Madras High Court
P.Shanthi @ Shanthi Bai vs D.Dhinakaran
Author: C.V.Karthikeyan
Bench: C.V.Karthikeyan
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IN THE HIGH COURT OF JUDICATURE AT MADRAS
RESERVED ON: 16.09.2020
PRONOUNCED ON: 15.10.2020
CORAM:
THE HONOURABLE MR.JUSTICE C.V.KARTHIKEYAN
C.S.No.652 of 2016
1. P.Shanthi @ Shanthi Bai
2. S.Yogalakshmi
3. S.Karpagam
4. P.Loganathan
5. Minor L.Dinesh
6. Minor L.Yuvaraj
[ The 5th plaintiff has been declared as major and the fourth plaintiff is
discharged from the guardianship by order dated 18.07.2019 in A.No. 5001
& 5002/2019]
...Plaintiffs
Vs
1. D.Dhinakaran
2. Mr.Subash Chand Jain ... Defendants
PRAYER:- This Civil Suit is filed under Order IV Rule 1 of Original
Side Rules read with Order VII Rule 1 of CPC., praying for a Judgment and
decree in favour of the plaintiffs:
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(a) to declare the sale deed dated 20.01.2015 executed by the 1 st
defendant, as power of attorney holder of plaintiffs, to and in favour of the
2nd defendant vide Document No. 198 of 2015, registered in the office of
the Sub-Registrar, Purasawalkam, Chennai as null and void and
unenforceable, not valid in law and biding on the plaintiffs and order it to
be delivered up and cancelled, consequently to send a copy of the decree to
the sub-registrar office, Purasawalkam and to note on the copy of the sale
deed and contained in his book the fact of its cancellation;
(b) for permanent injunction restraining the 2nd defendant, his men,
agents, servants or anyone, acting for and on his behalf, in any manner
whatsoever from alienating or encumbering the suit schedule property to
any third party except to the plaintiffs;
(c) for permanent injunction restraining the 1st and 2nd defendants, their
men, agents, servants, or anyone, acting for and on their behalf, in any
manner whatsoever, from interfering the plaintiffs' peaceful possession of
the suit schedule property; and
(d) for the costs of the suit.
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For Plaintiffs : Mr. M.Venkata Krishnan
For 1st Defendant: Mr.B.R.Shankaralingam
Mr.N.Selvarajan
Mr.S.Balaji
Set exparte
For 2nd Defendant: Mr.T.S.Baskaran
JUDGEMENT
The suit had been filed seeking a Judgment and Decree to declare a sale deed dated 20.01.2015 executed by the first defendant as power of attorney holder of the plaintiffs in favour of the second defendant in Document No. 198 of 2015 registered in the Office of the Sub Registrar, Purasawalkam, Chennai, as null and void and unenforceable and not valid in law and not binding on the plaintiffs and order it to be cancelled and also for a permanent injunction restraining the second defendant from alienating or encumbering the suit schedule property to any third party except to the plaintiffs and for a permanent injunction restraining the defendants from interfering with the peaceful possession of the plaintiffs in the suit property and for costs.
http://www.judis.nic.in 4 The Plaint:
2. It had been stated that the suit property at Old Door No.14, New Door No.16, New Manicka Naicker Street, Purasawalkam, Chennai, measuring an extent of 3380 sq.ft., was the absolute property of E.Panchala Naidu. The first plaintiff P.Shanthi @ Shanthi Bai and the fourth plaintiff P.Loganathn are the daughter and son of E.Panchala Naidu. The second and third plaintiffs S.Yogalakshmi and S.Karpagam, are the daughters of the first plaintiff and the fifth and sixth plaintiffs L.Dinesh and L.Yuvaraj are the sons of the fourth plaintiff. It was stated that E.Panchala Naidu executed a Will on 22.01.1970 bequeathing all his properties to his two wives, Seetha @ Seethammal and Meenakshi @ Meenakshiammal and also to his daughter, the first plaintiff Shanthi @ Shanthi Bai and to his son the fourth plaintiff, P.Loganathan and to his sister, Adhilakshmi with rights of enjoyment during the life time and thereafter to be devolved absolutely to his grandchildren, the second, third, fifth and sixth plaintiffs herein. He died on 23.01.1970. The Will was probated by a Judgment of this Court in T.O.S.No. 11 of 1970 dated 07.12.1977. The first wife Seetha @ Seethammal died on 08.01.1974. The second wife Meenakshi @ Meenakshi Ammal dided on 05.09.2006. It was stated that the plaintiffs became the absolute owners of the suit schedule property. The property http://www.judis.nic.in 5 was also under occupation of six tenants. The first plaintiff claimed that she was a housewife and her husband was working as Electrician; the fourth plaintiff was working as a car driver and was residing outside the suit property. The building in the property was very old and required demolition and reconstruction. The first defendant, D.Dhinakaran, Proprietor of M/s. Green Avenue Homes and Gardens, having Office at Alwarpet, Chennai, offered to demolish the existing building and to develop the property into an apartment complex consisting of eight residential units with all amenities. The plaintiffs and the first defendant entered into a Development Agreement on 14.12.2011. The first defendant agreed to construct two flats on the ground floor, four flats on the first floor and two flats on the second floor. Out of the eight flats, four flats were to be allotted to the plaintiffs and four flats were to be allotted to the first defendant.
3. It was covenanted in the Development Agreement that the first defendant would also pay a sum of Rs.65/- lakhs to the plaintiffs as free money. On the date of the agreement, a sum of Rs.15/- lakhs had been paid by way of two cheques favouring the first and fourth plaintiffs for a sum of Rs.7,50,000/- each.
http://www.judis.nic.in It was further covenanted that permission from the 6 Court should be obtained for the sale of the undivided share in the land of the minors, the fifth and sixth plaintiffs. In pursuance of the terms of the agreement, the fourth plaintiff P.Loganathan filed O.P.No. 263 of 2012 before the High Court seeking permission to deal with the undivided share of the property of the minors / his sons / fifth and sixth plaintiffs. This was ordered on 23.04.2012. Thereafter, the plaintiffs executed a General Power of Attorney in favour of the first defendant on 11.05.2012 registered as Document No. 262 of 2012 in the office of the Sub Registrar, Purasawalkam. It was claimed that power was granted only for the specific purpose of developing the schedule mentioned property by constructing eight flats and to sell the undivided share of the built up area and building. It was stated that the execution of the Development Agreement and the General Power of attorney are part of a single transaction for development of the suit property and co-terminus with each other. Thereafter, the six tenants, who were in occupation of the building also vacated after receiving adequate compensation.
4. The plaintiffs stated that they also obtained necessary permission for demolition from the Corporation of Chennai and also for reconstruction by order dated 12.06.2013. It was stated that however, the first defendant http://www.judis.nic.in 7 did not commence construction activity in the property and he sought extension of the time stipulated in the original agreement for a further period of 12 months from 12.03.2014. A Supplemental Agreement was executed between the parties on 05.04.2014. The first defendant failed to keep up the commitment as agreed in the Supplemental Agreement and therefore a further Supplemental Agreement was entered into on 21.01.2015. The plaintiffs had received a total sum of Rs.55/- lakhs out of the free amount offered of Rs.65/- lakhs. The first defendant however did not commence construction. He became hostile to the requests made by the plaintiffs to commence construction. The plaintiffs thereafter issued a legal notice on 20.03.2015 determining the Joint Development Agreement and the two Supplemental Agreements. Though the first defendant received the notice, he did not sent any reply. The plaintiffs then applied for encumbrance certificate and were shocked to find that the first defendant, as power of attorney holder, had on 20.01.2015, sold the 50% of the undivided share of the land to the second defendant, who is a third party, for a consideration of Rs.1,01,40,000/- and had actually received an advance of Rs.50/- lakhs when an agreement had been entered into as early as 15.06.2012 which agreement had also been registered as Document No. 2210/12 in the Office of the Sub Registrar, Purasawalkam. The sale deed http://www.judis.nic.in 8 also stated that the balance consideration of Rs.51,40,000/- had been paid by way of cash.
