Madras High Court
C.Kuppusamy vs P.Vijaya on 1 April, 2025
Author: N. Sathish Kumar
Bench: N. Sathish Kumar
A.S..No.411 of 2022
THE HIGH COURT OF JUDICATURE AT MADRAS
Date : 01.04.2025
CORAM:
THE HONOURABLE MR.JUSTICE N. SATHISH KUMAR
A.S.No.411 of 2022
1. C.Kuppusamy
2. K.Kandasamy
3. K.Rajeswari
4. K.Indira Gandhi ... Appellants
Versus
P.Vijaya ... Respondent
PRAYER : Appeal Suit filed under section 96 of Code of Civil Procedure read
with Order XLI Rule 1 of Code of Civil Procedure to set aside the judgment and
decree dated 26.11.2021 in O.S.No.48 of 2019 on the file of the Principal
District Judge, Tiruppur.
For Appellants : Mr.K.S.Jeyaganeshan
For Respondent : Mr.N.Manoharan
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A.S..No.411 of 2022
JUDGMENT
Challenging the judgment and decree of the trial Court decreeing the suit
in favour of the plaintiff, the present appeal has been filed by the unsuccessful
defendants.
2. The parties are arrayed as per their own ranking before the trial
Court.
3. It is the case of the plaintiff that the first defendant is a financier and is
doing finance business with the second defendant, third defendant is the wife of
the second defendant and the fourth defendant is the wife of the first defendant.
The suit property is situate in Coonoor, Nilgiris District. The plaintiff's
daughter has joined MBBS at Armenia, an Eastern European country. In order
to meet out the educational expenses, as the plaintiff was in dire need of funds,
she approached the first defendant through one Prabhu for availing loan of
Rs.10 lakhs. The first defendant has agreed to lend the amount on condition
that General Power of Attorney in favour of the first defendant as well as an
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agreement for sale in favour of the second and third defendants are to be
executed. As the plaintiff was in dire need of funds, due to undue influence
exerted on her by the first defendant, she had executed Power of Attorney dated
09.04.2012 in favour of the first defendant as well as agreement for sale dated
09.04.2012 in favour of the second and third defendants. Besides, she has also
given several signed blank papers, including cheques. It is agreed between the
parties that interest at the rate of 24% per annum has to be paid. The plaintiff
has also paid interest to the account of the first defendant. When the matter
stood thus, the first defendant fraudulently registered the suit property in the
name of the third and fourth defendants on 04.04.2014. Therefore, according to
the plaintiff, the document is null and void. Hence, sought to cancel the
document.
4. The first defendant filed the written statement which has been adopted
by the defendants 2 to 4. The first defendant took up a plea that the suit has not
been valued properly. The market value of the property is Rs.70 lakhs. It is his
further case that he is not aware of the said Prabu and Mohammed Ali. Further
Power of Attorney has not been cancelled from the year 2012 onwards The suit
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is hopelessly barred by limitation. According to the first defendant, they had
entered into an agreement for sale of the property and total sale consideration is
fixed at Rs.11 lakhs and paid an advance of Rs.10 lakhs and agreed to execute
the document within a period of two years from the date of the agreement.
Besides, the plaintiff also executed the Power of Attorney in favour of the first
defendant to sell the suit property. The sale agreement was cancelled on
02.04.2014. Thereafter, the suit property has been sold to the third and fourth
defendants and they became absolute owner of the suit property.
5. In the additional written statement, it is their contention that after the
agreement, they approached the plaintiff to hand over vacant possession. At
that time, the defendants came to know that the plaintiff had received a sum of
Rs.10 lakhs from three tenants. Therefore, the defendants have decided to
purchase the suit property in favour of the third and fourth defendants by paying
a sum of Rs.10 lakhs to the tenants and received original Pokkiyam deeds. The
plaintiff had also executed a receipt dated 09.03.2014 in favour of the first
defendant confirming the receipt of pokkiyam amount.
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6. On the basis of the above pleadings, the following issues have been
framed by the trial Court :-
1. Whether the sale deed executed by the first defendant
in favour of the defendants 3 and 4 on 04.04.2014 registered
with Sub Registrar, Coonoor in document No.712/2014 has to
be declared as null and void?
