BEFORE THE HIGH COURT OF JUDICATURE AT MADRAS DATE : 24.06.2008 CORAM THE HONOURABLE MR.JUSTICE A.C.ARUMUGAPERUMAL ADITYAN A.S.No.1010 of 1997 N.Muthu (Sole Appellant died) 1.Radhamani 2.Purushothaman 3.Hemalatha .. Appellants/Plaintiffs (Appellants 1 to 3 brought on record as LRs of the deceased as per order dt 3.7.92 in CMP.5919/92) Vs. 1.Govindaswami Naidu (died) (appeal as against R1 abated vide order of Court dt 21.4.2008 made in A.S.No.1010/97) 2.Kajulu Kangalar D.Ramachandran son of A.Doraiswami Naidu, Sesha Nilayam, No.1, Race Course Road, Coimbatore-18. .. Respondents/Defendants Prayer :- This appeal has been preferred Under Section 96 of CPC against the decree and judgment in O.S.No.624 of 1991 dated 8.1.1990 on the file of the II Additional Subordinate Judge, Coimbatore. For Appellants : Mr.R.Subramanian, Advocate For Respondents : Mr.R.Damodharan, Advocate (For R2) R1 : Already abated on 21.4.2008 made AS 1010/97 JUDGMENT This appeal has been directed against the judgment in O.S.No.624 of 1991 on the file of the II Additional Subordinate Judge, Coimbatore. The unfortunate plaintiff, who has lost his case before the trial Court, is the appellant herein. 2.The short facts of the plaint relevant for the purpose of deciding this appeal runs as follows:- https://hcservices.ecourts.gov.in/hcservices/ The plaint schedule properties are in Kala Patti Village in Coimbatore taluk. The first defendant representing as the agent of the second defendant and acting under his instructions prepared a layout plan for large area of land belonging to the second defendant. This layout plan has been approved by the Director of Town Planning in L.P/ R(C.N.) No.32 of 1975. The plaintiff had agreed to purchase two sites viz., site Nos.31 & 32 from the defendants. On 25.07.1980 the plaintiff entered into an agreement with the first defendant to purchase site Nos.31 and 32. The first defendant acted on behalf of the second defendant as his agent. The sale consideration was fixed as Rs.3000/- and an advance of Rs.1000/- was also paid to the first defendant by the plaintiff. The sale deed has to be executed within six months from the date of the agreement ie., 25.7.1980. In fact, this was in renewal of an earlier agreement dated 2.2.1980, which is now with the defendants. After expiry of the time fixed in the earlier agreement, the suit agreement was entered into between the plaintiff and the first defendant. The contract between the defendants is a layout contract. The first defendant took the responsibility of forming the layout and find buyers for the various house sites. The second defendant is obliged to execute sale deed by portions of the land as various house sites to the nominees of the first defendant. In furtherance of the contract dated 25.4.1975 entered into between the first defendant, the second defendant had sold various house sites to third parties. In pursuance of the above contract entered into between the first and second defendant, the first defendant entered into contract with the plaintiff on 25.7.1980. Thus the plaintiff is a nominee of the original vendee the first defendant to get a sale deed of the suit properties in his favour by the second defendant in accordance with the contract dated 25.4.1975. The contract dated 25.7.1980 is a part of the contract dated 25.4.1975 and it stands on a separate and independent footing and therefore the plaintiff is entitled to ask for the specific performance of the contract on the basis of the sale agreement entered into between the plaintiff and D1 dated 25.7.1980. The plaintiff is always ready and willing to perform his part of the contract. The plaintiff is always willing to pay the balance of the sale consideration, to get the necessary stamp papers and also to get the sale deed executed. But inspite of repeated requests the defendants have been postponing the same on one pretext or another. The plaintiff issued notice through his lawyer to both the defendants. The first defendant has not received the notice and managed to send it back