MUHAMMAD FAZLE GHANI KHAN, J.--On the 4th of November 1954, Sh. Muhammad Bashir, Proprietor, Bashir Bartan Stores applied to Messrs Australasia Bank Ltd., Sargodha, for an overdraft facility of Rs, 20,000 against the security of stockin-trade comprising of utensils and by creating an equitable mortgage of his residential house by deposit of title deed in favour of the appellant- bank. Sh. Mohd. Bashir executed demand promissory note and other documents in favour of the bank and obtained the full facility for an overdraft of Rs, 20,000 in his favour. By a letter dated 24th of November 1954, Sh. Muhammad Bashir handed over the title deed of the site of the suit house to the bank as security for the amount due creating an equitable mortgage. The agreement between the parties was that Sh. Muhammad Bashir will deposit the sale proceeds of all goods sold from day to day with the bank in order to liquidate this debt but he failed to do so and when the time limit for overdraft had expired he applied for the extension of time but this request was not granted by the appellant-bank. The repeated reminders of the bank to adjust the accounts also bore no fruits. A request was made to the appellant-bank by Sh. Muhammad Bashir on 21st of July 1955, that he be allowed to adjust the account by monthly instalments of Rs, 1,000. This request was, however, allowed as a special case but Sh. Muhammad Bashir did not respect this arrangement either. Consequently, he was served with a notice on 15th of September 1959, by the appellant- bank threatening him with legal action.
2. Before the period of grace allowed by the notice could expire on 19th of November 1955, Sh.
Muhammad Bashir sold the suit house which was already mortgaged in favour of the appellant- bank to Mst. Nasiban respondent No, 3 on 1st of October 1955. The appellant-bank, therefore, filed a suit for the recovery of Rs, 7,237 by sale of the mortgaged House No, 29 with site situate in Block No, 26, Sargodha with future interest at Rs 72 % till realization against all the respondents by sale of the hypothetical utensils etc. lying as stock-in-trade in the shop and also by sale of the above- mentioned house which was mortgaged with the appellant by deposit of title deed.
3. The suit was resisted on behalf of the respondents. Mst. Nasiban respondent No, 3 filed a separate written statement while a joint written statement was filed by Sh. Muhammad Bashir on his own behalf as well as for Bashir Barton Stores. It was pleaded on their behalf that the appellant was not entitled to recover interest as it had failed to comply with the provisions of the Money- lenders Registration Act and the Punjab Regulation of Accounts Act and that Bashir Bartan Store was not a legal entity, and that mortgage by deposit of title deed was void and uninforcible in the former Province of Panjab as it was not registered. Sh. Muhammad Bashir, however, expressed his desire to pay the amount due from him by means of instalments.
4. Mst. Nasiban, respondent No, 3, pleaded inter alia the protection of section 41 of the Transfer of Property Act and in that it was urged on her behalf that she was a bona fide purchaser for value without notice of the mortgage of the appellant upon the suit house and since she had made all necessary enquiries to find out whether there was any encumbrance upon the suit property or not she was fully protected and the house in dispute was not liable to be sold by the appellant as she had taken due care and caution while purchasing the suit house from Muhammad Bashir and had not acted negligently.
5. The above controversial pleadings of the parties gave rise to the framing of as many as 13 issues by the trial Court all of which have been reproduced in the judgments of the two Courts below, but for the diposal of this appeal it will be necessary to reproduce Issues Nos, 4 to 7 hereunder :-- "(4) Whether mortgage by deposit of title deed as per-missible at Sargodha could be created in favour of the plaintiff-bank?
(5)If Issue No, 4 be found in the affirmative, whether any such mortgage was created by the defendant in favour of the plaintiff-bank.
(6)Whether Mst. Nasiban defendant No, 3 was a bona fide purchaser for value without notice of the house in dispute and if so what is its effect?
(7)Whether the house in dispute is subject to any mortgage charge in the hands of defendant No, 3 and if so what is its effect on plaintiff's right?"
