Madras High Court
Assets Reconstruction Company India ... vs M.A.Sirajudeen on 25 September, 2014
Author: R.Mala
Bench: R.Mala
IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED :25 .09.2014 CORAM : THE HONOURABLE MS.JUSTICE R.MALA C.R.P(PD).No.4816 of 2011 and M.P.No.1 of 2011 Assets Reconstruction Company India Ltd., (Arcil) No.1, 2nd Floor, Ceebros Centre Montieth Road, Egmore, Chennai-8 Rep. by Mr.V.Ramachandran the Authorised Signatory and Power of Attorney Holder. .. Petitioner Vs. 1.M.A.Sirajudeen 2.S.Veerabadran 3.Dr.C.Hari 4.Susamma Hari .. Respondents Date of Reserving the judgment 23.09.2014 Date of Pronouncing the judgment 25.09.2014 Prayer:- Civil Revision Petition is filed under Article 227 of the Constitution of India, against the fair and decreetal order dated 26.08.2011 in I.A.No.10442 of 2011 in O.S.No.592 of 2011 on the file of the III Assistant Judge, City Civil Court, Chennai. For Petitioner : Mr.V.Jayachandran for Mr.V.Jayachandran Associates For R1 : Mr.V.Bhiman for Mr.V.Mani For R3 and R4 : No appearance O R D E R
Civil Revision Petition is filed against the fair and decreetal order dated 26.08.2011 in I.A.No.10442 of 2011 in O.S.No.592 of 2011 on the file of the III Assistant Judge, City Civil Court, Chennai.
2.The first respondent herein as a plaintiff filed a suit for the following reliefs:
(a) for declaration that the publication dated 31.12.2010 in Tamil Daily Dinamalar effected by the fourth defendant fixing the auction date as 09.02.2011 at 12 Noon on the basis of the document secured by the 2nd and third defendants through the registered document No.500/2005 dated 25.02.2005 executed by the plaintiff in favour of the first defendant before the Joint Sub-Registrar I, District Registrar Office, Chennai North, Chennai-600 011 is not legally enforceable and binding the plaintiff in view of the revocation dated 27.02.2005 communicated by the first defendant against the plaintiff resulting the registered cancellation deed dated 18.04.2005 with document No.1035/2005 before Joint I Sub-Registrar, Saidapet, Chennai-600 015.
(b) For declaration that the sale deed with document No.1625/2005 dated 5.4.2005 at Chennai by the first defendant in favour of the second defendant is inoperative, illegal, unjust, capricious, ab initio void without binding the plaintiff in whatsoever in the manner known to law with operative aspect against the interest of the third parties more particularly the defendants herein pertaining to the subject matter of the documents registered at Chennai. In view of the fact that the plaintiff is not a party to the suit only for the relief for declaration questioning the misdeeds alone legally and since the auction is held pursuant to the possession of the original document from the 1st defendant though the 2nd and 3rd defendants from the fourth defendant to enable the plaintiff to claim right over the properties as holding possession the relief is necessitated as contemplated under law.
(c ) For mandatory injunction directing the defendants more particularly the fourth defendant to return the documents, illegally retained by them securing the same for discharge of the liability of the second and third defendants pursuant to the power in respect of misdeeds on the part of the first defendant in collusion with the second defendant to secure the loan availed by the defendants 2 and 3 with the Standard Chartered Bank, now under custody of the 4th defendant unless and until the legal rights of the defendants are duly established in the manner known to law against the lawful right and holding of possession on the part of the plaintiff regarding the subject matter of the deeds with Document No.500/2005 and 1035/2005 and 1625/2005 at Chennai.
