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2014 (2) TMI 1424 - SC - Indian LawsExecution of decree obtained by the Respondent in Civil Suit - suit for recovery of amount on the property covered by an agreement for sale dated 3.11.2003 between the judgment debtor and decree holder - Petition was contested by the decree holder/Respondent stating that the applicant/objector had no legal right title or interest and that the execution of the General Power of Attorney and its registration would not confer any ownership right in favour of the Appellant/objector. As per K.S. Panicker Radhakrishnan J. HELD THAT - The observations made by the Court are not intended to in any way affect the validity of sale agreements and powers of attorney executed in genuine transactions - the Power of Attorney executed on 12.5.2006 in favour of the Appellant by the wife of Prem Chand Verma is a genuine transaction executed years before the judgment of this Court. Facts will clearly indicate that the Agreement for Sale dated 3.11.2003 was created by none other than the husband of Nirmal Verma who had executed the General Power of Attorney and possession was handed over to the Appellant. That being the fact situation in my view the Objection filed by the Appellant under Order 21 Rule 58 in execution has to be allowed. I therefore hold that the Executing Court can execute the decree in Civil Suit No. 407 of 2007 but without proceeding against the property referred to in registered Power of Attorney dated 12.5.2006 - Appeal allowed. As per Vikramajit Sen J The Appellant has not taken any steps for setting aside the ex parte decree against late Shri Prem Chand Verma. This is only to be expected since the Appellant/Objector has no reason to evince or harbour any interest in the inter se dispute between the Decree Holder and the judgment Debtor. Indeed if the Appellant had made any endeavour to assail or nullify the decree it would be fair to conclude that she had been put up by the judgment Debtor in an endeavour to defeat the decree - On a conjoint reading of Order XXI Rule 58 Code of Civil Procedure and the fasciculus of Order XXI comprising Rules 97 to 104 it becomes clear that all questions raised by the Objector have to be comprehensively considered on their merits. In the case in hand the decree from which the Execution proceedings emanate is not one for delivery of possession but is a simple money decree. Order XXI proscribes the filing of a separate suit and prescribes that all relevant questions shall be determined by the Court. Objection under Order XXI should be meaningfully heard so as to avoid the possibility of any miscarriage of justice. The Appellant/Objector who has approached the Court under Order XXI Rule 58 is more advantageously or favourably placed inasmuch as she is a third party so far as the decree is concerned and her property is not the subject-matter of the decree. It is thus clear that the Courts below have in a hurried if not prejudiced manner rejected the Objections merely because of some sympathy towards the Decree Holder. The Objections deserved to be allowed without disturbing the decree leaving all other remedies open to the Decree Holder/Respondent including proceedings against the Estate of the judgment Debtor. Appeal allowed.
Issues Involved:
1. Legal validity of the General Power of Attorney (GPA) executed on 12.05.2006. 2. Applicability of the judgment in Suraj Lamp and Industries Private Limited v. State of Haryana. 3. Alleged collusion and fraud in obtaining the decree in Civil Suit No. 407 of 2007. 4. Ownership and possession of the suit property. 5. Execution of the decree without affecting the property covered by the GPA. 6. Assessment of damages and penalties under the Indian Contract Act. Issue-wise Detailed Analysis: 1. Legal Validity of the General Power of Attorney (GPA) Executed on 12.05.2006: The Appellant claimed ownership of the suit property based on a registered GPA executed by Nirmal Verma on 12.05.2006. The Court recognized the GPA as a genuine transaction, executed years before the judgment in Suraj Lamp and Industries Private Limited (2) (2012) 1 SCC 656. The GPA was validated by the fact that Nirmal Verma acknowledged the receipt of Rs. 70,000/- and handed over physical possession of the property to the Appellant. The Court concluded that the GPA conferred valid ownership and possession rights to the Appellant. 2. Applicability of the Judgment in Suraj Lamp and Industries Private Limited v. State of Haryana: The Respondent argued that the GPA did not confer ownership rights, relying on the judgment in Suraj Lamp and Industries Private Limited (2009) 7 SCC 363. However, the Court clarified that the judgment in Suraj Lamp (2012) 1 SCC 656 stated that the observations regarding "SA/GPA/WILL transactions" were not intended to apply to bona fide/genuine transactions. The Court held that the GPA executed in favor of the Appellant was a genuine transaction and thus not affected by the Suraj Lamp judgment. 3. Alleged Collusion and Fraud in Obtaining the Decree in Civil Suit No. 407 of 2007: The Appellant contended that the decree obtained by the Respondent was collusive and fraudulent, as it was based on an agreement for sale dated 03.11.2003, which was allegedly created to bypass the GPA executed in favor of the Appellant. The Court noted that Prem Chand Verma, the husband of Nirmal Verma, did not contest the suit and was declared ex-parte. The Court found that the decree was obtained by collusion to undermine the registered GPA executed in favor of the Appellant. 4. Ownership and Possession of the Suit Property: The Court examined the ownership and possession of the suit property, noting that the Appellant had been in possession since 12.05.2006, following the execution of the GPA. The Court emphasized that the GPA was executed by Nirmal Verma, the wife of Prem Chand Verma, against whom the decree was obtained. The Court concluded that the Appellant's ownership and possession of the property were legitimate and should be upheld. 5. Execution of the Decree Without Affecting the Property Covered by the GPA: The Court held that the Executing Court could execute the decree in Civil Suit No. 407 of 2007 but without proceeding against the property covered by the registered GPA dated 12.05.2006. The Court emphasized that the property in question was legitimately owned and possessed by the Appellant, and thus should not be subject to the execution proceedings. 6. Assessment of Damages and Penalties Under the Indian Contract Act: The Court discussed the assessment of damages and penalties under Sections 73 and 74 of the Indian Contract Act. It highlighted that the imposition and recovery of penalties on breach of a contract are legally impermissible. The Court referred to the judgments in Sir Chunilal V. Mehta and Sons Ltd. v. Century Spinning and Manufacturing Company Ltd. AIR 1962 SC 1314, and Fateh Chand v. Balkishan Dass AIR 1963 SC 1405, which established that compensation for breach of contract must be reasonable and not in the nature of a penalty. The Court found that the claim for twice the amount of earnest money was a penalty and thus not enforceable. Conclusion: The appeal was allowed, and the impugned orders were set aside. The Court held that the GPA executed in favor of the Appellant was a genuine transaction, and the property covered by the GPA should not be subject to execution proceedings. The Court emphasized the need for careful consideration of objections in execution proceedings and the importance of adhering to the principles laid down in the Indian Contract Act regarding the assessment of damages and penalties.
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