Gujarat High Court
Prakash Babulal Sheth vs Shashikalal Mayur Sheth on 9 December, 2022
Author: Sonia Gokani
Bench: Sonia Gokani
C/FA/1076/2019 JUDGMENT DATED: 09/12/2022
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/FIRST APPEAL NO. 1076 of 2019
With
CIVIL APPLICATION (FOR BREACH OF ORDER) NO. 1 of 2021
In R/FIRST APPEAL NO. 1076 of 2019
FOR APPROVAL AND SIGNATURE:
HONOURABLE MS. JUSTICE SONIA GOKANI
and
HONOURABLE MR. JUSTICE HEMANT M. PRACHCHHAK
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1 Whether Reporters of Local Papers may be allowed YES
to see the judgment ?
2 To be referred to the Reporter or not ? YES
3 Whether their Lordships wish to see the fair copy NO
of the judgment ?
4 Whether this case involves a substantial question NO
of law as to the interpretation of the Constitution
of India or any order made thereunder ?
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PRAKASH BABULAL SHETH
Versus
SHASHIKALAL MAYUR SHETH
==========================================================
Appearance:
MR JIGAR RAVAL ASSISTED BY VASIM MANSURI(8824) for the
Appellant(s) No. 1,2,3
for the Defendant(s) No. 2
DS AFF.NOT FILED (R) for the Defendant(s) No. 2.1,2.3
LD.SR.ADV.MR.MIHIR JOSHI ASSISTED BY MR SALIL M THAKORE(5821)
for the Defendant(s) No. 1
VAIBHAV V GOSWAMY(9019) for the Defendant(s) No. 2.2,2.4
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CORAM:HONOURABLE MS. JUSTICE SONIA GOKANI
and
HONOURABLE MR. JUSTICE HEMANT M.
PRACHCHHAK
Date : 09/12/2022
ORAL JUDGMENT
(PER : HONOURABLE MS. JUSTICE SONIA GOKANI) Page 1 of 86 Downloaded on : Sat Dec 24 02:30:33 IST 2022 C/FA/1076/2019 JUDGMENT DATED: 09/12/2022
1.This appeal arises from the judgment and decree passed by the trial Court in Regular Civil Suit No.2245 of 1998, which resulted in form of the original plaintiff and original defendant.
Factual Matrix:
2. Brief facts in capsulized form are as follow:
2.1 The appellants Nos.1 to 3 are the original defendants and the respondent No.1 is the original plaintiff. Respondent Nos.2/1 and 2/4 are the heirs of the deceased defendant No.4 and they are joined after the demise of the original defendant No.4, who is the father of the appellant.
Appellants and respondents shall be referred to as the defendant and plaintiff Page 2 of 86 Downloaded on : Sat Dec 24 02:30:33 IST 2022 C/FA/1076/2019 JUDGMENT DATED: 09/12/2022 respectively for the sake of convenience hereinafter.
2.3 It is the case of the plaintiff that the suit property was purchased in the year 1990 in her name through power of attorney- the defendant No.1. Because of the good family relations, the plaintiff with the consultation of her husband Mr.Mayur Sheth (since deceased) permitted all the defendants including her father-in-law to reside in the said house as defendants did not have personal property to reside. As and when the plaintiffs visited India, they also resided in the same house.
2.4 In the year 1996, when they visited India on 02.12.1996 to attend the marriage of Manushi, the daughter of defendant No.1 Page 3 of 86 Downloaded on : Sat Dec 24 02:30:33 IST 2022 C/FA/1076/2019 JUDGMENT DATED: 09/12/2022 which was held on 05.12.1996, some news were received by them regarding the alleged transaction that might be entered by the defendant No.1 regarding the suit property on the basis of the power of attorney which was given to the defendant No.1. Therefore, on 08.12.1996 a letter was issued to the defendant No.1 and sent through the simple post cancellilng the power of attoreney. The plaintiff with her husband had left India on 11.12.1996. On 12.12.1996 and 23.12.1996 they had issued the Registered A.D. Notice to the defendant No.1 through learned advocate and along with that also, the very letter issued on 08.12.1996 regarding cancellation of power of attorney was sent.
Page 4 of 86 Downloaded on : Sat Dec 24 02:30:33 IST 2022 C/FA/1076/2019 JUDGMENT DATED: 09/12/2022 2.5 Thereafter, on 09.12.1996, the defendant No.1 is alleged to have
fraudulently executed two registered sale deeds of suit property in favour of defendant Nos.2 and 3, his wife and son. It is also alleged that the plaintiff had not received any consideration shown in the sale deed. It is alleged that both the sale deeds are fraudulently made, without the consent of the plaintiff and therefore, two suits for cancellation of sale deed and to get back the possession from the defendant No.1 were preferred.
2.6 In the written statement, the defendant No.1 had taken a clear stand that as per the family settlement between defendant No.4 as the father and karta of Page 5 of 86 Downloaded on : Sat Dec 24 02:30:33 IST 2022 C/FA/1076/2019 JUDGMENT DATED: 09/12/2022 the family with both his sons i.e. defendant No.1 and husband of the plaintiff, transaction regarding the sale deed in favour of defendant Nos.2 and 3 had taken place. The defendants also narrated the entire background of the family in detail and pointed out that there were many family businesses in which the husband of the plaintiff was actively involved. Because of the financial crunch and the litigation regarding the family business, the family decided to send the husband of the plaintiff Mr.Mayur Sheth to United States of America so that one member can earn handsomely and thereafter can help the family. Even the adoption of Mr.Mayur Sheth by his paternal uncle Mr.Jayantibhai was also a part of the family settlement and it Page 6 of 86 Downloaded on : Sat Dec 24 02:30:33 IST 2022 C/FA/1076/2019 JUDGMENT DATED: 09/12/2022 is clear that the plaintiff and her husband resided in a joint family property throughout.
Issues:
3. The trial Court on the strength of pleadings framed the issues and evidence came to be recorded. The following issues were framed and the trial Court answered them as follow:
(1) whether the plaintiff proves that he is owner of the suit property?
(2) whether the plaintiff proves that the sale made by the defendant No.1 in favor of defendant No.2 and 3 dated 9-12-
96 is illegal and without any authority? (3) Whether the plaintiff is entitled for possession of the suit premises from defendant No.2 and 3? (4) Whether the plaintiff proves that in alternative, he is entitled to recover Rs.60 Lacs from the defendant No.1 along with 20% interest from the date of suit? (5) Whether the defendant proves that the power of attorney Page 7 of 86 Downloaded on : Sat Dec 24 02:30:33 IST 2022 C/FA/1076/2019 JUDGMENT DATED: 09/12/2022 in favour of defendant NO.1 was irrevocable and defendant was authorized to sell the property? (6) whether the plaintiff is entitled for the relief's claimed? (7) What order and decree?
8. My findings to the above issues is as follows:
Issue No.1: Affirmative Issue No.2: Affirmative Issue No.3: Affirmative Issue No.4: Negative Issue No.5: Negative Issue No.6: Affirmative Issue No.7: As per the final order."
Evidence: Oral and Documentary:
4. The oral and documentary evidences of the plaintiff and defendants are required to be noted as follow:
Plaintiff's Oral Evidences:
Sr.No. Particulars Exhibit Nos. 1 Deposition of the plaintiff himself 102 2 Deposition of the witness No.2 105 Mayur Jayantilal Sheth 3 Deposition of witness No.3 paras 124 S.Rangwala Page 8 of 86 Downloaded on : Sat Dec 24 02:30:33 IST 2022 C/FA/1076/2019 JUDGMENT DATED: 09/12/2022
Plaintiff's Documentary Evidences:-
Sr. No. Particulars Exhibit Nos. 1 The certified copy of Foreign 107 Inward Remittance issued by Andra Bank 2 Permission under Section 31(1) of 108 Foreign Exchange Regulation Act issued by Reserve Bank 3 Valuation report of the suit 131 property 4 Xerox copy of sale deed, serial 225 No.4474 given by Sub-registrar, Ahmedabad 5 Xerox copy of sale deed, serial 226 No.4474 given by Sub-registrar, Ahmedabad 6 Office copy of Notice issued to 227 Advocate of the defendant Defendant's Oral Evidences: Sr.No. Particular Exhibit Nos. 1 Xerox copy of plaintiff's passport 113 2 Xerox copy of plaintiff's husband 114 passport 3 Income Tax returned jointly filed 115 to 118 by the plaintiff and her husband in USA 4 Letter issued by Charles J. 119 Prathhas 5 Letter issued by Shailesh Shah 103 for 1 lakh Pounds 6 Xerox copy of IRC2009FED35, 120 160 Page 9 of 86 Downloaded on : Sat Dec 24 02:30:33 IST 2022 C/FA/1076/2019 JUDGMENT DATED: 09/12/2022
Defendant's Documentary Evidences:-
Sr.No. Particular Exhibit Nos.1. Partnership deed 122 2. General Power of Attorney 121 3. Bank Statement of plaintiff 136 4 5 Bank Statement of plaintiff 138 6 Agreement of sale of Suit 193
Property 7 Supplement agreement of sale 194 8 Bill No.9633 of Ahmedabad 195 Municipal Corporation 9 Bill No.1721 of Ahmedabad 196 Municipal Corporation 10 Bill No.1721 of Ahmedabad 197 Municipal Corporation 11 Dastavej Receipt No.557015 198 12 Bill No.13703 of Ahmedabad 199 Municipal Corporation 13 Bill No.14166 of Ahmedabad 200 Municipal Corporation 14 Payment receipt of Ahmedabad 202 Municipal Corporation 15 Bill No.13704 of Ahmedabad 203 Municipal Corporation 16 Bill No.14167 of Ahmedabad 204 Municipal Corporation 17 Bill No.2844 of Ahmedabad 205 Municipal Corporation 18 Bill No.2627 of Ahmedabad 206 Municipal Corporation 19 Bill No.2975 of Ahmedabad 207 Page 10 of 86 Downloaded on : Sat Dec 24 02:30:33 IST 2022 C/FA/1076/2019 JUDGMENT DATED: 09/12/2022 Municipal Corporation 20 Bill No.2976 of Ahmedabad 208 Municipal Corporation 21 Bill No.2450 of Ahmedabad 209 Municipal Corporation 22 Receipt of Ahmedabad Municipal 210 Corporation 23 Index Copy of Sub-registrar office 211 24 Index Copy of Sub-Registrar 212 Office 25 Payment receipt of LIC Policy 213 26 Payment receipt of LIC Policy 214
5. The Court after noticing that all issues are interconnected, to avoid repetition of the reason has discussed all of them together and eventually answered each one of them and allowed the suit of the plaintiff and decreed the same. It was declared that the defendant No.1 had no authority under the power of attorney dated 19.01.1983 to sell the suit property to defendant Nos.2 and 3 as has been done by Page 11 of 86 Downloaded on : Sat Dec 24 02:30:33 IST 2022 C/FA/1076/2019 JUDGMENT DATED: 09/12/2022 him with a further declaration that the plaintiff being the true and lawful owner of the suit property, continued to be the owner despite of the sale deed executed by the defendant No.1 in favour of defendant Nos.2 and 3. It is further declared that the sale effected by the defendant No.1 in favour of the defendant No.2 for half of the portion of suit property by registered conveyance deed dated 09.12.1996 is illegal, unauthorized and without any authority of law. The defendant Nos.2 and 3 have been directed to handover the vacant and peaceful possession of the suit property to the plaintiff within a period of three months. The further transfer of the property in any mode of manner has been also particularly prohibited. This has Page 12 of 86 Downloaded on : Sat Dec 24 02:30:33 IST 2022 C/FA/1076/2019 JUDGMENT DATED: 09/12/2022 aggrieved the defendants, who are before this Court by way of this present first appeal.
