Wednesday 25 April 2012

basic concept of notice under transfer of property act

An actual notice to constitute a binding notice, must be definite information given by a parson interested in the thing in respect of which the notice is issued; for it is a settled rule that a person is not bound to attend to vague rumours or statements by mere strangers, and that a notice to be binding must proceed from some persons interested in the thing: Barnhart v. Green-Shields [1854] 9 Moore's P.G. 18.
Allahabad High Court
Ashiq Husain And Ors. vs Chaturbhuj And Anr. on 15 July, 1927
Equivalent citations: AIR 1928 All 159, 108 Ind Cas 152
Author: Mears
Mears, C.J.
1. The action, was directed by the respondents, Chaturbhuj and Girdhari Lal, against three sets of defendants under the following circumstances:
2. On 1st May 1909, Syed Nazar Hussain (now dead) father of defendants 1-5, executed a simple mortgage in favour of the plaintiffs respondents for Rs. 3,000 with interest at 12 annas per cent. per mensem with half-yearly rests. The property mortgaged consisted of a 20 biswas zamindari share in qasba Amanpur mahal khewat No. 1, and a two and a half biswa share in mahal Nawazish Ali, khewat No. 3, patti Ram Lal. By a clerical error the second item of property was described in the mortgage-bond as a 2-biswa share in mahal, Nawazish Ali entered in khewat No. 2, patti Ram Lal.

