Question

In which of these situations, presumption of constructive notice arises?

• A. Fraud or secrecy in transaction
• B. Registration of agreement
• C. Notice to relatives
• D. Both (a) and (c)

Hint:

Constructive notice is a legal fiction created to prevent subsequent buyers from claiming ignorance of public records.
There are three main forms of constructive notice: (1) Registration of a document, (2) Actual possession of the property by a third party, and (3) Gross negligence of the purchaser.

Answer 1

The Correct Option is B

Step 1: Understanding the Question:
The question asks to identify the situation in which the legal presumption of "constructive notice" automatically arises under the Transfer of Property Act, 1882.

Step 2: Key Legal Principles and Approach:
The concept of "notice" (which includes actual notice and constructive notice) is defined in Section 3 of the Transfer of Property Act, 1882.
Constructive notice is a legal presumption where a person is deemed to have knowledge of a fact, even if they have no actual knowledge, because they would have discovered it had they made reasonable inquiries and exercised due diligence.

Step 3: Detailed Explanation:

• The Rule of Registration: Under Explanation I to the definition of "notice" in Section 3 of the TPA, where any transaction relating to immovable property is required by law to be and has been effected by a registered instrument, any person subsequently acquiring such property or any part thereof shall be deemed to have notice of such instrument as from the date of registration.

• This means that the public registration of a property agreement serves as an official public record.

• Any subsequent purchaser has a legal duty to search the registry.

• If they fail to do so, the law presumes they have "constructive notice" of the registered transaction, and they cannot claim to be a bona fide purchaser without notice.

• Analyzing other options:

• Fraud or secrecy (Option A) actively conceals facts and prevents notice from arising.

• Notice to relatives (Option C) does not create any general legal presumption of constructive notice to others.

• Therefore, the registration of an agreement (Option B) is the classic situation where constructive notice is legally presumed.

Step 4: Final Answer:
Under Section 3 of the Transfer of Property Act, the registration of an instrument operates as constructive notice to subsequent purchasers, making Option (B) the correct answer.