INTRODUCTION

When we talk about notice in the context of property

transactions, it refers to having knowledge or being aware of
certain facts related to a property. This knowledge is important
because it can affect the rights and responsibilities of the parties
involved in the transaction.
The literal meaning of term ‘ notice ’ is knowledge. The concept
of Notice for the purpose of The Transfer of Property is given
under Section 3 of Transfer of Property Act, 1882. The concrete
knowledge regarding the transaction or transfer of any
immovable property is termed as notice in the Transfer of the
Property Act. Notice is the legal concept describing a
requirement that a party be aware of legal process affecting their
rights, obligations or duties. Where a person has knowledge of
any fact or it could be proved that under the circumstances he
must have knowledge of that fact, he is said to have notice of
that fact. In case of the transfer of any immovable property it is
obligatory for the parties concerned to be informed regarding the
legal instrument of the property, legal effect of the transfer as
well as it transferability otherwise his right might be
extinguished by the act of third party. If it is established before
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the Court of law that a person has notice of some fact or
transaction, the knowledge of that fact is binding on him. He
cannot deny the knowledge of that fact if it goes against him.
This knowledge can either be actually possessed by a person or
may be imputed to him by law. When knowledge of a fact is
actually possessed by the party, it is called actual notice and
when knowledge of a fact is not expressly given but can be
imputed to the party under certain circumstances, it is
constructive notice.

Bare Act Language

[“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 have made, or gross negligence, he
would have known it. Ought to
Explanation I-Where any 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 (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

2
acquired, or of the property wherein a share or interest is being
acquired, is situated:]
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.
Importance of notice.
The doctrine of notice is an equitable doctrine. It protects the
interests of a transferee for value (with consideration) without

3
notice. There might be transfers in which there is some legal
defect and the transfer is void. Under a void transfer of property
the transferee cannot get any interest. But, if it could be proved
that transferee was a transferee for valve (i.e., he has paid
money) and he had no notice of the legal defect, the equity shall
protect his interest under the doctrine of notice. For example, if
out of a property a person has right to be maintained and that
property is transferred. The transferee would get the property
with this liability. But, if it could be proved that transfer was for
value and the transferee had no notice (knowledge) of this
liability then, under Section 39 of the Act, the transferee would
not be bound by the liability to maintain that person out of the
property purchased by him. Other instances where under the
Transfer of Property Act, interests of transferees for value
without notice have been protected under the doctrine of notice
are given in Sections 40, 41, 53, 53-A. It may be noted that the
doctrine of constructive notice is applicable also against the
Government.1

•Theoretical evolution of concept of notice in relation to

transfer of property:
The concept of "notice" in relation to the transfer of property has
evolved over time in legal theory. Here is a brief overview of the
theoretical evolution of the concept of notice:

1
Secretary of State v. Dattatrya, (1901) 3 Bom. LR 923.

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Early Common Law:
The principle of caveat emptor, which means "let the buyer
beware," was used in the transfer of property under the common
law. This meant that buyers were responsible for investigating
the property and ensuring that they were acquiring a clear title.
The seller did not have to tell the buyer about any problems with
the property.
Equity:
In the 16th century, courts of equity began to develop in England.
These courts recognised that the strict application of caveat
emptor could result in unfair outcomes, particularly in situations
where a seller had defrauded a buyer. Equity courts began to
require sellers to disclose certain defects in the property, such as
encumbrances or easements.

Statutory law:
In the 19th century, statutory law started to codify the rules
requiring the giving of notice when one sold or gave away
property. In the UK, for example, The Conveyancing and Law of
Property Act of 1881 required that sellers tell buyers about
certain things about the property, such as any problems with the
title.

Modern Law:

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In modern law, notice is a very important part of making sure
that the transfer of property is valid. Buyers and people who
receive the property usually have to do a title search to find out
if there are any liens, encumbrances, or other claims on the
property. The seller and the person who gets the property must
also tell the buyer about certain things about the property, such
as any problems with the title or environmental hazards.

Classification Of Notice
There are mainly two kinds of Notice, they are:
1. Express notice or Actual notice
2. Constructive notice.

Actual notice sometimes called direct notice and the

constructive notice is called indirect notice. Actual notice is
the actual awareness or direct notification of a specific fact
or proceeding to a person but in case of constructive notice
it is assumed that the person has the knowledge. Now these
types of notice discussed below broadly:-

Express Notice or Actual Notice

Actual notice means when a person actually knows about the
existence of a fact. The fact must be definite information given
in the course of negotiations by a person interested in the
property. The information of fact should not be a rumour or
hearsay and thus is not bound by such information. In Section 3

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of the Transfer of Property Act, “actual notice” refers to the
actual knowledge or awareness of a particular fact or
information about a property. It means that a person has
personally received information or has been made aware of it in
some way. This can include receiving a direct communication or
having first-hand knowledge of a property’s status or ownership.
In other words, actual notice takes place when the information is
such that it would operate upon the mind of a rational man and
would make him act based on the knowledge so acquired.
Example
Let’s say you’re interested in buying a house, and you happen to
meet the current owner, who tells you that the property is going
to be sold soon. In this case, the owner’s verbal communication
directly informs you about the upcoming sale. This is an
example of actual notice because you have received first-hand
knowledge of the property’s change in ownership.