6. We have heard the learned advocates, Mr.Jigar Raval with Mr.Vasim Mansuri for the appellant and learned senior advocate, Mr.Mihir Joshi with learned advocate, Mr.Salil Thakore for the defendant No.1 and learned advocate, Mr.Vaibhav Goswami represented the defendant Nos.2.2 to 2.4.
They have also given their written submissions and substantiated their version with case laws decided by the Court. There may not be requirement of reproduction of the submissions, it would suffice to note down the authorities submitted by both the sides.
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C/FA/1076/2019 JUDGMENT DATED: 09/12/2022 6.1 On behalf of the defendants, reliance is placed on the following decisions:
(1) State of Rajasthan and others vs. Basant Nahata, reported in (2005) 12 SCC 77 (2) Krishna Mohan Kul alias Nani Charankul and another vs. Pratima Maity and others, reported in (2004) 9 SCC 468 (3) Sri U.Vijaya Kumar and another vs. Smt.Malini V. Rao, reported in ILR 2016 KAR 2670 (4) Mathra Das-Jagan Nath vs. Jiwan Mal-
Gian Chand, reported in ILR 1927 Lahore 7 (5) Nabi Khan (since deceased) through Lrs and others vs. Roojdar and others, reported in (2010) SCC Online Raj 604 (6) Central Board of Secondary Education and another vs. Aditya Bandopadhyay and Page 14 of 86 Downloaded on : Sat Dec 24 02:30:33 IST 2022 C/FA/1076/2019 JUDGMENT DATED: 09/12/2022 others, reported in (2011) 8 SCC 497 (7) Iswar Bhai C. Patel alias Bachubhai Patel vs. Harihar Behera and another, reported in (1999) 3 SCC 457 (8)Iqbal Basith and others vs. N.Subbalakshmi and others, reported in (2021) 2 SCC 718 (9) Ashwinkumar K. Patel vs. Upendra J. Patel and others, reported in AIR (1999) SC 1125 (10) Municipal Corporation, Hyderabad vs. Sunder Singh, reported in (2008) 8 SCC 485 (11) The Commissioner of Wealth Tax, Mysore vs. Her Highness Vijayaba, Dowger Maharani Saheb of Bhavnagar Palce, Bhavnagar and others, reported in (1979) 2 SCC 213.
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7. On the strength of the submissions as well as the evidence oral as well as documentary which have come on the record, the issues which had been framed by the Court will need to be regarded.
Issue No.1: Ownership.
7.1 Issue No.1 is as to whether the plaintiff is the owner of the suit property is concerned, which is answered in affirmation by the trial Court. 7.2 The property is situated at Sub-plot No.2-A of Final Plot No.795 of Ellisbridge, Town Planning Scheme No.III admeasuring 576 sq.yard i.e. 481 square meters of area on which the bungalow is constructed which shall be referred to as the suit property. 7.3 It appears that the defendant No.1 is a Page 16 of 86 Downloaded on : Sat Dec 24 02:30:33 IST 2022 C/FA/1076/2019 JUDGMENT DATED: 09/12/2022 son of defendant No.4 Babulal Laxmichand Sheth and defendant No.2 is the son of defendant No.1 and defendant No.3 is the wife of defendant No.1. Plaintiff is the wife of the brother of the defendant No.1. Mr.Mayur Sheth and thus, husband of the plaintiff and defendant No.1 are the real brothers and Mr.Babulal Laxmichand Sheth is the father-in-law of plaintiff. The plaintiff and her husband are residing abroad. It is the say of the family that they went abroad so that they can earn for the family and the family can prosper. According to the plaintiff, as she and her husband are residing abroad, there was a need for giving power of attorney to defendant No.1 for managing the bungalow as he is the sibling of her husband and the Page 17 of 86 Downloaded on : Sat Dec 24 02:30:33 IST 2022 C/FA/1076/2019 JUDGMENT DATED: 09/12/2022 same was given on 19.01.1983 to manage the property. The power of attorney had been executed on 05.01.1983 before the notary public Mr.B.F.Ujjaini where powers were given by the husband of the plaintiff to the defendant No.1. It is a matter of record and not being disputed that the suit property was purchased by the plaintiff from Mrs.Saralaben Hasmukhbhai Shah, Mr.Sunil Hasmukhbhai Shah, Miss Sonia Hasmukhbhai Shah and Miss Bela Hasmukhbhai Shah by a deed of conveyance on 08.02.1990 for a total consideration of Rs.16,50,000/-.
7.4 Defendant No.1 as the constituted attorney of the plaintiff had also got the names of the plaintiff and her husband Page 18 of 86 Downloaded on : Sat Dec 24 02:30:33 IST 2022 C/FA/1076/2019 JUDGMENT DATED: 09/12/2022 mutated in the Government Record. It appears that another original supplementary agreement of sale Exhibit 194 which was executed by those very owners in favour of the plaintiff on 14.12.1989 with regard to the suit property and the period of agreement dated 13.09.1989 had been extended upto 31.01.1990 as the vendors were not in a position to handover the suit property to the purchaser. The plaintiff had produced the registration fees receipt No.557015 and thus, it is clear that the property had been purchased by the plaintiff in the year 1989.
7.5 From the Tax Receipt, Municipal Corporation Tax Bills and various other documentary evidences from the Government Page 19 of 86 Downloaded on : Sat Dec 24 02:30:33 IST 2022 C/FA/1076/2019 JUDGMENT DATED: 09/12/2022 and Municipal Corporation would reveal that suit property was purchased by the plaintiff and her husband and defendant Nos.1, 2 and 3, who are residing in the suit property and plaintiff and her husband since were residing in USA, whenever they visited India, they would also reside with the family as the relationships were very cordial.
7.6 The Court on the strength of the registration receipt issued by the Sub- Registrar vide Exhibit 211 and all other documents including the Index Copy of Registration issued by the Sub-Registrar vide Exhibit 212 has rightly and unequivocally held that the suit property is owned by the plaintiff and her husband. Page 20 of 86 Downloaded on : Sat Dec 24 02:30:33 IST 2022
C/FA/1076/2019 JUDGMENT DATED: 09/12/2022 7.7 The plaintiff has brought on the record the income tax return of various years jointly filed by the plaintiff and her husband in USA vide Exhibit 115 to 118.
