Author : Saurav Agarwal, Student at University of Petroleum and Energy Studies.
Co-Author : Pratyaksha, Student at University of Petroleum and Energy Studies.
The word ‘Notice’ which means knowledge of a fact. Section 3 of the Transfer of Property Act, 1882, specifies three kinds of notices that is actual, constructive and imputed notice. “A person, therefore, is said to have ‘notice’ of a fact when he actually knows that fact or when but from wilful abstention from an enquiry or search or gross negligence, he ought to have known it.” This project would aim at understanding the concept, origin and relation of justice with law. But apart from that it would also be extended to the applicability of justice in today’s time, does it still stand as important as it used to at the time of origin of law. In this research paper, we shall majorly study the meaning of notice, actual notice, constructive notices, and instances where the very specific courts presume the knowledge of the Facts. Constructive Notice is a kind if notice which treats a person who ought to have known a fact as is if he crummy knows that presume notice has roughly been defined as a knowledge which the court imputes to a person upon a presumption that is so strong that it cannot be rebutted that the very knowledge must be obtained. In short, the doctrine of the Constructive knowledge is that of a person who is bound and to make an inquiry and fails to do it, should be held that to have notice of all the facts, which would have come to the very knowledge had he made the very inquiry.
The concept that is the Doctrine of Notice for the purpose of The Transfer of Property Act is given under Section 3 of Transfer of Property Act, 1882 (TPA). Notice which means to have knowledge of something i.e. to know about something. In law, it means knowledge of a fact which is used to decide on some conflicting claims of two parties. In legal arena, the Notice or the Knowledge of a fact generally affects one’s legal rights and liabilities.
Under Section 3 of The Transfer of Property Act, Notice can be “Actual or express Notice” or “Constructive Notice”, or it may be imputed to these called transferee when information of the fact has been obtained by his particular Agent. As we all very well know that notice is an alert or a kind of information which has been given or particularly informed to the person or the group of persons there by. The notice is served either to public at large or to an individual person. The notification is a data which is given lawfully or typically hand it over to individual or gathering of people to give data about a specific data or a notification which is given legitimately is bring which is a lawful notification by the court to an individual informing that the person must be available or show up before the court as the bring is given to the litigant in the suit documented against him by the offended party. Notice is for the most part determines the data with respect to any subject or any sort of information which is to be spread to all the individuals there by. Along these lines, the fundamental concentration or primary territory is the Doctrine of Constructive Notice. This convention is the rule of assumption of the information on that specific subject or data according to law. It is been assumed that you have information or you realize all the data with respect to the Articles and Memorandum of the organization to the untouchable to the organization. Update and Articles of each organization is enlisted with the recorder of the companies. The office of the recorder is a public office and the reminder and articles of the organization which is been obviously expressed on each site of the organization which each individual can undoubtedly experience it with no charges or any methodology to experience along these lines, notice and articles are known as the public reports which is effectively available and each one can admittance to it prior to managing the specific company. It is consequently the people obligation to assess every single archive and explanation of the organization. To think well about the organization’s inclinations or the limit of contracting which bargain they contract in or in which they not. So, it is simply the essential obligation to protect by perusing and experiencing every single proviso and the public reports of the company. In Law it is as of now been informed that some data you have been experienced which is been assumed that you have the information on that specific data. In the Indian Contract Act, 1872 there was a Latin maxima Ignorantia juris non excusatâ which implies ignorance of law isn’t a reason and it is assumed that you have the information on law.
Notice Is of Two Types-
- Actual Notice
- Constructive Notice
There are various kinds of presumptions which was there is Constructive notice which are required to be present before entering into any type of contract like Willful assentation from an Enquiry or search, Gross Negligence, Registration as a Notice, Actual Possession as a notice and Notice to Agent.
Constructive notice as elaborately explained above reflects the understanding of notice to be of much wider import than mere knowledge of a fact. Thus, purchasers will be deemed to have notice of earlier ‘agreement to sell’ should it be found to be true and valid.
STATEMENT OF PROBLEM
The problem which is highlighted in the project and is intended to be covered in this project is to understand the meaning and concept of doctrine of constructive notice. As we all know that notice is an alert and a kind of information which is always been given or informed to the person or the group of the persons there by. The notice is served either to public at large or to an individual personality. This topic has been chosen cause of the closely related concept yet having its own role to play in the legal system of a country to be discussed with the help of relevant case laws.
