# 2 S.C.R. 1129 MAYA DEVI v. LALTA PRASAD

- **Citation:** [2014] 2 S.C.R. 1129
- **Court:** Supreme Court of India
- **Decided:** 2014-02-19
- **Case number:** Civil Appeal No. 2458 of 2014
- **Bench:** K.S .. Radhakrishnan, Vikramajit Sen
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/2-s-c-r-1129-maya-devi-v-lalta-prasad-29796
- **Pages:** 32

## Headnote

Code of Civil Procedure, 1908: · Order XX/ r. 58 -
Execution proceedings - Suit for recovery of money sought
A
B
to be realized on a property covered by an agreement for sale
C
- Suit claim based on the stipulation in the contract that double
the amount of earnest money would be payable in the event
the contract was not performed - Suit decreed ex parte -
Objection by appellant-objector before executing court that in
respect of the said property a registered power of attorney in
D
2006 was already executed between objector and wife of
Judgment Debtor (JD) and possession was handed over to
objector - Executing court dismissed the objection - Held:
Power of Attorney executed in favour of objector was a
genuine transaction - The ex parte decree was obtained by
E
Decree Holder (DH) to get over the registered power of
attorney executed in favour of objector - DH could not
disprove the title of objector - Documents purportedly in
favour of DH were unregistered and alleged payment made
by JD was in cash - Also, objector was in possession of F
property in question since 2006 -Imposition and recovery of
penalty on breach of contract is legally impermissible under
the Indian Contract Act - No evidence was led by DH that
claim for twice the amount of earnest money was a fair
estimate of damages - Conjoint reading of Order XX/ Rule
58 and the fascicu/us of Order XX/ comprising Rules 97 to
G
104 would show that all questions raised by the Objector
should have been comprehensively considered on their
merits - Decree from which the execution proceedings
1129
H
1130
SUPREME COURT REPORTS
[2014] 2 S.C.R.
A emanated was not one for delivery of possession, but was a
simple money decree - The objector was a third party and was
brought into the tis as her property was sought to be attached
with the intention of satisfying a decree in which she was not
directly or intrinsically concerned - The objections ought to
8
have been allowed without disturbing the decree, leaving all
other remedies open to the DH including proceedings.against
the estate of the JD.
A suit for recovery of Rs.3.40 lacs was filed by the
respondent against one PCV which was sought to be
C realized on the property covered by agreement for sale
dated 3.11.2003 executed between them. The suit was
decreed ex parte. The appellant filed objection petition
before the executing court on the ground that a
registered Power of Attorney was already executed
D between the appellant anGI NV who was wife of Judgment
Debtor. The executing court dismissed the objection
petition. The High Court upheld the same.
In the instant appeal, it was contended for the
E appellant that the decree was obtained by collusion and
practicing fraud on the court; that she became the
absolute owner of the suit property by virtue of a
registered General Power of Attorney dated 12.5.2006
and that she has been in actual physical possession of
F the suit property.
Allowing the appeal, the Court
HELD:
G K.S. RADHAKRISHNAN. J.
H
1. The Executing Court as well as High Court have
committed a grave error in not properly appreciating the
objections filed by the appellant. The registered Power of
Attorney was executed by none other than the wife of
MAYA DEVI v. LALTA PRASAD
1131
Judgment Debtor and the appellant on 12.5.2006 in
A
respect of the property in· question for a sale
consideration of Rs.70,0001-, which was received by NV
in cash in advance and she acknowledged the same
before the Sub-Registrar, Delhi. On the same day, NV,
wife of Judgment Debtor handed over physical vacant
B
possession of the land and building situated thereon and
from 12.5.2006 onwards, the appellant was in possession
of the property. A decree was obtained by the respondent
without any proper contest and the court proceeded
against Judgment Debtor ex-parte. These facts speak for c
itself. Evidently, the collusive decree was obtained by the
respondent to get over the registered Power of Attorney
executed in favour of the appellant. The Power of Att

## Text

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[2014) 2 S.C.R. 1129
MAYA DEVI
v.
LALTA PRASAD
(Civil Appeal No. 2458 of 2014)
FEBRUARY 19, 2014
[K.S .. RADHAKRISHNAN AND VIKRAMAJIT SEN, JJ.]
Code of Civil Procedure, 1908: · Order XX/ r. 58 -
Execution proceedings - Suit for recovery of money sought
A
B
to be realized on a property covered by an agreement for sale
C
- Suit claim based on the stipulation in the contract that double
the amount of earnest money would be payable in the event
the contract was not performed - Suit decreed ex parte -
Objection by appellant-objector before executing court that in
respect of the said property a registered power of attorney in
D
2006 was already executed between objector and wife of
Judgment Debtor (JD) and possession was handed over to
objector - Executing court dismissed the objection - Held:
Power of Attorney executed in favour of objector was a
genuine transaction - The ex parte decree was obtained by
E
Decree Holder (DH) to get over the registered power of
attorney executed in favour of objector - DH could not
disprove the title of objector - Documents purportedly in
favour of DH were unregistered and alleged payment made
by JD was in cash - Also, objector was in possession of F
property in question since 2006 -Imposition and recovery of
penalty on breach of contract is legally impermissible under
the Indian Contract Act - No evidence was led by DH that
claim for twice the amount of earnest money was a fair
estimate of damages - Conjoint reading of Order XX/ Rule
58 and the fascicu/us of Order XX/ comprising Rules 97 to
G
104 would show that all questions raised by the Objector
should have been comprehensively considered on their
merits - Decree from which the execution proceedings
1129
H
1130
SUPREME COURT REPORTS
[2014] 2 S.C.R.
