'A' sold a house to 'B' for Rs. 1,00,000/- on 3.3.2011. 'A' retained the possession of the house. On 7.3.2011, 'A' again sold the same house to 'C' for a sum of Rs. 2,00,000/-. 'C' was aware of the earlier sale between 'A' and 'B'. The sale deed in favour of 'C' was got registered on the same day and 'C' was also given the physical possession of the house. The sale deed in favour of 'B' was got registered on 10.4.2011. 'B' thereafter filed a suit for recovery of possession of the house against 'A' and 'C'. Decide.

Both sale-deeds were ultimately registered, the competition between them is governed by Section 47 of the Registration Act, 1908, which fixes priority by date of execution rather than date of registration; and because C admittedly had actual notice of the prior sale to B, C cannot claim the protection ordinarily available to a bona fide subsequent purchaser.

The Governing Provision — Section 47

Section 47 provides that a registered document operates not from the date of its registration, but from the date of its execution. The settled legal consequence of this rule is that where two registered documents are executed by the same person in respect of the same property to two different persons at different times, the document executed earlier in time has priority over the one executed later, even though the earlier document happens to be registered after the later one.

Why Section 50 Does Not Govern This Case

It might appear, at first glance, that this is a case of competition between a registered document (C's) and an unregistered document (B's), attracting Section 50, which generally gives priority to a registered document over an unregistered one relating to the same property. This impression, however, is incorrect once the facts are examined closely: B's sale-deed, though registered later in point of time (on 10th April 2011), was nevertheless registered. Once a document is registered — regardless of when — the question of priority between it and another registered document is to be determined exclusively with reference to Section 47, and Section 50 has no application at all to a contest between two documents both of which are, in the end, registered. The relevant date for each is its date of execution, not its date of registration.

Applying Section 47 to the Present Facts

Applying this principle, A executed the sale-deed in favour of B on 3rd March 2011, and executed the sale-deed in favour of C four days later, on 7th March 2011. Since B's deed was executed first in point of time, it takes priority over C's deed once both stand registered — notwithstanding that C's deed happened to be registered immediately on the same day it was executed (7th March 2011), while B's deed was registered a month later, on 10th April 2011. The registration of B's deed, once effected, relates back in law to 3rd March 2011, the date of its execution, and from that date B's title must be treated as having come into existence, in priority to C's.

Reinforcement Through the Doctrine of Notice

Quite apart from the operation of Section 47, the outcome is independently reinforced by the fact, expressly stated in the problem, that C was aware of the earlier sale to B before he took his own sale-deed. The doctrine of notice, though not codified in the plain text of the Registration Act's priority provisions, has been consistently read into the scheme of registration law by the courts, precisely to prevent the registration machinery from being turned into "a most effectual instrument for perpetrating fraud." As explained in Waman v. Dhondiba, where the holder of a subsequent document had actual notice, at the time he took his transfer, of a prior transaction affecting the same property, he cannot use the mere fact of his own registration to defeat the prior transaction — the very purpose of notice being to fix him with the knowledge that a rival claim already existed. Here, C's admitted knowledge of the earlier sale in favour of B places him squarely outside the protection that the law extends only to those who purchase in good faith, for value, and without notice of a prior transaction — a protection expressly recognised, in analogous terms, in Section 19(b) of the Specific Relief Act, 1963, and reflected throughout the scheme of the Registration Act.

The Significance of A Retaining Possession

The fact that A retained physical possession of the house after selling it to B, and that A was consequently able to hand over possession to C on 7th March 2011, does not improve C's position. A's continued possession after the sale to B did not revive any ownership in A capable of being conveyed to C; once A executed a valid and complete sale in favour of B on 3rd March 2011 (a transaction that, upon registration, relates back to that date under Section 47), A retained no title of his own to sell to C four days later. A's possession, in these circumstances, was merely factual and unlawful vis-à-vis B, not a possession clothed with any subsisting ownership that A could pass on.

Illustration

If A sells his house to B on 3rd March by a deed subsequently registered on 10th April, and then sells the same house to C on 7th March by a deed registered the same day, with C being fully aware of the earlier sale to B, the priority as between the two registered deeds is determined by their respective dates of execution under Section 47 — B's deed, executed first, prevails over C's, executed later — and C's independent knowledge of the prior sale further disentitles him from asserting any equity of a bona fide purchaser. B, therefore, would be entitled to a decree for possession against both A, who had no title left to convey to C, and C, whose title is subject to and defeated by B's earlier and now duly registered sale-deed.

Comparative Summary