HN NARAYANASWAMY NAIDU V. DEVEERAMMA, AIR 1981 KANT 93
FACTS
- A son and his mother sold the house to B. It was a conditional sale, with a stipulation that if within a period of six and a half years, the seller would pay the entire consideration to B; B would reconvey the property back to them.
- A little later, however, for a consideration, the seller agreed to release this right of conveyance on favour of B, with the help of an unregistered agreement. B took possession of the properties and after the execution of release deed, carried major repairs at his costs.
- The sellers (mother and son) however, sold the right of reconveyance stipulated under the original sale deed to a person D, without disclosing to him, that it has already been released in favour of the buyer B.
- D, claiming to be a bona fide purchaser of the reconveyance rights without notice wanted to enforce the same.
HELD
- The court held that, since B was in actual possession of the property, D had a duty to direct his inquiries to B with respect to B’s rights over the property.
- Having failed to do that, he would be imputed with constructive notice of the release deed executed by the sellers in favour of B.