RESEARCH PROJECT (TRANSFER OF PROPERTY ACT, 1882)

ON

GROSS NEGLIGENCE AS CONSTRUCTIVE NOTICE

SUBMITTED TO: SUBMITTED BY:

Mr. Utkarsh Verma, Isha Kaushik

Faculty of Law Roll – 685 Section –B

NUSRL, Ranchi Semester – V

NATIONAL UNIVERSITY OF STUDY AND RESEARCH IN LAW

BUKRU, KANKE, RANCHI

 GROSS NEGLIGENCE AS CONSTRUCTIVE NOTICE

NOTICE:
A person is said to have a notice of a fact when he actually knows that fact, or when, but for
willful abstention from an inquiry or search which he ought to have made, or gross negligence,
he would have known it.1 Notice includes within its ambit both actual as well as constructive
notice.2
Section 3 of Transfer of Property Act enumerates three kinds of notices-
(a) Actual or express notice
(b) Constructive or implied notice
(c) Imputed notice.

 Actual notice: A person is said to have actual notice/express notice of a fact if he

actually knows it. It must be definite information given in the course of negotiations by
person interested in the property for a person is not bound to attend vague rumours. 3
Actual notice must be given to a person in the character in which the notice is intended to
affect him and not in any other character.4 It must be given not by a stranger but must
proceed from a person interested in the property.5

 Constructive notice: It is a notice which treats a person who ought to have known a fact,
as if he actually knows it. A person has constructive notice of all the facts of which he
would have acquired actual notice had he made those inquiries which he ought
reasonably to have made. Constructive notice has roughly been defined as knowledge
which the court imputes to a person upon a presumption so strong that it cannot be
rebutted that the knowledge must be obtained. It was held in the case of Hewitt v.
Loosemore,6that constructive notice is knowledge that Court imputes to a person, from
the circumstances of the case, upon a legal presumption so strong that it cannot be

1
Lata Chauhan v. L.S. Bisht, 2010 (117) DRJ 715 (Delhi).
2
Motilal Jain v. Prakash Bhartiya, AIR 2007 (NOC) 377 (MP).
3
N. Kashinath (Dr.) v. Arun R. Rawell, 2008 (67) AIC (Summary) 7.
4
Beioley v. Carier, (1869) 4 Ch. App. 230.
5
Barnhart v. Greensheilds, (1853) 9 Moo. P.C. 80 : 40 ER 204.
6
(1851) 9 Hare 449.

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 allowed to be rebutted, that the knowledge must exist though it may not have been
formally communicated.7
Legal presumption of knowledge arises when—(1) there is willful abstention from an
enquiry or search. It means willful or deliberate abstention to take notice of a fact which a
reasonable man would have taken in the normal cause of life. It is such abstention from
enquiry or search as would show want of bona fides in respect of a particular transaction.
Illustrations:
(i) ‘A’ contracts to sell his house to ‘B’. The house is on rent and B knows that the
tenants have been paying the rents to ‘C’. ‘B’ has constructive notice of the right of
‘C’ to take rents from the tenants.
(ii) ‘A’ propose to sell his property to ‘B’, who at the same time knows that rents due in
respect of the property are paid by the tenants to a third person X. B will be fixed
with notice of the right of X.8
(iii) A refuses a registered letter, which contains information relating to property which A
propose to purchase. A will be deemed to have notice of the contents of the latter.9
GROSS NEGLIGENCE:
Negligence means carelessness or omission to do such act which a man of ordinary prudence
would do. Negligence imports the neglect of some duty towards the person injured 10 and it
supports the disregard of a fact known to the purchaser and may without a fraudulent motive be
so gross as to justify the charge of constructive notice.11 Doctrine of constructive notice applies
when a person, but his gross negligence would have known the fact. Mere negligence is not
penalized. It should be high degree of neglect. In Hudston v. Vincy,12 Eve J. said, “Gross
negligence does not mean mere carelessness, but means carelessness of so aggravated a nature as
to indicate a attitude of mental indifference to obvious risk.” It can be described as ‘a degree of
negligence so gross that a court of justice may treat it as evidence of fraud, impute a fraudulent
motive to it and visit it with the consequences of fraud’. In Ware v. Lord Egmont,13Lord

