The Rights Of The Agent's Children Would Take Precedence In A Subsequent Sale Deed Executed By The Allottee After The Agent's Death

Case title:
Pardeep Chaudhary And Another Vs Birwati And Others

Date of Order:
29.04.2022

Bench:
Hon'ble Justice Anil Kshetarpal

Parties:
Petitioner- Pardeep Chaudhary and another
Respondent- Birwati Chaudhary

SUBJECT

The High Court, when deciding together a contractual, housing dispute arising out of two suits and a revision petition, held that the rights of the appellants who were the agent's children would stand on a higher pedestal and are superior to that of the respondents, who could not claim to be bonafide purchasers for consideration, as failed to proved payment of consideration.

IMPORTANT PROVISIONS

1. Section 202, Indian Contract Act, 1872- The section states that in the absence of an express contract, the agency cannot be dissolved to the detriment of the agent's interest in the property that is the subjectmatter of the agency.
2. Section 208, Indian Contract Act, 1872- This section provides that the termination of an agent's power does not take effect before it is known to him, nor does it take effect before it is known to third parties.
3. Order 41 Rule 27, Code of Civil Procedure, 1908- The Rule provides that if the appellate Court allows further evidence to be provided, the court should record the grounds for its admission.
4. Order 1 Rule 10, Code of Civil Procedure, 1908-The general rule in the prosecution of parties is that the plaintiff in a matter, be dominus litis, may pick the individuals against whom he desires to litigate and cannot be forced to sue someone against whom he seeks no remedy.

OVERVIEW

• In the instant case two Regular Second Appeals arisingfrom a common judgment passed by the trial Court as well as the FirstAppellate Court while deciding two cross-suits and a Civil Revision petitionarising from proceedings under the Haryana Urban (Control of Rent andEviction) Act, 1973 were all decided together.
• Smt. Sheetal and Sh. Pardeep Chaudhary, the children of Late Sh. Prem Singh and the appellants filed the first petition seeking a decree of declaration with the resultant remedy of a permanent obligatory injunction. They claimed to be joint owners in possession of House No.176, based on a registered sale deed made by the original allottee on September 29, 2010.
• It wass their contention that on June 11, 1980, the allottee issued a General Power of Attorney in favour of their father, late Sh. Prem Singh, over the suit property and conveyed ownership to him. The Housing Board (allotting agency) also issued a non-encumbrance certificate in favour of the father.
• It was asserted that the respondents were granted permission to live on the first floor as licensees, which was cancelled by notice dated October 13, 2010. On 23.01.2001.
• The allottee executed a General Power of Attorney in favour of Sh. Roop Singh, the defendant with respect to the property in issue, and on that premise, Sh. Roop Singh completed a sale deed in favour of Smt. Birwati (his wife) on 23.02.2010.
• The appellants alleged that the General Power of Attorney and the selling agreement were both fraudulent.
• The respondents claimed to have filed a previous complaint in a joint written statement submitted by Sh. Roop Singh and Smt. Birwati.They stated that the allottee issued a General Power of Attorney in favour of late Sh. Prem Singh, and that a conveyance deed for the house in question was registered on September 25, 2001. Following that, the allottee completed a Power of Attorney in favour of Sh. Roop Singh, who executed a registered sale deed in favour of his wife on February 23, 2010. On January 23, 2001, the Power of Attorney granted to late Sh. Prem Singh was withdrawn.
• The defendants therefore allege that they are the owners in possession of the property and that the licence granted to the appellants, namely Smt Sheetal and Sh. Pardeep Chaudhary, has expired, making them subject to be evicted.
• Apart from Sh. J.S.Luthra, the allottee, Smt. Birwati had filed a cross action in which she named Smt. Veena Chaudhary, the widow of late Sh. Prem Singh, Sh. Pardeep Chaudhary, and Smt. Sheetal as defendants. The two suits were combined.

Smt. Birwati, appearing to be the owner of the suit property, petitioned for Shri Chand's eviction from Shop No.176. She stated that as the landlady, she was entitled take ownership of the property for a variety of reasons, including failing to pay rent, transfer of user, breach of terms of service, annoyance, and so on. Shri Chand, the renter, has disputed any landlord-tenant connection and claimed that the property's owners were Sh. Pardeep Chaudhary and Smt. Sheetal.