Essential Conditions for an Express or Actual Notice:

The following are the essential conditions to constitute an actual
or express notice:
(i) The knowledge or information must be definite. It must
not be hearsay or rumours. If a person comes to know
about certain facts by way of rumours or through casual
conversation between some persons, this knowledge is
not legal because no person is bound to take notice of
rumours. The knowledge of the fact must be of such a

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 nature which a normal man would be expected to take
seriously so that he may do or may not do (abstain)
something in future. Unless the mind of the person has in
some way been brought to an intelligent apprehension of
the nature of the thing, there is no notice. Every notice
means knowledge of a fact but every knowledge is not
treated as notice.

(ii) Only the knowledge of the parties interested in the

transaction is actual notice regarding that transaction.
Knowledge or information of any other person who is
stranger for that transaction is no notice.

(iii) The Knowledge or information must be about or related

to the transfer in question. Knowledge of something
which is not relevant for a transaction cannot be taken to
be actual notice for that transaction.

Constructive Notice
Doctrine of constructive notice is based on equity. Where a
person actually does not know anything about a fact but the
court treats that under the circumstances he must be deemed to
have knowledge of that fact, the notice is constructive. This
knowledge is imputed when a person fails to make reasonable
inquiries that would have revealed the relevant information.

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The idea behind constructive notice is to ensure that people are
held accountable for information that is reasonably available to
them. It helps prevent individuals from claiming ignorance when
they should have been aware of certain facts or circumstances.
The circumstances are of such a nature that the Courts of law
would construe or presume that the person concerned is bound
to know that fact. He cannot say that he has no express or actual
notice of the fact. This is called presumption by the Courts or
legal presumption. Legal presumptions cannot be denied or
controverted. Constructive notice is a legal presumption and is
like a provision of law the knowledge (notice) of which cannot
be denied by any person. It is a matter of law which cannot be
rebutted or disproved. In Plumb v. Fluitt2, Eyre C.B. observed
thus:
“Constructive notice I take to be in its nature no more than
evidence of notice, the presumptions of which are so violent that
the Court will not allow even of its being controverted.”

Constructive notice is, therefore, imputed to or imposed upon a

person under legal presumptions. It is based on the law of
presumption or it is presumed that in certain circumstances that
the person knows the fact. The legal presumption of
constructive notice is made by the Court under the following
circumstances:-

• Wilful abstention from an inquiry or search:

2
(1791) 2 Aust.432.

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Wilful abstention from an inquiry or search means deliberately
avoiding to take notice of a fact which a reasonable man would
have taken in the normal course of life. If a person refuses to
accept a registered envelop addressed to him, it is his wilful
abstention from taking notice of the contents of that envelop. In
such a situation the law presumes that he must have knowledge
that the contents of the letter are against his interest and because
of this reason he is avoiding to accept that letter. Wilful
abstention in this section has been construed to mean want of
bona fides as distinguished from mere omission to make
enquiries. Therefore, a person who refuses to take a registered
letter shall be imputed with constructive notice of its contents
and he cannot take the plea that he does not know its contents.3
Actual notice of a deed is constructive notice of the contents and
all other deeds to which refers as affecting the same property. If
a person is purchasing certain immovable property and the seller
has shown him the title deeds which mention that the property
was partitioned property with certain conditions, shall be
imputed with notice of the fact of partition and its conditions. He
cannot be allowed to plead that he was ignorant of the
conditions. If a purchaser omits to inspect a title deed, although
he will actually not be able to know its contents but the Court
shall presume that he knows all the facts given in the deed. The
presumption of the Court in such a circumstance would be that
the person imputed with notice has designedly or purposely
abstained from inquiring into the contents of the deed with the
intention of avoiding to take its notice.
3
A.E.K Kaliapa Nadar v. S.V.K.R. Amirithavala Vandammal, AIR 1973 Mad 255 (1973) 1 MLJ 126

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So constructive notice is implied only in situations where a
person has means of knowing a particular fact, but has failed to
know it. There exist circumstances which ought to put him on an
inquiry which, if prosecuted, would have led to a discovery of it.
However, if a person has no opportunities to obtain information
about something, notice cannot be implied on him about the
thing. Thus in cases, where the purchasers does not have the
slightest idea or suspicion about any earlier agreement entered
into, far away from the place where the property is situated, it
cannot be said that there was any wilful abstention on the part of
the purchaser.
Bank of Bombay v. Suleman4
• S left his house and land to his sons by his first wife and
appointed them as the executors of his will. He bequeathed Rs.
30,000/- to the sons by his second wife as a charge upon the
property given to the sons of first wife by will.
• The first wife ’s son borrowed from the Bank depositing the
title deeds of the house and land as security. If the Bank had
made inquiries as to how the mortgagee derived the title from S,
they would have had cognizance of the will and so of the charge
in favour of the second wife’s sons. Therefore, they were fixed
with constructive notice of the charge which accordingly
prevailed over the mortgage to the bank.
The following are some instances where Courts have held
that a person is to be fixed with constructive notice for

4
(1908)10 BOM LR 1065

11
having abstained from making an inquiry which he ought to
have made:
(i) A proposes to sell his property to B, who at the same time
knows that rents due in respect of the property are paid by the
tenants to a third person X. B will be fixed with notice of the
rights of X.
(ii) A mortgages his house to B, who omits to investigate the
title deeds relating to the house. C has a charge on the property
mortgaged. B will be presumed to have notice of the charge.
(iii) A refuses a registered letter, which contains certain
information relating to property which A proposes to purchase. A
will be deemed to have notice of the contents of the letter.
(iv) A contracts to sell his house to B. The house in on rent
and B knows that the tenants have been paying the rents
to C. B has constructive notice of the right of C to take
rents from the tenants.5
• Gross-Negligence
The Courts of Equity invented the phrase ‘Gross Negligence’ to
extend their jurisdiction to where the purchaser wilfully shuts
his eyes to the circumstances which called for inquiry.
Negligence means carelessness or omission to do such act which
a man of ordinary prudence would do. It is the omission to do
(i.e. not doing of) something which a reasonable man guided by
those considerations which ordinarily regulate the conduct of
human affairs, would do and doing something which prudent
5
Hunt v. Luck (1902) 1 Ch, 429.

