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PETITIONER: AHMEDABAD MUNICIPAL CORPORATION OF THE CITY  OF AHMEDABAD

       Vs.

RESPONDENT: HAJI ABDULGAFUR HAJI HUSSENBHAI

DATE OF JUDGMENT18/03/1971

BENCH: DUA, I.D. BENCH: DUA, I.D. BHARGAVA, VISHISHTHA

CITATION:  1971 AIR 1201            1971 SCR   63

ACT: Transfer of Property Act (4 of 1882), s.  100--Applicability to auction sales--Whether s. 141(1) of the Bombay Provincial Municipal  Corporatiun  Act, 1949, falls within  the  saving provision  of  s.  100,  T.P.  Act--Constructive  notice  of existence of arrears of municipal taxes--If and when can  be imputed to auction purchaser.

HEADNOTE: In  1950,  a building vested in the receivers on  its  owner being  adjudicated  an insolvent.  In  1951,  the  receivers secured necessary orders from court for paying off municipal taxes  then  due,  but the receivers did  not  pay  and  the municipal  corporation did not also pursue the  matter.   In 1954,  the  property was brought to sale in execution  of  a mortgage decree obtained by a mortgagee of the property  and the  respondent purchased it at the court sale.  Before  the purchase  he made enquiries from the receiver if there  were any dues against the property, but he was not informed about the  arrears of municipalpal taxes.  In 1955, the  municipal corporation  attached the property for arrears of  municipal taxes  due from 1949, and the purchaser filed a suit  for  a declaration that the arrears were not recoverable by sale of the property. On the questions: (1) whether under s. 141(1) of the  Bombay Provincial Municipal Corporation Act, 1949, read with s. 100 of the Transfer of Property Act, 1882, the property could be sold for the arrears in the hands of the respondent even  if he  was a transferee for consideration without  notice,  and (2) whether the respondent, who was an auction purchaser  at a  court  sale, could be held liable to pay the  arrears  of taxes  and  the  property  could  be  held  subject  to  the liability  on the ground that he had constructive notice  of the existence of the arrears. HELD:     (1)  Section 100, Transfer of Property  Act,  lays down  that no charge is enforceable against any property  in the  hands of a transferee for consideration without  notice of the charge except when it is otherwise expressly provided by  any law for the time being in force.  The real  core  of the  saving provision of law is not mere  enforceability  of the  charge against the property but enforceability  of  the charge against the property in the hands of a transferee for consideration  without notice of the charge. S. 141  of  the

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Bombay  Municipal  Act is not such a provision.   It  merely creates  a  charge  in  express  language,  but  apart  from creating  a  statutory charge, it does not  further  provide that  the charge is enforceable against the property in  the hands  of a transferee for consideration without  notice  of the charge. [67A-B; 68E] (2)  (a)  There is no basis for the contentions that s.  100 of  the Transfer of Property Act does not apply  to  auction sales  and that therefore the execution purchasers  purchase the  property  subject to all the charges  and  encumbrances which  would bind the judgment debtor.  This Court in  Laxmi Devi v. Mukand Kunwar, [1965] 1 S.C.R. 726 pointed out  that a.  100  applies to proceedings by operation  of  law  also. [69A-B] 64 (b)  According  to s. 3, Transfer of Property Act, a  person is said to have notice of a fact when he actually knows  the fact  or  when  but for wilful abstention  from  enquiry  or search which he ought to have made, or gross negligence,  he would  have known it.  In the latter case he is presumed  to have  constructive notice.  For drawing the  presumption  in the present case, therefore, the question is not whether the purchaser had the means of obtaining, and might with prudent caution  have obtained, knowledge of the charge but  whether in  not doing so, he acted with wilful abstention  or  gross negligence.   There is no principle of law imputing, to  all Intending  purchasers of property in municipal  areas  where municipal  taxes are a charge on the property,  constructive knowledge  of the existence of such municipal taxes  and  of the reasonable possibility of those taxes being in  arrears. It is a question of fact or a mixed question of fact and law depending  on the facts and circumstances of the case.   The material  in  the  present case does not  justify  that  the respondent  purchaser should be fixed with any  constructive notice  of  the existence of the arrears,  because  (i)  lie could not reasonably have thought the municipal  corporation had not cared to secure payment of the taxes due since 1949; (ii)  the municipal corporation was far more  negligent  and blameworthy  than the respondent in allowing the arrears  to accumulate;   (iii)  though  he  made  enquiries  from   the receivers  they  did  not  give  any  intimation  about  the arrears;  and  (iv) the building was in  the  occupation  of tenants and the rent was recovered by the receivers and  the reasonable assumption would be that the municipal tax, which was a charge on the property and given priority under s.  61 of the Provincial Insolvency Act, 1920, had been paid by the receivers. [71G-H ; 72H 73D-G  74C-H; 75B-D] Nawal  Kishore v. Municipal Board, Agra, I.L.R. [1943]  All. 453, Municipal Board, Lucknow v. Ramjilal, I.L.R. [1916]  16 Luck. 607, Chandu Ram v. Municipal Commissioner of  Kurseong Municipality,  A.I.R.  19,51 Cal. 398 and  Municipal  Board, Lucknow v. Lala Ramji Lal, A.I.R. 1941 Oudh 305, overruled. Municipal Board, Cawnpore v. Roop Chand Jain, I.L.R.  [1940] All. 669, approved. Akhoy   Kumar Banerjee v. Corporation of Calcutta, I.L.R  42 Cal. 625, referred to.

