P L D 1965 (W (PLP)

Two brothers, Rab Nawaz and Haq Nawaz were jointly tried and convicted by a Magistrate 1st Class, Lahore, for an offence under section 420, P. P. C. and sentenced to rigorous imprison ment for one year and payment of fine of rupees five thousand each in default of payment of fine, they were to suffer rigorous imprisonment for a further period of one year each. On appeal to the learned Sessions Judge, Lahore, their conviction and sentence of rigorous imprisonment was maintained but the sentence of fine was reduced to rupees two thousand each, never theless in default of payment of fine, they were to suffer one year's rigorous imprisonment each. The learned Sessions Judge further directed that the fine, if recovered, shall be paid as compensation to the heirs of the complainant, Mirza Ahmad Beg, who has since died. This revision petition is directed against the judgment of the learned Sessions‑ Judge, which slightly modified the sentence imposed by the trial Magistrate.

2. By means of a registered' mortgage deed Exh. P. J., executed in the year 1957, the two petitioners jointly mortgaged with possession their property consisting of several houses and shops including two houses bearing survey Nos. H‑4‑349 and H‑350 to Mirza Nasir Ali (P. W. 1) for a period of two years ending the 18th May 1959. While this mortgage still subsisted, the petitioners by a registered mortgage deed Exh. P. G., dated 20‑7‑58 created a further mortgage with possession of the two above‑mentioned houses in favour of Mirza Ahmad Beg, deceased for a sum of Rs. 8,

000. At the time of the second mortgage, the petitioners are alleged to have misrepresented to the deceased complainant that the two houses being mortgaged were free from all encumbrances and the prosecution case is that it was because of this assurance that the deceased complainant was induced to agree to advance Rs. 8,000 to the two petitioners on the security of the two houses. On the basis of these facts, a case under section 420, P. P. C. was registered against the petitioners on a report in writing addressed to the Senior Superintendent of Police, Lahore, by Mirza Ahmad Beg the deceased mortgagee.

3. The two petitioners in their statements recorded under section 342, Cr. P. C. admitted having mortgaged with possession their property including the two houses in question to Mirza Nasir Ali (P. W. 1) vide mortgage deed copy marked Exh. P. J. They also admitted that they created a further mortgage with possession on the, two houses in favour of the deceased complainant as per mortgage deed Exh. P. G. for Rs. 8,

000. They, however, pleaded in their defence that they did not hold out any assurance to the deceased complainant that the two houses were free from previous encumbrances; that at any rate, the deceased complainant had actual notice or should have with the exercise of reasonable diligence notice of the earlier mortgage in favour of Mirza Nasir Ali Khan (P. W. 1) and that, therefore, they have committed no offence.

4. The factum of the‑two mortgages being admitted by the two petitioners, the short question that falls for determination in this case is whether they dishonestly concealed the earlier mortgage of the two houses so as to induce the deceased complainant into advancing Rs. 8,000 to them. On this point the most crucial evidence is the mortgage deed Exh. P. G. executed by the petitioners. It makes no reference, whatever, to the earlier mortgage in favour of Mirza Nasir Ali (P. W. 1). Not only that; it also contains a categorical assurance in the following unequivocal terms: In the face of this solemn assurance, that the houses being mortgaged are free from "all encumbrances whatsoever" it is idle to contend that the earlier mortgage in favour of Mirza Nasir Ali was made known to the deceased complainant. As rightly pointed out by the learned Sessions Judge, it is unbelievable that if the fact of earlier mortgage of the houses had been disclosed to the deceased complainant, he would have agreed to advance as large a sum of money as Rs. 8,000 to the petitioners. Besides the above recital in the mortgage deed the two brokers, Feroze Din (P. W. 2) and Din (P. W. 3), through whom the mortgage in question was negotiated also stated on oath that the two petitioners had assured them as also the deceased complainant that the two houses were free from all encumbrances. There is absolutely no evidence, that the deceased complainant had any knowledge of the previous mortgage aliunde. It was urged that there was no denial by the deceased on the point. But I am sure that learned counsel was not serious about this part of the plea for the deceased complainant died before he had occasion to enter the witness box. Therefore, the two Courts below rightly rejected the petitioner's plea that the deceased complainant had actual notice of the previous mortgage on the two houses.