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and reasonable man would not do. Mere negligence or ordinary
carelessness in taking notice of a fact is not ‘gross-negligence’.
There is no constructive notice in simply being negligent to take
notice of a fact. But, if the negligence is so grave or gross that a
man of common prudence can never be expected to do, the
negligence is ‘gross’. In Hudston v. Vincy,6 Eve J. Said, “Gross
Negligence does not mean mere carelessness, but means
carelessness of so aggravated a nature as to indicate attitude of
mental indifference to obvious risk.” It can be described as ‘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’.
It is not necessary to show that the person has been guilty of
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
Bank Ltd. V. P.E. Guzder and Co. Ltd.7
Respondent (A) deposited title deeds of his house in Calcutta
with the claimant Bank (N) to secure the loan he had taken from
the bank. Subsequently, A represented the bank that intending
purchases of the house wanted to see the title deeds. The bank
returned the deeds to A who deposited the deeds with the
plaintiff bank in order to secure a loan. It was held that the Bank
6
(1921) 1 Ch 98,
7
(1929) 56 Cal 868

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N, on account of gross negligence in parting with the deed has
lost its prior rights with respect of the house.
In Imperial Bank of India v. U. Raj Gyaw,8 case, a purchaser
was informed that the title deeds were in possession of a bank
for safe custody and omitted to make any inquiry from the bank.
It was held that he was guilty of gross negligence and was
deemed to have notice of the rights of the bank which had the
custody of the deeds.
Whether constructive notice may be imputed to a person on
the ground of his gross-negligence or not, depends upon the
facts of each case. Conduct of a person in a given circumstance
may be his gross-negligence while the same conduct in another
circumstance may not be gross-negligence. In other words, duty
to take notice of a fact may vary from case to case. In
Tilakdhari v. Khedan Lal,9 the Privy Council held that before
purchasing an immovable property, the omission to search the
registers kept in the Registrar’s office may amount to gross-
negligence so as to attract the consequences which result from
notice. But emission to inspect the title-deed of an adjoining
property which the seller is under no obligation to produce for
selling the present property, is not gross- negligence. Normally
where a property is situated in a municipal area, the purchaser is
expected to see the records of the municipality to assure that
there are no arrears of taxes or other dues on that property
because after sale they are to be liability of the purchaser. In
Ahmedabad Municipality v. Haji Abdul,10 the Supreme Court
8
(1923) 50 IA 283
9
AIR 1921 PC 112
10
AIR 1971 SC 1201

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held that omission of the transferee (purchaser) to inquire about
the arrears of taxes is not gross-negligence in each and every
case. Whether it would be a gross-negligence or not must be
adjudged on the facts of each case.

Difference Between Wilful Abstention and Gross Negligence:

In wilful abstention, there is intentional or conscious abstention
by an obligor from doing that which reasonably and under the
terms of the obligation he should have done. In the case of gross
negligence, there is no intention of the obligor but as a prudent
person, he must notice the things using alertness, common sense.

•Registration as Notice:
The action or process of registering or of being registered is
widely known as registration. According to registration act
190811 the instrument of some immovable property must be
registered. According to s.49 of registration act “ if any
document is not registered which is required to be registered by
law shall not operate to create, extinguish, assign, limit, declare
any right, title or interest, whether vested or contingent and shall
not confer any power to adopt.
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
11
Section 17 of The Registration Act 1908

15
person acquiring such property, shall be deemed to have notice
of such instrument from the date of registration. In explanation
I,12 registration under the Registration Act has been given the
effect of notice which also adopted in England by sec. 198 of the
Law of Property Act 1925. The chief objective of registration is
to provide a record on which every person dealing with the
property can rely on for a full account of all transactions by
which his title may be affected. It is mentionable that when a
document is not compulsorily registerable, its registration does
not amount to constructive notice. Thus, the registration is not
notice when there is no duty to search register. For instance, in
case of movable property, registration is not required. Any
person interested in the transaction which is registered under the
provisions of the Indian Registration Act, 1908 cannot plead that
he has no notice of the transfer made under the deed.
In Tilakdhari v. Khedan Lal,13 the Privy Council held that
there was no general rule of law applicable in all the cases that
registration amounted to notice; whether registration was notice
or not depended upon the fact of each case. But in India since
Registration Act provides compulsory registration of certain
documents, therefore, this decision was found to be in conflict
with the Registration Act. Because of this reason, Explanation I
was added to make it clear that registration of those documents
in which registration is compulsory under the Registration Act,
amounts to notice as a general rule and in all the cases. Where
registration of a document is compulsory, there is a duty to
search and inquire into the facts of the document.
12
Sec. 3 of Transfer of Property Act 1882
13
AIR 1921 PC 112

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 In order that registration may be treated as constructive notice
of its contents, following conditions are necessary------
(1) Registration is notice only of those documents which
are compulsorily registerable. Under Registration Act
certain transfer e.g. gift of immovable property or simple
mortgage etc. Must be made only by registered deeds; they
are compulsorily registerable. On the other hand, there are
transfers in which registration has been made optional i.e.
they may or may not be registered for example sale of
movable properties or wills. Registration of documents in
which registration do not tonal within constructive notice.
Thus, testamentary documents (wills) do not come within
the purview of notice as contemplated by Section 3,
Explanation 1 because they are not required to be
compulsorily registered.14

(2) Registration amounts to notice only when all the

formalities prescribed under the Registration Act are duly
completed.

