TRANSFER OF

PROPERTY ACT,
1882
-EKTA ROSE
ASSITANT PROSFESSOR (ALS)
NOTICE
 NOTICE
• Notice means knowledge or information of a fact.
• 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.
• If it is established before 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.
• Notice' means knowledge of a fact. In law, knowledge of a fact, affects one's legal rights
and liabilities. Sec. 3 of the T.P. Act, 1882, enumerates three kinds of notices,
A person is said to have "notice" of a fact:-
a) when he actually knows that fact (actual or express notice),or
b) when, but for willful abstention from an enquiry or search which he ought to have made,
or gross negligence, he would have known it (constructive or implied notice).
c) The imputed notice (notice to the agent imputed to his principal) is provided for in
Explanation III to this section.
 ACTUAL OR EXPRESS NOTICE
• Actual notice means direct or express knowledge or information about something. Actual notice
is a matter of fact. That is to say, whether a person has actual notice of a fact or not can itself be
proved or disproved on the basis or certain other facts.
• Express notice is binding on a person only under certain conditions. Following requisites are
necessary for an express notice.
i. The knowledge or information must be definite. It must not be heresy 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 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 appreciation 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 to the transaction is
no notice.
iii. The Knowledge or information must be about or related to the transaction 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. There are certain circumstances in which the court presumes that
under those circumstances a person should be taken to have knowledge of that fact.
• 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.
• Six Classes of constructive notice
1. Willful abstention from inquiry or search.
2. Gross negligence
3. Registration.
4. Actual possession.
5. Notice to agent.
6. State of property amounts to notice.
 (I) WILLFUL ABSTENTION FROM
AN INQUIRY OR SEARCH
• Willful 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 willful 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.
This is nothing but lack of bona fide intention on his part.
• Willful 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 it contents.
• Actual notice of a deed (written document) is constructive notice of the contents and all other
deeds to which it refers as affecting the same property.
• If a person is purchasing certain immovable property and the seller has show him the title deeds
which mention that the property was partitioned property with certain conditions, the purchaser
shall be imputed with notice of the fact of partition and its conditions. He cannot be allowed to
plead that he was ignorant or the conditions. If a purchaser on its 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.
• Constructive notice is inferred only where a person has means of knowing a fact but has omitted
to know it. In other words, there existed circumstances which ought to have put him upon an
enquiry that, if prosecuted, would have led to a discovery of it. Where a person has no means or
opportunities to get information about a thing notice cannot be imputed on him about that thing.
Where a purchaser had not the slightest idea or suspicion of any earlier agreement entered into
away from the place where property in dispute is situated, it cannot be said that there was willful
abstention on the part of the purchaser.
Illustrations
a) A registered letter was sent by landlord A to his tenant B. B refuses to take delivery of the letter.
B has constructive notice of the contents of the letter because he has willfully abstained from
knowing its contents.
b) 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.
c) A sells his house to B. The sale-deed mentioned that the house had fallen in A's share after a
partition. The partition-deed had reserved a right of pre-emption. B has Constructive notice of
the right of pre-emption.
d) (d) A mortgages his property to B and says that the title-deeds are placed in the bank for safe
custody. B, the mortgagee, does not make any inquiry as to why the deed is placed in the bank
and does not see it. B shall be affected with notice of the pledge if it is proved that the deed
was placed in bank not for safe-custody but for pledge to the bank.
e) A purchases two properties X and Y from B. A does not pay the full price to B. In the meantime
he sells property X to C and informs him of B's charge for unpaid price. Chas constructive notice
of B's charge. After one year A sells also property Y to C but C does not inform B about the
unpaid price. C shall not be imputed with notice of the unpaid price which was given to him in
the earlier transaction.
 CASES
• In Kausalsi Ammal v. Shankarmthiar, (AIR 1941 Mad. 707) it was held that the use of the word
'wilful' in the definition shows that the abstention from inquiry should be designed and due to a
desire to avoid an inquiry which would lead him to ultimate knowledge. It means such abstention
from inquiry as would show want of bona fides.
