Maya Devi V. Lalta Prasad

Maya Devi V. Lalta Prasad in India

Maya Devi V. Lalta Prasad [2014] Insc 108 (19 February 2014)

Court Judgment Information

  • Year: 2014
  • Date: 19 February 2014
  • Court: Supreme Court of India
  • INSC: [2014] INSC 108

Text of the Court Opinion

(Refortable) IN THE SUPREME COURT OF INDIA

Civil Appelate Jurisdiction

CIVIL APPEAL No. 2458 OF 2014 [Arising out of SLP (C) No.23069 of 2012) Maya Devi . Appellant Versus Lalta Prasad . Respondent

K. S. RADHAKRISHNAN, J.

1. Leave granted.

2. The appellant herein filed an Objection Petition under Order 21 Rule 58 CPC, when the decree obtained by the respondent in Civil Suit No.407 of 2007 was sought to be executed. Suit was filed for the recovery of an amount of Rs.3,40,000/with interest, which was sought to be realized, on the property covered by an agreement for sale dated 3.11.2003 between the judgment debtor and decree holder. The appellant claimed that she became the absolute owner of the suit property by virtue of a registered General Power of Attorney dated 12.5.2006 and that she has been in actual physical possession of the suit property. The Petition was contested by the decree holder/respondent stating that the applicant/objector had no legal right, title or interest and that the execution of the General Power of Attorney and its registration would not confer any ownership right in favour of the appellant/objector. Reliance was also placed on the judgment of this Court in Suraj Lamp and Industries Private Limited Through Director v. State of Haryana & Anr. (2009) 7 SCC 363. The Executing Court vide its order dated 23.7.2010 dismissed the Objection Petition filed by the appellant. Aggrieved by the same, the appellant preferred Execution First Appeal No.23 of 2010 before the High Court of Delhi at New Delhi. The High Court also placed reliance on the judgment of this Court in Suraj Lamp and Industries Private Limited (supra) and dismissed the appeal holding that the documents relied upon by the appellant would not confer ownership or possession over the property in her favour. The High Court also vide its order dated 24.1.2011 upheld the order of the Executing Court. Aggrieved by the same, this appeal has been preferred by the appellant.

3. Shri Rajesh Kumar, learned counsel appearing for the appellant submitted that the ratio laid down by this Court in Suraj Lamp and Industries Private Limited (supra) was wrongly applied by the Executing Court as well as the High Court. Learned counsel submitted that in the final judgment which is reported in Suraj Lamp and Industries Private Limited (2) Through Director v. State of Haryana &

Anr. (2012) 1 SCC 656, this Court has clarified the position that the judgment would not affect the validity of sale agreements and powers of attorney executed in genuine transactions and that the judgment would operate only prospectively. Learned counsel also submitted that the alleged agreement executed between the respondent and one Prem Chand Verma on 3.11.2003 was a collusive one, subsequently created, to get over the registered Power of Attorney executed on 3.6.1982 between the appellant and wife of Prem Chand Verma, viz.

Nirmal Verma. Learned counsel also pointed out that Civil Suit No.407 of 2007 was preferred by the respondent herein against Prem Chand Verma based on the deed of agreement dated 3.11.2003 created for the said purpose. Referring to the above-mentioned judgment, learned counsel further pointed out that Prem Chand Verma did not contest the Suit and he was declared ex-parte and a decree was passed in favour of the respondent. Learned counsel pointed out that the decree was obtained by collusion and practicing fraud on the Court and the Executing Court has committed an error in rejecting the Objection filed by the appellant herein, so also by the High Court by not appreciating the facts in the correct perspective.

4. Shri K. Krishna Kumar, learned counsel for the respondent, submitted that both the Executing Court and High Court have correctly applied the principles laid down in Suraj Lamp and Industries Private Limited (supra). Learned counsel pointed out that any process which interferes with regular transfers under deeds of conveyance properly stamped, registered and recorded in the registers of the Registration Department, is to be discouraged and deprecated and the Executing Court has rightly declined to give its seal of approval to General Power of Attorney, Agreement for Sale, etc. dated 12.5.2006.

5. I am of the view that the Executing Court as well as High Court have committed a grave error in not properly appreciating the objections filed by the Appellant. We are in this case concerned with the question whether we must give credibility to the registered General Power of Attorney executed on 12.5.2006 between Nirmal Verma and the appellant or on the alleged Agreement for Sale executed on 3.11.2003 between the respondent and Prem Chand Verma, husband of Nirmal Verma. Further, we have to examine the manner in which Civil Suit No.407 of 2007 was decreed without contest by Prem Chand Verma, husband of Nirmal Verma.