(3) Registration is notice only for a subsequent transferee.

It does not amount to constructive notice for transferees (or
persons interested in the transaction) prior to the
registration of that transaction. For example, A mortgages
his properties to B to secure certain loan taken by him. The
mortgage is usufructuary mortgage in which B takes also
the possession of that property. It is registered. B sub-
14
24. Paragana’s Lawyer’s Assn. V. State of West Bengal, AIR 1986 Cal. 205.

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 mortgages that property to C through registered deed. Now,
A pays debt to B without knowing that B has sub-
mortgaged it to C. Here, the registered mortgage by A to B
is notice for C because he is subsequent transferee. But,
registered sub-mortgage by B to C cannot be notice for A
and cannot deprive of the validity of payment of debt by A
to B.

If the instrument has been registered in the same registration

sub-district as that in which the property is situated, it operates
as notice from the date of registration. If, however, the property
is situated in several sub-districts, or if the registration has been
effected in another district, the registered deed will not operate
as notice until a memorandum of such registration has been
received and filed by the Sub-Registrar of sub-district in which
the property is situated.
In Backer Khoransanee v Ahmed Ismail15 it was held that
though the mortgage deed is registered, it being a subject of
movable property whose registration is not compulsory, the
registration does not amount to constructive notice. Similarly, A
mortgages her jewellery to B, through a registered deed and later
sells it to C for full consideration. Though the mortgage deed is
registered, it won’t amount to constructive notice as registration
of movable property is not compulsory.
The action or process of registering or of being registered is
widely known as registration. According to registration act 1908
under s.17 the instrument of some immovable property must be
15
AIR 1928 Rang 28

18
registered. “ if any document is not registered which is required
to be registered by law shall not operate to create, extinguish,
assign, limit, declare any right, title or interest, whether vested
or contingent and shall not confer any power to adopt.16

Objectives of registration:
The main purpose of registration of any document is to give
information to people regarding legal obligations arising or
affecting a particular property and to perpetuate documents
which may afterwards be of legal importance, and also to
prevent fraud.

The objectives can be listed as follows:

I. The conservation of evidence.
II. Assurance of title, publicity of documents and prevention
of fraud.
III. Registration ensures and safeguards the interest of the
intending purchaser.

So, registration acts as notice which is under constructive notice.

•Actual Possession as Notice of Title

Explanation II of section 3 of “Transfer of Property Act-1882”
says:
16
s.49 of registration act

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 “Any person acquiring any immoveable 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.”
In Bhagwan B. Kedari v. Dwarkanath K. Bagare,17
subsequent purchaser (A) was residing in the vicinity (near) of a
tenant (B) for more than 38 years. There was an agreement to
sell in favour of this tenant. The Karnataka High Court held that
the subsequent purchaser (A) had a constructive notice of the
agreement of sale executed in favour of the tenant (B). The
Court held that tenant (B) cannot be said to be a bona fide
purchaser without notice of this agreement of sale. Thus,
equitable relief cannot be granted to him (B).

What is Actual Possession?

Actual possession is what most of us think of as possession—
that is, having physical custody or control of an object . Actual
possession, also sometimes called possession in fact, is used to
describe immediate physical contact. For example, a person
wearing a watch has actual possession of the watch. Likewise, if
a person has wallet in his jacket pocket, he has actual possession
of that wallet. This type of possession, however, is by necessity
very limited. Frequently, a set of facts clearly indicate that an
individual has possession of an object but that he or she has no
physical contact with it. To properly deal with these situations,

17
AIR 2005 Karnataka 108

20
courts have broadened the scope of possession beyond actual
possession.

According to Explanation II of section 3, in order to operate as

constructive notice, possession must be actual, i.e., de facto
possession. It amounts to notice of title in another, e.g., A leased
a house and garden to B who takes possession of the properties.
A then sells the said properties to C. C is deemed to have
constructive notice of B’s rights over these properties, i.e., C
cannot plead that he had no knowledge (notice) of the fact of B’s
possession on the properties .
Explanation II was added to Section 3 by the Amending Act,
1929. Before 1929, the law in India was not settled. According
to the Allahabad, Bombay and Madras High Courts, possession
of an immovable property amounted to constructive notice of
such title as the person in actual possession may have But, the
Calcutta High Court took the view that possession of a property
was not conclusive (final) proof but only cogent (convincing)
evidence of notice. However, the controversy has now been
resolved by Explanation II which incorporates the view taken by
majority of the High Courts. Thus, the present law is that actual
possession is constructive notice of the title or that much interest
of the pass with which affects the transferee. Therefore, any
person who wants to deal with any immovable property must
ascertain whether son possessor has the title or interest in the
property or not. If a person does pot make such enquiries then he

21
cannot be allowed to say that he had no knowledge that the title
was not with the person who is in possession of the property.
Normally, the principle of constructive notice on the ground of
possession is not applicable in respect of the rights of third
parties, But in certain cases where the state of the property is
such that the rights of third party is necessarily affected, the rule
of constructive notice is made applicable. For example, where
the property is a burial ground (grave yard) the purchaser is
deemed to have notice that the property exists for burial ground
and would be affected by the right of burial in a third party.
Similarly, if there is a shrine or tomb on the land to be sold, the
purchaser will be put to an inquiry whether the land is wakf
because if it is wakf the rights of third person (who may come to
the shrine) is involved in the land.

