JUDGMENT N.K. Mehrotra, J.
1. This is second appeal against the judgment and decree dated 26.2.1981 passed by the IInd Additional District Judge, Pratapgarh in Civil Appeal No. 199 of 1978 arising out of Original Suit No. 13 of 1978.
2. I have heard Shri H.S. Jain for the appellants and Shri H.G.S. Parihar for the respondents.
PLEADINGS
3. Smt. Ram Rati, the plaintiff filed a suit for specific performance of the agreement to sell the land in suit executed by Sant Bux Singh, the defendant No. 1 in her favour impleading Smt. Awadhraj and Lalta Prasad Singh, the subsequent purchasers of the land in suit by a registered sale deed executed by Sant Bux Singh, the defendant No. 1. The case of the plaintiff is that in January, 1978, the defendant No. 1 Sant Bux Singh agreed to sell the land in suit in consideration of Rs. 6,000 after receiving Rs. 1,000 as advance of the sale consideration. The rest of the sale consideration was to be paid at the time of registration of the sale deed. An agreement to sell dated 31.1.1978 was got registered and the possession was also delivered to the plaintiff. It was agreed that the plaintiff would get the sale deed executed within two months from the date of the agreement. The plaintiff sent a registered notice to the defendant No. 1 on 17.3.1978 but he refused to receive the notice and executed a sale deed in favour of the defendant Nos. 2 and 3. The defendant Nos. 2 and 3 had full knowledge of the earlier registered agreement in favour of the plaintiff and they had also knowledge about the possession of the plaintiff over the disputed land. The plaintiff has always been ready and willing to perform the agreement.
4. Defendant No. 1 Sant Bux Singh filed written statement and admitted that he had entered into an agreement to sell in consideration of Rs. 6,000 with the plaintiff and he had also received Rs. 1,000 a part of the sale consideration and had executed a registered agreement. It is alleged by the defendant No. 1 Sant Bux Singh that he asked the plaintiff to get the sale deed executed but she avoided. It is also alleged that the defendant No. 3 is a clever person and on coming to know about the existing agreement in favour of the plaintiff, he made the defendant No. 1 in confident that the plaintiff would not make the payment of remaining amount of sale consideration by getting the sale deed executed and advised him that he should go to the office of the Sub-Registrar for getting cancellation of the agreement to sell and he agreed for getting cancellation of the registered agreement in favour of the plaintiff. He accompanied the defendant No. 3 to the office of the Sub-Registrar on 17.3.1978 and signed certain papers in the office of the Sub-Registrar. He was not read over and explained the documents which he had signed in the office of the Sub-Registrar. It is also alleged by the defendant No. 1 that the sale deed was got executed without consideration and on misrepresentation by the defendant Nos. 2 and 3. It is alleged by the defendant No. 1 that he has been in possession over the disputed land throughout.
5. The defendant Nos. 2 and 3, the subsequent purchasers of the disputed land have filed separate written statement. They denied the execution of the agreement in favour of the plaintiff and ignorance about the knowledge of any such agreement executed by the defendant No. 1 in favour of the plaintiff. It is alleged that the defendant No. 1 had taken the loan from the plaintiff as well as from the State Government and the disputed land was to be auctioned for recovery of loan by the State Government. Therefore, the plaintiff requested the defendant No. 1 to secure her loan by executing a simple mortgage of the disputed land in favour of the plaintiff. The defendant No. 1 had executed a simple mortgage after taking Rs. 1,000 instead of an agreement to sell. On an enquiry the defendant Nos. 2 and 3 came to know that the plaintiff had got executed an agreement to sell instead of simple mortgage. The agreement in favour of the plaintiff is the result of misrepresentation made to the defendant No. 1 and the signatures of the defendant No. 1 were obtained on the basis of the active confidence deposed by the defendant No. 1 in favour of Ram Ujagar Singh. The value of the disputed land is Rs. 20,000 and the plaintiff has got the sale deed in consideration of Rs. 6,000 only and in this way the defendant No. 1 is being given an inequitable position and therefore, the alleged agreement cannot be subsequently enforced. The defendant Nos. 2 and 3 had got the registered sale deed along with possession from the defendant No. 1 and they are bona fide purchasers in good faith without notice.
6. The following issues have been framed by the trial court :
(1) Whether the defendant No. 1 executed an agreement to sell on 31.1.1978 in consideration of Rs. 6,000 after getting part payment of Rs. 1,000 in favour of the plaintiff, if so its' effect?
