CONCEPT OF

NOTICE

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 TABLE OF CONTENTS

Sr. No. Title Pg. No.

1. Introduction 2-3
2. Actual or Express Notice 4-5
3. Constructive Notice 6-14
4. Importance Of Notice 15
5. Bibliography 16

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 INTRODUCTION

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 him1. The last paragraph of the section 3 states under what
circumstances a person is said to have notice of a fact. He may himself have actual
notice or he may have constructive notice may be imputed to him when
information of the fact has been obtained by his agent in the course of business
transacted by the agent for him.

DEFINITION

According to Transfer of Property Act 1882 "A person is said to have notice of the
fact -

 When he actually knows that fact {i.e. Actual notice} or

 When but for-
1. Willful absenteeism from an inquiry or search which he ought to have
made, or
2. Gross negligence
He would have known it.

1
Sinha Dr. R.K., The Transfer of Property Act, Central Law Agency, 2011

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Notice may either be

(i) Actual i.e. express notice

(ii) Constructive notice

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 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 of certain other facts.
Express notice is binding on a person only under certain conditions. Following
conditions are necessary for an express notice.

(i) The knowledge or information must be definite. It must not be hearsay or

rumors. If a person comes to know about certain facts by way of rumors or through
casual conversation between some persons, this knowledge is not legal because no
person is bound to take notice of rumors. 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 apprehension of the nature of the
thing, there is no notice. Every notice means knowledge of a fact but every
knowledge is not treated as notice.

(ii) Only the knowledge of the parties interested in the transaction is actual notice
regarding that transaction. Knowledge or information of any other person who is
stranger for that transaction is no notice.

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(iii) The Knowledge or information must be about or related to the transfer in
question. Knowledge of something which is not relevant for a transaction cannot
be taken to be actual notice for that transaction.2

2
Sinha Dr. R.K., The Transfer of Property Act, Central Law Agency, 2011

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 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 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 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 of the Courts or legal presumption. Legal presumptions
cannot be denied or controverted. Constructive notice is a legal presumption and is
like a provision of law the knowledge (notice) of which cannot be denied by any
person. It is a matter of law which cannot be rebutted or disproved.

Constructive notice is, therefore, imputed to or imposed upon a person under legal
presumptions. The legal presumption of constructive notice is taken by the Court
under the following circumstances:—

(i) Willful absenteeism from an inquiry or search -

Willful absenteeism from an inquiry of 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 absenteeism 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
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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
absenteeism in this section has been construed to mean want of bona fides as
distinguished from mere omission to make enquiries. Therefore, a person who
refuses to take a registered letter shall be imputed with constructive notice of its
contents and he cannot take the plea that he does not know its contents.

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. 3 If a person is
purchasing certain immovable property and the seller has shown him the title deeds
mentions 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 of the conditions. If a
purchaser omits to inspect a title deed, although he will actually not be able to
know its contents but the Court shall presume that he knows all the facts given in
the deed. The presumption of the Court in such a circumstance would be that the
person imputed with notice has designedly or purposely abstained from inquiring
into the contents of the deed with the intention of avoiding to take its notice.

For example-

(a) A registered letter was seat 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.

3
Mulla, Transfer of Property Act, LexisNexis Butterworths, 2013

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(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.

It may be noted that instances of gross-negligence and 'Willful absenteeism 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. If
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
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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.

Lloyds Bank Ltd. V. P.E. Guzder & Co. is a case in which g. deposited the title-deed
of his property with a bank N to secure his overdraft. This was, therefore, mortgage
by deposit of title-deed in which the only security of repayment of loan was the
possession of the deed by the person who gave the money. After sometime G asked
the Bank N thath he was intending to sell the property and the purchaser wants to
see the title-deed and after inspection of the deed by the 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 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 the bank L.

It was held that since this mortgage by deposit of title-deed in which the only
security for the repayment of loan is the possession of the 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,
mortgage of bank N was postponed to Bank L.

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(iii) Registration as Notice —

The doctrine of constructive notice applies also in case of documents which are
required by law to be registered. Much controversy once existed on the question
whether registration of any document relating to immovable property was itself a
notice of the said document and its contents.

In the case of Tilakdhari v. Khedan lal the Privy Council had held that there is no
general rule of law applicable in all the cases that registration amounts to notice;
whether registration is notice or not depends upon the fact of each case. But in
India since Registration Act provides compulsory registration of certain
documents, therefore, this decision was found 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. The order said that registration may be treated as constructive notice of
its contents.

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 compulsory. 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.
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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.

(iv) Actual Possession as Notice of Title-

Actual possession of an immovable property is regarded as constructive notice of

such title which the person in possession may have. Explanation II to Section 3
provides that any person acquiring any immovable property shall be deemed to
have notice a title, if any, of any person who is for the time being in actual
possession

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.

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.

Illustration-

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(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.

(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 HI under the Amending
Act, 1929. Notice to an agent is also called as imputed notice. It is called imputed
notice because if a person authorizes someone 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 even
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 L such circumstance
would be imposed or imputed on him. The reason for this rule is that if it is 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 1872 which
runs thus:

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"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."

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 or 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.

(d) Notice acquired by an agent must be relevant or material to the transaction.

(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.

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Exception:

Fraudulent concealment of fact by agent- The knowledge of an agent will not be

imputed to his principal if the agent fraudulently conceals the facts. It is not
sufficient to show that the agent concealed the fact. It must be shown that the party
charging the principal with notice was party to the fraud or otherwise knew of the
fraud.
In Arumilli Surayya v. Pinisetti Venkataramanamma, it was held that Sec. 100 of
the Transfer of Property Act does not apply to auction sales because the transfer
within the meaning of the Transfer of Property Act does not include an auction
sale. It was added that the position of a purchaser at an execution sale is the same
as that of the judgment -debtor and his position is somewhat different from that of
a purchaser at the private sale. 4

In the case of Taxas Co. Ltd. v. Bombay Banking Co. A was employed as agent of
both the companies i.e. the Texas 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 Texas Company. The Texas Company claimed that
the knowledge of the ownership of the money used for the payment of the
overdraft should he imputed to the Banking Company. It was held by the Privy
Council that since the agent A has committed fraud, knowledge of ownership of the
money used for payment of his private obligation (debt) cannot be imputed to the
Banking Company.

Partners.—Partners of a firm are agents of one another. Accordingly, notice of a

fact to partner with regard to the business of the firm is imputed notice to the firm.

4
http://mayank-lawnotes.blogspot.in/2007/01/transfer-of-property.html

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 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 defect and the transfer is void. Under a void transfer of
property the transferee cannot get any interest. But, if it could be proved that
transferee was a transferee for 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 of
notice are given in Sections 40, 41, 53, 53-A. It may be noted that the doctrine of
constructive notice is applicable also against the Government.

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 BIBLIOGRAPHY

 Sinha Dr. R.K., The Transfer of Property Act, Central Law Agency, 2011
 Mulla, Transfer of Property Act, LexisNexis Butterworths, 2013
 http://mayank-lawnotes.blogspot.in/2007/01/transfer-of-property.html

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