Discussion in Light of the Principle Established in “Daniels

Vs Davison”18:
The doctrine of “Daniels vs Davison” was applied in number of
Indian case laws. In “Hari Charan Kuar & Ors Vs Kaula Rai &
Ors” court approvingly quoted “Daniels Vs Davison” where the
tenant in possession of a public house and garden had entered
into a contract for the purchase of the property and a subsequent
purchaser was held to have constructive notice of the contract,
as he was bound to make inquiry from the tenant which would
have led him to a knowledge of it. In that case Lord Eldon said:

18
(1809) 16 Ves 249 at p. 254

22
“My opinion, therefore, considering this as depending upon
notice, is, that this tenant, being in possession under a lease with
an agreement in his pocket to become the purchaser, those
circumstances altogether give him an equity, repelling the claim
of the subsequent purchaser, who made no enquiry as to the
nature of the possession.”
In Mancharji Sorabji Chulla Vs Kongseoo,19 it was held by
the Chief Justice Couch that the English Authorities on the
question were applicable where a person bought an estate of
which some one, not the vendor, had the possession. Again the
principle of Daniels Vs Davison was applied in this case when
the court agreed that where there is a tenant is in possession
under a lease, or an agreement, a person, purchasing part of the
estate, must be bound to inquire, on what terms the person is in
possession.

What if there is no Actual possession?

If a tenant is not in the actual possession of the land, his
occupation will not amount to constructive notice.
For instance, A contracts to sell land to B who in pursuance of
the contract puts his tenant in possession. A sells the land to C. C
is not affected with notice of B’s interest.

Illustrations

19
(1911) 13 BOM LR 326

23
 (a) A leased a house and garden to B who takes possession
of the properties. A then sells the said properties to C. C
is deemed to have constructive notice of B’s rights over
these properties i.e. C cannot plead that he had no
knowledge (notice) of the fact of B’s possession on the
properties.

(b) A agrees to sell his property to B. On the basis of this

agreement B puts his tenant in possession of that
property. A afterwards sells the property to C. Here C
cannot be said to have constructive notice of B’s
possession because B had no actual possession; the
possession was with B’s tenant.
(c) A sold his land to B but remains in possession of the land
as tenant of B. The sale-deed was not registered. A sold
the same land to C under a registered sale-deed. C cannot
be deemed to have constructive notice of B’s rights over
the land because B was not in actual possession of the
land. C had no reason to believe that A was in possession
of the land otherwise than as owner.20

Notice of Agent is Notice to Principal

The general principle of the law of agency is that an agent stands

in the place of the principle thus notice of fact by the agent will
20
Moreshwar v. Duttu, (1888) 12 Bom, 569.

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be deemed to be noticed by principle as well. This is based on
the legal maxim qui facit per alium facit per se i.e. He who
does by another does by himself.
Explanation III to section 3 of the Transfer of Property Act, 1882
deals with the situation where a notice to an agent is treated as
an imputed notice to the principal.
Explanation III of sec. 3 of Transfer of Property Act 1882
bounds the principal with the notice of the facts obtained
through his agent in ordinary course of business which is based
on the principle qui facit per alium facit per se (i.e. he who acts
through another is deemed to act in person) and thus, agent
stands in the place of principal with reference to the business for
which he is agent so that his acts and knowledge are the acts and
knowledge of the principal.21 The Privy Council have said that it
is a rule of law that imputes the knowledge of the agent to the
principal for the agency extends to receiving notice on behalf of
the principal of whatever is material. 22 If the notice to the agent
would not be the notice to the principal, notice would be avoided
in every case by employing agents.23
Prior Rule: Explanation III, added by the Amendment Act,1929,
relates to notice to an agent. Prior to 1929 amendment, that part
of section 3 which dealt with notice to an agent ran as follows:

