TaxTMI 
TaxTMI 
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2025 (3) TMI 114
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....greement to Sell ... 32 a. 'Interest' in Power of Attorney ..................................................................................... 32 b. Nature of Power of Attorney ......................................................................................... 40 iii. Combined Reading of the General Power of Attorney and the Agreement to Sell ...... 46 iv. Effect of Suit for Injunction simpliciter ........................................................................... 54 G. CONCLUSION .................................................................................................60 1. Leave granted. 2. Since the issues raised in both the captioned appeals are the same, the parties are also same and the challenge is also the self-same, hence those were taken up analogously and are being disposed of by this common judgment and order. 3. These appeals have been filed before this Court from the judgment and order passed by the High Court of Karnataka at Bengaluru dated 16.10.2019 in R.F.A. No. 1318/2014 c/w R.F.A. No. 1317/2014 ("impugned judgment") whereby the High Court dismissed the appeals and affirmed the common judgment and decree dated 21.06.2014 passed in O....
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....outh Taluk do hereby appoint, nominate and constitute Smt. A. Saraswathi W/O M. S. Anantha Murthy, residing at No. 155, 5th Cross, Wilsongarden, Bangalore - 560 027 as my General Power of Attorney holder to do the following acts, deeds and things on my behalf that is to say: 1) To look after, maintain, manage the Schedule Property in the best manner as my attorney deems fit. 2) To enter into any type of agreements in respect of the Schedule property with any person for any amount, receive advance amount, issue proper receipts, apply to the competent authority seeking permission to execute any type of deeds, in favour of any persons, and to execute such deeds in favour of such persons, receive full consideration amount, issue proper discharge thereof, sign all deeds, forms etc., etc., 3) To apply for transfer of Khata and to pay all future taxes and to receive proper receipts. 4) To apply for sanctioned plan for construction of any type of building on the property and to construct such building, utilise the same as my attorney deems fit and to get all profits therefrom. 5) To represent me in respect of the Schedule property in all Government offices, BDA, BWSSB, KEB, Corpo....
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....or is in need of funds for the maintenance of his family and other legal necessities he desired to sell the Schedule Property in favour of the purchaser for a sum of Rs 10,250/-(Rs. Ten thousand two hundred fifty only) to which the Purchaser duly agreed to purchase the same for the said sum of Rs. 10,250/- only. In pursuance of this Sale agreement the purchaser paid a sum of Rs. 5,000/- on 20-5-1985 through a Cheque No. 0861556 of Syndicate Bank, Wilsongarden Branch, Bangalore and a sum of Rs. 5,250/- only Cheque No. 039 529/243 dated 3.4.86 of Syndicate Bank Wilson Garden, Bangalore total the Vendor received the full sale consideration of Rs.10,250/- only. This day the Vendor handed over the vacant possession of the Schedule property to the purchaser to have and to hold the same as absolute owner. As there is a prohibition of selling the revenue sites by the Government of Karnataka the Vendor could not execute the sale deed. As and when the Government of Karnataka revokes the fragmentation act the Vendor execute the sale deed. This day the Vendor handed over the vacant possession of the Schedule property to the purchaser, the Vendor have no objection to construct a dwelling hous....
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....ing this, the appellant no. 2 also filed O.S. No. 4045/2008 against the legal heirs of the original owner, the subsequent purchasers and the answering respondent respectively for declaration of sale deeds executed on 21.03.2003 and 29.09.2003 respectively, and the gift deed executed on 06.12.2004 as null and void. He sought further declaration of absolute ownership and direction to handover vacant physical possession of the Suit Property. Both the suits were consolidated and tried together by way of recording common evidence. 11. Upon appreciation of the oral as well as documentary evidence on record, the Trial Court vide its common judgment and order dated 21.06.2014 decreed the O.S. No. 133/2007 filed by the answering respondent by granting a decree of permanent injunction in her favour and dismissed the O.S. No. 4045/2008 filed by the appellant no. 2 herein. 12. The findings recorded by the Trial Court in its judgment and order can be better understood in four parts:- (i) First, on the issue of possession the Trial Court recorded that it was an admitted position that the answering respondent was in possession of the Suit Property. Further, the registered sale deed dated 29.0....
