AI Structured Summary
Not yet generated for this judgment
Judgment
The lower Court was called on to find on the question whether the appellant (fifth and sixth defendants) were bona fide purchasers for
consideration without notice of the fraud involved in Exhibit III. In returning its finding it has dealt separately with the question whether the fifth and
sixth defendants were bona fide purchasers and whether they had notice. The attempt to separate these two questions is not usually sound. For it is
seldom possible to form an adequate or correct opinion of the conduct of a transferee without considering whether his good faith extends to his
possession of actual or constructive notice with reference to the whole circumstances of the case. It is, however, sufficient for us to deal with the
portion of the finding which relates to the fifth and sixth defendants possession of notice. For the lower Court has, in our opinion, entirely mistaken
the legal position created by the facts.
The lower Court says that the fifth and sixth defendants would not, even it they made enquiries, have obtained information from the first and
second defendants'' witnesses or the mortgagee Naranyana Nair, because the first and second defendants'' witnesses of course would not disclose
any fraud, and Narayana Nair equally would not do so, as he was to get his mortgage redeemed by them. The lower Court then goes on:--""The
document which the defendant No. 6 says he saw would tell him nothing"" and that may be correct. But then it goes further and says that the
defendants were not bound to pursue the matter of the claim petition and ascertain what objections to the claim were raised by the decree-holder.
This, in our opinion, is entirely wrong. The decree-holder, the person who was alleging fraud in connection with Exhibit III was the person, to
whom enquires as to any objections to the title to the property would naturally be addressed, and he would certainly be in the best position to say
what objections in the shape of fraud were available against the title. The lower Court says also that, even if the sixth defendant knew of t1he claim
petition, that would tell him nothing; on the other hand, the order allowing the claim would lead him to think that the title of the claimants was good.
The is an absolute misrepresentation of the effect of the order, Exhibit A; and, even, if this were the only objection to the lower Court''s finding, we
should be unable to, accept that finding on account of it. Exhibit A, after stating the facts and the case of the decree-holder as being that Exhibit III
evidences a fraudulent and collusive transaction, goes on to to say that the claimant must establish his case in a regular suit properly framed for the
purpose. That statement is presumably made with reference to authority, as it then stood, that a transfer can be impeached as fraudulent, not by
way of a plea in defence, but in a suit properly framed for the purpose. True, the next sentence in Exhibit A, is to the effect that the claimants have
established a bona fide title to the properties, whatever that may mean. But it is clear that the effect of Exhibit A, as a whole, was simply to decide
in favour of the continuance of the attachment and that the order did not, and indeed could not, do more than make the title to the attached
property contingent on he result of the suit, if any, which might De brought within a year. That being the real effect of Exhibit A, and the possession
being with the fifth and sixth defendants, they have on their own showing failed to make any enquiry of the person who could ?have given them the
best information as to the defects in the title. We cannot hold that they were transferees in good faith without notice. We must, therefore, reject the
lower Court''s finding.
The result is, that the appeal fails and is dismissed with costs.