: December 14, 2017 |
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Notice of A Contract To Transfer of An Immovable Property - to a subsequent transferee
This article analyses the legal consequences of a Notice, of a previous agreement to transfer an immovable property to a subsequent transferee under the Transfer of Property Act, 1882.
The Transfer of Property Act lays down the principles to be followed for a legally enforceable transfer of an immovable property. It lays the basic requirement for a valid transfer –The transfer should be between two living individuals (inter- vivos). The same should be duly registered under the Registration Act. Registration is a process of officially recording of a document.
Where, there is a contact to transfer an immovable property, the same to be executed in the future on the full payment of consideration and the contract is in writing, stamped, attested, signed by the transferor and duly executed but not registered or the transfer is not made as prescribed by law. Moreover, the transferee is willing to perform his part of the contract and has taken possession of a part or whole of the property then the transferor cannot dispose the first transferee. The transaction shall be protected by the doctrine of Part Performance as stated u/s. 53-A of the Transfer of Property Act. The doctrine states that-
Equity looks on that as done which ought to have been done.
Equity treats the subject- matter of a contract as to its effects in the same manner as if the act contemplated in the contract had been fully executed, from the moment the agreement had been executed, though all the legal formalities of a contract have not been yet completed.
In such a situation if a subsequent transfer takes place the same can be held to be an invalid transfer subject to the exemption provided by the law under a few circumstances. Situations when a subsequent transfer is held to be invalid-
Ø When the subsequent transferee had means of acquiring the knowledge of the previous transfer or if the subsequent transferee had notice of the same, then the subsequent transfer shall be held void. Notice as defined under Section 3 of TPA-
“A person is said to have notice of a fact when he actually knows that fact, or when, but for willful abstention from an enquiry or search which he ought to have made, or gross negligence, he could have known it.”
Two situations under which the subsequent transferee is legally deemed to have notice of the title of the immovable property –
I) When any transaction relating to immovable property is required to be and has been effected by a registered instrument, any person acquiring such property or any part thereof, or share or interest in, such property shall be deemed to have notice of such instrument as from the date of registration.
II) Any person acquiring any immovable property or interest in any such property shall be deemed to have notice of the title, if any, of any person who for the time being in actual possession thereof.
In Sardar Govindrao Mahadiv v. Devi Sahai the Supreme Court held thus (para 39): "Induction into possession of an immovable property for the first time subsequent to the contract touching the property, may be decisive of the plea of part performance. Mere possession ceases to be of assistance when as in this case the person claiming benefit of part performance is already in possession, prior to the contract and continues to retain possession."
Possession operates as notice of the possessor’s title or interest in the property thus nobody can say that he has no knowledge of the ‘fact of possession’ by the possessor. Title here does not mean ownership. It simply means right to possess. Thus in a situation where the former transferee is already in possession of the property, for example as a tenant then he need to do something in furtherance of the contract in order to provide a general notice of his new rights or interest in the said property. Otherwise the tenant- landlord relationship shall prevail over the contractual relationship and based on that the subsequent transferee can claim to have no notice of the interest of the former transferee. Possession of a small portion of land is constructive notice only with regards to that portion. It does not constitute notice for the whole land. Constructive notice means where a person has means of knowing a fact but has omitted to know it. In other words, there are circumstances which ought to have put him in an enquiry which would have lead to the discovery of the fact.
In Mohd. Mustaffa v. Haji Mohd. Patna High Court held that it is not possible that a person who purchases a property must make an enquiry about any previous contract from any tenant who is at the time of contract in possession of a small part of the property.
The former transferee will hold a good interest in the property, and his rights would be protected under section 53-A of TPA. To avail the protection of 53-A the former transferee needs to satisfy the following requirements as laid down in D.S. Parvathamma v. A. Shrinivasan-
i) A contract must be in writing to transfer the movable property for consideration.
ii) It should be signed on behalf of the transferee or by himself.
iii) The terms of the contract must be ascertained with reasonable certainty from writing,
iv) The transferee takes possessions of the whole or part of the property or if already in possession continues in possession, such taking of the possession must be in part performance of the contract.
v) The transferee must have done some act in furtherance of the contract.
vi) He should have performed or willing to perform his part of contract.
But if any of the above condition is violated the subsequent transfer shall prevail and stand to be valid. Certain situations under which the subsequent transfer was held to be valid-
It has been said in the case of Sajan Singh v. Fanindra Pal Singh and Ors. that a subsequent transferee can retain the possession of the property if:
1.He has paid the whole amount.
2.He has done so in bona fide and had no knowledge of the prior contract.
3.The previous agreement to sale is oral.
4.The essentials of a valid contract have not been fulfilled in the previous contract.
# In Sardar Govindrao Mahadiv v. Devi Sahai(1982) 1 SCC 237 : (AIR (982 SC 989).
# Keamauddi v. Hara Mohan, 7 CWH 294.
# Ram Coomar Coondoo v. Macqueen, (1872) 11 Beng. L.R.46.
# AIR 1987 Patna., 5
# Appeal (civil) 1527 of 2000
# Sajan Singh v. Fanindra Pal Singh and Ors. [1994(1) VIBHA 77], Balram v. Bapu Singh (1982 MPWN 294)and Sadaram and Anr. v. Gangadhar [1977(1) MPWN 291]Veeramalai Vanniar and Ors. v. Thadikara # # Vanniar and Ors. : AIR1968Mad383.
# Mian Pir Bux v. Sardar Mohd. Tahir, AIR 1934 P.C.235.
# Sitaram v. Corp. of Calcutta, AIR 1956 Cal. 18.
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