either by registration and attestation or by mere delivery.
Thus, the TPA makes attestation a mandatory requirement, only in case of transfer by mortgage and
gift; that too, mortgages involving a principal sum of Rs. 100/- or upwards and gifts involving immobile
property, respectively. Under the TPA, where attestation is made mandatory for certain kinds of
transfers by mortgage and gift, attestation is not mandatory at all for other kind of transfers, whatever
principle sum they may involve or whatever property they may effect a transfer of.
Who may be a competent witness; - Anyone apart frm the parties to the transfer of property
mode of attestation; -
attestation by a Pardanasheen woman
(5) Kumar Harish Chandra Singh Deo vs Banisidhar Mohanty, AIR 1965 SC 1738: (1966) 1 SCR 153
No provision of law debars a money lender frm attesting a deed which evidences the transaction whr
under the money ws lent.
3rd person lended the money to the mortgagee but the mortgage deed ws between the mortgagor &
mortgagee. Held 3rd person cud attest the deed even though it ws he who lended the money. SC
obsrvd 3rd person is not a party to the deed but a party to the transaction.
(6) M.L. Abdul Jabbar Sahib vs H. Venkata Sastri, AIR 1969 SC 1147: AIR 1969 SC 1147
This case highlights the importance of valid attestation in matters of trnsfr of property, it is essential
tht the witness put his signature animo attestandi i.e. with intention of attesting.
(7) Padarath Halwai v Ram Narain, AIR 1915, PC 21
[ToP by pardanasheen woman, when the attesting witnesses cud nt see her but cud hear her voice,
the attestation ws held valid.]
Mortgagors were two pardanasheen women who did nt appear bfr the attesting witnesses hence their
face wsn't seen by the attesting witnesses. The issue ws whthr the document ws duly attested by
atleast two witnesses within the meaning of S59A of the TPA,1882.
----------------------------------
3. Notice (Sec 3)
NOTICE
The last paragraph of the section 3 states under what circumstances a person is said to have notice
of a fact. He may himself have actual notice or he may have constructive notice may be imputed to
him when information of the fact has been obtained by his agent in the course of business
transacted by the agent for him.
(a) Express or actual notice. -- An express or actual notice of fact is a notice whereby a person
acquires actual knowledge of the fact. It must be definite information given in the course of
negotiations by a person interested in the property.
(b) Constructive Notice. -- It is a notice which treats a person who ought to have known a fact, as if
he actually does know it. In other words, a person has constructive notice of all facts of which he
would have acquired actual notice had he made those enquiries which he ought reasonably to have
made. The cases of constructive notice into two classes :
(i) Cases in which the party charged has had actual notice that the property in dispute was in some
way affected, and the Court has thereupon bound him with constructive notice of facts and
documents, to a knowledge of which he would have been led by an inquiry after the circumstances
affecting the property had come to his knowledge.
(ii) Cases in which the Court has been satisfied from the evidence before it that the party charged
has designedly abstained from inquiry for the very purpose of avoiding notice – A purpose which, if
proved, would clearly show that he had a suspicion of the truth, and a fraudulent determination not to
learn it.
Notice – Effect of not making enquiry.-- Property was in possession of tenant. The vendee has not
made any enquiry with the tenant in respect of prior agreement for sale executed in favour of the
tenant. The vendee purchased the property without taking any enquiry though the property was in
possession of the tenant. Held that the vendee would be deemed to have notice of the prior
agreement in view of Section 3 of T.P.Act.
Constructive Notice.-- The explanation in Section 3 of the Transfer of Property Act, which provides for
fixing a party with constructive notice in respect of registered transactions, contains a proviso that in
order to amount to constructive notice, (1) the instrument has been registered and its registration
completed in the manner required by the Registration Act and the Rules made thereunder, (2) the
instrument has been duly entered or filed in books kept under Section 51 of the 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 the Act.
Constructive notice has roughly been defined as knowledge which the court imputes to a person
upon a presumption so strong that it cannot be allowed to be rebutted that the knowledge must have
been obtained. This legal presumption arises under this section :
(1) In relation to a fact -
(a) when but for wilful abstention from an inquiry which a person ought to have made he would have
known the fact; or
(b) When but for gross negligence he would have known it;
(2) In relation to a document compulsorily registrable;
(3) In relation to actual possession;
(4) In relation to a notice to an agent.
The possession of a small part of a house will not put a purchaser on constructive notice of that
person's rights as to whole house.
In Mohd. Mustaffa v. Haji Mohd. Hissa, it was held that the principle of constructive notice cannot be
extended to a case where the person who claims on the basis of prior agreement is in possession of
only a small fraction of the property. In such a case, it cannot be said that the person who
purchases the property must make an enqiry about the previous contract from the plaintiff or any
other tenant in occupation of a portion of the house.