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....ed 21.03.2003 executed in favour of the respondent no. 7 was legal. (iii) Thirdly, on the issue of legality of registered sale deed dated 29.09.2003 which was executed by the respondent no. 7 in favour of the respondent no. 8, and the registered gift deed dated 06.12.2004 which was executed by the respondent no. 8 in favour of the answering respondent, the Trial Court held that the appellants failed to prove that the above-mentioned sale deed and gift deed were illegal, null and void. At the same time, it held that the respondent no. 8 had a valid title over the Suit Property so as to execute the gift deed in favour of the answering respondent. (iv) Lastly, on the issue of maintainability of the suit instituted by the appellants, the Trial Court held that the suit instituted by the appellants was barred by limitation. It held that as per Article 58 of the Limitation Act, 1963 (for short, "Act of 1963"), for the purpose of challenging the sale deeds dated 21.03.2003 and 29.09.2003 respectively and the gift deed dated 06.12.2004, he should have presented the suit within three years from the date of the alleged sale deed or agreement to sell as he had come to know about the sale t....
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....representatives of the deceased Muniyappa @ Ruttappa in favour of one Sri. S. Sreenivasulu on 21-032003 which Sreenivasulu in turn sold the very same suit scheduled property to one Smt. C. Roopavathi (the mother of the plaintiff in O.S.No.133/2007) under a registered Sale Deed dated 29-09-2003. The said Smt. C. Roopavathi, in turn, has gifted the said property to her daughter - Smt.J. Manjula (plaintiff in O.S.NO.133/2007) under a registered Gift Deed dated 06-12-2004. It is based upon these documents and the subsequent documents like tax paid receipts, self-declaration of property tax and the water bill and water tax receipt which have all been produced as exhibits in 'P' series as observed above, the learned counsel for the plaintiff in O.S.No.133/2007 (Respondent in R.F.A.No.1318/2014) contends that, it is Smt. J. Manjula - the plaintiff in O.S.No.133/2007 has been in lawful possession of the suit schedule property in her capacity as the owner of the suit schedule property." (ii) Secondly, the High Court observed that the appellant no. 1 in his cross-examination had admitted that the original owner-executant of POA, died on 30.01.1997. It is further an admitted positio....
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....Contract Act"). The High Court held that executing a POA, including an irrevocable one or an agreement to sell for immovable property, does not automatically transfer any right or interest to the beneficiary, such as the attorney or agreement holder. By referring to the decisions of the High Court of Rajasthan in Prahlad & Ors. v. Laddevi & Ors., reported in 2007 SCC OnLine Raj 19 and the High Court of Karnataka in Wajid Pasha v. The Chairman, Bangalore Development Authority, reported in 2013 SCC OnLine Kar 10135, the High Court held that the purpose for which the GPA was executed had not been stated either in the GPA or the agreement to sell. It was observed that indisputably, the holder of POA did not enforce the agreement to sell against the legal representatives of the executant of the POA. After the death of the executant, the holder of POA transferred the Suit Property to her son i.e., the appellant no. 2, for a sale consideration of Rs. 84,000/- which was considerably higher than the amount she paid for the Suit Property to the original owner. Thus, the High Court held that the case of the appellants would not be covered by Section 202 of the Contract Act and that the POA di....