2. Whether the defendants 3 and 4 have to be restrained
from in any manner encumbering the suit property in
furtherance of the sale deed dated 04.04.2014 by way of
permanent injunction?
3. To what other relief?
7. On the side of the plaintiff, P.W.1 to P.W.3 have been examined and
Ex.A.1 to Ex.A.15 have been marked. On side of the defendant, D.W.1 and
D.W.2 have been examined and Ex.B.1 to Ex.B.28 have been marked.
8. The trial Court, appreciating entire evidence, both oral and
documentary, found that the document of sale was never intended by the
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plaintiff and it is only a loan transaction and set aside the sale deed on the
ground of undue influence. Challenging the said finding, present appeal came
to filed by the defendants.
9. It is the contention of the learned counsel appearing for the appellants
that when a registered document has been executed, the plaintiff cannot take a
contrary stand than the terms of the contract. The power of attorney has not
been cancelled till the sale deed has been executed by the first defendant.
Therefore, the plaintiff cannot take a different stand that the document is not
intended for sale of the property. The Court Fee has also not been paid
properly.
10. Whereas, it is the contention of the learned counsel appearing for the
respondent that the very nature of the document executed on the same day one
in favour of the first defendant and another agreement for sale in favour of the
defendants 2 and 3 and thereafter, the Sale Deed executed in favour of the
defendants 3 and 4 clinchingly probabilize the plaintiff's case that the
documents were never entitled for sale of the property. It is his further
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contention that Ex.A.10 receipt clearly prove that the plaintiff was paying
interest regularly to the first defendant. That apart, the very cross examination
of P.W.1 and suggestions put to P.W.1 indicate that there was no nexus between
the parties prior to the documents. Therefore, the plaintiff appointing the first
defendant, who is a financier, as her Power of Attorney is highly improbable.
Further, the entire evidence of P.W.2 and P.W.3 proves the fact that the plaintiff
was introduced to the first defendant only in a loan transaction. The trial Court
has clearly appreciated evidence and decreed the suit.
11. In the light of the above submissions, now the points that arise for
consideration in this appeal are :
1. Whether the sale deed dated 04.04.2014 is a result of
undue influence and misrepresentation of facts and result of
loan transaction?
2. Whether the plaintiff has discharged his burden in
establishing undue influence and misrepresentation of facts?
3. To what relief, the parties are entitled?
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12. Point Nos.1 to 3 :
The suit has been filed to avoid the document of sale executed by the first
defendant as power agent of plaintiff in favour of the third and fourth
defendants. The relationship of the parties assumes significance in this case.
The first defendant is said to be the power agent of the plaintiff. He is the
husband of the fourth defendant. Similarly, the third defendant is the wife of
the second defendant. It is the case of the plaintiff that she was in dire need of
funds to meet out the educational expenses of her daughter, who was studying
MBBS in Armenia. At this stage, through a broker, she approached the first
defendant, who is a financier at Perundurai and sought for a loan of Rs.10 lakhs.
At that time, the first defendant has agreed to lend the loan of Rs.10 lakhs
provided the plaintiff executed a General Power of Attorney in favour of the
first defendant and agreement for sale in favour of the second and third
defendants. P.W.2 and P.W.3 have been examined by the plaintiff to support
her version.
13. Whereas, it is the specific case of the defendants that it is a clear case
of sale of the property. It is relevant to note that the power of attorney was
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marked as Ex.A.2 and Ex.B.8. A registered Power of Attorney deed has been
executed by the plaintiff in favour of the first defendant. Though execution of
the document has not been disputed by the plaintiff not only in her pleadings,
but also in her evidence, she has given circumstances under which she has
executed the documents. Her evidence clearly indicate that she was in
economic duress. Therefore, she has executed the Power of Attorney. In fact
she was in adversity at the relevant point of time. The Power of Attorney, when
carefully perused, though it is styled as a general power of attorney, it was
executed in favour of the first defendant to execute the sale in favour of the
defendants 2 and 3. On the same day of Power of Attorney, a sale agreement
dated 09.04.2012, came to be executed in favour of the defendants 2 and 3,
which is marked as Ex.A.4 and Ex.B.7.
