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2009 Supreme(Cal) 493
High Court of Judicature at Calcutta
BHASKAR BHATTACHARYA & PRASENJIT MANDAL
Shamali Das
Versus
Swadesh Ghosh
F.M.A. No. 159 of 2009 (C.A.N. Nos. 536, 721, 1475 of 2009)
Decided On : 10-07-2009
For the Appearing Parties:Moloy Roy, Swarup Kumar Ghosh, Sardar Amjad Ali, Partha Pratim Mukherjee, Hansh Tandon, Karabi Ghosh, Advocates.
An agency is irrevocable if the agent has an interest in the subject matter of the agency, but this principle does not apply if the agent's interest is not created by a registered instrument.
Headnote:
POWER OF ATTORNEY - REVOCATION - IRREVOCABLE POWER - POWER COUPLED WITH INTEREST - Section 202 of the Contract Act - Section 54 of the Transfer of Property Act - Whether the power of attorney granted by the defendants to the plaintiffs was irrevocable due to the plaintiffs having an interest in the subject matter of the agency - Whether the agreements for sale entered into by the defendants prior to the execution of the power of attorney created any interest in favor of the plaintiffs in the property.
Fact of the Case:
The defendants, claiming to be the owners of certain landed properties, entered into two agreements for sale with the plaintiffs and received earnest money. Subsequently, the defendants executed two deeds of general power of attorney in favor of the plaintiffs, authorizing them to look after the properties, negotiate for sale, and manage the part of the property to intending buyers. The plaintiffs alleged that the defendants illegally cancelled the power of attorney without notice, and filed a suit for declaration that the cancellation deeds were illegal and void, and for injunction restraining the defendants from giving effect to the cancellation or negotiating with any intending buyers. The plaintiffs also filed an application for temporary injunction, which was granted by the trial court.
Finding of the Court:
The court held that the power of attorney was not irrevocable as the plaintiffs did not have any interest in the subject matter of the agency. The agreements for sale did not create any interest in the land in question, as per Section 54 of the Transfer of Property Act. The court further held that the second part of the injunction restraining the defendants from entering into any contract with a third party was not tenable as the suit was not for specific performance of the agreement for sale.
Issues: 1. Whether the power of attorney granted by the defendants to the plaintiffs was irrevocable due to the plaintiffs having an interest in the subject matter of the agency. 2. Whether the agreements for sale entered into by the defendants prior to the execution of the power of attorney created any interest in favor of the plaintiffs in the property.
Ratio Decidendi: 1. Section 202 of the Contract Act provides that an agency cannot be terminated to the prejudice of the agent's interest in the subject matter of the agency. However, in the present case, the plaintiffs did not have any interest in the property, as the agreements for sale did not create any interest in the land. 2. Section 54 of the Transfer of Property Act defines 'sale' as a transfer of ownership in exchange for a price, and provides that such transfer can only be made by a registered instrument in the case of tangible immovable property of the value of one hundred rupees and upwards. In the present case, the agreements for sale were not registered instruments, and thus did not create any interest in the property.
Final Decision: The court allowed the appeal, set aside the order of the trial court granting the temporary injunction, and rejected the application for temporary injunction.
BHASKAR BHATTACHARYA, J.
(1) This first miscellaneous appeal is at the instance of the defendant No. 1 in a suit for declaration and injunction and is directed against order dated 15th January, 2009 passed by the learned Judge, Seventh Bench, City Civil Court at Calcutta in Title Suit No. 4181 of 2008 thereby disposing of an application under Order 39 Rules 1 and 2 of the Code of Civil Procedure filed by the plaintiffs by restraining the appellant from giving effect to the impugned deeds of cancellation of power of attorney as described in Schedule B of the application and also from making any negotiation with any party or intending buyer of the lands in question described in the two power of attorneys dated 18th December, 2006.
(2) Being dissatisfied, the defendant No. 1 has come up with the present appeal.
(3) The respondent Nos. 1 to 3 filed in the City Civil Court at Calcutta a suit being Title Suit No. 4181 of 2008 thereby praying for declaration that two registered deeds for cancellation of power of attorney dated 15th September, 2008 executed by the defendants were illegal, null and void and inoperative and for further declaration that the registered deeds of power of attorney earlier executed by the defendants empowering the plaintiffs to act on their behalf were legal, valid and operative and were still in force.
(4) The case made out by the plaintiffs/respondents may be summed up thus:
(a) The defendants claiming to be the owners of some landed properties intended to sell of those lands to the plaintiffs and entered into two agreements for sale dated 18th September, 2002 upon receiving earnest money.
(b) On 5th July, 2005 and 7th September, 2005, the defendants further executed two agreements for sale of some other properties after taking further earnest money.
(c) Subsequently, in connection with the aforesaid agreements for sale, the defendants executed two deeds of general power of attorney on 18th December, 2006 and those were registered.
(d) In those registered deeds of power of attorney, exclusive power was given to the plaintiffs to look after the lands involved in the four agreements for sale and the plaintiffs were further authorised. to protect and manage and also negotiate for sale, the part of the property to the intending buyers.
(e) Although the plaintiffs had all along been sincerely and diligently looking after those landed properties, recently the defendant No. 1 informed the plaintiff No. 2s husband that in the event the plaintiffs did not pay to her at a higher rate she would cancel those agreements for sale and also the deeds of power of attorney executed in favour of the plaintiffs.
(f) On 20th September, 2008 in the newspaper Bartaman, the plaintiffs found out a legal notice, inter alia, stating that those two registered deeds of power of attorney had been cancelled by the defendants on 15th September, 2008 by virtue of two further registered cancellation deeds.
(g) The defendants had illegally cancelled those two registered deeds of power of attorney without notice to the plaintiffs and such arbitrary cancellation of those deeds should be declared to be illegal. Hence the suit.
(5) On the basis of selfsame allegations, as made in the plaint, the plaintiffs came up with an application for temporary injunction for restraining the defendants from giving effect or further effect to the deeds of cancellation of power of attorney and also from making any negotiation with any party or parties or intending buyer of the land in question described in the two deeds of power of attorney dated 18th December, 2006.
(6) The aforesaid application was contested by the appellant by filing written statement thereby denying the material allegation made in the application for temporary injunction and asserting that there was sufficient ground for revocation of the deeds of power of attorney earlier granted in favour of the plaintiffs.
(7) The learned Trial Judge on consideration of the materials on record
