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PETITIONER: DATTATRAYA SHANKER MOTE & ORS.

       Vs.

RESPONDENT: ANAND CHINTAMAN DATAR & ORS.

DATE OF JUDGMENT03/10/1974

BENCH:

ACT: Transfer  of  Property Act (4 of 1882)  s.  100,  proviso-If protection  is  afforded to a  simple  mortgagee.-Compromise decree creating charge, if covered by s. 100-Transferee  for consideration if includes mortgagee--In the hands of meaning of-Lis pendens applicability,.

HEADNOTE: The appellants filed a suit for the recovery of a money debt against  the respondents.  The suit was compromised  and  by the  compromise  decree  three  items  of  the  respondent’s property  were sought to be charged.  The compromise  decree was  presented  in the Registrar’s office and was  noted  in Book  No. 1, but, due to the negligence of that office  only the charge on one item of property was specifically recorded in  the  registers  mentioned  in  s.  51  and  the  Indices mentioned in s. 55 of the Registration Act.  The appellants, after  realising  some  money by the sale  of  the  item  of property  with respect to which the charge was  specifically recorded  in  the  Registrar’s office,  filed  on  execution application for the recovery of balance of money by the sale of  one of the items of property with respect to  which  the Registrar’s  office  had  not  recorded  the  charge.   That property,  in the meanwhile, was mortgaged under two  simple mortgages.   The mortgagee, claiming to be ignorant  of  the prior  charge,  objected to its sale in the  execution  pro- ceedings initiated by the appellants; but his objection  was overruled and the property was sold in execution. The  mortgagee under the two simple mortgages field  a  suit for  recovery  of  the  amount due to  him.   The  suit  was dismissed  by the trial court on the ground that  though  he had no actual or constructive notice of the charge in favour of  the  appellants, yet, the charge had priority  over  the subsequent  mortgages  and  could be  enforced  against  the mortgagee   in  as  much  as  a  simple   mortgage   without possession, did not give the mortgagee the protection  given by the amended proviso to s. 100 of the Transfer of Property Act,  1882,  which  provides  that a  charge  shall  not  be enforced  against any property in the hands of a  person  to whom  such property has been transferred  for  consideration and without notice of the charge. On  appeals against the order arising out of  the  execution application  of  the  appellants and  against  the  judgment dismissing the mortgagee’s suit, the High Court held against the appellants on the ground that the mortgage in favour  of the respondent was protected under the proviso to s. 100 and was free from the charge in favour of the appellants. In  appeals  to  this Court, on the  question  of  competing priorities  between a charge created by the decree  and  the subsequent simple mortgage,

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HELD (Per Curiam) : The appeals should be dismissed. [243 D- F-;258 C] (Per Jaganmohan Reddy and Alagiriswami, JJ:) (1)  The  charge  created  by the terms  of  the  decree  is covered  by  s. 100 of the Act.  A  compromise  decree,  not being  the  result  of  a decision  by  the  court,  but  an acceptance  by the court of something to which  the  parties had agreed, if it creates a charge on immovable property and is  duly registered, it amounts to the creation of  security by  act of parties within the meaning of s. 100 of the  Act. [232 B-C] (2)  The finding of the courts below that the mortgagee  had no notice actual or constructive of the prior charge created by the decree is correct. [231 E-C] (a)  It  was  an admitted position that even  on  a  careful inquiry the mortgagee would not have known that the property was  charged  in favour of the appellants, in  as  much  as, neither the property cards nor the municipal records nor the indices  contained  a reference to the charge  on  the  suit property.  If the property 225 which  a person wants to purchase or which is being  offered to  him as mortgage or security for payment of any money  is shown  in Index It then he would have notice of such  charge or  mortgage  and may wish to further  probe  by  inspecting Index I and Book 1. Merely inspecting Book  or Index I  will not  benefit him because all he can know is that there is  a decree  that has been registered which would not be  helpful to him. [230 H-231B, C-D] (b)  The proviso to Explanation 1 to s. 3 of the Transfer of Property   Act,  provides  that  in  order  to   amount   to constructive notice it is necessary (i) that the  instrument has  been registered and its registration completed  in  the manner required by the Registration Act; (ii) the instrument has been duly entered or filed in books kept under s. 51  of the  Registration Act; and (iii) the  particulars  regarding the  transaction to which the instrument relates  have  been correctly  entered  in  the  indices kept  under  s.  55  of Registration  Act.  In the instant case constructive  notice cannot be imputed to the mortgagee since the third condition required for the purpose was not satisfied. [231 D-F] (3)  The protection in the. proviso to s. 100 does not apply to  mortgages.  In order to make it applicable it has to  be shown that, (a) the property against which the charge is  to be enforced has been transferred for consideration; (b)  the transferee  had  no  notice  of the,  charge,  and  (c)  the property  which is the subject-matter of the charge,  is  in the  hands  of  the person to whom such  property  has  been transferred. [236H-237B] (i)  The  words "transferred for consideration  and  without notice of the charge" have never been used for describing  a mortgage  whether it be a simple mortgage or  mortgage  with possession.   This expression has always been understood  to describe  a sale and in antithesis to a transfer by  way  of gift.   Throughout the Transfer of Property Act  whenever  a transfer   of   property   is  referred   to   without   any qualification it is to the transfer of all the interests  in the  property.  Thus the ’transfer of property’ referred  to in  s. 100 is the transfer of the whole property and  not  a mere  interest in or over the property like mortgage,  lease etc.[234 F-H; 236 B-E] Under  English  aw,  the  expression  ’purchaser  for  Value includes  a mortgagee.  Before the Transfer of Property  Act came  into  force  whenever  any  expression  came  up   for consideration,  in  the absence of any  specific  definition

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under  the Indian statutes, the meaning assigned in  English law  seem- to have sometimes been applied in a general  way. The  usage  of any term conveying a  particular  meaning  in English Law and which subsequently has been incorporated  in the  definition  of  statutes in  England  cannot,  on  that hypothesis, be imported as if that word has the same meaning under  the  Indian Law when our statute-,  adopts  different connotations.  After the Act has come into force, if the Act intended to convey that a has an absolute title it has  used the word ’buyer’.  Through in the marginal note in s. 56 the word  ’Purchaser’ has been used, an analysis of the  section shows  that the legislature has used  different  terminology for  connoting different concepts aid that it has  used  the word  ’purchaser’ as synonymous with ’buyer’  and         is not  including the mortgagee or mortgagor or a lessee of-  a lessor as in English     Law. [237C.  E-G; 238A-B-G] (iii)The  expression ’in the hands of’ in the proviso  is  a figurative  expression  and  is intended to  convey  that  a person has sufficient control over the subject matter  ,  to enable  him to do anything with it which the nature of  that subject  matter would permit.  It is a  multifaceted  phrase connoting  many meanings depending on the context.   In  the context  of  the  saving clause in s.  100  the  phrase  was intended  to  convey and does convey that the  buyer,  as  a transferee for consideration without notice of a charge, was in  possession, including constructive possession through  a tenant  who  has  attuned to him and  that  the  vendor  had conveyed  to  him all his right. title and interest  in  the property  including  possession.  If the  intention  of  the Legislature  was  to make the proviso applicable even  to  a mortgage,  there was no need for it to have used  the  words ’in  the  hands of a person to whom such property  has  been because,  even if’ the proviso is Teal without these  words, the effect sought for would ensue. [234 D-E; 239 C-T), E-G] Arumilli  Surayya  v.  Pinisetti Venkataramanamma  and  ors. A.I.R. 1940 Mad. 701, referred to. 16-L251 Sup.CI/75 226 (4)  The  question  of  priority  between  a  charge  and  a mortgage  cannot be decided with reference to s. 48  of  the Transfer of Property Act, because, that section deals with a case  of  transfers  of  interest in  respect  of  the  same immovable property created at different times while a charge is  not  a  transfer of an interest  in  or  over  immovable property.  In fact, the proviso to s. 100 was amended to get over the effect of certain decisions which have held that  a charge was valid even against a subsequent purchaser without notice  on the assumption that a charge creates an  interest in  property,  because all provisions relating to  a  simple mortgage ’shall as for as may be apply to a charge’. [232 F- H, 239A; 234 A-B;240 D-E] (5)But  the  doctrine  of notice apart  from  the  statutory provisions such as s. 53A of the.  Transfer of Property Act, s. 48 of the Registration Act and s. 27 (b) of the  Specific Relief  Act,  1877 corresponding to s. 19  of  the  Specific Relief Act, 1963, is firmly embedded in the jurisprudence of this  country  as  part of the  equitable  principles  which courts  administer in conformity with "justice,  equity  and good conscience".  On this approach, the conclusion would be the  same  is  if  the proviso to s.  100  of  the  Act  was applicable to mortgages also. [243 B-C] (6)However,  it is no answer to say that merely because  the ultimate  result is the same we should read the language  of s. 100 ignoring the purpose for which the amendment was made or  give it an interpretation which is totally  at  variance

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with  the  tenor  of the entire Act in  order  that  it  may conform with the ultimate result. [243 C-D] (7)Since  the  finding  in  the instant  case  is  that  the respondent did not have notice of the appellants’ charge the mortgage  will  have  a  priority over  the  charge  of  the appellants. [243 D-E] (8)  There is no question of the appellants being  protected by the doctrine of Lis Pendents. [230 B-C] (Per Beg J :) : (1) The agreement between the parties  which was   embodied  in  the  compromise  decree  satisfies   the requirements  of  s.  100 of the Transfer  of  Property  Act inasmuch  as it is a charge created by the act  of  parties. If  the  rights  of  a  simple  mortgagee,  who  is  not  in possession  of the mortgaged property, are not protected  by the  proviso to the section, the first part of  the  section will  confer  upon the charge-holder, the same rights  as  a prior  simple  mortgagee  has against  a  subsequent  simple mortgagee  even  though  the charge does  not  amount  to  a mortgage. [246 D-E, G] (2)  There  is no reason to differ from the views  taken  by the  trial  court  and the High  Court  which  preclude  the existence   of  ’gross  negligence’  on  the  part  of   the respondent  who had made such attempts as could be  expected of  a reasonable and prudent individual to find out  whether the  property  to  be mortgaged was subject  to  a  previous charge.  The failure of the respondent to learn of the prior charge  on the mortgaged property could be ascribed only  to the  negligence  of  the Registrar’s office  for  which  the respondent could not be made to suffer.[248 F-G] (3)  The  High Court was correct in adopting the  view  that the  respondent, as a simple mortgagee, was not outside  the protection  conferred by the proviso to s. 100,  because  he was  both  a  bona fide transferee  for  consideration  with simple  mortgagee rights ’in hand’, as well as a person  who had  no notice, actual or constructive, of the prior  charge of the appellants.,[250 G-H] (i)  Section  58 of the Transfer of Property Act  defines  a mortgage  is  the  ’transfer  of  an  interest  in  specific immovable  property’ and ’property’ is indicative  of  every possible  interest a person can have.  Therefore,  a  simple mortgage is a transfer of property within the meaning of  s. 5  of the Act, and the mortgagee’s rights are  ’property  in the  hands  of  a  person to whom  such  property  had  been transferred  for  consideration’.   If  a  simple   mortgage amounts to a transfer of property for the purposes of s. 100 it  is  immaterial  that a transfer of  property  implies  a transfer of the whole bundle of rights in the property which the transferor has for the purpose of situations dealt  with by other sections.  For example, s. 8 of the Act laying down the effects, incidents and implications of a transfer. em- 227 bodies only a rule of interpretation and was meant to govern matters not expressly provided for in deeds of transfer.  It was not at all intended to govern or Jay down the meaning of ’transfer,  whenever  used in the Act.  That has  been  done expressly by ss. 5 and 6. In view of the other provisions of the  Act, the transferee under the proviso to s. 100 may  be of even an interest in property.  The words ’such  property’ do not stand only for ’full ownership of property’.  If  the transfer of an interest in property to. a mortgagee, whether simple  or  Usufructuary, is a transfer of  property,  ’such property’  could only mean, in the case of a mortgagee,  the interest  in  property  which has been  transferred  to  the mortgagee because that is also property. [249F; 253 D-E; 254 A-C.  F-G]

