TaxTMI 
TaxTMI 
2025 (3) TMI 114
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....pendent Reading of the General Power of Attorney and the Agreement 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 appeal....
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.... KNOW ALL MEN BY THESE PRESENTS THAT, I, Muniyappa urf Ruttappa Son of Ragallappa, Major, residing at Vajarahalli village, Uttarahalli Hobli, Bangalore South 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,....
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.... called the "PURCHASER" (which term shall mean and include all heirs, executors, administrators and assignees) of the other part witnesseth as follows:- WHEREAS the Vendor is the absolute owner in peaceful possession and enjoyment of the Schedule Property more fully described in the Schedule hereunder. And whereas the Vendor 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....
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.... concerned police station. The occupants as well as the answering respondent were called by the police to the police station. However, the police closed the matter saying that the dispute was civil in nature. 10. Later, the answering respondent filed O.S. No. 133/2007 for permanent injunction against the appellant no. 2 or anyone else acting under him from interfering with the peaceful possession and enjoyment of the Suit Property. Following 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....
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....1908 (for short, "Registration Act") and sale by GPA is not recognized by law. By placing reliance on Suraj Lamp & Industries Pvt. Ltd. v. State of Haryana, reported in (2012) 1 SCC 656, the Trial Court held that the sale deed dated 01.04.1998 executed by the holder of POA in favour of the appellant no. 2 was invalid along with the admitted position that it was executed after the death of the original owner. Thus, it was held that the registered sale deed dated 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 institute....
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....her daughter, i.e., the answering respondent by way of a registered gift deed dated 06.12.2004. Accordingly, answering respondent is the lawful owner in possession of the Suit Property. The relevant observations read as under:- "22. As already observed above, the plaintiff in O.S.No. 4045/2008 has not denied or disputed the documents at Exs. P-1, P-2, P-3 which are two registered Sale Deeds and a Gift deed respectively. By virtue of the said documents, it goes to show that the suit schedule property was sold by the legal 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 p....
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....position of law. If it can be concluded that she had acquired interest by virtue of Exs.D-4 and D-5, then probably, Section 202 of the Contract Act may come into picture. Otherwise, it would be Section 201 of the Contract Act that may come into operation." (iii) Thirdly, the principal contention of the appellants was that since the holder of POA had an interest in the property which is the subjectmatter of the POA, the POA would not come to an end on the death of the executant by virtue of Section 202 of the Indian Contract Act, 1872 (for short, "the 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 a....
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....r declaration and possession of the property. Therefore, as per Article 65 of the Act of 1963, the period of limitation would be twelve years. 15. In such circumstances, referred to above, the appellants are here before this Court with the present appeals. C. SUBMISSIONS ON BEHALF OF THE APPELLANT(S) 16. Ms. Farhat Jahan Rehmani, the learned counsel appearing for the appellants submitted that the present case relates to the scope, interpretation and construction of the POA and the agreement to sell dated 04.04.1986 executed by the original owner in favour of holder. Hence, 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 regis....
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....es, a suit for injunction simpliciter filed by the answering respondent would not be maintainable. Further, the respondent no. 7 had no title in the Suit Property as the title had already been conveyed under the registered sale deed and there was no challenge to the same. The suit O.S. No. 4045/2008 filed by the appellants for declaration and possession ought to have been decreed. 20. In view of the aforesaid submissions, the counsel prayed that the impugned judgment passed by the High Court be set aside and appellants be declared to be the true owner of the Suit Property and grant possession 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 proper....
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....tions fall for our consideration: a. Whether the agent, A. Saraswathi, by virtue of being a holder of the General Power of Attorney along with Agreement to Sell had any right, title or interest in the subject-matter of the agency, to execute the registered sale deed dated 01.04.1998 in favour of her son i.e., the appellant no. 2, after the death of the principal, on 30.01.1997? b. Whether it was obligatory for the answering respondent to challenge the execution and validity of the General Power of Attorney and the Agreement to Sell dated 04.04.1986 and a further prayer to declare that the registered 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 (respond....
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....ersons to jointly grant a power of attorney in favour of Defendant 34. Barring the ipse dixit of the learned counsel nothing was shown to us to make such a joint power impermissible in law. The relation between the donor of the power and the donee of the power is one of the principal and agent and the expression "agency" is used to connote the relation which exists where one person has an authority or capacity to create legal relations between a person occupying the position of principal and third parties. The relation of agency arises whenever one person called the agent has authority to act on behalf of another called the principal and consents so to act. 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 st....
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....lid in law and subject to the provisions of the Act is not compulsorily registerable." (Emphasis supplied) 30. From the above exposition of law, it is settled that power of attorney is a creation of an agency by which the grantor/donor/executant authorizes the grantee/donee/holder/attorney to do the acts specified on his behalf, which will be binding on the executant as if the acts were done by him. 31. In the present case, the original owner, executant of the POA, holds the position of a principal. Whereas, the holder of the POA is an agent. There is no gainsaying in the fact that the original owner by executing the POA dated 04.04.1986 in favour of the holder entered into a principal-agent relationship with each other. 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....