5. The plaintiffs claimed that the first defendant had paid a sum of Rs.7/- lakhs by way of five cheques on 05.04.2014 which had dishonoured for the reason insufficient funds and the plaintiffs stated that the first defendant had played a fraud on them by holding out that he would develop the property by construction of flats, but had instead sold 50% of the undivided share of the land to the second defendant. It was stated that the defendants were in collusion with each other. It is under these circumstances that the suit had been filed for the relief as stated above. The first defendant:
6. The first defendant entered appearance through counsels Mr.B.R.Shankaralingam, Mr.N.Selvarajan, Mr.S.Balaji and thereafter had taken a conscious decision to remain ex-parte. Written statement of the second defendant:
7. The second defendant Subash Chand Jain filed a written statement along with counter claim. In the written statement, the second http://www.judis.nic.in 9 defendant claimed that the first defendant had approached him for sale of residential flats together with undivided share of land. Thereafter, an agreement of sale was registered on 15.06.2012 for sale of 50% undivided share of land in the suit schedule property for a total consideration of Rs.1,01,40,000/-. The second defendant claimed that the entire sale consideration had been paid on various dates and thereafter, sale deed was also registered on 20.01.2015. The second defendant had also entered into a construction agreement with the first defendant for construction of four residential flats. The second defendant claimed that he was a bonafide purchaser of 50% undivided share of land in the suit schedule property without notice of deficiency in title or dispute regarding title.
8. The second defendant claimed that the plaintiffs were well aware of the transactions between him and the first defendant. The plaintiffs claimed that the first defendant had failed to commence construction, and instituted the suit seeking to cancel the sale deed executed in favour of the second defendant. The second defendant claimed that the plaintiffs cannot seek to set aside the sale deed which had been validly executed for adequate construction. The averment in the plaint regarding collusion and fraud were specifically denied. It was stated that the first defendant had http://www.judis.nic.in 10 every right to convey the undivided share of land since he was the power of attorney holder of the plaintiffs.
9. The second defendant also filed a counter claim seeking partition and separate possession of 50% of the undivided share of land on the basis of the sale deed in his favour with respect to 50% undivided share of land in the suit schedule property. The second defendant claimed that the suit should be dismissed and the counter claim should be allowed. Reply statement by the plaintiffs:
10. The plaintiffs filed a reply statement stating that a second Supplemental Agreement had been entered with the first defendant on 21.01.2015; whereas even prior to that date, on 20.01.2015, the first defendant had conveyed 50% of the land to the second defendant. The plaintiffs therefore claimed that the first defendant had played a fraud on the plaintiffs. The plaintiffs also claimed that they were not aware of the transactions between the first and second defendants. They were neither witnesses to the documents nor were they put on notice about the said transactions. The plaintiffs reiterated that the first and second defendants http://www.judis.nic.in 11 were in collusion with each other. The plaintiffs claimed that the second defendant was not a bona fide purchaser and was attempting to grab the property of the plaintiffs. The plaintiffs also claimed that since the second defendant is not a bona fide purchaser, the claim for partition is not sustainable. The plaintiffs therefore claimed that the counter claim of the second defendant should be dismissed.
Issues:-
11. On the basis of the above pleadings, on 15.04.2019, the following issues were framed:-
“(i) Whether the plaintiffs are entitled to a Decree of declaration that the Sale Deed dated 20.01.2015 is null and void and unenforceable?
(ii) Whether the plaintiffs are entitled for the relief of permanent injunction against the second defendant from alienating and encumbering the suit property?;
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(iii) Whether the plaintiffs are entitled to a decree for permanent injunction against the second defendant, who is the co-owner of the suit property?;
(iv) Whether the second defendant is entitled to the relief of partition by metes and bounds and for allotment of half-share of the suit property as prayed for in the counter claim?;
(v) Whether the plaintiffs are entitled for the relief of declaration that the Sale Deed dated 20.01.2015 executed by the first defendant in favour of the second defendant vide Doc.No.198 of 2015, as null and void and unenforceable in law?;
(vi) Whether the first defendant is entitled to convey his 50% undivided share in the suit schedule property before he complies with the conditions of Joint Development Agreement dated 14.12.2011?;
(vii) Whether the Sale Deed executed by the 1st defendant in favour of the second http://www.judis.nic.in 13 defendant before complying with the conditions of the Joint Development Agreement under clauses 1 to 3 and 5, is valid in law?
(viii) Whether the act of the first defendant in conveying his 50% undivided share of land before paying the entire free money of Rs.65,00,000/- agreed to be paid under Clause 10 of the Joint Development Agreement, is valid in law?;
(ix) Whether the counter claim of the second defendant seeking partition and allotment of his half share in the suit schedule property is maintainable in law?;
and
(x) To what other relief, the parties are entitled to? ” The Trial:-
12. The parties were then invited to adduce evidence. http://www.judis.nic.in 14
13. On the side of the plaintiffs, the first plaintiff P.Shanthi @ Shanthi Bai, was examined as PW-1. She marked Exs. P-1 to P-18. The second defendant Subash Chand Jain examined himself as DW-1. He marked Exs. D-1 to D-3. Ex.P-4 is the Development Agreement entered into between the plaintiffs and the first defendant on 14.12.2011; Ex.P-5 is the General Power of Attorney given by the plaintiffs to the first defendant on 11.05.2012; Ex.P-6 is the planning permission obtained for demolition of the property dated 12.06.2013; Ex.P-8 is the Supplementary Development Agreement dated 05.04.2015; Ex.P-9 is the second Supplementary Development Agreement dated 21.01.2015; Ex.P-11 is the legal notice issued by the plaintiffs to the first defendant dated 20.03.2015; Ex.P-13 dated 14.05.2012 is the encumbrance certificate for the property; Ex.P-14 is the Sale Deed executed by the first defendant in favour of the second defendant dated 20.01.2015; Ex.P-15 is the order in O.P.No. 263 of 2012 dated 23.04.2012; Ex.P-17 and P-18 are Agreements of Sale entered into between the first defendant and the second defendant dated 26.09.2012.
14. On the side of the defendants, Ex.D-1 is the Construction Agreement entered into between the first and second defendants dated 16.06.2012; Ex.D-2 is the legal notice issued on behalf of the second http://www.judis.nic.in 15 defendant dated 04.12.2017 and Ex.D-3 is the reply notice dated 20.12.2017.
Arguments Advanced:
15. Heard arguments advanced by Mr.M.Venkata Krishnan, learned counsel for the plaintiffs and Mr. T.S.Baskaran, learned counsel for the second defendant. As stated, though Mr.B.R.Shankaralingam, Mr.N.Selvarajan and Mr.S.Balajim, learned counsel had entered appearance on behalf of the first defendant, since a conscious decision had been taken to abstain and not to participate in the judicial proceedings, the first defendant did not participate or even try to refute the allegations in plaint.
The first defendant had been set ex-parte.
16. Mr. M. Venkata Krishnan, learned counsel for the plaintiffs traced the title of the property and stated that the first and fourth plaintiffs as the daughter and son of late E.Panchala Naidu had a right to enjoy the property during their life time and thereafter, the property would devolve to their children, who are the second, third, fifth and sixth plaintiffs. He stated that the first plaintiff was a housewife and the fourth plaintiff was working as a driver.
http://www.judis.nic.in They were not well educated. The building was in a 16 dilapidated condition. They wanted to develop the property. They did not have the means. The property roughly measured 32 feet into 104 feet. The road facing length was 32 feet.
17. The learned counsel stated that the first defendant, who claimed to be a reputed builder, had approached the plaintiffs and thereafter an agreement was entered into wherein the first defendant agreed to built eight flats and to hand over four flats to the plaintiffs apart from a sum of Rs.65/- lakhs as free money. It was admitted that a sum of Rs.55/- lakhs out of the promised Rs.65/- lakhs as free money was received. The fourth plaintiff filed O.P.No. 263 of 2012 before this Court seeking permission to deal with the share of his minor sons. An order was also obtained. Demolition and reconstruction permission was also obtained. However, the first defendant did not come forward to construct the flats. He kept delaying. Therefore, a Supplemental Agreement was entered into on 05.04.2014. The construction still did not commence. A second Supplemental Agreement was entered on 21.01.2015. It was later found that one day earlier, the first defendant had already transferred 50% of the undivided share of the second defendant. Learned counsel stated that the first defendant had colluded with the second defendant, who is a stranger and had knocked away the valuable property and the plaintiffs have been put to immense loss. http://www.judis.nic.in 17
18. The learned counsel claimed that the plaintiffs were not aware of the transactions between the first defendant and the second defendant and stated that therefore, the suit has been filed seeking to cancel the said sale deed as vitiated by fraud. He further pointed out that therefore the plea regarding partition put forth by the second defendant should also be rejected.