IDENTIFICATION OF ISSUES
- Meaning of doctrine of constructive notice
OBJECTIVE AND SCOPE OF RESEARCH
The objective of the project is to analyse the widely interpreted term doctrine of constructive notice, relevancy and applicability of it in our legal system. The scope of research would be extended to India mainly by taking relevant case laws and wherever important show the difference with western justice system too. The project would be incomplete without proving some critics along with some possible solutions.
This is a doctrinal research which analyses the case laws. This type of research is also known as pure theoretical research as secondary data is taken from books and various websites. Research would include the study from various articles, law and medicine as well several preceding cases which turned out to be landmark cases.
WHAT IS CONSTRUCTIVE NOTICE?
According to Section 3, a person is said to have notice of a fact, which he would have known, but for his “gross negligence” or “wilful abstention from making an enquiry or search” does not know. However, it is such knowledge which a person with ordinary prudence ought to have known. In other words, constructive notice of facts are those facts which a person ought to have known, but because of gross negligence or wilful abstention does not know assentation in Constructive notice, there is a legal presumption, that a person should have known a fact as if he actually knows it. Therefore, Constructive notice is knowledge of those facts which a court imputes on a person. If the circumstances indicate that a reasonably prudent person ought to have known a particular fact related to the transaction of transfer, then he will be deemed to know it.
In the Very famous case of Bipin v Priyabrata, , the Court observed that “Constructive notice is the knowledge which the court impute to a party upon presumption so strong that it cannot be allowed to be rebutted that knowledge must have been communicated.” The court presumes that there was knowledge of the fact to the person before entering into a contract in the following case.
Illustration: A who sells the house by a registered document to B. B, then later enters into a contract with C to sell him the same very 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. A’s failure to inspect the register will be detrimental to the interests of C, whereas he would be imputed with the constructive notice of the same registered transaction.
The court basically presumes that there was knowledge of the fact to the person before entering into any type of contract in following cases :
1). Willful absentation from an Enquiry or search
The words ‘willful abstention’, both cognizant and intentional are imply abstention from request or search which a judicious individual would have in any case needed in a real exchange. We can also say that an individual is to be fixed with valuable notification for having kept away from making a request which he should have made.
It very well might be noticed that the ‘wilful abstention from inquiry’ must hold a reason or configuration to intentionally evade an inquiry which would have prompted a definitive information on the reality. For example, if a prudent buyer to not miss the deal of a property deal willfully swears off looking for complete information about the restrictive rights and just depends on a change entry (in the land records), he neglects to do the vital and will be presented with a productive notification if there should be an occurrence of a question.
In Kausalsi Amal v. Amal; it was held that the utilization of the word ‘willful’ in the definition shows that the abstention from inquiry should be planned and because of a craving to evade an inquiry which would lead him to extreme information. It means such abstention from inquiry, as would show need of bona fides.
Illustration- A proposes to offer his property to B who, simultaneously realizes that rents due in regard of the property are paid by the inhabitants to a third individual C, whose receipt is conflicting with the title of the seller, B will be fixed with notice of the privileges of C, and if B keeps away from indicting his requests, his lead will add up to willful abstention.
2). Gross Negligence
The doctrine of constructive notice applies where a reasonable individual, because of his gross carelessness neglects to know about a reality. Carelessness implies exclusion to accept such consideration as a normal or prudent individual would have taken. Gross carelessness is a more significant level of such disregard. “Gross carelessness doesn’t mean simple carelessness yet implies heedlessness of so exasperated a nature as to demonstrate a disposition of mental lack of interest to clear dangers.” Hudston v Viney.
Jones v Smith, it isn’t obligatory that the party submitting gross carelessness is a functioning member of fraud. Fraud implies dynamic deceitfulness while carelessness implies unwillingness. The court held that the level of Gross carelessness is higher enough for it to be treated by an official courtroom as proof of misrepresentation, credit a deceitful thought process to it and visit it with the outcomes of extortion, notwithstanding the chance of the party being entirely honest.
Llyod Banks Ltd. v P.E. Guzdar and Co, for this situation an individual (A) saved title-deeds of his home with the bank to make sure about credit. Consequently, he spoke to the bank that he wished to offer house to clear the advance, and the expecting buyer needed to see deeds. The bank didn’t follow the typical methodology of conveying the deed to their specialists to deal with the arrangement, as A said that he would not get a great cost if the buyer came to realize that the bank had the deeds, where upon the bank restored the deeds to him. A mortgaged his home to another bank by saving title-deeds with it. Held that the bank is blameworthy of gross carelessness in giving up the title deeds to ‘A’.