to the plaintiff. The second defendant had acknowledged the same and sent a reply dated 8.8.91 containing false and vexatious contentions. The second defendant in his reply notice would state that the first defendant is not an agent of the second defendant and that he was not aware of the agreement entered into between the first defendant and the plaintiff. The City of Coimbatore has been upgraded into a corporation. The guide line value of immovable property has been doubled, and its real price is also gone up. Therefore, the second defendant is interested in denying the truth of https://hcservices.ecourts.gov.in/hcservices/ the agreement in order to get more profitable price from purchasers. The plaintiff is entitled to a sale of site Nos.31 & 32. Hence, the suit. 3.The first defendant in his written statement would contend that he is not an agent of the second defendant and that the second defendant is the owner of the plaint schedule property. The first defendant had entered into an agreement of sale with the second defendant on 25.4.1975. The time stipulated under the said agreement was extended upto 25.1.1981 and thereafter it expired. There was no power of attorney or a document creating an agency in favour of this defendant was executed by the second defendant. The plaintiff approached the first defendant to purchase two plots and the first defendant in his personal responsibility agreed to sell two plots within a period of three months from 2.2.1980. The plaintiff could not muster funds and purchase the property within the time stipulated under the said agreement dated 2.2.1980. The said agreement lapsed due to the default of the plaintiff. In July 1980, the plaintiff again requested this defendant to oblige him, assuring to arrange for funds and purchase the site within 6 months. Hence, the first defendant gave another opportunity to the plaintiff under an agreement dated 25.7.1980, after getting permission from the second defendant. But the plaintiff could not perform his obligation and purchase the site within the stipulated period of six months from 25.7.1980. At no point of time the plaintiff expressed his readiness and willingness to perform his part of the contract under the sale agreement. By his own failure and default the agreement dated 25.7.1980 stood lapsed and terminated. On 12.1.1981 the first defendant wrote to the plaintiff under certificate of posting calling upon him to perform his obligations and have the sale deed before the expiry of the period stipulated in the agreement. But there was no reply from the plaintiff. Since the plaintiff failed to act according to the terms of the agreement and have the sale deed in time, this defendant intimated the plaintiff on 27.1.1981 about his default and that the agreement was no more in force. There is no valid or subsisting agreement between the plaintiff and the first defendant. This defendant never refused to receive any notice dated 26.7.1981 as alleged in the plaint. If there is any such notice with an alleged endorsement of refusal, it is only a concoction by the plaintiff. The first defendant is not the owner of the plaint schedule properties. The first defendant has no subsisting right or interest therein. The first defendant's agreement with the second defendant is no more in force. Hence, the plaintiff cannot compel the first defendant to sell the plots, having failed to act in terms of the agreement. There is no cause of action to the plaintiff for filing the suit. Hence, the suit is liable to be dismissed. 