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(ii) Under  English Law, for the purpose of determining  the priority  between  the  owner  of  a  legal  estate  and  an equitable   owner,  a  ’purchaser  for  value’  includes   a mortgagee.  English equitable principle under the  provision of the Transfer of Property Act, so that, although the  term ’purchaser  is  not used in s. 100 of the Act,  the  proviso seems  to have been meant to incorporate the doctrine  of  a bona  fide purchaser for value.  It speaks of ’a  person  to whom  Such property has been transferred  for  consideration without  notice  of the charge’, and the language  used  was designedly  wide so as to confer the benefit of the  proviso also upon persons other than purchasers of ownership rights. [251G, 252G-253B] ((ii))  The  expression  ’in  the hands  of’  could  not  be confined  to  tengible  property which is  actually  in  the physical possession of the transferee, because, property  as defined  in  s.  6, includes both  tangible  and  intangible property  and extends to rights and interests  in  property. ’Possession’  is only one of the meanings of the  expression ’in  hand’  and  whenever  the  concept  of  possession  was intended to be conveyed, the word ’possession’ had been used as for example in Explanation 11 to s. 3. In the proviso  to s. 100, the Legislature deliberately employed the concept of ’property in hand’ in contradistinction to ’property in  the possession of’ a transferee, so as to include cases where  a person has a right, which is intangible property, vested  in him.   The  right of a simple mortgagee may  be  capable  of being  spoken  of as ’possessed’ by the mortgagee,  but  the right  could  more  appropriately be  spoken  of  as  either ’vested in the transferee’, or, as property ’in the hands of the  transferee’.  The object of employing this  terminology in  the proviso seems to be to include such rights as  those of a simple mortgagee.[249, G-H; 250 C-G] Observation   contra  in  Arumilli  Surayya   v.   Pinisetti Venkataramanamma & Ors A.I.R. 1940 Mad. 701 overruled. (4)The  appellants  cannot contend that their  prior  rights would be protected by the principle underlying s. 48 of  the Act because; (a) Apart from the qualifying words, ’so far as may   be’  in  s.  100,  one  of  the  conditions  for   the applicability  of  s.  48 is that there must  be  an  actual transfer  of  property, (b) Another condition  is  that  the previous  and  the subsequently created  rights  cannot  all exist  or be exercised to their full extent together,  which condition  is  not satisfied in tire present case.  (c)  The prior right of the charge bolder could only obtain  priority provided other things are not unequal. (d) The conditions of priority  as between the holder of a previous charge  and  a subsequent simple mortgage are completely covered by s. 100. [251 B-E] (5)If  the  same result on the question of a priority  of  a simple mortgage as against a charge, of which the  mortgagee has no notice, can be reached by resorting to the  principle of  ’equity, justice and good conscience’ s. 100 itself  can be  read  as  a direct statutory  recognition  of  the  very principles,   because,  it  contains   comprehensively   the requirements  of equity, justice and good  conscience.[254H- 255B] (6)A  wide and liberal interpretation must be given  to  the proviso  to  extend the benefit of the  amended  section  to mortgagees also, as bona fide transferees for value-the word ’purchaser’  having been deliberately eschewed.  The  amend- ment. made to negative the view in some cases that a  charge could  be  enforced even against a bona fide  purchaser  for value  without notice, should be interpreted to amplify  the remedy  and suppress the mischief aimed at.   Decisions  had

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also been given until now, since the amendment of s. 100  in 1928,  or  the assumption that a simple  mortgagee  is  also covered  by the protection conferred by the amended  powers, There is no reason why a new path or its meaning should  now be taken. [225 D-F; 256 F-H] 228 (7)  There  is no question of the mortgage being  struck  by the doctrine of Lis Pendens. [258 A-C]

JUDGMENT: CIVIL APPELLATE JURISDICTION : Civil Appeal Nos. 1882-1883 of 1967. Appeals from the _judgment and order dated the 12th November 1962  of the Bombay High Court in First Appeals Nos. 668  of 1957 and 40 of 1960. V. S. Desai, and K. Raj Choudhry, for the appellants. Navnit A. Shah and A. G. Ratnaparkhi, for the respondents. The Judgment of the Court was delivered by Jaganmohan  Reddy J., M. H. Beg, J. gave a separate Opinion. JAGANMOHAN  REDDY, J.-In both these appeals  by  certificate the  question  of  competing  priorities  between  a  charge created by a decree and a subsequent simple mortgage has  to be determined.  The appellants had filed Civil Suit No.  741 of  1938  for  recovery  of a sum  of  Rs.  1,34,000/-  with interest  from  respondents  1 to 7. On  March  31,  1941  a compromise decree was passed under which a charge was creat- ed  for  the decrements amount on three pieces  of  property belonging  to the said respondents 1 to 7. These  properties comprise  a house in Shukrawar Peth and Kekakuva Mansion  in Budhwar  Peth  both at Poona and a chawl  in  Kalyan.   This decree   was  registered  on  April  7,  1941  but  due   to inadvertence  the charge on the Kakakuva Mansion in  Budhwar Peth  at Poona was not shown in the Index  of  registration. The  significance of this omission will become evident  when the  full facts are narrated.  Thereafter on June  27,  1949 the respondents 1 to 7 mortgaged the Kakakuva Mansion to the plaintiff  respondent  14  for a sum of Rs.   1  lakh.   The respondents  created a further charge on September 13,  1949 in  favour  of  the said plaintiff  respondent  14  for  Rs. 50,000/- On July 7, 1951 a charge was created by a decree in favour  of  respondent 15 for a sum of Rs. 59,52 1 /1  1  /- under  an award decree.  In the meantime the appellants  had recovered some amounts by execution of their decree in Civil Suit  No. 741 of 1938 by sale of the property  at  Shukrawar Peta  at Poona and the chawl ,it Kalyan.  In spite of  these sales a large balance was still due, and in order to recover the balance of Rs. 1,57,164/- appellants filed Darkhast  No. 32 of 1952 in the Court of the 3rd Joint Civil Judge, Senior Division  ,it  Poona for the sale of Kakakuva  Mansion  over which,  as we have said earlier, there was a charge  created in favour of the appellants by the decree of March 31, 1941. Notices  were  issued under O.21 r.66 of the Code  of  Civil Procedure  to  respondent  14 and  other  respondents.   The Executing  Court,  however,  held  that  the;  presence   of plaintiff  respondent 14 was not necessary for the  purposes of effecting the sale on the Darkhast of the appellants  and accordingly, it vacated the notices.  Against the said order of the Executing Court respondent 14 filed First Appeal  No. 668 of 1957 in the High Court of Bombay and he also filed on June 5, 1958 Civil’ Suit No. 57 of 1968 in the Court of  the Joint  Judge, Senior Division at Poona for a recovery  of  a sum of Rs. 2,18,564/- alleged to be due to him under the two mortgages dated June 27, 1949 and September 13, 1949.

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229 It  may  be  mentioned that while Suit No. 57  of  1958  was pending The property-the subject-matter of that suit-was put up for sale on the appellants’ Darkhast and it was purchased by  the appellants with the leave of the Court.  In view  of this  development respondent 14 impleaded the appellants  in the  said  Suit  No. 57 of 1958 as the  purchasers  of  the, equity  of redemption.  The appellants resisted the suit  on the; ground that they had a prior _ in their favour and  the mortgage  of respondent 14 was subject to that  charge.   It was  also contended that s. 100 of the Transfer of  Property Act,  1882 (hereinafter referred to as ’the Act’)  regarding notice was not obligatory in respect of the interest created in favour of respondent 14.  The Trial Judge by his judgment dated  July.  21,  1959, while decreeing  the  suit  of  the plaintiff respondent 14 for recovery of Rs. 2,18,564./- held that the appellants had a prior charge over the property and were  bound  by  the mortgage in favour  of  the  plaintiff- respondent 14 and 15 (defendant 8 in the suit).  It  further held  that  the  rights  of  a  simple  mortgagee  are  not, "property  in the hands of" the mortgagee who could  not  be protected by the proviso to s. 100 of the Act. Against  the decree of the Trial Judge, respondent 14  filed First  Appeal  No. 40 of 1960 in the High Court  of  Bombay. The two First Appeals, one arising out of the Darkhast filed by  the  appellants and the other arising out  of  the  suit filed by respondent 14 were: heard together on November  12, 1962.  The High Court of Bombay by its judgment modified the decree  of the Trial Judge holding that as the  mortgage  in favour  of respondent was protected under the proviso to  s. 100 of the Act it is free from the, charge in favour of  the appellants.  It also gave priority to respondent 15 for  its dues,  though  it had not filed any  appeal.   Against  this judgment  and decree two appeals were filed, one in  respect of  First Appeal No. 40 of 1960 and the other in respect  of First Appeal No. 668 of 1957. It was contended before the High Court that whatever may  be the  position  under s. 100 of the  Act,  respondents  Motes would  still  be protected by s. 52 by the doctrine  of  lis pendens.  Overruling a preliminary objection that this point was  not  taken in the Trial Court, the  High  Court,  after considering  the admitted position, noticed that  originally there  was  only a money debt due to  defendants  9-13  from Datars.   The appellants had filed Suit No. 741 of 1938  and practically  three years thereafter at the time, of  passing of  the  decree, a charge by agreement was  created  on  the properties  of Datars.  Admittedly, the properties on  which the  charge was created were not the subject-matter of  the, suit  and  no, issue was raised in that suit in  respect  of these  properties.   It was pointed out that for  s.  52  to apply, two conditions have to be fulfilled, namely, (1)  the suit  or the proceedings must not be collusive and  must  be pending;  and  (2)  the right  to  immoveable  property  was directly  and specifically in question in the suit.   Unless both  these conditions are satisfied, no protection  can  be claimed.  The mere fact that a specific immoveable  property becomes  the  subject-matter  of a  decree  subsequently  by agreement  of  the  parties will not  justify  a  claim  for protection under s. 52.  If the change has been created by 230 consent  of  the parties it is something extraneous  to  the suit  and  accordingly no lis in fact exists in  respect  of that property nor can it be said that a lis had commenced at least from the date of the decree.  There is no commencement at all so far as the lis is concerned which in that suit was

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a simple claim for money and nothing more.  Apart from this, there  was no Darkhast or execution application  pending  at the  time  when  the  simple  mortgages  in  favour  of  the plaintiff  we,; created in 1949.  The High  Court  discussed several decisions in respect of the above conclusion and  we are  in  agreement  with the reasoning of  the  High  Court. Since  before us this point was not seriously argued, we  do not think that there is any need to deal with this aspect in any detail. It  may  also  be  mentioned that the  High  Court,  on  the evidence,  came to the conclusion that respondent 14 had  no notice  of  the prior charge inasmuch as the search  of  the indices  did not disclose that there was charge on the  suit property.   An attempt was made to show that the  respondent 14  had  feigned ignorance of the decree in  favour  of  the appellants  though  his witness admitted that he  had  taken search of the records of the Sub-Registrar’.S office  before he  took the two mortgages.  It was also contended that  the plaintiff-respondent 14 had admitted that the mortgage  Ext. 87 was registered in the Sub-Registrar’s Office on May  17-, 1941, and is noted as No. 104’9-B in Book No. 1. Though this decree was entered in Index I ’ it was not entered in  Index II.  From the very fact that the decree was shown in Index I and having been so registered, it is sought to be  contended that  the  High Court had, by ignoring  the  above-evidence, held  that  respondent 14 did not have notice.   It  may  be mentioned  that the properties which are the  subject-matter of the charge under the decree could only be shown under  s. 21  of the Registration Act in Index 11.  Unfortunately,  as we  have  said  earlier, by inadvertence  the  property  the subject-matter  of  the  suit-was not shown  in  that  Index (Index II).  A person who wishes to search the registers for arty  prior  sale,  mortgage  or  charge  would  necessarily inspect Index 11, which under s. 55 (3) of the  Registration Act is required to contain such particulars mentioned in  s. 21  relating  to every such document and memorandum  as  the Inspector General from time to time directs is that  behalf. Under  s. 21 description of property and maps or plans  have to  be mentioned in all non-testamentary documents  relating to   immoveable  property  before  they  are  accepted   for registration, with further particulars as specified in  sub- ss. (2) to (4) thereof.  Under s. 55(1) there are to be four Indices  I  to IIV.  Sub-section (2) provides that  Index  I shall  contain  the  names  and  addresses  of  all  persons executing  and of all persons claiming under every  document entered or memorandum filed in Book No. 1 and Index If shall contain  such  particulars mentioned in s.  21  relating  to every such document and memorandum as the Inspector  General may from time to time direct in that behalf, Under s.  51(2) in  Book  I  shall  be entered or  filed  all  documents  or memoranda registered under ss. 17, 18 and 89 which relate to immoveable  property,  and are not wills.  If  the  property which  a person wants to purchase or which is being  offered to him as a mortgage or security for payment of any money is shown in Index II, 23 1 then he would have notice of such charge or mortgage and may wish  to  further probe by inspecting Index I  and  Book  1. Merely  inspecting  Book 1 or Index I will not  benefit  him because  all he can know is that there is a decree that  has been  registered which may not be helpful.  The  High  Court was right in not accepting the contention of the  appellants that  respondent 14 had notice of the decree because  if  in fact  he  had  taken  the  trouble  of  going  to  the  Sub- Registrar’s   Office  for  inspection  and  search  and   to