19. Mr.T.S. Baskaran, learned counsel for the second defendant however stated that the first defendant had approached the second defendant to finance the project and had agreed to convey 50% of the land for valuable consideration of Rs1,04,000/-. The learned counsel stated that at the time of agreement of sale, a sum of Rs.50/- lakhs had also been paid to the first defendant and thereafter, since the balance consideration had also been paid, the first defendant had conveyed 50% of the undivided share of the land to the second defendant. The learned counsel stated that the second defendant was a bona fide purchaser for adequate consideration without notice of the transactions between the plaintiffs and the first defendant. The learned counsel also stated that quite independently the first and second defendants had entered into a construction agreement on http://www.judis.nic.in 18 16.06.2012 for construction of four flats. The learned counsel further stated that in the legal notice issued prior to institution of the suit, they had offered to construct the flats and asked the plaintiffs to come forward for some amicable settlement. He stated that the second defendant was in possession and was the lawful owner of 50% undivided share of the property. The learned counsel stated that as the 50% undivided share holder of the land, the second defendant was entitled to seek partition and separate possession. The learned counsel therefore stated that the counter claim for partition should be allowed and the suit relief for cancellation of the sale deed should be dismissed.
Issue Nos. (i) (v) (vi) (vii) & (viii):
20. I have carefully considered the arguments advanced and the materials on record.
21. It must be stated that at first blush, the right of the plaintiffs to seek cancellation of a sale deed executed by their power of attorney agent was doubted. However, a closure examination of the oral and documentary http://www.judis.nic.in 19 evidence, made it evident that the plaintiffs had initially entered into a Development Agreement with the first defendant on 14.12.2011 and among other conditions in the Development Agreement, the plaintiffs were placed under an obligation to obtain permission from the Court to deal with the shares of the minor children of the fourth plaintiff. Necessary petition under the Guardianship and Wards Act was also filed before the Original Side of the Madras High Court and orders granting such permission was also obtained on 23.04.2012. It was only thereafter that the first defendant was appointed as a Power of Attorney agent on 11.05.2012. The first defendant was then armed with not only the rights granted under the Power of Attorney but also with an order of the Court to deal with the property.
However, the order of the Court to deal with the property was granted only because the first defendant had undertaken to develop the property and to uphold the interest of the minors by abiding with the terms and conditions of the Development Agreement. When he breached the terms and conditions of the Development Agreement by not putting up any construction, naturally, the plaintiffs' right over the property had been directly infringed by the first defendant by taking undue advantage as their agents, when he conveyed 50% of the undivided share of land to the second defendant. When these facts were discerned from the oral and documentary http://www.judis.nic.in 20 evidence, it became clear that the plaintiffs can lay and maintain a suit for cancellation of the sale deed executed by the first defendant.
22. Section 31 of the Specific Relief Act, 1963 is as follows:
“31. When cancellation may be ordered.- (1) Any person against whom a written instrument is void or voidable, and who has reasonable apprehension that such instrument, if left outstanding may cause him serious injury, may sue to have it adjudged void or voidable; and the Court may, in its discretion, so adjudge it and order it to be delivered up and cancelled.
(2) If the instrument has been registered under the Indian Registration Act, 1908 (16 of 1908), the Court shall also send a copy of its decree to the officer in whose office the instrument has been so registered; and such officer shall note on the copy of the instrument contained in his books the fact of its cancellation.”
23. A learned Single Judge of this Court had occasion to examine whether a plaintiff/principal should seek a relief of declaration that a document is null and void or whether should seek a relief to cancel a sale deed executed by a power of attorney agent.
http://www.judis.nic.in In C.R.P.(PD)(MD).No. 21 2484 of 2010 [ Khader Meera Muthalip and others Vs. C.Periyakaruppan and others dated 20.06.2017, [http://indiankanoon.org/doc/109934345] a suit was filed for the relief of declaration that a sale deed dated 07.11.2006 executed by the power of attorney agent /second defendant in favour of the first defendant was null and void. The plaint was returned and the Court had observed that the relief of declaration of a document is null and void to which the power agent is a party is not sustainable. The Court had stated that the plaintiff/principal ought to have prayed for cancellation of the sale deed. This stand was upheld in the Civil Revision Petition by the learned Single Judge of this Court in the Judgement referred supra.
24. In this connection, Section 226 of the Indian Contract Act 1872 can be referred to with advantage:-
“226. Enforcement and consequences of agent’s contracts.—Contracts entered into through an agent, and obligations arising from acts done by an agent, may be enforced in the same manner, and will have the same legal consequences as if the contracts had been entered into the acts done by the principal in person. —Contracts entered into http://www.judis.nic.in 22 through an agent, and obligations arising from acts done by an agent, may be enforced in the same manner, and will have the same legal consequences as if the contracts had been entered into the acts done by the principal in person." Illustrations
(a) A buys goods from B, knowing that he is an agent for their sale, but not knowing who is the principal. B’s principal is the person entitled to claim from A the price of the goods, and A cannot, in a suit by the principal, set-off against that claim a debt due to himself from B. (a) A buys goods from B, knowing that he is an agent for their sale, but not knowing who is the principal. B’s principal is the person entitled to claim from A the price of the goods, and A cannot, in a suit by the principal, set-
off against that claim a debt due to himself from B."
(b) A, being B’s agent, with authority to receive money on his behalf, receives from C a sum of money due to B. C is discharged of his obligation to pay the sum in question to B. (b) A, being B’s agent, with authority to receive money on his behalf, receives from C a sum of money due to B. C is discharged of his obligation to pay the sum in question to B."
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25. It is seen that a contract entered through an agent will have the same legal consequence as if the contract had been entered into by the principal. The learned Single Judge very specifically stated as follows:-
“14. In this case also, the plaintiffs are parties to the sale deed since it was executed by their power agent when the power of attorney deed was in force. If the plaintiffs are aggrieved by the conduct of their agent and want to undo the act of their agent, they have to necessarily seek the relief to cancel the sale deed. ”
26. Thus the right of the plaintiffs to seek cancellation of the document in the instant case is a right, which, provided the facts and circumstances are established, can be granted by the Court.
27. Order VI Rule 4 CPC is as follows:-
“4. Particulars to be given where necessary.- In all cases in which the party http://www.judis.nic.in pleading relies on any misrepresentation, fraud, 24 breach of trust, wilful default, or undue influence, and in all other cases in which particulars may be necessary beyond such as are exemplified in the forms aforesaid, particulars (with dates and items if necessary) shall be stated in the pleading.”
28. In paragraph 20 of the plaint, after setting out the facts in detail, the plaintiffs have stated as follows:-
“20. The plaintiffs further submit that the sale deed has been brought out to exhibit the fraudulent act played by the first defendant in active collusion with the second defendant to deprive the plaintiffs of their valuable property. The said sale deed dated 20.01.2015 is ab initio void and not binding on the plaintiffs. The plaintiffs have taken immediate steps after coming to know of the fraud played by the defendants 1 and 2 for cancellation of the sale deed.
The sale deed therefore on the face of it is bogus, fabricated and sham and nominal document and is not valid and binding on the plaintiffs. The plaintiffs are still continues to be the absolute owners of the suit property. The plaintiffs are also in complete effective possession of the schedule mentioned http://www.judis.nic.in property. Left with no other alternative, but to 25 approach this Hon'ble High Court to set aside the sale deed dated 20.01.2015 executed by the first defendant to and in favour of the second defendant herein.”
29. In paragraph 7 of the Reply Statement, the plaintiffs have stated as follows:-
“7. In fact, the first defendant had cunningly obtained power of attorney and sold the property to the second defendant and subsequently, came with a supplementary agreement for extension without disclosing the fact that he has already executed sale deed in respect of 50% UDS in favour of the second defendant.”
30. In paragraph 9 of the Reply Statement, it had been stated as follows:-
“9. .................. It is pertinent to note that the power of attorney was executed in the year 2012 and the alleged sale transaction was taken place in the year 2015. In such a http://www.judis.nic.in 26 case, the life certificate of the principals should have been enclosed along with the sale deed, to ensure that the principals are alive. Whereas the alleged sale deed does not contained any such life certificate. Hence, the sale in favour of the second defendant by the first defendant obviously reveals the fact that both the first and second defendant in collusion with each other and influenced the registering authority to register the sale deed without production of life certificate. Hence, both the defendants have committed fraud on the plaintiffs.”
31. The plaint and the reply statement contains the requisite details relating to the acts of fraud as claimed by the plaintiffs to have been practised on them by the two defendants.