A emanated was not one for delivery of possession, but was a
simple money decree - The objector was a third party and was
brought into the tis as her property was sought to be attached
with the intention of satisfying a decree in which she was not
directly or intrinsically concerned - The objections ought to
8
have been allowed without disturbing the decree, leaving all
other remedies open to the DH including proceedings.against
the estate of the JD.
A suit for recovery of Rs.3.40 lacs was filed by the
respondent against one PCV which was sought to be
C realized on the property covered by agreement for sale
dated 3.11.2003 executed between them. The suit was
decreed ex parte. The appellant filed objection petition
before the executing court on the ground that a
registered Power of Attorney was already executed
D between the appellant anGI NV who was wife of Judgment
Debtor. The executing court dismissed the objection
petition. The High Court upheld the same.
In the instant appeal, it was contended for the
E appellant that the decree was obtained by collusion and
practicing fraud on the court; that she became the
absolute owner of the suit property by virtue of a
registered General Power of Attorney dated 12.5.2006
and that she has been in actual physical possession of
F the suit property.
Allowing the appeal, the Court
HELD:
G K.S. RADHAKRISHNAN. J.
H
1. The Executing Court as well as High Court have
committed a grave error in not properly appreciating the
objections filed by the appellant. The registered Power of
Attorney was executed by none other than the wife of
MAYA DEVI v. LALTA PRASAD
1131
Judgment Debtor and the appellant on 12.5.2006 in
A
respect of the property in· question for a sale
consideration of Rs.70,0001-, which was received by NV
in cash in advance and she acknowledged the same
before the Sub-Registrar, Delhi. On the same day, NV,
wife of Judgment Debtor handed over physical vacant
B
possession of the land and building situated thereon and
from 12.5.2006 onwards, the appellant was in possession
of the property. A decree was obtained by the respondent
without any proper contest and the court proceeded
against Judgment Debtor ex-parte. These facts speak for c
itself. Evidently, the collusive decree was obtained by the
respondent to get over the registered Power of Attorney
executed in favour of the appellant. The Power of Attorney
executed on 12.5.2006 in favour of the appellant by the
wife of Judgment Debtor was a genuine transaction
0
executed years before the judgment of Suraj Lamp. Facts
will clearly indicate that the Agreement for Sale dated
3.11.2003 was created by none other than the husband·
of NV, who had executed the General Power of Attorney
and possession was handed over to the appellant. That
being the fact situation, the Objection filed by the
E
appellant under Order 21 Rule 58 in execution has to be
allowed. The executing court can execute the decree but
without proceeding against the property referred to in
registered Power of Attorney dated 12.5.2006. [paras 5 'to
7, 9] [1141-E, G-H; 1142-A-C; 1143-A-D]
F
Suraj L:1mp and Industries Private Limited Through
Director v. State of Haryana & Anr. (2009) 7 SCC 363: 2011
(11) SCR 848; Suraj Lamp and Industries Private Limited (2)
Through Director v. State of Haryana & Anr. (2012) 1 SCC
G
656 • relied on.
VIKRAMAJIT SEN. J.
1. A perusal of the evidence of the Decree Holder
showed that he has failed altogether to disprove the title
H
1132
SUPREME COURT REPORTS
[2014] 2 S.C.R.
A of the appellant, and he has maintained that the
DefendanUJudgment Debtor was the owner, which was
admittedly not the actual legal position. If the Decree
Holder has been defrauded by the DefendanUJudgment
Debtor, largely because of the farmer's careless disregard
9 to conduct a title-search, he must face the legal
consequences; they cannot be transferred/imposed upon
a third party to its detriment. In the wake of the Decree
Holder/Plaintiff denying the title of NV, the courts below
erred in proceeding against her property. Both the courts
C below have preferred the view that the appellant, who has
been in possession from the date of the execution of the
registered GPA in her favour, has been introduced into
the scene in order to defeat the interests of the
Respondent, which is a perverse approach. The
documents purportedly in favour of the Respondent/
D Decree Holder were unregistered and the alleged
payment made by him to PCV was in cash. Therefore,
there was no justification for favouring the view that the
alleged transaction between Judgment Debtor and the
Respondent/Decree Holder was genuinely prior in time
E to the execution of the registered Power of Attorney in
favour of the appellant by NV, and the former
simultaneously and contemporaneously was put into
possession of the property by the latter. [paras 3, 4) [1146B-G]
F
Suraj Lamp and Industries Private Limited Through
Director v. State of Haryana & Anr. (2009) 7 SCC 363: 2011
(11) SCR 848 - relied on.