• Sh. Pardeep Chaudhary and Smt. Sheetal's plea under Order 1 Rule 10 of the Code of Civil Procedure, 1908, was rejected. Because the tenant had departed the premises, the eviction petition was rejected as infructuous. While declaring Smt. Birwati as the landlord, an order for possession had been issued against Shri Chand on the grounds that he has deftly transferred the tenanted premises to Sh. Pardeep Chaudhary and Smt. Sheetal.

ISSUES RAISED

Whether a succeeding sale deed executed by an allottee of the house in favor of the agent's kids after the agent's demise would be in consonance with the previous contract of agency, giving superiority to the children's rights, if the allottee, upon receiving the entire sale consideration, delivers possession to an agent while executing a registered General Power of Attorney in his favor?

ARGUMENTS ADVANCED BY THE APPELLANT

• It was submitted that according to Sections 202 and 208 of the Indian Contract Act, 1872, the Power of Attorney that was obtained in favour of Sh. Prem Singh could not be rescinded by the allottee.
• There was no cancellation notice sent to late Sh. Prem Singh, and the implementation of a subsequent General Power of Attorney forthe benefit of Sh. Roop Singh, who thereafter executed a registered sale deed on behalf of his wife, is invalid and not enforceable on the appellants.

ARGUMENTS ADVANCED BY THE RESPONDENT

• The counsel for the respondent submitted that the ownership of the property in issue was asserted to have passed to Smt. Birwati on the basis of a sale deed dated 23.02.2010, when Sh. Roop Singh possessed a valid General Power of Attorney obtained in his favour by the owner.
• It was argued that the allottees' subsequent sale deed in favour of Sh. Pardeep Chaudhary and Smt. Sheetal would not convey any right, ownership, or interest in the land.
• Relying on the case of Suraj Lamp and Industries Pvt. Ltd vs. State of Haryana and another [(2012) 1 SCC 656], the counsel asserted that they could not claim ownership on the basis of the aforementioned General Power of Attorney or the later sale deed issued by Sh. J.S.Luthra.
• It was further claimed that Pardeep Chaudhary and Smt. Sheetal acknowledged that Sh. J.S.Luthra's power of attorney, executed on June 11, 1980, expired with the death of Sh. Prem Singh. Following that, the sale document was executed in favour of Smt. Bitwati, and hence, Sh. Pardeep Chaudhary and Smt. Sheetal no longer had any right, title, or interest in the property.

JUDGEMENT ANALYSIS

• Placing reliance on Ramesh Mohan and another vs. Raj Kishan and others [1984, Punjab Law Reporter, 211], the Court determined that the sale contract, followed by Power of Attorney and delivery of ownership, rendered the power of attorney irrevocable, and that, under Section 202 of the Indian Contract Act, 1872, the power of attorney bearer remains the agent notwithstanding cancellation of the power of attorney.
• The court was of the opinion that it was abundantly clear that the title transferred by the allottee in favour of Sh. Pardeep Chaudhary and Smt. Sheetal via registered sale deed was in acknowledgement of the receipt of the whole sale consideration from late Sh. Prem Singh and in furtherance of the execution of the General Power of Attorney dated 11.06.1980.
• After a careful analysis of the facts and circumstances of the case, the court held that because the agency was formed with the agent having an interest in the property, the power of attorney could not be revoked. As a result, the allottees' conduct on 23.01.2001 in cancelling the General Power of Attorney was invalid, as it violated Section 202 of the Indian Contract Act,1872. Similarly, Sh. J.S.Luthra's execution of a new power of attorney in favour of Sh. Roop Singh was erroneous. Such an action would not give Sh. Roop Singh any rights.
• Furthermore, the court stated that Smt. Birwati had failed to substantiate payment of any sale consideration to Sh. J.S.Luthra, who has clearly denied receipt of any such money while testifying.
• Hence, the court held that the rights of late Sh. Prem Singh's children take precedence over those of Smt. Birwati, who could not claim to be a bona fide purchaser for consideration when she could neither prove payment of consideration nor that she was not aware of the aforementioned circumstances of the case.

CONCLUSION

As a result, while admitting the appeals, the lower courts' judgements and decrees were overturned. The suits filed by Sh. Pardeep Chaudhary and Smt. Sheetal were decreed, while Smt. Birwati'saction was dismissed. Shri Chand's civil revision petition was granted since Smt. Birwati was held to be neither the owner nor the landlord of the suit property.

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