It appears that these returns are indicative of their income in USA which they are handsomely earned in USA. The certified copy of the letter issued by
Charles J.Prathhas Principal Hellam Version and Company has reflected the income through loan of plaintiff and her husband. Certified copy of the letter issued by Mr.Shailesh Shah stated that he had wired 1,00,000 Pounds on 30.01.1990 to the plaintiff and her husband at Commerce Bank of Washington in USA vide Exhibit 103. 7.8 The plaintiff has brought on the Page 21 of 86 Downloaded on : Sat Dec 24 02:30:33 IST 2022 C/FA/1076/2019 JUDGMENT DATED: 09/12/2022 record the certificate of foreign inward remittance issued by the Andra Bank (Exhibit 107). The remittance of the foreign currency in US $6000/- through DD No.11019 on 29.08.1989 from the Bank of India to San Francisco USA is also on record. The permission issued by the Reserve Bank of India under Section 31(1) of the Foreign Exchange Regulation Act, 1973 ('the FERA' Act hereinafter) to acquire immovable property in India dated 28.12.1989 also is indicative of the fact that the purchase of the suit property is made in December 1989 through the Foreign Currency. The valuation report in respect of the suit property as approved by the Government Registered valuer is also on record vide Exhibit 131. Mr.Paras Rangwala Page 22 of 86 Downloaded on : Sat Dec 24 02:30:33 IST 2022 C/FA/1076/2019 JUDGMENT DATED: 09/12/2022 also has deposed vide Exhibit 124 that the suit property was constructed in the year 1983-1984 and in the year 1996, the total value of the suit property was around Rs.60,26,000/-. It is in a posh locality of Ahmedabad and the value of the same was Rs.60,26,000/- in the year 1996. 7.9 As a US citizen, the plaintiff needed to seek permission of Reserve Bank of India under Section 31 of the FERA Act which has come on record. Even the permission for selling the property under Section 31(1) of the FERA Act was necessary as the person who is not the Indian citizen, even for transfer of such property the Reserve Bank permission is necessary. However, that aspect would be dilated while coming other Page 23 of 86 Downloaded on : Sat Dec 24 02:30:33 IST 2022 C/FA/1076/2019 JUDGMENT DATED: 09/12/2022 issues.
7.10 It is thus more than clear and got established that the plaintiff Shasikala Mayur Sheth is the owner of the suit property and hence, there is no requirement for any interference so far as the issue No.1 is concerned.
Issue Nos.2, 3 and 4
8. This brings this Court to the Issue No.2, 3 and 4 with regard to the sale made by the defendant No.1 of the property in question in his capacity as power of attorney to defendant Nos.2 and 3 his own wife and son on 09.12.1986 and whether the same is without the authority!! And whether the defendant is entitled to the possession of the property because of the family understanding of the parties!! Page 24 of 86 Downloaded on : Sat Dec 24 02:30:33 IST 2022 C/FA/1076/2019 JUDGMENT DATED: 09/12/2022 8.1 The major & principal grievance on the part of the plaintiff is in respect of this sale, which had been made by the defendant No.1 in favour of defendant Nos.2 and 3. It appears that in December 1996, when the plaintiff and her husband visited India in a normal course, they had stayed at the property owned by them and which was otherwise used by defendant No.1 and his family. The plaintiff got suspicious about the activity of the defendant No.1 and therefore, communication was sent to the defendant No.1 to cancel the power of attorney dated 08.12.1996 through M/s.C.C.Gandhi and Company and thus, the original power of attorney was cancelled by the plaintiff as per his say.
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C/FA/1076/2019 JUDGMENT DATED: 09/12/2022 8.2 After the receipt of the letter, the defendant No.1 on 09.12.1996 executed two sale deeds in favour of defendant Nos.2 and 3 his son and the wife for their own benefit. It appears that the plaintiff and her husband were in India from 02.12.1996 to 11.12.1996. The passports of plaintiff and her husband Exhibit 113 and 114 are on record. Visa stamp by the US Government and the Indian Government are indicative of the fact that they were in India from 02.12.1996 to 11.12.1996.
8.3 The Court must also take a note of the fact that in the written statement itself the defendant had taken a stand of oral understanding where the plaintiff's husband had agreed to provide for a house, purchase Page 26 of 86 Downloaded on : Sat Dec 24 02:30:33 IST 2022 C/FA/1076/2019 JUDGMENT DATED: 09/12/2022 price of the same was Rs.16.50 Lakh and additional money of Rs.50 Lakh to defendant No.1.
8.4 A heavy reliance is placed on the written statement and the letter of defendant No.4 Mr.Babulal Sheth the father of defendant No.1 and plaintiff's father- in-law. Defendant No.4' written statement is similar to the written statement of defendant No.1. So far as the letter dated 02.03.1998 of defendant No.4 is concerned, is not an exhibited document. Moreover, the letter is not referred to in defendant No.4's written statement nor was it produced by the defendant No.4 in the suit. However, in a list dated 07.01.2010/ 11.02.2010 after about 11 years of filing Page 27 of 86 Downloaded on : Sat Dec 24 02:30:33 IST 2022 C/FA/1076/2019 JUDGMENT DATED: 09/12/2022 of the suit, the same had been produced. The defendant No.4 has not stepped into the witness box.
8.5 From the year 2005 onwards, as per the cross examination of defendant No.1, he was living separately in a flat at Paldi. He lived with defendant No.4 from 1999 to 2005 then he lived in a flat opposite Dharnidhar Derasar. He passed away in the year 2019 and thus he lived separately from defendant No.1 for the last about 15 years. 8.6 Worthwhile also would be to consider the contention of the defendant No.1 that cancelled power of attorney letter dated 08.12.1996 is not exhibited and therefore, cannot be looked into by the Court, this includes the plaintiff's letter dated Page 28 of 86 Downloaded on : Sat Dec 24 02:30:33 IST 2022 C/FA/1076/2019 JUDGMENT DATED: 09/12/2022 23.12.1996 (Exhibit 144). It is not in dispute that the plaintiff's letter which canceles the power of attorney is already exhibited and the cancelled power of attorney can be looked into in plaintiff's cross examination, the same is put to the plaintiff by defendant No.1 and thus, the same has been referred to during the cross examination and therefore also there will be a need to look into the same.
8.7 It is thus not about the Court having relied upon the letter dated 08.12.1996 in respect of the legality of sell, however, while discussing all the issues simultaneously it has taken note of basic principle of agency and fiduciary relationship which necessiates that the Page 29 of 86 Downloaded on : Sat Dec 24 02:30:33 IST 2022 C/FA/1076/2019 JUDGMENT DATED: 09/12/2022 power of attorney given in a trust requires to be used for benefit of the principal and not for the benefit of oneself or the relative. The cencellation of power of attorney is one of the grounds noted by the Court. However, it has also simultaneously taken note of the dubious nature of the transaction in favour of the wife and son of defendant No.1 without the consent of the principal as also the absence of any consideration not to talk about the valuation as per the report of the Government Approved Valuer.
8.8 Noticing the fact that the operation of Bank Account by the power of attorney himself and the transactions shrouded with suspicion and ambiguities. Let the Court to Page 30 of 86 Downloaded on : Sat Dec 24 02:30:33 IST 2022 C/FA/1076/2019 JUDGMENT DATED: 09/12/2022 refer to the fact that the plaintiff was in India when the sale deed was executed in favour of close relative of defendant No.1 his wife and his son.
8.9 In the opinion of this Court, the sale deed has been set aside on various grounds and not only on the ground of cancellation of power of attorney. Even otherwise, Order XLI Rule 27 of the Code of Civil Procedure permits the Court to confirm the decree on the grounds other than those on which the Civil Court has passed the decree. The Appellate Court has in various decisions emphasised that the remand should be the last resort as that has a tendency of causing undesirable delay and prejudice to the party.
Page 31 of 86 Downloaded on : Sat Dec 24 02:30:33 IST 2022 C/FA/1076/2019 JUDGMENT DATED: 09/12/2022 8.10 So far as the cancellation of power of attorney is concerned, it is the defence of the defendant that the learned judge has set aside the sale deeds only on the ground of cancellation of power of attorney by a letter dated 08.12.1996 and it is undisputedly made clear that only the grounds appealed is the letter dated 08.12.1996 regarding the cancellation of power of attorney by the plaintiff before execution of the sale deed on 09.12.1996. 8.11 It is also the defence put-forth that the communication dated 08.12.1996 is not exhibited and not proved. According to the defendants, at the time of filing the written statement, 15 documents had been produced vide Exhibit 41. Four documents in Page 32 of 86 Downloaded on : Sat Dec 24 02:30:33 IST 2022 C/FA/1076/2019 JUDGMENT DATED: 09/12/2022 original form were produced along with examination in chief (Exhibit 142) with postal receipts (Exhibit 141). The request is made to the trial Court to exhibit those documents. This contained the communication by the original defendant No.2 to the plaintiff and her husband on 11.01.1997, a letter dated 18.02.1997 and the third letter by the father-defendant No.4 to the plaintiff and her husband on 02.03.1998 (list Exhibit 41/1,41/3 and 41/13). They are original communications which were identified by the defendant in the examination in chief, which ought to have been executed by the trial Court and taken into consideration. However, when the same has not been done,there is a need for considering this request afresh and Page 33 of 86 Downloaded on : Sat Dec 24 02:30:33 IST 2022 C/FA/1076/2019 JUDGMENT DATED: 09/12/2022 therefore, the remand of the matter shall be necessary.
8.12 It is also the case of the defendant No.1 that the father of the plaintiff-husband defendant No.4 always felt that it was his responsibility to settle all the children in different vocations and certain understanding and settlement had been arrived at. It was decided that the husband of the plaintiff and his family were well settled in USA. They should be separated from defendant No.1 and defendant No.4 would stay with the family of the defendant No.1 along with their mother.