32. The issues now under consideration relate to examination of the sale deed executed by the first defendant in favour of the second defendant dated 20.01.2015 and registered as Document No. 198/2015 in the Office of the Sub Registrar, Purasawalkam. The suit had been filed by the plaintiffs seeking a declaration that the said sale deed is null and void and unenforceable and not valid in law and not binding on the plaintiffs. The http://www.judis.nic.in 27 property surrounding which the document had been registered is land and building measuring 3380 sq.ft., in Old No. 14, New No.16, New Manickm Naicker Street, Purasawalkam, Chennai – 600 007. The said property originally belonged to E.Panchala Naidu, who had purchased it from Rajambal Arputham under sale deed dated 29.07.1949 registered as Document No. 1556 of 1949 in the Office of the Sub Registrar, West Madras. The first plaintiff Shanthi @ P.Shanthi Bai and the fourth plaintiff P.Loganathan are the daughter and son of E.Panchala Naidu. The second and third plaintiffs are the daughters of the first plaintiff and the fourth and fifth plaintiffs are the sons of the fourth plaintiff.
33. E.Panchala Naidu executed a Will on 22.01.1970 bequeathing his properties to his two wives Seetha @ Seethammal and Meenakshi @ Meenakshiammal and also to his daughter Shanthi (first plaintiff) and son Loganathan (fourth plaintiff) and also his sister Adhilakshmi with rights for enjoyment and thereafter to be devolved absolutely to his grandchildren, namely, second, third, fifth and sixth plaintiffs. E.Panchala Naidu died on 23.01.1970. The Will was probated by this Court by order dated 07.12.1977 in T.O.S.No. 11 of 1970. Seetha @ Seethammal died on 08.01.1974.
http://www.judis.nic.in Meenakshi @ Meenakshi Ammal died on 05.09.2006. 28 Adhilakshmi also died in 2006. The plaintiffs therefore claimed that they are the absolute owners of the property. There were six tenants residing in the said property. The building was very old and dilapidated. The plaintiffs did not have the means to demolish and reconstruct the building. They wanted to develop the property into flats. It is to be mentioned that the property measures 32 feet facing the road side and 104 feet across. The first defendant had held out that he was a reputed builder. He offered to demolish the existing building and develop the property by building eight flats. He further offered that four flats shall be allotted to the plaintiffs and that he will retain four flats. Apart from that he also offered to pay a sum of Rs.65/- lakhs as free money to the plaintiffs. In view of this arrangement, a Development Agreement dated 14.12.2011 was entered into between the plaintiff and the first defendant.
34. Clause 1 of the Development Agreement stated that in consideration of the first defendant constructing, at his cost, and handing over 50% of the built up area in the building to be constructed, the plaintiffs had agreed to convey to the first defendant 50% undivided share of the land for the proposed construction which would be retained by the developer. The Clause 1 is as follows:-
http://www.judis.nic.in 29 “Clause 1:- In consideration of DEVELOPER constructing at his cost and handing over 50% of built up area in the building to be constructed in the land more fully described in the Schedule-A hereunder, the OWNERS agree to convey to the DEVELOPER and/or his nominees the 50% undivided share of land for the proposed construction agreed to be retained by the DEVELOPER in the land more fully described in Schedule-A hereunder.
The DEVELOPER further agrees to pay the OWNERS, a sum of Rs.65,00,000/- (Rupees Sixty Five Lakhs only) as free money in the following manner.
Rs.15,00,000/- (Rupees Fifteen Lakhs only) paid on this day by means of two cheques bearing Nos. 338287 & 338288 drawn on PNB Bank, Teynampet Branch, Chennai, favouring the first and fourth owners, for a sum of Rs.7,50,000/- (Rupees Seven Lakhs Fifty Thousand only) the receipt of which sum the OWNERS do hereby acknowledge.
Rs.50,00,000/- (Rupees Fifty Lakhs only) shall be paid on obtaining approvals for http://www.judis.nic.in 30 construction and after obtaining necessary permission from the Court for the sale of minors (Master Dinesh and Master Yuvaraj) share in the property more fully described in the Schedule A hereunder.”
35. A perusal and analysis of the above leads to the conclusion that the plaintiffs had agreed to convey to the first defendant and/or his nominees 50% undivided share of the land and the consideration for such handing over of the land was that the first defendant should construct at his cost apartments and handover 50% of the built up area to the plaintiff. Thus 50% undivided share of the land was handed over to the first defendant only subject to construction of the building over the said land by the first defendant. The nature of construction was also agreed between the parties. It was eight flats. The property was to be divided into two parts, namely, a front portion and a back portion. In the front portion, the entire ground floor would be allotted for car parking and the area in this car parking area will be shared equally by the plaintiffs and the first defendant.
36. Over and above the car parking, two flats were to be constructed in the first floor and two flats were to be constructed in the second floor. In http://www.judis.nic.in 31 the back portion, two flats were to be constructed in the ground flour and two flats were to be constructed in the first floor. The two flats in the first floor in the front portion and the two flats in the ground floor in the back portion were to be allotted to the plaintiffs. The two flats in the second floor in the front portion and the two flats in the first floor of the back portion were to be allotted to the first defendant. The first defendant also had the responsibility to apply for demolishing the existing building and obtaining sanction plan for construction of the new building. It was agreed that the first defendant shall commence construction after obtaining sanction from the authorities and after permission from the Court had been obtained for dealing with the shares of the minors, namely, the sons of the fourth plaintiff. It was also agreed that the plaintiffs shall execute and register sale deeds in respect of the proportionate undivided share of the land with respect to the buildings to be constructed and retained by the first defendant in favour of the first defendant and/or his nominees. Therefore, when the ground floor of the front portion is to be retained as a car parking area to be used in common and thereafter the area of the remaining undivided share of land is to be proportionate to the built up area, it cannot be said the first defendant had obtained a right over 50% of the available land.
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37. In other words, the total area of 3380 sq.ft., is to be divided after allotting the common area for the parking and thereafter the undivided share of land is to be calculated in proportionate to the built up area of the flats which are to be allotted to the plaintiffs and which are retained by the first defendant. This would imply that there cannot be and there was no intention for direct division in two halves of the existing land. The understanding between the parties was that the front portion land would be used in common by the plaintiffs and the first defendant and further the first defendant is to put up construction at his cost.
38. The plaintiffs also had an obligation to obtain permission from the Court to deal with the existing shares of the minors/sons of the fourth plaintiff. The amount mentioned in Clause 1 as Rs.65/- lakhs has been categorised only as free money. It is not an amount paid by the first defendant towards the cost of land handed over to him. This is an amount to be paid by the first defendant, since, he had been granted consent to construct flats and market the same over land though he was not the owner of the said land. Therefore, when the first defendant, who had no pre- existing right, title or interest over the land had offered to construct flats, http://www.judis.nic.in 33 then as a developer, even without being the owner of the land, he was under
obligation to build flats and for building the flats, the owners had handed over 50% of the land. The first defendant also had offered to pay 'free' money which would be commensurate to the profits which he would earn by selling the four flats allotted to him. This amount has no relation to the undivided 50% of the land handed over to him.
39. As stated above, there were also six tenants residing in the property. The plaintiffs took steps to vacate all the tenants by paying compensation. The existing building was also demolished. The plan for construction of flats was also obtained. The plaintiffs had a further obligation to obtain orders from the Court to deal with the shares of the minors. For this purpose, the fourth plaintiff P.Loganathan filed O.P.No. 263 of 2012 before this Court under Sections 3, 7 to 10 and 29 of the Guardian and Wards Act 1890 read with Order XXI Rules 2 and 3 of the High Court Original Side Rules. The fifth plaintiff L.Dinesh was aged 14 years and the sixth plaintiff L.Yuvaraj, was aged 9 years at that time.
40. In O.P.No. 263 of 2012, it was stated that the petitioner/Loganathan/fourth plaintiff and his sister/Shanthi / first plaintiff http://www.judis.nic.in 34 had entered into an agreement with Dinakaran, Proprietor, Green Avenue Homes and Gardens/first defendant on 14.12.2011. It was further stated as follows:-
“9. The petitioner states that his children, the minors, and his sister's children will become absolute owners of a valuable asset subject only to the life interest of the petitioner and his sister. Out of the four residential units allotted to the share of the owners, two will be of a constructed area of 750 sq.ft., each and two of a constructed area of 850 sq.ft., each. Two of the units will be situated in the first floor of the first block and the remaining two in the ground floor of the second block. All the units will have individual car parkings. The Builder is also paying an initial free money of Rs.15 lakhs.
After construction the minors along with S.Yogalakshmi and S.Karpagam will be absolutely entitled to 50% undivided share in the land which will be retained by them and the remaining 50% undivided share is to be alienated to the Builder or to his nominees commensurate with the four units allotted to the share of the builder. The construction is to be completed within a period of 15 months in accordance with the duly approved sanctioned plan. The original documents shall remain with the http://www.judis.nic.in 35 petitioner and his sister.''