d) For permanent injunction restraining the defendants or their men, servants, agents or anybody claiming through them from interfering with the plaintiff's lawful holding of the property as absolute owner in respect of the subject matter of the deeds with document No.500/2005 dated 25.02.2005 before the Joint Sub-Registrar I, District Registrar Office, Chennai North, Chennai-600 011 and the revocation letter dated 27.02.2005 communicated by the first defendant against the plaintiff resulting the registered cancellation deed dated 18.04.2005 with document No.1035/2005 before Joint I Sub-Registrar, Saidapet, Chennai-600 015 pertaining to the sale deed with document No.1625/2005 dated 5.4.2005 by the first defendant in favour of the second defendant by fixing of the auction date as 09.02.2011 at 12 Noon or any subsequent dates unless and until the legal rights of the defendants more particularly the 4th defendant is duly determined and established in the manner known to law;
3.During pendency of the suit, the revision petitioner herein, who was arrayed as fourth defendant in the suit, filed an application in I.A.No.10442 of 2011 under Order VII Rule 11 of C.P.C. for rejection of the plaint stating that the Civil Court has no jurisdiction as per Section 34 of the SARFAESI Act (Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002) (hereinafter called as the 'Act') and also the suit is barred by limitation. The trial Court, after considering the objection raised by the plaintiff, dismissed the application, against which, the present revision petition is preferred by the fourth defendant/revision petitioner.
4.Learned counsel for the revision petitioner/fourth defendant has submitted the following points for consideration:
(i)The first respondent/plaintiff is the original owner of the property and he executed the power of attorney in favour of the first defendant on 25.02.2005. According to the plaintiff, by virtue of a revocation letter dated 27.02.2005 issued by the first defendant to the plaintiff stating that he is unable to act upon as power agent, the plaintiff cancelled the power of attorney deed on 18.04.2005. In the meanwhile, the first defendant/power of attorney executed the sale deed in favour of the second defendant on 05.04.2005. The wife of the second defendant is the third defendant in the suit and both were obtained loan from the Bank by mortgaging the property. Since the defendants 2 and 3 have not paid the loan amount, possession of the property has been taken and paper publication has been issued for conducting auction by the fourth defendant.
(ii)On 18.01.2011 only, the plaintiff filed a suit for declaration that the publication dated 31.12.2010 in Tamil Daily viz., Dhinamalar effected by the fourth defendant fixing the auction date as 09.02.2011 at 12 Noon on the basis of the document secured by the second and third defendants through the registered document No.500/2005 dated 25.02.2005 executed by the plaintiff in favour of the first defendant is not legally enforceable and binding the plaintiff in view of the revocation dated 27.02.2005 communicated by the first defendant against the plaintiff and for other reliefs.
(iii)Learned counsel raised two limbs of arguments; the first limb of argument is that as per Section 34 of the Act, the Civil Court has no jurisdiction. If at all the plaintiff has any grievance, he has to approach the Debt Recovery Tribunal as per Section 17 of the Enactment Act. To substantiate his arguments, he relied upon the following decisions of this Court:
(1) AIR 1970 Madras 76 (Kathoom Bivi Ammal and another v. Arulappa Nadar and another);
(2) 2011 (3) CTC 153 (N.Ravindran v. V.Ramachandran);
(3) 2011 (3) CTC 801 (V.Thulasi v. Indian Overseas Bank, Sowcarpet Branch, Davey Complex, First Floor 143, NSC Bose Road, Chennai-79);
(4) 2014 (1) CTC 652 (Jagdish Singh v. Heeralal and others);
(iv)The second limb of argument is that the suit is barred by limitation as per Article 56 of the Limitation Act. Because the sale deed came into existence on 05.04.2005 and the suit was filed on 18.01.2011. As per Article 56 of the Limitation Act, the plaintiff ought to have filed the suit within three years from the date of knowledge of registration. In the case on hand, the plaintiff has knowledge about the sale deed and he has also lodged a complaint before the Inspector of Police, Central Crime Branch, Team No.I, Egmore, Chennai on 10.05.2005 and the same was filed as document No.6 in the list mentioned in the plaint. So prima facie the suit is barred by limitation and the said aspect is not considered by the trial Court. Hence, he prayed for allowing the revision petition.
5.Resisting the same, learned counsel for the first respondent/plaintiff submitted that question of limitation is mixed questions of law and facts and the plaint cannot be rejected on the basis as if the suit is barred by limitation. It is further submitted that since the fraud has been committed by the defendants 1 to 3, the Civil Court has jurisdiction to entertain the suit. To substantiate his arguments, he relied upon the following decisions of this Court:
(i) 2009 (4) CTC 663 ( G.V.Films Limited, rep. by its Director, P.Raghuraman, FO-Whispering Heights, No.132, St.Mary's Road, Alwarpet, Chennai-600 018 v. Indian Bank, Assets Recovery Management Branch-II, 55, Wellington Estate, Ethiraj Salai, Chennai-8 and others);
(ii) 2008 (1) CTC 471 (S.V.Subramaniam v. Cypress Semiconductor Technology India Private Limited, rep. by its Director, Mr.K.Viswanath, First Floor, No.56, Nandi Durga Road, Benson Town, Bangalore and others);
6.Considered the rival submissions made on both sides and perused the typed set of papers.