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ascertain  whether there was, any charge, mortgage or  other encumbrance on the property in respect of which he wanted to advance such a large sum of Rs. 1,50,000/-, he would not, as a man of. prudence, have advanced the said amounts if be had in  fact  known  that  there was  a  prior  charge  on  that property.   In fact the High Court observed that it  was  an admitted  position  that  even  on  a  careful  inquiry  the plaintiff  (respondent  14) would not have  known  that  the property  (Kakakuva  Mansion)  was  charged  in  favour   of defendants  9  to  13 (the appellants  herein)  inasmuch  as neither  the property cards, nor the Municipal Records,  nor the indices contained a reference to the charge on the  suit property.  The Explanation in s. 3 of the Act which provides for  fixing  a party with constructivenotice in  respect  of registered transactions, contains a proviso to Explanation I that  in  order  to amount to  constructive  notice,  it  is necessary  that (1) the instrument has been  registered  and its  registration  completed in the manner required  by  the Registration,  Act  and the Rules made thereunder,  (2)  the instrument  has  been duly entered or filed  in  books  kept under s. 51 of the Registration Act, and (3) the particulars regarding  the, transaction to which the instrument  relates have been correctly entered in the indices kept under s. 55, of that Act.  It further observed that though in some  cases by  legal fiction, constructive notice may be imputed  to  a party,  in the case before it, it cannot be imputed  to  the plaintiff   (respondent  14),  since  the  third   condition required  for  the  purpose was not  satisfied.   We  would, therefore,  accept  the  finding of  both  the  Courts  that respondent  14 had no notice of the prior charge created  by the decree. The  question  which will arise, for  our  consideration  is whether  the appellants by reason of the decree  creating  a charge  on  the  suit properties have a  priority  over  the subsequent  simple mortgage created in favour of  respondent 14.  We need not go into other niceties, as to what would be the  position  where  a sale deed is  invalid  for  want  of registration  or  whether  a transaction intended  to  be  a mortgage  but  not reduced to writing  and  registered  will operate as a charge, because in this case the competition is between  a charge created by a decree which  was  registered and a subsequent mortgage without notice of a prior  charge. It  is contended that the provisions contained in s. 100  of the Act that "save as otherwise provided by any law for  the time being in force, no charge shall be enforced against any property in the hands of a person to whom such property  has been  transferred for consideration and without  notice:  of the  charge" means and implies that where there is a  charge and  where the property is sold and is in possession of  the purchaser  for consideration, no charge so created prior  to the sale can be enforced against a property in the hands  of a  person  to whom such property has  been  transferred  for consideration 232 and  without  notice  of the charge.   The  words  "save  as otherwise  provided"  would  imply  that  a  charge  can  be enforced even against a purchaser without notice where a law expressly so provides. It  is further contended that a charge created by the  terms of a decree is not covered by s. 100 of the Act inasmuch  as it  is neither a security on immoveable property created  by act  of parties or by operation of law.   Several  decisions have been referred to before us which,. in our view, have no application,  because  a  compromise decree  not  being  the result  of a decision by the Court but an acceptance by  the

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Court  of something to which the parties have agreed  if  it created  a  charge on an immoveable property, and  was  duly registered,  as indeed it was in this case, amounts  to  the creation of a security by act of parties within the  meaning of  s.  100 of the Act.  In order to  resolve  the  question before  us it is necessary to analyse the provisions  of  S. 100 of the Act, the text of which is given below :-               "Where immoveable property of one person is by               act  of  parties  or  operation  of  law  made               security for the payment of money to  another,               and  the  transaction  does not  amount  to  a               mortgage, the latter person is said to have  a               charge on the property; and all the provisions               hereinbefore contained which apply to a simple               mortgage  shall,  so far as may be,  apply  to               such charge.               Nothing in this section applies to the  charge               of   a  trustee  on  the  trust-property   for               expenses properly incurred in the execution of               his  trust, and, save as  otherwise  expressly               provided  by  any law for the  time  being  in               force, no charge shall be enforced against any               property in the hands of a person to whom such               property  has been transferred for  considera-               tion and without notice of the charge." It is apparent from the provisions of the above section that a  charge  does  not amount to a  mortgage  though  all  the provisions which apply to a simple mortgage contained in the preceding provisions shall, so far as ,nay be, apply to such charge.   While  a charge can be created either  by  act  of parties or operation of law, a mortgage can only be  created by  act of parties.  A charge is thus a wider term ,is  it includes  also  a  mortgage, in that  every  mortgage  is  a charge, but every charge is not a mortgage.  The Legislature while defining  charge in s. 100 indicated specifically that it does not amount to a mortgage.  It may be incongruous and in terms even appear to be an anti-thesis to say on the  one hand  that  a charge does not amount to a mortgage  and  yet apply  the provisions applicable to a simple mortgage to  it as  if  it  has been equated to a simple  mortgage  both  in respect  of the nature and efficacy of the  security.   This misconception  bad given rise to certain decisions where  it was  held that a charge created by a decree was  enforceable against  a  transferee  for  consideration  without  notice, because  of  the  fact that a charge  has  been  erroneously assumed to have created an interest in property reducing the full ownership to a limited ownership.  The declaration that "all the provisions hereinbefore contained which apply to  a simple mortgage shall., so far as 2 33 may  be, apply to such charge" does not have the  effect  of changing  the  nature  of a charge to  one  of  interest  in property. Order 34 r. 15 of the Code of Civil Procedure also  provides for  the  remedy of enforcing a charge under which  all  the provisions  of  O.34 in so far as they are applicable  to  a simple mortgage would be applicable to a charge under s. 100 of the Act.  This rule was substituted for the old r. 15  by the  Transfer  of Property  (Amendment)  Supplementary  Act, 1929, which came into operation on the 1st April, 1930.  The old r. 15 of O.34 was as follows :               "All the provisions contained in this Order as               to   the  sale  or  redemption  of   mortgaged               property  shall, so far ,is may be, apply  to               property  subject  to  a  charge  within   the

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             meaning   section  100  of  the  Transfer   of               Property Act,1882." The  words  "as to the sale or redemption of  the  mortgaged property" which were in the old rule, have been omitted, and instead  it  is  now  provided in  general  terms  that  the provisions  applying  to  simple mortgages  shall  apply  to charges.   A  charge-holder like a simple  mortgagee  has  a right  to bring the property charged to sale or can  enforce his  charge  against any portion of  the  property  charged. here a cbarge-holder is given possession of the property  as a charge-holder, he can remain in possession of it until the amount due to him is satisfied; but if the possession is not attributable  to the charge, he cannot insist  on  retaining possession until his dues are paid. The  reason  for the above provision in s. 100 of  the  Act, read  with O.34 r.15, is merely to declare that  the  rights and  liabilities of a charge-holder are to be that  which  a simple  mortgagee has under the provisions of the Act in  so far ,is they may be applicable.  The words also far as  may be" indicate that provisions which apply to simple  mortgage may not be applicable to the charge.  It has been held  that Ss. 56, 67(2), 68(3), 73(4). 83(5) and 92(6) arc  applicable to  charges.  On the other hand, s. 67A has been held to  be applicable  to charges created by act of parties and not  to charges created by operation of’ law on the ground that  the clause  "in  the  absence of a  contract  to  the  contrary" occurring  in  that section is an essential part of  it  and cannot  be  given  effect to in a statutory  charge.   If  a charge  carries with it a personal liability as in the  case of  a seller’s charge for price not paid, the  charge-bolder is  entitled under O.34 r-.6 of the Code of Civil  Procedure to a personal decree. The   Privy  Council  had  observed  that  in  a  suit   for enforcement  of a charge under s. 100 of the Act  read  with O.34 r. 15 Code of Civil Procedure, a decree for sale, as in a  suit  for a mortgagee should have been passed :  See  Ram Raghubir  Singh  Lal v. United Refineries(1).   The  several aspects  of  the application of the provisions of  a  simple mortgage  have not been and need not be considered by us  as they are not relevant for our purpose.  Our object is merely to  illustrate  the reason for a reference in s.  100  to  a simple mortgaee (1)  [1933] 60 I. A. 183. 234 The  question would then what is the purpose and  intendment of 1929 Amendment adding the proviso to S. 100 of the Act  ? There  may  be several views as to why  this  amendment  was effected,  but  certainly  one of them is to  get  over  the effect  of certain decisions of the Courts which  have  held that a charge was valid as against a subsequent purchaser of property  without  notice on the assumption  that  a  charge created  an  interest in property and since  its  effect  is similar to a simple mortgage it being first in point of time has  a  priority over a subsequent sale to  a  purchaser  of property  who  has taken it with consideration  and  without notice.   It is contended that even after the  Amendment  of 1929 since no charge can be enforced against any property in the  hands  of  a  person to whom  such  property  has  been transferred  for  consideration and without  notice  of  the charge,  the saving clause applies to a simple  mortgage  as well  as  to mortgages with possession inasmuch as  in  both cases property which could be transferred under s. 6 of  the Act  can  be said to be transferred.  In  other  words,  the saving clause is not confined only to an out not out sale. On the other hand, the submission of the appellants is  that

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the  proviso  to s. 100 applies only to cases  of  sale  for consideration  where  the property is in possession  of  the purchaser.   It is only in such a case where  the  purchaser has  bought the property without notice of the  charge  that the charge cannot be enforced against him.  It appears to us that  if  the intention of the Legislature was to  make  the proviso  applicable  even to a mortgage including  a  simple mortgage,  there was no need for it to have used  the  words "in  the hands of a person to whom such property  has  been" because  if  the  proviso is read without  those  words  the effect sought for would nonetheless ensue.  The proviso read after the deletion of the words indicated by us would read :               "Save  as otherwise expressly provided by  any               law  for  the time being in force.  no  charge               shall   be  enforced  against   any   property               transferred  for  consideration  and   without               notice of the charge." If  mortgages  were  sought to be included,  it  would  look somewhat  incongruous  because the  words  "transferred  for consideration and without notice of the charge" in so far as we are able to ascertain have never been used in  describing a  mortgage  whether it be a simple mortgage or  a  mortgage with possession.  This expression has always been understood to describe a sale, because transfer of all the rights which the  transferor  has can also be  legally  effected  without consideration and voluntarily as in the case of a gift.   It is  in  anti- thesis of a transfer by way of gift  that  the expression  "transferred for consideration" as indicating  a sale has been used.  A done of property taking a property by way of gift even if he does so without notice of the  charge cannot  ’in any case claim the benefit of the  proviso.   If what  is being dealt with in the proviso is a sale which  in the case of an immoveable property of the value of Rs. 100/- or  upwards has to be effected by a registered document,  it is  not  necessary  for the validity of such  a  sale,  that possession  should also have been given.  Where a  sale  has been 235 validly  effected  and possession has not  been  given,  the purchaser  has always the right to enforce a sale  deed  and obtain possession of the property. In  order  to ascertain the true import of  the  terminology used in s. 100 of the Act, it is necessary to state  clearly some  of  the basic concepts embodied in the Act  which  are beyond   controversy.   Section  5  defines   "transfer   of property"  as  meaning  "an act by  which  a  living  person conveys  property, in present or in future, to one  or  more other  living persons, or to himself, or to himself and  one or more other living persons", and "to transfer property  is to  perform such act.  Section 6 says that property  of  any kind may be transferred, except as otherwise provided by the Act  or by any other law for the time being in  force  other than  those  mentioned specifically in clauses  (a)  to  (i) which  cannot  be  transferred.  Section 8  deals  with  the operation  of  transfer  and says that  unless  a  different intention is expressed or necessarily implied, a transfer of property  passes  forthwith  to  the,  transferee  all   the interest which the transferor is then capable of passing  in the  property, and in the legal incidents thereof.  It  then narrates all such incidents having regard to the land, debt, etc.  etc.  Chapter III of the Act deals  specifically  with sales  of  immoveable  property, the sale  in  s.  54  being defined  as  transfer of ownership in exchange for  a  price paid or promised or part-paid and part-promised.   Mortgages are  dealt with in Ch.  IV where mortgage is defined  in  s.