JUDGMENT: CIVIL  APPELLATE  JURISDICTION : Civil Appeal  No.  1161  of 1967. Appeal from the judgment and order dated April 28, 29,  1966 of the Gujarat High Court in Letters Patent Appeal No. 19 of 1961

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S. T. Desai and I. N. Shroff, for the appellant. The respondent did not appear. The Judgment of the Court was  delivered by Dua,  J.-In this appeal on certificate granted by  the  High Court of Gujarat under Article 133(1)(c) of the Constitution of  India  the question raised relate to  the  liability  of auction purchaser of property at court sale for the  arrears of municipal taxes due on the date of sale to the  municipal corporation  of  the  City of Ahmedabad  which  dues  are  a statutory  charge  on  the property sold and  of  which  the purchaser had no actual notice.  On the                              65 question of constructive notice there is a sharp conflict of judicial  decisions  in the various High Courts and  in  the Allahabad  High  Court itself there  have  been  conflicting expression  of  opinion.   In  this  Court  there  being  no representation  on behalf of the respondent the  appeal  was heard ex parte. The  property which is the subject matter of controversy  in this litigation originally belonged to one Haji Nur-Mahammad Haji   Abdulmian.    He  apparently   ran   into   financial difficulties  in February, 1949, and insolvency  proceedings were  started  against him in March, 1949.   By  an  interim order  receivers  took charge of his estate and  finally  on October 14, 1950 he was adjudicated insolvent.  The property in  question  accordingly  vested in  the  receivers.   This property  had  been  mortgaged with a  firm  called  Messrs. Hargovind  Laxmichand.   In execution of a  mortgage  decree obtained  by the mortgagee this property was  auctioned  and purchased  at  court sale by the plaintiff  Haji  Abdulgafur Haji Hussenbhai, (respondent in this Court) for Rs.  22,300. He was declared purchaser on November 28, 1954.  At the time of  this purchase there were municipal taxes in  respect  of this  property in arrear for the years 1949-50  to  1953-54, which  means  that the receivers had not cared  to  pay  the municipal  taxes during all these years.  The  property  was attached  by  the  municipal  corporation  by  means  of  an attachment  notice dated- July 20, 1955 for the  arrears  of the  municipal  taxes  amounting to Rs. 543.79  ps.  As  the municipal  corporation  threatened  to  sell  the   property pursuant   to  the  attachment  proceedings  the   purchaser instituted  the  suit  (giving rise to this  appeal)  for  a declaration  that he was the owner of the property and  that the  arrears  of municipal taxes due from  Haji  Nurmohammad Haji  Abdulmian  were not recoverable by attachment  of  the suit property in the plaintiff’s hands and that the  warrant of  attachment  of  the property  issued  by  the  municipal corporation was illegal and ultra vires.  Permanent  injunc- tion  restraining the municipal corporation  from  attaching the property for arrears of municipal taxes was also sought. The  trial court declined the prayer for a declaration  that the  property was not liable to be attached for recovery  of the  arrears  of  municipal  taxes.   But  the  war-rant  of attachment  actually  issued  in this case was  held  to  be illegal  and  void with the result that  an  injunction  was issued restraining the municipal corporation from  enforcing the impugned warrant of attachment against the plaintiff  in respect of the suit property.  Both parties feeling aggriev- ed appealed to the District Court.  The Assistant Judge  who heard  the  appeals dismissed both of them.   The  plaintiff thereupon  presented  a second appeal to  the  Gujarat  High Court  which  was summarily dismissed by  a  learned  single Judge.  Leave to appeal to a Division Bench under cl. 15  of the Letters Patent was however granted.  The Division  Bench hearing the Letters