7.For the sake of convenience, the revision petitioner and the first respondent herein are called as fourth defendant and plaintiff respectively. The respondents 2 to 4 herein are called as defendants 1 to 3.
8.The suit property is originally owned by the plaintiff and he executed the power of attorney to the first defendant on 25.02.2005. According to the plaintiff, on 27.02.2005, a revocation letter was communicated by the first defendant to the plaintiff stating that he could not act upon as power agent. But the first defendant executed the sale deed dated 05.04.2005 in favour of the second defendant. Then only the plaintiff cancelled the power of attorney deed on 18.04.2005. On the basis of the sale deed, the second defendant and his wife/third defendant obtained a loan from the Standard Chattered Bank and since they have not repaid the loan amount, proceedings has been initiated against them as per the provisions of the Act and the possession of the property has been taken and now through the fourth defendant, auction date was fixed to sell the properties by invoking Section 5 of the Act. So the plaintiff filed the suit for the above said reliefs.
9.On 18.04.2011, fourth defendant has filed an application in I.A.No.10442 of 2011 under Order VII Rule 11 of C.P.C. for rejection of the plaint on the ground that the suit is barred by law.
CIVIL COURT HAS NO JURISDICTION:
10. The first limb of argument advanced by the learned counsel for the fourth defendant/revision petitioner is that as per Section 34 of the Act, the Civil Court has no jurisdiction to entertain the suit. It is appropriate to incorporate Section 34 of the Act, which is as follows:
34. Civil Court not to have jurisdiction No civil court shall have jurisdiction to entertain any suit or proceeding in respect of any matter which a Debts Recovery Tribunal or the Appellate Tribunal is empowered by or under this Act to determine and no injunction shall be granted by any court or other authority in respect of any action taken or to be taken in pursuance of any power conferred by or under this Act or under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (51 of 1993).
11.Before adverting to the facts of the case, it is appropriate to consider the following decisions relied upon by the learned counsel for the revision petitioner/fourth defendant:
(i) In 2014 (1) CTC 652 (Jagdish Singh v. Heeralal and others), wherein it has been held that the Bank has proceeded only against the secured assets of the borrower, the Civil Court has no jurisdiction as per Section 34 of the Enactment Act. It is appropriate to extract para-7 and 23, which are as follows:
7. Aggrieved by the said order, Respondent Nos.1 to 5 herein filed Civil First Appeal No.130/08 before the High Court of Madhya Pradesh at Indore. The High Court, however, allowed the appeal. The operative portion of the judgment reads as follow:
I have perused the contents of the plaint from the record of the case. A bare perusal of the plaint indicates that the plaintiffs have raised the question of title, on the basis of Joint Hindu Family property and they being the members of the Joint Hindu Family, it has been pleaded by them that the property in question had been acquired through the earnings of the joint family property. On that basis, it has been maintained by them that the property in question was liable to be treated as Joint Hindu Family property, and not the exclusive property of the defendants. In these circumstances, on the bare perusal of the contents of the plaint, it cannot be suggested at all that the civil suit, filed by the plaintiffs, is barred under any provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2000, or that civil court has no jurisdiction in the matter.
23. We are of the view that the civil court jurisdiction is completely barred, so far as the measure taken by a secured creditor under sub- section (4) of Section 13 of the Securitisation Act, against which an aggrieved person has a right of appeal before the DRT or the Appellate Tribunal. to determine as to whether there has been any illegality in the measures taken. The bank, in the instant case, has proceeded only against secured assets of the borrowers on which no rights of Respondent Nos.6 to 8 have been crystalised, before creating security interest in respect of the secured assets. In such circumstances, we are of the view that the High Court was in error in holding that only civil court has jurisdiction to examine as to whether the measures taken by the secured creditor under sub-section (4) of Section 13 of the Securitisation Act were legal or not. In such circumstances, the appeal is allowed and the judgment of the High Court is set aside. There shall be no order as to costs.