5. Learned counsel for the petitioners next urged that the deceased complainant had at any rate constructive notice of the first mortgage. In this behalf, he relied upon Explanation I to the definition of the expression "a person is said to have notice" in section 3 of the Transfer of Property Act, 1882 and contended that registration of the earlier mortgage Exh. P. J. in favour of Mirza Nasir Ali per se constituted a constructive notice of the prior mortgage to the deceased, notwithstanding any assurance to the contrary in the mortgage deed Exh. P. G. The argument, I have no doubt in my mind, proceeds on a misconception of the true import of the Explanation. It would be wrong to read the Explanation as a substantive provision unrelated to the definition of the expression "a person is said to have notice" to which it‑is appended. For a proper understanding of the true import of Explanation, it appears necessary to reproduce the relevant provision in extenso; it reads "a person is said to have notice' of a fact when he actually knows that fact, or when, but for, willful abstention from an inquiry or search which he ought to have made, or gross negligence, he would have known it. Explanation I.‑Where any transaction relating to immov able property is required by law to be and has been effected by a registered instrument, any person acquiring such property or any part of, or share or interest in such property shall be deemed to have notice of such instrument as from the date of registration to

: Provided that‑‑ (1) ....................................... (2) ....................................... (3) ....................................... Explanation II‑Any person acquiring any immovable 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. Explanation III.‑A person shall be deemed to have had notice of any fact if his agent acquires notice thereof whilst acting on his behalf in the course of business to which that fact is material: Provided that ................................. The argument on behalf of the petitioners overlooks the fact that the Explanation I is an integral part of the definition of the relevant expression in the interpretation clause in the Registration Act. It is well‑known principle of interpretation of statutes, that the definition has the effect of a declaratory provision which generally governs all cases coming within the ambit of the statute and not outside it. I have no doubt in my mind that in the instant case the definition set out above has reference to the equitable doctrine of notice which controls uncon scionable transactions regarding which the Transfer of Property Act contains a number of substantive provisions elsewhere. For instance by section 39 of the Act, if transfer is made of a property out of which a person has right to receive maintenance, the transferee takes it subject to that right if he had notice of such right but not otherwise. Similarly, section 40` of the Act makes certain equitable interests in land enforceable against transferee for value but with notice thereof or against a gratuitous transferee whether with or without notice. Therefore, the definition of "a person is said to have notice" in the definition clause of Act along with the various Explanations appended thereto including Explanation I relied upon by the petitioners' learned counsel is applicable to cases falling within the purview of the Transfer of Property Act only and would be inapplicable to matters foreign to the scope of that Act. This is in consonance with the general principle, discussed in Chapter 3 of Maxwell on Interpretation of Statutes 1953 Ed. that the words of statute should be construed with regard to the object of the statute and that the Legislature by the use of general language did not intend to subvert the established principles of equity on the subject of constructive notice. Numerous English precedents are cited in support of the above principle.

6. The above discussion leaves no manner of doubt that Explanation I set out above, cannot be invoked in the present case to set up the previous mortgage deed Exh. P. J. in favour of Mirza Nazir Ali as constructive notice to the deceased complain ant in answer to a charge of deception. Ramchandra v. Jainarain (I L R 1898 Bom. 698) is in point. In that case it was held that, a decree "holder bringing his judgment‑debtor's property to sale, cannot set up a mortgage to himself which he has not disclosed and pleaded that its registration was constructive notice to the purchaser. Conversely if it were to be held that Explanation I is a substantive provision applicable to all manner of cases whether falling within or outside the ambit of the Transfer of Property Act. then it will, throw the door for deception wide open, for any surruptitious document, if registered, would be a sure defence to any subsequent transaction relating to property covered by the document on the basis of constructive notice. It is not possible to attribute such intention to the Legislature.

7. It was next urged on behalf of the petitioners that the deceased complainant and nova his lawful heirs can avail the remedy under section 81 of the Act so as to enforce security against the two houses subject to rights of the previous mortgagee Mirza Nasir Ali and, therefore, it cannot be said that the deceased complainant or his heirs suffered any monetary loss. Whether or not the deceased complainant or his heirs are able to recover the entire mortgage sum by enforcing the security of two houses is besides the point. The real question to be determined is whether facts proved in this case constituted a criminal offence of cheating regardless of the fact whether there will be available any civil remedy to the heirs of the deceased complainant against the petitioners or the property on the security of which Rs. 8,000 were advanced. The crux of the case against the petitioners is the state of their mind at the time when they offered to mortgage two houses to the deceased complainant, regardless of any remedy, whether civil or criminal, that may be available upon the facts of the case. It was held in Lal Bahadur v. Emperor (A I R 1933 All. 42) (that mere existence of civil remedy does not exclude a trial by a criminal Court for an offence of cheating. Pirthve Rai v. State (P L D 1959 Dacca 88) relied upon by the learned counsel for the petitioners has no bearing on the case. All that this case lays down is that the initial intention to cheat must be established in order to justify the conviction for cheating. In my opinion on the facts proved or admitted, this condition is amply satisfied in this case. The written assurance given by the petitioners in the mortgage deed Exh. P. G. that the two houses were free from any previous encumbrance was out and out dishonest and it is difficult to explain it on any other hypothesis.

9. For the foregoing reasons, I find no reason to interfere in revision with the concurrent findings of the two Courts below and the sentence imposed by the learned Sessions Judge. The revision petition is, therefore, dismissed. The petitioners are on bail. They shall surrender themselves forthwith to undergo the un-expired period of their respective sentences. K. B. A. Petition dismissed.