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.... the agency. If both the conditions are fulfilled the agency becomes irrevocable and cannot be terminated unilaterally at the behest of the principal. As the first condition is satisfied in the present case, we shall now proceed to examine whether from the reading of the GPA, the holder of POA had an interest in the subject matter of the agency, namely, the Suit Property. 36. We may quote an extract from Bowstead on Agency, 14th Edition, page 423 it stated as under:- "(i) Where the authority of an agent is given by deed or for valuable consideration, 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. But it 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, 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 obli....
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....g that had accrued to him." ( Emphasis supplied ) 38. In the case of Palani Vannan v. Krishnaswami Konar, reported in 1945 SCC OnLine Mad 119, the decree-holder had executed a POA authorizing the holder to execute the decree. Later, the executant revoked the POA through a notice. The question before the court was whether the notice revoking the authority was valid in law or not. The court held that the POA was not coupled with interest as the object of the POA was not securing any interest of the agent. It held that the primary object of the POA was to recover the fruits of the decree on behalf of the principal despite the fact that the agent's remuneration was fixed to be drawn from the proceeds of the decree. The relevant observations are reproduced hereinbelow: "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 w....
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....revocability of a contract of agency as, (i) authority to agent given for valuable consideration; (ii) such valuable consideration was given for the purpose of effectuating a security or protecting or securing the interest of the agent; (iii) agency not being irrevocable merely because the agent has some interest in carrying it out or holds a special right, such as a lien or advance, over its subject matter. Thus, the agency has to be specifically meant to secure the agent's benefit or interest. It further observed that the interest of the agent can be inferred from the language of the document or from the course of business between the principal and agent. The observations are reproduced hereinbelow:- "All the conditions of irrevocability are satisfied in the present case. The authority to the agent was given for valuable consideration which 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....
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....ubject matter for which it has been executed. The nomenclature of the POA does not determine its nature. Even a POA termed as a 'general power of attorney' may confer powers that are special in relation to the subject matter. Likewise, a 'special power of attorney' may confer powers that are general in nature concerning the subject matter. The essence lies in the power and not in the subject-matter. 43. In Halsbury, Vol. 1, at page 151, the author defines special and general agents, the definition of general agent has been stated as follows: "A general agent is one who has authority, arising out of and in the ordinary course of his business or profession, to do some act or acts on behalf of his principal in relation thereto; or one who is authorised to act on behalf of the principal generally in transactions of a particular kind or incidental to 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 ....
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.... reported in 2011 SCC OnLine Guj 7028. The relevant observations are reproduced below:- "12. I am of the view that while construing a document, it is necessary to determine the real intention of the parties. The mere form in which document is couched is immaterial. The intention of the parties has to be gathered from the terms of the documents themselves and from such of the surrounding circumstances, as later required to show in what manner the language of the document is related to the existing fact. It is very difficult task to know the intention of the parties on the basis of the recital of the document. But, the Court can rely safely on the language of the document, the language, which has been used by the parties to manifest the intention of the parties. If the Court goes on extraneous evidence, that may lead to more difficulty and confusion. But, there are certain principles to be borne in mind. 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 ....
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.... him to execute a sale-deed...." (Emphasis supplied) 46. Applying the above exposition of law in the facts of the present case, it is evident from the tenor of POA that is not irrevocable as it was not executed to effectuate security or to secure interest of the agent. The holder of POA could not be said to have an interest in the subject-matter of the agency and mere use of the word 'irrevocable' in a POA would not make the POA irrevocable. The High Court was right in holding that the holder did not have any interest in the POA. When the High Court observes that the power of attorney does not explicitly state the reason for its execution, it implies that its nature is general rather than special. 47. It is a settled law that a transfer of immovable property by way of sale can only be by a deed of conveyance. An agreement to sell is not a conveyance. It is not a document of title or a deed of transfer of deed 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. Fro....
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.... that the [State Government] may, by order published in the [Official Gazette], exempt from the operation of this sub-section any lease executed in any district, or part of a district, the terms granted by which do not exceed five years and the annual rents reserved by which do not exceed fifty rupees. (1A) The documents containing contracts to transfer for consideration, any immovable property for the purpose of section 53A of the Transfer of Property Act, 1882 (4 of 1882) shall be registered if they have been executed on or after the commencement of the Registration and Other Related laws (Amendment) Act, 2001 (48 of 2001) and if such documents are not registered on or after such commencement, then, they shall have no effect for the purposes of the said section 53A. (2) Nothing in clauses (b) and (c) of sub-section (1) applies to- (i) any composition deed; or (ii) any instrument relating to shares in a joint stock Company, notwithstanding that the assets of such Company consist 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 a....
