Supreme Court of India
Manjit Singh vs Darshana Devi on 21 November, 2024
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REPORTABLE
2024 INSC 895 IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO.13066/2024
(@Petition for Special Leave to Appeal (C) No.18899/2019)
MANJIT SINGH & ANR. Appellant(s)
VERSUS
DARSHANA DEVI & ORS. Respondent(s)
O R D E R
1. Leave granted.
2. This appeal arises from the judgment and order passed by the
High Court of Punjab and Haryana at Chandigarh dated 22-1-2019 in
Regular Second Appeal No.1145/1992 by which the High Court allowed
the Second Appeal filed by the original plaintiff and thereby
decreed the suit of the plaintiff granting specific performance of
oral agreement of sale of the year 1986.
3. The facts giving rise to this appeal may be summarized as
under.
4. The Respondent No.1 – herein (original plaintiff) instituted
suit for specific performance of contract based on an unregistered
sale deed dated 12-02-1986 with respect to the suit property.
5. It appears from the materials on record that the original
defendant No.1, i.e., the owner of the suit property after entering
into an agreement with the plaintiff transferred the suit property
in favour of the defendants Nos.2 and 3 respectively i.e., the
Signature Not Verified
Digitally signed by
VISHAL ANAND
Date: 2024.11.25
appellants before us by way of a sale deed dated 29-8-1986.
18:17:57 IST
Reason:
6. In such circumstances, the Respondent No.1 – herein (original
plaintiff) had to institute the Civil Suit No.27/1987 praying for
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specific performance.
7. The Trial Court allowed the suit in favour of the plaintiff.
The subsequent purchasers, i.e., the petitioners – herein (original
defendant Nos.2 & 3) preferred first appeal before the District
Court. The first appeal came to be allowed and the decree passed by
the Trial Court was quashed and set aside.
8. In such circumstances, the plaintiff went before the High
Court by way of Second Appeal under Section 100 of the Civil
Procedure Code, 1908.
9.The High Court framed the following substantial question of law
for its consideration:-
“Whether the judgment passed by the First Appellate
Court is the result of misreading and non-reading of
evidence while returning a finding that the defendant
Nos.2 and 3 are bona fide purchasers as per Section
19(b) of the Specific Relief Act, 1963.”
10. The High Court after due consideration of all the relevant
aspects of the matter recorded a categorical finding that the
subsequent purchasers, i.e., the appellants – herein could not be
said to be bona fide purchasers in accordance with Section 19 (b)
of the Act, 1963 for the reasons assigned as under.
“1. Manjit Singh-defendant No.2 in his oral evidence
admitted that defendant No.1 i.e. owner-Bishan Singh is
his uncle. It is father and the father of Manjit Singh
are co-sharers in one Khata/Khewat of land.
2. It is undisputed that husband of the plaintiff
Kishan Singh was mortgagee in possession of the
property. Defendant Nos.2 and 3 made no inquiry from
Kishan Singh with regard to title of the property which
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was normal unless there was collusion between defendant
No.1 on the one hand and defendants No.2 and 3 on the
other hand.
3. From plain reading of sale deed dated 29.08.1986
in favour of defendant Nos.2 and 3 respectively, it is
apparent that out of total sale consideration of
Rs.25,000/-, Rs.10,000/- is alleged to have already
been paid at home whereas Rs.5,000/- was paid in cash
before the Sub-Registrar and the balance amount of
Rs.10,000/- was kept as a mortgage amount for
redemption. No evidence has come on record that there
was any prior agreement to sell in favour of the
defendant Nos.2 and 3.
4. As per defendant Nos.2 and 3, they paid the amount
of Rs.10,000/- at home and Rs.5,000/- at the time of
registration. However, no evidence has been adduced to
establish that this amount was withdrawn from any bank
or from any other source.”
11. Section 19 of the Specific Relief Act upon which strong
reliance is sought to be placed has been interpreted by this Court
in “R.K. Mohammed Ubaidullah v. Hajee C. Abdul Wahab 2000 (6) SCC
402 wherein this Court held as follows:-
“14. Section 19 of the Specific Relief Act, 1963, to
the extent it is relevant, reads:
“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;
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(c)-(e) … … …
As can be seen from Sections 19(a) and (b) extracted
above specific performance of a contract can be
enforced against (a) either party thereto; and (b) any
person claiming under him by a title arising subsequent
to the contract, except a transferee for value who has
paid his money in good faith and without notice of the
original contract. Section 19(b) protects the bona fide
purchaser in good faith for value without notice of the
original contract. This protection is in the nature of
exception to the general rule. Hence, the onus of proof
of good faith is on the purchaser who takes the plea
that he is an innocent purchaser. Good faith is a
question of fact to be considered and decided on the
facts of each case. Section 52 of the Penal Code
emphasises due care and attention in relation to good
faith. In the General Clauses Act emphasis is laid on
honesty.
