Case: Ram Bilas Ojha and Others Vs. Bishwa Muni and Others

2. The first defendant (4th respondent) on receipt of a sum of Rs. 1, 300/executed a sarllat in favour of the first plaintiff with condition that the first plaintiff would enter into possession of the said plot in lieu of the interest of the debt, After some time the fourth respondent gave up his residence and moved to a different place and while so doing expressed the desire that he wanted to dispose of the plot aforesaid and made a request to the plaintiff that he should purchase the same. The first plaintiff had already entered into possession and occupied the land. After sometime the 4th respondent settled with the plaintiff for the transaction of sale in respect of that plot for a sum of Rs. 1, 700/4 he received a sum of Rs. 100/as earnest money from the plaintiffs. Onthe 4th respondent executed an agreement for sale also in favour of the plaintiffs. As plaintiffs had to pay an additional sum of Rs. 300/and as plaintiffs did not have that amount plaintiffs stated that they will get the sale deed executed after payment. According to the plaintiffs, the defendants 2 to 7 who are appellants before us because of grievance against the plaintiffs, by a sale deed dated 4th June 1964 purchased the properties for a sum of Rs.The plaintiffs who are respondents 1 to 3 in this Court filed the suit for specific performance of their agreement for sale alleging that the sale in favour of defendants 2 to 7 appellants herein, was not bona fide and was with notice. The trial court raised certain issues. The issue relating to this question is issue No. 7 which is in the following termsthe defendants Nos. 2 to 7 are bona fide purchasers for value without notice? If so itsThe trial court answered the issue in the negative holding that as respondents 1 to 3 were in possession from 1960 it must be held that they were in possession onwhen the sale deed in favour of the appellants was executed. The respondents possession would have put the appellants on enquiry which if prosecuted would have disclosed a previous agreement and hence they cannot be called as transferees without notice.4. In the result the suit was decreed by the trial court with costs with a direction for performance of the contract to sell the disputed properties. An appeal was taken by the appellants to the Court of Civil Judge, Gorakhpur. The learned Judge also agreed with the reasoning of the trial court and dismissed the appeal. The second appeal to the High Court also failed and hence this appeal by special leave.

Court's reasoning:
This registered usufructuray mortgage should have put the appellants in notice of the possession of the respondents. It was sought to be contended by the learned counsel that even if they had notice of the possession, it would only mean that they were in possession in pursuance of a usufructuary mortgage and not in pursuance of an agreement of sale. This defence would have had some substance if it was taken in the pleadings and spoken to in the evidence. His plea on the other hand was that the respondents 1 to 3 were not in possession. The usufructuary mortgage was not referred to in the sale deed in favour of the appellant. On the facts therefore, we have no. hesitation in coming to the conclusion that all the courts below were right it holding that the appellants were not bona fide purchasers without notice.