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5-1 S.C. India/71 66 Patent  appeal  in  a  fairly  lengthy  order  allowed   the plaintiffs  appeal  and decreed his suit  holding  that  the plaintiff  is the owner of the suit property and the  charge of the municipal corporation for arrears of municipal tax is not  enforceable against his property and  also  restraining the  municipal  corporation by a permanent  injunction  from proceeding  to  realise  from this property  the  charge  in respect  of  the arrears of municipal taxes.  On  appeal  in this  Court three main questions were raised by Shri  S.  T. Desai, learned counsel for the appellant. To begin with it was contended that there is no warranty  of title in an auction sale.  This general contention seems  to us  to  be  well-founded because it is  axiomatic  that  the purchaser at auction sale takes the property subject to  all the defects of title and the doctrine caveat emptor (let the purchaser  beware) applies to such purchaser.  The  case  of the  judgment debtor having no saleable interest at  all  in the  property sold such as is contemplated by 0. 21, R.  91, C.  P. C. is, however, different and is not covered by  this doctrine.   The second point canvassed was that there is  an express provision in Section 141(1) of the Bombay Provincial Municipal  Corporation  Act, 1949  (hereinafter  called  the Bombay Municipal Act) for holding the present property to be liable  for the recovery of municipal taxes  and,  therefore though  the  property  was  subject only  to  a  charge  not amounting to mortgage and, therefore, involving no  transfer of interest in the property, the same could nevertheless  be sold for realizing the amount charged, even in the hands  of a transferee for consideration without notice.  Section  141 of  the Bombay Municipal Act is an express saving  provision as contemplated by Section 100 of Transfer of Property  Act, contended Shri Desai.  This submission has no merit as would be clear from a plain reading of Section 100 of the Transfer of  Property  Act,  1882  and  Section  141  of  the  Bombay Municipal  Act,  the  only  relevant  statutory  provisions. Section  100  of the Transfer of Property Act  dealing  with ’charges’ provides .               S.    100  "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 later 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,                                     67               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."               This section in unambiguous language lays down               that  no  charge is  enforceable  against  any               property  in  the hands of  a  transferee  for               consideration  without  notice of  the  charge               except   where  it  is   otherwise   expressly

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             provided  by  any law for the  time  being  in               force.   The  saving  provision  of  law  must               expressly provide for enforcement of a  charge               against  the  property  in  the  hands  of   a               transferee  for  value without notice  of  the               charge and not merely create a charge.  We now               turn  to Section 141 of the Bombay  Provincial               Municipal  Corporation Act, 1949 to see if  it               answers  the  requirements of Section  100  of               Transfer of Property Act.  This section  reads               :-               Section  141.  "Property taxes to be  a  first               charge on premises on which they are assessed:               (1)   Property  taxes  due under this  Act  in               respect of any building or land shall, subject               to  the prior payment of the land revenue,  if               any, due to the State Government thereupon, be               a first charge, in the case of any building or               land  held  immediately from  the  Government,               upon the interest in such building or land  of               the person liable for such taxes and upon  the               movable property, if any, found within or upon               such  building or land and belonging  to  such               person  ;  and,  in  the  case  of  any  other               building  or land, upon the said  building  or               land  and upon the moveable property, if  any,               found within or upon such building or land and               belonging to the person liable for such taxes.               Explanation.-The term "Property taxes" in this               section  shall  be seemed to  include  charges               payable  under section 134 for water  supplied               to  any premises and the costs of recovery  of               property-taxes as specified in the rules.               (2)   In  any decree passed in a suit for  the               enforcement  of  the charge  created  by  sub-               section  (1), the Court may order the  payment               to  the  Corporation of interest  on  the  sum               found  to  be due at such rate  as  the  Court               deems   reasonable  from  the  date   of   the               institution of the suit until realisation, and               such  interest and the cost of  enforcing  the               said  charge, including the costs of the  suit               and  the  cost  of bringing  the  premises  or               moveable  property in question to  sale  under               the decree, shall, subject as aforesaid, be  a               fresh  charge  on such premises  and  moveable               property  along  with the amount found  to  be               due, and the Court may direct payment  thereof               to be made to the Corporation out of the  sale               proceeds."                              68 Sub-section  (1). as is obvious, merely creates a charge  in express  language.  This charge is subject to prior  payment of land revenue due to the State Government on such building or  land.   The  section, apart from  creating  a  statutory charge,  does  not  further  provide  that  this  charge  is enforceable  against the property charged in the hands of  a transferee  for consideration without notice of the  charge. It was contended that the saving provision, as  contemplated by Section 100 of the Transfer of Property Act, may, without using express words, in effect provide that the property  is liable to sale in enforcement of the charge and that if this liability is fixed by a provision expressly dealing with the subject,  then the charge would be enforceable  against  the property even in the hands of a transferee for consideration