8.13 Thus, family settlement was made orally as per the deposition vide Exhibit Page 34 of 86 Downloaded on : Sat Dec 24 02:30:33 IST 2022 C/FA/1076/2019 JUDGMENT DATED: 09/12/2022 142 in order to work out the settlement, house was required to be provided to the defendant No.1 for his children and parents and the amount of Rs.50 Lakh or equivalent was to be paid by Mr.Mayur Sheth and for that very purpose the power of attorney was executed on 19.01.1983 and the purchase of the property was as per the understanding of the parties in the name of the plaintiff as some tax benefit was to be derived from USA and on account of some litigations pending against the defendant No.4, Mr.Mayur Sheth the brother of the defendant No.1 and the husband of the plaintiff had sent $ 1,00,000/- and the purchase of the property was made in the name of the plaintiff. This understanding was verbal and hence, the same is not on record. Page 35 of 86 Downloaded on : Sat Dec 24 02:30:33 IST 2022
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9. According to the plaintiff, this is all a story made out after once the defendant No.1 has misused the power of attorney given to him. The property was not purchased in the name of the plaintiff's husband Mr.Mayur Sheth, but instead it is purchased in the name of the plaintiff. There is no document indicating any pending litigation against the defendant No.4. It is also their say that the property was purchased in the year 1989 for the consideration of Rs.16.50 Lakh whereas the remittance from the husband of the plaintiff was of Rs.50 Lakh ($ 1,00,000/-), the detail of remaining amount has not forthcoming.
10. It appears from the deposition of Page 36 of 86 Downloaded on : Sat Dec 24 02:30:33 IST 2022 C/FA/1076/2019 JUDGMENT DATED: 09/12/2022 Mr.Paras Rangwala, who has given the valuation of suit property being a Registered Government Valuer that he visited the property on 25.03.2009 and value he has assessed in the year 2009 is Rs.60 Lakh.
11. It is necessary to make a mention here that the defendant No.4 Mr.Babulal Laxmichand Sheth, the father of Mr.Mayur Sheth and defendant No.1 was quite annoyed with the conduct of his son Mayur and his wife Shasikala Mayur Shah the plaintiff. He therefore, filed an application to be impleaded as a party respondent, which was allowed by the Court and the same was challenged in the Revision before the Gujarat High Court which had failed. Page 37 of 86 Downloaded on : Sat Dec 24 02:30:33 IST 2022 C/FA/1076/2019 JUDGMENT DATED: 09/12/2022 11.1 He then filed his written statement at Exhibit 36 stating therein that Mr.Mayur Sheth was a partner in all the firms run by joint family and hence, he visited India for more than 18 times. In the year 1996, mother of Mr.Mayur Sheth and Mr.Prakash Sheth, the wife of the defendant No.4 passed away. Mr.Mayur Sheth had suggested the the bungalow to be sold of without disturbing the occupancy of the defendant Nos.1 and 4 and the purchase price thereof may be invested in a manner as would fetch the return equivalent to the expenses as there were overheads which were not possible to be met with.
11.2 In September 1996, defendant No.3 suggested that he and his family members should not be allowed to feel that they are Page 38 of 86 Downloaded on : Sat Dec 24 02:30:33 IST 2022 C/FA/1076/2019 JUDGMENT DATED: 09/12/2022 a burden as the bungalow with the occupancy had not been sold. The defendant No.4 continued his occupancy as of right, and therefore, it was decided that the bungalow should be purchased by one or more of the family members for the suitable price. After Mr.Mayur Sheth left for USA, the issue was discussed many a times and phone calls also were made and it was agreed that Mr.Mayur Sheth and his wife Mrs.Shashikala Sheth that the family members may purchase the property at such price as may be quoted or agreed by the defendant No.4 as a head of the family and his decision would be binding upon one and all. The defendant No.1 since had a general power of attorney, the transaction has been completed even without the presence of the plaintiff and Page 39 of 86 Downloaded on : Sat Dec 24 02:30:33 IST 2022 C/FA/1076/2019 JUDGMENT DATED: 09/12/2022 Mr.Mayur Sheth and when they were scheduled to visit India in December 1996 to attend the marriage of Manushi, the daughter of defendant No.1, they attended the same on 05.12.1996, when everything was discussed on telephone was refreshed and after the marriage the papers were completed and in favour of defendant Nos.2 and 3, this registration had been done.
11.3 The plaintiff and Mr.Mayur Sheth were in a hurry to leave India therefore, they requested the defendant No.1 to complete the transaction as was decided under the guidance of defendant No.4. He also left it to the discretion of the defendant No.4 to decide the price and hence, the conveyance was executed. Both Page 40 of 86 Downloaded on : Sat Dec 24 02:30:33 IST 2022 C/FA/1076/2019 JUDGMENT DATED: 09/12/2022 defendant Nos.2 and 3 had paid Rs.10 Lakh as a price of consideration. In the overall interest of the family and as per the wish of the defendant No.4, this amount was decided to be the amount of consideration. They also had expressed the wish to send more amount from USA for the betterment of the family. Thus, it was the say of the defendant No.1 in his deposition that the reason for use of the power of attorney and the sale of property in question in favour of his wife and son was in this background. The copy of the sale deed Exhibits 225 and 226 have been produced on record.
11.4. The version puts forth creates a serious doubt as held by the Court
concerned rightly this wise that if there Page 41 of 86 Downloaded on : Sat Dec 24 02:30:33 IST 2022 C/FA/1076/2019 JUDGMENT DATED: 09/12/2022 was an oral understanding amongst the family members, there was no requirement for the sale deed to be executed by way of a family settlement or a gift deed, the transfer could have been easily made possible. The Court cannot be oblivious of the fact that the plaintiff had already issued a notice to the defendant No.1 for cancellation of power of attorney on 08.12.1996 declaring the power of attorney as cancelled. He being an agent by virtue of such power of attorney could not have executed sale deed in favour of his own wife and son by Registration Nos.4474 and 4475 dated 09.12.1996.
11.5 Again, the plaintiff and her husband were in India and they resided with Page 42 of 86 Downloaded on : Sat Dec 24 02:30:33 IST 2022 C/FA/1076/2019 JUDGMENT DATED: 09/12/2022 the defendant and therefore, there was no earthly reason for them not to be the part of this transaction. Again, the amount of Rs.20 Lakh, which has been paid by way of sale consideration by various cheques each of Rs.2 Lakh also has a history for which the Bank employee was needed to be examined.
12. The defendant No.3 paid Rs.10 Lakh by cheque No.206636, 206637, 206638, 206639 and 206640 on 09.12.1996, each of Rs.2 Lakh. The amount had been deposited in the Bank on 10.12.1996 and on the very day the same had been withdrawn. The defendants did not produce the Bank Statement of theirs on their own.
12.1 Apt would be to refer here to the Page 43 of 86 Downloaded on : Sat Dec 24 02:30:33 IST 2022 C/FA/1076/2019 JUDGMENT DATED: 09/12/2022 deposition of the Bank employee and the statement of account of Andhra Bank from 10.12.1996 to 05.08.2002 produced by the plaintiff of the account No.S.B.NRO/1/1.
The account holder is plaintiff Mrs.Shashikala Mayur Sheth and account is operated by Mr.Prakash Babulal Sheth defendant No.1 as a power of attorney holder. Two times Rs.10 Lakh had been credited in the account on 10.12.1996 by way of transfer and the same was withdrawn on the very day on 10.12.1996 by self. The defendant No.1 argued that the plaintiff withdrew this amount by self. Contrary to this submission, it is all along on record that the power of attorney holder defendant No.1 was operating the account. A copy of ledger and account of statement issued by Page 44 of 86 Downloaded on : Sat Dec 24 02:30:33 IST 2022 C/FA/1076/2019 JUDGMENT DATED: 09/12/2022 the Andhra Bank have also come on the record.
13. The Bank Account of plaintiff in the Bank Statement specifies at the top "General Power of Attorney Holder; Mr.Prakash B. Sheth". Withdrawal of money by the plaintiff is not even contended in the written statement. As rightly pointed out by the learned counsel for the plaintiff that the defendant No.1 had claimed that Mr.Mayur Sheth while leaving India has expressed the desire to send further amount for the comfort of Mr.Babulal Sheth. If that was his desire, as expressed by the defendant No.1, it would demolish his case that the plaintiff had withdrawn the money from her Bank Page 45 of 86 Downloaded on : Sat Dec 24 02:30:33 IST 2022 C/FA/1076/2019 JUDGMENT DATED: 09/12/2022 account on 10.12.1996 as on one hand Mr.Mayur Sheth would be withdrawing this amount of consideration and on the other hand expressed his desire to send the further amount. Assuming that two could not be correlated, it is also the say of the defendant No.1 that Mr.Mayur Sheth needed to pay Rs.50 Lakh more as per the oral family arrangement. Had that been the case and if the plaintiff and her husband has no objection to such a transfer, there could not have been the withdrawal of Rs.20 Lakh as averred by defendant No.1.
13.1 Again, as mentioned above so far as sale deed No.4474 is concerned, the amount of consideration is Rs.10 Lakh by way of five cheques each of Rs.2 Lakh written on Page 46 of 86 Downloaded on : Sat Dec 24 02:30:33 IST 2022 C/FA/1076/2019 JUDGMENT DATED: 09/12/2022 09.12.1996. However, the sale deed No.4475 indicates that the amount of Rs.10 Lakh was received by five cheques of Rs.2 Lakh each dated 09.12.1996. In the Bank Statement instead of 10 cheques of Rs.2 Lakh each, only two credit entries of Rs.20 Lakh each and no 10 entries of Rs.2 Lakh each is reflected. This also is arising serious doubt about the genuineness of the transaction. This withdrawal behind the back of the plaintiff and her husband who were very much in India speaks a volume about the conduct of the parties. 13.2 Again, as per the report of Government Registered and Approved Valuer, Mr.Paras Rangwala the value was at least of Rs.60 Lakh of the property whereas what has Page 47 of 86 Downloaded on : Sat Dec 24 02:30:33 IST 2022 C/FA/1076/2019 JUDGMENT DATED: 09/12/2022 been found here is that the sale deeds have been executed without consideration and if at all the sale consideration has been paid, it is much below what the market value of the property was.
