SupremeToday Landscape Ad
Back
Next
Judicial Analysis Court Copy Headnote Facts Arguments Court observation
Listen Audio Icon Pause Audio Icon
judgment-img

2024 Supreme(Mad) 386

IN THE HIGH COURT OF JUDICATURE AT MADRAS
P.T. ASHA, J.
M. Sundarraj – Appellant
Versus
S. Jayalakshmi and Another – Respondents
A.S. No. 248 of 2021
Decided On : 08-03-2024

Advocates:
Advocate Appeared:
For the Appellants : V. Raghavachari, V. Srimathi.
For the Respondents: N. Manokaran, D. Ramesh Kumar.

The court ruled that a power of attorney does not confer title; fraudulent sales to a power agent's spouse are invalid and do not transfer ownership, reinforcing the principles against benami transactions.

Headnote:(A) Benami Transactions (Prohibition) Act, 1988 - Section 4(2) - Power of Attorney - Suit to set aside sale deed - Plaintiff sought to set aside sale deed executed by power agent - Court found that plaintiff is the actual owner who paid consideration - The defense of Benami was barred - Dismissal of the suit by the Trial Court reversed. (Paras 67(a), 67(d), 67(e))

(B) Agency and Ownership - Powers of attorney do not convey ownership - Power agent sold property to their spouse, resulting in breach of fiduciary duty - Defendants' claims deemed mutually destructive resulting in the loss of their defense. (Paras 59, 66)

Facts of the case:
The plaintiff, having purchased agricultural property, granted a power of attorney to his brother-in-law to manage it while living abroad. Upon returning, he discovered the property had been fraudulently sold by the brother-in-law to the sister without his consent. (Paras 3, 5, 6)

Findings of Court:
The plaintiff was recognized as the real owner of the property, having supplied funds for its purchase. The sale deed executed by the brother-in-law was declared invalid as the requisite consideration was not received by the plaintiff. (Paras 67(a), 67(b), 67(g))

Issues: Whether the sale deed executed by the power agent was binding? Was the plaintiff the actual owner despite the deed being in a different name? (Paras 35)

Ratio Decidendi: The plaintiff's funding of the property purchase established his ownership, while the misuse of the power of attorney by the brother-in-law formed the basis for deeming the sale deed invalid. (Paras 44, 67)

Result: Appeal allowed with costs, Trial Court's decision set aside.

Judgement Key Points

Key Points: - The court held that a power of attorney does not confer title and that a sale by a power agent to the agent’s spouse is invalid and constitutes a breach of fiduciary duty. (!) (!) (!) - The suit was allowed to the extent that the plaintiff is the real owner who funded the purchase, and the Benami defense under Section 4(2) of the Act is applicable to bar such a defense. (!) (!) (!) (!) - The plaintiff proved payment of sale consideration for Ex.A.1 and Ex.B.10 through documentary evidence and bank transfers, while the defendants failed to prove payment. (!) (!) (!) (!) (!) - The defendants’ mutually destructive pleas and the defense that the property was purchased by the power agent in the plaintiff’s name were rejected; the plaintiff’s title as owner was upheld. (!) (!) (!) (!) - The appeal set aside the trial court’s dismissal and granted relief in favor of the plaintiff, including setting aside the sale and recognizing the plaintiff as owner. (!)

What is the effect of a power of attorney on title to property and whether it can transfer ownership?

What are the circumstances under which a sale by a power agent to the agent's spouse is invalid or constituting Benami transactions?

What is the proper determination of whether the plaintiff paid the sale consideration for Ex.A.1 and Ex.B.10, and whether the defendants’ claims to ownership are barred by Benami provisions?


Table of Content
1. plaintiff's property purchase and fraudulent sale. (Para 1 , 2 , 3 , 4 , 5 , 6)
2. defendants' claims about property ownership and legal transactions. (Para 7 , 8 , 9 , 10)
3. trial court's issues and points of consideration. (Para 12 , 35 , 36)
4. arguments regarding power of attorney and its limitations. (Para 14 , 15 , 16 , 17 , 18 , 19 , 20 , 21 , 22 , 23)
5. power of attorney does not confer ownership. (Para 24)
6. benami transactions are not enforceable. (Para 37 , 52)
7. court's conclusion on fraud and ownership. (Para 44 , 50 , 62 , 63)
8. final judgment to allow first appeal. (Para 68)

JUDGMENT :

P.T. ASHA, J.

Prayer: First Appeal is filed under Section 96 read with Order 41 Rule 1 of C.P.C. against the Judgment and Decree in O.S. No. 5 of 2016 on the file of the Principal District Judge, Dharmapuri dated 12.03.2021.

1. The plaintiff in the suit O.S. No. 5 of 2016 on the file of the Principal District Judge, Dharmapuri is the appellant before this Court challenging the dismissal of his suit which has been filed for the following reliefs:

    (a) Pass a decree in favour of the plaintiff setting aside the alleged sale deed dated 11/02/2015 registered as document No. 3305/2015 on the file of the Sub-registrar of Palacode executed by the 2nd defendant in favour of the 1st defendant as null, void, sham, nominal and not binding on the plaintiff and further direct the defendants to deliver possession of the suit property to the plaintiff within a period fixed by this Honourable Court and if the defendants fail to do so cause the same to be done by due process of this Honourble Court.

    (b) Pass a decree for permanent injunction in favour of the plaintiff restraining the defendants 1 and 2 from in any way alienating or encumbering the suit properties.

    (c) Pass a decree directing the defendants to pay the cost of the suit.

    (d) Pass a decree granting such other relief or reliefs as this Honourable court may deem fit and proper in the circumstances of the case and thus render justice.

The parties are referred to in the same ranking as before the Principal District Court, Dharmapuri.

Plaintiff’s Case:

2. The plaintiff would submit that the 1st defendant is his sister and the 2nd defendant is his brother-in-law. The plaintiff would submit that he had completed his education in 1979 and was employed in India for over 5 years. In the year 1985, he had gone to Kuwait for employment. The plaintiff would submit that thereafter he has been regularly coming to India. In the year 1991, the plaintiff had got married to one, Padmini and they are blessed with 3 children. The plaintiff was desirous of purchasing agricultural lands with a farm house so that he and his family would have a place of their own to stay when they came to India. His brother-in-law, the 2nd defendant has assured him that he would find a suitable property for him. Later, the 2nd defendant had informed the plaintiff that the suit property and its adjacent property was available for sale and the same suited the plaintiff's requirements. The plaintiff therefore proceeded to purchase the suit property and the adjacent property. On 22.11.2004, the plaintiff had purchased the suit property and thereafter the adjacent property was purchased in the name of his wife, Padmini.

3. The plaintiff would submit that since he was away from the country, the 2nd defendant had assured him that he would take care and manage the property. In the light of the above, the plaintiff had permitted him to reside in the farm house as a care taker. The plaintiff having immense trust on his brother-in-law had executed and registered a general power of attorney in favour of the 2nd defendant on 22.11.2004. The 2nd defendant had taken a power of attorney stating that he would collect the original documents from the Sub Registrar's Office, effect mutation of records, transfer electricity service connection and all other things that are required for managing the property in the name of the plaintiff. In view

            Click Here to Read the rest of this document
            1
            2
            3
            4
            5
            6
            7
            8
            9
            10
            11
            SupremeToday Portrait Ad
            supreme today icon
            logo-black

            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

            qr

            Scan Me!

            India’s Legal research and Law Firm App, Download now!

            For Daily Legal Updates, Join us on :

            whatsapp-icon Back to top