Likewise, in Imperial Bank of India v U. Raj Gyaw, where a buyer was educated that the title-deeds were in control of a bank for safe authority and overlooked to make any request from the bank, it was held that he was blameworthy of gross carelessness and was regarded to have notice of the privileges of the bank which had the guardianship of the deeds.
3). Registration as a Notice
Registration basically serves in as notice under the Transfer of Property Act at whatever point any individual neglects to ask about a legitimate instrument/exchange that should have been enlisted. Any exchange identified with immovable property is affected by a registered document, to be a lawfully adequate exchange. In the event that any party neglects to ask registration, he should be presented with a constructive notice.
All together that registration of an instrument may work as a notification of its substance, the following three conditions must be fulfilled:
(1) The instrument must be necessarily registrable. Accordingly, registration is notice just where the instrument is needed to be registered necessarily, and not where the registration is discretionary.
(2) The registration of the document must be finished in the way recommended by the Indian Registration Act.
(3) The instrument (or its memorandum) and the points of interest with respect to the exchange to which it related must be effectively entered in the registers and files kept under the Registration Act.
At the point when a document is registered, it turns into a public record and any individual procuring interest in a property can and should affirm the title of individual by taking a looking at documents in Registrar’s office. For example, A offers the house by registered document to B. He later goes into an agreement with C to sell him a similar house. Law forces an obligation upon C to review the registers at the Registrar’s office, and in the event that he does that, he would come to think about the deal for B. Inability to review the register will be detrimental to the C’s advantages, as he would be credited with useful notification of the registered transaction. It is likewise a consistent result that if such registration is inappropriately done, or if the records are not appropriately kept up, an individual couldn’t have discovered regardless of whether he made a request. In such case, notice can’t be attributed to him. Consequently, any place, registration of a document isn’t required however just an alternative, registration would not work as a constructive notice.
In Backer Khoransanee v Ahmed Ismail , it was held that however the home loan deed is registered, it being a subject of movable property whose registration isn’t mandatory, the registration doesn’t add up to constructive notice. For example, A mortgages loans her gems to B, through a registered deed and later offers it to C for full thought. In spite of the fact that the mortgage deed is registered, it won’t add up to constructive notice as registration of movable property isn’t mandatory.
4). Actual Possession as a notice
Actual Possession, i.e.de facto possession, of property by another must put the buyer of such property wary. Ownership, thusly, sums to notice of title in another. It is, along these lines, set out that any individual procuring any steadfast property is regarded to have notice of the title (assuming any) of any individual, who is for the time being in genuine belonging thereof.
In Abdul Mazid v B Ahmed , the defendant landlord rented out suit property to the plaintiff on lease. Afterward, the defendant went into a concurrence with the plaintiff to offer the suit property to him; got a development and consented to execute a sale deed. The possession was conveyed to the offended party however the deed was not executed. The defendant in the then offered the property to different defendants, and subsequently a suit for specific performance of the contract was documented.
It should be noticed that notice isn’t reached out to possession which is just of a constructive nature, as it would be an excessive amount to anticipate that a man should discover each conceivable individual who however not on the spot, but rather may be on it from behind.
5). Notice to Agent
The Doctrine of Imputed notice depends on the maxim Qui facit per alium facit per se i.e. for example he who does by another does without help from anyone else. Notice through Agency is characterized in Explanation III to Section 4 of the Transfer of Property Act. For such notice to emerge the following conditions should be available:
(i) Notice ought to have been received in his ability as agent– for example while following up in the interest of the head. In re David Payne and Co. an organization acquired inside it getting powers however for a reason not approved by its notice of affiliation. The security in the possession of the loaning organization in such a case would be invalid just on the off chance that it had information or notice of the way that the cash would be applied for an ill-advised use. The inquiry was whether loaning organization knew about the reality before the obtaining organization had applied for the credit. It was held that this information couldn’t be ascribed to the organization in light of the fact that the chief didn’t then maintain to follow up for the loaning organization.