41. In the petition, the relief was sought that Loganathan/petitioner/fourth plaintiff herein be permitted to develop the property in the manner stated above and in terms of the agreement dated 14.12.2011 entered into with the first defendant herein/Dhinakaran, Proprietor, Green Avenue Homes and Gardens.
42. Order XIII Rule 10 of the Code of Civil Procedure provides for production of records in relation to any other suit or proceedings even on the own motion of the Court.
43. Rule 74 of the Civil Rules of Practice has to be read in conjunction with Order XIII Rule 10 of CPC.
44. A perusal of the records in O.P.No. 263 of 2012 reveal that it was first posted before the Court on 11.04.2012 wherein it was directed to be provided before the Master for recording of evidence on 16.04.2012. On 16.04.2012, the petitioner/Loganathan/first plaintiff herein and his witness Dinakaran/first defendant herein were present and were examined as PWs1 http://www.judis.nic.in 36 and 2. Exs. P1 to P3 were marked. Ex.P3 was the Original Development Agreement dated 14.12.2011.
45. The first defendant herein Dhinakaran filed his proof affidavit. In his proof affidavit, he stated as follows:-
“1. I am the Sole Proprietor of Green Avenue Homes and Gardens, having office at No.117, Raheja Complex, Omega Wing, Ground Floor, Anna Salai, Chennai – 600 002.
2. I state that I am a reputed Builder in the city of Chennai having carried out various developmental and housing projects. I state that the petitioner herein has been examined as PW-1 and Exhibit P-7 being the Development Agreement entered into with me on 14.12.2011 has also been spoken about by the petitioner. I state that taking into consideration the location of the property, it is feasible to construct only eight flats in all for which I have already applied for http://www.judis.nic.in 37 planning permission. By construction of the said eight flats, the permissible floor space index will be achieved. In the light of the cost involved in development of the property in relation to the value of the land, the ratio of share has been fixed at 50% for the owners and 50% for the Developer namely, myself. I state that the terms of development are the best possible and will be most beneficial to the minors.
3. I state that the property is already vacant and ready for demolition and development. I have also applied for sanction of the demolition and construction. I undertake to develop the property in the best manner possible and complete the development strictly in terms of the agreement within the time period of 15 months stipulated from the date of commencing of demolition.
4. I therefore pray that the petition, as filed by the father of the minor children, be allowed as prayed for.” http://www.judis.nic.in 38
46. In his proof affidavit, P.Loganathan stated as follows:-
“6. I state that my sister and I are not possessed of requisite funds to demolish the existing building and effect fresh construction thereon. In such circumstances, we had negotiated with a reputed builder, Mr.Dhinakaran, Proprietor, Green Avenue Homes and Gardens, having office at No.117, Raheja Complex, Omega Wing, Ground floor, Anna Salai, Chennai – 600 002, for joint development and improvement of the property by effecting construction of flats thereon. After due negotiations, it has been proposed to construct a flat complex of two blocks and each block is to consist of four flats. Out of the eight flats to be constructed, four flats are allotted to the share of the builder towards the cost of the development incurred by him and the remaining four flats are to be allotted to the share of the owners namely, my sister, myself and our four children. I state that by such development our family including my minor sons will be immensely benefitted as we will in all become the full and absolute owners of four flats, that is http://www.judis.nic.in 39 two flats in the first floor in the front block and two flats in the ground floor on the rear block. The front block is to consist of first and second floors, the ground floor to be utilised as car park. The rear block is to consist of ground plus first floor. The promoter will be entitled to two flats in the second floor in the front block and two flats in the first floor in the rear block. We have accordingly entered into a Development Agreement with the said Mr.Dhinakaran on 14.12.2011 and the said agreement is marked as Exhibit P-7.
7. I state that the daughters of my sister and my minor sons will become the absolute owners of a valuable asset only subject to the life estate of my sister and myself. The flats to be constructed will be of an extent of 750 square feet each (two flats) and 850 square feet each (two flats). All the flats will have individual car parkings.
8. I state that initial free money of Rs.7.5 laksh each totaling to Rs.15 lakhs was paid to my sister and myself.
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9. I state that by reason of the said development, 50% of the undivided share in the land will have to be sold to the builder or his nominee/nominees towards the builder's share of four flats and the remaining 50% undivided share in the land will be retained by our family. The construction is to be completed within a period of 15 months in accordance with the duly approved sanctioned plan. The original documents of title pertaining to the property shall be retained by us.”
47. On appreciation of the evidence recorded, which evidence had been tendered under oath, the learned Single Judge observed that there was nothing on record to show any adverse interest and granted permission to the petitioner/Loganathan to alienate the share of the minors in the 50% undivided share in the lands which measured to a total extent of 3380 sq.ft. Such permission was granted only because the first defendant herein had agreed under oath to develop the properties. If there was no such undertaking to develop the properties, the Court would never have granted permission to convey 50% of the undivided share of land to the first defendant. Thus the entire basis for conveying 50% of the undivided share http://www.judis.nic.in 41 of the land to the first defendant was the construction of flats in accordance with the Development Agreement dated 14.11.2011. If the flats are not constructed, then it would amount to fraud played by the first defendant and also unlawful gain by the first defendant since he was vested, as power agent, with land, free of cost, without payment of any consideration for the land. The consideration for the 50% undivided share of the land which he has to pay was to develop and build flats. It defies logic to conclude that the first defendant, who was not at all the owner of any portion of the land and was a stranger to the family of the plaintiffs would get 50% of the land without parting with a single rupee as consideration towards the cost of the land or without constructing and developing them into flats at his cost. The other amount mentioned in the agreement, namely, free money, was independent of the directly related issues, namely conveying 50% of the undivided share of the land only because the first defendant had agreed to develop flats over the land. That is why it was termed 'free' money in the Development Agreement. There was no condition attached towards its payment.
48. The first defendant did not put up even one square foot of construction.
http://www.judis.nic.in Since the first defendant had undertaken to obtain the 42 demolition plan and sanction plan for the building, the plaintiffs also executed a General Power of Attorney on 11.05.2012. This had been marked as Ex.P5. It is to be noted that this was not executed on the date when the Development Agreement was executed. This power of attorney was executed only after orders were passed in O.P.No. 263 of 2012 on 23.04.2012. Therefore, the plaintiffs performed their part of the agreement, namely to obtain Court permission to deal with the share of the minors. The Court granted this permission to convey the land, in the interest of the two minors, namely, fifth and sixth plaintiffs only because of the undertaking given by the first defendant to construct flats as agreed under the Development Agreement dated 14.12.2011. If the land had been conveyed and if the first defendant had failed to put up any construction as agreed by them, then any further act done by him is a direct breach of the undertaking given before the Court to develop the lands. After obtaining the orders of the Court, the plaintiffs executed Ex.P5 on 11.05.2012. The Power of Attorney has to be read as a whole. The first defendant had agreed to act as an agent of the plaintiffs to do not just a single act but all the acts mentioned in the Power of Attorney. He had agreed to negotiate and fix the sale price for conveying undivided share of the land in whole or in several parts and to enter into agreements of sale and to receive sale http://www.judis.nic.in 43 advance and total sale consideration by way of cheques in full and final settlement. This amount which he receives towards negotiating and selling 50% undivided share conveyed to him will have to be utilised by him to construct flats as agreed with the plaintiffs. After conveying the land, if he did not his perform his part of the agency, then any act done by him would be in violation of the terms of the agency. After entering into agreements of sale either in whole or in part and after receiving consideration, the agent/first defendant was also authorised to enter into a sale deed with respect to the lands for which he had entered into an agreement of sale. For this purpose, he was authorised to appear before the registering authority for and on behalf of the plaintiffs herein. Thereafter, he was also authorised to represent before every other authority and sign necessary applications with respect to the development and management of the property. He was also under obligation to apply for electricity connection, water and swearage connection and also to make necessary payments for the charges required for such connection. He was also authorised to obtain demolition plan to demolish the existing superstructure and obtain planning permission to effect construction in the property from the Corporation of Chennai and Chennai Metropolitan Development Authority. He was also authorised to appear before the Revenue Authorities with respect to transfer http://www.judis.nic.in 44 or issue of patta and sign necessary papers. He was finally authorised to do all such further acts or deeds in relation to the schedule mentioned property.