15. Notice is defined in Section 3 of the Transfer of
Property Act. It may be actual where the party has
actual knowledge of the fact or constructive. “A person
is said not 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 II of said Section 3 reads:
“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.”
Section 3 was amended by the Amendment Act of 1929 in
relation to the definition of “notice”. The definition
has been amended and supplemented by three
explanations, which settle the law in several matters
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of great importance. For the immediate purpose
Explanation II is relevant. It states that actual
possession is notice of the title of the person in
possession. Prior to the amendment there had been some
uncertainty because of divergent views expressed by
various High Courts in relation to the actual
possession as notice of title. A person may enter the
property in one capacity and having a kind of interest.
But subsequently while continuing in possession of the
property his capacity or interest may change. A person
entering the property as Tenant later may become
usufructuary mortgagee or may be agreement holder to
purchase the same property or may be some other
interest is created in his favour subsequently. Hence,
with reference to subsequent purchaser it is essential
that he should make an inquiry as to the title or
interest of the person in actual possession as on the
date when the sale transaction was made in his favour.
The actual possession of a person itself is deemed or
constructive notice of the title if any, of a person
who is for the time being in actual possession thereof.
A subsequent purchaser has to make inquiry as to
further interest, nature of possession and title under
which the person was continuing in possession on the
date of purchase of the property.”
12. The aforesaid decision of this Court makes it clear that
Section 19 (b) of the Act, 1963 is an exception from the general
rule and the onus is on the subsequent purchaser to prove that he
purchased the property in good faith and also bona fide purchaser
for value.
13. Section 3(2) of the General Clauses Act defines ‘good faith’ as
follows:—
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“3(22). A thing shall be deemed to be done in good
faith where it is in fact done honestly whether it is
done negligently or not.”
14. Section 2(11) of the Bhartiya Nyaya Sanhita, 2023
defines “good faith”, as follows:—
“2(11). “Good faith- Nothing is said to be done or
believed in “good faith” which is done or believed
without due care and attention;”
15. The abovesaid definitions and the meaning of the term ‘good
faith” indicate that in order to come to a conclusion that an act
was done in good faith it must have been done with due care and
attention and there should not be any negligence or dishonesty.
Each aspect is a complement to the other and not an exclusion of
the other. The definition of the Penal Code, 1860 emphasises due
care and attention whereas General Clauses Act emphasises honesty.
16. The effect of abstention on the part of a subsequent purchaser,
to make enquiries with regard to the possession of a tenant, was
considered in Ram Niwas v. Bano, 2000 (6) SCC 685. It was held in
paragraphs 16 and 18 therein as follows:
“16. The purchasers have acquired a legal right under
Sale Deed (Ext.4). The right of the tenant under Ext.1,
if it is true and valid, though earlier in time, is
only an equitable right and it does not affect the
purchasers if they are bona fide purchasers for
valuable consideration without notice of that equitable
right.
***
18. …If the purchasers have relied upon the assertion
of the vendor or on their own knowledge and abstained
from making inquiry into the real nature of the
7possession of the tenant, they cannot escape from the
consequences of the deemed notice under Explanation II
to Section 3 of the Transfer of Property Act.”The wilful abstention of the Defendants 4 and 5 to make
an enquiry or search, is writ large on the fact of the
records due to —
(i) their failure to demand the production of the
original title deeds before going ahead with the
registration,
(ii) the knowledge that they admittedly had at least
about the other encumbrances existing in the property,
and
(iii) their retention of an amount of Rs. 2.5 crores
from out of the total sale consideration of Rs.
4,11,08,000/=, specially for the purpose of settling
the claim of the Plaintiffs.
Since all the payments under Exx.A-29 to 34 to the tune
of Rs. 55 lakhs, Rs. 35 lakhs, Rs. 60 lakhs, Rs. 130
lakhs, Rs. 130 lakhs and Rs. 1.08 lakhs (totalling to
Rs. 4,11,08,000/-) were admittedly only cash payments
and also since DW-1 categorically admitted that a sum
of Rs. 2.5 crores, out of the above amount was retained
by the Defendants 4 and 5 for settling the claim of the
second Plaintiff, the Defendants 4 and 5 had a duty
cast upon them to make a search or enquiry about the
nature of such a claim. Their failure to do so,
amounted to wilful abstention leading to constructive
notice.”