14. The recitals in Ex.A.4 agreement makes it very clear that it has been
executed for sale of the property for a total sale consideration of Rs.11 lakhs,
out of which Rs.10 lakhs has been paid towards sale consideration. For paying
remaining sale consideration of Rs.one lakh, two years time has been fixed to
complete the sale. This Court is of the view that having paid substantial sale
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consideration and fixing of two years to pay the remaining paltry sum of Rs.one
lakh is against normal human conduct. When a person is really intended to
purchase the property and paid substantial sale consideration, and again
entering into a contract and fixing two years for completing the sale is against
the normal human conduct. It is further fortified by various other factors. On
the same day a Power of Attorney was also executed in favour of the first
defendant and Sale Agreement has been executed in favour of the second and
third defendants. The recitals in the Power of Attorney executed in favour of
the first defendant clearly show that only for the specific purpose of executing
sale in favour of the second and third defendants. Now it appears that taking
advantage of the non revocation of the Power of Attorney, the first defendant
himself has cancelled the sale agreement in favour of the second and third
defendants and sold the property in favour of the third and fourth defendants.
15. It is to be noted that the very sale in favour of the third and fourth
defendants on the basis of the Power of Attorney itself cannot be valid in the
eye of law for the simple reason that the Power of Attorney has been executed
only to execute sale in favour of the second and third defendants alone and not
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in favour of the third and fourth defendants. Therefore, when a specific power
has been conferred specifically to sell the property to the second and third
defendants, selling the property to the fourth defendant, in view of this Court, in
fact probabilize the case of the plaintiff that the documents came in a loan
transaction. It is further to be noted that the very cross examination of P.W.1,
the suggestions put to P.W.1 in cross examination further fortify the stand of the
plaintiff that the entire transaction is nothing but a loan transaction. The very
suggestions put to P.W.1 clearly indicate that she is only a house wife and she
was not doing any business. The very suggestions put to P.W.1 clearly indicate
that the plaintiff was introduced to the first defendant only through brokers,
namely Prabu and Mohammed Ali. Only through them, the loan is sought by
the plaintiff. These suggestions put to P.W.1 probabilize the plaintiff's case.
P.W.3 has been examined in this regard and he has also supported the case of
the plaintiff.
16. Further at the relevant point of time, the plaintiff's daughter was
pursuing MBBS at Armenia and the same has not been disputed. Ex.A.8 has
also been filed in this regard. P.W.1 has clearly stated in her evidence that she
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has executed the Power of Attorney and the Agreement for Sale when she was
in economic duress and was in dire need of funds to meet out the educational
expenses of her daughter, who was studying in abroad. Therefore when a
person is in adversity and stringent financial crises, taking such a situation as an
advantage and getting execution of the documents, this Court is of the view that
such execution cannot be said to be out of free will or there is a consensus ad
idem between the parties to execute the documents. In this regard, it is relevant
to refer the judgment in U.Nilan Vs. Kannayyan [dead] through LRs
reported in 1999 [8] SCC 511 in para 40, the Appex Court has held as follows
:
“40. Adversity of a person is not a boon for others. If a
person in stringent financial conditions had taken the loan and
placed his properties as security therefor, the situation cannot
be exploited by the person who had advanced the loan. The
Court seeks to protect the person affected by adverse
circumstances from being a victim of exploitation. It is this
philosophy which is followed by the Court in allowing that
person to redeem his properties by making the deposit under
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Order 34 Rule 5 C.P.C.”
17. Further it is relevant to note that having agreed to purchase the
property for a sum of Rs.11 lakhs and Power of attorney has also been
registered in favour of the first defendant only to execute sale in favour of the
second and third respondents, whereas, the first defendant registered the
property in the favour of the third and fourth defendants, who are wife of the
first and second defendants for a sale consideration of a sum of Rs.19 lakhs also
creates serious doubt. Further the guideline value is more than the sale amount.
The same is also established on record. The property is consisting of three
floors of RCC building. Therefore, registering the property on a throw away
price also create serious doubt about the sale itself.
