LexRAM NIWAS (DEAD) THROUGH LRS. versus SMT. BANO AND ORS.
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RAM NIWAS (DEAD) THROUGH LRS. A v. SMT. BANO AND ORS. -;;/ AUGUST 1, 2000 [SYED SHAH MOHAMMED QUADRI AND SHIVARAJ V. PATIL, JJ.] B Specific Relief Act, 1963-Section 19(b); 20(2rTransfer of Property Act, 1882~Section 3; Explanation JI-Sale of shop· by vendor to two per- sons-Suit jor specific performance by person who entered into sale deed .first-Held, on facts, the validity of the sale deed and entitlement of relief of c specific performance to be looked into-Remanded back to High Court. Appellant was tenant of suit-shop. Subsequentl.Y he entered into an agreement with Re5pondent-vendor to purchase the shop in January 1978 for Rs. 9,200. The appellant and the vendor are ciosely related. The appellant paid Rs. 3,200 and the balance amount of Rs. 6,000 on execution D of sale deed. Respondent-purchasers purchased the shop from the vendor in July 1978 for a sum of Rs. 20,000. The appellant filed a suit for specific performance against the vendor and the purchasers. The trial court decreed the suit in favour of the appellant. The purchasers filed appeal ·- before High Court, which was allowed by the Single Judge. The Division E Bench reversed the decision· of the Single Judge. In appeal to this Court, the appellant contended that the High Court erred in interpreting 'notice' without taking note of Explanation Il to Section 3 of the Transfer of Property Act 1882 while holding that the purchasers acted in good faith and without notice of original contract F under Section 19(b) of the Specific Relief Act, 1963. The respondent-purchasers contended that they knew the fact that the vendor and the appellant were closely related to each other and the appellant was tenant of the former. Therefore, Explanation Il to section 3 G of the Transfer of Property Act will have no ·application. ·.• Allowing the appeal, the Court HELD : 1.1. A transferee for value, who has paid his money in good faith and without notice of the original contract, is excluded from the pur- view of Section 19(b) of Specific Relief Act, 1963 providing for specific per- H 39 A B c D . . 40 SUPREME COURT REl>ORTS [2000] SUPP. 2 S.C.R. formance against "any other person claiming under him by a title arising subsequently to the contract''. To fall within the excluded class, a transferee must show that; (a) he has purchased for value the property (which is the subject-matter of the suit for specific peifprmance of the contract); (b) he has paid money to the vendor in good faith; ·and (c) he had no notice of the earlier contract for sale (specific performance of_ which is sought to be en- forced against him). The said provision is based on the principle of English law which fixed priority between a legal right and an equitable right. This principle is embodied in Section 19(b) of the Act. [42-C-FJ Snell's Equity - Thirtieth Edition ·Page 48, referred to. 1.2. 'Notice' may be (i) actual, (ii) constructive or (iii) imputed. Under Section 3 of the Transfer of Property Act 1882 and Explanation II thereof, a statutory presumption of 'notice' arises against any person who acquires any immovable property or any share or interest therein of the title, if any, of the person who is for the time being in actual possession thereof. [42-F; 43-A] Faki Ibrahim v. Faki Gu/am Mohidin, Affi (1921) Bombay 459; Mahadeo v. S.B. Kesarkar, AIR (1972) Bombay 100; Tiloke Chand v. J.B. Bettie & Co., AIR (1926) Calcuttd 204; Parthasarathi Iyer. v. Subbaraya Gramani, AIR (1924) j\1adras 67 and Mummidi Reddi Papannagari Yella E Reddy v. Salta Subbi Reddy & Ors.,1IR (1954) Andhra 20, referred to. 1)aniels v. Davison, [1809] 16 Ves. 249, referred to. 1.3. The purchasers have acquired a legal right under the sale deed. The right of the tena.nt, if it is true and valid, though earlier in time, is only F an equitable right and it.does not affect the purchasers if they are bona jid~ purchasers for valuable consideration without notice of that equitable right. The Single Judge should have considered the evidence and recorded a find- ing on the question whether the sale dt!ed entered into by the appellant with the vendor was a true and valid agreement. The Division Bench did not G H advert to this. This has to be considered afresh by the Single.Judge~ · [45-G; 46-C] 1.4. The High Court dealt with the question whether the purchasers had actual knowledge of the earlier contract and on evidence found that the purchasers did
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