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2004 Supreme(Kar) 272

Karnataka High Court
CLIFFORD GEORGE PINTO - Appellant
Versus
M.R.SHENAVA - Respondent
Decided On : 04-08-04
R.F.A. : 18 of 1999

Advocates:
B.V.Krishna, CHAITANYA HEGADE, K.MUNIVENKATAPPA, S.P.SHANKAR

Headnote:Principal s liability

       INDIAN CONTRACT ACT, 1872

       Section 237 -Principal s liability -Power-of attorney given for sale of one property -Agent tampered with Power-of-attorney and included another property also -Can principal be held liable for the acts done by his agent through forged power-of-attorney? Yes.

       [K. Sreedhar Rao, J]: The provisions of Section 237 of Contract Act envisage that if the principal by his words or conduct induces third persons to believe that the acts and obligations are within the scope of agent s authority, it would bind the principal. In the present case, the plaintiff has constituted the first defendant as his power of attorney executing Ex. D. 57 may be to deal with only one item of the property. The said conduct takes the case squarely within the scope of the words "principal by his act induces such third persons". The plaintiff to his peril has chosen unscrupulous person as his power of attorney and allowed scope for manipulation and forgery by the power of attorney. The defendants 2 and 3 without the knowledge of forgery and fraud, going by the apparent tenor of Ex. D. 57, bona fidely purchased the property assuming that the first defendant was within the scope to deal with the properties, therefore, the transaction binds the plaintiff.

       Cases Referred: (1882) 9 QBD 555: 51 LJQB 401: 47 LT 146: 30 WR 932: 46 JP 500.

       Distinguished: AIR 1940 PC 160: 67 Ind. App 318; AIR 1977 SC 336: (1977)1 SCC 379: (1977) 1 SCR 853.

       Principal s liability

       POWERS -OF -ATTORNEY ACT, 1882 - Principal s liability -Power-of attorney given for sale of one property -Agent tampered with Power-of-attorney and included another property also -Can principal be held liable for the acts done by his agent through forged power-of-attorney? Yes.

       [K. Sreedhar Rao, J]: The provisions of Section 237 of Contract Act envisage that if the principal by his words or conduct induces third persons to believe that the acts and obligations are within the scope of agent s authority, it would bind the principal. In the present case, the plaintiff has constituted the first defendant as his power of attorney executing Ex. D. 57 may be to deal with only one item of the property. The said conduct takes the case squarely within the scope of the words "principal by his act induces such third persons". The plaintiff to his peril has chosen unscrupulous person as his power of attorney and allowed scope for manipulation and forgery by the power of attorney. The defendants 2 and 3 without the knowledge of forgery and fraud, going by the apparent tenor of Ex. D. 57, bonafidely purchased the property assuming that the first defendant was within the scope to deal with the properties, therefore, the transaction binds the plaintiff.

       Cases Referred: 30 WR 932: 46 JP 500

       Distinguished:AIR 1940 PC 160: 67 Ind. App 318; (1882) 9 QBD 555: 51 LJQB 401: 47 LT 146; AIR 1977 SC 336: (1977)1 SCC 379: (1977) 1 SCR 853.

       Applicability

       TRANSFER OF PROPERTY ACT, 1882 - Section 52 -Applicability -Applicable to private sale transactions taken place during pendency of suit -Fact matrix presently is that, suit for specific performance was filed prior to a suit filed by the principal of power of attorney for declaration of sale made by attorney as null and void -Hence, provisions of the section are not applicable.

       [K. Sreedhar Rao, J]: The suit filed by the 4th defendant for specific performance in O.S. No. 265 of 1983 is prior to the suit of the plaintiff. After the decree, through Court the 4th defendant has obtained sale deed. Section 52 of the Transfer of Property Act, 1882 would apply in a case where the sales are made by way of private negotiations and during the pendency of the suit. The facts on hand stand on a different footing and do not attract Section 52.

       Cases Referred: 51 LJ QB 401: 47 LT 146: 30 WR 932: 46 JP 500.

