Delhi High Court on the law of irrevocable power of attorney(s) and ‘agency coupled with interest’ in the context of GPA/Agreement to Sell transactions.

Posted by

Case Note on : Vimla Devi v. Pushpa Devi and Anr- 2017 SCC OnLine Del 8694

In this case, Hon’ble High Court of Delhi had the occasion of examining the above question.

The facts of the case lie in a very narrow conspectus:

Plaintiff’s case

            Conventional (purported) sale documents

  • The Plaintiff/Appellant claimed that she was the owner of 200 sq. yards of the property situated in Shahdara, Delhi. Out of the area of 200 sq. yards, the appellant/plaintiff sold 70 sq. yards to the respondent no. 1/defendant no. 1 on 11.2.1998 for a sale consideration of Rs. 1,75,000/-.
  • On 11.2.1998, appellant/plaintiff executed a conventional set of documentation being the agreement to sell, general power of attorney, Will, receipt, etc. in favour of the respondent no. 1/defendant no. 1. (These documents used to be executed in order to avoid stamp duty/registration charges, and when Sub Registrars would not recognise Sale Deed(s) in an unauthorised colony/area. For a more detailed discussion of validity of such documents, see Suraj Lamps and Industries Pvt. Ltd.State of Haryana, 183 (2011) DLT 1 (SC).

Cancellation of those documents

  • The area of 70 sq. yards consists of two rooms, a latrine and a bath room, and possession of which was taken by the respondents/defendants on 11.2.1998. It was further pleaded in the plaint that since there was non-payment of the entire consideration, hence the appellant/plaintiff cancelled the documentation dated 11.2.1998 by the cancellation document dated 6.4.1998, and appellant/plaintiff also sent a legal notice of the same date to the respondents/defendants.
  • It was further pleaded that inspite of cancellation of the documents on 6.4.1998 the respondents/defendants did not vacate the suit property, and hence the subject suit was filed.

Defendant’s stance

  • The suit was contested by the respondents/defendants. It was pleaded by the respondents/defendants that complete consideration of Rs. 1,75,000/- was paid when the documents dated 11.2.1998 were executed in favour of the respondent no. 1/defendant no. 1.
  • It was also pleaded that the appellant/plaintiff with dishonest intentions cancelled the documents on 6.4.1998. It was pleaded by the respondents/defendants that appellant/plaintiff had no authority to cancel the documents and hence the cancellation has no significance to the purchase of the suit property by the respondent no. 1/defendant no. 1. The respondents/defendants pleaded that the adjoining 130 sq. yards to the plot of 70 sq. yards was already owned and was in possession of the respondents/defendants, and hence the respondents/defendants are in possession of the whole 200 sq. yards. The suit was accordingly prayed to be dismissed.

Main Issue Before the Court

  • The main issue which arose was whether GPA/and other documents in this case constituted ‘agency coupled with interest’ and therefore irrevocable? If yes, what is the effect of the registered cancellation deed?

 

Decision

  • The Court held that the cancellation of the documents dated 11.2.1998 by the appellant/plaintiff by the documentation dated 6.4.1998 is of no legal effect.
  • The Court noted that transfer of rights in an immovable property is by a contract i.e the same is a bilateral act, and such bilateral contract cannot be cancelled unilaterally i.e by unilateral cancellation of documents by which rights in immovable property are transferred by the transferor to the transferee.
  • On the question of ‘irrevocable agency’ the court extracted the legal position from previous cases:

“20. In the matter of Hardik Kaur v. Kailash (S.B.) 193 (2012) DLT 168 it was stated “the words” and interest in property which forms the subject matter of the agency” in Section 202 of the Contract Act, 1872 are of wider amplitude than the words “an interest in or charge on such property” in Section 54 of the Transfer of Property Act, 1882. Where the seller has received the sale consideration in pursuance of the agreement to sell and has delivered the possession to the purchaser, the purchaser would have interest in the property within the meaning of Section 202 of the Contract Act” 

Thus the GPA dated 11.02.1998 is irrevocable in view of Section 202 of the Contract Act, 1872. The plaintiff, therefore, had no right to terminate the said GPA. The revocation of the GPA by plaintiff is, therefore, of no consequence.