• In Bank of Bombay v. Sulaiman, (33 Bom. 1(PC)), S left his house and land to his sons by his first
wife and appointed them the executors of his will. By the will, he bequeathed Rs. 30,000 to the
sons by his second wife charging it on the property given to the sons by the first wife. The first
wife’s sons borrowed from the Bank depositing the title-deeds of that house and the land as
security. The Bank did not make any inquiry about title, If the Bank would have made inquiries as
to how the mortgagee derived title from S, they would have known about the will and so of the
charge in favour of the second wife's sons. They were, therefore, fixed With constructive notice of
the charge which accordingly prevailed over the mortgage to the Bank.
• In Ahwar Chetty v. Jagannath, (54 MLJ 109), B borrowed money from and deposited as security
by way of equitable mortgage the sale-deed by which he had purchased the property from A. The
sale-deed recited that part of the purchase money had been retained by B to pay A's debts. In
respect of that money, A had the unpaid vendor's lien. C did not inquire whether B had paid those
debts. In fact, they remained unpaid and A attached the property. It was held that C was affected
with constructive notice of A's lien.
 (II) GROSS-NEGLIGENCE
• Negligence means carelessness.
• 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 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.
• Gross negligence is blameworthy under the law and is never excused. It means carelessness
of so aggravated nature as to indicate an attitude of mental indifference to obvious risks.
• Formerly, gross-negligence was regarded as evidence of fraud. But, since fraud necessarily
implies that there is no carelessness but a designed purpose or bad intention, therefore, now
a gross-negligence is not regarded as evidence of fraud.
• It is carelessness of grave nature but without any mala fide or bad motive.
Wilful abstention and gross negligence, difference
• It may be noted that instances of gross-negligence and ‘wilful abstention from enquiry' are almost similar.
• But, theoretically there is distinction between the two.
• If A purchases the property of B, he is expected to inspect the title deeds of B respecting that property.
• In normal course, since A purchases property i.e. takes ownership from B, he has a duty to know whether
B has that ownership or not. It he omits to do so, it shall be presumed that he has knowledge that contents
of the deed might be against his interests.
• For example, the deed mentions certain conditions and when A becomes Owner of that property he could
say that he is not bound by these conditions because he did not inspect the title-deed. This suggests lack
of bona fide intention on his part.
• But suppose A takes loan from B by depositing his title-deeds. Possession of title-deeds with B is the only
security for repayment of money given by him to A. If B parts with the deeds and gives it to A before the
loan is fully paid, the conduct of B is his carelessness of such a degree which cannot be excused.
• In this example, there is not lack of bona fide intention; the intention of B is bona fide but his conduct is so
negligent that it cannot be protected by law and he would not be allowed to say that he did not know that
parting with the deeds would mean losing the money. Moreover, the question, when it is sought to affect a
purchaser with constructive notice, is not whether he had the means of obtaining, and might by prudent
caution have obtained the knowledge in question, but whether the not obtaining it was an act of gross or
culpable negligence.
• In the 'wilful abstention, opportunity of knowledge might be an important factor but in the case of 'gross-
negligence it is not relevant.
• 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, (AIR 1921 PC 112) 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
omission 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, (AIR 1971 SC 1201) the Supreme Court 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.
• Lloyds Bank Ltd. v. P.E. Guzder & Co.(AIR 1930 Cal 22), G. deposited the title-deed of
his property with a bank N to secure his overdraft (loan from bank). This was,
therefore, mortgage by deposit of title- deed in which the only security of repayment of
loan was the possession of the title-deed by the person who gave money. After
sometime G asked the bank N that he was intending to sell the property and the
purchaser wants to see the title-deed and after inspection of the deed by purchaser he
would return the same to the bank. The bank N relying upon this statement gave the
title-deed to G. But, after taking the title-deed G deposited it in another bank L and
took another loan. Thus, it was second mortgage by G by depositing the same title
deed. The question arose whether the prior loan given by N was to be secured first or
the second loan given by L which was at present in possession of bank L.