Wilful abstention from an enquiry or search.
The words “wilful abstention” are said to be such abstention from inquiry or search as would show
want of bona fide in respect of a particular transaction.
It should be noted 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 he has struck a good bargain and wants to purchase the property quickly lest
other persons might come forward and compete with him.
Gross Negligence
The doctrine of constructive notice also applies when a person, but for his gross negligence, would
have known the fact. Mere negligence is not penalised. It must be gross negligence.
In Nawal Kishore v. The Municipal Board, Agra, The court felt that there was a principle on which
question of constructive notice cold rest, that principle being that all intending purchasers of the
property in municipal areas where the property is subject to a municipal tax which has been made a
charge on the property by statute have a constructive knowledge of the tax and of the possibility of
some arrears being due with the result that it becomes their duty before acquiring the property to
make enquiries as to the amount of tax which is due or which may be due and if they fail to make
this enquiry such failure amounts to a willful abstention or gross negligence within the meaning of
Section 3 of the Transfer of Property Act and notice must be imputed to them.
It is not necessary to show that the person has been guilty to fraud or negligence amounting to
fraud. Fraud is quite different from negligence. The former connotes active dishonesty, the latter
simply implies indolence. Gross negligence is “a degree of negligence so gross that a court of
justice may treat it as 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.
Registration as Notice.
The doctrine of constructive notice applies also in case of documents which are required by law to
be registered. 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, shall be deemed
to have notice of such instrument from the date of registration.
It must be noted that registration amounts to notice only in those cases where the instrument is
required law to be registered. That is to say where the registration of a transaction is of a transaction
is optional, the fact of registration does not amount to notice.
Finally, it must be noted that the instrument must have been registered in the manner prescribed by
the Indian Registration Act, 1908. If the instrument has been registered in the same registration sub-
district as that in which the property is situate, it operates as notice from the date of registration. If,
however, the property is situate in several sub-districts, or if the registration has been effected in
another district, the registered deed will not operate as notice until memorandum of such registration
has been received and filed by the Sub-Registrar of sub-district in which the property is situate.
Actual Possession as Notice.
Explanation II says that 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.
In order to operate as constructive notice possession must be actual possession. Thus, if a tenant is
not in the actual occupation of the land, his occupation is not constructive notice.
Where a certain party is not in possession, the presumption under the explanation to Sec. 3, does
not arise, that the person purchasing the property title shall be deemed to have notice of the title, if
any, of any person who is not in actual possession.
Notice to Agent.
Explanation III, of Section 3 which dealt with notice to an agent ran as follows :
“A person is said to have notice of fact. When the information of fact is given to, or obtained by, his
agent under the circumstances mentioned in Section 229 of the Indian Contract Act, 1872.”
The general principle of the agency law is that an agent stands in the place of the principal for the
purpose of the business in hand, his acts and knowledge being considered as the acts and
knowledge of the principal.
Scope of the Rule.-- The general rule that the knowledge of the agent is the knowledge of the
principal has certain limitations. The notice should have been received by the agent : (i) as an agent,
(ii) during the agency, (iii) in the course of the agency business, (iv) in a matter material to the
agency business.
Exception : Fraudulent concealment of fact by agent.-- The knowledge of an agent will not be
imputed to his principal if the agent fraudulently conceals the facts. It is not sufficient to show that
the agent concealed the fact. It must be shown that the party charging the principal with notice was
party to the fraud or otherwise knew of the fraud.
In Arumilli Surayya v. Pinisetti Venkataramanamma, it was held that Sec. 100 of the Transfer of
Property Act does not apply to auction sales because the transfer within the meaning of the Transfer
of Property Act does not include an auction sale. It was added that the position of a purchaser at an
execution sale is the same as that of the judgment -debtor and his position is somewhat different
from that of a purchaser at the private sale.