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without  notice of the charge.  According to the  submission it  is not necessary for the saving provision  to  expressly provide  for the enforceability, of the charge  against  the property  in  the hands of a  transferee  for  consideration without   notice   of  the  charge.   This   submission   is unacceptable  because, as already observed, what is  enacted in  the second half of Section 100 of Transfer  of  Property Act  is  the  general prohibition that no  charge  shall  be enforced  against any property in the hands of a  transferee for  consideration  without  notice of the  charge  and  the exception to this general rule must be expressly provided by law.   The real core of the saving provision of law must  be not  mere enforceability of the charge against the  property charged  but enforceability of the charge against  the  said property  in  the hands of a  transferee  for  consideration without  notice  of the charge.  Section 141 of  the  Bombay Municipal  Act is clearly not such a provision.  The  second contention accordingly fails and is repelled. The third argument, and indeed this was the principal  argu- ment which was vehemently pressed with considerable force by Shri  Desai.  is that the plaintiff must be deemed  to  have constructive notice of the arrears of municipal taxes and as an  auction  purchaser he must be held liable to  pay  these taxes  and the property purchased must also be held  subject to  this  liability  in  his  hands.   In  support  of  this submission he cited some decisions of our High Courts.   The first  decision  relied upon by Shri Desai  is  reported  as Arumilli  Suravya v. Pinisetti Venkataramanamma(1) in  which relying on Creet v. Ganga Ram Gool Rai(2) it was observed by Horwill J., that Section 100 of the Transfer of Property Act does not apply to auction sales because the transfer  within the meaning of the Transfer of Property Act does not include an  auction  sale.   It was added that  the  position  of  a purchaser  at an execution sale is the same as that  of  the judgment-debtor and his position is somewhat different  from that of a (1) A.I.R. 1940 Mad. 701.   (2) I.L.R. [1937] 1 Cal. 203. 69 purchaser   at  a  private  sale.    Execution   Purchasers. according to this decision, purchase the property subject to all  the charges and encumbrances legal and equitable  which would bind the debtor$.  We do not agree with the view taken in this decision.  We how,ever, do not consider it necessary to  go into the matter at length because we find  that  this decision was expressly overruled by this Court in Laxmi Devi v.  Mukand  Kunwar(1) and the High Court,  relying  on  this Court’s  decision,  had also repelled a  similar  contention pressed on behalf of the Municipal Corporation there.   This Court  pointed out in Laxmi Devi’s case(2) that  the  provi- sions  of  Section  2(d) of the  Transfer  of  Property  Act prevail  over Section 5 with the result that the  provisions of  Section  57  and those contained in Chapter  IV  of  the Transfer  of  Property  Act  must  apply  to  transfer,   by operation of law.  Section 100, it may be pointed out, falls in  Chapter  IV.  Reliance was next placed on a  Full  Bench decision of the Allahabad High Court in Nawal Kishore v. The Municipal  Board, Agra (1). According to this ,decision  the question of constructive notice is a question of fact  which falls to be determined on the evidence and circumstances  of each  case.  But that Court felt that there was a  principle on  which question of constructive notice could  rest,  that principle  being  that  all  intending  purchasers  of   the property in municipal areas where the property is subject to a municipal tax which has been made a charge on the property by  statute have a constructive knowledge of the tax and  of