Held: It was held that since this was a mortgage by deposit of title-deeds in which the
only security for the repayment of loan is the possession of title deed, bank N committed
gross-negligence in parting with the title-deed. N cannot be allowed to plead that it has
no notice that G would take the deeds and deposit it in another bank. Thus, the
mortgage of bank N was postponed to mortgage of bank L.
 (III) REGISTRATION AS NOTICE.-
EXPLANATION I TO SECTION 3
• Explanation I to Section 3 provides that registration of a document is notice of all the facts
stated in that document. Where a document has been registered, it is presumed that all the
persons concerned have constructive notice of the material facts affecting the property
which are apparent in the deed or which can be reasonably inferred from its contents. 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 that
deed. It may be noted that Explanation I was added to Section 3 by the Amending Act of
1929, Before, 1929 the law whether registration amounted to constructive notice or not
was not settled. According to some High Courts registration was constructive notice but
according to others, it did not amount to notice.
• In Tilakdhari v, Khedan Lal, (AIR 1921 P. C. 112) 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.
• 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 is optional is not
constructive notice. Thus, testamentary documents (wills) do not come within the
purview of notice as contemplated by Section 3, Expl. 1 because they are not
required to be compulsorily registered.
2. Registration amounts to notice only when all the formalities prescribed under the
Registration Act are duly completed. As discussed earlier under the head. "Registered", a
document is deemed to be registered only on the date and time when the Sub-Registrar
certifies and puts his signature and seal under Section 60 of the Registration Act.
Therefore, registration amounts to constructive notice only from the date and time
mentioned by the Sub-Registrar in his certificate stated above
Where a property is situated in one sub-district and the rest in other district or sub-district,
the Registration Act provides for sending a memorandum of the registration to the Sub-
Registrar of the other district or sub-district where other properties are situated. In such
cases registration operates as notice only from the date when such memorandum is
received and filed by the Sub-Registrar where the property is situated. Provisos first,
second and third to Explanation I make it clear that unless the registration has duly been
completed under the provisions of Registration Act and all entries have been made
correctly in the prescribed registers, it is not binding notice for a purchaser.
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-
mortgages that property to C through registered deed.
Mortgage

A B
Registered Sub-Mortgage
Registered

C
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.
Punjab.-In Punjab where the Transfer of Property Act is not inforced, registration does not operate as notice
in all the cases. Whether registration is constructive notice or not depends on the fact of each case. In
Punjab, therefore, the law on this point is still the law laid. down by the Privy Council Tilakdhari's case
discussed earlier.
• According to Explanation 1 to Sec. 3, 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.
• In order that registration of an instrument may operate as a notice of its contents, the
following three conditions must be satisfied:-
1) The instrument must be compulsorily registrable. Thus, registration is notice only
where the instrument is required to be registered compulsorily, and not where the
registration is optional.
2) The registration of the document must be completed in the manner prescribed by
the Indian Registration Act.
3) The instrument (or its memorandum) and the particulars regarding the transaction
to which it related must be correctly entered in the registers and indices kept under
the Registration Act.
• When a document is registered, it becomes a public document and any person
acquiring interest in a property can and ought to confirm the title of person by looking
at documents in Registrar's office.
• For instance, A sells the house by a registered document to B. He later enters into a
contract with C to sell him the same house. Law imposes a duty upon C to inspect the
registers at the Registrar's office, and if he does that, he would come to know about
the sale in favour of B. Failure to inspect the register will be detrimental to the Cs
interests, as he would be imputed with constructive notice of the registered
transaction. It is also a logical corollary that if such registration is improperly done, or
if the documents are not properly maintained, a person could not have found out even
if he made an inquiry. In such case, notice cannot be imputed to him.