(Emphasis supplied)
17. In the case reported in Kailas Etc., Works v. Munlity, B. & N.,
reported in 1968 Bombay Law Reporter 554, the Bombay High Court
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observed as follows: —
“A person cannot be said to act honestly unless he acts
with fairness and uprightness. A person who acts in a
particular manner in the discharge of his duties in
spite of the knowledge and consciousness that injury to
someone or group of persons is likely to result from
his act or omission or acts with wanton or wilful
negligence in spite of such knowledge or consciousness
cannot be said to act with fairness or uprightness and,
therefore, he cannot be said to act with honesty or in
good faith. Whether in a particular case a person acted
with honesty or not will depend on the facts of each
case.
Good faith implies upright mental attitude and clear
conscience. It contemplates an honest effort to
ascertain the facts upon which the exercise of the
power must rest. It is an honest determination from
ascertained facts. Good faith precludes pretence,
deceit or lack of fairness and uprightness and also
precludes wanton or wilful negligence.”
(Emphasis supplied)
18. The decision of the Bombay High Court referred to above was
taken on Appeal to this Court in The Municipality of Bhiwandi and
Nizampur v. Kailash Sizing Works, 1974 (2) SCC 596. While approving
the decision of the Bombay High Court, this Court held as follows:
“15. In Jones v. Gordon, Lord Blackburn pointed out the
distinction between the case of a person who was
honestly blundering and careless, and the case of a
person who has acted not honestly. An authority is not
acting honestly where an authority has a suspicion that
9there is something wrong and does not make further
enquiries. Being aware of possible harm to others, and
acting in spite thereof, is acting with reckless
disregard of consequences. It is worse than negligence,
for negligent action is that, the consequences of
which, the law presumes to be present in the mind of
the negligent person, whether actually it was there or
not. This legal presumption is drawn through the well-
known hypothetical reasonable man. Reckless disregard
of consequences and mala fides stand equal, where the
actual state of mind of the actor is relevant. This is
so in the eye of law, even if there might be variations
in the degree of moral reproach deserved by
recklessness and mala fides.
16. The Bombay, as also, the Central, General Clauses
Acts, help only in so far as they lay down that
negligence does not necessarily mean mala fides.
Something more than negligence is necessary. But these
Acts say “honestly” and so, for the interpretation of
that word, we have explained the legal meanings above.”
(Emphasis supplied)
19. The leading case on the subject, relied on in a number of
Indian decisions is — ‘Daniels v. Davison’ [(1809) 16 Ves Jun
249: 33 ER 978]. The Lord Chancellor held that:
“where there is a tenant in possession under a lease,
or an agreement, a person purchasing part of the estate
must be bound to inquire on what terms that person is
in possession … that a 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 a subsequent purchaser
10who made no inquiry as to the nature of his
possession.”
(Emphasis supplied)
20. In our opinion, no error not to speak of any error of law
could be said to have been committed by the High Court in passing
the impugned Judgment and order.
21. In the result, this appeal fails and is hereby dismissed.
22. The plaintiff may now go for the execution of the decree
passed by the Civil Court.
23. Pending applications, if any, also stand disposed of.
…………………………………………J
(J.B. PARDIWALA)
…………………………………………J
(R. MAHADEVAN)
NEW DELHI
21ST NOVEMBER, 2024.
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ITEM NO.1 COURT NO.15 SECTION IV-B
S U P R E M E C O U R T O F I N D I A
RECORD OF PROCEEDINGS
Petition for Special Leave to Appeal (C) No.18899/2019
[Arising out of impugned final judgment and order dated 22-01-2019
in RSA No. 1145/1992 passed by the High Court of Punjab & Haryana
at Chandigarh]
MANJIT SINGH & ANR. Petitioner(s)
VERSUS
DARSHANA DEVI & ORS. Respondent(s)
(IA No. 111032/2019 – EXEMPTION FROM FILING O.T.)
Date : 21-11-2024 This matter wsd called on for hearing today.
CORAM :
HON’BLE MR. JUSTICE J.B. PARDIWALA
HON’BLE MR. JUSTICE R. MAHADEVANFor Petitioner(s)
Mr. Vishal Mahajan, Adv.
Mr. Anil Kumar, Adv.
Ms. Reena Devi, Adv.
Mr. Vinod Sharma, AOR
For Respondent(s)
Mr. M.L. Saggar, Sr. Adv.
Mrs. Tanuj Bagga Sharma, AOR
Ms. Armaan Saggar, Adv.
Dr. M.K. Ravi, Adv.
Mr. Sudarshan Singh Rawat, AOR
Mr. Sskhaira, Adv.
Mr. Sunny Sachin Rawat, Adv.
UPON hearing the counsel the Court made the following
O R D E R
1. Leave granted.
2. The appeal is dismissed, in terms of the signed Reportable
order.
3. Pending applications, if any, also stand disposed of
(VISHAL ANAND) (POOJA SHARMA)
ASTT. REGISTRAR-cum-PS COURT MASTER (NSH)
(Signed Reportable Order is placed on the file)