(2) Whether the defendant No. 1 had executed the deed of agreement after understanding it to be a simple mortgage which was obtained on misrepresentation?
(3) Whether the defendant Nos. 2 and 3 are bona fide purchaser for value without notice?
(4) To what relief, the plaintiff is entitled?"
FINDING OF THE TRIAL COURT
7. The learned trial court held that the defendant No. 1 had not agreed to execute an agreement to sell in favour of the plaintiff and he had not received any part of sale consideration in connection with an agreement to sell. The defendant Nos. 2 and 3 had no knowledge of the earlier agreement in favour of the plaintiff. The plaintiff has failed to prove her case. The suit was dismissed. The plaintiff filed first appeal against the judgment of the trial court. During the pendency of the appeal, she died and she was substituted by Gulab Singh and Dinesh Singh, the plaintiff-respondent Nos. 1 and 2 in this appeal. The first appellate court has allowed the appeal after recording the finding that the defendant No. 1 had agreed to sell in favour of the plaintiff and a registered agreement to sell was got executed after receiving Rs. 1,000 as part of sale consideration. The plaintiff has always been willing and ready to perform her part of agreement. The defendant Nos. 2 and 3 had prior notice of the earlier registered agreement in favour of the plaintiff before execution of the sale deed in their favour. After recording this finding, the suit of the plaintiff was decided by the first appellate court.
8. The defendant Nos. 2 and 3 the subsequent purchasers had filed this second appeal under Section 100 of the Code of Civil Procedure.
SUBSTANTIAL QUESTIONS OF LAW
9. The appeal was admitted on the following substantial questions of law :
"(1) Whether a registered sale deed made in favour of a person who is a bona fide purchaser without notice can be nullified at the instance of a person in whose favour an agreement to sell was executed by the owner?
(2) Whether a person claiming registration of a sale deed on the basis of agreement to sell is required to prove his readiness and willingness to perform his part of contract by serving notice and by depositing the balance of consideration of agreement in the Court at the time of filing the suit?
(3) Whether specific performance of contract can be claimed after execution of sale deed and handing over possession to a party or refund of money can be the only appropriate remedy?
(4) Whether registration of an agreement to sell can be termed as sufficient notice to the purchaser?
10. So far as the first substantial question of law raised by the defendant-appellants and formulated by this Court is concerned, the learned counsel for the plaintiff-respondents has argued that this substantial question of law does not arise because it is clear from the provisions of law under the Specific Relief Act that the registered sale deed in favour of the subsequent purchaser can be nullified in certain circumstances given under Section 19 of the Specific Relief Act. Section 19 of the Specific Relief Act is as follows :
"19. Relief against parties and persons claiming under them by subsequent title.--Except as otherwise provided by this Chapter, specific performance of a contract may be enforced against :
(a) either party thereto ;
(b) any other person claiming under him by a title arising subsequently to the contract, except a transferee for value who has paid his money in good faith and without notice of the original contract ;
(c) any person claiming under a title which, though prior to the contract and known to the plaintiff, might have been displaced by the defendant ;
(d) when a company has entered into a contract and subsequently becomes amalgamated with another company, the new company which arises out of the amalgamation ;
(e) when the promoters of a company have, before its incorporation, entered into a contract for the purpose of the company and such contract is warranted by the terms of the incorporation, the company :
Provided that the company has accepted the contract and communicated such acceptance to the other party to the contract."
11. Section 19(b) of the Specific Relief Act clearly provides that specific performance of a contract may be enforced against any other person claiming under him by a title arising subsequently to the contract, except a transferee for value who has paid his money in good faith and without notice of the original contract. The defendant-appellants claim their title from the executant Sant Bux Singh, the defendant No. 1 being subsequent purchaser for value without notice but there is a finding of fact after discussing the evidence on record that the defendant-appellants are not bona fide purchasers for value without notice. Therefore, I agree with the argument advanced by the learned counsel for the plaintiff-respondents that this substantial question of law does not arise in this second appeal.