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the  possibility of some arrears being due with  the  result that it becomes their duty before acquiring the property  to make enquiries as to the amount of tax which is due or which may  be  due  and if they fail to  make  this  enquiry  such failure  amounts to a wilful abstention or gross  negligence within the meaning of Section 3 of the Transfer of  Property Act  and notice must be imputed to them.  The  reference  to the Full Bench in the reported case was necessitated because of conflict of judicial opinion between that Court and  Oudh Chief  Court.  The earlier decision of a Division  Bench  in Municipal  Board,  Cawnpore  v.  Roop  Chand  Jain  (2)  was overruled  and  the  Bench decision of Oudh  High  Court  in Municipal Board, Lucknow v. Ramjilal (4) was approved.   The next  decision to which reference was made by Shri Desai  is reported as Akhoy Kumar Banerjee v. Corporation of  Calcutta (5).   In this case, after distinguishing a mortgage from  a charge,  it was observed-that the statutory charge  in  that case could not be enforced against the property in the hands of  bona  fide purchaser for value  without  notice.   While dealing  with  the question whether the appellants  in  that case  were  purchasers  for value  without  notice,  it  was observed that they had (1)  [1965] 1 S.C.R. 726. (2)  I.L.R. [1943] All. 453. (3)  I.L.R. [1940] All. 669. (4)  I.L.R. [1916] 16 Lucknow 607. (5)  I.L.R. 42 Cal. 625. 70 not  pleaded  in  their written  statement  that  they  were Purchasers  for  value without notice.  Having  not  pleaded this  defence  they were held disentitled to  avail  of  it. Having  so  observed the Court dealt with the  case  on  the assumption  that the defence though not expressly  taken  in the  pleadings was available to the defendants.   The  Court said :               "But  even  if  we assume  that  the  defence,               though not expressly taken in their  written               statement,  is  available to  the  defendants,               they  are  in a position  of  difficulty  from               which there is no escape.  The appellants  are               private purchasers of the property and if they               had  enquired at the time of  their  purchase,               they would have discovered that the rates were               in arrears; as a matter of fact, they would be               personally  liable under Section 223  for  the               arrears  of the year immediately prior to  the               date  of their purchase, and they  admit  that               they have satisfied such arrears, though  they               do  not disclose whether by enquiry  they  had               ascertained  the  existence  of  the   arrears               before they made the purchase. The  Court then, proceeded to deal with the position of  the vendor  from whom the appellants had purchased the  property in  order  to see if he could raise the defence of  being  a purchaser for value without notice.  The appellant’s  vendor was  a  mortgagee who had acquired title  by  foreclosure-an involuntary alienation by his mortgagor-and it was held that to him constructive notice could not be imputed to the  same extent as to a purchaser at a private sale.  But had he made enquiries from the municipal authorities he could still have ascertained  whether any arrears of consolidated rates  were due.   When he had taken the mortgage ,be was aware that  if the rates were not paid the arrears would be fiat charge  on the property with the result that before becoming full owner by foreclosure he should have ascertained the true state  of

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affairs.  On this reasoning he was held to have constructive notice  and the purchasers from him could not claim  greater protection.   These circumstances clearly disclose that  the reported case is not similar to the one before us and is  of little assistance. Chandu  Ram  v.  Municipal Commissioner  of  Kurseong  Muni- cipality (1) was the next decision cited.  The Bench in that case followed the Full Bench decision of the Allahabad  High Court  in Nawal Kishores case (supra).  A Division Bench  of the  Oudb  Chief Court in Municipal Board, Lucknow  v.  Lala Ramji  Lal  (2) disagreeing with the Bench decision  of  the Allahabad  High  Court  in Roop Chand  Jain’s  case  (supra) observed  that  it must be presumed that a person  who  buys house property situate in a municipality is acquainted  with the law by which a charge is imposed (1)  A.I.R. 1951 Cal. 398. (2) A.I.R. 1941 Oudh 305. 71 on  that  property  for the payment of  taxes.   The  charge having been expressly imposed by the Municipal Act upon  the property for payment of municipal taxes the municipality was entitled to follow the property in the hands of a transferee who  had  not cared to make any enquiry as  to  whether  the payment  of  taxes was in arrears.  The Court  approved  the Calcutta  decision in Akhoy Kumar’s case (supra).  The  next decision  cited is reported as Laxman Venkatesh Naik v.  The Secretary of State for India (1) but being a case of takkavi loans it is of no assistance in the present case. We may now turn to the Bench decision of the Allahabad  High Court in Roop Chand Jain’s case (supra).  The reasoning  for the view adopted there may be reproduced :               "A bona fide purchaser takes property he  buys               free of all charges of which he has no  notice               actual  or constructive.  He is said  to  have               constructive notice when ordinary prudence and               care  would have impelled him to undertake  an               enquiry which would have disclosed the charge.               If  for  instance the charge is created  by  a               registered  document then the purchaser  would               be  held to have constructive notice  of  that               charge  inasmuch as a prudent purchaser  would               in ordinary course search the registers before               effecting the purchase.  There is no register,               as  far as we know, of arrears of taxes or  of               charges  in respect thereof. It has  not  been               shown   that  the  municipality  of   Cawnpore               intimate  to the public in the "Press"  or  by               other  publication  a list of  the  properties               which  are  charged in respect of  arrears  of               taxes.   There is nothing upon the  record  to               justify  the  conclusion that  the  defendants               could  have demanded any information  from-the               municipality in regard to charges on immovable               property within the municipal limits." The Court then noticed the fact that the Kanpur  Corporation had allowed II years’ arrears of taxes to accumulate and  it was  observed  that  no intending  purchaser  was  bound  to presume  that  taxes  upon  the  property,  he  contemplates purchasing had not been paid in the ordinary course, in  the absence of special intimation by the municipality.  On  this reasoning   the  suggestion  of  constructive   notice   was negatived. According to Section 3 of the Transfer of Property Act which is  described as interpretation clause, a person is said  to have  notice of a fact when he actually knows that  fact  or