2. There can be no gainsaying that when the
G probative value of documents is to be assessed, specially
those dealing with the creation of any interest in property
or its transfer, of a value exceeding Rs.100/-, obviously
documents which have been duly registered regardless
of whether or not that was legally mandatory, would
H score over others. A perusal of the judgment showed that
MAYA DEVI v. LALTA PRASAD
1133
whether the sum of Rs.1, 70,000/- allegedly paid by the
A
Plaintiff to PCV was in cash or through a traceable Bank
transaction or through a registered acknowledgment has
not been cogitated upon. It was not controverted that the
appellant was in possession of the property in question
from May, 2006. A reading of the judgment by which the
B
suit was decreed for a sum of Rs.3,40,000/- did not shed
any light on the circumstances which made the Plaintiff
wait to initiate legal action till after the property was sold
and its possession delivered to the appellant. Therefore,
the so-called "Deed of Agreement for Earnest Money"
C
allegedly executed almost three years earlier on
03.11.2003 does not appear genuine. The veracity of the
document dated 3.11.2003, looking upon the Power of
Attorney and other documents appear mala fide. It is not
disputed that the title and possession of the property
which has been brought within the sweep of the
D
execution proceedings, was never held in any capacity
by the Defendant/ Judgment Debtor, but by his wife, NV.
To give even a semblance of a case to the Plaintiffrespondent, the Deed of Agreement for Earnest Money
should have been between the Plaintiff/Decree Holder/
E
Respondent and NV. [para 5] [1146-G-H; 1147-A-F]
3. The trial court having accepted the payment of
Rs.1,70,000/- without insisting on any proof, did not go
into the question whether a covenant stipulating that
double the amount of earnest money would be payable
F
in the event the contract was not performed, is legal in
terms of the Indian Contract Act. The imposition and the
recovery of penalty on breach of a contract is legally
Impermissible under the Indian Contract Act As regards
liquidated damages, the Court would have to scrutinize
G
the pleadings as well as evidence in proof thereof, in
order to determine that they are not in the nature of a
penalty, but rather as a fair pre-estimate of what the
damages are likely to arise in case of breach of the
contract. No evidence whatsoever has been led by the
H
1134
SUPREME COURT REPORTS
[2014] 2 S.C.R.
A Plaintiff to prove that the claim for twice the amount of
earnest money was a fair measure or pre-estimate of
damages. [Para 6) [1148-A-D]
4. Returning to the facts of the instant case, the so
called Deed of Agreement for Earnest Money inasmuch
B as it postulates the payment of twice the sum received
ought not to have been decreed as firstly, the contract
itself could not have been specifically enforced since the
Defendant was devoid of title; and secondly, the Plaintiff
had not proved that he had suffered any damages and
c facially the stipulated sum was in the nature of a penalty.
[Para 11) [1153-E-F]
5. The Execution proceedings were initiated by the
Respondent/Decree holder on 27.10.2007 under Order
XXI Rule 11, CPC. Objection application under Order XXI
D Rule 58 read with Section 151, CPC was preferred by the
appellant pleading, inter alia, that the Decree Holder had
wrongly scheduled her property in the Execution
Application; that she was the absolute and real owner
thereof having purchased it on 12.05.2006 from NV, wife
of Judgment Debtor; that she has no other connection .
E or concern with the Judgment Debtor or with his wife in
any manner whatsoever. In the Execution proceedings,
the Plaintiff/Decree Holder/Respondent in crossexamination of the appellant has only suggested that the
documents were fabricated in collusion with NV. This was
F noy possible, since they were duly registered documents.
The other question put in cross-examination was that NV
was never the owner of the property; and that the
appellant's Objections were filed at the behest of NV. All
these suggestions were denied. If NV had no title, the
G consequence would be that the property would revert to
her predecessor-in- title, thereby placing the property
beyond the pale of the Execution proceedings. [para 14)
[1155-E-H; 1156-A-D]
6. NV had also participated in the Execution
H proceedings and had filed her affidavit asseverating
MAYA DEVI v. LALTA PRASAD
1135
therein that she had sold the property to the appellant by
A
executing a registered General Power of Attorney,
Agreement to Sell, Affidavit, Receipt, Possession Letter,
Will Deed, which were duly notorised on 12.05.2006. She
further stated that she had purchased the property by
means of similar documentation all of which were handed
over by her to the appellant at the time of selling of the
said property. She stated that her husband PCV I
Judgment Debtor had expired on 8.10.2008. As Order XXI
Rule 97 to Rule 101 of CPC envisage the determination
B
of all questions in Execution proceedings and not by way
C
of an independent suit, the Executing Court was duty
bound to consider and decide the Objections filed by the
Appellant with complete care and circumspection. This
was not done. This showed that the Executing Court
ignored and overlooked the important submission of the
appellant stating that she was the absolute owner of the
D
suit property and that she had no truck whatsoever either
with the Judgment Debtor or his wife NV beyond
purchasing the subject property from the latter. What has
also escaped the attention of the Court was that Suraj
Lamp case has prospective operation, thereby rendering
E
it inapplicable to the subject 2006 transaction. Secondly,
if the General Power of Attorney in favour of the appellant
was bereft of legal efficacy, the ownership of NV would
also be invalid, and sequentially the property would have
F
no connection whatsoever with the Judgment Debtor
since he had purportedly derived title only through a Will.
