Full Judgment Text
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PETITIONER:
M. N. DODAMANI & ORS.
Vs.
RESPONDENT:
U. S. D. WALIKAR (DEAD) BY LEGAL REPRESENTATIVES &ORS.
DATE OF JUDGMENT29/07/1980
BENCH:
GUPTA, A.C.
BENCH:
GUPTA, A.C.
SHINGAL, P.N.
CITATION:
1980 AIR 2078 1981 SCR (1) 123
1980 SCC (4) 92
ACT:
Bombay Agricultural Debtors Relief Act, 1947 Sections 4
and 25(ii)-Scope of-Notice-Section if excludes constructive
notice.
HEADNOTE:
Section 25(ii) of the Bombay Agricultural Debtors’
Relief Act, 1947 provides that nothing in section 24 shall
apply to any bona fide transferee for value without notice
of the real nature of such transfer or his representative
where such transferee or representative holds under a
registered deed executed on or before 15th February, 1939.
The predecessors in interest of the appellants
transferred two plots of land in 1927 to one Krishnaji. The
document evidencing the transfer of the plots was described
as a sale deed and contained a statement that the vendors
had absolutely sold both the said lands to him, that the
entire ownership was his "alone" and that possession had
been given to him. In 1932 and 1935 Krishnaji sold the two
plots to the predecessors in interest of the respondents at
a price lower than that paid by him when he purchased the
plots. After the coming into force of the 1947 Act the
appellants applied under section 4 of the Act for adjustment
of debts claiming that the transaction of 1927 was really
not a sale but a mortgage.
Although the trial court came to the conclusion that
the transaction was mortgage and not a sale it dismissed the
application on the ground that the respondents were entitled
to protection under section 25(ii) of the Act. On appeal the
District Judge allowed the application under section 4. In
revision, the High Court recorded a consent order that the
transaction was not a sale but a mortgage and remitted the
case to the trial court for a decision whether the
purchasers were transferees for value without notice of the
real nature of the transaction and were entitled to
protection of section 25(ii).
On remand the trial court dismissed the application
under section 4 holding that the purchasers were bona fide
transferees for value without notice of the real nature of
the original transaction. The lower appellate court reversed
this decision. The High Court set aside the order of the
appellate court and restored that of the trial court on the
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view that the purchasers had no actual knowledge or notice
of the real nature of the transaction of 1927. It also held
that the notice contemplated by section 25(ii) was actual
notice and that constructive notice was clearly beyond the
contemplation of section 25(ii).
Dismissing the appeal,
^
HELD: Construing the notice referred to in section
25(ii) as actual notice only is likely to defeat the purpose
of the statute which was enacted to provide for the relief
of agricultural debtors in the province of Bombay. Section
25(ii) does not exclude constructive notice. [126A-B]
124
In the instant case, however, the transferees had no
notice, actual or constructive, of the real nature of the
transaction of 1927. [126B]
The fact that the lands were sold to the respondents
for a price lower than what they fetched in 1927 might have
been due to various reasons and it cannot be said that this
ground alone was sufficient to raise a suspicion that the
transaction was really a mortgage. The Act of 1947 could not
have been within the contemplation of any one in 1932 or
1935 when the lands were sold. The lands were fallow and
barren. The record of rights does not contain any indication
that the transaction was a mortgage. The transferees were
put in possession of the lands. Therefore there was no
occasion or circumstance to impel the transferees to start
an enquiry as to the real nature of the transaction between
the seller and the predecessors-in-interest of the
appellants in 1927. [126F-H, 127A-B]
JUDGMENT:
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 691 of
1970.
Appeal by Special Leave from the Judgment and Order
dated 12-8-1969 of the Mysore High Court in Civil Revision
Petition No. 1322 of 1967.
S. S. Javali, M. Veerappa and J. R. Das for the
Appellant.
S. C. Javali, P. G. Gokhale and B. R. Agarwala for the
Respondents.
The Judgment of the Court was delivered by
GUPTA J.-The only question that arises for decision in
this appeal by special leave is whether the respondents
before us are entitled to relief under section 25(ii) of the
Bombay Agricultural Debtors Relief Act, 1947. The question
arises on the following facts. On June 1, 1927 the
predecessors-in-interest of the appellants transferred to
one Krishnaji two plots of land bearing survey numbers 125/1
and 136 measuring respectively 14.5 and 21.31 acres in
village Murnal, Bagalkot Taluk in Bijapur District. The
document by which the transfer was effected, described as a
sale deed, shows that the two items of property were sold
"absolutely" for a total sum of Rs. 2000/-. In 1932
Krishnaji sold the plot bearing survey No. 136 to one
Ramanna, predecessor-in-interest of respondent Nos. 2(a) to
2(e). for Rs. 400/-. In 1935, Krishnaji sold the other plot,
survey No. 125/1, for Rs. 1000/ to Utalsab Dogrisab.
Walikar, predecessor-in-interest of respondents 1(a) to
1(c). After the Bombay Agricultural Debtors Relief Act, 1947
came into force, the appellants applied under section 4 of
the Act for adjustment of debts claiming that the
transaction in 1927 was really not a sale but a mortgage.