7
Espin v. Pernbuton, (1859) 28 LJ Ch. 311
8
Hunt v. Lack, (1902) 1 Ch 429.
9
Ismail Khan’ v. Kali Krishna, (1901) 6 Cal WN 134.
10
Rimmer v. Webster, (1902) 2 Ch 163.
11
West v. Reid, (1843) 2 Hare 249.
12
(1921) 1 Ch 98.
13
(1854) 4 D.M. & G. 460.

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CRANWORTH stated no definite rule as to what will amount to gross or culpable negligence can
be laid down. “Where a person has actual notice of any matter of fact there can be no danger of
injustice if he is bound to be held by all the consequences of that which he knows to exist. In
Lagunas Nitrate Company v. Lagunas Syndicate,14 LINDLEY, M.R., said, “Their negligence
must be not omission to take all possible care; it must be much more blamable than that; it must
be a business sense culpable or gross.”
In Lloyds Bank Ltd. v. P.E. Guzders and Co. Ltd.,15 a person A deposited title deeds of
his house in Calcutta with Bank. N to secure the loan he had taken from the bank. Subsequently,
A represented the Bank that intending purchases of the house wanted to see the title deeds. The
bank returned the deeds to A who deposited the deeds with the plaintiff bank in order to secure a
loan. It was held that the Bank N, on account of gross negligence in parting with the deed has
lost its prior rights with respect of the house.
In Imperial Bank of India v. U. Raj Gyaw,16a purchases was informed that the title deeds were
in possession of a bank for safe custody and omitted to make any inquiry from bank It was held
that he was guilty of gross negligence and was deemed to have notice of the rights of the bank
which had the custody of the deeds.
DOCTRINE OF CONSTRUCTIVE NOTICE:
According to Section 3, Transfer of Property Act, 1882 a person is said to have notice of a fact
when he actually knows the fact or when but for willful abstention from enquiry or search which
he ought to have made, or gross negligence, he would have known it. 17 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
willful abstention or gross negligence. Under the law, each party to a legal action must be given
notice of the action, with copies of documents filed with the court. Such notice must be provided
either personally, or in some cases, by registered mail. Once initial notice has been made by
personal service, the courts often allow notice of subsequent happenings within the same case to
be made by mail.

14
(1899) 2 Ch. 392 (435).
15
(1929) 56 Cal 868.
16
(1923) 50 IA 283.
17
Tilakdhari Lal v. Khedan Lal, (1920) 22 BOMLR 1319.

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When a person has actual notice of any matter of fact, there can be no danger of doing injustice if
he is held to be bound by all the consequences of that which he knows to exist. But where he has
no actual notice, he ought not to be treated as if he had notice, unless the circumstances are such
as it enables the Court to say, not only that he might have acquired, but also, that he ought to
have acquired, the notice with which it is sought to affect him that he would have acquired it but
for his gross negligence in the conduct of business in question. For example, constructive notice
is considered given if an advertisement is posted in a local newspaper several times over the
course of several weeks. It is assumed that either the interested party saw the advertisement or
that enough people around the interested party saw the notice and would inform the interested
party of the notice that they read.
Another example of constructive notice is the recording in county registries of deeds, mortgages,
liens, divorce papers, and other kinds of documents that are considered public information.
Because documents like these can be accessed by any member of the general public, they are
considered constructive notice of events that have already taken place.
In a company, constructive notice is assumed because anyone having dealings with that company
is assumed to be knowledgeable of the company’s dealings. In small claims court, it is often
difficult to get a defendant to accept service. Therefore, constructive notice is a fairly common
method of service in these cases.