49. He was never authorised to enter into any construction agent with any third party stages. For executing this power of attorney whereby the first defendant had been granted absolute powers in trust by the plaintiffs, the first defendant did not pay any consideration. The consideration which he was expected to pay was in the form of putting up construction of flats at his cost. For construction of the flats he can generate money by entering into agreements of sale with prospective purchasers of the flats by conveying the undivided share of land proportionate to the square area of flats and thereafter, handing over four flats to the plaintiffs as agreed under the Development Agreement Ex.P-4. It is thus seen that both Ex.P4 and Ex.P5 are connected to and related to the construction of flats as agreed by the first defendant. Every act done by him must be in furtherance of the object of constructing flats as agreed by him. If he violates this object then every act done by him will be examined with scrutiny to determine whether they were mala fide or bona fide.
50. Now let us examine what the first defendant actually did. http://www.judis.nic.in 45
51. Immediately after obtaining the General Power of Attorney Ex.P5 dated 11.05.2012 the first defendant entered into an Agreement of Sale with the second defendant on 15.06.2012, Ex.P-6. He then entered into a construction agreement with the second defendant on 16.06.2012, Ex.D1. He had no authority to do so. In the Agreement of Sale, acting as the Power of Attorney Agent of the plaintiffs herein, the first defendant stated that the fourth plaintiff had obtained permission to sell the share of the minors from the Madras High Court in O.P.No. 263 of 2012 and thereafter, the plaintiffs herein had executed a Power of Attorney on 11.05.2012 authorising him (first defendant) to sell 50% of the undivided share of land and therefore he had by the said Agreement of Sale offered to sell 50% undivided share of land to the second defendant for a total consideration of Rs.1,01,40,000/-. Towards this total sale consideration, the first defendant had received an advance of Rs.50/- lakhs and the second defendant undertook to pay the balance of Rs.51,40,000/- within a period of 12 months. There was no mention that on receipt of the advance of Rs.50/- lakhs, the first defendant would put up construction as agreed by him with the plaintiffs. Only in the preamble portion, it was stated that the first and fourth plaintiffs had decided to develop the schedule property and had entered into a Memorandum of Agreement on 14.12.2011 with the first http://www.judis.nic.in 46 defendant to develop the 'A' schedule property for the welfare of the children. When it was specifically stated that there was an existing agreement for development of property, then the first defendant was under
obligation to advertise and sell the land in proportion to the flats, which are to be constructed. But fraud and collusion are writ large in the faces of the first and second defendants, as instead of constructing flats on behalf of the plaintiffs, the first defendant, under Ex.D1 agreed to construct flats on behalf of the second defendant. Again, it must be noted that the ground floor in the front portion was to be retained as a car parking area with equal rights of possession/ownership between the plaintiffs and the first defendant. Thereafter flats were to be constructed in the back portion and over the car parking area. Therefore, the land which is available for conveyance is only proportionate to the building which was agreed to be put up and conveyed. It is clear that the first defendant had betrayed the trust placed on him by the plaintiffs.
52. The first defendant actually appeared in Court in response to the notice and Mr.B.R.Shankaralingam, Mr.N.Selvarajan and Mr.S.Balaji, learned counsels had also filed vakalat on his behalf. He was then set ex- http://www.judis.nic.in 47 parte. It must be pointed out that every advocate files vakalath to appear in Court proceedings. If after filing vakalat, he chooses to abstain from appearing in Court, then he must inform the Court about the same and more importantly inform his client that though he is an advocate, he probably has no habit of attending courts or is not prepared to attend to Court hearings. The vakalath authorises an advocate to appear in Court, not to abstain from appearance.
53. Therefore even though the first defendant has been set ex-parte, I hold that since the vakalath given by him to Mr.B.R.Shankaralingam, Mr.N.Selvarajan and Mr.S.Balaji, is effectively still in force, orders of this Court will bind the first defendant. It is to be taken that he had constructive notice of all the proceedings. In Black's Law Dictionary 10 th Edition “constructive notice” has been defined as follows:-
“Constructive notice. Notice arising by presumption of law from the existence of facts and circumstances that a party had a duty to take notice of, such as a registered deed or a pending law suit; notice presumed by law to have been acquired by a person and thus imputed to that person. - Also termed legal http://www.judis.nic.in 48 notice.”
54. It is thus seen that a presumption of law can be drawn by the availability of a vakalat filed on behalf of the first defendant which had not been withdrawn by the Advocates, Mr.B.R.Shankaralingam, Mr.N.Selvarajan and Mr.S.Balaji. It is to be presumed by law that notice has been acquired by the first defendant about the existing judicial proceedings and direct knowledge about the further proceedings, including the order setting him exparte, the evidence recorded during trial and the oral and written arguments advanced can be imputed to him. Mere deliberate abstinence from Court proceedings will not absolve the first defendant from suffering a decree of the Court, on findings rendered on merit and on examining the agreement entered into by him and his own subsequent fraudulent conduct and collusion with the second defendant.
55. The first defendant, as Power of Attorney, as stated, sold the undivided share of 50% of the land to the second defendant under sale deed dated 20.01.2015. The second defendant tendered evidence as DW-1. Since the first defendant was not able to adhere to the time schedule fixed under Ex.P4 Development Agreement dated 14.12.2011 a Supplemental Agreement was entered into between the plaintiffs and the first defendant on 05.04.2014 under Ex.P8 and a second Supplemental Development http://www.judis.nic.in 49 Agreement was entered into on 21.01.2015, Ex.P9. The extreme malafide condcut of the first defendant stands exposed because just one day to this second Supplemental Development Agreement undertaking to develop the property on behalf of the plaintiffs, he had actually sold the entire 50% undivided share of the land to the second defendant on 20.01.2015, under Ex.P14. He still entered into a second Supplemental Development agreement on the very next day with the plaintiffs. He must realise that some morality should be adhered to even when he practices fraud. Thus on 21.01.2015, the first defendant had no right or authority to develop the property. The execution of the second Supplemental Agreement is a fraud played by the defendants on the plaintiffs.
56. The conduct of the second defendant stood exposed during cross examination.
“Q: Do you know that the agreement for sale will not confer any right in the immovable property except to enforce the same?
A: I have purchased so many properties by way of entering sale agreement. To purchase the property I entered into sale agreement.
Q: Till date how many properties have you purchased by following this procedure?
http://www.judis.nic.in A: I purchased about 15 properties including 50 Bank Auction and also through SARFAESI Act.
Q: You are well aware of the requirements of the real estate transaction?
A: I am not doing real estate business, I just wanted to invest money in purchasing the properties.
Q: Do you have any other transactions with the first defendant apart from Ex.P6?
A: I do not remember.
Q: This is Encumbrance Certificate relating to the property situated at MRC Nagar belonging to the first defendant. It refers to some transactions between you and the first defendant. The entry No.2 in the said encumbrance certificate refers to an agreement between D.Dhinakaran the first defendant and one Subash Chand Jain. The Subash Chand Jain referred in the said certificate are you?
A: Yes. I am the Subash Chand Jain referred in the said certificate but this property is not related to the suit property. The said certificate is marked as Ex.P16.
Q: Item Nos. 2, 3, 8 in the said encumbrance certificate refers to some transactions between you and the first defendant?
A: Please explain me the details of the items http://www.judis.nic.in 51 referred in Ex.P16.
Q: The Serial No.2 in Ex.P16 refers to an agreement for sale between you and the first defendant dated 26.09.2012?
A: If the deed sale agreement is shown to me I can answer.
Q: Certified copy of the sale agreement dated 26.09.2012 is shown to the witness, Is this the sale agreement entered by you with the first defendant?
A: Yes. This is the agreement mentioned in Ex.P16. The said agreement is marked as Ex.P17.
Q: In the Serial No.3 in Ex.P16 refers to another agreement for sale entered by you with the first defendant on 26.09.2012 bearing Doc.No.2139/2012, is this the sale agreement entered by you?
A: Yes. The said agreement is marked Ex.P18.”
57. In the beginning the second defendant stated that he did not remember whether he had any other transactions with the first defendant. This answer that he did not remember is false as he had earlier transactions with the first defendant in all of which the first defendant had entered into agreements of sale with the second defendant.
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58. The encumbrance certificate Ex.P16 shows that the first and second defendant had an actual working business relationship with respect to land dealings. There was also an earlier agreement of sale dated 26.09.2012. When these facts were pointed out, the second defendant asked for a copy of the agreement of sale. The copy of the agreement of sale was immediately shown to him and marked as Ex.P17 and only then did he admit the transaction. Another agreement of sale was marked as Ex.P18. It is very clear that the first defendant is actually an agent of the second defendant, and both can be literally termed as land grabbers.