21
Mohori Bibee V. Durmodas Ghose (1903)

22
Rampal Singh V. Bal Badar Singh
23
Berwick & Co V. Prince (1905)

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“A person is said to have notice of a fact -when the information
of the fact is given to, or obtained by, his agent under the
circumstances mentioned in section 229 of Indian Contract Act
1872.”
The word “ given to or obtained by his agent” used in the old
definition suggested that the rule was restricted to the facts of
which the agent had actual knowledge or, in the other words,
had express notice. The agreement omits the words ‘given or
obtained ‘.The effect of this omission is that the principal will be
bound even if his agent acquired constructive notice.
Present rule:
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. It is the general rule, settled by an
unbroken current of authority, that notice to, or knowledge of, an
agent while acting within the scope of his authority and in
reference to a matter over which his authority extends, is notice
to, or knowledge of, the Principal.
The theory of the rule:-
Two general theories prevail as to the foundation upon which,
this rule is based, and the results of these respective theories are
not entirely alike. The first finds the reason of the rule in the
legal identity of the agent with the principal during the
continuance of the agency-in the fact that the agent, while,
keeping within the scope of his authority, is, as to the matters
embraced within it, for the time being the principal himself, or,
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at all events, the alter ego of the principal-the principal’s other
self. Whatever notice or knowledge, then, reaches the agent
during this time and under these circumstances, in law reaches
the principal, whether it does so in fact or not. It is the legitimate
and necessary result of this view, therefore, that only such notice
or knowledge as comes to the agent, while he is agent, is thus
binding upon the principal.
The other theory is based upon the rule that it is the duty of the
agent to disclose to his principal all notice or knowledge which
he may possess and which is necessary for the, principal’s
protection or guidance. This duty the law presumes the agent to
have performed, and, therefore, imputes to the principal
whatever notice or knowledge the agent then possessed, whether
he has in fact dis-closed it or not.23 According to this view it is
immaterial when the agent obtained the information, if he then
possessed it. The courts have not, however, always recognized
these differences, nor have their decisions in all cases been
consistent with the theory adopted.

Scope of the Rule:

The relevance of notice to an agent being an imputed notice to
the principal rests on the following conditions:
 The notice should be obtained by the agent in his capacity
being an agent.
 The agent appointed should be for that specific transaction
to which the notice relates to.

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  The notice must be acquired by the agent in the course of
his employment as an agent to the principal.
 The notice acquired by the agent must be relevant to that
particular transaction for which the agent is appointed.
 Any fraudulent concealment of facts must not have been
from the principal by the agent.

Texas Company Limited v Bombay Banking Co :24

V, who was an agent of the bank had an overdraft in his private
banking account which he discharged with money belonging to
the Texas company who were his principal in an oil business. It
was contended that as V was agent of the bank, knowledge of
the ownership of the money should be imputed to the bank. But
it was held by the Privy Council that it would be shining the
doctrine of notice beyond all reasonable limits to hold that in
such circumstances money received in absolute good faith
should be earmarked with some independent ownership, because
the debtor ,who was also a servant of the company committed a
fraud in or to discharge his obligations.

Distinction between "notice" and "constructive notice"

A notice may be actual, express, implied or constructive. A
direct notice or express notice are varieties of a factual notice.
This is a matter of fact. A constructive notice, on the other hand,
is not of any of the above kinds. It is not factual, but presumed

24
AIR 1919 PC 20

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or imputed. It is based on equity. It is inferred from
circumstances which are on the equitable ground to be taken as
amounting to notice, like notice to agent is notice to his
principal; notice to a partner is a notice to the firm of which he is
a partner.

“Notice” under section 41 of the Transfer of Property

Act ,1882:

We know that section 41 of the Transfer of Property Act, 1882

deals with the transfer by the ostensible owner. An ostensible
owner is not actually a real owner. There has a general rule that
“a person can not confer a better title than he himself has in the
property transferred”. But the transfer by ostensible owner is an
exception to the general rule. If the conditions laid down in this
section are fulfilled, then the transfer shall not voidable on the
ground that the transferor was not the authority to make to make
it .

This is also based on the equitable principle of estoppel which

has been enumerated in the section 110 of the Evidence Act . In
order to apply the section , the transferee have to prove that the
transferor was the ostensible owner of the property with the
consent of the owner or co-sharers and he took reasonable care
to ascertain whether the transferor had the power to make
transfer of the full interest .

29
The section says that:-
“Where, with the consent, express or implied, of the persons
interested in immovable property, a person is the ostensible
owner of such property and transfers the same for consideration,
the transfer shall not be voidable on the ground that the
transferor was not authorized to make it. Provided that the
transferee, after taking reasonable care to ascertain that the
transferor had power to make the transfer, has acted in good
faith”.

If we dissect the section, we will find the following condition for

this section to be applied…

a) The transferor is the ostensible owner.

b) He is so by the consent, express or implied, of the real
owner.
c) The transfer is for consideration.
d) The transferee has acted in good faith and has taken
reasonable care to find out that the transferor had power to
transfer.

Now, to what extent “Notice” is used in the case of transfer by

an ostensible owner? If we dissect the meaning of “reasonable
care to find out the power of the transferor” of this section, then
we will be able to co-relate it with “Notice”.

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Reasonable care to find out the power of the transferor and
Notice:
We know that actual notice is whereby a person actually knows
the fact and constructive notice is where a person ought to have
known the fact but he don’t know and he would have known the
fact, had he made enquiries which he would have reasonably to
have made . The court given detailed about constructive notice
in Jones vs Smith . On the other hand, Reasonable care means to
take such care as an ordinary man of prudence would take. It
includes reasonable inquiry.
In the case of Hasan Ali vs Azamuddin the court said that
“section 41 of the Transfer of Property Act makes it incumbent
on the transferee to act in good faith and to take reasonable care
to ascertain that the transferor had the power to make the
transfer. It is obvious that the first step which the transferee is
expected to take is to search the registration office to ascertain
what transfer if any made by the transferor. The transferee is not
entitled to the benefit of the section if he fails to do so.
So from this case it is crystal clear that the court assumed the
search of registration office is a constructive notice of the
transferee. In Rabeya Khatun vs Moniruddin , the court also
regarded reasonable inquiry as constructive notice. In case of
transfer without making inquiries as to whether there are other
co-sharers is not amounted to reasonable care . Thus the court
regarded it as constructive notice.
So we can say that “reasonable care” enshrined in the section 41
of the Transfer of Property Act,1882 can be regarded as

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constructive notice. So there has existence of “Notice” in the
section 41 of the Transfer of Property Act.