Unfortunately, this is also the approach which has been
preferred by the High Court in terms of the impugned
order. The High Court has also wrongly applied Suraj
Lamp and has also neglected to reflect upon the
appellant's plea that she was the actual owner of the suit G
property having purchased it for valuable consideration,
and being a third party not connected in any mala fide
manner with the Judgment Debtor, and not having
received prior notice of any action of PCV was imperious
to Execution proceedings. A miscarriage of justice, of H
1136
SUPREME COURT REPORTS
[2014] 2 S.C.R.
A monumental proportions, took place on an unsubstantiated presumption that one of the assets of "the
Judgment Debtor had been illegally transferred to defeat
the decree. The appellant had no other recourse than to
file Objections under Order XXI Rule 58 CPC. [paras 15
B to 17] [1156-G-H; 1157-A-H; 1158-A-D]
Sir Chunilal V. Mehta & Sons Ltd. vs Century Spinning
and Manufacturing Co. Ltd. AIR 1962 SC 1314: 1962 Suppl.
SCR 549; Fateh Chand vs Balkishan Dass AIR 1963 SC
1405: 1964 SCR 515; Phulchand Exports Limited Vs 0.0.0.
C Patriot 2011 (1 O)SCC 300: 2011 (15) SCR 1129; Mau/a Bux
vs Union of India 1969 (2) SCC 554: 1970 (1) SCR 928; UO/
vs Raman Iron Foundry 1974 (2) SCC 231: 1974 (3) SCR
556; BSNL vs Reliance Communication Ltd. 2011 (1) SCC
394:2010 (15) SCR 705; Shanti/al Guiabchand Mutha vs
o Tata Engineering and Locomotive Company Limited, (2013)
4 sec 396 - relied on.
7. The plaint contained an averment thatthe suit
property had already been sold. The Judgment Debtor,
(his wife NV was not impleaded) had appeared in the trial
E court and filed his Written Statement in which, whilst
admitting the documentation executed between the
parties, he had denied that he had been served with any
legal notice and set up the defence that he was entitled
to forfeit the amount received by him because the
F Plaintiff/Decree Holder had failed to pay the balance sale
consideration as envisaged in the Deed of Agreement for
Earnest Money. After filing his Written Statement he
stopped appearing, and the suit proceeded ex-parte.
Significantly, the Deed of Agreement for Earnest Money
G as well as the Written Statement predicate Defendant's
title on a Will, and in this context there is no evidence on
record that it had taken effect because of the death of the
Testator. In the event, as is to be expected, no appeal
against the judgment and decree came to be filed, and,
therefore, the decision was not testi:td before or
H
MAYA DEVt v: LAI.TA PRASAD
1137
scrutinized by the Appellate Court. The absence of the
A
Defendant does not absolve the trial court from fully
satisfying itself of the factual and legal veracity of the
Plaintiffs claim; nay, this feature of the litigation casts a
greater responsibility and onerous obligation on the trial
court as well as the Executing Court to be fully satisfied . 8
that the claim has been proved and substantiated to the
hilt by the Plaintiff. [para 18] [1158-E-H; 1159-A-B]
8. The appellant has not taken any steps for setting
aside the ex parte decree against Judgment Debtor. This
was only to be expected since the Appellant/Objector had
C
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
0
endeavour to defeat the decree. On a conjoint reading of
Order XX.I Rule 58 CPC and the fasciculus of Order XX.I
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
E
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
prescribes the filing of a separate suit and prescribes that
all relevant questions shall be determined by the Court.
Objection under Order XX.I should be meaningfully heard
so as to avoid the possibility of any miscarriage of justice.
Rule 103 ordains that where any application has been
adjudicated upon under rule 98 or rule 100, the order
made thereon shall have the same force and be subject
F
to the same conditions as to an appeal or otherwise, as
G
if it were a decree. The appellant is a third party and has
been brought into the lis by a side wind in that her
property is sought to be attached with the intention of
satisfying a decree in which she was not directly or
intrinsically concerned. The appellant/Objector who has
H
1138
SUPREME COURT REPORTS
[2014) 2 S.C.R.
A 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 to me that the courts below have in a hurried, if not
8 prejudiced manner, rejected the Objections merely
because of some sympathy towards the Decree Holder.
The Objections deserved to be allowed without disturbihg
the decree, leaving all other remedies .op~n to the Decree
Holder/Respondent, including proceedings against the
Estate of the Judgment Debtor. [para 19) [1159-E-H; 1160C A-C, D-G]
Brahmdeo Chaudhary vs Rishikesh Prasad Jaiswal,
(1997) 3 SCC 694, Shreenath vs Rajesh, (1998) 4 SCC 543,
and Tanzeem-e-sufia vs Bibi Haliman, (2002) 7 SCC 50 -
0
referred to.