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58(a) as the transfer of an interest in specific  immoveable property  for the purpose of securing the payment  of  money advanced or to be advanced by way of loan.  Different  kinds of  mortgages  are also specified in that section  of  which clause  (b)  states  what a  simple  mortgage  is,.  namely, "where, without delivering possession of the mortgaged  pro- perty,  the  mortgagor binds himself personally to  pay  the mortgage money, and agrees, expressly or impliedly, that, in the  event of his failing to pay according to his  contract, the  mortgagee  shall have a, right to cause  the  mortgaged property to be sold and the proceeds of sale to be  applied, so  far  as may be necessary, in payment  of  the  mortgage- money,  the transaction is called a simple mortgage and  the mortgagee a simple mortgages". A  charge  on  the other hand under s. 100  of  the  Act  is neither a sale nor a mortgage because it creates no interest in  or  over a specific immoveable property but  is  only  a security for the payment of money. Leases of immoveable properties are dealt with in Ch.  V  of the Act, of which s. 105 defines a lease as a transfer of  a right  to  enjoy  such property, made for  a  certain  time, express or implied, or in perpetuity, in consideration of  a price  paid or promised, or of money etc. etc.   Chapter  VI deals  with  exchanges of ownership in  one  property,;  for another.   It  is  provided by s. 118  that  a  transfer  of property  in completion of an exchange can be made  only  in the  manner  provided for the transfer of such  property  by sale, so that in that Election the mutual transfer which  is referred  to is the transfer of ownership of one  thing  for the ownership of another and in relation thereto the  manner in which the exchange is to be completed is specified as 236 similar  to  the transfer of property as on a sale.   In  so specifying  S. 118 of the Act equates the term "transfer  of property"  with the term "transfer of ownership".   Chapters VII and VIII deal with gifts .and actionable claims which do not necessarily appertain to immovable properties alone. It  will  thus be seen that throughout the  Act  whenever  a transfer   ,of   property  is  referred   to   without   any qualification, it is to the transfer of all the interest  in the  property.   As already referred to, s. 8 says  that  "a transfer of property passes forthwith to the transferee  all the interest which the transferor is then capable of passing in the property"’.  Section 10 when it says "where  property is  transferred" refers to all the rights in  the  property. Section  11 makes it still more clear when it provides  that "where,  on  transfer of property, an  interest  therein  is created  absolutely in favour of any person" and  ,contrasts the transfer of property with the creation of an interest in the  property.   Section 12, which refers  to  the  property transferred,  refers  to the whole of the  interest  in  the property.              Section  13 refers to a  transfer  of property and creation of an interest therein and brings  out the  distinction between the phrase ’transfer  of  property’ and ’creation of interest in the property’; so do ss. 14 and 15  Section  16  refers  to the  creation  of  an  interest. Section  17  very obviously refers to the  transfer  of  the whole  of  the property when it refers to  the  transfer  of property.  So also s. 18.  ’Sections 19, 20, 21, 22, 23, 24, 26,  27, 28, 31 and 33 are like ss. 11 and 13.   Section  38 again  clearly refers to the transfer of the A hole  of  the interest  in a property.  So do ss. 39, 40, 41. 42, 43,  44, 45,  46,  47, 48, 49, 50, 51, 52, 53, and 53A.  Thus  it  is clear that the transfer of property referred to in s. 100 of the Act is the transfer of the whole property and not a mere

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interest in or over the property like a mortgage, lease etc. A careful scrutiny of the conspectus of the sections of  the Act  indicates  clearly  that the  Legislature  has  adopted certain   phraseology  to  connote  different  concepts   of transfer  to which we have referred above.  Property is  the most comprehensive of all terms inasmuch as it is indicative and descriptive of every possible interest it can have.  The terms  ’transfer of property’, ’transfer of an  interest  in property’,  ’creation of an interest in or  over  property’, ’transfer  of  a  right  to  enjoy  property’  ’transfer  of ownership’ have been associated in the context of  different sections  with  sale, gift, exchange, mortgage,  lease  etc. etc.   In  the case of a sale, after the sale  there  is  no interest  left in the seller : in the case ,of a charge  the transferor has a subsisting interest though limited to ’some extent  by the charge-holder’s right to recover  the  monies due  ’from the specific immovable property.  In a  mortgage, the mortgagor ’has the equity of redemption of the  mortgage left  in  him.  In the case of a lease the  lessor  has  the right  of  ownership  in the property except  the  right  of enjoyment which, has been transferred to the lease under the agreement.  A gift like a sale is transfer of all the rights which   a  person  can  have  in  the  property  with   this difference,  namely.  while the sale is  for  consideration, gift is voluntary and without consideration. A  reference to the Proviso to S. 100 of the Act would  show that in order to make it applicable it has to be shown  that (a) the property 237 against  which the charge is to be enforced must  have  been transferred  for  consideration; (b) the transferee  has  no notice of the charge; (c) the property which is The subject- matter  of the charge is in the hands of the Person to  whom such  property  has  been transferred.  it  is,  there-fore, necessary to ascertain as to what is meant by the expression "property in the hands of a person to whom such property has been transferred".  There is no need and indeed it would  be an incorrect approach to adopt a strained construction or to indulge  in  unnecessary exercise in semantics to  make  the proviso applicable to a simple mortgage by holding that  the right a mortgage gets under a mortgage can. also be said  to be  in  the hands of the mortgagee.  In Berwick  &  Co.  v., Price,(1)  Joyce, J., began his judgment by saying : "It  is well  settled  that  a purchaser (in which term  I  must  be understood  to  include  a mortgagee or a  transferee  of  a mortgage)......... From this single passage, Halsbury’s Laws of England (3rd Edn.) Vol. 14, p. 539, Foot Note (p)  treats the  case as an authority for the expression  ’purchaser  to the  Conveyancing Act, 1882 (1881) 44 and 45 Viet.  Ch.  41, which by  s.  2  (viii)  defines  a  "purchaser",  unless  a contrary intention appears, to     include   a  lessee,   or mortgagee, and an intending purchaser, lessee, or mortgagee, or other person, who, "for valuable consideration, takes  or deals  for  any  property; an purchase,  unless  a  contrary intention appears, has a meaning corresponding with that  of purchaser;  but sale mans only a sale properly  so  called". Similarly,  s.  205 (1) (xxi) of, the Law of  Property  Act, 1925  which  brought order from chaos created  by  forms  of action, the distinction between legal and equitable remedies and  the  different courts which  conferred  the  respective remedies,  defined ’purchaser’ to mean "a purchaser in  good faith  for  valuable consideration and  includes  a  lessee, mortgagee  or  other person who for  valuable  consideration acquires  an  interest  in property".   Where  the  Act  has intended  to  convey  that the person who  has  an  absolute

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title,  it has used the word buyer. though in  the  marginal note  to  s. 56 the word ’purchaser’ has  been  used.   This merely  shows  that  the  legislature  has  used  the   word ’purchaser’ as synonymous with buyer’ and as not including a mortgagee  or  mortgagor  or a lessee or lessor  as  in  the English  Act.   Before  the Act came  into  force  in  1882, wherever  any such expression came up for consideration,  in the  absence  of any specific definition  under  the  Indian Statute,  the  meaning  assigned in the  English  law  seems sometimes  to  have  been applied in  a  general  way.  Se-. Bazayet  Hossein v. Dooli Chand (2) where it was  held  that the,  creditor  of a deceased Mohammedan cannot  follow  his estate into the hands of a bona fide purchaser for value, to whom  it has been alienated by the heir-at-law, whether  the alienation  has been made by absolute sale or  by  mortgage. Though  it  may appear at first flush that a  purchaser  for value would include a mortgagee, actually what was held  was that a creditor cannot follow a property alienated by  heir- at-law  into the hands of an alienee whether the  alienation is  by way of an absolute sale or by mortgages The  emphasis is on alienation of the, interest in immovable property  and not on the word ’purchaser’. (1) [1905] Ch.  D. 639. (2) I.L.R.4Cal.402(P.C.) The dangers inherent in relying on English cases rendered on the  law  of property are many, and we should  be  chary  in allowing  a particular technical meaning acquired by a  word in  that  country to govern the interpretation of  our  Acts which  have used that word in different ,connotations.   The usage  of  any term conveying a particular  meaning  in  the English law and which subsequently has been incorporated  in the  definition  of  a statute as in the  case  of  the  two statutes  referred  to above, cannot on that  hypothesis  be imported  as  if that word has the same  meaning  under  the Indian  law,  when,  as we have pointed  out,  ,our  statute adopts  different  connotations.   Nor would  there  be  any justification  to refer to the principles developed  by  the Chancellor’s  Court of Equity in England or the notion  that equity  follows  the law, in their application to  our  law, because that would lead only to confusion.  In our view,  to interpret  our statutory laws on the basis of the  statutory provisions  of England which were enacted to deal  with  the peculiarities of their laws is to show subservience to  that law  or to the legislature in that country in preference  to ours,  though the legislative sovereignty in India  even  in the  British days did not make our laws subordinate  to  the English  laws.   It  is much more so  now  long  after the independence and the Constitution.  This Court cannot accept such an approach, as is suggested. We  may  by way of illustration refer to section 56  of  the Act.  it ,states : "If the owner of two or  more  properties mortgages  them to one person and then sells one or more  of the  properties  to  another person, the buyer  is,  in  the absence of a contract to the contrary, entitled to have the mortgagee  debt satisfied out of the property or  properties not sold to him, so far as the same will extend, but not  so as  to  prejudice  the rights of the  mortgagee  or  persons claiming  under  him  or of any other  person  who  has  for consideration   acquired   an  interest  in  any   of the properties".  A careful analysis of the above section  would show  that  the Legislature has at one  place  used  several words which we have underlined to convey different concepts. The  words owner, purchaser, buyer, sale have been used  for connoting  an absolute transfer of all the rights vested  in an  owner; the words mortgage, mortgagor and  mortgagee  are

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used to connote a transfer of an interest in property.  That apart,  even  a  person  who has  acquired  an  interest  in property,  who may be like a mortgagee, is said  to  acquire "an   interest  in  property  for consideration",   which expression  is  certainly  used to connote  only  a  limited interest.   This clearly indicates that the Legislature  has used different terminology for connoting different  concepts and would have in the proviso, if it intended to apply it to mortgages, used the appropriate language and expression. Another indication from which the meaning, which we have as- cribed, can be gathered is the use of the expression "in the hands   of".   This  expression,  and  indeed   the   entire phraseology  of the saving clause, is significant and  lends itself  to  the  construction that  a  charge-holder  cannot enforce his charge against any property in a case where that property is "in the hands of a person to whom such  property has been transferred for consideration and without notice of the charge." What then is the significance of the words  "in the  bands  of"  ? Do they mean "in the  possession  of"  or "under the control of" ? If this is so, then a 239 simple mortgage of a property is not covered by the proviso, as the property the subject of such a mortgage is not in the possession  or control of the mortgagee, or do  these  words mean  that  whatever interest in property  is  created  that interest can be said to be in the hands of a person in whose favour  that interest has been created.  In Arumilli  Suryya v.  Pinisetti  Venkataramanamma  and  Ors.(1)  Horwill,  J., observed  at  p.  704 : "If the appellant is  treated  as  a simple   mortgagee,  he  cannot  by  any  stretch   of   the imagination  be  considered  to have  the  property  in  his hands."  The  High  Court  in the  judgment  in  appeal  has disagreed with Horwill, J.’s view on the ground that if  the words imply physical possession, then possession of an agent or tenant will not be included.  According to the High Court the  words  "in the hands of" only mean the holding  of  the title and nothing else. The  expression  "in  the hands of" appears to us  to  be  a figurative  expression intended to convey that a person  has sufficient  control over the subject-matter to which in  the context the phrase is applied so as to enable that person to do whatever he can do with it as the nature of that subject- matter would permit.  See Edwardes’ Menu Company Limited  v. Chudleigh.(2) ’The judgment of.  Kekewich, J., was confirmed by  the Court of Appeal Lindley, M. R., Chitty  and  Vaughan Williams, L. JJ., which is reported in the same Volume at p. 64.   The actual control as compared to the  possibility  of obtaining  control  seems to be implied in  the  term.   The proverb  "a  bird  in the hand is worth two  in  the  bush", would, in our view, appropriately convey the meaning of  the phrase.  No doubt, "in the hands of" may be a  multi-faceted phrase  connoting  many  meanings,  of  which  the   meaning applicable  in the context in which it is used, is the  most appropriate.   In  the  context of the  saving  clause,  the inappropriateness of its applicability to a simple  mortgage or  in  the  setting  of the  entire  phraseology  its  non- application  to other mortgages seems to us to be clear  and evident. In  the  context in which the phrase "in the hands  of"  has been  used we have no doubt that it was intended  to  convey and  does  convey  that  the  buyer  as  a  transferee   for consideration   without   notice  of  the  charge   was   in possession,  including  constructive  possession  through  a tenant who has attuned to him and which for all intents  and purposes,  as far as transfer is concerned, has conveyed  to