6. We are not entering into the discussion about other issues as none of the learned counsel for the parties has based any argument upon them in this second appeal. However, it will not be out of place to mention that about the hypotheticated goods it was found by the trial Court that these goods were no more available, therfore, the appellant-bank could not get the decree for their sale.
7. The finding on Issue No, 4 was also answered in favour of the appellant and the decision of the learned trial Court was based on the two decisions of Lahore High Court reported as Gurdas Mal v.
Panjab-Sindh Bank Ltd., Rawalpindi and another and Hem Raj and another v. Simla Banking and Industrial Co. Ltd. and others and it was held that the mortgage by deposit of title deed was permissible in Sargodha and could be created in favour of the plaintiff-bank. Under Issue No, 5 it was held that since Muhammad Bashir had appeared as D. W. 3 and had admitted in his cross- examination that he had mortgaged the house in dispute with the Bank and had executed various documents in its favour and there was no evidence in rebuttal the issue was answered in favour of the bank and Muhammad Bashir had validly created mortgage of suit property in favour of the plaintiff.
8. The main controversy centered round the findings on issue No, 6 whether Mst. Nasiban as a transferee for consideration had acted in good faith so as to avail of the protection of section 41 of the Transfer of Property Act, 1882 if any, or the house in dispute was subject to the mortgage charge of the Bank in her hands. Her case is that she had made bona fide enquiries and satisfied1 2 herself about the title of the vendor. As in Sargodha town the ownership of houses could be ascertained only by reference of fards of Patwari, she made enquiries about it from the revenue authorities but no one told her that the house in question was mortgaged with the appellant-bank.
She being an illiterate lady had therefore acted in good faith and taken proper care to ascertain that the transferor had power to sell the house in dispute. She cannot be said to have acted negligently and was, therefore, fully protected against the bank under section 41 of the Transfer of Property Act. The learned trial Court on the basis of certain decision of Lahore High Court held that since the revenue enteries in the present case showed Muhammad Bashir as the sole-proprietor of the land, the purchaser was not bound to go behind those entries to make any further enquiry and as such she was fully protected by section 41 of the Act, and that she was a bona fide purchaser for value without notice of the mortgage and the bank could follow this property in her hands.
Consequently, the suit of the bank was dismissed against all the respondents and even no personal decree was passed against respondent No, 2 on the grounds that no such prayer was made by the appellant in this behalf.
9. Before the first appellate Court the findings of the learned trial Judge on Issue No, 6 were seriously contested but all the contentions of the bank were repelled by the learned District Judge and it was held by him that Mst. Nasiban had made all the enquiries which were required to be made in this case, she was a bona fide purchaser for value of the suit property and, as such, she was entitled to the protection of section 41. The prayer for the sale of the mortgage property in the hands of Mst. Nasiban was, therefore, rejected and the bank suit to that extent was dismissed.
However, the learned District Judge passed a personal decree for Rs, 7,237 in favour of the bank against Muhammad Bashir with cost and future interest from the date as claimed in the suit.
10.The learned District Judge held that Mst. Nasiban being a woman could not make all the enquiries herself and her statement must be believed that she left detailed enquiries to be made by the broker and since the broker had left no stone unturned to ascertain that the house was free from all encumbrances she was entitled to the protection of section 41 of the Transfer of Property Act. To us it, however, appears that the entire approach to the problem by the learned trial Judge as well as by the learned District Judge was erroneous in law. Admittedly, the site of the house in dispute was originally the property of the Government which was purchased by one Kh. Shams- ud-Din from the Government by Registered Sale Deed (Exh. PA) dated 24th of March 1952. Any prudent buyer is expected to ask from a seller about the title deeds of the property. In our opinion, a simple question to elicit the whereabouts of the previous title deed either by Mst. Nasiban or by her broker would have revealed that Muhammad Bashir had parted with those documents and the mystery of the mortgage created. by Muhammad Bashir in favour of the bank would have been solved. Mst. Nasiban has also failed to produce her brother, Alla Ditta who is said to have made the necessary enquiries before the purchase. There is, thus, no evidence on record to remotely indicate that Mst. Nasiban or any other person on her behalf had made any enquiry about the original title deed. In the absence of enquiry from Muhammad Bashir about those documents of title, it cannot be said that the enquiries made by Mst. Nasiban about the title of property in the Revenue record were sufficient. No due and reasonable care was, therefore, taken to ascertain that the property was free from encumbrance. It is true that according to the Revenue record Muhammad Bashir was shown to be the owner of the house but with respect to an immovable property situated in a town like Sargodha no prudent buyer can depend solely on the entries in the revenue records.