Notice Under Sale: The relation between seller and

purchaser in terms of notice:

The equitable doctrine of notice which is entrenched in sec. 3 of

Transfer of Property Act 1882, casts some duty upon purchaser
in a sale upon ascertainment of some facts obtained by him in
the course of negotiations. The courts of equity made some
classifications and enriched our ideas about the relation of notice
with seller and buyer. Definite information regarding the matter
of the property obtained by a person from another person
interested in the property is termed as express or actual notice.
In Jones v. Smith, Wigram VC resolved constructive notice
which treats a person who ought to have known a fact as if he
actually knows it, into two classes. First, cases in which the
party charged had actual notice and the court has thereby bound
him with constructive notice of facts and instruments, to a
knowledge of which he would have been led by inquiry of the
the property of which he had actual notice. Thus if a purchaser
had actual notice of some kind of charge upon the sold property,
the court will bind him to the knowledge of the nature of the
charge upon the property which he would have obtained by
making an inquiry. Secondly, the cases in which evidence shows
some designed abstention from inquiry on the part of purchaser.
Now, there is difference between wilful blindness and mere want
32
of caution. The constructive notice doesn’t apply to the latter. It
is to be determined from case to case basis where there is
designed purpose to avoid notice and where there is mere want
of caution. If the party seeking the benefit of the doctrine of
constructive notice is guilty of fraud in the transaction, the
doctrine of constructive notice will not apply.

•Interrelationships of the Doctrine of Notice with other Key

Section

Section 11 and Section 4

Tulk V. Moxhay.
T, owned a piece of land in London. This land had a garden
surrounded by houses. T, sold the garden to E with a covenant
that E and his sounded by assignees shall keep the garden intact
as an ornamental garden and shall not construct any building on
it. T retained with him the ownership of the houses surrounding
the garden. After some time, E sold the garden to another
person. He also sold it to some other person and one after the
other, the garden was purchased by M. M had notice of the
terms of covenant but he attempted to build upon the land
(garden). Enforcing the covenant, T sought an injunction to
restrain M from constructing buildings in the garden.
The Court held that in equity the subsequent transferees in
series (M) were bound by the covenant and restrained M from
building houses in the garden. Lord Cotenham L.C. observed

33
that since M had notice of the covenant and since T had
legitimate interest in preserving the garden, the covenant was
enforceable at equity against M. Under the terms of the
covenant, M was, therefore, not allowed to construct buildings
in the garden.
Section 11 deals with both kinds of Covenants i,e. negative &
positive covenants enforceable against the transferee. But it
doesn’t refer to the enforcement of a covenant against the
subsequent transferee. Section 40 deals with only negative
covenants and provides also for its enforcement against
subsequent transferee.

Section 39
Section 39 of the Transfer of Property Act, 1882 deals with
situations where a third person has a right to receive
maintenance, advancement, or marriage expenses from the
profits of immovable property, and that property is then
transferred to another person. The section essentially protects
the rights of this third person against the new owner of the
property, depending on whether the new owner had notice of the
third person’s rights and the nature of the transfer.

Here’s how notice is crucial in understanding Section 39:

If the transferee (new owner) has notice of the third person’s

right:
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Gratuitous Transfer: If the transfer of the property was without
consideration (meaning it was a gift), the third person can
enforce their right against the new owner, even if the new owner
didn’t intend to defeat their right.
Transfer for Consideration: If the transfer was for
consideration (meaning the new owner paid for the property),
the third person can still enforce their right against the new
owner, only if the new owner had actual notice of the right.
Mere constructive notice (meaning they could have found out
with reasonable diligence) is not enough in this case.
If the transferee does not have notice of the third person’s right:

The third person cannot enforce their right against the new
owner, regardless of whether the transfer was gratuitous or for
consideration.
It’s important to note that:
 This section only applies to immovable property (land and
buildings).
 The section only deals with rights to maintenance,
advancement, and marriage expenses. Other types of rights
might be governed by different legal provisions.
 The burden of proving notice lies with the third person
claiming the right.

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Section 45 (Transfer for an unlawful consideration)
Section 47 (Transfer with a fraudulent or unlawful purpose)
And Section 48 (Transfer for immoral consideration):

These sections address property transfers involving illegal or

immoral considerations. Notice again plays a vital role:
 If the buyer has actual notice of the unlawful or immoral
nature of the consideration, the transfer is void.
 Constructive notice may not always render the transfer
void, but it can undermine the buyer’s claim to bona fide
purchase and prevent them from seeking specific
performance or enforcing a mortgage arising from the
transfer.

Sections 55 (Effect of seller’s misrepresentation)

Section 58 (Sale without title)
And Section 114 (Effect of omission to make known facts):

These sections deal with situations where the seller

misrepresents facts or fails to disclose them. Notice is crucial in
assessing the buyer’s remedies:
 If the buyer had actual notice of the misrepresentation or
omission, they cannot claim compensation or rescind the
contract.

36
  Constructive notice may also bar remedies if the buyer
failed to make reasonable inquiries.
Section 8 (Transfer not affected by fraud or
misrepresentation by third party):

This section protects the transferee from the consequences of

fraud or misrepresentation by a third party, unless they had
actual or constructive notice of it.