E
F
G
H
Halsbury's Laws of England (4th edn Reissue, 1998)
Vol 12(1), para 1065; Corpus Juris Secundum, Volume
25A (2012) - referred to.
K. S. RADHAKRISHNAN, J.
Case Law Reference:
2011 (11) SCR 848
Relied on
(2012) 1 sec 656
Relied on
VIKRAMAJIT SEN, J.
· Case Law Reference:
1962 Supp SCR 549
Relied on
2010 (15) SCR 705
Relied on
1964 SCR 515
Relied on
2011 (15) SCR 1129
Relied on
1970 (1) SCR 928
Relied on
Para 2
Para 3
Para 7, 8
Para 7, 8
Para 7
Para 12
Para 13
MAYA DEVI v. LALTA PRASAD
1139
1974 (3) SCR 556
Relied on
Para 13
2010 (15) SCR 705
Relied on
Para 13
(2013)-4 sec 396
Relied on
Para 18
(1997) 3 sec 694
Relied on
Para 19
(1998) 4 sec 543
Referred to
Para 19
(2002) 1 sec 50
Referred to
Para 19
CIVIL APPELLATE JURISDICTION : Civil Appeal No.
2458 of 2014.
From the Judgment and Order dated 24.01.2011 of the
High Court of Delhi at New Delhi in EXFA No. 23 of 2010.
Rajesh Kumar (for Bhaskar Y. Kulkarni) for the Appellant.
K. Krishna Kumar (for M.A. Krishna MoorthyO for the
Respondent.
The Judgments of the Court was delivered by
K.S. RADHAKRISHNAN, J. 1. Leave granted.
A
B
c
D
E
2. The appellant herein filed an Objection Petition under
Order 21 Rule 58 CPC, when the decree obtained by the
respondent in Civil Suit No.407 of 2007 was sought to be
executed. Suit was filed for the recovery of an amount of F
Rs.3,40,000/- with interest, which was sought to be reali~ed,
on the property covered by an agreement for sale dated
3.11.2003 between the judgment debtor and decree holder.
The appellant claimed that she became the absolute owner of
the suit property by virtue of a registered General Power of
Attorney dated 12.5.2006 and that she has been in actual
G
physical possession of the suit property. The 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 H
1140
SUPREME COURT REPORTS
[2014] 2 S.C.R.
A
the appellant/objector. Reliance was also placed on the'
judgment of this Court in Suraj Lamp and Industries Private
Limited Through Director v. State of Haryana & Anr. (2009)
7 SCC 363. The Executing Court vide its order dated
23.7.2010 dismissed the Objection Petition filed by the
9
appellant. Aggrieved by the same, the appellant preferred
Execution First Appeal No.23 of 2010 before the High Court
of Delhi at New Delhi. The High Court also placed reliance on
the judgment of this Court in Suraj Lamp and Industries Private
Limited (supra) and dismissed the appeal holding that the
documents relied upon by the appellant would not coflfer
C ownership or possession over the property in her favour. The
High Court also vide its order dated 24.1.2011 upheld the order ·
of the Executing Court. Aggrieved by the same, this appeal bas
been preferred by the appellant.
D
3. Shri Rajesh Kumar, learned counsel appearing for the
appellant submitted that the ratio laid down by this Court in
Suraj Lamp and Industries Private Limited (supra) was wrongly
applied by the Executing Court as well as the High Court.
Learned counsel submitted that in the final judgment which §-
E
reported in Suraj Lamp and Industries Private Limited (2)
Through Director v. State of Haryana & Anr. (2012) 1 SCC
656, this Court has clarified the position that the judgment would
not affect the validity of sale agreements and powers of attorney
executed in genuine transactions and that the judgment would
operate only prospectively. Learned counsel also submitted that
F
the alleged agreement executed between the respondent and
one Prem Chand Verma on 3.11.2003 was a collusive one,
subsequently created, to get over the registered Power of
Attorney executed on 3.6.1982 between the appellant and wife
of Prem Chand Verma, viz. Nirmal Verma. Learned counsel
G also pointed out that Civil Suit No.407 of 2007 was preferred
by the respondent herein against Prem Chand Verma based
on the deed of agreement dated 3.11.2003 created for the said
purpose. Referring to the above-mentioned judgment, learned
counsel further pointed out that Prem Chand Verma did not
H contest the Suit and he was declared ex-parte and a decree
MAYA DEVI v. LALTA PRASAD
1141
[K.S. RADHAKRISHNAN, J.]
was passed in favour of the respondent. Learned counsel
A
pointed out that the decree was obtained by collusion and
practicing fraud on the Court and the Executing Court has
committed an error in rejecting the Objection filed by the
appellant herein, so also by the High Court by not appreciating
the facts in the correct perspective.