4.The second defendant in his written statement would state that the first defendant was not an agent of the second defendant. The second defendant has not authorized the first defendant to deal with https://hcservices.ecourts.gov.in/hcservices/ any third party on behalf of the second defendant. Thus the first defendant had no right or authority to enter into any transaction on behalf of the second defendant. The second defendant is not bound by the dealings or transactions of the first defendant with the third parties. The first defendant was not authorised to act so and agreement entered into between the first defendant and the plaintiff will not bind the second defendant. The plaintiff and the first defendant are colluding and making a show of a mock fight to gain an advantage over this defendant to get at this property against which they have no tenable or subsisting claim or right. The plaintiff never met the defendant nor offered to purchase the site. This defendant also did not agree to sell any site to the plaintiff. It is false to allege that plaintiff was ready and willing to act up to the terms of the agreement alleged in the plaint. The plaintiff never offered to purchase the site either directly or through the first defendant. The notice sent by the plaintiff was suitably replied by the second defendant. The agreement of sale entered into between the first defendant and the second defendant is no more in force nor subsisting. The suit is speculative and collusive in nature. It is an abuse of process of Court. The plaintiff is not entitled to the relief of specific performance. Hence, the suit is liable to be dismissed with compensatory cost. 5.On the above pleading the learned trial Judge has framed as many as 6 issues for trial. On the side of the plaintiff, P.W.1 to P.W.3 were examined and Ex.A.1 to Ex.A.21 were marked. On the side of the defendants, the first defendant has examined himself as D.W.1 besides examining one Thiyagarajan as D.W.2. Ex.B.1 to Ex.B.11 were marked on the side of the defendants. 6.The learned Trial Judge after giving due deliberations to the submissions made by the learned counsel on both sides and after scanning the evidence both oral and documentary has come to the conclusion that the plaintiff is not entitled to any relief in the suit and accordingly dismissed the suit, but without costs. Aggrieved by the findings of the learned trial Judge, the plaintiff has preferred this appeal. 7.The points that arose for consideration in this appeal are as follows:- 1)Whether the first defendant is an authorized agent or power of attorney holder of the second defendant to enter into an agreement of sale with the plaintiff under Ex.A.9 in respect of the plaint schedule properties, which are belonged to the second defendant? 2)Whether the plaintiff is entitled to a decree for specific performance of contract under Ex.A.9? 3)Whether the second defendant had given power under Ex.B.1 in favour of the first defendant for executing a sale agreement https://hcservices.ecourts.gov.in/hcservices/ under Ex.A.9 in favour of the plaintiff? 4)Whether the decree and judgment in O.S.No.624 of 1991 on the file of the II Additional Subordinate Judge, Coimbatore, is liable to be set aside for the reasons stated in the memorandum of appeal? 8.Point No.1 & 2 :- Heard the learned counsel Mr.R.Subramanaian appearing for the appellant and the learned counsel Mr.R.Damodharan appearing for the second respondent. The first respondent is no more. The plaintiff has not taken any steps to implead the LRs of the first respondent, which resulted in the abatement of the appeal as against the first respondent. 8(a)The learned counsel Mr.R.Subramanian appearing for the appellant relying on Ex.B.1, an agreement entered into between D1 and D2 dated 25.4.1975 would contend that D1 is an agent or power of attorney holder of D2 in respect of the plaint schedule property to enter into an agreement of sale under Ex.A.9 with the plaintiff. The learned counsel for the appellant relying on Section 186 of the Indian Contract Act 1872, would contend that only as an agent of D2, D1 had impliedly acted on behalf of D2 and entered into an agreement of sale under Ex.A.9 in respect of the plaint schedule properties. Section 186 of the Indian Contract runs as follows:- "The authority of an agency may be expressed or implied" Now we have to see under Ex.B.1-agreement of sale dated 25.4.1975 whether D2 had expressly or impliedly recognized D1 as an agent of D2. The relevant observation in Ex.B.1 runs as