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PETITIONER: M. N. DODAMANI & ORS.

       Vs.

RESPONDENT: U. S. D. WALIKAR (DEAD) BY LEGAL REPRESENTATIVES &ORS.

DATE OF JUDGMENT29/07/1980

BENCH: GUPTA, A.C. BENCH: GUPTA, A.C. SHINGAL, P.N.

CITATION:  1980 AIR 2078            1981 SCR  (1) 123  1980 SCC  (4)  92

ACT:      Bombay Agricultural Debtors Relief Act, 1947 Sections 4 and 25(ii)-Scope  of-Notice-Section if excludes constructive notice.

HEADNOTE:      Section 25(ii)  of  the  Bombay  Agricultural  Debtors’ Relief Act,  1947 provides  that nothing in section 24 shall apply to  any bona  fide transferee for value without notice of the  real nature  of such  transfer or his representative where  such  transferee  or  representative  holds  under  a registered deed executed on or before 15th February, 1939.      The  predecessors   in  interest   of  the   appellants transferred two  plots of land in 1927 to one Krishnaji. The document evidencing  the transfer of the plots was described as a  sale deed  and contained  a statement that the vendors had absolutely  sold both  the said  lands to  him, that the entire ownership  was his  "alone" and  that possession  had been given  to him.  In 1932 and 1935 Krishnaji sold the two plots to  the predecessors in interest of the respondents at a price  lower than  that paid  by him when he purchased the plots. After  the coming  into force  of the  1947  Act  the appellants applied under section 4 of the Act for adjustment of debts  claiming that  the transaction  of 1927 was really not a sale but a mortgage.      Although the  trial court  came to  the conclusion that the transaction was mortgage and not a sale it dismissed the application on the ground that the respondents were entitled to protection under section 25(ii) of the Act. On appeal the District Judge  allowed the  application under section 4. In revision, the  High Court  recorded a consent order that the transaction was  not a  sale but a mortgage and remitted the case  to   the  trial  court  for  a  decision  whether  the purchasers were  transferees for value without notice of the real  nature   of  the  transaction  and  were  entitled  to protection of section 25(ii).      On remand  the trial  court dismissed  the  application under section  4 holding  that the purchasers were bona fide transferees for  value without  notice of the real nature of the original transaction. The lower appellate court reversed this decision.  The High  Court set  aside the  order of the appellate court  and restored that of the trial court on the

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view that  the purchasers  had no actual knowledge or notice of the  real nature of the transaction of 1927. It also held that the  notice contemplated  by section  25(ii) was actual notice and  that constructive  notice was clearly beyond the contemplation of section 25(ii).      Dismissing the appeal, ^      HELD: Construing  the notice  referred  to  in  section 25(ii) as actual notice only is likely to defeat the purpose of the  statute which  was enacted to provide for the relief of agricultural  debtors in  the province of Bombay. Section 25(ii) does not exclude constructive notice. [126A-B] 124      In the  instant case,  however, the  transferees had no notice, actual  or constructive,  of the  real nature of the transaction of 1927. [126B]      The fact  that the  lands were  sold to the respondents for a  price lower than what they fetched in 1927 might have been due  to various reasons and it cannot be said that this ground alone  was sufficient  to raise  a suspicion that the transaction was really a mortgage. The Act of 1947 could not have been  within the  contemplation of  any one  in 1932 or 1935 when  the lands  were sold.  The lands  were fallow and barren. The record of rights does not contain any indication that the  transaction was  a mortgage.  The transferees were put in  possession of  the lands.  Therefore  there  was  no occasion or  circumstance to  impel the transferees to start an enquiry  as to the real nature of the transaction between the  seller   and  the   predecessors-in-interest   of   the appellants in 1927. [126F-H, 127A-B]

JUDGMENT:      CIVIL APPELLATE  JURISDICTION: Civil  Appeal No. 691 of 1970.      Appeal by  Special Leave  from the  Judgment and  Order dated 12-8-1969  of the  Mysore High Court in Civil Revision Petition No. 1322 of 1967.      S. S.  Javali, M.  Veerappa  and  J.  R.  Das  for  the Appellant.      S. C.  Javali, P. G. Gokhale and B. R. Agarwala for the Respondents.      The Judgment of the Court was delivered by      GUPTA J.-The  only question that arises for decision in this appeal  by special  leave is  whether  the  respondents before us are entitled to relief under section 25(ii) of the Bombay Agricultural  Debtors Relief  Act, 1947. The question arises  on   the  following  facts.  On  June  1,  1927  the predecessors-in-interest of  the appellants  transferred  to one Krishnaji two plots of land bearing survey numbers 125/1 and 136  measuring respectively  14.5  and  21.31  acres  in village Murnal,  Bagalkot Taluk  in  Bijapur  District.  The document by  which the transfer was effected, described as a sale deed,  shows that  the two  items of property were sold "absolutely"  for  a  total  sum  of  Rs.  2000/-.  In  1932 Krishnaji sold  the plot  bearing  survey  No.  136  to  one Ramanna, predecessor-in-interest  of respondent Nos. 2(a) to 2(e). for Rs. 400/-. In 1935, Krishnaji sold the other plot, survey  No.  125/1,  for  Rs.  1000/  to  Utalsab  Dogrisab. Walikar,  predecessor-in-interest  of  respondents  1(a)  to 1(c). After the Bombay Agricultural Debtors Relief Act, 1947 came into  force, the  appellants applied under section 4 of the  Act   for  adjustment   of  debts   claiming  that  the transaction in  1927 was  really not  a sale but a mortgage.

