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Ram Niwas v. Bano, (2000) 6 SCC 685

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  • This case was decided by the Hon’ble Supreme Court on 1st August 2000 deals with the Doctrine of Constructive Notice concerning Section 19(b) and Section 20(2) of the Specific Relief Act, 1963, and Section 3 of the Transfer of Property Act, 1882, 1882 (TPA).


  • The plaintiff took a shop on rent from the defendant and subsequently entered into a contract for the purchase of the shop.
  • He paid part of the consideration on the date of the agreement and undertook to pay the remaining amount on the date of the execution of the sale deed.
  • Six months later, the defendant sold the shop to a third party for the consideration of Rs 20,000.
  • The plaintiff filed a suit seeking specific performance of a contract for the sale of a shop.
    • The trial court ruled in favor of the plaintiff.
  • The purchasers, dissatisfied with the trial court's decision, filed an appeal in the High Court.
    • The HC's Single Judge found that the purchasers were bona fide purchasers without knowledge of the agreement between the plaintiff and the vendor.
    • The Single Judge dismissed the appeal, which was later upheld by a Division Bench of the High Court.
  • The appellant (tenant) filed a Special Appeal before the SC, challenging the judgment.
    • The tenant argued that the purchasers had notice of the agreement between the plaintiff and the vendor.

Issue Involved

  • Whether the third party purchased the disputed shop after paying the full price and had they no knowledge of the alleged agreement to sell?


  • The SC set aside the judgments of the lower courts.
  • The case was remanded to the Single Judge for a fresh decision on the validity of the agreement and the entitlement of the plaintiff to specific performance.
  • The Court emphasized the importance of considering the provisions of Section 20(2) of the Specific Relief Act in deciding on specific performance.
  • No costs were awarded due to the circumstances of the case.


  • A statutory presumption of “notice” arises against any person who acquires any immovable property or any share or interest therein of the title.
  • SC observed that, 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.