follows:- "v';fSf;F ghf rhrdg;go rh;t Rje;jpukha; ghj;jpag;gl;L v';fs; mDgt RthjPdj;jpypUe;J tUk; ,jdoapy; fz;l g{kpia Vf;fh; 1?f;F U:gha; 1.50.000-? (xU yl;rj;J Ik;gjhapuk; kl;Lk;) tPjk; j';fSf;F tpiy ngrp Koj;J eP';fSk; xg;g[f;bfhz;lgoahy; fPH;f;fz;l g{kpia nyat[l; gphpj;J njitahd g;shd; nghl;L A. Jiurhkp eha[L efh; _bt';flhrygjp uhjhfpUc;zh kpy;!; nygh; mt[!; gpy;o'; brhirl;o B fhydp vd;W bgah; itj;J m';fPfhuk; bgWtjw;F VJthf fPH;f;fz;l g{kpfisa[k; ehsJ njjpapnyna j';fs; RthjPdj;jpy; tpl;Ltpl;nlhk;/ nkw;go g{kpfis j';fs; RthjPdk; bra;J bfhz;L rapl;Lfs; gphpj;J rh;nt bra;J Kl;Lf;fw;fs; elt[k;. gpshd;fs; jahhpj;J nyat[l; ghh;k; bra;J nkw;go nyat[l;il m';fPfhuk; bgWtjw;F ntz;oa vy;yh Vw;ghLfisa[k; jil ,y;yhky; bra;tjw;F eh';fs; j';fSf;F g{h;z mjpfhuk; bfhLj;jpUf;fpnwhk; ,d;W Kjy; 18 gjpdl;L khj bfLt[f;Fs; jh';fs; xnu fpuakhfnth my;yJ jdpj;jdp fpuakhfnth vGjp fpuaj;Jifia hp$p!;l;uhh; Kd;dpiyapy; jh';fs; v';fSf;Fr; brYj;jp fpuag;gj;jpuk; my;yJ fpuag; gj;jpu';fis j';fs; brytpy; hp$p!;l;lh; bra;J bfhs;sntz;oaJ/ fpuaj;jpd; nghJ rh;t tpy;y';f Rj;jpahf fpuaKk; https://hcservices.ecourts.gov.in/hcservices/ RthjPdKk; bra;J bfhLf;f cs;sth;fs;/ ,e;jg;go v';fs; kdg;g{h;t rk;kjj;Jld; vGjpitj;Jf; bfhLj;j fpua xg;ge;jk;/ . The learned counsel for the appellant relying on the above said passage in Ex.B.1 would contend that D2 has authorized D1 to execute one sale deed or separate sale deeds in the presence of the Sub-Registrar on behalf of D2 and this gives an authorization to D1 by D2 to procure the prospective purchasers in respect of the plaint schedule properties and only on the said power D1 had entered into a sale agreement with the plaintiff under Ex.A.9. But a reading of Ex.A.9-sale agreement will go to show that even though there is a reference about Ex.B.1 in Ex.A.9- Sale agreement dated 25.7.1980 there is no recital in Ex.A.9 as to the effect that only as a power of attorney holder of D2, D1 had entered into Ex.A.9 – agreement of sale with the plaintiff. Even though in Ex.A.9 D1 would state that only as a power of agent of D2 he had entered into with the plaintiff the said sale agreement under Ex.A.9, there is no details as to whether the said power deed is registered one or when the power deed was executed by D2 in favour of D1 in respect of the plaint schedule properties conveying the power to encumber the plaint schedule properties in the said sale agreement etc. But even in Ex.A.9 it has been stated as follows:- nkw;go jpU/ Jiurhkp eha[L mth;fspd; tifauhtpw;Fr; brhe;jkhd brshpghisak; k$uh gPsnkl;oy; f/r/518. 519 be/ fhiyapy; D.D.P. mth;fshy; 32-75 bek;guhf rh!;cd; bra;ag;gl;l nyat[l; gpshdpy; fz;Ls;s irl; bek;gh; 31. 32 Mfpa ,uz;L fhyp kid fl;Lk; ,l';fis j';fSf;F fpiuak; bra;J bfhLg;gjha; xg;g[f; bfhz;L. XU brz;l; U:/3.000-? (K:thapuk; kl;Lk;) tPjk; tpiy ngrp Koj;J fpiuaj; bjhifapd; Xh;ghfk; U:gha; 1.000-? (U:gha; Mapuk; kl;Lk;) Kd; ml;thd;rhf fPH;f;fz;l rhl;rpfs; Kd;gl buhf;fkha; bgw;Wf; bfhz;lgoahy;. ,d;W Kjy; 6 khj fhy bfLt[f;Fs; jh';fs; ghf;fpf; fpiuaj; bjhif g{uht[k; brYj;jp ntz;Lk;nghJ. ehd; kWf;fhky;; fpiuak; bra;J bfhLj;J brhj;ija[k; RthjPdk; bra;J bfhLf;f cs;ntdhFk;/ ." A reading of the above recitals in Ex.A.9 will go to show that D1 as a power agent had entered into Ex.A.9 – sale agreement with the plaintiff. But under Ex.B.1 D1 was authorised to form layout for the plain schedule properties and get a layout plan approved and also to execute sale deeds in favour of D2, there is no other deed of power of attorney was executed by D2 in favour of D1 authorizing him to execute sale deed or to create encumbrance in respect of the plaint schedule properties. On the basis of Ex.A.9 D1 has no power to execute any sale deed in respect of the plaint schedule properties which are admittedly belonged to D2. Relying on Section 237 of the Indian Contract Act the learned counsel for the appellant would contend that https://hcservices.ecourts.gov.in/hcservices/ D1 had acted as an agent for D2 and hence under Ex.B.1 he has been authorized to enter into a sale agreement under Ex.A.9 with the