2017 (11) TMI 1957 - HC - FEMA

Mesne profits - suit for declaration of title and possession, recovery of possession of plaint A and B schedule properties in case the defendants are found in possession of the same, and for perpetual injunction - A relief of mandatory injunction has also been sought for, for directing the defendants to vacate the plaint B schedule property - HELD THAT - Section 32(c) of the Registration Act, 1908 also deals with power of attorney. There also, it has been specifically stated that it should be a power of attorney executed and authenticated. When Ext. A2 was not executed and authenticated within the meaning of the said provision, that could not have been relied on for permitting the execution and registration of Ext. A3. Moreover, Ext. A2 cannot be said to be a document attested within the meaning of Section 3 of the Transfer of Property Act also. This is a case wherein even though the plaintiff had agreed in cross-examination that she was ready to examine the executants through video conferencing, the said facility was ultimately not made available. The reason mentioned by the courts below for the same is that the Malaysian Government did not grant permission. The said version is one coming from the mouth of the plaintiff alone, that too, without any documentary evidence. There is absolutely nothing to show that permission was sought for from the Malaysian Government for the said facility and the said facility was denied by the Malaysian Government. The suit is one for declaration of title and recovery of possession. When the reliefs of declaration and recovery of possession based on title have been sought for, the plaintiff has to stand on her own legs to prove that she has title. The weakness of the defence or the absence of title on the part of the defendants cannot be encashed by the plaintiff to prove the title of the plaintiff. From all the above, this Court is satisfied that both the courts below have gone wrong in decreeing the suit. The impugned judgment and decree passed by the lower appellate court as well as the trial court are liable to be set aside. The suit is only to be dismissed. In the result, this Regular Second Appeal is allowed and the judgments and decrees passed by both the courts below are set aside. The suit is dismissed. In the nature of the RSA, there is no order as to costs. All pending interlocutory applications in this appeal are closed.

Summary

Issues Involved:
1. Validity of Ext. A2 Power of Attorney and Ext. A3 Gift Deed.
2. Legality of the trial court's and appellate court's decisions.
3. Compliance with the Notaries Act, Indian Evidence Act, and Registration Act.
4. Compliance with Section 31 of the Foreign Exchange Regulation Act (FERA).

Detailed Analysis:

1. Validity of Ext. A2 Power of Attorney and Ext. A3 Gift Deed:
The primary issue revolves around the legitimacy of Ext. A2 and the subsequent Ext. A3 gift deed. The plaintiff claimed that Pauline James and her children, who were settled in Singapore, executed Ext. A2 in favor of the plaintiff's husband, allowing him to execute Ext. A3. However, the defendants challenged the authenticity of Ext. A2, alleging it was fabricated and manipulated. The court found significant irregularities in Ext. A2, such as missing signatures on certain pages, discrepancies in dates, and unauthorized corrections. Furthermore, the schedule of the property in Ext. A2 was partially written in Malayalam, which would not typically be approved by Malaysian authorities. Based on these findings, the court concluded that Ext. A2 was unreliable and tampered with, thus invalidating Ext. A3.

2. Legality of the Trial Court's and Appellate Court's Decisions:
The trial court had decreed in favor of the plaintiff, declaring her title and possession over the plaint schedule properties and directing the defendants to vacate the premises. The appellate court concurred with this decision. However, the High Court found that both lower courts erred in their judgments by relying on the flawed Ext. A2 and Ext. A3 documents without adequately addressing the evident irregularities and illegalities. Consequently, the High Court set aside the judgments and decrees of the lower courts, dismissing the suit.

3. Compliance with the Notaries Act, Indian Evidence Act, and Registration Act:
The court examined whether Ext. A2 complied with relevant legal provisions. Section 85 of the Indian Evidence Act presumes the authenticity of a power of attorney executed before a notary public. However, the court noted that the notarial act in Ext. A2 did not meet the requirements of the Notaries Act, 1952, as the notary in Malaysia was not recognized under Indian law. Additionally, the execution and authentication of Ext. A2 did not comply with Sections 32 and 33 of the Registration Act. The court concluded that Ext. A2 was not properly executed or authenticated, further undermining its validity.

4. Compliance with Section 31 of the Foreign Exchange Regulation Act (FERA):
Section 31 of FERA prohibits foreign citizens from transferring immovable property in India without prior permission from the Reserve Bank of India. The executants of Ext. A2 were foreign citizens, and no evidence was presented to show that they had obtained the necessary permission. As a result, the court found that Ext. A3 was void under Section 23 of the Indian Contract Act, as it violated Section 31 of FERA.

Conclusion:
The High Court concluded that the plaintiff failed to prove her title and possession over the plaint schedule properties due to the invalidity of Ext. A2 and Ext. A3. The court emphasized that the plaintiff could not rely on the weaknesses of the defendants' case to establish her claim. Consequently, the High Court allowed the second appeal, setting aside the judgments and decrees of the lower courts and dismissing the suit. There was no order as to costs, and all pending interlocutory applications were closed.