(ii) In 2011 (3) CTC 801 (V.Thulasi v. Indian Overseas Bank, Sowcarpet Branch, Davey Complex, First Floor 143, NSC Bose Road, Chennai-79), wherein it has been held that only aggrieved party can approach the Debt Recovery Tribunal by invoking Section 17 of the Act. In para-7 and 29, it was held as follows:
7.Upon consideration of the rival contentions, the learned single Judge held that in view of Section 34 of SARFAESI Act, no Civil Court shall have jurisdiction to entertain the suit. The learned single Judge further held that even though prayers in the plaint are carefully and tactfully worded, the plaint prayer is only to avoid the embargo created under the statute. Finding that the suit is barred in view of Section 34 of SARFAESI Act, the learned single Judge allowed Application - A.No.3294 of 2006 filed by the Bank and rejected the plaint. Hence this appeal.
29. By clever and astute drafting, the plaintiff might create an illusion of cause of action by trying to bring civil suit within the parameters laid down by the Supreme Court in Mardia Chemicals case, (2004) 4 SCC 311. Pointing that Court has duty to see if such allegations of fraud are thrown just for the purpose of maintaining a suit, in PUNJAB NATIONAL BANK VS. J.SAMSATH BEEVI, ((2010(3) CTC 310)), Justice V.Ramasubramanian held as under:
"8. But at the same time, the Court has a duty to see, if such allegations of fraud are thrown, just for the purpose of maintaining a suit and ousting the jurisdiction of the Tribunal and to keep the Banks and Financial Institutions at bay. If by clever drafting, the plaintiff creates an illusion of a cause of action, the Court is duty bound to nip it in the bud. To find out if it is just a case of clever drafting, the Court has to read the plaint, not formally, but in a meaningful manner. So is the dictum of the Apex Court in T.Arivandandam vs. T.V.Satyapal [1977 (4) SCC 467]. It was again reiterated by the Court in I.T.C. Ltd vs. Debts Recovery Appellate Tribunal [1998 (2) SCC 70], by holding that clever drafting, creating illusions of cause of action are not permitted in law. The ritual of repeating a word or creation of an illusion in the plaint can certainly be unravelled and exposed by the Court while dealing with an application under Order VII, Rule 11(a). .. ..
12.Learned counsel for the first respondent/plaintiff relied upon the following decisions:
(i)In 2009 (4) CTC 663 ( G.V.Films Limited, rep. by its Director, P.Raghuraman, FO-Whispering Heights, No.132, St.Mary's Road, Alwarpet, Chennai-600 018 v. Indian Bank, Assets Recovery Management Branch-II, 55, Wellington Estate, Ethiraj Salai, Chennai-8 and others), wherein it was held that the Civil Court is having jurisdiction. In para-15, it is held as follows:
15.If it is seen in the light of the above precedents, it can still be held that there is some scope for moving the Civil Court notwithstanding the fact that the financial institutions have invoked the provisions of SARFAESI Act. But the above decision is not applicable to the facts of the present case. It was held that the suit for declaration that the SARFAESI Act would not apply to agricultural land and injunction and redemption of the mortgage filed before the High Court. It was further held that the Civil Court has jurisdiction and the jurisdiction of the Civil Court is not ousted. Whereas in the case on hand, by invoking Section 5 of the Act, possession of the property has been taken by the fourth defendant and steps have been taken to sell the property in the public auction and then only, the plaintiff filed the suit and the fourth defendant filed the application for rejection of the plaint. As per the dictum of the Apex Court, unless any fraud committed by the financial institution, then only they can approach the Civil Court. So I am of the view, the above decision is not applicable to the facts of the present case.