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when  before  wilful abstention from an  enquiry  or  search which  he  ought to have made or gross negligence  he  would have known it.  There (1)  XLI B.I.R. 257. 72 are three explanations to this definition dealing with three contingencies when a person acquiring immovable property  is to  be  deemed  to  have notice  of  certain  facts.   Those -explanations are:               "Explanation I.-Where any transaction relating               to  immoveable 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 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 subsection  (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 property 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 filed, 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   II.-Any  person  acquiring   any               immoveable  property or any share or  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  had  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." Now  the  circumstances which by a  deeming  fiction  impute notice  to  a party are based, on his wilful  abstention  to enquire  or search, which a person ought to make or, on  his gross  negligence.  This presumption of notice  is  commonly known as constructive notice. 73 Though originating in equity, this presumption of notice  is now  ;a part of our statute and we have to interpret  it  as such.   Wilful abstention suggests conscious  or  deliberate abstention  and gross negligence is indicative of  a  higher degree  of neglect.  Negligence is ordinarily understood  as

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an  omission  to  take such reasonable  care  as  under  the circumstances  is the duty of a person of ordinary  prudence to  take.  In other words it is an omission to do  something which  a reasonable man guided by consideration  which  nor- mally  regulate  the conduct of human affairs  would  do  or doing something which a normally prudent and reasonable man would  not do.  The question of wilful abstention  or  gross negligence and, therefore, of constructive notice considered from  this point of view is generally a question of fact  or at  best mixed question of fact and law depending  primarily on  the facts and circumstances of each case and except  for cases  directly  falling within the three  explanations,  no inflexible  rule  can be laid down to serve as  a  straight- jacket  covering all possible contingencies.   The  question one  has to answer in circumstances like the present is  not whether  the purchaser had the means of obtaining and  might with  prudent caution have obtained knowledge of the  charge but whether in not doing so he acted with wilful  abstention or  gross  negligence.  Being a question  depending  on  the behaviour  of a reasonably prudent man, the Courts  have  to consider it in the background of Indian conditions.   Courts in  India  should,  therefore, be careful  and  cautious  in seeking assistance from English precedents which should  not be blindly or too readily followed. Adverting now to the case before us, as already noticed. the property  in  question  had  vested  in  the  receivers   in insolvency  proceedings  since  March, 1949  by  an  interim order,  and  in  ,October,  1950  the  original  owner   was adjudicated as an insolvent and the property finally  vested in the receivers in insolvency.  The plaintiff purchased the property in November, 1954 and in our opinion it could  not have  reasonably  been expected by him  that  the  receivers would not have paid to the municipal corporation since  1949 the taxes and other dues which were charged on this property by  statute.   According  to Section 61  of  the  Provincial Insolvency Act, 1920 the debts due to a local authority  are given priority, being bracketed along with the debts due  to the  State.  Merely because these taxes are charged  on  the property  could  not  constitute  a  valid  ground  for  the official receiver not to discharge this liability.  In  fact we  find  from  the  record that on  January  15,  1951  the receivers  had  submitted a report to the  insolvency  court about their having received bills for Rs. 6283-0 in  respect of municipal taxes of the insolvent’s property and leave  of the  court was sought for transferring the said property  to the  names of the receivers in the municipal and  Government records.  The court recorded an order on February 8, 74 1951  that  the  municipal taxes had to  be  paid.   On  the receivers stating that they did not possess sufficient funds the court gave notice to the, counsel for the opposite party and on February 24, 1951 made the following order :               "Mr.   Pandya  absent.  The taxes have  to  be               paid.   The Receivers state that they can  pay               only  by  sale  of  some  properties  of   the               insolvent  from which they want.   Sanctioned.               The  property  in which  the  insolvent  stays               should  first be disposed of.  The  terms  arc               accordingly so authorised." It  is not known what happened thereafter.  It is,  however, difficult  to  appreciate  why  after  having  secured   the necessary order from the court municipal taxes were not paid off  by the receivers and why the municipal corporation  did not  pursue the matter and secure payment of the taxes  due. May  be  that the municipal corporation thought  that  since