12. The second substantial question of law relates to the readiness and willingness on the part of the plaintiff to perform her part of the agreement. Section 16 of the Specific Relief Act provides that the specific performance of a contract cannot be enforced in favour of a person who fails to aver and prove that he has performed or has always been ready and willing to perform the essential terms of the contract which are to be performed by him, other than terms the performance of which has been prevented or waived by the defendant. I find that no specific issue was framed on this point but there are pleadings of the parties and both the parties have led evidence on this issue also. The learned trial court as well as the first appellate court have also recorded the finding in favour of the plaintiff that she has been ready and willing to perform her part of the contract. Therefore, this substantial question of law also does not arise and there is no need to refer back to the court below to decide this issue again.
13. The third substantial question of law relates to the plea taken by the defendant Nos. 2 and 3 in their written statement. The defendant Nos. 2 and 3 have taken the plea that the value of the disputed land is Rs. 20,000 and the defendant No. 1 is being given Rs. 6,000 on the enforcement of the agreement to sell in favour of the plaintiff and he is taking an inequitable position. Section 20 of the Specific Relief Act is as follows :
"20. Discretion as to decreeing specific performance.--(1) The jurisdiction to decree specific performance is discretionary, and the Court is not bound to grant such relief merely because it is lawful to do so, but the discretion of the Court is not arbitrary but sound and reasonable, guided by judicial principles and capable of correction by a court of appeal.
(2) The following are cases in which the Court may property exercise discretion not to decree specific performance :
(a) where the terms of the contract or the conduct of the parties at the time of entering into the contract or the other circumstances under which the contract was entered into are such that the contract though not voidable, gives the plaintiff an unfair advantage over the defendant ; or
(b) where the performance of the contract would involve some hardship on the defendant which he did not foresee, whereas its non-performance would involve no such hardship on the plaintiff ;
(c) where the defendant entered into the contract under circumstances which though not rendering the contract voidable, makes it inequitable to enforce, specific performance.
Explanation 1.--Mere inadequacy of consideration, or the mere fact that the contract is onerous to the defendant or improvident in its nature, shall not be deemed to constitute an unfair advantage within the meaning of Clause (a) or hardship within the meaning of Clause (b).
Explanation 2.--The question whether the performance of a contract would involve hardship on the defendant within the meaning of Clause (b) shall, except in cases where the hardship has resulted from any act of the plaintiff subsequent to the contract, be determined with reference to the circumstances existing at the time of the contract.
(3) The Court may properly exercise discretion to decree specific performance in any case where the plaintiff has done substantial acts or suffered losses in consequence of a contract capable of specific performance.
(4) The Court shall not refuse to any party specific performance of a contract merely on the ground that the contract is not enforceable at the instance of the other party."
14. A perusal of the lower court record goes to show that the defendant Nos. 2 and 3 firstly got prepared a written statement on behalf of all the defendants including Sant Bux Singh, the defendant No. 1 but latter on probably Sant Bux Singh, the defendant No. 1 did not agree and his name was deleted from the title of the written statement but at the foot, the name of Sant Bux Singh was not scored out. The written statement filed by the defendant Nos. 2 and 3 is signed by only two defendants namely ; Smt. Awadh Raj and Lalta Prasad Singh. Subsequently Sant Bux Singh filed a separate written statement and he has not taken this plea of inequitable position as averred by the defendant Nos. 2 and 3 in para 20 of their written statement. The plea is that the defendant No. 1 is getting Rs. 6,000 instead of Rs. 20.000. This plea is open to the defendant No. 1 Sant Bux Singh and not to the defendant Nos. 2 and 3 the subsequent purchasers. The defendant Nos. 2 and 3 did not press any such issue at the time of framing of issues in the trial court and perhaps this issue has not been pressed because this plea was not available to the defendant-appellants. At the same time I find that the defendant No. 1 has not accepted that the execution of the sale deed was his conscious act. The defendant No. 1 Sant Bux Singh has pleaded that he was taken to the Sub-Registrar office for getting the cancellation of the agreement and he had signed certain papers in the office of the Sub-Registrar without knowing the contents of the documents which was going to be registered. It is worth noting that Sant Bux Singh, the executant of the agreement has not challenged the judgment of the first appellate court by filing the second appeal.
15. No doubt, the relief of specific performance is a discretionary relief and this specific performance can be refused where the defendant entered into the contract under the circumstances which though not rendering contract voidable makes it inequitable to enforce specific performance but always this plea of inequitable advantage or hardship can be taken by the executant of the agreement and it is not open to the subsequent purchaser. The only plea available to the defendant-appellants is the plea of being bona fide purchaser for value without notice as provided under Section 19(b) of the Specific Relief Act cited above.