11.It is in evidence that Muhammad Bashir in his letter (Exh. P-6) addressed to the bank had delivered the title deed with respect to site and the site-plan of the house as sanctioned by the Municipal Committee, Sargodha, together with its certificate and ten receipts to the bank as security by way of equitable mortgage, therefore, besides the revenue records there were other documents of title and since no enquiry was made by Mst. Nasiban to ascertain the real facts about the title of the property she cannot be said to have acted in good faith.
12.In Sethumadhava Ayyar v. Bacha Bibi and others it was held that under section 41 of the Transfer of Property Act reasonable care would be to inspect the title deeds under which the vendor claims title and to ascertain if the vendor had power to transfer under the deeds. In Ram Chalitra Thakur and others v. Shivanandan Thakur and others it was held that where a vendee fails to look into the papers to see whether vendor had power to sell the property he was not entitled to the benefit of section 41 and the mere fact that the vendor's name appeared in the Register 'D' was not sufficient.
13.We were unable to agree with the learned District Judge that Mst. Nasiban being a woman had to depend upon her broker who had left no stone unturned to ascertain that the suit house carried no encumbrance. A purchaser of property cannot be said to have acted in good faith and with reasonable care simply because he entrusted the enquiry into the title of property to a trusted person and completed the transaction after he was told that everything was right. In Purnendu Nath Tagore v. Hanut Mull Dogar and others when a purchaser had reposed such a confidence in a solicitor, it was held that he was not entitled to the protection of section 41 and could not be said to have acted in good faith and with reasonable care. The position of the property brokers in our country is much worse than the solicitors who are educated in law and are trained-technicians for the purposes of finding out the defects in the title of a property. The entrustment of such an enquiry to a lay broker whose only interest is to collect his commission from the bargain will not amount to acting in good faith and with reasonable care.
14. The words 'reasonable care' under section 41 of the Transfer of Property Act mean such care as an ordinary man of prudence would take. In dealing with the real property regard is had to the usual course of business and a purchaser, who wilfully departs from it is not entitled to derive any advantage of the section. The ordinary standard of care and diligence that would constitute reasonable care for the purposes of ascertaining the power of transferor would be to enquire about his title to the property and in cases relating to urban immovable property where the Registration Act is applicable and the offices of Sub-Registrars of documents exist the first requirement will be to enquire about the existence of title deed and to inspect it if produced. Since neither Mst. Nasiban nor her broker made any endeavour to ask for the title deed from the vendor, the mere fact that they had satisfied themselves from the entries in the revenue papers will not in the circumstances of the case amount to an enquiry into the title of the transferor. For these reasons we are clearly of the view that Mst. Nasiban had not taken reasonable care to ascertain that Muhammad Bashir had power to transfer the suit house or that it was free of encumbrances.
As such issues Nos, 6 and 7 were incorrectly decided by both the Courts below. We therefore hold that the house in dispute in the hands of Mst. Nasiban is subject to mortgage charge of the plaintiff-bank.
14. As a result of the above discussion we accept this appeal and in modification of the decree passed by the lower appellate Court we pass a preliminary decree against the defendants- respondents for payment of Rs, 7,237 to the plaintiff-appellant along with interests due thereon from the date of suit till realization in full at the rate of 6% per annum and cost within a period of four months from today. In default of this payment, the plaintiff-appellant shall be entitled to apply to the Court for final decree for recovery of the amount due to the bank by the sale of the mortgage property in suit in accordance with rule 4 of Order XXXIV of the Code of Civil Procedure. AIR 1933 Lah. 972 AIR 1935 Lah. 10 AIR 1928 Mad. 7783 4 5 1 2 3