(ii)In 2008 (1) CTC 471 (S.V.Subramaniam v. Cypress Semiconductor Technology India Private Limited, rep. by its Director, Mr.K.Viswanath, First Floor, No.56, Nandi Durga Road, Benson Town, Bangalore and others), wherein it has been held that suit is for declaration with regard to the order passed by the Debt Recovery Tribunal having been sought for, which is alleged to have been obtained by playing fraud on the Tribunal, we hold that the suit is not covered by the expression suit for land under Clause 12 of the Letters Patent (Madras) and the Suit cannot be dismissed on that ground and that the civil suit is maintainable. It is not the case of the plaintiff that the financial institution has played fraud, because as per the facts of the present case, the plaintiff executed the power of attorney deed in favour of the first defendant on 25.02.2005 and the first defendant executed the sale deed in favour of the second defendant on 05.04.2005, then only the plaintiff cancelled the power of attorney on 18.04.2005. In the meanwhile, the defendants 2 and 3 obtained loan from the Bank. In such circumstances, I am of the view, the above decision is not applicable to the facts of the present case.
13.As per the decision of this Court reported in 2014 (1) CTC 652 (Jagdish Singh v. Heeralal and others) and as per Section 34 of the Act, I am of the view, the Civil Court has no jurisdiction to entertain the suit.
SUIT IS BARRED BY LIMITATION:
14.Admittedly, the sale deed was executed by the first defendant to the second defendant on 05.04.2005. In the plaint's prayer, the plaintiff sought for declaration that the publication dated 31.12.2010 in Tamil Daily Dinamalar effected by the fourth defendant fixing the auction date on the basis of the document secured by the 2nd and 3rd defendants through the registered document No.500/2005 dated 25.02.2005 executed by the plaintiff in favour of the first defendant, is not legally enforceable. But the first defendant executed the sale deed dated 05.04.2005 in favour of the second defendant. It show that the sale deed dated 05.04.2005 is declared as null and void. But the suit has been filed only in the year 2011. So it is appropriate to incorporate Article 56 of the Limitation Act, which runs as follows:
Description of suit Period of limitation Time from which period begins to run
56.To declare the forgery of an instrument issued or registered.
Three years when the issue or registration becomes known to the plaintiff. In the above extract, it was specifically mentioned that within three years from the date of knowledge of the registration, the suit has to be filed.
15.At this juncture, it is appropriate to consider the decision of this Court relied upon by the learned counsel for the revision petitioner reported in 2011 (3) CTC 153 (N.Ravindran v. V.Ramachandran), wherein it was held that the suit can be rejected on the ground of suit is barred by limitation. In para-2, 10, 18 and 23, it is held as follows:
2.The suit is one for specific performance of agreement of sale of immovable property, for damages and permanent injunction. Admittedly, no regular agreement of sale was entered into between the plaintiff and the defendant. Case of plaintiff is that in January, 1994, he entered into an understanding with the defendant under which defendant agreed to sell his property in Old No.40, New No.14, Venkatesan Street, T.Nagar, Chennai- 17 measuring an extent of 5700 sq.ft. for a total consideration of Rs.46,00,000/-. In pursuance to the said understanding, plaintiff paid a sum of Rs.1,00,000/- on 10.1.1994 and another sum of Rs.6,00,000/- on the same day (10.1.1994). In evidence of the same, on 10.1.1994 defendant issued a stamped receipt, which is stated to contain terms and conditions relating to the sale of the property. Between 10.1.1994 to 23.6.1994, the plaintiff has paid a total amount of Rs.33,00,000/-. The plaintiff claims that in part performance of the contract of sale, he was put in possession of the property in May, 1995. According to the plaintiff, he has always been ready and willing to pay the balance sale consideration of Rs.13,00,000/- and get the sale deed executed, but the defendant failed to complete the transaction; but has engineered the scheme to dispossess the plaintiff and dispose of the property to some third party thereby defeating the valuable rights of the plaintiff.
10. The well settled position is that while considering the application under Order VII Rule 11 C.P.C., Court is not required to take into consideration the defence set up by the defendant in his written statement or other documents. The question whether plaint discloses any cause of action and whether it is barred by any law is to be decided by looking at the averments contained in the plaint itself and not the defence set up in the written statement. While considering the application, the strength or weakness of the case of the plaintiff is not to be examined. It is fairly well settled that the Court has to find out from the allegations made in the plaint itself and not beyond it as to whether any vexatious or frivolous litigation has been initiated by the plaintiff. The Court cannot take into account materials beyond the plaint to declare that the case of the plaintiff is frivolous or is barred by any law.
