Supreme Court: Sale executed by original owner would prevail over sale made by a power of attorney

Sakunjay Vyas

Published on: April 12, 2022 at 03:50 IST

The Two Judge Bench of Justice M. R. Shah and Justice B.V. Nagarathna of the Supreme Court overturned the impugned judgment passed by the High Court of Karnataka bench, allowing the appeal and granting a decree for specific performance of an agreement to sell.

The Supreme Court recently ruled that the declaration that the sale deeds executed by the person holding the power of attorney in favor of any third person are not binding on the actual owner in case a prior sale has been executed by the actual owner.

The Two Judge Bench of Justice M. R. Shah and Justice B.V. Nagarathna was hearing an appeal against the impugned judgment passed by the High Court of Karnataka bench, allowing the appeal and granting decree for specific performance of an agreement to sell.

The Apex Court, by analyzing the facts and evidence of the present case, was befuddled by the judgment passed by the High Court, it stated that the High Court has heavily relied upon Section 20 of the Specific Relief Act, and stated that due to the fact that the Power of Attorney holder had executed sales deeds in favor of third parties, the Trial Court should not have exercised discretion bypassing the specific performance decree in favor of the original owner.

 it is a discretionary relief and therefore, in view of the fact that person named in the power of attorney had executed sale deeds in favour of any third person, the learned Trial Court ought not to have exercised discretion in favour of the original owner for passing the decree for specific performance.” the Court said.

That the Apex Court further stated that due to the fact that the powers of attorney holder executed the sale deeds in favor of third parties without the consent of the actual owner and that those deeds are nominal sale deeds and because defendants failed to establish that the agreement to sell is a created document and no consideration was paid, Section 34 of the Specific Relief Act, upon which reliance was placed by the High Court, may have no application at all.

” the sale deeds executed by original defendant No. 2 in favour of defendant Nos. 3 and 4 are not binding on defendant No. 1 and the plaintiff and those sale deeds are nominal sale deeds and that defendant Nos. 2 to 4 have failed to prove that agreement to sell dated 12.04.2005 is a created document and by virtue of the same no consideration has been paid, Section 34 of the Specific Relief Act, upon which the reliance has been placed by the High Court will have no application.. “ the Court said.

As a result, the Apex court overturned the impugned judgment passed by the High Court of Karnataka bench by stating that the impugned judgment and order passed by the High Court is hereby quashed and set aside and the judgment and decree passed by the learned Trial Court are restored. In the facts and circumstances of the case, there shall be no order as to costs.

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