 CASES
• Where registration of a document is not mandatory but only an option, then registration would not
operate as a constructive notice eg selling of immovable property of less than Rs. 100; gifts of
movables; registration of testamentary instruments, documents pertaining to transfer of movable
property; equitable mortgages, gift of property given to the daughter by way of pasupu kumkuma,
etc. A partituon deed is not required to be registered. A partition is effected between a father and
his son in which the land goes to the father and the house to the son. The partition deed is
registered. Later, the father sells the land to B. B is supposed to be vigilant as a prospective
transferee, and though the elements of gross negligence and wilful abstention from an inquiry
have to be looked into independently, mere registration of partition deed would not amount to
constructive notice (Baba Kamchandra v Kondeo Jogna AlR 1940 Nag 7)
• Similarly, A, mortgages her jewellery to B, with the help of a written and registered deed but retains
possession of it, with an understanding that if within 10 years she fails to repay the amount, B
would have a right to recover the loan amount by the sale of this jewellery. A sells the jewellery to C,
tor full consideration. Though the mortgage deed is registered, its registration would not amount
to constructive notice, as mortgage of movables is not required by law to be compulsorily
registered (Backer Khoransanee v Ahmed Ismail AlR 1928 Rang 28).
• The registration of a document is notice to subsequent transferees only. A prior transferee
is not affected by notice of subsequent transactions from the fact of registration of the
same. For example, A mortgages his property to B who grants a sub-mortgage to C. A in
ignorance of the sub mortgage pays the mortgage debt to B. The fact that the sub-
mortgages registered does not amount to notice of the sub-mortgage to A [Sahadev v
Shekh Papa, (1905) 29 Bom 119].
• Likewise, A contracts to sell a house to B for a sum of Rs. 10 lakhs, accepts an advance of
two lakhs from him but then sells it to C with a written and registered document. In
litigation between B and C tor this property, C cannot take the plea that as the transaction
in his favour through a registered document, B ought to have constructive notice of the
same, because B is a prior transferee and registration as constructive notice would not
operate on prior transferees. However, in the same case if after the conclusion of the
contract between A and C, A sells the same house to D, then C would be entitled to plead
registration of the transaction as constructive notice as against D as D is a subsequent
transferee.
 (IV) ACTUAL POSSESSION AS
NOTICE OF TITLE
• Actual possession of an immovable property is regarded as constructive notice of such title
which person in possession may nave. Explanation II to Section 3 provides that any person
acquiring any immovable 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.
• For example, A contracts to sell land to B for Rs. 5000/, B takes possession of the land.
Afterwards A sells it to C for Rs. 6000/-, C makes no inquiry of B relating to his interest in land. B's
possession is sufficient to affect C with notice of his interest and B may enforce specific
performance of the contract against C. Thus, C cannot say that he has no notice of B's interest in
the land.
• In Bhagwan B. Kedari v. Dwarkanath K. Bagare,AIR 2005, Kant. 108, a 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).
• 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 possessor which affects the transferee. Therefore, any person who wants to deal
with any immovable property must ascertain whether the possessor has the title or interest in the
property or not. If a person does not make such enquiries then he 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.
• It may be noted that possession operates as notice of the possessor's title or interest in the
property would mean that if a person is in possession of a property, 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'. Actual or physical possession of a property is a fact which cannot
be denied by a person who acquires that property. Instances of possession as notice occur mostly
in cases of tenants who are in possession of the property under certain 'right to possess'.
• However, possession by a tenant operates as notice only of his right of possession. Notice of
tenancy is not notice of tenant's equitable right to have the tenancy agreement rectified.
Only actual possession operates as notice or the title of the possessor. If a person himself is
in constructive possession of the property, the other person may not be imputed with notice
as to his title in that property. Mere proof of payment of rent by a tenant without his being in
actual possession or the property is no constructive notice of tenant's interest(i.e. his right
to live) in the property.
• Possession of a small portion of land is constructive notice only with regard to that portion.
It cannot operate as notice for the whole land. Thus, possession of a small portion of a
house cannot put a purchaser (of the house) on constructive notice of that person's rights as
to the whole house.
Illustrations
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.
d) A leased his land to B for seven years on March 1901 to B for seven years. In May, 1901 A entered
into an agreement with B for the renewal of the lease on the expiry of the term of the lease. In July
1901 A purported to settle the same land with C for seven years from May 1908. C sued to take
possession of the land on the ground that lease to B was now expired . Held, that C had
constructive notice of the agreement because B was in actual possession of the land. Therefore, C
was not entitled to get possession. [Kalyani v. Krishnan Nambiar, AIR 1932 Mad 305]
• 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 buril 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.
