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IN THE HIGH COURT OF JUDICATURE AT MADRAS
V. BHAVANI SUBBAROYAN, J.
M/s. Vashi Pari Villas, a Registered Partnership Firm, duly represented by its Managing Partner, T. Kamakshi - Appellant
Versus
M/s. Pandian Real Estates, duly consisting of its partners, P.S. Kumar & Others - Respondent
C.S. No. 396 of 2010
Decided On : 02-09-2022
Suit for recovery of money on account of dishonored cheques issued by the 6th defendant as a power of attorney holder on behalf of the defendants 2 to 4. Plaintiff and defendants 2 to 4 entered into an agreement of sale for the purchase of land. Plaintiff paid an advance of Rs. 80 lakhs. The agreement stipulated that the sale transaction should be completed within 45 days from obtaining NOC from government authorities. NOC was not obtained. Defendants 2 to 4 executed a power of attorney in favor of the 6th defendant to deal with the sale proceedings. Subsequently, a third party was willing to purchase the property for a higher sale consideration. The 6th defendant executed a memorandum of agreement with the plaintiff for payment of Rs. 2 crores as refund of advance amount and damages for not proceeding with the sale agreement. The defendants claimed that the power of attorney executed in favor of the 6th defendant was revoked by a letter sent by registered post. The plaintiff contended that the letter was not a valid document evidencing revocation of the power of attorney and that the memorandum of agreement was valid and binding on the defendants.
Fact of the Case:
Plaintiff and defendants 2 to 4 entered into an agreement of sale for the purchase of land. Plaintiff paid an advance of Rs. 80 lakhs. The agreement stipulated that the sale transaction should be completed within 45 days from obtaining NOC from government authorities. NOC was not obtained. Defendants 2 to 4 executed a power of attorney in favor of the 6th defendant to deal with the sale proceedings. Subsequently, a third party was willing to purchase the property for a higher sale consideration. The 6th defendant executed a memorandum of agreement with the plaintiff for payment of Rs. 2 crores as refund of advance amount and damages for not proceeding with the sale agreement. The defendants claimed that the power of attorney executed in favor of the 6th defendant was revoked by a letter sent by registered post. The plaintiff contended that the letter was not a valid document evidencing revocation of the power of attorney and that the memorandum of agreement was valid and binding on the defendants.
Finding of the Court:
The court held that the letter sent by registered post was not a valid document evidencing revocation of the power of attorney and that the memorandum of agreement was valid and binding on the defendants. The court also held that the plaintiff was entitled to receive the balance amount for compensation as per the memorandum of agreement.
Issues: 1. Whether the Memorandum of Agreement dated 23.03.2007 executed by the 6th defendant on behalf of the 2 to 4 defendants is valid and binding on the defendants to pay the compromise amount of the plaintiff? 2. Is not the agreement of sale dated 23.09.2006 entered by the plaintiff and the defendants 2 to 4 valid and binding? 3. Is not the Power of Attorney dated 18.01.2007 executed by the defendants 2 to 4 appointing the 6th defendant in force at the time of execution of the Agreement dated 23.03.2007? 4. Whether the cheques issued by the 6th defendant in favour of the plaintiff is towards the compromise agreement for balance payment arising out of the contract? 5. Is not the plaintiff entitled to the reliefs claimed in a sum of Rs.1,13,49,319/- from the defendants with costs. 6. To what other reliefs?
Ratio Decidendi: The court relied on the following principles: * A power of attorney can only be revoked by a registered document. * A compromise agreement is valid and binding on the parties. * A party is entitled to compensation for breach of contract.
Final Decision: The court decreed the suit in favor of the plaintiff and ordered the defendants 2 to 4 to pay a sum of Rs. 1,13,49,319/- within a period of six months from the date of receipt of copy of the judgment. The court also ordered that if the defendants failed to pay the aforesaid amount, it shall carry an interest at 6% per annum.
JUDGMENT
(Prayer:- This Civil Suit filed under Order IV Rule 1 of O.S. Rules and Order VII Rule 1 of C.P.C. praying for the following reliefs:
(a) the Defendants 1 to 7 are jointly and severally liable to pay a sum of Rs.1,13,49,319/- (One Crore Thirteen Lakhs Forty Nine Thousand Three Hundred and Nineteen Only) together with interest at 6% per annum from the date of plaint till date of decree and thereafter till date of realization, and
(b) for the costs of this suits and
(c) Pass such orders accordingly.)
This suit has been filed by the plaintiff against the defendants seeking for:
(a) the Defendants 1 to 7 are jointly and severally liable to pay a sum of Rs.1,13,49,319/- (One Crore Thirteen Lakhs Forty Nine Thousand Three Hundred and Nineteen Only) together with interest at 6% per annum from the date of plaint till date of decree and thereafter till date of realization, and
(b) for the costs of this suits and
(c) Pass such orders accordingly.
2. The brief facts of the case is as follows:
2.1. The plaintiff and the 1st defendant are the registered Partnership Firms. The Defendants 2 to 4 are the partners of the 1st defendant/firm. Defendants 1 to 4 have executed a power of attorney in favour of the 5th defendant. The 5th defendant is stated to have entered into an agreement of sale with the plaintiff in which a sum of Rs.80,00,000/- has been received as an advance for the agreement of Sale from the plaintiff.
2.2. Later on, the defendants 1 to 4 cancelled the Power of Attorney executed in favour of the 5th defendant and executed a fresh power of attorney in favour of the 6th defendant. Since sale was not effected in terms of agreement of sale, the 6th defendant had issued two cheques for a sum of Rs.1 Crore in favour of the plaintiff towards the discharge of liability. The cheques issued by the 6th defendant on behalf of the other defendants have been returned with an endorsement as "insufficient fund". Hence, the plaintiff had initiated proceedings under Section 138 of the Negotiable Instruments Act against the 6th defendant before the XI Metropolitan Magistrate, Saidapet in C.C. No.239/2009. Since the 6th defendant was dragging the aforesaid case and limitation period of Civil suit was getting close to expiry, the plaintiff has filed this Civil suit seeking a claim for a sum of Rs.1 Crore as against the defendants with interest.
3. The learned counsel for the plaintiff would submit that the plaintiff had entered into an agreement of sale dated 23.9.2006 with first defendant, claimed to be a partnership firm and second to fourth defendants claimed to be partners of the firm and signatory to the agreement of sale, for purchase of the lands of an extent of 46 acres and 24 cents, comprised in various Survey numbers situated at Pillaipakkam Village, Sriperumbadur Taluk, Kancheepuram District, for a sale consideration of Rs.6,47,36,000/-. The Plaintiff paid a sum of Rs.80,00,000/- as an advance amount on various dates viz., 23.9.2006 and on 5.12.2006 to the Defendants 1 to 5 and all of them agreed to complete the sale within 45 days from the date of agreement of sale.
4. It has been further submitted that initially Power of attorney was executed in favour of the 5th Defendant for the aforesaid transaction of sale, for dealing with the plaintiff with regard to the sale of the suit property. Subsequently, the Defendants cancelled the Power of Attorney executed in favour of the 5th Defendant and a fresh Power of Attorney was executed in favour of the 6th Defendant namely, Mr. T.Ravi vide Power of Attorney dated 18.1.2007 by registered document in No.225 of 2007, on the file of the District Registrar, Chennai North, and thus the 6th Defendant was dealing with the plaintiff with absolute knowledge of all the defendants who are the principals of the Power of Attorney dated 18.1.2007.
5. The learned counsel for the plaintiff would further submit that as p
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