Landmark Cases of India / सुप्रीम कोर्ट के ऐतिहासिक फैसले

Civil Appeal No.2592 of 2022
(Arising out of Special Leave Petition (C) No.20047 of 2017) 
V. Ramasubramanian
1. Their suit for partition having been decreed by the trial Court
but   reversed   by   the   High   Court   in   a   regular   first   appeal,   the
plaintiffs have come up with the above appeal.
2. We have heard Shri Dushyant A. Dave, learned senior counsel
for the appellant and Shri Thomas P. Joseph, learned counsel for
the respondent.
3. The   suit   schedule   property   originally   belonged   to   one
Ullattukandiyil Sankunni. After his death, the property devolved
upon his two daughters, one of whom is the appellant herein. The
appellant   herein   executed   a   general   Power   of   Attorney   on
21.07.1971, registered as Document No.35 of 1971, in favour of her
sister Smt. Ranee Sidhan. However, the said power was cancelled
on 31.01.1985. But in the meantime, the appellant’s sister was
found to have executed four different documents in favour of certain
third parties, assigning/releasing some properties. Therefore, the
appellant first filed a suit in O.S.No.16 of 1986 followed by another
suit in O.S.No.27 of 1988 against the assignees/releasees. Though
a preliminary decree was passed in the second suit on 7.01.1989,
the appellant came to know later that the assignees/releasees had
sold the property to the respondent herein. 
4. Therefore, the appellant filed yet another suit in O.S No.130 of
1989, seeking partition and separate possession of her half share in
the suit property. The trial Court granted a preliminary decree in
favour of the appellant. However, the regular appeal filed by the
respondent herein was allowed by a Division Bench of the High
Court   by   the   judgment   and   decree   impugned   in   this   appeal.
Therefore, the appellant has come up with the above appeal.
5. At the outset, it should be stated that the respondent herein
did not dispute the fact that the suit schedule property originally
belonged to the father of the appellant and her sister and that the
appellant   and   her   sister   were   entitled   to   equal   shares   in   the
property. But the respondent contested the suit on the grounds
inter alia (i) that in view of two prior suits for partition, namely, O.S.
No.16 of 1986 and O.S.No.27 of 1988, the suit was barred under
Order II Rule 2 of CPC;  (ii)  that the general Power of Attorney
executed by the appellant in favour of her sister, authorized the
agent   to   sign   all   documents   and   present   them   for   registration;
(iii)  that   by   virtue   of   the   said   power,   the   appellant’s   sister
transferred   the   suit   schedule   properly   to   four   persons,   for   the
purpose of discharging the debts incurred in the family business;
(iv)  that   those   transferees,   in   turn,   sold   the   property   to   the
respondent herein for a valuable consideration; (v) that though the
appellant was earlier residing in England, she came back to India
and was   staying in a house just 1 km. away from the plaint
schedule property; (vi) that the appellant was therefore aware of all
the transfers including the transfer in favour of the respondent and
the development made by the respondent over the suit property;
(vii)  that, therefore, the appellant is guilty of acquiescence; and
(viii)  that   the   respondent   has   actually   developed   a   commercial
complex on the suit property and hence entitled at least to the value
of improvements, in the event of a decree being passed.
6. The trial Court framed as many as 23 issues for consideration
in the suit. The objection on the basis of Order II Rule 2 of CPC was
rejected by the trial Court on the ground that the appellant’s sister
had committed a fraud and that the cause of action for the present
suit was different from the cause of action for the previous suits.
The contention that the appellant was guilty of acquiescence was
rejected by the trial Court on a factual finding that the appellant
was not aware of the transfer. On an examination of the recitals
contained in the Power of Attorney, the trial Court came to the
conclusion that the document did not confer any power to sell the
property and that, therefore, the appellant’s sister was not entitled
to alienate the property. Since the original alienations made in 1981
and 1982 by the appellant’s sister were null and void on account of
lack of express power to sell, the subsequent sale made by those
alienees in favour of the respondent herein was also held to be
invalid. On the basis of these findings, the trial Court decreed the
suit, as prayed for.
7. While reversing Judgment and decree of the trial Court, the
High Court held: (i) that the failure of the appellant to seek the relief
of   setting   aside   the   documents   of   transfer   and/or   recovery   of
possession of the property was fatal to her case; (ii) that though the
principle behind Order II Rule 2 CPC may not be applicable to suits
for partition, the appellant must be held to have had constructive
notice of the alienations made by her sister, in view of Section 3 of
the Transfer of Property Act, 1882 (hereinafter referred to as “the
Act”);  (iii)  that   once   constructive   notice   is   attributed   to   the
appellant, any relief for cancellation of the documents of alienation
would have already become time barred, by the time the Power of
Attorney was cancelled; (iv) that since the deed of general Power of
Attorney filed as Exhibit A­1 did not contain any express power to
sell   the   suit   property,   the   transferee   cannot   be   held   to   have
exercised ‘reasonable care’ as required by the proviso to Section 41
of the Transfer of Property Act, 1882; and (v) that despite this fact,
the appellant was not entitled to a decree for partition, in view of
her failure to seek the cancellation of the alienations, in spite of
having constructive notice of the alienations.
