Mst. NASIBAN BIBI vs THE AUSTRALASIA BANK, LAHORE AND 2 Other
This matter concerns a petition for special leave to appeal against a High Court judgment that denied the petitioner protection as a bona fide purchaser of a house. The house had been subject to an equitable mortgage created by the original owner, Muhammad Bashir, in favour of the respondent-Bank through the deposit of title deeds. The petitioner claimed protection under Section 41 of the Transfer of Property Act, 1882, arguing that her reliance on revenue records, which showed no encumbrances, constituted sufficient inquiry. The core legal question was whether the petitioner's limited inquiry into revenue records satisfied the requirement for a bona fide purchaser to act with reasonable care. The Supreme Court upheld the High Court's decision, holding that the petitioner's inquiry was insufficient. The Court established the principle that for urban immovable property, a purchaser's duty of inquiry is not satisfied by merely checking revenue records; it must extend to demanding the title deeds, which would have disclosed the existing equitable mortgage. Consequently, the petition was dismissed.
- Does reliance solely on revenue records constitute sufficient inquiry for a purchaser to claim protection under Section 41 of the Transfer of Property Act 1882?
- Is a purchaser of urban immovable property required to demand title deeds to establish bona fide status?
- Can a purchaser claim protection as a bona fide purchaser if they fail to discover an equitable mortgage that would have been revealed by requesting the title deeds?
- Section 41, Transfer of Property Act 1882
1. SAJJAD AHMAD, J.-The petitioner purchased the house in dispute from its owner Sh. Muhammad Bashir who had earlier created an equitable mortgage of the same in favour of the respondent- Bank by deposit of the title deed of the site of the house and other documents, including the plan of the house sanctioned by the Sargodha Municipality. The mortgage was effected as a security for over-draft facilities from the Bank by the aforesaid Muhammad Bashir who failed to pay the amount of the over-draft within time, which amounted to Rs. 7,237 and a suit was brought against him for recovery of that amount by sale of the house in dispute. The petitioner who was impleaded as a party, pleaded protection as a bona fide purchaser under section 41 of the Transfer of Property Act. The first Court and the lower appellate Court upheld her plea, but the High Court has rejected it, leading to this petition for special leave to appeal.
2. The basis of the plea of bona fide purchase was that the petitioner and her Mukhtar had seen the entries in the revenue papers pertaining to the disputed house which showed that the site of the house was in the ownership of Bashir free from any encumbrance and that this examination of the revenue record was a sufficient inquiry to give to the petitioner protection under section 41 of the Transfer of Property Act. 'The High Court has held that the petitioner should have made further enquiries and asked for title deed of the house from the vendor which would have revealed the real position that the title deed had been deposited with a view to create an equitable mortgage on the house. We agree with the view of the High Court that the plea of bona fide purchase was not placed on a sound footing as the inquiry made by the petitioner about the title of the suit house should not have been merely confined to the examination of the revenue papers. As the property concerned was an urban immovable property, the inquiry should have been extended to a demand for the title deed which would in this case have revealed the real position that the house was subject to an equitable mortgage in favour of the respondent-Bank.
3. There is no merit in this petition which is dismissed.