13.3 Again, the plaintiff being the citizen of USA as discussed above is obligated to seek prior permission of Reserve Bank before the sale is made by her. No such permission was taken prior to the sale in the year 1996, which again is in violation of Section 31 of the FERA Act. Any such transaction without the permission of Reserve Bank would be violative of Section 31 of the FERA Act.
14. In these circumstances, the Court needs to regard the principle of agency which is Page 48 of 86 Downloaded on : Sat Dec 24 02:30:33 IST 2022 C/FA/1076/2019 JUDGMENT DATED: 09/12/2022 well established and pressed into service for and on behalf of the respondent- original plaintiff. Agent is not required to use the power of attorney for his own benefit and if he so does it, the burden of proving that this transaction was made in a good way and is fair and reasonable would always be on a person who claims the same to be a genuine transaction. Otherwise also, it is for the agent to establish that the action was with the consent of the principal and the price paid was of a full value of the property so purchased.
15. The Apex Court in case of State of Rajasthan and others vs. Basant Nahata, reported in (2005) 12 SCC 77 has made it clear that the power of attorney holder Page 49 of 86 Downloaded on : Sat Dec 24 02:30:33 IST 2022 C/FA/1076/2019 JUDGMENT DATED: 09/12/2022 acts in a fiduciary capacity and he cannot use the power for his own benefit. 15.1 The Apex Court has held and observed thus:
"52.Execution of a power of attorney in terms of the provisions of the Contract Act as also the Powers-of- Attorney Act is valid. A power of attorney, we have noticed hereinbefore, is executed by the donor so as to enable the donee to act on his behalf. Except in cases where power of attorney is coupled with interest, it is revocable. The donee in exercise of his power under such power of attorney only acts in place of the donor subject of course to the powers granted to him by reason thereof. He cannot use the power of attorney for his own benefit. He acts in a fiduciary capacity. Any act of infidelity or breach of trust is a matter between the donor and the donee.
15.2 The Apex Court in case of Krishna Mohan Kul alias Nani Charan Kul and another vs. Pratima Maity and other, reported in (2004) 9 SCC 468 also has held Page 50 of 86 Downloaded on : Sat Dec 24 02:30:33 IST 2022 C/FA/1076/2019 JUDGMENT DATED: 09/12/2022 that when a person in a fiduciary relationship with another is in a position of active confidence, it will be his onus to prove that there is a absence of fraud, misrepresentation and undue influence and that the transaction was fair and real and genuine as well. The burden of proving the good faith of the transaction is thrown upon the dominant party, the party who is in a position of active confidence.
"12. As has been pointed out by the High Court, the first Appellate Court totally ignored the relevant materials and recorded a completely erroneous finding that there was no material regarding age of the executant when the document in question itself indicated the age. The Court was dealing with a case where an old, ailing illiterate person was stated to be the executant and no witness was examined to prove the execution of the deed or putting of the thumb impression. It has been rightly noticed by the High Court that the courts below have wrongly placed onus to prove execution of the deed by Dasu Charan Kul on the plaintiffs.Page 51 of 86 Downloaded on : Sat Dec 24 02:30:33 IST 2022
C/FA/1076/2019 JUDGMENT DATED: 09/12/2022 There was challenge by the plaintiffs to validity of the deed. The onus to prove the validity of the deed of settlement was on defendant No. 1. When fraud, mis-representation or undue influence is alleged by a party in a suit, normally, the burden is on him to prove such fraud, undue influence or misrepresentation. But, when a person is in a fiduciary relationship with another and the latter is in a position of active confidence the burden of proving the absence of fraud, misrepresentation or undue influence is upon the person in the dominating position, he has to prove that there was fair play in the transaction and that the apparent is the real, in other words, that the transaction is genuine and bona fide. In such a case the burden of proving the good faith of the transaction is thrown upon the dominant party, that is to say, the party who is in a position of active confidence. A person standing in a fiduciary relation to another has a duty to protect the interest given to his care and the Court watches with zealously all transactions between such persons so that the protector may not use his influence or the confidence to his advantage. When the party complaining shows such relation, the law presumes everything against the transaction and the onus is cast upon the person holding the position of confidence or trust to show that the transaction is perfectly fair and reasonable, that no advantage has been taken of his position. This principle has been engrained in Section 111 of the Indian Evidence Act, 1872 (in short the 'Evidence Act'). The rule Page 52 of 86 Downloaded on : Sat Dec 24 02:30:33 IST 2022 C/FA/1076/2019 JUDGMENT DATED: 09/12/2022 here laid down is in accordance with a principle long acknowledged and administered in Courts of Equity in England and America. This principle is that he who bargains in a matter of advantage with a person who places a confidence in him is bound to show that a proper and reasonable use has been made of that confidence. The transaction is not necessarily void ipso facto, nor is it necessary for those who inpeach it to establish that there has been fraud or imposition, but the burden of establishing its perfect fairness, adequacy and equity is cast upon the person in whom the confidence has been reposed. The rule applies equally to all persons standing in confidential relations with each other. Agents, trustees, executors, administrators, auctioneers, and others have been held to fall within the rule. The Section requires that the party on whom the burden of proof is laid should have been in a position of active confidence. Where fraud is alleged, the rule has been clearly established in England that in the case of a stranger equity will not set aside a voluntary deed or donation, however, improvident it may be, if it be free from the imputation of fraud, surprise, undue influence and spontaneously executed or made by the donor with his eyes open. Where an active, confidential, or fiduciary relation exists between the parties, there the burden of proof is on the donee or those claiming through him. It has further been laid down that where a person gains a great advantage over another by a voluntary instrument, the burden of proof Page 53 of 86 Downloaded on : Sat Dec 24 02:30:33 IST 2022 C/FA/1076/2019 JUDGMENT DATED: 09/12/2022 is thrown upon the person receiving the benefit and he is under the necessity of showing that the transaction is fair and honest."
15.3 In case of Sri U. Vijaya Kumar and another vs. Smt.Malini V.Rao, reported in ILR 2016 KAR 2670 a deed was executed by the attorney in favour of his own wife. The Court after examining the provisions of Indian Contract Act particularly Section 215 of the Indian Contract Act has held that it is clear that the sale deed was executed without the plaintiff's knowledge and consent and the same is disadvantageous to the plaintiff. The defendants had concealed the same from her and hence, the plaintiff has repudiated the transaction. The Court held that the agent is bound not only not to injure the interest of his Page 54 of 86 Downloaded on : Sat Dec 24 02:30:33 IST 2022 C/FA/1076/2019 JUDGMENT DATED: 09/12/2022 principal, but also to further it. He is not to place himself in a position where his interest might be adverse to that of the principal.
"29. In the instant case, there is no dispute that the plaintiff was the owner of 'A' schedule property and the sale deeds stand in her name. The possession of the property is with the 1st defendant; he is also the Power of Attorney Holder of the plaintiff. The plaintiff is a resident of USA and the 1st defendant by virtue of the Power of Attorney, is managing the schedule 'A' property. Now, under the same Power of Attorney the 1st defendant has executed a sale deed in his wife's favour in respect of the 'B' schedule property for a consideration of Rs.5,00,000/- without the knowledge and consent of the plaintiff. The 1st defendant being the agent is now claiming adverse interest of his own in the property. By such transaction, a cloud is cast upon the title of the plaintiff over the 'B' schedule property.
30. From the evidence on record it is clear that the sale deed was executed without the plaintiff's knowledge and consent and it is disadvantageous to her. The defendants concealed the same from her and therefore the plaintiff has repudiated the transaction. The defendants are since Page 55 of 86 Downloaded on : Sat Dec 24 02:30:33 IST 2022 C/FA/1076/2019 JUDGMENT DATED: 09/12/2022 asserting title over 'B' schedule property by denying the plaintiff's title, it has become necessary for the plaintiff to seek a declaration that the said sale deed is null and void and does not bind her. Section 34 of the Specific Relief Act confers on the plaintiff a right to seek such declaration.
***
37. An agent is bound not only not to injure the interest of his principal, but also to further it. This means that the agent should not place himself in a position where his interest might be adverse to that of the principal. No agent will be permitted to put himself in a position where his interest conflicts with his duty and therefore, he must not enter into any transaction which is likely to produce such results. If an agent desires to do so, he must confide in the principal and must obtain his prior consent. An agent cannot, without the knowledge or consent of his principal, be allowed to make any profit out of the subject matter of his agency beyond the proper remuneration as an agent. An agent therefore, may not use his position as an agent or his principal's property, or confidential information arising from the agency for making a profit for himself.
38. Where an agent employed to sell, becomes the purchaser himself, then he must show beyond reasonable doubt, that this was with the knowledge and consent of Page 56 of 86 Downloaded on : Sat Dec 24 02:30:33 IST 2022 C/FA/1076/2019 JUDGMENT DATED: 09/12/2022 the Principal and that the price paid was the full value of the property so purchased. Thus, in order to set-aside a transaction by an agent dealing on his own account, the agent should have concealed material fact dishonestly or that the dealing should have been to the disadvantage of the principal.
39. A principal who seeks to set-aside a transaction on the ground that the provisions of Section 215 of Indian Contract Act have been violated must take proceedings for that purpose within a reasonable time after becoming aware of the circumstances relied on. The burden of proof lies on the agent to prove full disclosure or that the transaction is not disadvantageous to the principal.
