Back
IN THE HIGH COURT OF KARNATAKA
N. Kumar, B. Manohar, JJ.
U. Vijaya Kumar and another – Appellants
Versus
Smt. Malini V. Rao – Respondent
R.F.A. No. 813 of 2012
Decided On : 30-05-2016
INDIAN CONTRACT ACT, 1872 - Section 215: [N. Kumar & B. Manohar, JJ] Repudiation dealing by agent without principal’s consent - Agent sold property of principal/plaintiff without her knowledge and consent - Sale was for meagre amount in favour of his wife - Agent made attempt to conceal sale transaction - Held, What is disadvantageous to the principal and what is not depends upon the facts of each case. Anyone standing in the position of an agent cannot be allowed to put his duty in conflict with the principal’s interest. If the principal proves that his consent had not been obtained for such an act and that the agent had not acquainted him with all material circumstances, it is not further necessary for him to establish any dishonest concealment by the agent or that the transaction was to his disadvantage. Any transaction creating conflict between the agent’s duty and the interest of the principal, must be presumed to be disadvantageous to the principal who is not informed of the fact. When there is no disclosure the fairness of the transaction is immaterial and such transaction should be voidable at the principal’s option. The plaintiff has every right to repudiate the transaction and such a statutory right is conferred upon the principal under Section 215.
SPECIFIC RELIEF ACT,1963 - Section 34: [N. Kumar & B. Manohar, JJ] Suit for declaration of title and possession - Plaintiffs title to property was not in dispute - Her agent, power of attorney, defendant sold property to his wife without knowledge and consent of plaintiff - Held, There is a clear and well marked distinction between a suit for cancellation of a deed affecting certain property and a suit for declaration that a particular document is inoperative as against the plaintiff. A suit for cancellation must be brought by a person who was a party to the deed or by a person who is otherwise bound by it in law. But a person who is neither party to the deed nor bound by it need not sue for its cancellation. Where the plaintiff seeks to establish title in himself but, cannot do so without removing an inseparable obstacle to such a deed to which he may be a party, he must get it cancelled. However, when he seeks to establish a title and finds himself threatened by a transaction between some parties, his remedy is to get a declaration that the decree or deed or transaction is invalid so far as he is concerned. When a person is a party to the deed, he can get over the effect of such deed, only in a manner provided under the Contract Act, especially when third party interests are created. But when he is not a party but in law is not a party to such deed, he can seek a declaration that such a deed is not binding on him, when no third party interest is created. A sale-deed obtained by an agent in the name of his wife cannot be treated as a sale-deed in favour of a third party. It is a sale- deed in favour of the agent only, which is void, until the condition stipulated in Section 215 of the Contract Act is fulfilled. The effect of such declaration is the sale-deed becomes inoperative and purchaser under the sale-deed cannot claim any right under the sale-deed, in view of the declaration granted by the Court. The title of the plaintiff to the property under dispute was never in doubt, as the purchaser traces his title to plaintiff. The said sale-deed creates a cloud on the title of the plaintiff. The declaration granted by the Court that the said sale- deed is not binding on the plaintiff, removes the cloud and the plaintiff continues to be the owner, notwithstanding the said sale-deed. The said sale deed is in the name of the wife of the agent. No third party interest is involved. Therefore, no relief of cancellation need be prayed for.
The said sale-deed is null and void and does not bind her. Section 34 confers on the plaintiff a right to seek such declaration. Therefore she, necessarily, has to recover possession of the property form the defendants. Else, a mere declaration that the sale-deed is null and void and does not bind her in effect will be no relief at all. In the facts and circumstances of the present case, the relief of possession is the further relief that ought to be sought in terms of proviso to Section 34 and not cancellation of the sale-deed. The decree of declaration of title, notwithstanding the existence of a sale-deed in favour of the second defendant, has the effect of nullifying the sale deed and therefore, there is no need to seek the cancellation of the sale-deed. Unless the decree of possession is granted, the claim of the plaintiff would not be complete. Hence, it is prayed for and granted. Thus the requirements of proviso to Section 34 is complied with. Therefore the finding of the Trial that the suit is not hit by Section 34 is well founded and does not suffer from any illegality.