8
4. Shri K. Krishna Kumar, learned counsel for the
respondent, submitted that both the Executing Court and High
Court have correctly applied the principles laid down in Suraj
Lamp and Industries Private Limited (supra). Learned counsel
pointed out that any process which interferes with regular C
transfers under deeds of conveyance properly stamped,
registered and recorded in the registers of the Registration
Department, is to be discouraged and deprecated and the
Executing Court has rightly declined to give its seal of approval
to General Power of Attorney, Agreement for Sale, etc. dated
D
12.5.2006.
' 5. I am of the view that the Executing Court as well as High
Court have committed a grave error in not properly appreciating
the objections filed by the Appellant. We are in this case
. concerned with the question whether we must give credibility
E
to the registered General Power of Attorney executed on
12.5.2006 between Nirmal Verma and the appellant or on the
alleged Agreement for Sale executed on 3.11.2003 between
the respondent and Prem Chand Verma, husband of Nirmal
Verma. Further, we have to examine the manner in which Civil
F
Suit No.407 of 2007 was decreed without contest by Prem
Chand Verma, husband of Nirmal Verma.
6. The registered Power of Attorney was executed by none
other than the wife of Prem Chand Verma and the appellant
herein on 12.5.2006 in respect of the property in question for G
a sale consideration of Rs.70,000/-, which was received by
Nirmal Verma in cash in advance and she acknowledged the
same before the Sub-Registrar, Delhi.. On the same day, Nirmal
Verma, wife of Prem Chand Verma. handed over physical
vacant possession of tbe land and building situated thereon and
H
1142
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from 12th May, 2006 onwards, the appellant is in possession
of the above-mentioned property.
7. We are, in this case, therefore, concerned with the legal
validity of a General Power of Attorney executed by none other
than the wife of Prem Chand Verma against whom a decree
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has been obtained by the respondent without any proper
contest and the court proceeded against him ex-parte. These
facts speak for itself. Evidently, the collusive decree was
obtained by the respondent to get over the registered Power
of Attorney executed in favour of the appellant and, it is in this
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perspective, we have to understand and apply the ratio laid
down by this Court in Suraj Lamp and Industries Private
Limited (2) (supra).
8. Paragraph 27 of the judgment of this Court in Suraj
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Lamp and Industries Private Limited (2) (supra) reads as
follows:
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"27. We make it clear that our observations are not
intended to in any way affect the validity of sale agreements
and powers of attorney executed in genuine transactions.
For example, a person may give a power of attorney to
his spouse, son, daughter, brother, sister or a relative to
manage his affairs or to execute a deed of conveyance.
A person may enter into a development agreement with a
land developer or builder for developing the land either by
forming plots or by constructing apartment buildings and
in that behalf execute an agreement of sale and grant a
power of attorney empowering the developer to execute
agreements of sale or conveyances in regard to individual
plots of land or undivided shares in the land relating to
apartments in favour of prospective purchasers. In several
States, the execution of such development agreements
and powers of attorney are already regulated by law and
subjected to specific stamp duty. Our observations
regarding "SA/GPA/will transactions" are not intended to
apply to such bona fide/genuine transactions."
MAYA DEVI v. LALTA PRASAD
1143
9. In the above judgment, it has been stated that the
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observations made by the Court are n~t intended to in any way
affect the validity of sale agreements and powers of attorney
executed in genuine transactions. I am of the view that the
Power of Attorney executed on 12.5.2006 in favour of the
Appellant by the wife of Prem Chand Verma is a genuine
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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 C
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.
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10. The appeal is allowed, as above, and the impugned
orders are set aside. There shall, however, be no order as to
costs.
VIKRAMAJIT SEN, J. 1. I have perused the judgment of E
my learned and esteemed Brother Radhakrishnan, and I entirely
and respectfully agree with his conclusion that the appeal
deserves to be allowed. My learned Brother has succinctly
analysed the sterling judgment in Suraj Lamp and Industries
Private Limited vs State of Haryana (2009) 7 SCC 363, which
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has been rendered by a Three-Judge Bench of this Court. I
completely concur with the view that since General Power of
Attorney (GPA) in favour of the Appellant was executed and
registered on 12.05.2006, it could not be impacted or affected
by the Suraj Lamp dicta. Furthermore, a reading of the order G
of the Executing Court as well as of the High Court makes it
·palpably clear that both the Courts had applied the
disqualification and illegality imposed upon GPAs by Suraj
Lamp, without keeping in mind that the operation of that
judgment was pointedly and poignantly prospective. This
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question has been dealt with by my esteemed Brother most
comprehensively.
2. What strikes us as a perverse, certainly misplaced or
inconsistent approach, is that if the Appellant does not possess
any title to the property predicated on the GPA executed in her
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favour by Smt. Nirmal Verma (the wife of the Judgment Debtor
Shri Prem Chand Verma), this legal infirmity would inexorably
invalidate the title of Smt. Nirmal Verma herself, thereby
denuding any titular claim of her husband, the Judgment Debtor,
and rendering the property impervious to the subject execution
C proceedings. Additionally, there is not even a semblance of a
right in favour of the Judgment Debtor whose wife was not even
impleaded in the suit or in the execution. The impugned
judgment notes this contention but fails to address it. The
evidence of the Decree Holder has not been filed and therefore
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the judicial records were summoned from the High Court.