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him  all the right, title and interest which the vendor  had in  the property including the possession.  Before  we  part with this aspect, it is necessary to point out that  Mulla’s Indian Registration Act, 8th Edn., at p. 195, states on  the basis  of  the decision in Chhaganlal v.  Chunnilal(3)  that "under section 100 of the Transfer of property Act, 1882, as amended  by  Act 20 of 1929 a mortage has  priority  over  a previous charge of which the mortgagee had no notice."  This decision  is  one  rendered  under  s.  48  of  the   Indian Registration Act and not under s. 100 of the Act though  the arguments  advanced  thereunder were noticed (see  pp.  191- 192).  It was in fact contended that s. 50 of the  Amendment Act of 1929 by which the proviso was added had retrospective effect similar to s. 63 (1)  A. I. R. 1940 Mad. 701. (3)  A. 1. R. 1934 Bom. 199. (2) 14 T. L. R. 47. 24 0 of  the Amendment Act, but it was repelled.  Tyabji, J.,  at p.  192, said: "We cannot accordingly, accept  the  argument that we must decide this case in accordance with the amended S. 100." If  the  ’proviso  to S. 100 of the Act does  not  apply  to mortgages, then what is the position of a charge-holder vis- a-vis the subsequent mortgagee without notice of the charge. A  charge not being a transfer or a transfer of interest  in property  nonetheless creates a form of security in  respect of immoveable property.  So far as mortgage is concerned, it being  a transfer of interest in property the mortgagee  has always  a  security  in the property  itself.   Whether  the mortgage  is  with  possession or  a  simple  mortgage,  the interest in the property enures to the mortgagee so that any subsequent  mortgage or sale always preserves the rights  of the  mortgagee  whether  the  subsequent  dealings  in   the property are with or without notice.  The obvious reason for this  is  that in a mortgage there is always  an  equity  of redemption  vested  in  the owner  so  that  the  subsequent mortgagees or transferees will have, it they are not careful and  cautious in examining the title before entering into  a transaction,  only the interest which the owner has  at  the time of the transaction. In  so far as competing mortgagees are concerned, S.  48  of the  Act  gives priority to the first in point  of  time  in whose favour transfer of an interest in respect of the  same immovable property is created, if the interest which he  has taken  and  the  interest  acquired  subsequently  by  other persons  cannot  all  exist or be exercised  to  their  full extent  together.   This  section speaks  of  a  person  who purports to create by transfer at different times rights  in or  over the same immoveable property, and since  charge  is not  a  transfer of an interest in or  over  the  immoveable property  he gets no security as against mortgagees  of  the same  property  unless  he  can  show  that  the  subsequent mortgagee  or mortgagees had notice of the existence of  his prior charge. A  reference to S. 48 of the Indian Registration Act and  S. 27(b)  of  the  Specific  Relief  Act  would,  however,   be necessary  to  spell out the implications of  the  competing priorities  between  a  charge  and  amortgage.   Before  we examine these provisions it is necessary to note that  under S.  54 of the Act, it is only a transfer of interest in  the tangible  immoveable property of the value of Rs. 100/-  and upwards  or  of a reversion or other intangible  thing  that requires  the  transaction to be effected  by  a  registered instrument.   But  in  the case  of  a  tangible  immoveable

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property  of the value of loss than Rs. 100/-  a  registered instrument is not compulsory but only optional.  A transfer of  such  property  can be  effected  either  by  registered instrument  or by delivery of the property, i.e.,  when  the seller  places  the buyer or such person as he  direct-,  in possession of the property.  Where an oral sale of property’ of the value of less than Rs. 100/- takes place  accompanied or  followed by possession a question may arise as  to  what would be the effect of a sale of the same property  effected by  a subsequent registered document ? There was a  conflict of  decisions under the old Registration Acts,  viz.,  under Act  20  of 1866, Act 8 of 1871 and Act 3 of 1877,  and  the words  "unless where the agreement or declaration  has  been accompanied or followed by delivery of possessions’ 241 were  first  added by Act 8 of 1871 to give  effect  to  the preponderant view that where possession was given under  the oral  agreement the registered document did not take  effect against  an oral agreement.  The rationale underlying  these cases was, as explained by Muttusami Ayyar, J., in Kannan v. Krishnan(1) is, that the protection given to oral  agreement accompanied  with or followed by delivery of  possession  is equivalent to registration.  The effect of registration,  it may  be said, is to invest the subsequent purchaser  or  any person  who takes an interest in that property with  notice. If  notice  of a prior transaction whether  by  delivery  of possession or by registration is the basis of conferment  of priority,  then even in the case of a transaction which  did Pot  effect a transfer by delivery of possession  but  there were  rights created in favour of the person by an  oral  or written agreement, then a person taking an interest in  that property  or who purchases that property with notice of  the prior  charge would take that property subject to the  prior rights  of which he had notice.  That is why s. 53A  of  the Act  and  the  amendment in s. 48 of  the  Registration  Act recognise  certain  equities even where the  transaction  as required  by  law  is  not  entered  into  by  a  registered instrument  and would not, but for these provisions,  amount to  effecting  a transfer of an interest or ownership  in  a specific immoveable property. Section 48 of the Registration Act, 1908, as it now  emerges after the amendment Act 21 of 1929, gives a priority to’  an oral  agreement  or declaration relating to  a  moveable  or immoveable  property where the agreement or declaration  has been  accompanied or followed by delivery of possession  and the same constitutes a valid transfer under any law for  the time  being  in force.  The ordinary rule of s.  48  of  the Registration  Act  is that non-testamentary  documents  duly registered  under the Act relating to any  property  whether moveable  or  immoveable shall take effect against  an  oral agreement  or declaration relating to such property  subject to the exception stated above.  In Chhaganlal’s case (supra) the decision was concerned mainly with the question  whether a charge can be an oral charge, or it must, like a mortgage, be created only by a registered instrument.  That was a case of  an  oral  charge competing to have  a  priority  over  a mortgage.   Tyabji,  J.,  after referring to s.  48  of  the Registration Act said at p. 191 :               "As  there has been no delivery-of  possession               in  the present case, the exception  may,  for               the present purposes, be disregarded." This  exception would, however, still leave a case where  an interest  in  immoveable  property  is  created  without   a registered instrument and without delivery of possession and that may be the case of a mortgage by deposit of title deeds

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as  defined  in  s. 58 of the Act.  For  this  purpose,  the proviso to s. 48 of the Registration Act makes an  exception in  the  case of mortgage by deposit of  title  deeds  which neither  requires  delivery of  possession  nor  constitutes notice  of such a mortgage.  This section does not give  any indication  as to what would be the position where a  person taking  a  subsequent registered document had notice  of  an oral  or  written  agreement in  respect  of  an  immoveable property (1) 1. L. R. [1890] 13 Mad. 324,330. 17-L251Sup.CI/75 242 which  is  not  accompanied  or  followed  by  delivery   of possession.  Will the right created under an oral or written agreement  take  a priority over the interest created  by  a registered  document  ?  The answer appears  to  be  in  the affirmative, because, as we have stated earlier, the  reason for  a  transaction  relating to  immovable  property  being effected by a registered document is to impute notice to all those who subsequently take an interest in that property and the  same  protection was afforded  to  transactions,  which though  not effected by registered instruments,  nonetheless were accompanied or followed by delivery of possession.  Any actual  notice  of  a transaction effected  by  an  oral  or written agreement in respect of specific immoveable property though not accompanied or followed by delivery of possession should logically be accorded the same protection as  against a subsequent transferee who takes it with notice. Reference  to  s.  27(b) of the Specific  Relief  Act,  1877 (corresponding to s. 19 (b) of the new Specific Relief  Act, 1963)  would furnish the answer.  The old Act  had  provided certain  illustrations,  but the new Act has  deleted  them. Section 27(b) of the old Act is in the following terms :               "27.   Except  as otherwise provided  by  this               Chapter,  specific performance of  a  contract               may be enforced against-               (a) x         x        x        x               (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." The illustrations given in respect of clause (b) of s. 27 of the old Specific Relief Act are all cases of sale or out and out transfer of land.  It is apparent from this clause  that even  a subsequent transfer is subject to a  contract  under which a right to obtain a transfer of specific property  has been  created.  If a subsequent purchaser takes the risk  of not  ensuring himself of any prior rights in respect of  the property  to be purchased by him, he cannot be said  not  to have acted in good faith.  But there may be instances  where he  has  notice or but for his carelessness would  have  bid notice  of the prior charge and nonetheless has  obtained  a transfer,  such as where the charge holder is in  possession of  that property, or where the charge is registered but  no inspection  is taken of the Register of  Charges,  mortgages and   transfers.   If  he  has  such  a  notice  either   by registration  or by property being in the possession of  the person  who has dealt with it first or otherwise, then  even the  fact  that be has a registered document and  the  right created  in the property is only by a simple  contract  does not avail him.  In the case to which the Specific Relief Act did  not apply, Mitter, J., in Nemai Charan v. Kokil  Bag(1) observed at pp. 537-538 :               "  It  appears  to us, that if  we  adopt  the

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             principle that no               enquity (that is, equity arising from  notice)               is to be consi-               (1)   [1881] 1. L. R. 6 Cal. 534.                                    643               dered  where an oral agreement to alienate  is               not  followed by possession, the 27th  section               of  the Specific Relief Act,  as  illustrated,               would  be rendered a deed letter  wherever  it               applies,  when competition arises  between  an               oral  agreement to alienate  unaccompanied  by               possession,  and an alienation  by  registered               deed  with notice of the  Previous  agreement;               but  we  are  not  compelled  to  adopt   this               conclusion." The  doctrine  of  notice, even  apart  from  the  statutory provisions, is firmly embedded in the jurisprudence of  this country  as  part of the equitable principles  which  Courts administer in conformity with the maxim "justice, equity and good conscience".  On this approach the conclusion would  be the  same  as  it  the proviso to s.  100  of  the  Act  was applicable  to  mortgages also, but it is no answer  to  say that  merely  because the ultimate result is  the  same,  we should  read the language of s. 100 of the Act ignoring  the purpose  for  which the amendment was made, or given  to  an interpretation  which is totally at variance with the  tenor of  the  entire Act in order that it may  conform  with  the ultimate result, which in any case has been reached, even if it was by a different road. The result of a close examination of the several aspects  of the question posed before us leads us to the conclusion that a  subsequent mortgagee with notice of a prior charge  takes the  mortgage, subject to the charge.  But as in  this  case the  finding is that the respondent did not have  notice  of the  appellants’  charge,  the  appeals  will  have  to.  be dismissed,  and  are  accordingly  dismissed,  but  in   the circumstances without costs. BEG,  J.-The two appeals before us, by certification of  the case  under Article 133(1)(a) of the Constitution of  India, arise in the circumstances detailed below. A  set of defendants (Nos.  1 to 7) of Original Suit No.  57 of 1958 (hereinafter referred to as "The Datars"), which  is now  before  us  in  appeal No. 1883  of  1967,  had  become indebted  to  a  number  of creditors.   One  set  of  these creditors, Defendants Nos. 9 to 13 (hereinafter referred  to as "Motes") of this suit had filed the suit No. 741 of  1938 for  the recovery of a sum of Rs. 1,34,000/-  with  interest due  to them from the Datars under a simple loan.  On  31-3- 1941, the Motes had obtained a compromise decree in suit No. 741 of 1938 by which three sets of properties of Datars were sought to be charged.  Two of these 244 properties  were  in Poona, one in Shukrawar Peth  and  ’the other  in  Budhwar Peth, whereas the third property  was  in Kalyan.   After a copy of the compromise decree,  showing  a charge on all three properties, was duly present before  the Sub-Registrar  for registration, on 13-5-1941, the  document was  noted  at serial No. 1048-B in Book No. 1 kept  by  the Registrar,  and a certificate complying with the  provisions of  Section 60, sub.s(2) of the Indian Registration Act  was issued  by  the Sub-Registrar.  But, presumably due  to  the negligence  of  the office of the  Sub-Registrar,  only  the charge  on  the  Shukrawar Peth  property  was  specifically recorded  as required by law in the registers  mentioned  in Section  51  and  indices mentioned in  Section  55  of  the