59. The following facts therefore emerge from the above discussion:-
(1) The plaintiffs were enticed into entering into a Development Agreement by the first defendant;
(2) The plaintiffs bona fide obtained permission from the Court to deal with the share of the minors;
(3) The first defendant also tendered evidence before the Court that he would develop the land;
(4) He did not develop the land, he did not even build even one square http://www.judis.nic.in 53 foot of constructed area;
(5) After obtaining Court permission, the plaintiffs also granted a Power of Attorney to the first defendant;
(6) With the help of the Power of Attorney in which there was a composite series of acts to be done by the first defendant, the only act which the first defendant did was to convey the 50% undivided and to the second defendant.
60. Fraud is writ large directly on that conveyance, I have no hesitation in setting it aside.
61. The sale deed executed by the first defendant suffers from lack of bona fide as it was in direct violation of the undertaking given to the plaintiffs, given to the Court and I hold it was a direct attempt to grab the land of the plaintiffs. The sale deed has to be set aside and is accordingly set aside.
62. The learned counsel for the second defendant placed reliance on a Judgment delivered by me and reported in 2017 (5) CTC 369 http://www.judis.nic.in 54 [B.R.Srinivasa Rao and another Vs. Dr.B.R.Shankar and others] which had also been affirmed in Appeal, which was reported in 2019 (4) CTC 385 [Dr.B.R.Shankar and Others Vs. B.R.Srinivasa Rao and another]. The learned counsel stated that in that case, I taken a view that a document which has been registered cannot be cancelled.
63. I would only place reliance on the interpretation clause in the Indian Evidence Act 1872 relating to a 'fact in issue' which means and includes any fact from which either by itself or in connection with other facts, existence, or non existence, of any right or liability is asserted or denied in any suit or proceeding.
64. Naturally the evidence recorded in that particular suit will have to be analysed. Further a 'fact' is said to be 'proved' when under the circumstances of that particular case, a Court either believes it to exist or considers its existence probable. Similarly a 'fact' is said to be 'disproved' when again only under the circumstances of that particular case, a Court believes that the fact does not exist or does not consider its existence probable.
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65. The inference is that the pleadings and evidence in each case will have to be examined, particularly when a document is sought to be cancelled on the ground of fraud and misrepresentation.
66. In Meghmala Vs. G.Narasimha Reddy reported in (2010) 8 SCC 383, the Hon'ble Supreme Court had, with reference to fraud and collusion stated as follows:-
30. In Shrisht Dhawan v. Shaw Bros. [(1992) 1 SCC 534 : AIR 1992 SC 1555] it has been held as under: (SCC p. 553, para 20) “20. Fraud and collusion vitiate even the most solemn proceedings in any civilised system of jurisprudence. It is a concept descriptive of human conduct.”
31. In United India Insurance Co. Ltd. v.
Rajendra Singh [(2000) 3 SCC 581 : 2000 SCC (Cri) 726 : AIR 2000 SC 1165] this Court observed that “Fraud and justice never dwell together” (fraus et jus nunquam cohabitant) and it is a http://www.judis.nic.in 56 pristine maxim which has never lost its temper over all these centuries.
32. The ratio laid down by this Court in various cases is that dishonesty should not be permitted to bear the fruit and benefit to the persons who played fraud or made misrepresentation and in such circumstances the Court should not perpetuate the fraud. (See Vizianagaram Social Welfare Residential School Society v. M. Tripura Sundari Devi [(1990) 3 SCC 655 : 1990 SCC (L&S) 520 :
(1990) 14 ATC 766] ,Union of India v. M. Bhaskaran [1995 Supp (4) SCC 100 : 1996 SCC (L&S) 162 : (1996) 32 ATC 94], Kendriya Vidyalaya Sangathan v. Girdharilal Yadav [(2004) 6 SCC 325 : 2005 SCC (L&S) 785] , State of Maharashtra v. Ravi Prakash Babulalsing Parmar [(2007) 1 SCC 80 : (2007) 1 SCC (L&S) 5] ,Himadri Chemicals Industries Ltd. v. Coal Tar Refining Co. [(2007) 8 SCC 110 : AIR 2007 SC 2798] and Mohd. Ibrahim v. State of Bihar [(2009) 8 SCC 751 : (2009) 3 SCC (Cri) 929] .)
33. Fraud is an intrinsic, collateral act, and fraud of an egregious nature would vitiate the most solemn proceedings of courts of justice. Fraud is an act of deliberate deception with a design to http://www.judis.nic.in 57 secure something, which is otherwise not due. The expression “fraud” involves two elements, deceit and injury to the person deceived. It is a cheating intended to get an advantage. [Vide Vimla (Dr.) v. Delhi Admn. [AIR 1963 SC 1572 : (1963) 2 Cri LJ 434] , Indian Bank v. Satyam Fibres (India) (P) Ltd. [(1996) 5 SCC 550] , State of A.P. v T. Suryachandra Rao [(2005) 6 SCC 149 : AIR 2005 SC 3110] , K.D. Sharma v. SAIL [(2008) 12 SCC 481] and Central Bank of India v. Madhulika Guruprasad Dahir [(2008) 13 SCC 170 : (2009) 1 SCC (L&S) 272] .]
34. An act of fraud on court is always viewed seriously. A collusion or conspiracy with a view to deprive the rights of the others in relation to a property would render the transaction void ab initio. Fraud and deception are synonymous.
Although in a given case a deception may not amount to fraud, fraud is anathema to all equitable principles and any affair tainted with fraud cannot be perpetuated or saved by the application of any equitable doctrine including res judicata. Fraud is proved when it is shown that a false representation has been made (i) knowingly, or (ii) without belief in its truth, or (iii) recklessly, careless whether it be http://www.judis.nic.in 58 true or false. Suppression of a material document would also amount to a fraud on the court. (Vide S.P. Chengalvaraya Naidu [(1994) 1 SCC 1 : AIR 1994 SC 853] , Gowrishankar v. Joshi Amba Shankar Family Trust [(1996) 3 SCC 310 : AIR 1996 SC 2202] , Ram Chandra Singh v. Savitri Devi [(2003) 8 SCC 319] , Roshan Deen v. Preeti Lal [(2002) 1 SCC 100 : 2002 SCC (L&S) 97 :
AIR 2002 SC 33] , Ram Preeti Yadav v. U.P. Board of High School & Intermediate Education [(2003) 8 SCC 311 : AIR 2003 SC 4268] and Ashok Leyland Ltd. v. State of T.N. [(2004) 3 SCC 1 : AIR 2004 SC 2836] )
35. In Kinch v. Walcott [1929 AC 482 : 1929 All ER Rep 720 (PC)] it has been held that:
“… mere constructive fraud is not, at all events after long delay, sufficient but such a judgment will not be set aside upon mere proof that the judgment was obtained by perjury”.
Thus, detection/discovery of constructive fraud at a much belated stage may not be sufficient to set aside the judgment procured by perjury.”
67. In the instant case, the following facts stare at the face of the http://www.judis.nic.in 59 defendants:-
(i) The first defendant claimed to be a reputed builder and offered to construct and develop the property of the plaintiffs;
(ii) As consideration and for the purpose of development and construction of flats, the plaintiffs agreed to handover 50% of the undivided land to him;
(iii) He did not develop or construct any flats;
(iv) He however sold the undivided share of land on 20.01.2015 to the second defendant;
(v) On 21.01.2015 he entered into a Supplemental Development Agreement extending the time for development and construction of flats with the plaintiffs.
68. There cannot be a better instance of fraud and misrepresentation played upon the plaintiffs. The first defendant after conveying the land to the second defendant had the temerity to enter into a Supplemental http://www.judis.nic.in 60 Development Agreement over a land over which he had no right or title and which right and title he had transferred to the second defendant. Therefore, in these circumstances and on the basis of these facts, I hold that the sale deed dated 20.01.2015 executed by the first defendant in favour of the second defendant will necessarily have to be cancelled and set aside by this Court.
69. Incidentally, it must also be again mentioned that during his cross examination, the second defendant pleaded ignorance about the first defendant but when confronted with documents, admitted that he had entered into similar agreements of sale with the first defendant with respect to other properties. It is therefore clear that they worked in tandem as against the interest of the plaintiffs.