40. What is disadvantageous to the principal and what is not depends upon the facts of each case. Anyone standing in the position of an agent cannot be allowed to put his duty in conflict with the principal's interest. If the principal proves that his consent had not been obtained for such an act and that the agent had not acquainted him with all material circumstances, it is not further necessary for him to establish any dishonest concealment by the agent or that the transaction was to his disadvantage. Any transaction creating conflict between the agent's duty and the interest of the principal, must be presumed to be disadvantageous to the principal who is not informed of the fact. When there is no disclosure, the Page 57 of 86 Downloaded on : Sat Dec 24 02:30:33 IST 2022 C/FA/1076/2019 JUDGMENT DATED: 09/12/2022 fairness of the transaction is immaterial and such transaction should be voidable at the principal's option.
41. In the instant case, admittedly the plaintiff who is the owner of 'A' schedule property executed a General Power of Attorney in favour of her brother, the first defendant on 15.07.1995. The evidence on record shows that a portion of the 'A' schedule property measuring about 12,070 square feet as described in the 'B' schedule is sold by the first defendant in favour of his own wife, the second defendant for a sum of Rs.5,00,000/- while the market price of the property as per Government guidelines was Rs.96,56,000/-. This would demonstrate that the transaction between the defendants is a nominal one and in fact, the 1st defendant has purchased the property for himself and his wife is only a name lender.
42. The material on record discloses that Ex.P3, the MOU between the plaintiff and the 1st defendant is silent about the plaintiff agreeing for such sale. In Ex.P18, e- mail dated 08.01.2009 the 1st defendant requests the plaintiff to sacrifice 30% of the sale value of 'A' schedule property to him and his family and to decide the sale price. He has also advised the plaintiff not to go for distress sale of the said property owing to bad condition of real estate market. He had even advised her to wait for two years and to permit him to run the industry for two years. In this background if one were to consider the Page 58 of 86 Downloaded on : Sat Dec 24 02:30:33 IST 2022 C/FA/1076/2019 JUDGMENT DATED: 09/12/2022 defense put forth by the 1st defendant, it would be patently fallacious and unacceptable.
43. It is also seen from the evidence on record that an attempt was made by the defendants to conceal the sale transaction in question, after depositing Rs.5,00,000/- into her account, by erasing her name in the statement of accounts and inserting the 2nd defendant's name in that place. So that she would not come to know about such deposit and take any action against the defendants immediately. Not only this, the 1st defendant has sold a property worth Rs.96,00,000/- just for Rs.5,00,000/- and this could by no stretch of imagination be said to be advantageous to the plaintiff. The plaintiff thus has every right to repudiate the transaction and such a statutory right is conferred upon the principal under Section 215 of the Indian Contract Act. The trial court, after appreciating the legal evidence on record, has come to the right conclusion and we do not find any reasons to interfere with the same."
15.4 In case of Mathra Das-Jagan Nath vs. Jiwan Mal-Gian Chand, reported in ILR 1927 Lahore 7 the Court was examining the power of attorney, his conduct of entering Page 59 of 86 Downloaded on : Sat Dec 24 02:30:33 IST 2022 C/FA/1076/2019 JUDGMENT DATED: 09/12/2022 into the transaction where his personal interest conflicted his duty towards the principal, to hold that except with the consent of the latter, he would not be permitted to enter into any such transaction.
15.5 The Court also referred to the decision of Lagunas Nitrate Coy. vs. Lagunas Syndicate where the Court has held that it is an equitable rule, which has always been guarded and enforced with utmost jealousy, that no fiduciary agent shall intentionally place himself in a position in which his interest may conflict with his duty.
15.6 In case of Nabi Khan (since deceased) through Lrs and ors. vs. Roojdar Page 60 of 86 Downloaded on : Sat Dec 24 02:30:33 IST 2022 C/FA/1076/2019 JUDGMENT DATED: 09/12/2022 and ors, reported in (2010) SCC OnLine Raj 604 the transaction by a person in his own favour had been set aside by the Court.
"13. I have given my thoughtful consideration to the rival submissions and I have perused the record. In the present case it is not in dispute that as per the plaintiff Nabi Khan, an agreement for sale was entered into by Khurshid, the power of attorney holder of the defendant Chand Mal for the sale of the land in dispute. Khurshid is the son of the plaintiff and on the basis of the power of attorney executed by the defendant Chand Mal in favour of Khurshid, the agreement to sell of the land in dispute has been executed by the Khurshid on behalf of the defendant Chand Mal. Even if the other evidence and the fact as to whether the deceased defendant Chand Mal only executed the power of attorney for the purpose of effecting the partition of the land in dispute and for representing the deceased defendant in various courts and offices for the said purpose in favour of Khurshid as the deceased defendant Chand Mal was residing in the State of Haryana at the relevant time is ignored for the time being and only the validity of the agreement and whether specific performance of the same can be asked for in the facts of the case read with Section 215 of the Contract Act, 1872, I am inclined to agree with the submissions of the learned Page 61 of 86 Downloaded on : Sat Dec 24 02:30:33 IST 2022 C/FA/1076/2019 JUDGMENT DATED: 09/12/2022 counsel for the defendant-respondents that the provisions of Section 215 of the Indian Contract Act, 1872 are attracted in the present case. Section 215 of the Indian Contract Act, 1872 reads as follows:-
"215. Right of principal when agent deals, on his own account, in business of agency without principal's consent. If an agent deals on his own account in the business of the agency, without first obtaining the consent of his principal and acquainting him with all material circumstances which have come to his own knowledge on the subject, the principal may repudiate the transaction, if the case shows, either that any material fact has been dishonestly concealed from him by the agent, or that the dealings of the agent have been disadvantageous to him."
14. A look at the above provision together with the Illustration (a) below the Section 215 of the Indian Contract Act, 1872 which his as follows:-
"(a) A directions B to sell A's estate. B buys the estate for himself in the name of C. A, 'on discovering that B has bought the estate for himself, may repudiate the sale, if he can show that B has dishonestly concealed any material fact, or that the sale has been disadvantageous to him."
15. It is clear that the said provision is attracted to Page 62 of 86 Downloaded on : Sat Dec 24 02:30:33 IST 2022 C/FA/1076/2019 JUDGMENT DATED: 09/12/2022 the facts of the present case.
16. It is not the case of the plaintiff nor so stated by the power of attorney PW-2 Khurshid that he had apprised Chand Mal about the transaction with Nabi, the plaintiff, and obtained his consent because the power of attorney holder PW-2 Khurshid was none other than the son of the plaintiff Nabi Khan. In the transaction the interest of Khurshid, the agent of the defendant, was inherent at the land was agreed to be sold to his father.
17. Applying the facts of the present case, it is clear from the evidence of the plaintiff himself that at the relevant time of the execution of the alleged agreement for sale on 17.02.1986 the price of land was much higher than Rs.6,000/- per bigha which was agreed to by the power of attorney holder Khurshid, the son of the plaintiff while entering into the agreement for sale with the plaintiff. Thus, the agreement having been made at a price much below what was the price of land at the relevant time, as admitted by the plaintiff of Rs.50,000/- in 1992 the price could safely have been Rs.20,000/- as determined by the learned trial court in 1986. The said agreement was definitely disadvantageous to the principal in the facts and circumstances of the case. On account of the above, the principal (deceased defendant Chand Mal) was entitled to repudiate the contract.
Page 63 of 86 Downloaded on : Sat Dec 24 02:30:33 IST 2022 C/FA/1076/2019 JUDGMENT DATED: 09/12/2022
18. Looking at it from another angle, the son Khurshid, the power of attorney holder had entered into an agreement with the plaintiff Nabi Khan who is none other than the father of the power of attorney holder Khurshid it can safely be inferred that the agreement had been entered into by the agent creating an interest in his own favour. There is no evidence in the present case to suggest that Khurshid while doing so had taken the consent of the deceased defendant Chand Mal. Thus, both the conditions which are there under Section 215 of the Indian Contract Act, 1872 are attracted to the facts and circumstances of the present case. In that view of the matter, the plaintiff is not entitled to have the specific performance of the agreement (Exhibit-2)"
15.7 In case of Central Board of Secondary Education and another vs. Aditya Bandopadhyay and others, reported in (2011) 8 SCC 497 the idea of fiduciary relationship has been explained in detailed by the Apex Court.
"38.The term 'fiduciary' and 'fiduciary relationship' refer to different capacities and relationship, involving a common duty or obligation.Page 64 of 86 Downloaded on : Sat Dec 24 02:30:33 IST 2022
C/FA/1076/2019 JUDGMENT DATED: 09/12/2022 38.1 Black's Law Dictionary defines 'fiduciary relationship' thus:
"A relationship in which one person is under a duty to act for the benefit of the other on matters within the scope of the relationship. Fiduciary relationships - such as trustee-beneficiary, guardian-ward, agent- principal, and attorney-client - require the highest duty of care. Fiduciary relationships usually arise in one of four situations : (1) when one person places trust in the faithful integrity of another, who as a result gains superiority or influence over the first, (2) when one person assumes control and responsibility over another, (3) when one person has a duty to act for or give advice to another on matters falling within the scope of the relationship, or (4) when there is a specific relationship that has traditionally been recognized as involving fiduciary duties, as with a lawyer and a client or a stockbroker and a customer."