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Registration Act. The appellants, Motes, then got the Shukrawar Peth  property and  the small property in Kalyan sold in execution  of  the compromise decree.  But, as the amount realised by the  sale of  these properties was not enough to satisfy their  claim, the  appellants,  Motes,  filed  an  execution   application Darkhast  No.  31 of 1952 in the Court of a Civil  Judge  at Poona for the recovery of Rs. 1,57,164/-. The  claim  of  the plaintiff-respondent No.  14  before  us (hereinafter  called  "Oswal")  had,  meanwhile,  come  into existence  by reason of two duly executed simple  mortgages, dated  27-6-49  and 13-9-49, on the strength  of  which  the Original  suit No. 57 of 1958, before us in appeal No.  1883 of 1967, for the recovery of Rs. 2,18,564/- by enforcing the two simple mortgages, was filed.  Oswal claimed that he  had no knowledge of the alleged prior charge of the Motes. The  Budhwar Peth property was also sold in  proceedings  to execute  the  compromise decree started by  the  appellants, Motes,  by  Darkbast No. 31 of 1952 and purchased  by  Motes themselves.  The Execution Court, in proceedings under Order 21,  Rule  66,  Civil  Procedure  Code,  had  dismissed  the objection   of  the  plaintiff  respondent.   Against   this dismissal  an  appeal  was filed in  the  High  Court  which allowed  it.  Hence, the Motes died appeal No. 1882 of  1967 in this Court against this dismissal by the common  judgment of the High Court deciding tile two appeals before it. The Trial Court dismissed the suit No. 57 of 1958 brought by Oswal.   It  held  that, although, Oswal had  no  actual  or constructive   notice  of  the  charge  in  favour  of   the appellants, yet the charge had priority over the  subsequent mortgages and could be enforced against Oswal the plaintiff- respondent, inasmuch as a simple mortgage with-out Po  ion, did  not give the mortgagee a right to protection  given  by the    proviso to Section 100 of the Transfer of Prop"  Act. (here-inafter referred  to as "the Act") against enforcement of a charge upon"any property the hands of a person to  whom such property has been for consideration and without  notice of  the  charge".The Trial Court held that the rights  of  a simple  mortgage-  are  not property in the  hands"  of  the mortgagee  who  could, therefore, not be  protected  by  the proviso  to  Section 100 of the Act.  On  appeal,  the  High Court  of Bombay reversed the decree of the Trial Court  and held the subsequent simple mortgages to be protected by  the proviso. 245 The  High Court had also, in modification of the  decree  of the  Trial  Court,  directed  payment of  the  dues  of  the Maharashtra  Bankdefendant  No. 8, under the  provisions  of order  34,  Rule  4, Civil Procedure  Code.   The  principal question which arises in the two appeals now before us is  : Does  the protection given by the proviso to Section 100  of the  Act  against the enforcement of a charge  extend  to  a simple  mortgagee as a transferee for consideration  without notice of the charge ?               Section 100 of the Act reads as follows:               "Where  immovable property of on.-, person  is               by  act  of parties or operation of  law  made               security for the payment of money to  another,               and  the  transaction  does not  amount  to  a               mortgage, the latter person is said to have  a               charge on the property; and all the provisions               hereinbefore contained which apply to a simple               mortgage  shall,  so far as may be,  apply  to               such charge.               Nothing in this section applies to the  charge

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             of   a  trustee  on  the  trust-property   for               expenses properly incurred in the execution of               his  trust, and, save as  otherwise  expressly               provided  by  any law for the  time  being  in               force, no charge shall be enforced against any               property in the hands of a person to whom such               property    has    been    transferred     for               consideration   and  without  notice  of   the               charge". One of the questions raised before us whether Section 100 of the Act has any application to a charge created by the terms of  a  decree.  It was contended that such a  charge  has  a binding force independently of the provisions of Section 100 if   the  Act.   In  support  of  this  submission   several authorities were cited :               (1)   Seth Ghasiram Seth Dalchand Palliwal  v.               Mi. Kundanbai w/o Rameshwar Shukul & Ors.(1)               (2)   V.  S.  V.  Thangavelu  Mudaliar  v.  G.               Thirumalswami Mudaliar & Anr.;(2)               (3)   Seth Radhe Lal v. Ladli Parshad;(3)               (4)   Jata Bhusan Chatterjee v. Smt.   Krishna               Bhamini Debi & Anr.;(4)               (5)   Seethalakshmi Ammal v. Srinivasa Naicker               & Ors. (5)               (6)   Sri  Rajah  Mommadevara  Naganna   Naidu               Bahadur Jamindar Garu (died) & Ors. v. Sri Rao               Janardhana  Krishna Rangarao Bahadur  Jamindar               Garu & Ors. (a)                (7)  Dhirendra Nath Sen & Ors. v. Santa Shila               Devi & Ors. (7)               (1) AIR    1940 Nag. 163.               (3)   AIR 1957 Pb. 92.               (5)   AIR 1958 Mad. 23.               (7) AIR 1968 Cal. 336.               (2)   AIR 1956 Mad. 67.               (4)   AIR 1957 Cal. 204.               (6)   AIR 1959 AP 622 (FB). 246 None  of  these is a case in which there  was  a  compromise decree.They  were  cases decided by an  application  of  the principles  of Res judicata which bind parties to  a  decree and  those who derive their rights and interests  from  such parties.   It  has  been held by this  Court  in  Pulavarthi Venkata  Subba Rao & Ors. v. Valluri Jagennadha Rao  &  Ors. (1) with regard to a compromise decree (at page 322) :               "The  compromise decree was not a decision  by               the Court.  It was the acceptance by the Court               of something to which the parties had  agreed.               It  has  been said that  a  compromise  decree               merely  sets  the  seal of the  court  on  the               agreement  of the parties.  The court did  not               decide  anything.  Nor can it be said  that  a               decision  of  the court was  implicit  in  it.               Only  a  decision by the Court  could  be  res               judicata, whether statutory under S. 11 of the               Code of Civil Procedure, or constructive as  a               matter  of public policy on which  the  entire               doctrine rests". In  several of the cases mentioned above the question  arose whEther  the terms of the decree were sufficient  to  confer the  rights  upon the parties or  their  representatives  in interest  to  execute the Decree to satisfy the claim  or  a separate unit was needed.  That question has not been raised before  us.  We are concerned here with a charge created  by the  terms  of an agreement between the  parties  which  was

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embodied in the compromise decree.  This agreement satisfies the requirements of Sec. 100 of the Act inasmuch as it is  a charge created by the act of parties.  It is immaterial that the  charge was subsequently incorporated in a  decree.   We also  find  that no contention was advanced  either  in  the Trial  Court  or in the High Court that a charge  under  the terms  embodied in the, compromise decree operates or  binds outside the conditions laid down by sec. 100 of the Act  for enforcing  charges  in general.  I am not impressed  by  the argument. I  hold  that  a  charge was created by  the  terms  of  the agreement embodied in the consent decree, which was actually registered   even  though,  unfortunately  for  the   charge holders,  the provisions of Section 51 of  the  Registration Act were not fully complied with in keeping a record of  the charge.  That charge against Budhwar Peth property would  be enforceable if the plaintiff-respondent is not protected  by the terms of the proviso after its amendment by the Transfer of Property (Amendment) Act XX of 1929.  If the rights of  a simple mortgagee, who is not in possession of the  mortgaged property, are not protected by the proviso at all, there  is no doubt that the first part of Section 100 will confer upon the  charge-holder  the  same  rights  as  a  prior   simple mortgagee  has  against a subsequent simple  mortgagee  even though the charge does not "amount to a mortgage" Before proceeding further I will deal with a question raised before  the Trial Court, the High Court, and, again,  before us,  about the degree of diligence to be proved by  a  party setting  up  want  of  notice  of a  charge  as  a  bona  Me transferee  for  consideration.  Section 3 of the  Act  lays down : (1)  [1964] 2 SCR 310, 322. 247               a  person  is said to 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  1. Where any transaction relating to  immovable property is required by law to be and has been affected   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 or, where the property is not all  situated in one sub-district, or where the registered instrument  has been  registered under sub-section (2) of section 30 of  the Indian  Registration  Act, 1908, from the earliest  date  on which any memorandum of such registered instrument has  been filed  by  any Sub-Registrar within whose  sub-district  any part of the property which is being acquired, or of the pro- perty  wherein  a share or interest is  being  acquired,  is situated;               Provided that-               (1)the instrument has been registered and  its               registration    completed   in   the    manner               prescribed  by  the Indian  Registration  Act,               1908, and the rules made thereunder,               (2)the  instrument  (or memorandum)  has  been               duly entered or filled, as the case may be, in               books kept under section 51 of that Act, and               (3)the  particulars regarding the  transaction               to  which  the instrument  relates  have  been               correctly  entered in the indexes  kept  under               section 55 of that Act.               Explanation   11.-Any  person  acquiring   any

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             immovable property or any share of 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.               Explanation  III.-A person shall be deemed  to               have notice of any fact if his agent  acquires               notice thereof whilst acting on his behalf  in               the  course of business to which that fact  is               material :               Provided  that,  if  the  agent   fraudulently               conceals the fact, the principal shall not  be               charged  with  notice thereof as  against  any               person  who  was  a  party  to  or   otherwise               cognizant of the fraud’.               It is no body’s case that there was any wilful               abstention  from enquiry by Oswal whose  agent               Bhikam Dass deposed :               "the  search  in  Sub-Registrar’s  office  was               taken  by me.   searched under No. 1 and 2  of               property card.  I did not see the register  in               which the decretal charge was noted.  The               248               transactions in disputed were settled  through               me.   gave information to plaintiff". Anant  Sitaram  Joshi,  the  Clerk  of  the  Sub-Registrar’s office,  stated  that, although the  compromise  decree  was mentioned  in  Index No. 1, no entry about it  was  made  in Index  No. 2. Even in Index No. 1 it was not mentioned  that the  Budhwar  Peth  property was subject to  a  charge.   He stated that it was not mentioned in Index No. 2 because  the appropriate  orders  were wanting although it  was  property which  should have been entered in the property cards as  it bore CIS Nos.  Hence, it is clear that an examination of the relevant  property index No. 2 could not have disclosed  the existence  of  the  charge  on  Budhwar  Peth  property.   A reasonably  prudent person could not be expected to  suspect that the misleading entries were incorrect, and, from a mere reference  to a decree, imagine that property not  shown  as charged at all may also be included, and, therefore, attempt to find out all the particulars given in the decree  itself, which  should have been given in Index No. 11.  Section  55, sub.  s.(3) of the Registration Act, lays down : "Index  No. 11  shall contain such particulars mentioned in  Section  21 relating  to  every  such document  and  memorandum  as  the Inspector General from time to time directs in that behalf’. On  the  evidence  on record, the Trial Court  came  to  the conclusion "that only the property at Shukrawar Peth,  Poona city,   was  mentioned  in  the  various  official   records maintained  by the Sub-Registrar and City Survey Officer  as affected  by the charge, though property ill  Budhwar  Peth. which was also included therein, was not at all referred  to therein".  The High Court affirmed this finding and held               "that from inspection of the records it  could               not have been possible for any one to find out               if  the  suit  property was  charged  and  the               plaintiff, therefore, could not be fixed- with               notice, either actual or constructive, of  the               above decretal charge in favour of  defendants               Nos. 9 to 13". After  having  been  taken through  the  evidence  mentioned above, I see no reason to differ from the views taken by the Trial Court and the High Court which preclude the  existence of "gross negligence’" on the part of the plaintiff who  had made such attempts as could be expected of a reasonable  and

