Gross Negligence under TP Act
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A Rengarajan
Jan 31, 2009, 12:13:01 PM1/31/09
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Gross Negligence under Section 3 of Transfer of Property Act 1882
When a person buying a property and he is told that title deeds of the property are with a bank for safe custody, he should inquire from the bank because if it turns out later that the deeds were actually pledged with the bank, it will amount to gross negligence.
Lloyds Bank Ltd v P.F. Guzdar & Co
A deposited title deeds of his property with Bank Y for securing an over draft. A then asked for the return of the title deeds saying that he wished to sell the property and clear the overdraft. The usual practice is that prospective buyers to inspect the original title deeds from Bank's counsel. In this case A feels that he would not get good price if the purchaser came to know that the bank had title deeds. Due to the reason, the bank returned the title deeds to A, He then borrowed money from Bank Z by falsely representing that the property is free from encumbrances and the charge was created. In the above circumstances, Bank Y was held guilty of gross negligence in surrendering the title deeds to A. The Bank Z had priority over the mortgage to Bank Y.
In another case ( Tilakdhari v Khedan lal) the Privy council held that before purchasing an immovable property , the omission to search the registers kept in the Registrar's office may amount to gross negligence so as to attract the consequences which result from notice,
When a person buying a property and he is told that title deeds of the property are with a bank for safe custody, he should inquire from the bank because if it turns out later that the deeds were actually pledged with the bank, it will amount to gross negligence.
Lloyds Bank Ltd v P.F. Guzdar & Co
A deposited title deeds of his property with Bank Y for securing an over draft. A then asked for the return of the title deeds saying that he wished to sell the property and clear the overdraft. The usual practice is that prospective buyers to inspect the original title deeds from Bank's counsel. In this case A feels that he would not get good price if the purchaser came to know that the bank had title deeds. Due to the reason, the bank returned the title deeds to A, He then borrowed money from Bank Z by falsely representing that the property is free from encumbrances and the charge was created. In the above circumstances, Bank Y was held guilty of gross negligence in surrendering the title deeds to A. The Bank Z had priority over the mortgage to Bank Y.
In another case ( Tilakdhari v Khedan lal) the Privy council held that before purchasing an immovable property , the omission to search the registers kept in the Registrar's office may amount to gross negligence so as to attract the consequences which result from notice,
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