6. The registered Power of Attorney was executed by none other than the wife of Prem Chand Verma and the appellant herein on 12.5.2006 in respect of the property in question for a sale consideration of Rs.70,000/-, which was received by Nirmal Verma in cash in advance and she acknowledged the same before the Sub-Registrar, Delhi. On the same day, Nirmal Verma, wife of Prem Chand Verma. handed over physical vacant possession of the land and building situated thereon and from 12th May, 2006 onwards, the appellant is in possession of the above mentioned property.

7. We are, in this case, therefore, concerned with the legal validity of a General Power of Attorney executed by none other than the wife of Prem Chand Verma against whom a decree has been obtained by the respondent without any proper contest and the court proceeded against him ex-parte. These facts speak for itself. Evidently, the collusive decree was obtained by the respondent to get over the registered Power of Attorney executed in favour of the appellant and, it is in this perspective, we have to understand and apply the ratio laid down by this Court in Suraj Lamp and Industries Private Limited (2) (supra).

8. Paragraph 27 of the judgment of this Court in Suraj Lamp and Industries Private Limited (2) (supra) reads as follows :

“27. We make it clear that our observations are not intended to in any way affect the validity of sale agreements and powers of attorney executed in genuine transactions. For example, a person may give a power of attorney to his spouse, son, daughter, brother, sister or a relative to manage his affairs or to execute a deed of conveyance. A person may enter into a development agreement with a land developer or builder for developing the land either by forming plots or by constructing apartment buildings and in that behalf execute an agreement of sale and grant a power of attorney empowering the developer to execute agreements of sale or conveyances in regard to individual plots of land or undivided shares in the land relating to apartments in favour of prospective purchasers. In several States, the execution of such development agreements and powers of attorney are already regulated by law and subjected to specific stamp duty. Our observations regarding “SA/GPA/will transactions” are not intended to apply to such bona fide/genuine transactions.”

9. In the above judgment, it has been stated that the observations made by the Court are not intended to in any way affect the validity of sale agreements and powers of attorney executed in genuine transactions. I am of the view that the Power of Attorney executed on 12.5.2006 in favour of the Appellant by the wife of Prem Chand Verma is a genuine transaction executed years before the judgment of this Court. Facts will clearly indicate that the Agreement for Sale dated 3.11.2003 was created by none other than the husband of Nirmal Verma, who had executed the General Power of Attorney and possession was handed over to the Appellant. That being the fact situation, in my view, the Objection filed by the Appellant under Order 21 Rule 58 in execution has to be allowed. I, therefore, hold that the Executing Court can execute the decree in Civil Suit No.407 of 2007, but without proceeding against the property referred to in registered Power of Attorney dated 12.5.2006.

10. The appeal is allowed, as above, and the impugned orders are set aside. There shall, however, be no order as to costs.

eard Hear.J.

(K. S. Radhakrishnan) New Delhi, February 19, 2014. IN THE SUPREME COURT OF INDIA

Civil Appelate Jurisdiction

CIVIL APPEAL No. 2458 OF 2014 [Arising out of SLP©No.23069 of 2012] MAYA DEVI .(Appelant) vs

VIKRAMAJIT SEN,J.

1 I have perused the judgment of my learned and esteemed Brother Radhakrishnan, and I entirely and respectfully agree with his conclusion that the appeal deserves to be allowed. My learned Brother has succinctly analysed the sterling judgment in Suraj Lamp and Industries Private Limited vs State of Haryana (2009) 7 SCC 363, which has been rendered by a Three Judge Bench of this Court. I completely concur with the view that since General Power of Attorney (GPA) in favour of the Appellant was executed and registered on 12.05.2006, it could not be impacted or affected by the Suraj Lamp dicta. Furthermore, a reading of the order of the Executing Court as well as of the High Court makes it palpably clear that both the Courts had applied the disqualification and illegality imposed upon GPAs by Suraj Lamp, without keeping in mind that the operation of that judgment was pointedly and poignantly prospective. This question has been dealt with by my esteemed Brother most comprehensively.

2 What strikes us as a perverse, certainly misplaced or inconsistent approach, is that if the Appellant does not possess any title to the property predicated on the GPA executed in her favour by Smt. Nirmal Verma (the wife of the Judgment Debtor Shri Prem Chand Verma), this legal infirmity would inexorably invalidate the title of Smt. Nirmal Verma herself, thereby denuding any titular claim of her husband, the Judgment Debtor, and rendering the property impervious to the subject execution proceedings. Additionally, there is not even a semblance of a right in favour of the Judgment Debtor whose wife was not even impleaded in the suit or in the execution. The impugned judgment notes this contention but fails to address it. The evidence of the Decree Holder has not been filed and therefore the judicial records were summoned from the High Court.