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....ce, the limited question for our determination is whether the POA, which was coupled with interest is irrevocable as per Section 202 of the Contract Act or it stood terminated upon the death of the original owner as per Section 201 of the Contract Act? 17. Ms. Rehmani submitted that the fact of execution of the POA and the agreement to sell in favour of the holder by the original owner in exchange of sale consideration is not disputed. Since both the POA and the agreement to sell are in favour of the same person, they should be read together and construed harmoniously. The holder of POA executed the registered sale deed dated 01.04.1998 in favour of the appellant no. 2. Further, there is no challenge to the validity of the GPA and agreement to sell dated 04.04.1986 and the registered sale deed dated 01.04.1998. The GPA specifies that it had been executed for the purpose of the Suit Property. It specifically mentions that it is 'irrevocable' and the schedule to the GPA references the particulars of the Suit Property. The GPA read with the agreement to sell would indicate that it had been executed for a valid sale consideration, and possession of the Suit Property was also d....
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....ossession thereof. D. SUBMISSIONS OF BEHALF OF THE RESPONDENT(S) 21. Mr. Mahesh Thakur, the learned counsel appearing for the answering respondent submitted that an agreement of sale creates an interest against the vendor or his legal representatives and to enforce that interest the intended buyer is required to file a suit for specific performance by virtue of Section 40 of the Transfer of Property Act, 1882 (for short, "the TPA"). In view of Section 17 of the Registration Act, a property worth Rs. 100 or more cannot be transferred without registration. In the present case, the value of property is more than Rs. 100, therefore, the original owner could not have transferred the property merely by an agreement to sell or GPA or by executing both. 22. To buttress his aforesaid submission that such documents cannot pass on title, Mr. Thakur relied on the decision in Suraj Lamp (supra) to submit that by virtue of Section 54 of the TPA, an agreement to sell does not create any interest in or charge on such property. Further, a POA is not an instrument of transfer qua any right, title or interest in any immovable property. A sale by an agreement to sell or GPA will neither convey any....
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....tered sale deed dated 01.04.1998 is invalid, non-est or illegal in O.S. 133/2007? F. ANALYSIS 26. At the cost of repetition, we deem it necessary to state how the property exchanged hands on both sides. It is the case of the appellants that the original owner executed a GPA and agreement to sell in favour of the holder. Thereafter, the holder in her capacity as a holder of POA vide a registered sale deed sold the Suit Property to her son, appellant no. 2. On the other hand, it is the case of the respondents that after the death of the original owner, his heirs (respondent no. 1-6) sold the Suit Property to S. Sreenivasullu (respondent no. 7) vide a registered sale deed, thereafter, S. Sreenivasullu sold the Suit Property to C. Roopavathi (respondent no. 8) vide another registered sale deed. Lastly, C. Roopavathi vide a registered gift deed gifted the Suit Property to her daughter, J. Manjula (answering respondent). Appellant's Version Muniyappa @Ruttapa (Owner) ↓ A. Saraswathi (GPA holder) ↓ A. Manohar (appellant no. 2) Respondent's Version After Muniyappa's death Heirs of the Owner ↓ S. Sreenivasullu ↓ C. Roopavathi ↓ J. Manjula (....
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....The relationship has its genesis in a contract. If agency is the outcome of a contract between the principal and the agent, in order to show that three principals jointly constituting an agent by a deed called "Power of Attorney" was impermissible, provisions of Contract Act or the general law of contract should have been shown as having been violated by such a contract. Nothing of the kind was pointed out to us. On the contrary, in Halsbury's Laws of England, Vol. I, 4th Edn., para 726, the following proposition has been stated: "Co-principals may jointly appoint an agent to act for them and in such case become jointly liable to him and may jointly issue him." We are in agreement with this view and, therefore, three principals could jointly appoint an agent." (Emphasis supplied) 29. In State of Rajasthan v. Basant Nahata, reported in (2005) 12 SCC 77, while dealing with the challenge to the constitutional validity of Section 22A of the Registration Act, it was held that a deed of power of attorney is a document of convenience empowering the agent to act for the principal or manage the affairs of the principal. The relevant observations are reproduced hereinbelow: "Pow....