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....f any earnest money or of the whole or any part of the purchase money. (3) Authorities to adopt a son, executed after the 1st day of January, 1872, and not conferred by a will, shall also be registered." --xxx-- 49. Effect of non-registration of documents required to be registered.-No document required by section 17 [or by any provision of the Transfer of Property Act, 1882 (4 of 1882)], to be registered shall- (a) affect any immovable property comprised therein, or (b) confer any power to adopt, or (c) be received as evidence of any transaction affecting such property or conferring such power, unless it has been registered: [Provided that an unregistered document affecting immovable property and required by this Act or the Transfer of Property Act, 1882 (4 of 1882), to be registered may be received as evidence of a contract in a suit for specific performance under Chapter II of the Specific Relief Act, 1877 (3 of 1877) *** or as evidence of any collateral transaction not required to be effected by registered instrument.]" 51. Section 17(1)(b) prescribes that any document which purports or intends to create, declare,....
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....noted with care. Suffice it to note that a deed of power of attorney is not one of the instruments specified under Section 17 of the Registration Act compulsorily registrable. However, if a power has been created empowering the attorney to sell the property i.e., if a document that gives a right to the attorney holder to sell the immovable property, then it would be a document creating an interest in immovable property, which would require compulsory registration. In the present case, the General Power of Attorney alleged to have been executed by defendants 1 to 3 in favor of the second plaintiff is coupled with interest i.e., power of alienation is conferred but it is not registered. The Apex Court in the SURAJ LAMP's case has held that the General Power of Attorney Sale, or Sale Agreements/Will do not convey title and do not amount to transfer, nor can they be considered valid modes of transfer of immovable property. Therefore, it can be safely concluded that the declaration of facts/statement of facts (affidavit) and General Power of Attorney do not convey title. They are inadmissible in evidence." (Emphasis supplied) 55. The High Court rightly held that even tho....
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....ale deed dated 01.04.1998 executed in favour of appellant no. 2. The appellants' submission does not hold good, as the absence of a separate suit for declaration or even a specific prayer to that effect does not alter the legal position of either party in the facts of this case. The legal standing of both parties remains unaffected, for want of a distinct challenge to the instruments in question. 58. Where the question of title is "directly and substantially" in issue in a suit for injunction, and where a finding on an issue of title is necessary for granting the injunction, with a specific issue on title raised and framed, a specific prayer for a declaration of title is not necessary. As a result, a second suit would be barred when facts regarding title have been pleaded and decided by the Trial Court. In the present suit, the findings on possession rest solely on the findings on title. The Trial Court framed a categorical issue on the ownership of the appellants herein. To summarize, where a finding on title is necessary for granting an injunction and has been substantially dealt with by the Trial Court in a suit for injunction, a direct and specific prayer for a declarati....
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....injunction in the earlier suit and was also the substantive basis for grant of injunction. In this context, we may refer to Corpus Juris Secundum (Vol. 50, para 735, p. 229) where a similar aspect in regard to findings on possession and incidental findings on title were dealt with. It is stated: "Where title to property is the basis of the right of possession, a decision on the question of possession is res judicata on the question of title to the extent that adjudication of title was essential to the judgment; but where the question of the right to possession was the only issue actually or necessarily involved, the judgment is not conclusive on the question of ownership or title."" (Emphasis supplied) 61. In Anathula Sudhakar v. P. Buchi Reddy (Dead) by LRs., reported in (2008) 4 SCC 594, this Court expounded upon the question whether a finding regarding title could be recorded in a suit for injunction. The relevant observations are being reproduced below:- "21. To summarise, the position in regard to suits for prohibitory injunction relating to immovable property, is as under: (a) Where a cloud is raised over the plaintiff's title and he....
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....m or tries to encroach upon his property. The court should use its discretion carefully to identify cases where it will enquire into title and cases where it will refer to the plaintiff to a more comprehensive declaratory suit, depending upon the facts of the case." (Emphasis supplied) 62. We are conscious of the fact that the holder of POA did not choose to register the agreement to sell executed by the original owner in her favour. On this, we would like to underscore the observations of this Court on the objective and advantages of registration in Suraj Lamp (supra). The relevant excerpt has been reproduced hereinbelow:- "Advantages of registration 15. In the earlier order dated 15-5-2009 [(2009) 7 SCC 363 : (2009) 3 SCC (Civ) 126], the objects and benefits of registration were explained and we extract them for ready reference: (SCC p. 367, paras 15-18) "15. The Registration Act, 1908 was enacted with the intention of providing orderliness, discipline and public notice in regard to transactions relating to immovable property and protection from fraud and forgery of documents of transfer. This is achieved by requiring compulsory registration....