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The trial court held that the transaction was a mortgage and
not a sale but dismissed the application on the view that
the respondents were entitled to protection under section
25(ii) of the Act. The District Judge reversed the decision
and allowed the application under section 4. The matter was
taken to the High Court in revision and the High Court
recorded a consent order that the tran-
125
saction was not a sale but a mortgage and remitted the case
to the trial court for a decision on the question whether
the purchasers, Ramanna and Walikar, were transferees for
value without notice of the real nature of the transaction
between the appellants’ predecessors and Krishnaji and as
such entitled to the protection of section 25(ii). This
order of the High Court was made on January 25, 1963. At
this stage we may mention that our attention was drawn to an
order made in the same matter by the High Court on January
31, 1962, which is reported in 1962 Mysore Law Journal 682,
that shows that the same learned Judge had set aside the
order of the appellate court and restored that of the trial
court. Counsel for both sides appeared to think that the
order made by the High Court in 1962 must have been set
aside later on review though neither of them was able to
produce the order by which the 1962 order had been set
aside. However both learned counsel agreed that for the
purpose of this appeal it is the order of the High Court
made on January 25, 1963 that need be considered. That the
1963 order held the field would be apparent from the fact
that the case was reconsidered by the trial court as
directed by the aforesaid order. The trial court on hearing
the matter after remand dismissed the application under
section 4 on the finding that the purchasers were bona fide
transferees for value without notice of the real nature of
the original transaction. The lower appellate court reversed
this decision. The purchasers then moved the High Court in
revision from the order passed by the appellate court. The
High Court by the impugned order set aside the order of the
appellate court and restored that of the trial court
agreeing with the trial court that the purchasers had no
notice of the real nature of the transaction of 1927.
Section 24 of the Bombay Agricultural Debtors Relief
Act, 1947 empowers the court to declare any transfer of land
by a person whose debts are being adjusted under this Act
purporting to be a sale, to be a mortgage if the court was
satisfied that the circumstances connected with the transfer
showed it to be in the nature of a mortgage. Section 25(ii)
provides that nothing in section 24 shall apply to "any bona
fide transferee for value without notice of the real nature
of such transfer or his representative where such transferee
or representative holds under a registered deed executed on
or before the 15th day of February, 1939". The document
evidencing the transfer of the plots to Krishnaji in 1927 is
discribed as a "sale deed" and contains a statement that the
vendors "have absolutely sold both the said lands to
Krishnaji" and that the "entire ownership" was Krishnaji’s
"alone". It is also said that possession of the lands has
also been given to Krishnaji. The High Court found that the
purchasers from Krishnaji had no "actual knowledge or
notice" of the real nature of the transaction in 1927. But
the High Court also held that the notice contemplated in
section
126
25(ii) was "actual notice" and that "constructive notice was
clearly beyond the contemplation of section 25(ii)". It
seems to us that construing the notice referred to in
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section 25(ii) as actual notice only is likely to defeat the
purpose of the statute which was enacted to provide for the
relief of agricultural debtors in the province of Bombay. We
are of the view that section 25(ii) does not exclude
constructive notice. However on the facts of the case it
appears that the transferees had no notice, actual or
constructive, of the real nature of the transaction of 1927.
It has been found that they had no actual notice; the High
Court appears to have also found that they had no
constructive notice. Referring to the provision of section
25(ii) requiring that the transferee must hold under a
registered deed executed on or before February 15, 1939 the
High Court says:
"It will be seen that the reference is to a period
anterior to the coming into force of the Act, a period
therefore during which the special provisions of the
Act could not have been within the contemplation of
anybody. If those provisions were not in contemplation
it is impossible to postulate a situation where any
given circumstance could be regarded as sufficient to
excite suspicion that the transaction might be hit by
the statute and therefore persuade people to start and
pursue further enquiries."
Mr. S. S. Javali appearing for the appellants contends that
the fact that the lands in question were transferred for a
smaller amount in 1932 and 1935 than the price Krishnaji had
paid for them in 1927 was a circumstance that should have
put the transferees on enquiry and that if reasonable
enquiries had been made they would have had knowledge of the
real nature of the transaction of 1927. The fact that the
lands were sold to the respondents for a price lower than
what they fetched in 1927 might have been due to various
reasons and it cannot be said that this ground alone was
sufficient to raise a suspicion that the transaction of 1927
was really a mortgage. As pointed out by the High Court, the
Act of 1947 could not have been within the contemplation of
anyone in 1932 or 1935. Ramappa in his deposition said that
he paid Rs.400/- for the land as it was "fallow", and that
if there were no weeds the price would have been Rs. 600/-.
As for the land sold to Utalsab, he was dead when the matter
came up for hearing before the trial court. The record of
rights also does not contain
127
any indication that the transaction of 1927 was in the
nature of a mortgage. The evidence discloses that Krishnappa
put the transferees in possession of the lands in question.
There was therefore, no such occasion or circumstance to
impel the transferees to start an enquiry as to the real
nature of the transaction between Krishnaji and the
predecessors-in-interest of the appellants in 1927.
The appeal is dismissed but in the circumstances of the
case without any order as to costs.
N.K.A. Appeal dismissed.
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