16. The learned counsel for the defendant-appellants has argued that after the execution of the sale deed, the specific performance of a contract in favour of the plaintiff cannot be claimed because the possession was also given to the defendant-appellants. There is no evidence of possession of defendant-appellants. There is no finding of the courts below about the possession of the defendant-appellants over the disputed property. The record speaks that the defendant-appellants applied for mutation which was also refused. Section 19 of the Specific Relief Act provides that the specific performance of contract may be enforced against any other person claiming under the vendor by a title arising subsequently to the contract. So, this is a general rule of law that a contract can be enforced against any person who derives his title from a party to the contract. So, it cannot be held in the absence of proof of possession of the defendant-appellants' that the specific performance of contract cannot be claimed after execution of the alleged sale deed pleaded by the defendant-appellants. No doubt, the refund of money can be the remedy if, the discretionary relief of specific performance is refused by the Court but in the instant case the defendant No. 1 Sant Bux Singh, the executant of the agreement has not taken the plea for refund of money which he had admittedly received from the plaintiff. Therefore, this question of law is decided against the defendant-appellants.
17. The fourth substantial question of law relates to the question as to whether the defendant-appellants are bona fide purchasers for value without notice. I may again refer to the exception of the general rule given in Section 19 of the Specific Relief Act. This exception has been created in Section 19 of the Specific Relief Act in favour of the bona fide transferee without notice. The burden of proving this exception is on the party pleading it. Here, in the instant case, the defendant-appellants are pleading that they are the bona fide transferees for value without notice. In order to challenge the finding of the lower appellate court ; the defendant-appellants have raised this contention. The learned first appellate court has recorded a finding that the agreement in question executed in favour of the plaintiff is a registered document and the defendant-appellants have not made any enquiry before getting the sale deed executed from the office of the Sub-Registrar about the title over the disputed land. The first appellate court has referred the admission of the defendant No. 2 Lalta Prasad Singh in which he has stated that he had not made any enquiry before the execution of the sale deed. It has been argued that the registration of the agreement cannot be said to be sufficient notice to the purchaser. This contention has no force of law. For this purchase, I may refer the interpretation of a phrase "a person is said to have notice" given under Section 3 of the Transfer of Property Act, 1882 which is as follows :
" 'a person is said to have notice' of a fact when he actually knows that fact, or when, but for wilful abstention from an inquiry or search which he ought to have made, or gross negligence, he would have known it.
Explanation 1.--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 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 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 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 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."
18. The Transfer of Property Act, 1882 contemplates three kinds of notice ; (i) actual notice, (ii) constructive or implied notice and (iii) notice to an Agent. Notice includes both actual and constructive notice. The legal presumption of knowledge of notice arises from (a) a wilful abstention from inquiry and search ; (b) gross negligence ; (c) omission to search registration in the register kept under the Registration Act ; (d) Actual possession and (e) Notice to Agent. (See Ram Saran and Anr. v. Kuriamal and Ors., 1988 ALJ 1288). The person who is bound to make an inquiry and fails to do it should be held to have notice of all facts which would have come to his knowledge had he made the inquiry. Where a document has been registered a person would, as a matter of law be deemed to have notice in the circumstances and to the extent mentioned in the Explanation / to Section 3 of the Transfer of Property Act, 1882 cited above. It has been held by the Supreme Court that if, there is a charge on immovable property by registered instrument, the subsequent transferee will have notice of charge (See M.L. Abdul Jabbar Sahib v. H. Venkata Sastri and Sons and Ors., AIR 1969 SC 1147). Therefore, in view of the aforesaid legal proposition of law, I hold that the registration of an agreement to sell can be termed as sufficient notice to the purchaser in the circumstance when the subsequent purchaser himself admits that he had not made any enquiry before getting the sale deed executed from the vendor. The question as to whether the finding whether the defendant-appellants are bona fide purchaser for value without notice or not? is a finding of fact or law? Here, in this case when the defendant-appellants have not made any enquiry, there is a legal presumption of knowledge of notice arising from wilful abstention from enquiry and search. There can be a case of constructive notice and in that case, it will be a question of fact.
19. In view of the above, I hold that the learned first appellate court has not committed any legal error in holding that the defendant-appellants have not been able to prove that they are the bona fide purchasers for value without notice.
20. Accordingly, the second appeal has no force. It is dismissed with costs to the plaintiff-respondents.