Sections 41 (Transfer of property in consideration of future

marriage),
Section 56 (Sale by co-owners),
And Section 62 (Transfer by persons jointly entitled):

These sections concern specific categories of transferors. Notice

operates as follows:
 Section 41: If a transfer in consideration of marriage is
subsequently avoided due to fraud or non-performance of
the marriage contract, the buyer is protected only if they
had no notice of the fraud or non-performance.
 Sections 56 and 62: Here, the knowledge of one co-owner
is generally treated as the knowledge of all, affecting their
rights equally. This principle, however, requires cautious
application based on the specific facts and circumstances.

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 Actual and Constructive Notice: A Comparison

Nature: An actual notice is in the form of an express

intimation whereas a constructive notice is an assumption. In
actual notice the person having notice is said to be
consciously aware of the existence of the fact, there is no
assumption but an assurance of information on the part of the
person having an actual notice. Whereas, in case of a
constructive notice, knowledge of a fact is assumed on
existence of certain circumstances.
There is no absolute conscious awareness of the fact, rather
the knowledge is imputed to the person. In accordance with
Section 3 of the Transfer of Property Act, 1882 a constructive
notice upon the parties is deemed when there were means of
acquiring knowledge and had the means been rightly
exhausted, the person would have received a conscious
awareness about the fact. Further, a similar notice
(constructive) is deemed when the party has been grossly
negligent.

Formal Communication:
Actual notice should not be based hearsay or rumours.[10]
The notice must be of such a nature that it is expected out of a
reasonable to take the notice seriously. It must be the result of
a formal communication and not a casual conversation

38
 between individuals. There is no such requirement in case of a
constructive notice. A constructive notice is imputed to a
person and is not a result of a formal communication of any
information. Such a notice is assumed based on the
circumstances under which the knowledge could have been
acquired and thus rules out any requirement of a formal
communication.
Bearer of the Notice:
An Actual notice must be given by a party interested in the
transaction. It is a settled rule that a person is not bound to
attend to vague rumours or statements by mere strangers, and
for a notice to be binding, it must proceed from some persons
interested in the transaction.[11] There is no such requirement
in the case of a Constructive Notice. So, when there is no
requirement of an express intimation, there arises no question
of who shall give the information.
A constructive notice is assumed after an assessment of the
circumstances, and do not necessarily need to arise from the
side of any party to the transaction. For instance, registration
of a document is considered as a constructive notice of its
contents. Here, the notice is imputed through the fact that the
document after registration, is in the public domain. No party
to the transaction gives any notice to the other directly.
Rebuttable:
A constructive notice is based on a presumption in law and
such presumptions are not rebuttable. Once the presumption is
raised based on the existence of the circumstances required
39
 for assuming a notice of the fact, it is a constructive notice,
and the presumption is irrefutable in law. Whereas, an actual
notice is definite knowledge, since there is no presumption,
there is no question of rebuttal of a presumption.
Equity looks on that as done which ought to be done. The
Doctrine of Notice is an equitable doctrine In other words, it
ensures that no party to a transfer is treated in an unfair
manner.
In essence, what basic structure is to the constitution, the
Doctrine of notice is to Property law.

Conclusion
Notice has various uses in various sections in the the Transfer of
Property Law and. Actual notice is not as conflicting as
constructive notice because in case of constructive notice the
knowledge of the fact is assumed. It contains wider importance
for its multiple applications in numerous sections of the Act as
well as in other statutory provisions.
Thus it can be said that Constructive notice is a manifestation of
the rule of Caveat Emptor. This is because according to
Constructive notice, a person ought to have known a fact as if he
actually does know it. It presupposed that in property translation
a transferee ought to ascertain and verify certain facts for
safeguarding his own interest. Thus he must be aware of the
nature of the transaction. These facts may relate to property or

40
the transferor, like whether the property is free of any charge or
encumbrances or whether the transferor is competent to transfer
the property or not.

BIBLIOGRAPHY

Books Referred :
 Dr. R.K Sinha, The Transfer Of Property Act
 Mulla, Transfer Of Property Act
 S.N Shukla, Transfer Of Property Act

Journals & Articles :

 https://www.jlsrjournal.in/doctrine-of-constructive-notice-
by-saurav-agarwal-pratyaksha/
 https://student.manupatra.com/Academic/Studentmodules/
Corporate-Laws/Real-Estate-Law/Transfer-of-Property-Act-
1882.htm

Websites :
 https://blog.ipleaders.in/the-doctrine-of-notice-under-
transfer-of-property-act1882/
 https://www.legalserviceindia.com/legal/article-4525-
doctrine-of-notice-actual-and-constructive-notice.html

41
  https://lawlegum.com/notice-section-3-of-trasfer-of-
property/
 https://www.ezylegal.in/blogs/what-is-section-3-of-the-
transfer-of-property-act
 https://www.toprankers.com/transfer-of-property-notes-
for-judiciary
 https://lawbhoomi.com/transfer-of-property-act-notes-
case-laws-and-reading-materials/
 https://www.lawcolumn.in/notice-concept-and-its-kinds-
under-transfer-of-property-act/
 https://indiankanoon.org/

Lectures:
 Class Lecture by Ms Insha Yaseen
 https://youtu.be/BniDMM0LzoI?
si=G5JsH679xAOnvOqv

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