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....er. We shall now proceed with an independent as well as combined reading of the GPA and the agreement to sell. ii. Independent Reading of the General Power of Attorney and the Agreement to Sell a. 'Interest' in Power of Attorney 32. It was submitted on behalf of the appellants that the GPA read with the agreement to sell categorically states that POA was executed for a consideration, and the possession of the Suit Property was delivered to the holder. It was further submitted that since both the documents were executed on the same day, in favour of the same person, they should be read together and construed harmoniously. It is because of this reason that POA holder (agent) has an interest in the subjectmatter of the agency and the POA is coupled with interest which makes the agency irrevocable by virtue of Section 202 of the Contract Act. 33. Section 201 of the Contract Act prescribes various ways of revocation of authority given by the principal to his agent. A principal can terminate the contract of agency unless such revocation is precluded by Section 202 of the Contract Act. Section 202 of the Contract Act, as an exception to the general rule under Section 201, pr....
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.... irrevocable merely because the agent has an interest in the exercise of it or has a special property in, or lien for advances upon, the subject matter of it, the authority not being given expressly for the purpose of securing such interest or advances; (ii) Where a power of attorney, whenever created is expressed to be irrevocable and is given to secure a proprietary interest of the donee of the power, or the performance of an obligation owed to the donee, then, so long as the donee has that interest, or the obligation remains undischarged, the power is irrevocable; (iii) Authority expressed by this article to be irrevocable is not determined by the death, insanity or bankruptcy of the principal, nor.....where the principal is an incorporated company, but its winding up or dissolution, and cannot be revoked by the principal without the consent of the agent." 37. As far back as 1931, in Dalchand v. Seth Hazarimal & Ors., reported in 1931 SCC OnLine MP 57, the defendant-agent claimed that he had an interest in the cloth supplied to him by the plaintiff-principal for sale because according to the agent he was entitled to keep for himself any amount obtained by him as per the ass....
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....It is only necessary to refer to one further decision, Frith v. Frith [[1906] A.C. 254.], in which the Judicial Committee discuss the general position relating to these matters. Their Lordships point out that in what is known as Carmichael's case [[1896] 2 Ch. 643.]: "The donor of the power, for valuable consideration, conferred upon the donee, authority to do a particular thing in which the latter had an interest, namely, to apply for the shares of the Company which the donee was promoting for the purpose of purchasing his own property from him, and the donor sought to revoke that authority before the benefit was reaped." The effect of all these cases appears to be stated accurately in Bowstead on the Law of Agency, Eighth Edition, page 456. It is stated (Article 138): "Where the authority of an agent is given for the purpose of effectuating any security, or of protecting or securing any interest of the agent, it is irrevocable during the subsistence of such security or interest." --xxx-- My view of this document is as follows. I think its primary object was to recover on behalf of the principal the fruits of his decree. It contained incidentally a provision for the....
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....hich proceeded from the respondent. It was given for the purpose of effectuating a security or protecting or securing the interest of the agent. For, the only purpose of the agency was to ensure and secure the performance of the contract by the appellant in favour of the respondent for whom Shri Gulati was acting as the husband and the nominee and, therefore, a representative or an agent. Where the performance of the agency is not to secure the interest or the benefit of the agent then the agency is not irrevocable merely because the agent has an interest in the exercise of it or has a special property in or lien for advances upon the subject-matter of it." (Emphasis supplied) 40. In the present case, it is evident from para 1 of the GPA executed by the original owner in favor of the holder that the POA was to look after, maintain, manage the Scheduled Property. Para 2 states that the attorney can enter into any agreement with any person with respect to the Scheduled Property for any amount, receive advance amount, to execute deeds in favor of such persons, issue proper discharge. Para 3 states that attorney has the power to apply for transfer of khata and to pay all future taxe....