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prudent  individual to find out whether the property  to  be mortgaged was subject to a previous charge.  The failure  of the  plaintiff to learn of the prior charge on  the  Budhwar Peth  property  could be ascribed to the negligence  of  the Sub-Registrar concerned for which the plaintiff Oswal  could not be made to suffer. Coming back to the principal question indicated above, which was  most  strenuously argued on behalf of  the  appellants, relating to the interpretation of the proviso to Section 100 of  the  Act,  I  think that the  correct  meaning  of  this provision will emerge by determining what its object is by : firstly, considering the language employed in the context of other  sections of the Act defining the  concepts  involved; and, secondly, if there is any uncertainty left, by glancing at some legal 24 9 history  so  as to appreciate what the provisions  could  be aimed at achieving. I have set out above the requirements of notice, both actual and constructive, found hi Section 3 of the Act.  So far  as constructive  notice  is concerned, it is evident  that  the three  Explanations  lay down what is deemed  to  be  notice under  each  of the three sets of circumstances  dealt  with separately  by  each Explanation.  There  is  a  presumption against  redundance or meaningless overlapping of  statutory provisions.   Explanation  1, within which the case  of  the plaintiff  Oswal  was sought to be brought by  Motes,  deals with a very different set of circumstances, and, apparently, dispenses  with  circumstances bringing  in  Explanation  II which  makes it clear that a person acquiring any  share  of interest  in  immovable  property will be  "deemed  to  have notice  of the title, if any of any person who is in  actual possession   thereon".   In  other  words,  Explanation   If constitute&   an  independent  category  of  a   deemed   or constructive notice of entitlement of the person shown to be in  possession.  The significance of this provision is  that it  shows  that, where actual possession was  to  constitute notice of entitlement, it is clearly and specifically  dealt with  in Section 3 of the Act.  It indicates that  reference to the factum of possession is made in the Act itself  where this  constitutes a part of a set of facts which has  to  be proved for establishing a right or liability. The  High Court had correctly held the view,   in accordance with what was laid down by this Court in Ahmed G. H. Ariff & Ors.   Vs.  Commissioner of Wealth  Tar,  Calcutta,(1)  that "property" is "the most comprehensive of all the terms which can be used, inasmuch as it is indicative and descriptive of every  possible  interest which the party  can  have".   Its amplitude  as well as what is excluded from  its  definition are  indicated by Section 6 of the Act.  Section 58  of  the Act  defines a mortgage as "the transfer of an  interest  in specific immovable property for the, purpose of securing the payment  of money advanced or to be advanced." There can  be little  doubt  that  a  simple mortgage  is  a  transfer  of property within the meaning of Section 5 of the Act. If a simple mortgage is a "transfer of property", as I think it is. the mortgagee’s rights must vest in someone.  In  the context  of  the provisions set out above, it seems  that  a prior  charge  of which a transferee for  consideration  has notice becomes enforceable, by reason of Section 100 of  the Act,  against the person in whom a transferees rights  vest. The  right  vested in a person by virtue of a  transfer  for consideration is nothing more nor less than "property in the hands of a person to whom such property his been transferred for consideration".  The expression "in the hands of"  could

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not  be confined to tangible property which is  actually  in the   physical   possession  of  the  transferee.    It   is incontrovertible that the term "property" defined in Section 6 of the Act includes both tangible and intangible property. It  extends to rights and interests in property  too.   When these  vest in somebody they are property "in the hands  of" that person. (1)  [1970] 2 SCR 19. 250 The  word "hand" has acquired a number of extended  meanings in the English language.  It denotes power over or  capacity to  do  or skill in doing various  things.   Its  derivative "handle"  may  be an object one can  physically  grasp  with one’s hand, but "to handle" denotes capacity for  management or  control.   The word "hand" is used in  conjunction  with "at"  and "on" and "to" and "in".  The various  meanings  of "in  hand"  given  in  Webster’s  Third  New   International Dictionary (p. 1026) are : (1) In one’s possession (e.g.  to have enough money in hand); (2) In control (e.g. to keep the children  in hand by a system of rewards  and  punishments); (3) At one’s disposal (e.g. to have a large property in hand because  of  one’s  position); (4) To spare  (e.g.  to  have plenty of time in band); (5) In preparation (e.g. a new play in hand); (6) Under consideration (e.g. matter in hand); (7) Under  effective  control or management  (e.g.  business  in hand). Thus,  we see that to have possession of an object  is  only one  of  the several Dictionary meanings but  not  the  only meaning of the expression "in hand"’.  Moreover, the concept of  possession in legal terminology is so well  known  that, whenever it is intended to convey what it signifies, lawyers and  draftsmen  do not hesitate to use the  word  possession just as we find it used in Section 3, Explanation 11, relat- ing  to deemed "notice".  It seems that, in the  proviso  to Section  100  of  the  Act,  the  legislature   deliberately employed  the  concept  of "property in  hand",  in  contra- distinction   with  "property  in  the  possession   of"   a transferee,  so  as to include cases where a person  has  at right, which is intangible property vested in him. The  right  of a simple mortgagee may be  capable  of  being spoken of as "possessed" by the mortgagee.  But, since it is an intangible right, even the word possession, when used  in conjunction  with  mortgagee’s rights, would not  denote  an actual  physical handling of the right which is  intangible. The right may be evidenced by a document kept in the  vaults of  a  bank or in an almighty in a private  home,  but,  the right itself is incorporeal.  It is something distinct  from the  document which evidences it.  It is incapable of  being "handled" physically.  The right could more appropriately be spoken  of  as  either vested in  the  transferee",  or,  as property  "in the hands of the transferee".  The  object  of employing this terminology in proviso to Section 100 of  the Act seems to be to include such rights as those of a  simple mortgagee.  1, therefore, think that the Bombay  High  Court was  correct  in  adopting  the  view  that  the  plaintiff- respondent Oswal, as a simple mortgagee, was not outside the protection  conferred by the proviso to Section 100  because be  was  both a bonafide transferee for  consideration  with simple  mortgagee rights "in hand", as well as a person  who had  no notice, actual or constructive, of the prior  charge of the Motes for reasons already mentioned above. The only authority which learned Counsel for the  appellants could cite against the view adopted by the Bombay High Court was a stray 251

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remark  in Arumilli Sitrayya v. Pinisetti Venkataamanamma  & Ors.,(1) where it was observed by Horwill, J. :               "If  the  appellant  is treated  as  a  simple               mortgagee,  he  cannot by any stretch  of  the               imagination be considered to have the property               in his hands".               The High Court had considered it and dissented               from it in the following words :               "With  respect there is no  justification  for               construing the words "in his hands" literally.               If  the words were to be construed  literally,               the  section would not apply to  a  purchaser,               who  is not in actual physical possession  but               is  in  possession through his  agent  or  his               tenant  or his mortgagee.  The words  "in  the               hands"  can  and must only mean "held  by"  or               "owned by" and cannot mean physical holding of               the  property.  They only mean the holding  of               the  title and nothing else.  These  words  do               not indicate that the section was only intend-               ed  to apply to a purchaser or a mortgagee  in               possession.   Section 58 of the,  Transfer  of               Property  Act  does not  make  any  difference               between  a  mortgagee, who is a  simple  mort-               gagee,  and a mortgagee with  possession.   It               only  slightly  alters  the  rights  that  are               available  to  the mortgagee, but  the  actual               transfer  is  the transfer  of  a  subordinate               interest in the mortgaged property and that is               the same in both the cases". As  explained above, even the literal meaning of  the  words "property  in hand" could be said to be wider than  that  of tangible  property  in physical possession.   After  all,  a literal  meaning  or the "plain ordinary meaning"  of  words used  becomes what words employed have come, by common  use, to  mean  and  to  find  recognition  as  their  "dictionary meaning".   We  need go no further here.  For  applying  the literal  Rule of interpretation, which  ordinarily  suffices unless  there  is  good  reason  to  depart  from  it,   the Dictionary meaning has to be necessarily relied upon.   This does  not  exclude other very useful aids  to  construction, such  as  a  glance  at legal history  to  discover  what  a provision was aimed at achieving.  An attempt to apply  what is  known  as the mischief Rule will, I think, lead  to  the same result. As equitable principles evolved by the Chancellor’s Court in England  underlie a number of provisions of our Transfer  of Property  Act,  it  is useful to  remind  ourselves  of  the equitable  doctrine embodied in the proviso to Section  100. This  doctrine is stated as follows in Halhsbury’s  Laws  of England-III Edn.  Vol. 14, page 539 :-               "1011.  The legal estate gives priority.  When               there  is  an existing equitable  interest  in               property,  and  an  interest  is  subsequently               created  in  favour of a purchaser  for  value               without  notice of the earlier  interest,  and               that purchaser either gets in the legal estate               at  the time of his purchase, or,  in  certain               circumstances,   after   his   purchase,   his               possession of the legal               (1)   AIR 1940 Mad. 701.               252               estate  gives  him priority over  the  earlier               equitable  owner.   The equities  being  equal               except  as  regards time,  the  legal  estate,

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             properly  got  in by the owner  of  the  later               equitable  interest, entities him to hold  the               property either as absolute owner or until his               mortgage  is discharged, as the case  may  be.               There is, in the absence of notice or of  any               other  circumstances  to postpone  him,  other               than that of being later in point of time,  no               equity attaching upon his conscience by virtue               of  which  the Court will deprive him  of  his               legal advantage; and the subsequent  purchaser               is entitled to the like priority if he has the               better  right to call for a conveyance of  the               legal estate.  The importance which courts  of               equity, in deciding priorities, attach to  the               legal  estate, is an instance of  the  general               principle that equity follows the law". It will be seen that in the passage set out above, the, term "holder  of the legal estate" is obviously used for one  who holds  the property "either as absolute owner or  until  his mortgage is discharged as the case may be".  In other words, for  applying  the equitable principle explained  there,  a mortgagee  is  equated  with the  absolute  owner  under  an outright  sale  of  rights of  ownership.   A  reference  to Barwick & Co. v. Price(1) also shows that the meaning of the term  "purchaser for value" as including a mortgagee was  so well  settled  in  English law that  it  received  statutory recognition  in  Section 2(viii) of  the  Conveyancing  Act, 1882,  there.   Again,  Section 205(1)(xxi) of  the  Law  of Property  Act,  1925,  in  defining  "purchaser",  made   it abundantly  clear,  that both an outright  purchaser  and  a mortgagee  could  fall  under the protective  cover  of  the doctrine  of  a "bonafide purchaser for value".   This  only meant   that  English  law  too  gave  statutory  form   and expression to doctrines evolved by Courts of Equity.  A bare perusal  of passages in Pomeroy’s Equity  Jurisprudence"  is enough to show that the concept of a "bonafide purchaser for value  includes the mortgagee and that a  "legal  mortgagee" has,  for  the purposes of applying the doctrine,  a  "legal estate".  In  a discussion of"what constitute& a  bona  fide purchase", the need to show a purchaseof     the     whole interest  which a transferor could pass finds  no  place(See :Pomeroy’s  Equity  Jurisprudence  5th  Edn.  Val.  3,  para 745,pages 19-20).  A distinction is made between the  claims of  a  "legal mortgagee", who is described  as  "holding  of course, the legal estate", and those of a merely  "equitable mortgagee" (See : Pomeroy, Vol. 3, part 741). The  question  whether  a  bonafide  ’purchaser  for  value" includes a "legal mortgagee" or not could arise only in  the context of use of the term "purchaser" which became attached to  the  concept for historical reasons.  As  we  have  seen above  the concept covers the "legal mortgagee"  in  English law.  In the case before us, the simple mortgagee is a legal mortgagee  and not merely an equitable mortgagee.   Although the term "purchaser" is not used in Section 100 of the  Act, the proviso to it seems undoubtedly meant to incorporate the doctrine  of a bonafide purchaser for value in  speaking  of transfer "for consideration". (1)  [1950] (1) Ch. 632. 253 It  seems  to  me that the proviso to Section  100  is  less capable  of giving rise to difficulty inasmuch as  the  term purchaser is not used here.  It only speaks "of a person  to whom  such property has been transferred  for  consideration without  notice  of the charge".  One cannot  help  thinking that  the language used here was designedly wider so  as  to