3 The Statement of the Respondent/Decree Holder reads thus: “Ex. No. 224/2009 DHW-1: Sh.Lalta Prasad, S/o Sh. Naubat Ram, aged 58 years, R/o 1908, Gali Mata Wali, Chandni Chowk, Delhi-6. ON S.A.

I, hereby, tender my affidavit in my evidence. The same be read as part and parcel of my statement. My affidavit is Ex. DHW 1/A(running in 2 pages) which bears my signatures at point A and B on page 1 & 2. XXXXXX by Sh. Pradeep Chaudhary Adv. for objector.

I have passed 11th standard. The affidavit Ex. DHW-1/A was prepared in the office of my counsel. My counsel has explained me contents of the same to me before I signed the same. Whatever I stated to my counsel was incorporated in Ex. DHW-1/A. The Agreement with Prem Chand Verma was entered on 11.11.2003. I had seen original documents of the property at that time in possession of Prem Chand Verma. He also gave me some copies of the same.

Remaining cross-examination of the witness is deferred till 12.00 P.M.

RO&AC BRIJESH KUMAR GARG ADJ CENTRAL-18 DELHI/ 29.01.10 DHW-1: Sh.Lalta Prasad, recalled for his further cross-examination at 12.50 P.M.

ON S.A.

XXXXXX by Sh. Pradeep Chaudhary Adv. for objector.

I have no knowledge that Smt. Maya Devi had purchased the suit property from Smt. Nirmal Verma. The documents filed by the objectors are forged and fabricated documents. I have no knowledge that Smt. Nirmal Verma purchased the suit property from one Sh.

Rajender Kumar.

Sh. Prem Chand Verma was my friend for the last about 30 years.

It is correct that Sh. Prem Chand Verma had already expired on 7.10.2008. It is wrong to suggest that Sh. Rajender Kumar was the owner of the property and he sold the property to Nirmal Verma from whom Smt. Maya Devi purchased the suit property. It is wrong to suggest that Sh. Prem Chand Verma was never the owner of the suit property. It is wrong to suggest that I have filed a false affidavit and I am deposing falsely in the court today.

RO&AC BRIJESH KUMAR GARG ADJ CENTRAL-18 DELHI/ 29.01.10” It discloses that the Decree Holder has failed altogether to disprove the title of the Appellant, and he has maintained that the Defendant/Judgment Debtor was the owner, which is admittedly not the actual legal position.

If the Decree Holder has been defrauded by the Defendant/Judgment Debtor, largely because of the former’s careless disregard to conduct a title search, he must face the legal consequences; they cannot be transferred/imposed upon a third party to its detriment. In the wake of the Decree Holder/Plaintiff denying the title of Smt. Nirmal Verma, the Courts below erred in proceeding against her property.

4 Both the Courts below have preferred the view that the Appellant, who has been in possession from the date of the execution of the registered GPA in her favour, has been introduced into the scene in order to defeat the interests of the Respondent, which is a perverse approach for reasons that shall be presently explained. The documents purportedly in favour of the Respondent/Decree Holder are unregistered and the alleged payment made by him to Shri Prem Chand Verma is in cash. Therefore, there is no justification for favouring the view that the alleged transaction between Shri Prem Chand Verma and the Respondent/Decree Holder was genuinely prior in time to the execution of the registered Power of Attorney in favour of the Appellant Smt. Maya Devi by Smt. Nirmal Verma, and the former simultaneously and contemporaneously was put into possession of the property by the latter.

5 There can be no gainsaying that when the probative value of documents is to be assessed, specially those dealing with the creation of any interest in property or its transfer, of a value exceeding Rs.100/-, obviously documents which have been duly registered regardless of whether or not that was legally mandatory, would score over others. A perusal of the judgment shows that whether the sum of Rs.1,70,000/- allegedly paid by the Plaintiff in Suit No.407 of 2007, namely, Shri Lalta Prasad to Shri Prem Chand Verma was in cash or through a traceable Bank transaction or through a registered acknowledgment has not been cogitated upon. Proof of payment by the Plaintiff to the Defendant/husband of the previous owner of the property has not been adjudicated upon. It is not controverted that the Appellant Smt. Maya Devi has been in possession of the property in question from May, 2006. A reading of the judgment by which the Suit was decreed for a sum of Rs.3,40,000/ does not shed any light on the circumstances which made the Plaintiff wait to initiate legal action till after the property was sold and its possession delivered to the Appellant.

I, therefore, disbelieve the genuineness of the so-called “Deed of Agreement for Earnest Money” allegedly executed almost three years earlier on 03.11.2003. And, I would rather discount the veracity of the document dated 3.11.2003, then looking upon the Power of Attorney and other documents executed in favour of the Appellant Smt. Maya Devi by Smt. Nirmal Verma as mala fide. What is important is that it is not disputed that the title and possession of the property which has been brought within the sweep of the execution proceedings, was never held in any capacity by the Defendant/Shri Prem Chand Verma, but by his wife, Smt. Nirmal Verma. To give even a semblance of a case to the Plaintiff Lalta Prasad, the Deed of Agreement for Earnest Money should have been between the Plaintiff/Decree Holder/Respondent and Smt. Nirmal Verma.