(ii) Notice more likely than not been given throughout organization business – Notice ought to have been gotten over the span of the office business. In Chabildas v. Dayal Mawzi, property was sold under an intensity of offer in an English home loan. A depreciatory condition was presented in the agreement of offer. After the deal was finished, the buyer educated a specialist to represent him in the planning of the movement. The specialist realized that the title was acceptable and that the depreciatory condition was not advocated. The Bombay High Court held that the buyer was influenced with valuable notification of the genuine condition of title. Switching the choice Sir Arthur Wilson conveyed the judgment of the Privy Council noticed:
“Till the agreement of offer was marked, the lawyer was not representing the buyer. The main thing wherein he did so act was the ensuing readiness of the movement. The perspective on the Court of allure ascribes to the essential the information on a specialist not obtained in the issue for which he was specialist and utilized it to agitate an exchange of a date before the office initiated. This is an augmentation of the regulation of helpful notification wherein their Lordships agree.”
(iii) Notice must be of a reality which is material to the Agency Business – The notification should be of an issue material to the organization business. In Wyllis v. Polien, a task of a home loan was affected through the mortgagee’s specialist. The specialist realized that there was another encumbrance on the property. That reality not being material to the exchange of task, no notification could be credited to the appointee of the mortgagee. Ensuing advances made by him to the mortgagor were, consequently, held to be unaffected by notice to the middle of the road contract.
(iv) Fraud by a specialist – In English law where a specialist is liable of misrepresentation and has an interest in disguising the information from the head and does so hide it, the overall standard that notice to specialist is notice to chief doesn’t make a difference and the chief isn’t to be ascribed with notice of the extortion. This special case will apply with more prominent power where the gathering looking to help the tenet of useful notification is a gathering to or is insightful of the extortion. In Sharpe v. Foy, S, progressed cash on a home loan executed in support of himself by F, the exchange being haggled by C, a specialist’s representative who represented the two players. It gave the idea that there was a past settlement influencing the land contained in the home loan and F had conveyed that reality to C. C, nonetheless, disclosed to F that he would not impart it to S, as it would make him anxious and cause him to waver about propelling cash. It was held that when C wouldn’t convey the reality to S, it was simply the obligation of F to impart it to S, that by his inability to do so F must be viewed as involved with what added up to a misrepresentation submitted by C upon his customer S and that “If it somehow managed to be held that notice given under these conditions was official upon the head, it would add up to looting the individual who best in class the cash.” A comparative view was taken in Cave v. Cavern.
In acquainting the stipulation with Explanation III, by the Amending Act XX of 1929, the Legislature appears to have withdrawn somewhat from the English Law as expressed above under the stipulation, notice even to a specialist who falsely hides his insight from the head, will be notification to the chief besides against an individual who is a gathering to or in any case conscious of the misrepresentation.
Thus, it can be very well said that the Constructive notice is a particular manifestation of the rule of the Caveat Emptor which means Let the buyer beware. This is because according to the Constructive notice, a person ought to have known some fact as if he actually does know it. It presupposed that in the property translation a transferee is ought to ascertain and verify certain facts for safeguarding his own very interest. Thus, he must be aware of the nature of the transaction done. These facts may relate to the property or 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. If the property is encumbered, then the exact very nature of the encumbrance ought to be ascertained by the particular transferee.
Law puts it as the prime duty of the transferee, as a very reasonably prudent person to be reasonably vigilant and diligent to ascertain some of the facts, inspects the documents relating to the property which are in possession of the transferor, inspecting some concerned persons, even with relevant statutory authorities, if required. Failure to do this would definitely result in the imposition of Constructive notice.
The Courts in India should be cautious about applying the English choices on valuable notification to this nation, and ought to do so just when the conditions are truly comparative. The instances of Daniels v. Davisons and Barnhart v. Greenshields, just as different cases are openly cited and applied by Indian Courts, and the outcome is that the tenet of helpful notification is conveyed to incredible lengths. At the point when the Indian Courts apply the rule that a man has notice since, in such a case that he had made sensible requests he would have discovered current realities and in the event that he has not learned the realities he has been blameworthy of gross carelessness the Court should cautiously respect all the conditions of the case and of the individuals to whom the Courts will apply the standard.
 AIR 1921 Cal 730
 (1921) 1 Ch. 98
 (1841) 1 Hare 41
 (1929) 56 Cal 868
 (1923) 50 IA 283
 AIR 1928 Rang 28
 AIR 1930 Gau 44
  2 CH 608
 (1907) 9 BOMLR 1062
 2001 SCC 2
 (1809) 16 Ves 249
  UKPC 27