plaintiff. Section 237 of the Indian Contract Act runs as follows:- "When an agent has, without authority, done acts or incurred obligations to third persons on behalf of his principal, the principal is bound by such acts or obligations, if he has by his words or conduct induced such third persons to believe that such acts and obligations were within the scope of the agent's authority" Ex.B.1 is only a sale agreement entered into between D1 and D2. Under Ex.B.2, Ex.B.3 and Ex.B.4 the time has been extended for executing the sale deed in respect of the properties scheduled under Ex.B.1 in favour of D2. From Ex.B.1 we cannot infer that D1 is the agent of D2 in respect of the properties scheduled to Ex.B.1 for entering into a sale agreement with the third parties. The well known principle of law is "caveat emptor" i.e., "purchaser beware". Though there is a reference in Ex.A.9 that D1 is agent of D2 the plaintiff ought to have demanded D1 to produce the deed of power of attorney alleged to have been executed by D2 in favour of D1 in respect of the properties scheduled under Ex.A.9. It is not in evidence that D1 got right and title in respect of the properties scheduled under Ex.A.9 which are admittedly belonged to D2, to execute a sale deed on the basis of Ex.A.9-sale agreement in favour of the plaintiff. 8(b)Another limb of argument advanced by the learned counsel appearing for the appellant is that in pursuance of Ex.B.1 sale deeds have been executed by D1 under Exs.A.6, 13, 11 & 12. Even though there is reference about Ex.B.1 in Ex.A.6, 11 & 12 there is absolutely no reference about Ex.B.1 in Ex.A.13 - sale deed. All the Exhibits.A.6, 13, 11 & 12 were executed by D2 in favour of the vendees under the above said documents. It is pertinent to note at this juncture that the vendees under Exs.A.6, 11, 12 & 13 have not entered into any agreement of sale with D1 in respect of the properties scheduled under Exs.A.6, 13, 11 & 12 before the execution of the sale deed by D2 in favour of the vendees under Exs.A.6, 13, 11 & 12. There is no material placed before this Court to show that under Ex.A.9-sale agreement D1 had entered into an agreement of sale in respect of the plaint schedule properties or in respect of the properties under Ex.B.1 against the third parties on the basis of Ex.B.1 and acted in the capacity of an agent of D2. The learned counsel for the appellant would contend that as an ostensible owner in respect of the plaint schedule property, D1 had entered into Ex.A.9-sale agreement, on the basis of Ex.B.1 and hence under Ex.A.9, the plaintiff is entitled to a decree for specific performance of contract. For this proposition of law, the learned counsel for the appellant would rely on AIR 2005 SUPREME COURT 3087 (Chairman, Life Insurance Corporation and others, Appellants v. Rajiv Kumar Bhasker), wherein the relevant observation of the Honourable Apex https://hcservices.ecourts.gov.in/hcservices/ Court runs as follows:- " A somewhat similar view was taken by the House of Lords in Branwhite v. Worcester Works Finance Ltd. ((1969) 1 AC 552) in the following terms: In the Garnac case Lord Pearson with the concurrence of the House, used these words: The relationship of principal and agent can only be established by the consent of the principal and the agent. They will be held to have consented if they have agreed to what amounts in law to such a relationship, even if they do not recognize it themselves and even if they have professed to disclaim it...... But the consent must have been given by each of them, either expressly or by implication from their words and conduct." The significant words, for the present purpose, are "if they have agreed to what amounts in law to such a relationship". These I understand as pointing to the fact that, while agency must ultimately derive from consent, the consent need not necessarily be to the relationship of principal and agent itself (indeed the existence of it may be denied) but may be to a state of fact upon which the law imposes the consequences which