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2024 Supreme(Mad) 2217

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

Advocates Appeared:
For the Appellant : Mr. V.Raghavachari, Senior Counsel for M/s. V.Srimathi
For the Respondent: Mr. N.Manokaran for D.Ramesh Kumar

A power of attorney does not confer title to property; fraudulent sales executed by an agent without the principal's consent are invalid under the Benami Transactions Act.

Headnote:(A) Benami Transactions (Prohibition) Act, 1988 - Section 4(2) - Power of Attorney - Fraudulent sale - Plaintiff challenged the validity of a sale deed executed by his brother-in-law, claiming it was based on a power of attorney that was misused - The court found that the plaintiff had paid the sale consideration and the defendants failed to prove their claims - The sale deed was deemed sham and nominal. (Paras 67, 49, 36, 18, 12)

(B) Power of Attorney - Nature and effect - A power of attorney does not confer title to property and is revocable - The agent cannot act against the interests of the principal. (Paras 59, 60)

Facts of the case:
The plaintiff, an expatriate, purchased agricultural land intending to use it for his family. He executed a power of attorney to his brother-in-law for property management, but the brother-in-law fraudulently sold the property without the plaintiff's consent. The plaintiff discovered the sale upon returning to India and filed suit.

Findings of Court:
The court found that the plaintiff was the true owner of the property, having paid for it, and that the defendants had not proven their claims of ownership or payment. The sale deed executed by the brother-in-law in favor of his wife was declared invalid.

Issues: The main issues included whether the sale deed was valid, whether the plaintiff had paid the sale consideration, and whether the defendants' claims were barred under the Benami Transactions Act.

Ratio Decidendi: The court ruled that the power of attorney does not confer ownership and that the defendants' actions constituted a breach of fiduciary duty. The sale deed was invalid as it was executed without the plaintiff's knowledge and consent.

Result: Appeal allowed; trial court's judgment set aside.

JUDGMENT :

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

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 of the trust that he had reposed on the 2nd defendant, the plaintiff had not gone through the contents of the power of attorney. The plaintiff would submit that he had never intended to sell the property as the property was purchased for his own use and the power of attorney had been given only to manage the property.

4. The plaintiff would submit that he had returned to Kuwait within 4 days after the registration of deeds and thereafter he has been periodically sending funds to the 2nd defendant for the maintenance of the lands and for meeting the agricultural expenses. The plaintiff has not even checked the accounts on accoun

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