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confer  the benefit of the proviso also upon  persons  other than purchasers of ownership rights.  ’the only condition is that   the   property  must  have   been   transferred   for consideration.   This, of course, implies that the  transfer covered  should have been in accordance with law.   That  is the  only condition imposed by the proviso upon the kind  of transferee  who can get the benefit of it.  I see no  reason for depriving a class of transferees of the benefit  which was, I an convinced, meant to be confirmed upon them also by this proviso. The effect of provisions of our Act is that a legally  valid charge.   even  though  Section  100  makes  it  a   legally enforceable  claim is not a transfer of property  which,  as Section 58 of the, Act shows, a mortgage is.   Nevertheless, it charge for purpose,; of enforceability would rank equally with  a  transfer  of  interest  in  property  provided  the trainsferee had notice of that charge within the meaning  of "notice"  as defined by Section 3 of the Act.  If  a  simple mortgage amounts to a transfer of property for the  purposes of Section 100, as it does, it is immaterial that a transfer of property implies a transfer of the whole bundle of rights in  property  which the transferee has for the  purposes  of situations  dealt  with  by other  Sections.   For  example, Section 8 of the Transfer of Property Act reads as follows               "8.  Operation of transfer.               Unless  a different intention is expressed  or               necessarily  implied, a transfer  of  property               passes  forthwith  to the transferee  all  the               interest which the transferee is then  capable               of  passing in the property, and in the  legal               incidents thereof.               Such  incident.,; include, where the  property               is  land, the casements annexed  thereto,  the               rents  and profits thereof accruing after  the               transfer and all things attached to the earth;               and, where the property is machinery  attached               to the earth, the movable parts thereof;               and,  where  the  property  is  a  house,  the               casements  annexed, thereto, the rent  thereof               accruing  after  the transfer and  the  locks,               keys,  bars,  doors,  windows  and  all  other               thing,-, provided for permanent use therewith;               and,  where  the property is a debt  or  other               actionable  claim,  the  securities   therefor               (except where they are also for other debts or               claims not transferred to the transferee), but               not  arrears  of interest accrued  before  the               transfer;               and,  where  the property is  money  or  other               property  yielding  income,  the  interest  or               income  thereof accruing after the..  transfer               takes effect". 254 Now  this section, laying down the effects,  incidents,  and implications  a transfer begins with words showing that  its operation is subject to express terms of transactions  which restrict  the  rights of transferees to less than  those  of ownership.  A mortgage is a transfer of property but not  of ownership.  Section 8 embodies only a rule of interpretation for   transactions  or  acts  of  purported  transfer.    It corresponds  to Sections 60(1) and 62 of the English Law  of Property Act, 1925.  Transfers may be either of the whole or a part of the interest of the transferor.  Section 8, in  my opinion, was meant to govern matters not expressly  provided for in deeds of transfer.  It was not, I think, intended  at

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all to govern or lay down the meaning of the term "transfer" whenever  used in the Act.  That has been done expressly  by Section 5 read with Section 6 of the Act.  Various  Sections of  the Act, such as Section 58, dealing with various  types of transactions. specifically lay down whether a transaction of particular kind is a transfer or not. A number of other provisions of the Act to which  references have  been  made in the course of arguments do  not,  in  my opinion,  really help us in arriving at the correct  meaning of the transferee of property contemplated by the proviso to Section  100 of the Act.  It is enough, for the purposes  of interpreting  Section  100, to reach the  conclusion,  as  I think  we  have to in view of other provisions of  the  Act, that the transferee may be of even an interest in property. I regret that I am unable to share the view that the  Bombay High  Court,  in the Judgment under  appeal,  stretched  the meaning  of  the  words "in the hands of" too  far  to  read something  into Section 100 of the Act which is  not  there. On  the  other hand, I think that we will have to  add  some words  if we import a limitation, which is not  there,  into the  words : "any property in the hands of a person to  whom such  property has been transferred for consideration".   We will  have  to so read them as to confine the meaning  to  a transfer  of "full rights of ownership in property".  To  do that,  we  will  have  to at least  alter  the  words  "such property" into "rights of ownership in such property".   The words "such property" do not, it seems to me, stand only for "full  ownership of property’.  They obviously  denote  that property which has been transferred.  If the transfer of  an interest  in  property  to a mortgagee,  whether  simple  or usufructuary,  is  a transfer of property,  "such  property" could only mean, in the case of a mortagee, the interest  in property which has been transferred to the mortgagee because that  is also "property".  The words used could not, in  the context,  stand  only for the whole bundle of  rights  which ownership  of  such property may made up of.  In  any  case, what  the  mortgagee, has in hand is only  an  interest  in- property,  so that this, and nothing more, is  "property  in the   hands  of"  a  mortagee.   When  his  case  is   under consideration  that is all we are concerned with.   We  need indulge  in  no semantic, refinements at all to  reach  this result  which  flows  directly from the words  used  in  the section.   And,  we  need not  unnecessarily  cut  down  the apparent amplitude of their scope. If we can reach the same result on the question of  priority of  a  simple  mortgage  as against  charge,  of  which  the mortgagee has no notice                             255 by resorting to the principles of "equity, justice and  good conscience",,  the  question arises : why can  we  not  read Section  100  of  the  Act itself’  as  a  direct  statutory recognition  of  those very principles when  this  provision contains,  comprehensively, as it appears to me to be  meant to  do,  the  requirements  of  equity,  justice,  and  good conscience,  on the question of priority between  a  charge- holder  and  other possible transferees including  a  simple mortgagee  against whom the question of enforceability of  a prior   charge  could  arise?   To  answer   this   question satisfactorily I think we are, of necessity, driven to  seek light  from  the principles, developed by  the  Chancellor’s Court  of Equity in England which a number of our  statutory provisions are intended to incorporate into our  statutory law justas a number of them have been embodied in  English statutory law nowIf  the maxim of equity is that  "equity follows the law", it is no lesstrue  that statutory  law

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generally  purports  to  follows  the  behests  of   equity, justice, and good conscience. A  wide and liberal enough interpretation of the proviso  to Section.  100  of the Act to extend the benefit  of  it,  as amended  and  clarified  by Section 50 of  the  Transfer  of Property  (Amendment) Act XX of 1929, to mortgagees also  as bona  fide transferees for value (the word "purchaser  seems to  have  been deliberately eschewed), is  supported  by  an examination of all such relevant cases decided by  different High  Courts  on the amended provision as have  come  to  my notice,  with the solitary exception of  Arumilli  Surayya’s case  (supra)  of  the  Madras  High  Court  containing   an observation,  quoted already, by Horwill, J. The  amendment, was  apparently made to negative the view expressed in  some cases  that a charge could be enforced even against  a  bona fide  purchaser  for  value  without  notice.   The  proviso should, I think, be so interpreted as to amplify the  remedy and  to suppress the mischief aimed at by the amendment.   I may  mention some cases decided on the assumption  that  the mortgagees were also protected by the proviso. In Chhaganlal Sakharam & Anr. v. Chunilal Jagmal &  Ors.,(1) the  question  arose  of  priority  of  two  mortgagees   by registered  deeds, over a previous charge in favour  of  the appellants.   The  mortgagee was given the  benefit  of  the amended Section 100 of the Act. In Barhu Mahto & Anr. v. Srimati Jasoda Devi & Ors.,(2) Fazl Ali,  C.J.,  and B. P. Sinha, J., held  that  plaintiff  who brought  a  suit to enforce a right under  a  mortgage  bond obtained priority over a previous charge under a  compromise decree.   The learned Judges remanded the case to the  Trial Court for framing an issue and deciding the question (1) AIR 1934 Bombay 189. (2) AIR 1945 Pat. 426. 256 whether the transferor of the rights of the plaintiff  under the  mortgage bond (defendant 23) had notice of  the  charge upon which the Defendants-Appellants relied. In Goswami Maheshpuri Guru Ramkrishnapuriji vs.   Ramchandra Sitarami  A Anr. (1) the plea of a Defendant  charge  holder under  a  decree  was repelled  as  against  the  plaintiff- respondent  who bad brought a suit to enforce  a  subsequent mortgage because the mortgagee had no notice of the  charge, Grille, C.J. observed with regard to the distinction between the unamended and amended sections (at page 5)               "The main difference. to he noticed in the two               sections  is  that  the  section  as   amended               explicitly  states  that no  charge  would  be               enforced against a person taking the  property               for  consideration and without notice  of  the               charge.   The amendment was made in  order  to               set  at  rest the conflict of  decisions  that               existed   before.   The  view  taken  by   the               Judicial Commissioner’s Court, Nagpur,  before               the  amendment  was that no  charge  could  be               enforced  against property in the bands  of  a               person   to  whom  such  property   had   been               transferred  for  consideration  and   without               notice  of  the charge: 15 N.L.J.  141.   This               view was approved in 30 N.L.R. 303 at p.  305.               The view taken in several other cases was that               inasmuch  as there is no transfer of  interest               in property in a charge while there is such  a               transfer  of interest in a mortgage  a  charge               would  be good against subsequent  transferees               such  as mortgagees or purchasers only if  the

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             subsequent transferees had notice of the prior               charge  : 33 Cal. 985, at p. 993, 38 All.  254               at p. 258 and 42 Cal. 625". Of  course,  the precise question raised before us  was  not actually   raised  in  the  cases  mentioned   above,   and, therefore, it was not decided simple    mortgagee  is   also covered by the protection conferred by the amended  proviso. If  this  has been the basis on which  decisions  have  been given until now since the amendment of sec. 100 by Act XX of 1929,  we should, I think, be most reluctant to tread a  new path on the meaning-of such a statutory provision unless  we could not avoid doing so because some clear misconception of the law is revealed. Another  contention advanced on behalf of the appellant  was that  their  prior rights would be protected by  either  the terms  of  or the principles underlying Sec. 48 of  the  Act which reads as follows (1)  AIR 1944 Nag. 1. 257               "S. 48.  Where a person purports to create  by               transfer at different times rights in or  over               the  same immovable property, and such  rights               cannot all exist or be exercised to their full               extend  together,  each  later  created  right               shall, in the absence of a special contract or               reservation  binding the carrier  transferees,               be subject to the rights previously created". The  contention  was  that, although a  charge  may  not  be described  :is "a transfer", yet, the result of Section  100 of the Act was to equate it with a simple mortgage which  is a  transfer  because Section 100 says : ill  the  provisions here  in before contained which apply to a  simple  mortgage hall,  so  far as may be, apply to such  charge".   I  think that, apart from the, qualifying words, "so far as may  be", used by Section 100 of the Act, a condition essential to the applicability of Section 48 of the Act is that there must be an  actual  transfer  of  property.   Furthermore,   another condition  for  invoking Section 48 of the Act is  that  the previous  and  the subsequently created rights  "cannot  all exist  or be exercised to their full extent  together".   In the  case before us, this does not appear from facts  found. In any case, the prior right of the charge-holder could only obtain priority provided other things are not unequal.  This follows  from words used indicating that each of the two  or more   transactions   must  at  least   be   a   "transfer". Furthermore the conditions of priority as between the holder of  a previous charge and a subsequent simple  mortgage  are completely covered by Section 100 of the Act.  The principle underlying  Section  48  is one expressed in  the  maxim  of Equity  : "Qui prior est tempore potior est jure  (first  in time  is  stronger in right).  This  principle,  applied  to ranking  between  rival  equitable  claims,  is  applied  by Section  48  to contending claims of otherwise  equal  legal validity.  The effect of Section 100 is that while a charge, which is not a "transfer" of property, gets recognition as a legally enforceable claim, that enforceability is  subjected by  the  proviso to the requirements of a  prior  notice  in order to give it precedence over a legally valid transfer of property.  The rights of the appellants chargeholders  could only  be exercised, on facts found, subject to the  priority obtained by the respondent mortagagee’s rights.  This  clear result  of the law, as contained in Section 100 of the  Act, cannot  be defeated by invoking either the terms of  or  the principles  underlying Section 48 of the Act read  with  the first  part  only  of  Section  100  of  the  Act.   If  the

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respondent simple mortgage Oswal could not have claimed  the benefit  of  the proviso to Section 100. the first  part  of Section  100,  read with Section 48 of the Act.  could  have come to the aid of the applicants.  But. on the view adopted by me, this line of reasoning does not help the  unfortunate chargeholders at all. 258 Lastly,  learned Counsel for the appellants  suggested  that the  mortgages made subsequent to the charge by a decree  in favour  of  the  Motes were struck by the  doctrine  of  Lis Pendens.  The Bombay High Court had repelled this contention on  two  grounds  :  firstly,  the  properties  which   were subsequently  charged with the payment of the debts  to  the Motes  were not the subject matter of suit No. 741 of  1938; and secondly, there was no Darkhast or execution application pending  at the time when the simple mortgages in favour  of the plaintiff respondent Oswal were created in 1949. 1 agree with  these  reasons for holding that the  doctrine  of  Lis Pendens  had no application on the facts of the case  before us. The  result  is that, finding myself in agreement  with  the views  expressed and the conclusions reached by  the  Bombay High  Court,  I would dismiss these appeals.   But,  in  the circumstances of this case, the parties must bear their  own costs. V.P. S. Appeals dismissed 251 Sup C. 1.175-2500-24-9-75  GIPF. 25 9