(8) Ahmedabad Municipal Corporation vs Haji Abdul Gafur Haji Hussenbhai, AIR 1975 SC 1201;
(1971) 1 SCC 757
The question of constructive notice depends upon facts & circumstances of each case. thr is no
presumption of contructive notice with regd to muncipal taxes. Prop of a person who became
insolvent vested in the Official Reciever of the Court - Recvr recvd bill pertaining to taxes frm
muncipality - rcvr sought courts permission to sell the property to pay the taxes, which ws grntd to
him - lapse of 5 yrs - auction -purchaser purchased property w/o actual notice of the municipal
charge - due inquiry frm purchasers behalf on acc of the pending taxes - no info given to purchaser
by rcvr - issue cud the purchaser be held to have constructive notice of the fact tht arrears might be
due - SC overruled the decision in Naval Kishore vs Muncipal Board of Agra in which it ws held tht all
the intending purchasers(in muncipal area whr proprty is subject to muncipal tax) have a duty to
enquire abt the amt of tax due (past arrears) & if they fail to do so, constructive notice shall be
imputed to them - ccourt cited the decision in Roop Chand Jain's case whr it ws held tht no
intending purchaser is bound to presume tht taxes upon the property were nt paid in the ordinary
course, in the absence of special intimation by the muncipality (eg press notification) -
circumstances by which a deeming fiction is imputed to a party are based on wilful absentation or
gross negligence - while former suggests conscious & deliberate absentation latter implies high
degree of neglect - prsnt case muncipality ws far more negligient than the plaintiff - question is nt
whtr a person hd means of obtaining knowledge, but whtr as a reasonable man he ought to have
made it i.e. in the given circumstances thr ws a duty to find out. In prsnt case plaintiff cudnt have
reasonably have thought tht the muncipality hd nt cared to secure the payment of taxes due & thus
bound to enquire abt the matter - he did enquire abt the rent tht ws collectd by the rcvr - hence
reasonable assumption tht payment of taxes frm rental income wud be paid by rcvr to the
muncipality
(9) Md Mustafa vs Haji Md. Isa, AIR 1987 Pat 5
Principle of constructive notice does nt apply in cases whr the person who claims on basis of prior
agreement is in possession of a small portion of the property -
(Plaintiff)Tenant ws occupying 1/7th of the property - occupied by many tenants - claimed prior
agreement - asked fr decree for specific performance - claimed defndnt took full consideration amt fr
the prop also executed a registered sales deed - claimed defndnt asked all tenants to pay - SC
obsrvd tht 1/7th possession of land - 6 more tenants - plaintiff cannot be said to be in possession of
the land
(10) H.N. Narayanaswamy Naidu vs Deveeramma, AIR 1981 Kant 93
[Principle of notice & constructive notice is applicable when the plaintiff ws in actual possession of
the property & carried out major repairs at his costs.] - conditional sale - money to be returned after
6 years & within 6months thereafter - subsequently the vendors were in need of money, they further
executed an agreement tht they wud release the agreement of re-conveyance - it is fr tht purpose tht
plaintiff calling upon them to execute the registered release deed as assured - mother-son(def)
resold the reconveyance right to another party (def3) - issue in this case is whtr def3 a bonafide
purchaser fr value w/o notice of the right to get the reconveyance fr the def1 & def2 -
(11) Ram Niwas vs Bano, AIR 2000 SC 2921: (2000) 6 SCC 685
The principle of constructive notice is applicable whn the plaintiff ws in actual possession of the
property, the word notice is of wider import than the word knowledge - a person may nt have actual
knowledge of a fact but he may have notice of it.
tenant takes suit shop on rent - later agrees to buy it fr 9200 pays 3200 as consideration amount
and agrees to pay the rest on execution of the sale deed - later resp1 to 4 buy the shop fr 20000 -
tenant files suit of sp performance resp 1 to 5(vendor & purchasers) - purchasers deny the genuiness
of the agreement to sell - S19 of Specific Relief Act provides catergories of persons against whom
the sp perfrmance of a contract may be enfrcd - among them is included under S19(b) any transferee
claiming under the vendor by a title arising subsequently to the contract of which sp pefrmnce is
sought - however a transferee fr value, who hs paid his money in gud faith & w/o notice of the original
contact, is exclded frm the purview of the said clause
- to fall within the excluded clause a transferee must show tht
(i) he hs purchased for value the property (which is the subject matter of the suit)
(ii) he hs paid the money to the vendor in gud faith
(iii) he hd no notice of the earlier contract fr sale (sp perfrmnce of which is sought against him)
SC obsrvd tht both TC & HC dealt with the question of purchasers knowledge of the fact - but said
the issue in question here is not knowledge but Notice(which is wider than the scope of knowledge) -
Apex court held tht purchasers will be deemed to have notice of earlier 'agreement to sell', shld it be
found to be true & valid
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4. Meaning of Transfer of Property (Sec 5)
Section 5. “Transfer of property” defined.—
In the following sections “transfer of property” means an act by which a living person conveys
property, in present or in future, to one or more other living persons, or to himself, 1[or to himself]
and one or more other living persons; and “to transfer property” is to perform such act.
1[In this section “living person” includes a company or association or body of individuals, whether
incorporated or not, but nothing herein contained shall affect any law for the time being in force
relating to transfer of property to or by companies, associations or bodies of individuals.]
COMMENTS
Right to Property
Right to obtain shares of a company is a “property” and the donee’s right to such shares cannot be
thwarted only because such shares in the name of the donee was not entered into the register of the