38.2 American Restatements (Trusts and Agency) define 'fiduciary' as one whose intention is to act for the benefit of another as to matters relevant to the relation between them. The Corpus Juris Secundum attempts to define fiduciary thus :
"A general definition of the word which is Page 65 of 86 Downloaded on : Sat Dec 24 02:30:33 IST 2022 C/FA/1076/2019 JUDGMENT DATED: 09/12/2022 sufficiently comprehensive to embrace all cases cannot well be given. The term is derived from the civil, or Roman, law. It connotes the idea of trust or confidence, contemplates good faith, rather than legal obligation, as the basis of the transaction, refers to the integrity, the fidelity, of the party trusted, rather than his credit or ability, and has been held to apply to all persons who occupy a position of peculiar confidence toward others, and to include those informal relations which exist whenever one party trusts and relies on another, as well as technical fiduciary relations.
The word 'fiduciary,' as a noun, means one who holds a thing in trust for another, a trustee, a person holding the character of a trustee, or a character analogous to that of a trustee, with respect to the trust and confidence involved in it and the scrupulous good faith and candor which it requires; a person having the duty, created by his undertaking, to act primarily for another's benefit in matters connected with such undertaking. Also more specifically, in a statute, a guardian, trustee, executor, administrator, receiver, conservator, or any person acting in any fiduciary capacity for any person, trust, or estate. Some examples of what, in particular connections, the term has been held to include and not to include are Page 66 of 86 Downloaded on : Sat Dec 24 02:30:33 IST 2022 C/FA/1076/2019 JUDGMENT DATED: 09/12/2022 set out in the note."
38.3 Words and Phrases, Permanent Edition defines 'fiducial relation' thus :
"There is a technical distinction between a 'fiducial relation' which is more correctly applicable to legal relationships between parties, such as guardian and ward, administrator and heirs, and other similar relationships, and 'confidential relation' which includes the legal relationships, and also every other relationship wherein confidence is rightly reposed and is exercised.
Generally, the term 'fiduciary' applies to any person who occupies a position of peculiar confidence towards another. It refers to integrity and fidelity. It contemplates fair dealing and good faith, rather than legal obligation, as the basis of the transaction. The term includes those informal relations which exist whenever one party trusts and relies upon another, as well as technical fiduciary relations."
38.4 In Bristol and West Building Society vs. Mothew the term fiduciary was defined thus :
"A fiduciary is someone who has undertaken to act for and on behalf of another in a particular matter in circumstances which give rise to a relationship of Page 67 of 86 Downloaded on : Sat Dec 24 02:30:33 IST 2022 C/FA/1076/2019 JUDGMENT DATED: 09/12/2022 trust and confidence. The distinguishing obligation of a fiduciary is the obligation of loyalty..... A fiduciary must act in good faith; he must not make a profit out of his trust; he must not place himself in a position where his duty and his interest may conflict; he may not act for his own benefit or the benefit of a third person without the informed consent of his principal."
38.5 In Wolf vs. Superior Court the California Court of Appeals defined fiduciary relationship as under :
"any relationship existing between the parties to the transaction where one of the parties is duty bound to act with utmost good faith for the benefit of the other party. Such a relationship ordinarily arises where confidence is reposed by one person in the integrity of another, and in such a relation the party in whom the confidence is reposed, if he voluntarily accepts or assumes to accept the confidence, can take no advantage from his acts relating to the interests of the other party without the latter's knowledge and consent."
39. The term 'fiduciary' refers to a person having a duty to act for the benefit of another, showing good faith and condour, where such other person reposes trust and special confidence in the person owing or discharging the duty. The term 'fiduciary relationship' is used to describe a Page 68 of 86 Downloaded on : Sat Dec 24 02:30:33 IST 2022 C/FA/1076/2019 JUDGMENT DATED: 09/12/2022 situation or transaction where one person (beneficiary) places complete confidence in another person (fiduciary) in regard to his affairs, business or transaction/s. The term also refers to a person who holds a thing in trust for another (beneficiary). The fiduciary is expected to act in confidence and for the benefit and advantage of the beneficiary, and use good faith and fairness in dealing with the beneficiary or the things belonging to the beneficiary. If the beneficiary has entrusted anything to the fiduciary, to hold the thing in trust or to execute certain acts in regard to or with reference to the entrusted thing, the fiduciary has to act in confidence and expected not to disclose the thing or information to any third party." 15.8 The Apex Court in case of Ashwinkumar K. Patel vs. Upendra J. Patel and others, reported in AIR (1999) SC 1125 held thus:
"5. The High Court, while dealing with this appeal preferred by defendants 15 to 19, observed that the trial Court had mainly relied upon a compromise decree dated 14.8.1992 between the owners(defendants 1 to 14) and defendants 20 to 25 in an earlier suit, bearing Suit No.1384/88 filed by defendants 20 to 25 against the owners on the basis of an agreement dated 14.10.1980, allegedly executed by the same owners. According to the High Court, while it was true that the said defendants 20 Page 69 of 86 Downloaded on : Sat Dec 24 02:30:33 IST 2022 C/FA/1076/2019 JUDGMENT DATED: 09/12/2022 to 25 accepted the possession of the owners defendants 1 to 14, the said admission related to the date of compromise dated 26.4.1990 and not to 14.8.1992 when the compromise was recorded and hence the trial Court was wrong in thinking that the present defendants 15 to 19 could not have come into possession on 16.7.1991 from the owners. According to the High Court, the Trial Court was wrong in thinking that there was an admission by defendants 20 to 25 of the possession of the owners, defendants 1 to 14 as on 14.8.92, the date when the compromise was recorded and also in thinking that defendants 15 to 19 could not have come into possession on 16.7.1991. The admission, if any, related to 26.4.90 the date of compromise and there was, according to the High Court, no inconsistency with the case of defendants 15 to 19 of possession being given to them under the agreement dated 16.7.1991. Further, the finding of the trial Court that the property was new tenure was challenged even by the plaintiff by filing A.O. 476 of 1997. The High Court said that `this also makes the factual foundation of the trial Court's order erroneous'. For the above reasons, the High Court set aside the order of the trial Court and remitted the matter for fresh decision. It is against the above order that the plaintiff has preferred this appeal.
6.The point for consideration is whether the order of the Page 70 of 86 Downloaded on : Sat Dec 24 02:30:33 IST 2022 C/FA/1076/2019 JUDGMENT DATED: 09/12/2022 High Court in remitting the matter to the trial Court was necessary? Question also is whether this court should remand the case to the High Court in the event of this Court holding that the remand by the High Court was not called for? If not, whether the order of the trial Court is to be sustained?
7. In our view, the High Court should not ordinarily remand a case under Order 41 Rule 23 CPC to the lower Court merely because it considered that the reasoning of the lower Court in some respects was wrong. Such remand orders lead to unnecessary delays and cause prejudice to the parties to the case. When the material was available before the High Court, it should have itself decided the appeal one way or other. It could have considered the various aspects of the case mentioned in the order of the trial Court and considered whether the order of the trial Court ought to be confirmed or reversed or modified. It could have easily considered the documents and affidavits and decided about the prima-facie case on the material available. In matters involving agreements of 1980 (and 1996) on the one hand and an agreement of 1991 on the other, as in this case, such remand orders would lead to further delay and uncertainty. We are, therefore, of the view that the remand by the High Court was not necessary."Page 71 of 86 Downloaded on : Sat Dec 24 02:30:33 IST 2022
C/FA/1076/2019 JUDGMENT DATED: 09/12/2022 15.9 In case of Municipal Corporation, Hyderabad vs. Sunder Singh, reported in (2008) 8 SCC 485 the Apex Court has held and observed as follow:
"18.It is now well settled that before invoking the said provision, the conditions precedent laid down therein must be satisfied. It is further well settled that the court should loathe to exercise its power in terms of Order XLI Rule 23 of the Code of Civil Procedure and an order of remand should not be passed routinely. It is not to be exercised by the appellate court only because it finds it difficult to deal with the entire matter. If it does not agree with the decision of the trial court, it has to come with a proper finding of its own. The appellate court cannot shirk its duties.
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33.Order XLI rule 23A of the Code of Civil Procedure is also not attracted. The High Court had not arrived at a finding that a re-trial was necessary. The High Court again has not arrived at a finding that the decree is liable to be reversed. No case has been made out for invoking the jurisdiction of the Court under Order XLI Rule 23 of the Code.
34. An order of remand cannot be passed on ipse Page 72 of 86 Downloaded on : Sat Dec 24 02:30:33 IST 2022 C/FA/1076/2019 JUDGMENT DATED: 09/12/2022 dixit of the court. The provisions of Order II Rule 2 of the Code of Civil Procedure as also Section 11 thereof could be invoked, provided of course the conditions precedent therefor were satisfied. We may not have to deal with the legal position obtaining in this behalf as the question has recently been dealt with by this Court in Dadu Dayalu Mahasabha, Jaipur (Trust) v. Mahant Ram Niwas & anr."
16.The defendants having failed to prove that the transactions was made in good faith, bona-fide for fair consideration in the interest of the principal, and with the plaintiff's knowledge he being the agent, this transaction of sale to his own wife and son surely can not be sustained to be a genuine sale.
17. Reference would be apt at this stage to the application moved by the plaintiff vide Exhibit 132 for issuing the witness summons to the Assistant General Manager, Andhra Page 73 of 86 Downloaded on : Sat Dec 24 02:30:33 IST 2022 C/FA/1076/2019 JUDGMENT DATED: 09/12/2022 Bank, Parimal Society, C.G.Road, Ahmedabad. She had stated that the certified copies of the statements of two of her accounts, NRO account No.1/1 and NRE No.1/5 had been obtained. She would require the presence of Assistant General Manager, Andhra Bank to produce the statement of the account of both NRO and NRE accounts by an authorized representative as per the Banking Books of Evidence Act and to give deposition. The Court had accordingly issued the summons.