Moreover the plaintiff has shown only the photocopies of the cancellation deeds Ex.PW 1/7 and Ex PW 1/8 dated 06.04.1998. The cancellation deeds are thus not proved on record. The documents can be looked at, at the instance of the opposite party. The cancellation deed neither mentions that consideration was not received nor has any other cause of cancellation been specified. The non-disclosure of any reason in the cancellation deed clearly suggests that there was in fact no dispute about consideration, as being claimed by the plaintiff in his suit. In addition, the legal notice sent makes no mention of the fact that the consideration amount had not been received. Moreover, the legal notice also does not state as to whether upon cancellation the consideration amount paid was being returned to the defendant by the plaintiff.

 Even if it is assumed for the sake of argument that the cancellation deeds are genuine, the agreement tot sell of which the plaintiff has placed on record a certified copy Ex.PW 1/2 was never cancelled by the plaintiff. As per the agreement to sell, it is on record that the possession was handed over by the plaintiff to defendant no. 1 while executing the documents. It is also clearly stated in the agreement to sell which is a document admitted by both parties that the consideration of Rs. 1,75,000/- has been paid by the defendants to the plaintiff. The plaintiff has also executed a receipt of the same amount. Hence the plaintiff has no right to cancel or revoke documents dated 11.02.1998 which were executed by the plaintiff in favour of defendant no. 1 for sale of 70 sq. yards of the suit property.

Placing reliance on judgments of the Hon’ble High Court of Delhi inRamesh Chandv. Suresh Chand, 188 (2012) DLT 538 and Hardip Kaur v. Kailash Supra, it is held that Defendant no. 1 in the matter at hand thus may not be a classical owner as would be in case of a registered sale deed, however, they would have certain rights and entitlement over the property. Furthermore this coupled with the fact that the defendants also have actual physical possession, builds a strong case in their favour. Thus, the interest created by the agreement entered into between the parties still lies with the defendant.

On basis of the discussion above, it is held that plaintiff is not entitled to the relief of possession or injunction in regard 70 sq. yards of the suit property as claimed for. Furthermore the plaintiff has asked for the relief of permanent injunction in relation to the whole 200 sq. yards. When the relief of 70 sq. yards out of 200 sq. yards cannot be granted, there is no question of granting a relief in relation to whole 200 sq. yards.”

  • The Court upheld the decision of courts below placing reliance upon Section 202 of the Indian Contract Act as also the judgment delivered by this Court in the case of Shri Ramesh ChandSuresh Chand, 188 (2012) DLT 538  which holds that documents which are in accordance with the amended Section 53A of the Transfer of Property Act, 1882 and executed prior to 24.9.2001 when by Act 48 of 2001 Section 53A of the Transfer of Property Act was amended to require compulsory stamping and registration of an agreement to sell, then such documents prior to 24.9.2001 are valid documents because the amendment to Section 53A of the Transfer of Property Act is prospective in nature.
  • The Court also held that –  this aspect is clearly stated by the Supreme Court in the judgment in the case of Suraj Lamps and Industries Pvt. Ltd.State of Haryana, 183 (2011) DLT 1 (SC) wherein the Supreme Court has held that those agreements to sell, power of attorneys and Wills, which are in accordance with Section 53A of the Transfer of Property Act, Section 202 of the Indian Contract Act and the relevant provisions of the Indian Succession Act, the same will continue to be valid i.e documents executed prior to 24.9.2001 being in accordance with the then existing Section 53A of the Transfer of Property Act which did not require stamping and registration of the agreement to sell would be valid documents.
  • The Court concluded by holding : “The courts below, in my opinion, have also rightly held that the fact that possession was given to the respondent no. 1/defendant no. 1 by the appellant/plaintiff in terms of the documents dated 11.2.1998 shows that the appellant/plaintiff had received the entire sale consideration. I also adopt the other reasoning as given by the courts below showing that complete sale consideration has been duly received by the appellant/plaintiff”

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s