8. As could be seen from the judgments of the trial Court and the
High Court, the deed of general Power of Attorney executed by the
appellant in favour of her sister on 21.07.1971, did not specifically
contain any power of sale. Therefore, the trial Court as well as the
High Court held in no uncertain terms that the appellant’s sister
was   not   competent   to   sell   the   property   to   the   predecessor­ininterest of the respondent. However, the learned counsel appearing
for the respondent argued, (i) that while construing a document, all
punctuation marks should be given due weightage; (ii) that the deed
of Power of Attorney was drafted by a doyen of the Bar;  (iii)  that
Clause 22 of the deed of Power of Attorney conferred upon the
agent, the power to execute and register all documents; (iv) that the
power to execute a document and present the same for registration,
should be understood to mean the power to execute documents
requiring registration in the light of Section 49 of the Registration
Act, 1908; and  (v)  that, therefore, a  bonafide  purchaser like the
respondent should not be made to suffer.
9. But we do not agree with the above submissions of the learned
counsel for the respondent. It remains a plain and simple fact that
the   deed   of   Power   of   Attorney   executed   by   the   appellant   on
21.07.1971 in favour of her sister contained provisions empowering
the agent: (i) to grant leases under Clause 15; (ii) to make borrowals
if and when necessary with or without security, and to execute and
if necessary, register all documents in connection therewith, under
Clause 20; and (iii) to sign in her own name, documents for and on
behalf of the appellant and present them for registration, under
Clause 22. But there was no clause in the deed authorizing and
empowering the agent to sell the property. The argument that the
deed was drafted by a doyen of the Bar, is an argument not in
favour of the respondent. This is for the reason that the draftsman
has   chosen   to   include,  (i)  an   express   power   to   lease   out   the
property;   and  (ii)  an   express   power   to   execute   any   document
offering   the   property   as   security   for   any   borrowal,   but   not   an
express   power   to   sell   the   property.   Therefore,   the   draftsman
appears to have had clear instructions and he carried out those
instructions faithfully. The power to sell is not to be inferred from a
document of Power of Attorney. The trial Court as well as the High
Court were ad idem on the finding that the document did not confer
any power of sale.  
10. In fact the High Court rejected even the refuge sought by the
respondent under Section 41 of the Transfer of Property Act which
reads as follows:
“Transfer   by   ostensible   owner.­   Where,   with   the
consent, express or implied, of the persons interested in
immoveable property, a person is the ostensible owner
of   such   property   and   transfers   the   same   for
consideration, the transfer shall not be voidable on the
ground that the transferor was not authorised to make
Provided   that   the   transferee,   after   taking
reasonable  care to ascertain that  the transferor had
power to make the transfer, has acted in good faith.”
11. The High Court has held and in our view rightly so, that if the
respondent   had   exercised   reasonable   care   as   required   by   the
proviso to Section 41, they could have easily found out that there
was no power of sale.
12. Unfortunately after finding  (i)  that the Power of Attorney did
not   contain   authorization   to   sell;   and  (ii)  that   the   respondent
cannot claim the benefit of Section 41 of the Act, the High Court fell
into an error in attributing constructive notice to the appellant in
terms of Section 3 of the Act. The relevant interpretation clause in
Section 3 of the Act reads as follows:
“Interpretation Clause­ 
xxxx xxx xxxx
“a person is said to have notice" of a fact when he actually
knows that fact, or when, but for wilful abstention from an
enquiry or search which he ought to have made, or gross
negligence, he would have known it.
Explanation   I­Where   any   transaction   relating   to
immoveable property is required by law to be and has been
effected by a registered instrument, any person acquiring
such property or any part of, or share or interest in, such
property shall be deemed to have notice of such instrument
as from the date of registration or, where the property is not
all   situated   in   one   sub­district,   or   where   the   registered
instrument   has   been   registered   under   sub­section   (2)   of
section 30 of the Indian Registration Act, 1908 (16 of 1908),
from the earliest date on which any memorandum of such
registered instrument has been filed by any Sub­Registrar
within whose sub­district any part of the property which is
being acquired, or of the property wherein a share or interest
is being acquired, is situated:
Provided that­­
(1)  the   instrument   has   been   registered   and   its
registration completed in the manner prescribed
by the Indian Registration Act, 1908 (16 of 1908)
and the rules made thereunder,
(2) the instrument or memorandum has been duly
entered or filed, as the  case   may   be,   in   books
kept under section 51 of that Act, and
(3) the   particulars   regarding   the   transaction   to
which the instrument relates have been correctly
entered in the indexes kept under section 55 of
that Act.