18. Vide Exhibit 134, the plaintiff's witness Mr.Vadali Gangadhar Narayan Shashtri serving as a Senior Manager of Andhra Bank had deposed that original Books of Accounts are in the custody of the Bank, he verified the copy. All the three documents, the account of SBNRO 1/1, Page 74 of 86 Downloaded on : Sat Dec 24 02:30:33 IST 2022 C/FA/1076/2019 JUDGMENT DATED: 09/12/2022 account No.NRE/1/5 and the ledger of NRE account No.1/5 have been produced by him. He had verified them and these documents have been exhibited at Exhibit 136, 137 and
138. His attention was drawn to the document at Exhibit 137 which according to him is operated by the power of attorney, it does not speak about the power of attorney and his attention was drawn to the document at Exhibit 138 that also is the account operated by the power of attorney. In his cross examination, this witness had agreed that in particular column 'self' is shown at Exhibit 137. In ledger it is not clear that on 10.12.1996 whether it was a transfer or by self transaction. There could be a possibility that it may be a transfer entry, the original ledger, Page 75 of 86 Downloaded on : Sat Dec 24 02:30:33 IST 2022 C/FA/1076/2019 JUDGMENT DATED: 09/12/2022 according to him, is in the Branch. According to him, all the three documents are the original true copies of the original account ledger.
19. Exhibit 136 when is seen, it is reflecting the entry of Rs.20 Lakh on 10.12.1996, which had been withdrawn by self. These are certified to be the true copies of the account/ledger/books maintained in ordinary course of the business of the Bank. These are all accounts held by Mrs.Shashikala Mayur Sheth and the General Power of Attorney Mr.Prakash B.Sheht defendant No.1. This, of course, is reflective of the fact that the defendant No.1 Mr.Prakash Sheth is a General Power of Attorney and this Page 76 of 86 Downloaded on : Sat Dec 24 02:30:33 IST 2022 C/FA/1076/2019 JUDGMENT DATED: 09/12/2022 withdrawal of the amount of Rs.20 Lakh is through the self. This will assume importance in as much as the transfer has been effected on 09.12.1996 and the cancellation of the power of attorney was by a letter dated 08.12.1996. The stay of the plaintiff and her husband in India because of her niece's wedding was from 02.12.1996 to 11.12.1996.
20. As mentioned above, it is not the case in the written statement also of the defendant No.1 that the amount of consideration of Rs.20 Lakh had been withdrawn by the plaintiff, on the contrary, heavy reliance is placed on the communication of defendant No.4 father of defendant No.1 and father-in-law of the Page 77 of 86 Downloaded on : Sat Dec 24 02:30:33 IST 2022 C/FA/1076/2019 JUDGMENT DATED: 09/12/2022 plaintiff Shashikalaben, who had insisted that the entire transaction of transfer of property had taken place pursuant to the oral agreement and the family arrangement that had been made. In fact, from the beginning it is emphasised that the family interest had resulted into transfer of the property.
21. It is necessary to make a mention of the cross examination of the defendant No.1, who had been questioned seriously and vociferously that Laxmichand Godhardas Sheth had no HUF business at any point of time. The business was started according to the defendant No.1, around 1945 and he was not born also. The cotton-waste business of HUF had also resulted into its paying Page 78 of 86 Downloaded on : Sat Dec 24 02:30:33 IST 2022 C/FA/1076/2019 JUDGMENT DATED: 09/12/2022 income tax which these persons did not have. This business was closed 35 years back and he was 28 years of age. Defendant No.1 and the husband of the plaintiff Mr.Mayurbhai Sheth both had gone to USA for their study and once again, Mr.Mayurbhai went to USA in January 1972.
21.1 The defendant No.4 had two other brothers Mr.Jayantilal and Mr.Rameshbhai. On 26.06.1974, Mr.Mayurbhai Sheth was given in adoption by defendant No.4 to his own brother Mr.Jayantibhai and from 26.06.1974 Mr.Mayurbhai Sheth shifted to Mr.Jayantibhai's residence at 16, Subhasnagar, Shahibaug area. He with his wife had continued to reside there till 1980 and the plaintiff gave birth to two Page 79 of 86 Downloaded on : Sat Dec 24 02:30:33 IST 2022 C/FA/1076/2019 JUDGMENT DATED: 09/12/2022 children in the meantime. He was also cross examined on the business of Security Equipment Private Limited and other businesses started at GIDC, Plot NO.47/A. According to him, he had joined the business in the year 1971.
21.2 There were other family members who were the share holders, which included his grandmother, Mr.Mayurbhai Sheth and his wife defendant No.2. He had no written details or any document to show that Mr.Mayurbhai was the share holder there. He agreed that Shri Jayantibhai Laxmichand Sheth had cotton-waste business as a proprietor. The business of Security Equipment Private Limited had run into rough weather because of the liver problems Page 80 of 86 Downloaded on : Sat Dec 24 02:30:33 IST 2022 C/FA/1076/2019 JUDGMENT DATED: 09/12/2022 and was closed down in the year 1979. It was for the treatment of the son of Mr.Mayurbhai who had meningitis that plaintiff and Mr.Mayurbhai, her husband had shifted to America in February 1980 where the son was operated and Mr.Mayurbhai decided to settle in USA only. According to the defendant No.1, he and Mr.Mayurbhai Sheth both were the HUF member of Babulbhai Laxmichand HUF and till his brother was given into adoption, he continued to be the member of HUF.
22. There appears to be an emotional appeal by defendant No.4-the father to his son Mr.Mayur Sheth and to the plaintiff, who is respondent herein, where he speaks of the general and broad understanding as Page 81 of 86 Downloaded on : Sat Dec 24 02:30:33 IST 2022 C/FA/1076/2019 JUDGMENT DATED: 09/12/2022 well of the family arrangement. That according to him, which had resulted into the buying of the suit property as well as the transfer of the same in the name of the defendant Nos.2 and 3. He also speaks of this arrangement being the result of understanding of family that the defendant No.1 and his family needed the place to reside and his having agreed to that. Again, over and above that, the amount of Rs.50 Lakh he had agreed to contribute towards the need of the family.
23. However, the facts remains that this is all oral family arrangement which is being talked about, there is nothing in the writing nor any valid document is put-forth to substantiate their version. Even if, it is presumed that it was understood by Page 82 of 86 Downloaded on : Sat Dec 24 02:30:33 IST 2022 C/FA/1076/2019 JUDGMENT DATED: 09/12/2022 everyone that the defendant No.1 as the brother and son of defendant No.4 would continue to reside with his family members at the suit property and the power of attorney was given to him for that purpose, there is bound to be cogent and acceptable evidence to that effect. It is not unusual in a joint family in Indian society to continue to have internal arrangement along the things however, till everything gets worked out smoothly, it is however, once there is a challenge before the Court, it shall need to regard essentially the documentary as well as oral evidences on the basis of the exhibited documents. Oral evidence which has come on the record and the chronology of events which have taken place, if cumulatively, are examined, this Page 83 of 86 Downloaded on : Sat Dec 24 02:30:33 IST 2022 C/FA/1076/2019 JUDGMENT DATED: 09/12/2022 appears unfailingly to be an action on the part of an agent in breach of the settled principle of law where the agent is expected to act as per the expressed consent and nod of the principal. He cannot in a fiduciary relationship divert the property for his own benefit. An attempt was made on the part of the trial Court and this Court also to ensure that the parties amicably resolve the disputes, considering closeness of relationship however, that has surely not happened and therefore, the law shall need to take its own course.
23. The Trial Court has committed no error in setting aside the sale and directing the defendant to handover the possession of the suit property in the stipulated time Page 84 of 86 Downloaded on : Sat Dec 24 02:30:33 IST 2022 C/FA/1076/2019 JUDGMENT DATED: 09/12/2022 period. All the issues are answered correctly and in accordance with law.
24. We notice that this Court was requested by the appellant to direct maintenance of the status quo in relation to the title, possession and the nature of the suit property at the time of admission. This Court (Coram:Dr.Justice Vineet Kothari and Justice B.N.Karia) in its order dated 02.08.2021 with certain directions for amicable settlement had granted the status quo order dated 15.07.2021 to be confirmed till the disposal of the appeal.
25. We inquired from the learned counsels on both the sides to note that the disputes between the family has not ended amicably as otherwise was proposed. Any of the parties, if has deposited any sum pursuant to the Page 85 of 86 Downloaded on : Sat Dec 24 02:30:33 IST 2022 C/FA/1076/2019 JUDGMENT DATED: 09/12/2022 direction of this Court, let the amount be returned to the concerned party with accrued interest.
26. With the aforesaid discussion, Appeal fails and stands dismissed.
27. Civil Application is also stands disposed of in wake of disposal of the appeal.
(SONIA GOKANI, J) (HEMANT M. PRACHCHHAK,J) After the pronouncement of the judgment, appellant has sought the time of eight (8) weeks to stay the judgment and order to enable the appellant to challenge this appeal, which is not necessary.
(SONIA GOKANI, J) (HEMANT M. PRACHCHHAK,J) M.M.MIRZA Page 86 of 86 Downloaded on : Sat Dec 24 02:30:33 IST 2022