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....a particular business." 44. A three-Judge Bench of this Court settled the rules of interpretation applicable to power of attorney in Timblo Irmaos Ltd., Margo v. Jorge Anibal Matos Sequeira, reported in (1977) 3 SCC 474. It was held that words used in a POA must be interpreted in the context of the whole; the purpose of the powers conferred must then be examined through the circumstances in which it was executed; and finally, necessary powers must be implied. The relevant observations are reproduced hereinbelow:- "11. We think that perhaps the most important factor in interpreting a power of attorney is the purpose for which it is executed. It is evident that the purpose for which it is executed must appear primarily from the terms of the power of attorney itself, and, it is only if there is an unresolved problem left by the language of the document, that we need consider the manner in which the words used could be related to the facts and circumstances of the case or the nature or course of dealings. We think that the rule of construction embodied in proviso 6 to Section 92 of the Evidence Act, which enables the Court to examine the facts and surrounding circumstances to which ....
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....The first principle is, the mere saying that the power of attorney is an irrevocable power of attorney coupled with interest is not the end of the matter. The Court, can clearly say that the document, though, is styled as an irrevocable power of attorney is not in substance a power coupled with interest so as to make it an irrevocable power of attorney. At the same time, even if there is no title to show that the power is an irrevocable power, but, the substance of the entire document would suggest that the same is an irrevocable power coupled with interest. Therefore, a document has to be construed as a whole. A stray sentence here and there cannot be picked out to construe a document. To understand the tenor of the document and the intention of the parties, it has to be read as a whole. The real intention of the parties has to be covered not merely from what ex-facie is stated in the document, but, from the totality of the recitals in the document. At this stage, I may quote with profit a very lucid judgment rendered by learned Single Judge of Madras High Court explaining the general principles regarding the construction of power of attorney. In case of Anantha Pillai v. Ratiinas....
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....ed of transfer of property and does not confer ownership right or title. In Suraj Lamp (supra) this Court had reiterated that an agreement to sell does not meet the requirements of Sections 54 and 55 of the TPA to effectuate a 'transfer'. 48. From the independent reading of the POA and the agreement to sell, the submissions of the appellants fail on two grounds, first, the POA is general in nature and does not secure agent's right in the subject-matter of the agency, and secondly, an agreement to sell simpliciter does not confer ownership in the immovable property so as to transfer a better title to anyone else. iii. Combined Reading of the General Power of Attorney and the Agreement to Sell 49. The issue at hand may also be looked at from another angle. The appellants have submitted that that since the GPA and the agreement to sell were executed by the same person in favour of the same beneficiary, it ought to have been read together. 50. Here, we deem it appropriate to take note of Sections 17 and 49 of the Registration Act respectively. The provisions have been reproduced hereinbelow:- "17. Documents of which registration is compulsory.-(1) The following docum....
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....ist in whole or in part of immovable property; or (iii) any debenture issued by any such Company and not creating, declaring, assigning, limiting or extinguishing any right, title or interest, to or in immovable property except in so far as it entitles the holder to the security afforded by a registered instrument whereby the Company has mortgaged, conveyed or otherwise transferred the whole or part of its immovable property or any interest therein to trustees upon trust for the benefit of the holders of such debentures; or (iv) any endorsement upon or transfer of any debenture issued by any such Company; or (v) any document other than the documents specified in sub-section (1A) not itself creating, declaring, assigning, limiting or extinguishing any right, title or interest of the value of one hundred rupees and upwards to or in immovable property, but merely creating a right to obtain another document which will, when executed, create, declare, assign, limit or extinguish any such right, title or interest; or (vi) any decree or order of a Court [except a decree or order expressed to be made on a compromise and comprising immovable property other than that which is the sub....
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....which purports or intends to create, declare, assign, limit or extinguish any right, title or interest, whether vested or contingent, of the value of one hundred rupees and upwards to or in immovable property is compulsorily registerable. Whereas, Section 49 prescribes that the documents which are required to be registered under Section 17 will not affect any immovable property unless it has been registered. 52. The aforesaid has been emphatically laid down by this Court in Shyam Narayan Prasad v. Krishna Prasad & Ors., reported in (2018) 7 SCC 646. The relevant observations are reproduced hereinbelow:- "20. Section 17(1)(b) of the Registration Act mandates that any document which has the effect of creating and taking away the rights in respect of an immovable property must be registered and Section 49 of the Registration Act imposes bar on the admissibility of an unregistered document and deals with the documents that are required to be registered under Section 17 of the Registration Act. Since, the deed of exchange has the effect of creating and taking away the rights in respect of an immovable property, namely, RCC building, it requires registration under Section 17. Since th....