6 The Trial Court had framed the following issues in Suit No.407/2007, from which subject of proceedings emanates:

“(1) Whether the plaintiff is entitled for the suit amount? If so to what sum? OPP (2) Whether the plaintiff is entitled for the interest? If so at what rate and for which period? OPP (3) Relief.” The Trial Court having accepted the payment of Rs.1,70,000/- without insisting on any proof, did not go into the question whether a covenant stipulating that double the amount of earnest money would be payable in the event the contract was not performed, is legal in terms of the Indian Contract Act. The imposition and the recovery of penalty on breach of a contract is legally impermissible under the Indian Contract Act. As regards liquidated damages, the Court would have to scrutinize the pleadings as well as evidence in proof thereof, in order to determine that they are not in the nature of a penalty, but rather as a fair pre-estimate of what the damages are likely to arise in case of breach of the contract.

No evidence whatsoever has been led by the Plaintiff to prove that the claim for twice the amount of earnest money was a fair measure or pre estimate of damages.

7 The pronouncements of the Constitution Bench in Sir Chunilal V. Mehta & Sons Ltd. vs Century Spinning and Manufacturing Co. Ltd. AIR 1962 SC 1314, and later in Fateh Chand vs Balkishan Dass AIR 1963 SC 1405, hold the field, making it unnecessary to refer to any other precedent for an enunciation of the law, except to appreciate the manner in which the opinion of the Constitution Benches have been applied to the factual matrix in later cases. With the number and volume of precedents increasing exponentially each year, reference to all decisions make arguments excruciatingly lengthy and judgments avoidably prolix. The first important judgment of this Court on the question of Sections 73 and 74 of the Contract Act is that of the Constitution Bench in Chunilal V. Mehta.

The two significant issues which arose were firstly, as to what would constitute a substantial question of law requiring the grant by the High Court of a Certificate to appeal to this Court, and secondly, the quantum of damages that can be awarded in that case owing to the breach of the subject contract. It is the second question which is relevant for the present purposes. The admitted position was that the contract had been wrongfully breached by the Defendant. A clause in the compact between the parties stipulated that in these circumstances, the Plaintiff would be entitled to receive from the Defendant “as compensation or liquidated damages for the loss of such appointment a sum equal to the aggregate amount of the monthly salary of not less than Rs.6000/- which the Firm would have been entitled to receive from the Company, for and during the whole of the then unexpired portion of the said period of 21 years if the said Agency of the Firm had not been determined.” The Plaintiff had initially claimed a sum of Rs.50 Lakhs which was subsequently reduced by way of amendment of the plaint to Rs.28,26,804/-. The Constitution Bench opined that “when parties name a sum of money to be paid as liquidated damages they must be deemed to exclude the right to claim an unascertained sum of money as damages. . Again the right to claim liquidated damages is enforceable under S. 74 of the Contract Act and where such a right is found to exist no question of ascertaining damages really arises. Where the parties have deliberately specified the amount of liquidated damages there can be no presumption that they, at the same time, intended to allow the party who has suffered by the breach to give a go-by to the sum specified and claim instead a sum of money which was not ascertained or ascertainable at the date of the breach”. This precedent prescribes that if a liquidated sum has been mentioned in a contract to be payable on its breach, then if damages have actually been suffered, the said liquidated amount would be the maximum and upper limit of damages awardable by the Trial Court.

8 The judgment of the Constitution Bench one year later, in Fateh Chand concerns award of damages of the ‘liquidated’ sum even though actual damages may have been less. In that respect it is the converse of the factual matrix that existed before the earlier Constitution Bench in Chunilal V. Mehta. J.C. Shah, J (who authored Fateh Chand) along with Chief Justice B.P. Sinha were members of both Constitution Benches.

Whilst the aspect of the liquidated damages being in the nature of a penalty or in terrorem did not arise in Chunilal V. Mehta, It did so in Fateh Chand where the complaint was that the Plaintiff, namely, Fateh Chand had agreed to sell an immovable property for Rs.1,12,500/- of which Rs.1000/- had been received/paid as earnest money. The Agreement envisaged payment of a further sum of Rs.24,000/- and it stipulated that if the vendee failed to get the Sale Deed registered thereafter, then the sum received i.e. Rs.25,000/- would stand forfeited. Fateh Chand alleging a breach of the Agreement, sought to forfeit the sum of Rs.25,000/ which was found to be impermissible in law. It was in those circumstances that the Constitution Bench opined as follows:

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