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The trial court held that the transaction was a mortgage and not a  sale but  dismissed the  application on the view that the respondents  were entitled  to protection  under section 25(ii) of  the Act. The District Judge reversed the decision and allowed  the application under section 4. The matter was taken to  the High  Court in  revision and  the  High  Court recorded a consent order that the tran- 125 saction was  not a sale but a mortgage and remitted the case to the  trial court  for a  decision on the question whether the purchasers,  Ramanna and  Walikar, were  transferees for value without  notice of  the real nature of the transaction between the  appellants’ predecessors  and Krishnaji  and as such entitled  to the  protection of  section  25(ii).  This order of  the High  Court was  made on  January 25, 1963. At this stage we may mention that our attention was drawn to an order made  in the  same matter by the High Court on January 31, 1962,  which is reported in 1962 Mysore Law Journal 682, that shows  that the  same learned  Judge had  set aside the order of  the appellate court and restored that of the trial court. Counsel  for both  sides appeared  to think  that the order made  by the  High Court  in 1962  must have  been set aside later  on review  though neither  of them  was able to produce the  order by  which the  1962 order  had  been  set aside. However  both learned  counsel agreed  that  for  the purpose of  this appeal  it is  the order  of the High Court made on  January 25,  1963 that need be considered. That the 1963 order  held the  field would  be apparent from the fact that the  case  was  reconsidered  by  the  trial  court  as directed by  the aforesaid order. The trial court on hearing the matter  after remand  dismissed  the  application  under section 4  on the finding that the purchasers were bona fide transferees for  value without  notice of the real nature of the original transaction. The lower appellate court reversed this decision.  The purchasers  then moved the High Court in revision from  the order  passed by the appellate court. The High Court  by the impugned order set aside the order of the appellate  court  and  restored  that  of  the  trial  court agreeing with  the trial  court that  the purchasers  had no notice of the real nature of the transaction of 1927.      Section 24  of the  Bombay Agricultural  Debtors Relief Act, 1947 empowers the court to declare any transfer of land by a  person whose  debts are  being adjusted under this Act purporting to  be a  sale, to be a mortgage if the court was satisfied that the circumstances connected with the transfer showed it  to be in the nature of a mortgage. Section 25(ii) provides that nothing in section 24 shall apply to "any bona fide transferee  for value without notice of the real nature of such transfer or his representative where such transferee or representative  holds under a registered deed executed on or before  the 15th  day of  February, 1939".  The  document evidencing the transfer of the plots to Krishnaji in 1927 is discribed as a "sale deed" and contains a statement that the vendors  "have  absolutely  sold  both  the  said  lands  to Krishnaji" and  that the  "entire ownership" was Krishnaji’s "alone". It  is also  said that  possession of the lands has also been  given to Krishnaji. The High Court found that the purchasers  from  Krishnaji  had  no  "actual  knowledge  or notice" of  the real  nature of the transaction in 1927. But the High  Court also  held that  the notice  contemplated in section 126 25(ii) was "actual notice" and that "constructive notice was clearly beyond  the contemplation  of  section  25(ii)".  It seems to  us that  construing  the  notice  referred  to  in

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section 25(ii) as actual notice only is likely to defeat the purpose of  the statute which was enacted to provide for the relief of agricultural debtors in the province of Bombay. We are of  the  view  that  section  25(ii)  does  not  exclude constructive notice.  However on  the facts  of the  case it appears that  the  transferees  had  no  notice,  actual  or constructive, of the real nature of the transaction of 1927. It has  been found  that they had no actual notice; the High Court  appears   to  have   also  found  that  they  had  no constructive notice.  Referring to  the provision of section 25(ii) requiring  that the  transferee  must  hold  under  a registered deed  executed on or before February 15, 1939 the High Court says:           "It will be seen that the reference is to a period      anterior to  the coming into force of the Act, a period      therefore during  which the  special provisions  of the      Act could  not have  been within  the contemplation  of      anybody. If  those provisions were not in contemplation      it is  impossible to  postulate a  situation where  any      given circumstance  could be  regarded as sufficient to      excite suspicion  that the  transaction might be hit by      the statute  and therefore persuade people to start and      pursue further enquiries." Mr. S.  S. Javali appearing for the appellants contends that the fact  that the  lands in question were transferred for a smaller amount in 1932 and 1935 than the price Krishnaji had paid for  them in  1927 was  a circumstance that should have put the  transferees  on  enquiry  and  that  if  reasonable enquiries had been made they would have had knowledge of the real nature  of the  transaction of  1927. The fact that the lands were  sold to  the respondents  for a price lower than what they  fetched in  1927 might  have been  due to various reasons and  it cannot  be said  that this  ground alone was sufficient to raise a suspicion that the transaction of 1927 was really a mortgage. As pointed out by the High Court, the Act of  1947 could not have been within the contemplation of anyone in  1932 or 1935. Ramappa in his deposition said that he paid  Rs.400/- for  the land as it was "fallow", and that if there  were no weeds the price would have been Rs. 600/-. As for the land sold to Utalsab, he was dead when the matter came up  for hearing  before the  trial court. The record of rights also does not contain 127 any indication  that the  transaction of  1927  was  in  the nature of a mortgage. The evidence discloses that Krishnappa put the  transferees in possession of the lands in question. There was  therefore, no  such occasion  or circumstance  to impel the  transferees to  start an  enquiry as  to the real nature  of   the  transaction   between  Krishnaji  and  the predecessors-in-interest of the appellants in 1927.      The appeal is dismissed but in the circumstances of the case without any order as to costs. N.K.A.                                    Appeal dismissed. 128