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3. The Statement of the Respondent/Decree Holder reads
tl:lus:-
"Ex. No. 224/2009
DHW-1: Sh.Lalta Prasad, S/o Sh. Naubat Ram, aged 58
years, R/o 1908, Gali Mata Wali, Chandni Chowk, Delhi6.
.
ON S.A.
I, hereby, tender my affidavit in my evidence. The same_be
read as part and parcel of my statement. My affidavit is
Ex. DHW-1/A(running in 2 pages) which bears my
signatures at point A and B on page 1 & 2.
XXXXXX by Sh. Pradeep Chaudhary Adv. for objector.
I have passed 11th standard. The affidavit Ex. DHW-1/A
was prepared in the office of my counsel. My counsel has
explained me contents of the same to me before I signed
the same. Whatever I stated to my counsel was
MAYA DEVI v. LALTA PRASAD
1145
[VIKRAMAJIT SEN, J.]
incorporated in Ex. DHW-1/A. The Agreement with Prem A
Chand Verma was entered on 11.11.2003. I had seen
original documents of the property at that time in
possession of Prem Chand Verma. He also gave me
some copies of the same.
Remaining cross-examination of the witness is deferred B
till 12.00 P.M.
RO&AC
BRIJESH KUMAR GARG C
ADJ CENTRAL-18
DELHI/ 29.01.10
DHW-1: Sh.Lalta Prasad, recalled for his further crossexamination at 12.50 P.M.
ON S.A.
XXXXXX by Sh. Pradeep Chaudhary Adv. for objector.
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I have no knowledge that Smt. Maya Devi had
purchased the suit property from Smt. Nirmal Verma. The E
documents filed by the objectors are forged and fabricated
documents. I have no knowledge that Smt. Nirmal Verma
purchased the suit property from one Sh. Rajender Kumar.
Sh. Prem Chand Verma was my friend for the last
about 30 years. It is correct that Sh. Prem Chand Verma F
had already expired on 7.10.2008. It is wrong to suggest
that Sh. Rajender Kumar was the owner of the property and
he sold the property to Nirmal Verma from whom Smt.
Maya Devi purchased the suit property. It is wrong to
suggest that Sh. Prem Chand Verma was never the owner G
of the suit property. It is wrong to suggest that I have filed
a false affidavit and I am deposing falsely in the court
today.
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RO&AC
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G
BRIJESH KUMAR GARG
ADJ CENTRAL-18
DELHI/ 29.01.1 O"
It discloses that the Decree Holder has failed altogether to
disprove the title of the Appellant, and he has maintained that
the DefendanUJudgment Debtor was the owner, which is
admittedly not the actual legal position. If the Decree Holder has
been defrauded by the DefendanUJudgment Debtor, largely
because of the former's careless disregard to conduct a titlesearch, he must face the legal consequences; they cannot be
transferred/imposed upon a third party to its detriment. In the
wake of the Decree Holder/Plaintiff denying the title of Smt.
Nirmal Verma, the Courts below erred in proceeding against
her property.
4. Both the Courts below have preferred the view that the
Appellant, who has been in possession from the date of the
execution of the registered GPA in her favour, has been
introduced into the scene in order to defeat the interests of the
Respondent, which is a perverse approach for reasons that
shall be presently explained. The documents purportedly in
favour of the RespondenUDecree Holder are unregistered and
the alleged payment made by him to Shri Prem Chand Verma
is in cash. Therefore, there is no justification for favouring the
view that the alleged transaction between Shri Prem Chand
Verma and the RespondenUDecree Holder was genuinely prior
in time to the execution of the registered Power of Attorney in
favour of the Appellant Smt. Maya Devi by Smt. Nirmal Verma,
and the former simultaneously and contemporaneously was put
into possession of the property by the latter.
5. There can be no gainsaying that when the probative
value of documents is to be assessed, specially those dealing
with the creation of any interest in property or its transfer, of a
value exceeding Rs.100/-, obviously documents which have
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been duly registered regardless of whether or not that was
MAYA DEVI v. LALTA PRASAD
1147
[VIKRAMAJIT SEN, J.]
legally mandatory, would score over others. A perusal of the
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judgment shows that whether the sum of Rs.1,70,000/- allegedly
paid by the Plaintiff in Suit No.407 of 2007, namely, Shri Lalta
.. Prasad to Shri Prem Chand Verma was in cash or through a
traceable Bank transaction or through a registered
acknowledgment has not been cogitated upon. Proof of B
payment by the Plaintiff to the Defendant/husband of the
previous owner of the property has not been adjudicated upon.
It is not controverted that the Appellant Smt. Maya Devi has
been in possession of the property in question from May, 2006.