18. As pointed out by the learned single Judge, even in November/December 2002, the plaintiff had notice that the defendant is trying to dispossess the plaintiff and that the defendant has also entered into an agreement with a builder to put up flats. Even then the plaintiff had not chosen to file the suit for specific performance, but had filed only the suit for permanent injunction -O.S.No.6514 of 2002 to restrain the defendant from dealing with the property and also to protect the possession of the plaintiff. The plaintiff had filed the suit for specific performance only in November 2006, which the learned single Judge held, is barred by limitation.
23. As held by the Supreme Court in C. Natrajan v. Ashim Bai, (2007) 14 SCC 183, the limitation would not commence unless there has been a clear and unequivocal threat to the right claimed by the plaintiff. In the case on hand, the plaint averments would clearly show that there has been a clear and unequivocal threat to the right claimed by the plaintiff. As pointed out earlier, in paragraph No.10 of the plaint, the plaintiff has categorically averred that in November 2002, one Mohan Kumar claiming to be a builder called upon the plaintiff and threatened him to vacate the suit premises as he (Mohan Kumar) proposed to purchase the property to put up several flats. It is also averred in the plaint that the plaintiff lodged a police complaint on 2.12.2002. In paragraph No.12 of the plaint, the plaintiff has averred that following several telephone calls threatening him he filed suit - O.S.No.6514 of 2002. Before filing the suit, the plaintiff issued legal notice on 18.11.2002 calling upon the defendant to receive the balance consideration of Rs.13,00,000/- and to execute the sale deed. Stating that the defendant has not come forward to execute the sale deed, in December 2002, plaintiff has filed the suit - O.S.No.6514 of 2002 for bare permanent injunction. In the plaint averments in C.S.No.264 of 2007, there is a repeated reference to the threats by the defendant in November/December 2002 and also his refusal to fulfil his obligation. Suit for specific performance should have been filed atleast by 2.12.2005. Even though there was such clear and unequivocal threat to the alleged agreement of sale/undertaking, the plaintiff has not chosen to file the suit for specific performance; but filed the suit for specific performance - C.S.No.264 of 2007 only in the month of November 2006. The suit is clearly barred by limitation. Even though the question of limitation is a mixed question of facts and law, the facts are writ large on the face of it to hold that the suit for specific performance - C.S.No.264 of 2007 is barred by limitation. On the factual matrix of this case the ratio of the decision of the Supreme Court in (2007) 14 SCC 183 is not applicable to the facts of the case on hand.
16.Considering the above decision along with the facts of the present case, the plaintiff has knowledge about the document and moreover, in the list mentioned in the plaint itself, in document No.6, it was stated that the plaintiff has lodged a complaint before the Inspector of Police, Central Crime Branch, Team No.I, Egmore, Chennai on 10.05.2005, which shows that the plaintiff even in the year 2005, has knowledge about the misdeeds, but he filed the suit only in the year 2011 (i.e.) after three years from the date of knowledge. So glaringly the suit is barred by limitation.
17.At this juncture, learned counsel for the revision petitioner/fourth defendant relied upon the decision of this Court reported in AIR 1970 Madras 76 (Kathoom Bivi Ammal and another v. Arulappa Nadar and another) and submits that cancellation of power of attorney will not bind upon the defendants 2 and 3, since they purchased the property. He relied on para-2 and 3, which read as follows:
2. As both the Courts below have held that the power-of-attorney executed by the first defendant in favour of the fourth defendant has been validly cancelled by her even before the fourth defendant executed the mortgage in favour of the plaintiff, the only question that arises is whether under Section 208 of the Indian Contract Act, such cancellation will have the effect of making the mortgage executed by the fourth defendant void as against the first defendant. Section 208 of the Indian Contract Act is as follows :
208. The termination of the authority of an agent does not, so far as regards the agent, take effect before it becomes known to him, or so far as regards third persons, before it becomes known to them. Illustration (6) to this section is as follows:
(b) A, at Madras, by letter directs B to sell for him some cotton lying in a warehouse in Bombay and afterwards by letter, revokes his authority to sell and directs B to send the cotton to Madras. B, after receiving the second letter, enters into a contract with C, who knows of the first letter, but not of the second, for the sale to him of the cotton. C pays B, the money, with which B absconds. C's payment is good as against A. This illustration is apposite to the facts of this case. In Mulla on Indian Contract Act, Students' Edition, Eighth Edition, page 226, the case of Trueman v. Loder (1840) 2 A. & E. 589, is referred to. That was a case where A traded as B's agent with B's authority all parties with whom A made contracts in that business were held to have a right to hold B liable to them until B gives notice to the world that A's authority is revoked; and it makes no difference if in a particular case the agent intended to keep the contract on his own account. It is argued on behalf of the appellant that it is very unreasonable to expect that the first defendant should inform the whole world that she had cancelled the power-of-attorney given to the fourth defendant, and that that she cannot be expected to approach everybody with whom the fourth defendant was likely to enter into contract and inform them of the cancellation. I do not think that such considerations have any relevance in the face of the clear words of the section. The policy of the law, apparently in the interests of trade and commerce, is that the agent's action should bind the principal, even though the principal might have cancelled the agent's authority unless the third persons with whom the agent enters into contracts knew of the termination of the agency. On this point, therefore, the conclusion of the lower appellate Court is correct, and it should be held that the mortgage executed by the fourth defendant in favour of the plaintiff is valid and binding on the first defendant.