Explanation II.­­Any person acquiring any immoveable
property or any share or interest in any such property shall
be deemed to have notice of the title, if any, of any person
who is for the time being in actual possession thereof.
Explanation III.­­A person shall be deemed to have had
notice of any fact if his agent acquires notice thereof whilst
acting on his behalf in the course of business to which that
fact is material:
Provided that, if the agent fraudulently conceals the
fact, the principal shall not be charged with notice thereof as
against   any   person   who   was   a   party   to   or   otherwise
cognizant of the fraud.”
13. Two things are important for the above interpretation clause to
come into effect. They are: (i) wilful abstention from an enquiry or
search; and  (ii)  gross negligence.  Explanation I  and  Explanation II
under the above interpretation clause are applicable to the person
acquiring an immovable property, the transaction relating to which
is required by law to be effected by a registered instrument. The
High Court has turned the above interpretation clause upside down
and held the Principal in relation to a deed of Power of Attorney, to
have had constructive notice in terms of Section 3, of a sale effected
by the agent.
14. The reasoning given by the High Court for holding that the
appellant   ought   to   have   challenged   the   alienations,   is   that   the
appellant was out of possession. Here again, the High Court failed
to appreciate that the possession of an agent under a deed of Power
of Attorney is also the possession of the Principal and that any
unauthorized sale made by the agent will not tantamount to the
Principal parting with possession.
15. It is not always necessary for a plaintiff in a suit for partition
to seek the cancellation of the alienations. There are several reasons
behind this principle. One is that the alienees as well as the cosharer are still entitled to sustain the alienation to the extent of the
share of the co­sharer. It may also be open to the alienee, in the
final decree proceedings, to seek the allotment of the transferred
property, to the share of the transferor, so that equities are worked
out  in   a   fair   manner.   Therefore,  the   High   Court  was   wrong  in
putting   against   the   appellant,   her   failure   to   challenge   the
16. The learned counsel for respondent relied upon the decision of
this Court in  Delhi   Development   Authority  vs.  Durga   Chand
,   in   support   of   his   argument   about   the   rule   of
interpretation to be adopted while construing Exhibit A­1, the deed
of general Power of Attorney. He also relied upon the Judgment of
this Court in Syed Abdul Khader vs. Rami Reddy and Others2
driving home the question as to how the deed of Power of Attorney
should be construed.
17. We do not know how the ratio laid down in the aforesaid
1 (1973) 2 SCC 825
2 (1979) 2 SCC 601
decisions could be applied to the advantage of the respondent. As a
matter   of   plain   and   simple   fact,   Exhibit   A­1,   deed   of   Power   of
Attorney did not contain a clause authorizing the agent to sell the
property though it contained two express provisions, one for leasing
out the property and another for executing necessary documents if
a security had to be offered for any borrowal made by the agent.
Therefore, by convoluted logic, punctuation marks cannot be made
to convey a power of sale. Even the very decision relied upon by the
learned counsel for the respondent, makes it clear that ordinarily a
Power of Attorney is to be construed strictly by the Court. Neither
Ramanatha Aiyar’s Law Lexicon nor Section 49 of the Registration 
Act can amplify or magnify the clauses contained in the deed of
Power of Attorney.  
18. As held by this Court in Church of Christ Charitable Trust
and   Educational   Charitable   Society  vs.  Ponniamman
Educational Trust3
 the document should expressly authorize the
agent,  (i)  to execute a sale deed;  (ii)  to present it for registration;
and (iii) to admit execution before the Registering Authority.
3 (2012) 8 SCC 706
19. It is a fundamental principle of the law of transfer of property
that “no one can confer a better title than what he himself has”
(Nemo dat quod non habet). The appellant’s sister did not have the
power   to   sell   the   property   to   the   vendors   of   the   respondent.
Therefore, the vendors of the respondent could not have derived any
valid   title   to   the   property.   If   the   vendors   of   the   respondent
themselves did not have any title, they had nothing to convey to the
respondent, except perhaps the litigation.
20. Therefore, the appeal is allowed, the impugned judgment of the
High Court is set aside and the Judgment and preliminary decree
passed by the trial Court are restored.  There will be no order as to
    (Hemant Gupta)
(V. Ramasubramanian)
APRIL 1, 2022


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