Decided on March 18,1955

Kuchipudi Balakrishnayya Appellant
Chamarthi Mallikharjuna Rao And Others Respondents


UMAMHESWARAM,J. - (1.)Plaintiffs in O.S. No. 194 and 242 of 1946 are the appellants herein. The simple question that arises for determination in the two Second Appeals is, whether the plaintiffs are not entitled to enforce the terms of security as against B schedule property in accordance with sale deeds Exs. A-1 and A-3 respectively. The sale deeds which were executed on 2-8-1928 were duly registered. It was agreed by the vendor in those sale deeds that if there was any defect in title in respect of A schedule properties, the vendee might recover loss or damages on the security of B schedule properties. In O.S. No. 104 of 1931 on the file of the Subordinate Judge's Court, Bezwada it was found that the vendor had no title to A schedule property. Consequently the present suits were filed for the enforcement of the security in respect of B schedule property in pursuance of the terms contained in the sale deeds.
(2.)The second defendant urged that he obtained a mortgage of B schedule property on 30-8-1930 and a sale deed subsequently on 5-12-1935 and that being a bonafide purchaser for value without notice, the security could not be enforced against the properties in his hands. Both the Courts below dismissed the suits holding that the 2nd defendant was a bonafide purchaser and had no notice of the security created under the sale deeds Exs. A-1 and A-3. The simple question that arises for determination in the Second Appeals is, whether, having regard to the amendment introduced to Section 3 of the Transfer of Property Act by Act XX of 1929, the contesting defendant is fixed with knowledge of the security contained in the two sale deeds.
(3.)Under Section 3, a person is said to have notice of a fact when he actually knows that fact, or when, but for wilful abstention from an enquiry or search which he ought to have made, or gross negligence, he would have known it. Explanation I added by the Amending Act in so far as it is relevant runs as follows:-
"Where any transaction relating to immoveable 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...."


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