• In Mohd. Mustaffa v. Haji Mohd. Hissa (AIR 1987 Patna. 5) the Patna High Court observed that it
cannot be said that the person who purchases a property must make enquiry about the previous
contract from the plaintiff or any other tenant in occupation of a portion of the house. The Court
held that the principle of constructive notice cannot be extended to a case where the person, who
claims on basis ot prior agreement, is in possession of only a small fraction or the property. The
plaintiff entered into an agreement with two persons, defendants Nos. 1 and 2 for purchasing a
site. The third defendant purchased the site from defendant No. 1. The plaintiff contended that
the third defendant had notice of the agreement because of his son. Evidence showed that the
relationship between the third defendant and his son was not cordial and therefore he could
• In Danielsv Davison (1809) 16 Ves. 240, A leased a house to B and then agreed to sell the property
to B. A then sold the property to C. Held that C was affected by constructive notice of B's rights
with respect to the property. Where the land is in occupation of someone other than vendor, the fact
of the occupation gives the purchaser constructive notice of any rights of the occupying tenant.
• In Abdul Marzid v B. Ahmed (AIR 1980 Gau 44), the defendant landlord leased out suit property to
the plaintiff on rent. Later, the defendant entered into an agreement with the plaintiff to sell the suit
property to him; received an advance and agreed to execute a sale deed. The possession was
delivered to the plaintiff but the deed was not executed. The defendant in the meanwhile sold the
property to other defendants, and hence a suit for specific performance of the contract was filed. It
was held that the plaintiff having no title in the suit property (i.e. sale-deed being not executed) was
not entitled to be noticed as a title-holder and hence cannot get a decree for specific performance,
but would be entitled to defend his possession only. The enquiry under Expl. II, Sec. 3 is limited to
'title only. On the date of the sale of the property to other defendants, the plaintiff was not a tenant
but a contractor and therefore he would be entitled to protection of his rights attached to that
status and not that of a tenant.
• It should be noted that notice is not extended to possession which is merely of a constructive
nature, as it would be too much to expect a man to find out every possible person who, though not
on the spot, is operating on it from behind. 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.
 (V) NOTICE TO AGENT IS NOTICE
TO PRINCIPAL
• Notice or knowledge of a fact to any agent amounts to constructive notice to his principal. The
principal cannot deny that the notice of the fact was to agent and not to him. The rule that a
principal was bound constructively with notice of certain facts to his agent was added in Section
3 by Explanation Ill under the Amending Act, 1929.
• Notice to an agent is also called an imputed notice. It is called imputed notice because if a
person authorizes some one to act as his agent for doing certain things, he is supposed to have
control over the activities of that agent with respect to that thing. Where such agent does
something beneficial to the principal, it is obvious that principal would accept the knowledge of
that act of his agent event though he has no actual knowledge (notice). But, where some act of
that agent goes against the interests of the principal, he would take the plea that he had no notice
of that act. In such cases the equity would not allow him to say that he has no notice of that 'act'
of his agent. In other words, the notice in such circumstance would be imposed or imputed on
him. The reason for this rule is that if were not so, every principal would be successful in avoiding
unfavorable notice by appointing an agent.
• This provision corresponds to Section 229 of the Indian Contract Act 1872which runs
thus:
"Any notice given to or information obtained by the agent, provided it be given or
obtained in the course of the business transacted by him for the principal, has the
same legal consequence as if it had been given to or obtained by the principal.

• "Before 1929, the words "given or obtained" were interpreted to mean that ony actual
notice to agent is constructive notice to a principal. Explanation III widened the scope
of these words and now any kind of notice (actual or constructive) to agent is
constructive or imputed notice to principal.