This is the defendants' regular first appeal challenging the judgment and decree dated 24.02.2012 in O.S.No.2405/2010 passed by the XII Addl. City Civil Judge, Bangalore, decreeing the plaintiff's suit by declaring that the sale-deed dated 17.2.2009 in respect of 'B' schedule property, executed by the 1st defendant as the GPA holder of M/s. Tex X International in favour of the 2nd defendant is null and void and not binding on the plaintiff etc. and for damages at the rate of Rs.50,000/- p.m.
2. For the sake of convenience, the parties are referred as per their original rank before the trial court.
3. The subject matter of the suit is 'B' schedule property measuring 12070 Sq. feet forming the western portion of 'A' schedule property, an industrial shed measuring 2074 Sq. meters.
4. The plaintiff's case is that she is the proprietress of M/s. Tex X International, Bangalore: Karnataka Industrial Area Development Board (for short 'KIADB') allotted and sold 'A' schedule property in favour of the said Firm under registered sale-deed dated 04.05.1995. The 1st defendant is her brother and the 2nd defendant is his wife. When the 1st defendant lost his job and was unemployed for nearly an year in 1988, she arranged for rent free accommodation for him and his family at her sister-in-law's house bearing No. 42, P&T Colony, 2nd Cross, R.T. Nagar, Bangalore; the defendants resided there for a period of six years. In 1989 she constructed an industrial shed on the 'A' schedule property, entrusted its management to the 1st defendant with the intention of generating income to help him. The 1st defendant let out the said property and utilized the entire income derived therefrom: and he has not spent any money from his pocket towards managing the said property.
5. On 27.5.2005, she and the 1st defendant entered into a memorandum of understanding that the 1st defendant should pay her a sum of Rs.5,00,000/- towards the past usage of 'A' schedule property and the rental income; a sum of Rs.2,00,000/- towards rental income for 2005-06 and 2006-07 and a sum of Rs.6,00.000/- from May 2005 till March 2007. It was further agreed that the 1st defendant should pay enhanced rent at the rate of 107c on Rs.2,00,000/- from the end of 2006 till March 2010 towards the rental income. The said rental income of Rs.2,00,000/- is also a meager amount compared to the prevailing rent in that area. The 1st defendant had sent a number of e-mails to her about the difficult times and that he is depending on the rental income derived from the 'A' schedule property.
6. She and her husband were carrying on business in the USA. So while going to USA. she handed over all the original records pertaining to the 'A' schedule property to the 1st defendant. Their business in the USA suffered as her husband was down with bone cancer for seven years and she had to manage the business in the USA single handed and also look after him. On account of this, they decided to wind up the business in the USA and settle down in Bangalore; they also purchased a villa in Bangalore with that intention. The rental income from 'A' schedule property was sufficient to lead a decent and comfortable life.
7. During January 2009, when she requested the 1st defendant to send the original title deeds of 'A' schedule property and the khata extract, the 1st defendant postponed it on one pretext or the other. On 08.01.2009 and 27.01.2009, the 1st defendant had sent e-mails advising her to wait for two years, not to go for distress sale of the property as the real estate market had hit a low and to permit him to run the industry for 5 more years. She grew suspicious of the said conduct and got applied for the khata extract of 'A' schedule property through a friend at Bangalore in August 2009 and came to know that while the original Khata No. 37 stood in the Firm's name, khata No. 37/A pertaining to 'B' schedule property was mutated in the name of the 2nd defendant on the basis of a sale-deed dated 17.02.20
An indispensable Tool for Legal Professionals, Endorsed by Various High Court and Judicial Officers
Please visit our Training & Support
Center or Contact Us for assistance
Scan Me!
India’s Legal research and Law Firm App, Download now!
For Daily Legal Updates, Join us on :
Back to top
