2004 (4) TMI 660 - HC - Indian Laws

Court upholds sale deeds' validity; plaintiff's conduct binds under Indian Contract Act. Previous judgment failure not a bar.

The High Court upheld the trial court's decision, confirming the validity of the sale deeds executed by the first defendant. The court found that the ... - Issues Involved1. Validity of the sale deeds executed by the first defendant.2. Allegations of forgery and tampering of powers of attorney.3. Applicability of Section 52 of the Transfer of Property Act, 1882.4. Application of Section 237 of the Indian Contract Act.5. Legal implications of not appealing the judgment in O.S. No. 265 of 1983.Issue-wise Detailed Analysis1. Validity of the Sale Deeds Executed by the First DefendantThe plaintiff sought a declaration that the sale deeds executed by the first defendant were null and void and sought possession free from all encumbrances. The trial court dismissed the suit, finding that the first defendant had valid authority under the powers of attorney to execute the sale deeds. The High Court confirmed this decision, stating that the sale deeds were binding on the plaintiff under Section 237 of the Indian Contract Act, as the plaintiff's conduct induced third parties to believe that the first defendant had the authority to sell the properties.2. Allegations of Forgery and Tampering of Powers of AttorneyThe plaintiff contended that the powers of attorney were tampered with to include additional properties not originally authorized for sale. The trial court found that the insertions were made by the fifth defendant and not the first defendant, thus not affecting the validity of the powers of attorney. The High Court, however, noted that even if the powers of attorney were tampered with, the principal (plaintiff) would still be bound by the unauthorized acts of the agent (first defendant) under Section 237 of the Indian Contract Act, as the plaintiff had induced third parties to believe in the agent's authority.3. Applicability of Section 52 of the Transfer of Property Act, 1882The plaintiff argued that the sale deed obtained by the fourth defendant through court was hit by Section 52 of the Transfer of Property Act, 1882. The High Court found this contention untenable, as the suit filed by the fourth defendant for specific performance was prior to the plaintiff's suit. Section 52 would apply only to sales made by private negotiations during the pendency of the suit, which was not the case here.4. Application of Section 237 of the Indian Contract ActThe High Court emphasized the application of Section 237 of the Indian Contract Act, which binds the principal by the unauthorized acts of the agent if the principal's conduct induced third parties to believe that such acts were within the agent's authority. The court found that the plaintiff had chosen an unscrupulous person as his power of attorney and allowed scope for manipulation and forgery. Therefore, the transactions were binding on the plaintiff, as the defendants 2 and 3 had bona fidely purchased the property without knowledge of any forgery.5. Legal Implications of Not Appealing the Judgment in O.S. No. 265 of 1983The plaintiff did not appeal the judgment in O.S. No. 265 of 1983, which decreed specific performance in favor of the fourth defendant. The High Court noted that this did not pose a legal impediment for the plaintiff to maintain the appeal in O.S. No. 62 of 1984. The reliefs prayed for in O.S. No. 62 of 1984 were comprehensive enough to adjudicate the adverse claim of the fourth defendant, notwithstanding the decree in O.S. No. 265 of 1983.ConclusionThe High Court dismissed the appeal, confirming the trial court's judgment and decree, although for different reasons. The court found that the plaintiff failed to prove acts of fraud by defendants 2 and 3, and the provisions of Section 237 of the Indian Contract Act applied, making the sale deeds binding on the plaintiff. The parties were ordered to bear their own costs.