result from agency. It is consensual, not contractual. So interpreted, this formulation allows the establishment of an agency relationship in such cases as the present." Yet again in Armagas Ltd. v. Mundogas S.A. ((1986) AC 717), the House of Lords pointed out that even in absence of any express contract of agency in relation to the transaction made with the third party, ostensible authority may be presumed, stating: "...... Ostensible authority comes about where the principal, by words or conduct, has represented that the agent has the requisite actual authority, and the party dealing with the agent has entered into a contract with him in reliance on that representation. The principal in these circumstances is estopped from denying that actual authority existed. In the commonly encountered case, the ostensible authority is general in character arising when the principal has placed the agent in a position which in the outside world is generally regarded as carrying authority to enter into transactions of the kind in question. Ostensible general authority may also arise where the agent has had a course of dealing with a particular contractor and the principal has acquiesced in this course of dealing and honoured transactions arising out of it." Except giving a right under Ex.B.1 to execute one sale deed or more sale deeds in favour of D2 by D1 there is absolutely no right of authorization given to D1 by D2 for selling or encumbering the https://hcservices.ecourts.gov.in/hcservices/ properties scheduled under Ex.B.1 to third parties. Under such circumstances, D1 cannot be construed as an ostensible owner. So the above said ratio decidendi will not be applicable to the present facts of the case. 8(c)For the same proposition of law the learned counsel for the appellant relied on AIR 1962 ORISSA 164 (V 49 C 63) (Kasinath Das and others, Plaintiffs, Appellants v. Nisakar Rout and others, Defendants, Respondents.), wherein the relevant observation of the Honourable Division Bench runs as follows:- "Thus, the question of apparent or ostensible authority of the plaintiffs' agents, - Tahasildar and Gumusta, - in contrast with – the agents' actual authority, on the facts of this case, is the main point involved in this appeal. The authority expressly conferred by a principal upon his agent may, and normally will, be supplemented by an implied authority, which the principal has by implication consented that the agent should have in addition to his express authority. Thus, for example, every agent has implied authority to do whatever is necessary for, or ordinarily incidental to the effective execution of his express authority in the usual way." There cannot be two opinion with regard to the above findings of the learned Judges. But the only thing is that under Ex.B.1 D2 has not given any power to D1 to execute any sale deed or enter into an agreement of sale in respect of the properties scheduled to Ex.B.1 on behalf of D2. If D2 would have given authorization to D1 to act on behalf of D2 for executing any sale deed on behalf of D2 then D1 would have entered into the sale agreement with the vendees under Exs.A.6, 11, 12 & 13. So the dictum in AIR 1962 ORISSA 164 (V 49 C 63) (Kasinath Das and others, Plaintiffs, Appellants v. Nisakar Rout and others, Defendants, Respondents.) will also not be applicable to the present facts of the case. 8(d)Yet another ratio relied on by the learned counsel appearing for the appellant for the same point is A.I.R. (32) 1945 Nagpur 121 (Raja Sir Bissessardas son of Sir Kasturchand Mahesari vs. Kabulchand son of Asaram Garga Jain, Plaintiff and another), wherein the relevant observation runs as follows:- "The authority of an agent may, according to S. 186, Contract Act, 1872 (9 of 1872), be express or implied, and under the succeeding section an authority is said to be implied when it is to be inferred from the circumstances of the case, and things spoken or written, or the ordinary course of dealing, may be accounted circumstances of the case. Daulatram's authority