TaxTMI 
TaxTMI 
1891 (11) TMI 3
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....ew Collector's certificate was issued in May 1878 and handed to him, but he did not receive back the title-deeds from Mrs. Smith, and on asking her for them was told that they were retained by the Collector, with which answer he was satisfied and took no further steps to obtain the title-deeds. We understand from the judgment that the learned Judge who tried the case did not believe this explanation and we see no reason whatever to differ from him. It is possible that the first part of the story is true and that the title-deeds were given up by the second defendant to Mrs. Smith to enable her to get the new Collector's certificate, but we agree with the learned Judge that it is incredible that the second defendant, a sowcar of experience, who, on his own admission, had had a good deal to do with mortgages and who is well known in this Court as having been concerned in much litigation connected with mortgage transactions, could have believed that it was the practice for the Collector to retain possession of title-deeds handed to him on the occasion of a new certificate being applied for--not to retain them temporarily, but to keep them altogether--and that he should have bel....
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....prior mortgagee and this view is strengthened by the use of the word "misrepresentation," which is not necessarily fraudulent misrepresentation. The framers of the Indian Act must have considered the English decisions prior to the Northern Counties of England Fire Insurance Company v. Whipp L.R. 26 Ch. D. 482 and if they had wished to limit the application of the words " gross neglect" to cases where there was an element of fraud could have done so by appropriate words. And it is in our opinion strictly in accordance with the principles of equity that a person who, by his gross neglect, enables another to commit a fraud shall suffer for that fraud. We should therefore hold that, under Section 78 of the Transfer of Property Act, apart from the question of fraud, the second defendant having been guilty of gross neglect in allowing the title-deeds to be out of his possession and thereby allowing the plaintiff company to be induced to advance money on the security of the mortgaged property should be postponed to the plaintiff's mortgage. 3. It may be noted that such was the view of the law taken by the Madras High Court before the passing of the Transfer of Property Act in Somasun....
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....circumstances of the case negative fraud on the part of the second defendant, for it could not have been to his advantage that the title-deeds should be out of his possession. As to this it must be said that we have very little evidence as to the exact nature of the pecuniary transactions is between the second defendant and Mrs. Smith and that little only the statements of himself and his agent. He admitted that he had other money dealings with her besides the mortgage in question. We know from the documents that he advanced money on mortgage of this very property to former owners of it and joined them in conveying it to Mrs. Smith in January 1878. According to his own story, he immediately obtained a mortgage of the property from Mrs. Smith in February 1878. Then he takes the mortgage in December 1879 and subsequently sues Mrs. Smith on this mortgage and withdraws the suit on her selling the property to him and she conveys it to him by deed of 19th August 1886. Even then he does not profess to have made any inquiry about the title-deeds, for he says he first knew of the mortgage to the plaintiff company at the end of 1887. And this, although the conveyance to him by Mrs. Smith, co....
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....ng. Much is to be said on both sides. It is for the Legislature if it considers that it is expedient to make notice one of the effects of registration to so enact in express words, as is done in the latest Yorkshire Registration Act 47 and 48 Vict., Cap. 54. The Indian Legislature must have been aware of the conflict between the English and Irish decisions and those of the Bombay High Court upon the subject, and yet in laying down what shall be the effect of registration and non-registration they have abstained from declaring that notice to subsequent purchasers and mortgagees shall be one of the effects of registration. We think it is not the province of the Courts to do that which the Legislature has abstained from doing. In the judgment in The Madras Hindu Union Bank v. C. Venkatrangiah I.L.R. 12 Mad. 424 the words occur "Registration would be notice to subsequent lenders, but without it how is a prior mortgage to be discovered?" We do not understand that it was intended by those words to lay down the rule that registration of itself would amount to notice. The first mortgage there was unregistered and it was pointed out that this was a reason for extra caution on the part of th....
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....we have already dealt. It is also charged against them that they omitted to inquire for the Collector's certificate and that their attention should have been particularly directed to the matter of the certificate by the recital in one of the title-deeds (Exhibit B3) of the old Collector's certificate, which, if they had asked for, they might have got upon the track of the new certificate and of the second defendant's mortgage. As to this we observe that the same document (Exhibit B3), which was a conveyance by the second defendant and some previous mortgagors to Mrs. A. Smith, contains a covenant that the property was then (January 1878) free from incumbrances. This of itself would divert persons, dealing with Mrs. Smith and having no reason to suspect her of dishonesty, from inquiry as to incumbrances. The documents which showed a legal title in Mrs. Smith being in her possession, the absence of the Collector's certificate would not of itself be sufficient to arouse suspicion. The company's agents ascertained that Mrs. Smith was in possession of the property and she put them into possession by executing a rent agreement in their favour. Although they might have....