3. The document was registered in the office of the Sub-Registrar of Tahsil Kasganj. District Etah, on 3rd May 1909.
4. The mortgagor having died without discharging his liability in whole or in part, the mortgagees brought the present suit against his heirs, defendants 1-5, for recovery of Rs. 11,154-4-0.
5. Defendants 6-12 are the subsequent transferees of portions of the mortgaged property.
6. The defendants set up various defences which gave rise to no less than ten issues. At a late stage of the suit, the plaintiffs withdrew their claim against defendant 12, and the trial proceeded against the remaining defendants and eventually a decree was passed in plaintiff's favour.
7. Defendants 6-11 have submitted to the decree of the Court below. Defendants 1-5, who are the sons of the original mortgagor, have come up in appeal, and it is contended on their behalf that the plaintiffs' claim was time barred. The other pleas taken in the memorandum of appeal were abandoned.
8. In order to be able to appreciate the plea of limitation raised by these defendants, it is necessary to examine their written statement with care. In the additional pleas, they say:
The plaintiff' suit is barred by time. The plaintiffs' allegation, that the cause of action accrued on 1st of May 1912 is totally wrong. The cause of action accrued to the plaintiffs long before that date, and the suit has been instituted long after the accrual of the cause of action.
9. The terms in which the plea of limitation has been couched are thus as vague as can be, and the Court should at once have required the pleader to set out with particularity the circumstances upon which he relied in support of the plea of limitation.
10. It was not until a late stage of the trial, possibly during the course of argument before the lower Court, that the plea of limitation materialized into a more distinct form. The mortgage in suit is dated 1st May 1909. It was payable in three years and the plaintiffs could sue for recovery of the mortgage money within 12 years from 30th April 1912. The suit was launched on 27th March 1924, and was therefore within time on that date. The mortgage bond, while providing that the money was payable on 30th April 1912, contained a further stipulation in these terms:
If I make transfer, etc., of the hypothecated property, or if anyone gets the same advertised for sale, the creditors shall even before the expiry of the term, be at liberty to institute a suit for recovery of the amount of this bond with the entire interest and compound interest for the aforesaid period of three years.
11. On 8th March 1911, Syed Nazar Husain, the mortgagor, stood surety for one Munshi Ali Raza and executed a surety bond in favour of the Secretary of State in Council for a paltry sum of Rs. 50 and hypothecated a 1-biswa share in mauza Amanpur, mahal Nawazish Ali, entered in khewat as holding No. 3. It is contended before us that Nazar Husain, in breach of his covenant not to transfer the hypothecated property, had, by executing the mortgage bond in favour of the Secretary of State on 8th March 1911 accelerated the cause of action in plaintiffs' favour and the plaintiffs were, there fore, under Article 132, Lim. Act, bound to institute their suit within 12 years from the 8th March 1911. The last date of limitation expired on 8th March 1923, and if this contention is right, the suit was time barred on 27th March 1924. We have already pointed out above that there was a misdescription in the mortgage bond in suit as regards the second item of the secured property. The defendants-appellants in para. 3 of the additional pleas contended that the plaintiffs had no power to get any property other than the hypothecated property sold in auction. It was strenuously contended in the trial Court that the property mortgaged to the plaintiff was situate in khewat No. 2 and not in khewat No. 3 and the plaintiffs, therefore, could not enforce their mortgage against the property situate in khewat No. 3. This plea was repelled by the Court below and the learned Counsel for the appellants has very properly abandoned this plea at the time of argument. The fact, however, remains that para. 3 of the additional pleas was not reconcilable with the facts on which defendants' plea of limitation is founded.
12. We have been referred to a number of authorities in support of the plea of limitation. In Panoham v. Ansar Husain A.I.R. 1921 All. 296, two persons borrowed Rs. 5,000 under a mortgage bond on 21st February 1893 and agreed to repay the loan in 12 years. They further stipulated that they would pay annually a sum of Rs. 500 on account of interest, but if in any year they were unable to pay the interest, the interest might be treated as principal. The bond further provided that if there was any default in payment of Rs. 500 per annum, the mortgagee was to have power without waiting for the expiry of the stipulated period to set aside all other stipulations embodied in the document and at ones to bring a suit to enforce the mortgage security. It was held by the Court that time began to run from the first default in payment of the annual sum of Rs. 500. A similar view was taken in Nathi v. Tursi A.I.R. 1921 All. 192.
13. There has been in the past a divergence of judicial opinion on this point both in this Court and the other Indian High Courts. As an illustration of the opposite view we have been referred to Mata Tahal v. Bhagwan Singh A.I.R. 1921 All. 104, Girdhari v. Govind Ram A.I.R. 1921 All. 171, and the view of the minority in Gayadin v. Jhammalal [1915] 37 All. 400. On the other side of the line are cases like Ramdas v. Mohammad Said Khan A.I.R. 1922 All. 524. In this case it was held that when there was a covenant to pay the principal sum in three years and interest year by year, but the mortgagee was authorized to realise the whole amount of his principal and interest in case of default of the payment of the annual interest the cause of action for the suit matured in default of payment of interest in the first year. So far as this Court is concerned, the conflict of decisions was set at rest by the pronouncement in re Shib Dayal v. Mehrban A.I.R. 1923 All. 1, but we are not prepared to extend the principle beyond the limits of decided cases, more especially in view of the warning note sounded by the Privy Council in Panoham v. Ansar Husain A.I.R. 1926 P.G. 85.
14. The noticeable feature in the latter group of cases is that there being default either in the payment of the instalments or in the payment of interest at stated periods the matter was peculiarly within the knowledge of the mortgagee. He knew that the default had taken place on the part of the mortgagor. He knew that under a distinct stipulation contained in the mortgage bond, his money had "become due" and he was bound to sue for his money from the date of the default.
15. In the present case, however, time is said to begin to run, not by the happening of an event which was peculiarly or at all within the knowledge of the mortgagee, but by reason of the mortgagor executing an hypothecation bond of a small portion of the second item of property. In the normal course of events, the mortgagees could not be expected to know anything about this transaction. The defendants do not allege in their written statement that the mortgagees came to know of this document any time before the institution of the present suit or how or when they came to know of it. They have led no evidence whatsoever on the point and the learned Counsel for the appellants has taken shelter under the plea that the mortgage dated 8th March 1911 was effected by means of a registered instrument and should, therefore, be held to be constructive notice. It is not pretended that the mortgagees had at any time actual notice of the mortgage dated 8th March 1911.
An actual notice to constitute a binding notice, must be definite information given by a parson interested in the thing in respect of which the notice is issued; for it is a settled rule that a person is not bound to attend to vague rumours or statements by mere strangers, and that a notice to be binding must proceed from some persons interested in the thing: Barnhart v. Green-Shields [1854] 9 Moore's P.G. 18.
16. It was held in the case of Hewitt v. Loosemore [1851] 9 Hare 449 that constructive notice is knowledge which the Court imputes to a person, from the circumstances of the case upon a legal presumption so strongly that it cannot be allowed to be rebutted, that the knowledge must exist though it may not have been formally communicated. Different High Courts have held different views as to whether registration amounts to notice. Our own Court while answering the question affirmatively, does not lay down any inflexible rule. In Janki Prasad v. Kissen Dutt [1894] 16 All. 478 it has been observed as follows:
We do not decide that registration is of itself notice to all the world. All we do decide is where it is the duty of a person to search, or where a reasonably prudent man would in his own interest make a search, then the fact that the search, if made would have disclosed a document affecting the property, affects that man with notice of such a document and puts on him the necessity of further enquiry.
17. The Judicial Committee In re Tilakdhari Lal v. Khedan Lal A.I.R. 1921 P.G. 112 has also made a similar pronouncement.
18. We have no doubt that no legal duty was cast upon the mortgagees on grounds of public policy or on considerations of prudence or business to make a search of the registry. We have no doubt that the transaction dated 8th March 1911 was not in any shape or form brought home to the plaintiffs-respondents. We hold, therefore, that the cause of action was not accelerated and the suit is within time. We dismiss the appeal with costs.
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