Following conditions are necessary for the applicability of the rule that notice to agent is imputed
notice to principal-
a) Notice must have been acquired by a person as an agent; not in any other capacity. Unless it
could be shown that there exists relationship of agency between two persons notice of one
cannot be treated as imputed notice to another (principal).
b) Notice to an agent is imputed notice to principal only with regard to the particular business or
transaction for which the agent has been appointed. A solicitor appointed for a particular
business is agent for all matters related to that business and his knowledge or information
respecting that business is notice to his principal. But where a solicitor is engaged only for
writing a deed, his knowledge about the transaction in deed cannot be treated as notice to
principal because he was appointed not for all dealings concerning that deed.
c) Notice must be acquired or obtained by an agent during the course of agency. Knowledge
acquired by a person before his appointment as agent or after the termination of agency is no
knowledge and is not imputed notice for the principal. Where a solicitor is employed for a
business or transaction, his knowledge concerning that business is imputed notice to his
employer. But knowledge of the same solicitor cannot be treated as imputed notice to the
same employer if the knowledge by him was acquired during the course of any prior or
subsequent business. However, if a principal ratifies i.e. approves any prior act of his agent,
notice to that agent will be imputed to the principal because the effect of ratification is to
constitute the agent an agent ab initio i.e. agent from the beginning.
• d) Notice acquired by an agent must be relevant or material to the transaction. Any
knowledge obtained or acquired by an agent during the course of agency which is not
material to the particular business for which agency exists, shall not be regarded as notice
to the principal.
• (e) Notice must not have been fraudulently concealed by the agent. Fraudulently
concealment would mean that the agent has knowledge of certain facts related to the
business but he has not communicated it to his principal with dishonest intention. It may
be mentioned that normally a principal is bound by the knowledge (notice) of the agent
whether the agent communicates it to principal or not. Whether the agent does not give
information of any fact to his principal and the third party has also no knowledge of
concealment of that fact, the principal is bound by the notice of the agent as against that
third party. But where the third party and the agent both have knowledge of a fact and the
fact is being concealed from the principal, the concealment would be a fraudulent
concealment. In such cases, the principal is not bound by the notice to his agent. Proviso
to Explanation III lays down clearly that if the agent fraudulently conceals the fact, the
principal shall not be charged with notice against any person (third party) who was a party
to or otherwise in the knowledge of the fraud. This proviso is, therefore, an exception to the
general rule that notice to an agent is an imputed notice to his principal.
• In Taxas Co. Ltd. v. Bombay Banking Co., (AIR 1919 P. C. 20) A was employed as agent
of both the companies, i.e., the Taxas Company doing oil business and also the
Banking Company. A paid off his personal overdraft (debt) in the Banking Company
with the funds of the Taxas Company. The Taxas Company claimed that the
knowledge of the ownership of the money used for the payment of the overdraft
should be imputed to the Banking Company. It was held by the Privy Council that since
the agent A had committed fraud, knowledge of ownership of the money used for
payment of his private obligation (debt) could not be imputed to the Banking Company.
• Partners.-Partners of a firm are agents of one another. Accordingly, notice of a fact to
a partner with regard to the business of the firm is imputed notice to the firm.
• Importance of notice.-The doctrine of notice is an equitable doctrine. It protects the
interests of a transferee for value (with consideration) without notice. There might be
transfers in which there is some legal detect and the transfer is void. Under a void
transfer of property the transferee cannot get any interest. But, it it could be proved
that transferee was a transferee for value (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 ot 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.
 CASES
• (1) Notice should have been received in his capacity as agent,i.e., while acting on behalf of
the principal. In Re David Payne and Co.(1904) 2 Ch 608, a company borrowed within its
borrowing powers but for a purpose not authorised by memorandum of its association.
The security in the hands of the lending company in such a case would be invalid only if it
had knowledge or notice of the fact that the money would be applied for an improper use.
The question was whether lending company had knowledge of the fact before the
borrowing company had applied for the loan. It was held that this knowledge could not be
imputed to the company because the Director did not then profess to act on behalf of the
lending company.
• (2) Notice must have been given in the course of agency business.- Notice should have
been received in the course of the agency business. In Chabildas v. Dayal Mawzi,(3 Bom.