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.... even though the GPA and the agreement to sell were contemporaneous documents executed by the original owner in favour of the holder, this alone cannot be a factor to reach the conclusion that she had an interest in the POA. Thus, even though the GPA and the agreement to sell were contemporaneous documents executed by the original owner in favour of the same beneficiary, this cannot be the sole factor to conclude that she had an interest in the subject-matter. Even if such an argument were to persuade this Court, the document must have been registered as per Section 17(1)(b) of the Registration Act. In the absence of such registration, it would not be open for the holder of the POA to content that she had a valid right, title and interest in the immovable property to execute the registered sale deed in favour of appellant no. 2. 56. The practice of transferring an immovable property vide a GPA and agreement to sell has been discouraged by the following observations of this Court in Suraj Lamp (supra). The relevant observations are reproduced hereinbelow:- "24. We therefore reiterate that immovable property can be legally and lawfully transferred/conveyed only by a registered dee....
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....is not a necessity. 59. Where a finding on an issue of title is not necessary for deciding the question of possession and the grant of an injunction, or where no issue on title has been framed to decide a suit for injunction, any observation or decision on title would be incidental and collateral and will not operate as res judicata. However, findings on an issue of title in an earlier suit will operate as res judicata in a subsequent suit where the question of title is directly and substantially in issue in a suit for injunction. 60. In the case of Sajjadanashin Sayed MD. B.E. EDR. (Dead) by LRS. v. Musa Dadabhai Ummer, reported in (2000) 3 SCC 350, this Court laid down the test to decide when a case will fall in "directly and substantially in issue" or "collaterally or incidentally in issue". The relevant observations are reproduced hereinbelow:- "24. Before parting with this point, we would like to refer to two more rulings. In Sulochana Amma v. Narayanan Nair [(1994) 2 SCC 14] this Court held that a finding as to title given in an earlier injunction suit would be res judicata in a subsequent suit on title. On the other hand, the Madras High Court, in Vanagiri Sri Selliamman....
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.... possession, with or without a consequential injunction, is the remedy. Where the plaintiff's title is not in dispute or under a cloud, but he is out of possession, he has to sue for possession with a consequential injunction. Where there is merely an interference with the plaintiff's lawful possession or threat of dispossession, it is sufficient to sue for an injunction simpliciter. (b) As a suit for injunction simpliciter is concerned only with possession, normally the issue of title will not be directly and substantially in issue. The prayer for injunction will be decided with reference to the finding on possession. But in cases where de jure possession has to be established on the basis of title to the property, as in the case of vacant sites, the issue of title may directly and substantially arise for consideration, as without a finding thereon, it will not be possible to decide the issue of possession. (c) But a finding on title cannot be recorded in a suit for injunction, unless there are necessary pleadings and appropriate issue regarding title (either specific, or implied as noticed in Annaimuthu Thevar [Annaimuthu Thevar v. Alagammal, (2005) 6 SCC 202]). Where....
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....he Registration Act clearly provides that any document (other than testamentary instruments) which purports or operates to create, declare, assign, limit or extinguish whether in present or in future 'any right, title or interest' whether vested or contingent of the value of Rs 100 and upwards to or in immovable property. 17. Section 49 of the said Act provides that no document required by Section 17 to be registered shall, affect any immovable property comprised therein or received as evidence of any transaction affected such property, unless it has been registered. Registration of a document gives notice to the world that such a document has been executed. 18. Registration provides safety and security to transactions relating to immovable property, even if the document is lost or destroyed. It gives publicity and public exposure to documents thereby preventing forgeries and frauds in regard to transactions and execution of documents. Registration provides information to people who may deal with a property, as to the nature and extent of the rights which persons may have, affecting that property. In other words, it enables people to find out whether any particular prop....