A reading of the judgment by which the Suit was decreed for a
sum of Rs.3,40,000/- does not shed any light on the
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circumstances which made the Plaintiff wait to initiate legal
action till after the property was sold and its possession
delivered to the Appellant. I, therefore, disbelieve the
genuineness of the so-called "Deed of Agreement for Earnest
Money" allegedly executed almost three years earlier on
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03.11.2003. And, I would rather discount the veracity of the
document dated 3.11.2003, then looking upon the Power of
Attorney and other documents executed in favour of the
Appellant Smt. Maya Devi by Smt. Nirmal Verma as mala fide.
What is important is that it is not disputed that the title and
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possession of the property which has been brought within the
sweep of the execution proceedings, was never held in any
capacity by the Defendant/Shri Prem Chand Verma, but by his
wife, Smt. Nirmal Verma. To give even a semblance of a case
to the Plaintiff Lalta Prasad, the Deed of Agreement for
Earnest Money should have been between the Plaintiff/Decree
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Holder/Respondent and Smt. Nirmal Verma.
6. The Trial Court had framed the following issues in Suit
No.407/2007, from which subject of proceedings emanates:
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"(1) Whether the plaintiff is entitled for the suit amount? If
so to what sum? OPP
(2) Whether the plaintiff is entitled for the interest? If so at
what rate and for which period? OPP
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(3) Relief."
The Trial Court having accepted the payment of Rs.1, 70,000/-
without insisting on any proof, did not go into the question
whether a covenant stipulating that double the amount of
earnest money would be payable in the event the contract was
B not performed, is legal in terms of the Indian Contract Act. The
imposition and the recovery of penalty on breach of a contract
is legally impermissible under the Indian Contract Act. As
regards liquidated damages, the Court would have to scrutinize
the pleadings as well as evidence in proof thereof, in order to
C determine that they are not in the nature of a penalfy, but rather
as a fair pre-estimate of what the damages are likely to arise
in case of breach of the contract. No evidence whatsoever has
been led by the Plaintiff to prove that the claim for twice the
amount of earnest money was a fair measure or pre-estimate
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of damages.
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7., The pronouncements of the Constitution Bench in Sir
Chunilal V. Mehta & Sons Ltd. vs Century Spinning and
Manufacturing Co. Ltd. AIR 1962 SC 1314, and later in .. Fateh
Chand vs Balkishan Dass AIR 1963 SC 1405, hold the. field,
1 E making it unnecessary to refer to any other precedent for an
enunciation of the law, except to appreciate the manner in which
the opinion of the Constitution Benches have been appfjed to
the factual matrix in later cases. With the number and volume
ofprecedents increasing exponentially each year, reference to
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all decisions make arguments excruciatingly lengthy and
judgments avoidably prolix. The first important judgment of this
Court on the question of Sections 73 and 74 of the Contract
Act is that of the Constitution Bench in Chunilal V. Mehta. The
two significant issues which arose were firstly, as to what would
G constitute a substantial question of law requiring the grant by
the High Court of a Certificate to appeal to this Court, and
secondly, the quantum of damages that can be awarded in that
case owing to the breach of the subject contract. It is the
second question which is relevant for the present purposes. The
admitted position was that the contract had been wrongfully
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MAYA DEVI v. LALTA ·PRASAD
1149
[VIKRAMAJIT SEN, J.]
breached by the Defendant. A clause in the compact between
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the parties stipulated that in these circumstances, the Plaintiff
would be entitled to receive from the Defendant "as
compensation or liquidated damages for the loss of such
appointment a sum equal to the aggregate amount of the
monthly salary of not less than Rs.6000/- which the Firm would
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have been entitled to receive from the Company, for and during
the whole of the then unexpired portion of the said period of
21 years if the said Agency of the Firm had not been
determined." The Plaintiff had initially claimed a sum of Rs.50
Lakhs which was subsequently reduced by way of amendment
of the plaint to Rs.28,26,804/-. The Constitution Bench opined C
that "when parties name a sum of money to be paid as
liquidated damages they must be deemed to exclude the right
to claim an unascertained sum of money as damages .....
Again the right to claim liquidated damages is enforceable
under S. 74 of the Contract Act and where such a right is found D
to exist no question of ascertaining damages really arises.
Where the parties have deliberately specified the amount of
liquidated damages there can be no presumption that they, at
the same time, intended to allow the party who has suffered by
the breach to give a go-by to the sum specified and claim
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instead a sum of money which was not ascertained or
ascertainable at the date of the breach". This precedent
prescribes that if a liquidated sum has been mentioned in a
. contract to be payable on its breach, then if damages have
actually been suffered, the said liquidated amount would be the
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maximum and upper limit of damages awardable by the Trial
Court.
8. The judgment of the Gonstitution Bench one year later,
in Fateh Chand concerns award of damages of the 'liquidated'
sum even though actual damages may have been less. In that G
respect it is the converse of the factual matrix that existed before
the earlier Constitution Bench in Chunilal V. Mehta. J.C. Shah,
J (who authored Fateh Chand) along with Chief Justice B.P.
Sinha were members of both Constitution Benches.