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these  dues  were  a charge on the property  they  need  not pursue  the  matter  with the receivers and  also  need  not approach  the  insolvency court.  If so, then this,  in  our opinion,  was not a proper attitude to adopt.  In any  event the  plaintiff  could not reasonably have thought  that  the municipal corporation had not cared to secure payment of the taxes  due  since 1949.  On the facts and  circumstances  of this case, therefore, we cannot hold that the plaintiff as a prudent  and  reasonable man was bound to enquire  from  the municipal corporation about the existence of any arrears  of taxes  due from the receivers.  It appears from the  record, however,  that  he  did  in fact  make  enquiries  from  the receivers  but  they  did  not  give  any  intimation.   The plaintiff  made a statement on oath that when  he  purchased the building in question it was occupied by the tenants  and the rent used to be recovered by the receivers.  There is no rebuttal  to  this  evidence.  Now, if  the  receivers  were receiving  rent from the tenants, the reasonable  assumption would be that the municipal taxes which were a charge on the property and which were also given priority under Section 61 of  the Provincial Insolvency Act, 1920, had been duly  paid by  the receivers out of the rental income.   The  plaintiff could have no reasonable ground for assuming that they  were in arrears.  From the plaintiff’s testimony it is clear that he  did  nevertheless make enquiries from the  receivers  if there were any dues against the property though the  enquiry was not made specifically about municipal dues.   Apparently he  was not informed about the arrears of  municipal  taxes. This  seems  to  us  explainable  on  the  ground  that  the receivers  had, after securing appropriate orders, for  some reasons not clear on the record, omitted to pay the  arrears of  municipal taxes and they were, therefore,  reluctant  to disclose this lapse on their part.  On these facts and  cir- cumstances  we  do  not  think  that  the  plaintiff   could reasonably  be  fixed with any constructive  notice  of  the arrears of municipal taxes 75 since  1949.  So far as the legal position is  concerned  we are  inclined  to agree with the reasoning  adopted  by  the Allahabad  High Court in Roop Chand Jain’s case  (supra)  in preference to the reasoning of the Full Bench of that  Court in Nawal Kishore’s case (supra) or of the Division Bench  of Oudh  Chief  Court in Ramji Lal’s case (supra).  We  do  not think  there  is  any  principle or  firm  rule  of  law  as suggested  in Nawal Kishore’s case (supra) imputing  to  all intending  purchasers  of property in municipal  area  where municipal  taxes are a charge on the property,  constructive knowledge  of the existence of such municipal taxes  and  of the reasonable possibility of those taxes being in  affears. The  question of constructive knowledge or notice has to  be determined  on  the facts and circumstances  of  each  case. According to the Full Bench decision in Nawal Kishore’s case (supra)  also  the  question of  constructive  notice  is  a question of fact and we do not find that the material on the present record justifies that the plaintiff should be fixed, with  any  constructive notice of the arrears  of  municipal taxes. We  may  add  before  concluding that  as  the  question  of constructive  notice  has to be  approached  from  equitable considerations we feel that the municipal corporation in the present case was far more negligent and blameworthy than the plaintiff.   We  have, therefore, no hesitation  in  holding that  the  High  Court took the correct view  of  the  legal position  with the result that this appeal must fail and  is dismissed.   As there is no representation on behalf of  the

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respondent there will be no order as to costs. V.P.S.                       Appeal dismissed. 76