3. One point, which was strenuously urged by the appellants in this Court was that this appeal is barred by res judicata. The argument is put thus : The first defendant in O.S.No 42 of 1962 obtained a decree in O.S. No. 17 of 1962 holding that the mortgage executed by the fourth defendant in favour of the plaintiff and Fareeda Beevi, who were the first and second defendants respectively in that suit (O.S. No. 17 of 1962) was void and not binding on the first defendant, who was the plaintiff in that suit. There was no appeal against that decree. It has, therefore, become final and operates as res judicata because the same question arises in this suit. On the other hand, it is urged on behalf of the contesting respondent that this question was not raised by the first defendant in his appeal before the lower appellate Court and that if she had raised that question he could at least have filed an appeal with a petition to excuse delay and that the appellants should, therefore, not be allowed to raise this question of res judicata in this Court. There is considerable force in this contention. But all the same I will discuss the question of res judicata that has been raised.
18.Considering the aforestated circumstance of the case along with the above decisions, the plaintiff has executed the power of attorney in favour of the first defendant on 25.02.2005 and the same has been cancelled on 18.04.2005. In the meanwhile, the first defendant executed the sale deed in favour of the second defendant on 05.04.2005, on that basis, the defendants 2 and 3 obtained loan from the Bank by mortgaging the property. Since they did not repay the loan amount, the possession has been taken under the SARFAESI Act and the steps for public auction have also been taken by the fourth defendant. In such circumstances, argument advanced by the learned counsel for the first respondent/plaintiff that on 27.02.2005, the first defendant has given a letter for revocation of power of attorney deed dated 25.02.2005 stating that he could not be acted upon as a power agent, is unbelievable.
19.Furthermore, the plaintiff has knowledge about the sale deed even on 10.05.2005, on which date, the plaintiff lodged a complaint before the Crime Branch regarding the misdeeds. But he kept quite for a long time and only in the year 2011, filed the suit. It clearly shows that the suit is barred by limitation as per Article 56 of the Limitation Act. So the suit is barred by limitation and it is liable to be rejected. But the trial Court came to the conclusion that the limitation is mixed questions of law and facts and that have to be decided only after letting oral and documentary evidence before the trial Court is unsustainable. In my view, the trial Court has failed to consider that the suit is barred under Section 34 of the Act, since the Civil Court has no jurisdiction to entertain the suit. Further, the trial Court failed to consider the suit is barred by Article 56 of the Limitation Act, since the suit is filed after three years from the date of knowledge. So I am of the considered opinion, the impugned order passed by the trial Court is unsustainable and it is liable to be set aside and it is hereby set aside.
20.In fine, the Civil Revision Petition is allowed after setting aside the fair and decreetal order dated 26.08.2011 in I.A.No.10442 of 2011 in O.S.No.592 of 2011 on the file of the III Assistant Judge, City Civil Court, Chennai. Consequently, I.A.No.10442 of 2011 is allowed. Plaint is rejected. No costs. Consequently, connected Miscellaneous Petition is closed.
25.09.2014 kj To III Assistant Judge, City Civil Court, Chennai.
R.MALA,J.
Kj Pre-delivery order in C.R.P(PD).No.4816 of 2011 and M.P.No.1 of 2011 25.09.2014