Case Note & Summary
The dispute originated from a suit filed by the plaintiff, a junior engineer, regarding property he owned. He entered into an oral agreement to sell the property to the first defendant for Rs. 55,000 and executed a registered special power of attorney in favor of the second defendant, a deed writer, to facilitate the sale. The plaintiff alleged that when the first defendant could not arrange the money, he cancelled the power of attorney by returning the original to the plaintiff, but the second defendant fraudulently obtained a copy and executed a sale deed on 28.04.1987 for Rs. 30,000 in collusion with the first defendant. The plaintiff sought declaration and permanent injunction that he remained owner in possession, and alternatively, rendition of accounts from the second defendant. The first defendant claimed to be a bona fide purchaser who paid Rs. 10,000 as part price and Rs. 20,000 at registration, denying fraud. The second defendant contended the sale was for Rs. 30,000 as agreed, with the power of attorney returned after the sale, and that a registered power of attorney cannot be cancelled orally. The Trial Court framed issues including whether the sale was void, entitlement to declaration and injunction, and rendition of accounts. After examining evidence including witnesses, documents (P1 to P11, DX), and the sub-registrar's testimony, the Trial Court found the sale deed valid under the Registration Act, as the second defendant had a certified copy of the registered power of attorney, and cancellation required a registered document and notice to the agent. It held the first defendant was a bona fide purchaser not bound by the internal agreement between plaintiff and second defendant. However, it decreed the suit for rendition of accounts against the second defendant, finding him liable to pay Rs. 55,000 based on the P1 agreement. The First Appellate Court upheld these findings. The High Court, in a second appeal, reversed the concurrent findings, framing questions of law on fraud, construction of documents, compliance with Registration Act provisions, and entitlement to relief. The Supreme Court, in the present appeal, considered these issues. The court analyzed the provisions of the Registration Act, 1908, particularly Sections 18A, 32, 33, 34, 58, 59, 60, and 61, emphasizing the presumption of validity of registered documents and the requirements for cancellation of a power of attorney. It held that the sale deed was validly executed as the second defendant possessed a certified copy of the registered power of attorney, and the plaintiff's alleged oral cancellation was ineffective without a registered document and notice to the agent. The court found no fraud proven against the first defendant, who was a bona fide purchaser. Consequently, it upheld the Trial Court's decision, granting rendition of accounts against the second defendant but denying declaration and injunction to the plaintiff.
Headnote
A) Property Law - Sale Deed Execution - Validity of Sale Deed Under Power of Attorney - Registration Act, 1908, Sections 18A, 32, 33, 34, 58, 59, 60, 61 - Dispute involved sale of property by agent under registered power of attorney for Rs. 30,000 when principal alleged agreement for Rs. 55,000 and cancellation of power - Court held sale deed valid as agent had certified copy of registered power of attorney, cancellation required notice to agent and registered document, and sub-registrar verified execution - Presumption of validity under Registration Act provisions applied (Paras 2-9). B) Agency Law - Power of Attorney - Cancellation and Revocation - Registration Act, 1908, Sections 18A, 32, 33, 34 - Principal alleged oral cancellation and return of original power of attorney before sale deed execution - Court found cancellation ineffective as registered power of attorney requires registered document for cancellation and notice to agent - Mere writing 'cancelled' on original without notice to agent did not revoke authority (Paras 2-9). C) Evidence Law - Presumption of Regularity - Registration of Documents - Registration Act, 1908, Sections 58, 59, 60 - Trial Court relied on presumption that registration endorsement indicates executants or authorized agents appeared before registrar - Once document presented for registration, burden shifts to other side to prove non-compliance - Sub-registrar's evidence and marginal witnesses supported sale deed validity (Paras 7-9). D) Contract Law - Agency Agreement - Agent's Authority and Duty - Not mentioned - Principal executed agreement (P1) with agent to sell property for not less than Rs. 55,000 - Agent sold for Rs. 30,000, breaching duty to act in principal's interest - Court held agent liable for rendition of accounts and to pay Rs. 55,000 based on P1 agreement, but sale to third party (first defendant) remained valid as third party not bound by internal agreement (Paras 6-9).
Issue of Consideration
Whether the sale deed executed by the second defendant under a power of attorney was valid despite allegations of fraud and cancellation, and whether the plaintiff was entitled to declaration and injunction or only to rendition of accounts
Final Decision
Supreme Court reversed the High Court's judgment and restored the Trial Court's decision, upholding the validity of the sale deed, denying declaration and injunction to the plaintiff, and granting rendition of accounts against the second defendant
Law Points
- Power of attorney cancellation requires notice to agent
- registered power of attorney cannot be cancelled orally
- presumption of validity of registered documents under Registration Act
- agent's duty to act in principal's interest
- mandatory compliance with Registration Act provisions for sale deed execution