70. In view of all these reasons, Issue Nos. (i), (v), (vi), (vii) & (viii) are answered in favour of the plaintiffs. I very specifically hold (a) with respect to Issue No.(i) that the plaintiffs are entitled for a decree of declaration that the sale deed dated 20.01.2015 is null and void and unenforceable and (b) with respect to Issue No.(v) that the plaintiffs are again entitled for relief of declaration that the sale deed is null and void and http://www.judis.nic.in 61 unenforceable in law and (c) with respect to Issue No.(vi) that the first defendant was not entitled to convey his 50% undivided share in the suit schedule property before complying with the conditions of the Joint Development Agreement dated 14.12.2011 and (d) with respect to Issue No. (vii) that the sale deed executed by the first defendant in favour of the second defendant before complying with the conditions of the Joint Development Agreement under Clause 1 to 3 and 5 is not valid in law. Clause 1 to 3 relate to construction of flats by the first defendant at his cost and conveying of 50% undivided share of land to the first defendant and the first defendant paying a sum of Rs.15,000/- towards rent from date of handing over possession till completion of project and clause 5 relates commencement of construction after obtaining sanction from the authorities and permission from the Court. The first defendant had failed to perform all his obligations; and (e) with respect to Issue No.(viii) that the act of the first defendant in conveying his 50% undivided share of land without paying the entire free money of Rs.65/- lakhs as agreed under Clause 10 of the Joint Development Agreement is not valid in law since admittedly the entirety of the amount had not been paid.
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71. All the above issues are therefore answered in favour of the 62 plaintiffs.
Issue No.(ii):
72. This is a corollary to the issues for which answers have been given above.
73. The sale deed in favour of the second defendant dated 20.01.2015 has been specifically held to be null and void and unenforceable. This naturally means that the second defendant does not have any right, title or interest over the property. Therefore, he cannot by any stretch of imagination even alienate or encumber the property. He cannot be considered as title holder. He has become a stranger to the property. Therefore, the plaintiffs are entitled for the relief of permanent injunction against the second defendant from alienating or encumbering the suit property. The issue is answered in favour of the plaintiffs. Issue No.(iii):
74. This issue though does not specifically mention that the permanent injunction is to protect possession, I hold that since it had been http://www.judis.nic.in 63 declared that the second defendant has no right or title over the property he cannot be termed as a co-owner and therefore, the plaintiffs have every right, particularly since they are in possession, which fact has not been specifically denied, for a decree of permanent injunction to protect their possession.
75. The issue is answered in favour of the plaintiffs. Issue Nos. (iv) & (ix):
76. These issues arise owing to the counter claim raised by the second defendant in his written statement. In the counter claim, basing his title on the sale deed executed in his favour by the first defendant, the second defendant had sought partition and separate possession of the property which had been conveyed to him, namely 50% of the undivided share of land. The issue does not survive any more.
77. Since the said sale deed in his favour has been cancelled and set aside and has been declared as null and void and unenforceable, the second defendant cannot seek any partition and separate possession of any share http://www.judis.nic.in 64 much less one half share in the suit property. However, in the sale deed executed by the first defendant in favour of the second defendant, it had been very specifically stated by the first defendant, as Power of Attorney Agent of the plaintiffs herein that he would indemnify the second defendant against all actions, claims, damages, demands and actions in law at the instance of any persons. Naturally having held out such an undertaking, I hold that the second defendant will have every right to proceed against the first defendant for having induced him into purchasing him the property for valuable sale consideration of Rs.1,01,40,000/-. The second defendant is entitled to proceed in any manner known to law to seek enforement of the undertakings given by the first defendant to indemnify by him from actions at law. This is the only relief the Court can to grant the second defendant.
78. The issue is answered accordingly. However, it is made clear that the second defendant is not entitled to seek partition and separate possession of the suit property, particularly on the basis of the sale deed dated 20.01.2015, which has been cancelled and set aside and held to be unenforceable.
Issue No.(x):
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79. In the result, I hold that
(i) the suit is decreed as prayed for with costs as against the first defendant and without costs as against the second defendant.
(ii) The counter claim of the second defendant is dismissed without costs.
(iii) In so far as the costs are concerned, the plaintiffs are entitled to maintain the cost as against the first defendant in accordance with the amended Section 35 of the Code of Civil Procedure as amended by the Commercial Courts Act 2015 and the Registry is delegated and directed to determine the costs, and the plaintiffs are permitted to file their Bill of Costs relating to (1) fees and expenses of the witnesses; (2) legal fees and expenses; and (3) any other expenses incurred in connection with the proceedings. On the filing of the Bill of Costs, the Registry may determine the quantum of the costs.
80. I further take recourse to Order VII Rule 7 of CPC which is as http://www.judis.nic.in 66 follows:-
“7. Relief to be specifically stated:-
Every plaint shall state specifically the relief which the plaintiff claims either simply or in the alternative and it shall not be necessary to ask for general or other relief which may always be given as the court may think just to the same extend as if it had been asked for. And the same rule shall apply to any relief claimed by the defendant in his written statement.”
81. I therefore direct as follows:-
(1) The plaintiffs are directed to deposit the sum of Rs.55/- lakhs which they have received out of the free money of Rs.65/- lakhs together with interest at the rate of 6% p.a., calculated from the date of the last receipt till the date of deposit into Court which should not be later than three months from the date of receipt of a copy of this Judgment;
(2) The second defendant is permitted to apply for payment out of the said amount so deposited by the plaintiffs since it is evident that he had financed the first defendant; and http://www.judis.nic.in 67 (3) The second defendant as stated earlier is permitted, if he and deems it appropriate to initiate proceedings against the first defendant for recovery of the sale consideration mentioned in the sale deed in his favour dated 20.01.2015 marked as Ex.P14 and also seek the first defendant to indemnify him for any damages incurred.
82. It is reiterated that the first defendant, having received notices and suit summons and having engaged counsels had taken a conscious decision to abstain from participating in the judicial proceedings. Therefore this Judgement would also bind him since he had deliberately not participated in the judicial proceedings.
15.10.2020 Index:Yes/No Web:Yes/No vsg Speaking/Non Speaking Order
1. List of Witnesses Examined on the side of the Plaintiff:-
1. P.W.1 – P.Shanthi @ P.Shanthi Bai
2. List of Exhibits Marked on the side of the Plaintiff:-
1. Ex.P1 The certified copy of sale deed dated 29.07.1949 in favour of the plaintiffs' father;
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2. Ex.P2 The xerox copy of Will executed by the father of 68 the plaintiffs dated 22.01.1970;
3. Ex.P3 The xerox copy of Judgment in T.O.S.No. 11 of 1970 dated 07.12.1977;
4. Ex.P4 the Original Development Agreement entered into between the plaintiffs and 1st defendant dated 14.12.2011;
5. Ex.P5 the Certified copy of General Power of Attorney given by the plaintiffs to the first defendant dated 11.05.2012.
6. Ex.P6 The Certified copy of Sale Agreement executed by the first defendant in favour of the second defendant dated 15.06.2012;
7. Ex.P7 The xerox copy of planning permission obtained by the first defendant for demolition of the property dated 12.06.2013.;
8. Ex.P8 The original Supplementary Development Agreement entered into between the plaintiffs and first defendant dated 05.04.2014;
9. Ex.P9 The original Second Supplementary Development Agreement entered into between the plaintiffs and first defendant dated 21.01.2015;
10.Ex.P10 (series) (Nos.4) are xerox copies of cheques issued by the first defendant in favour of the plaintiff dated 08.04.2015 to 28.05.2015;
11.Ex.P11 The office copy of legal notice issued on behalf of the plaintiffs to the first defendant dated 20.03.2015;
12. Ex.P12 The print out of proof of Delivery;
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13. Ex.P13 The Original encumbrance Certificate dated 14.05.2012;
14. Ex.P14 The certified copy of sale deed executed by the first defendant in favour of the second defendant dated 20.01.2015;
15. Ex.P15 The xerox copy of order passed in O.P.No. 263 of 2012 dated 23.04.2012;
16. Ex.P16 Encumbrance Certificate for the period from 01.01.2012 to 25.09.2015 (Ex.P16)
17. Ex.P17 Agreement for sale entered into between the first defendant and second defendant.
18. Ex.P18 Agreement for sale dated 26.09.2012
3. List of Witnesses Examined on the side of the defendants:-
1. D.W.1 – Mr.Subhash Chand Jain
4. List of Exhibits Marked on the side of the defendants:-
1. Ex.D1 The original construction agreement dated 16.06.2012 executed by the first defendant in favour of me (2nd Defendant);
C.V.KARTHIKEYAN, J.
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2. Ex.D2 The Office Copy of legal notice dated 04.12.2017 issued by me to the first defendant;
3. Ex.D3 The original Reply Notice dated 20.12.2017 issued on behalf of the plaintiff to my legal notice.
15.10.2020 vsg Pre-Delivery Judgement in C.S.No.652 of 2016 http://www.judis.nic.in