       Distinguished:AIR 1940 PC 160: 67 Ind. App 318; (1882) 9 QBD 555: AIR 1977 SC 336: (1977)1 SCC 379: (1977) 1 SCR 853.

K. SREEDHAR RAO, J.

( 1 ) THE appeal filed against the judgment and decree passed in O. S. No. 62 of 1984 on the file of Principal Civil Judge (Senior Division), mangalore. The Trial Court disposed of the suits O. S. Nos. 62 of 1984 and 265 of 1983 by recording common evidence and common judgment.

( 2 ) THE appellant is the plaintiff in O. S. No. 62 of 1984 filed for declaration that the sale deeds Exs. P. 1 and P. 2 executed by the first defendant are null and void and seek consequential relief of possession free from all encumbrances. The 4th defendant filed a separate suit O. S. No. 265 of 1983 against the second defendant for the relief of specific performance in respect of the property, which is a subject-matter of O. S. No. 62 of 1984.

( 3 ) THE appellant in this proceeding will be referred to as plaintiff and the respondents would be referred to as defendants for convenient discussion.

( 4 ) ACCORDING to the plaintiff the suit properties belonged to his mother Mrs. Aquis Pinto. After her demise, the plaintiff along with his father (defendant 5), sister (defendant 6) and brothers (defendants 7 to 9) succeeded to the property and they are all co-owners of the property. The suit property was mortgaged. The mortgagee had filed a suit in O. S. No. 22 of 1973 for recovery of the mortgage amount. The suit was decreed, the suit property was brought to sale for realisation of the decreetal debt.

( 5 ) THE first defendant is an Advocate, who defended the interests of the plaintiff and defendants 5 to 7 in O. S. No. 22 of 1973. Mrs. Aquis pinto found it difficult to manage the property, since her husband and children were all scattered and living at different places. Therefore, the 1st defendant was requested to negotiate and sell the property to third parties to avoid Court sale. The defendant 5 and defendants 7 and 8 executed the GPA in favour of the first defendant. The first defendant entered into an agreement with defendants 2 and 3. They insisted that the 1st defendant had to produce the powers of attorney of all the co- owners. Pursuant to which the plaintiff who is residing at Doha in quotar executed power of attorney at Ex. D. 57 and the 6th defendant residing at Bombay executed power of attorney Ex. D. 56 in favour of the 1st defendant. The Ex. D. 57, power of attorney is prepared at Doha and sent by post to the first defendant. On the basis of powers of attorney the sale deeds Exs. P. 1 and P. 2 are executed.

( 6 ) IT is the case of the plaintiff that the powers of attorney Exs. D. 56 and D. 57 authorised the first defendant to sell only Item No. 1 of the 'a' schedule and not Item No. 2 of the 'a' Schedule. The powers of attorney ex. D. 56 and Ex. D. 57 are tampered and interpolated to include Item no. 2 of the suit schedule. The 2nd defendant was aware of the forgery when he purchased the property. Therefore, it is contended that the sale deeds executed by the first defendant in favour of defendants 2 and 3 on the basis of forged power of attorney is null and void and the first defendant would not get any legal authority to effect of sale on the strength of the forged documents. It is further contended that the first defendant has misappropriated the sale consideration and has not accounted for the same to the plaintiff and other co-owners.

( 7 ) DEFENDANTS 1 to 4 contested the case, defendant 5 died immediately after filing of the suit and he had not filed the written statement. The defendants 6 to 9 support the case of the plaintiff.

( 8 ) BEFORE filing of the suit, the second defendant entered into an agreement for sale in respect of a portion of the 'a' Schedule property. In that connection the 4th defendant filed a suit against the 2nd defendant in O. S. No. 265 of 1983 seeking specific performance of the contract. The suit is decreed. The execution proceedings are taken out by the 4th defendant, and the sale deed is obtained through Court. The plaintiff and other defendants are not parties in O. S. No. 265 of 1983


































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