566 (PC)) property was sold under a power of sale in an English mortgage. A depreciatory
condition was introduced in the contract of sale. After the sale was completed, the
purchaser instructed a solicitor to act for him in the preparation of the conveyance. The
solicitor knew that the title was good and that the depreciatory condition was not justified.
The Bombay High Court held that the purchaser was affected with constructive notice of
the true state of title.
• (3) Notice must be of a fact which is material to the agency business.-The notice
should be of a matter material to the agency business. In Wyllis v. Polien, ((1863) 3
Deg. J. and Sm. 596 : 46 ER 797) an assignment of a mortgage. was effected through
the mortgagee's solicitor. The solicitor knew that there was another encumbrance on
the property. That fact not being material to the transaction of assignment, no notice
could be imputed to the assignee of the mortgagee. Subsequent advances made by
him to the mortgagor were, therefore, held to be unaffected by notice to the
intermediate mortgage.
• (4) Fraud by an agent.-In English law, where an agent is guilty of fraud and has an
interest in concealing the knowledge from the principal and does so conceal it, the
general rule that notice to agent is notice to principal does not apply and the principal
is not to be imputed with notice of the fraud. This exception will apply with greater
force where the party seeking the benefit of the doctrine of constructive notice is a
party to or is cognizant of the fraud. In Sharpe v. Foy, (117 WR (Eng) 65) S, advanced
moneys on a mortgage executed in his favour by F, the transaction being negotiated by
C, a solicitor's clerk who acted for both parties. It appeared that there was a previous
settlement affecting the land comprised in the mortgage and F had communicated
that fact to C. C, however, told F that he would not communicate it to S, as it would
make him nervous and cause him to hesitate about advancing money. It was held that
when C refused to communicate the fact to S, it was the duty of F himself to
communicate it to S, that by his failure to do so F must be considered to be a party to
what amounted to a fraud committed by C upon his client, S and that "f it were to be
held that notice given under these circumstances was binding upon the principal, it
would amount to robbing the person who advanced the money."
 (VI) STATE OF PROPERTY

• Sometimes the situation and condition of a property speaks louder than the man. A
necessary inference, therefore, may be drawn about the probable users thereof, for
example situation of tombs in any field is notice of the fact that the land has been and
would be used for burial purposes. The Statue of Ravana in a ground points out the
holding of Ram Lila there; the marks left by egress and ingress may operate as notice
of right to way.
LIS PENDENS AND DECREE AS NOTICE.
• The pendency of a suit is very often spoken of as operating as notice to all the
transferees of the property involved in the suit. That this view was incorrect was
pointed out in Bellamy v. Sabine (44 ER 842 : 6 WR (Eng.) 1.). In that case, the Lord
Chancellor said: "It is scarcely accurate to speak of lis pendens affecting a purchaser
upon the doctrine of notice, although undoubtedly the language of the Court often so
describes its operation. It affects him, not because it amounts to notice, but because
the law does not allow to litigant parties, and give to them pending the litigation, rights
in the property in dispute so as to prejudice the opposite party." A decree is not a notice
to a purchaser which purchases after the decree where it is merely declaratory and
inexecutable."
FRAUDULENT PARTY CANNOT
PLEAD CONSTRUCTIVE NOTICE
• A person who is himself guilty of fraud in transactions with another cannot plead that the
other had constructive notice of the facts which he was bound to disclose and which he
actively concealed from him. Thus, where a person who had a registered mortgage in his
favour obtained a decree against the mortgagor on another debt and sold the property in
execution but fraudulently concealed the fact of his mortgage in execution proceedings, it
was held that he was estopped from charging the execution purchaser with constructive
notice of the registered document.(Dhondo Balakrishna Kantikar v Rasji, 29 Bom. 290)
Similarly, it was held, that the doctrine of constructive notice by the omission of a
purchaser to call for and examine the title-deeds of his vendor, would not cover a case
where the vendor practised a fraud on the purchaser.“ (Hipkins v Amery, 66 ER 122:8WR
(Eng) 360)
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 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.