What is the Doctrine of Constructive Notice?

 

INTRODUCTION

 

Today, I will discuss the Doctrine of Constructive Notice in the context of a latest judicial pronouncement by the Hon’ble Supreme Court, namely, Salim D. Agboatwala & Others v. Shamalji Oddhavji Thakkar & Others, Civil Appeal No. 5641 of 2021.

 

TYPES OF NOTICES

 

But before adverting any further, let us understand the types of notices that are prevalent in the Indian Jurisprudence. In the case of Collector (LA) v. J. Sivaprakasam, (2011) 1 SCC 330, the Court explained that there are three types of notices, actual, implied and constructive. Let us discuss them.

 

a. Actual Notice – When notice is directly served upon a party in a formal manner or when it is received personally by him, there is actual notice.

b. Implied Notice – If from the facts it can be inferred that a party knew about the subject-matter of the notice, knowledge is imputed by implied notice.

c. Constructive Notice – Notice arising by presumption of law from the existence of certain specified facts and circumstances is constructive or deemed notice.

 

DICTIONARY MEANING

 

Now, let us understand the dictionary meaning of ‘constructive notice.’ Black’s Law Dictionary, Eighth Edition, defines ‘constructive notice’ as: -

 

“Notice presumed by law to have been acquired by a person and thus imputed to that person.”

 

Thus, in simple terms, constructive notice is a presumption that a person has a duty to take notice of certain facts.

 

LEGAL PROVISION

 

In order to gain further clarity, let us also peruse, let us also peruse the relevant excerpt of Section 3 of the Transfer of Property Act, 1881. It states that: -

 

“A person is said to have notice of a fact when he actually knows that fact, or when, but for wilful abstention from an enquiry or search which he ought to have made, or gross negligence, he would have known it.

 

Explanation II — Any person acquiring any immoveable property or any share or interest in any such property shall be deemed to have notice of the title, if any, of any person who is for the time being in actual possession thereof.”

 

Thus, we see that a person is said to have notice of a fact: -

 

a. When he actually knows that fact.

b. When he ought to have known that fact but could not know or do so on account of his wilful abstention or gross negligence.

 

WILFUL ABSTENTION AND GROSS NEGLIGENCE

 

Now, what is ‘wilful abstention’ and gross negligence? It has been explained in the case of Ahmedabad Municipal Corpn. v. Haji Abdulgafur Haji Hussenbhai, (1971) 1 SCC 757, wherein it was noted that “wilful abstention suggests conscious or deliberate abstention and gross negligence is indicative of a higher degree of neglect. Negligence is ordinarily understood as an omission to take such reasonable care as under the circumstances is the duty of a person of ordinary prudence to take. In other words it is an omission to do something which a reasonable man guided by considerations which normally regulate the conduct of human affairs would do or doing something which normally a prudent and reasonable man would not do.”

 

RELEVANT CASE LAWS

 

Further, the Hon’ble Supreme Court has discussed the Doctrine of Constructive Notice in plethora of case laws. Some of the pertinent ones are: -

 

1. Ram Niwas v. Bano, (2000) 6 SCC 685, wherein it was observed that “a statutory presumption of “notice” arises against any person who acquires any immovable property or any share or interest therein of the title.” Thus, if a person is purchasing a property and he knows that a tenant is in possession of that property, then he ought to inquire about the terms of possession of that tenant.

 

2. The next case is Mohd. Noorul Hoda v. Bibi Raifunnisa, (1996) 7 SCC 767, wherein it was opined that “constructive notice in equity treats a man who ought to have known a fact, as if he actually knows it. Generally speaking, constructive notice may not be inferred unless some specific circumstances can be shown as a starting point of enquiry which if pursued would have led to the discovery of the fact.”

 

3. Further, in the case of ONGC Ltd. v. Nippon Steel Corpn. Ltd., (2007) 2 SCC 382, the Court cautioned that “the doctrine of constructive notice cannot be extended to acts that are performed at the instance of a third party.”

 

4. Now, in the case of Rajasthan Housing Board v. New Pink City Nirman Sahkari Samiti Ltd., (2015) 7 SCC 601, it was observed that “constructive notice means a man ought to have known a fact” and it “is a notice inferred by law, as distinguished from actual or formal notice.”

 

5. And lastly, in the case that I mentioned in the beginning, Salim D. Agboatwala & Others v. Shamalji Oddhavji Thakkar & Others, the Court noted that when ‘a person is said to have notice’, is a matter of fact that is to be established through evidence. Therefore, if a party is claiming that he did not have notice of certain fact and the opposite party is alleging otherwise, then such claim about notice could only be established by way of evidence.

 

CONCLUSION

 

Thus, in conclusion, Doctrine of Constructive Notice could be summed up as: -

 

a. It is a presumption under law that a person has a duty to take notice of certain facts.

b. Wilful abstention or gross negligence cannot be taken as exceptions to this doctrine.

c. when ‘a person is said to have notice’, is a matter of fact to be established through evidence.

d. It cannot be extended to acts of third parties.

 

Therefore, I hope that the nature and the meaning of Doctrine of Constructive Notice is clear by now.