18. It is further stand of the defendants that they also paid a sum of Rs.10
lakhs to the tenants later in this regard and the receipts have also been marked
as Ex.B.28. Ex.B.28 shows as if the plaintiff had also acknowledged the
payment in favour of the tenants. It is relevant to note that the very plea of such
payment to the tenants have been raised only in the additional written statement,
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which has been filed after the evidence was over. Further Ex.B.28 is typed in a
non judicial stamp paper. Infact the serial number of said paper is next to the
serial number of stamp papers which were used for typing agreement Ex.A.3
and Ex.A.4 Power of Attorney. Therefore, it is hard to believe that while
making payment to the tenants in the year 2015, same serial number of papers
were purchased. It is highly improbable to contend that from the year 2012,
from the date of agreement there was no sale of any stamp papers by the stamp
vendor till 2015. These facts clearly probabilize the case of the plaintiff that
apart from the sale agreement, plaintiff's signatures have been obtained in many
other blank papers which have been utilized later to suit the convenience of the
defendants.
19. It is also relevant to note that Ex.B.28 has come on record after the
trial is over. There was no mention in the written statement originally filed by
the defendants about Ex.B.28 receipt. As far as the contention of the appellants
that the suit is barred by limitation is concerned, the suit has been filed within a
period of three years of sale deed. The suit has been originally presented before
the Principal District Judge, Udhagamandalam on 22.03.2017 and later it has
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been transferred to District Munsif Court, Coonoor and later transferred to the
Principal District Court, Tiruppur. Hence, the suit has been filed well within
the period of limitation, within three years from the date of registration of the
sale deed. When the plaintiff has established that she was in stringent financial
condition and in dire need of funds, she was totally in adversity and in order to
pay the college fees of her daughter, who was pursuing MBBS in a foreign
country, she was under the mercy of the financiers at the relevant point of time.
Therefore, the first defendant who was a financier had taken undue advantage
since he was in a dominant position to dominate the will of the party who was
in dire need of funds, thereby got the execution of several documents and one
such document is the Power of Attorney. Taking advantage of the Power of
Attorney, sale deed has been executed in favour of the third and fourth
defendants. Therefore, the burden shifted on the defendants to show good faith
in transaction. On overall appreciation of evidence, the defendants have not
discharged their burden to show that the transaction was in good faith.
20. In this regard it is useful to refer the judgment of the Apex Court in
Krishna Mohan Kul Alia Nani Charan Kul and another Vs. Pratima Maity
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and others reported in [2004] 9 SCC, wherein it has been held as follows :
“This principle has been engrained in Section 111 of the
Indian Evidence Act, 1872 (in short the 'Evidence Act'). The rule
here laid down is in accordance with a principle long
acknowledged and administered in Courts of Equity in England
and America. This principle is that he who bargains in a matter
of advantage with a person who places a confidence in him is
bound to show that a proper and reasonable use has been made of
that confidence. The transaction is not necessarily void ipso
facto, nor is it necessary for those who inpeach it to establish that
there has been fraud or imposition, but the burden of establishing
its perfect fairness, adequacy and equity is cast upon the person
in whom the confidence has been reposed. The rule applies
equally to all persons standing in confidential relations with each
other. Agents, trustees, executors, administrators, auctioneers,
and others have been held to fall within the rule. The Section
requires that the party on whom the burden of proof is laid
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should have been in a position of active confidence. Where fraud
is alleged, the rule has been clearly established in England that in
the case of a stranger equity will not set aside a voluntary deed or
donation, however, improvident it may be, if it be free from the
imputation of fraud, surprise, undue influence and spontaneously
executed or made by the donor with his eyes open. Where an
active, confidential, or fiduciary relation exists between the
parties, there the burden of proof is on the donee or those
claiming through him. It has further been laid down that where a
person gains a great advantage over another by a voluntary
instrument, the burden of proof is thrown upon the person
receiving the benefit and he is under the necessity of showing
that the transaction is fair and honest.”
The above dictum clearly show that when a person was in advantageous
position, otherwise, he is in a dominant position, to dominate the will of others,
the burden lies on the person who takes advantage of such dominance to prove
the good faith in transaction. Whereas, in the present case, the entire evidence
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indicate that the defendants have not proved good faith of the transaction as per
section 111 of the Indian Evidence Act and and Section 114 of Bharathiya
Sakshya Adhiniyam.
21. As already discussed, when the parties have obtained several
documents in favour of the family members on the same day, besides, various
other empty stamp papers, those documents came into existence only in a loan
transaction, Though the plaintiff has executed above documents, as already
held the same is not intended for sale of the property and it is only a result of a
loan transaction and there was no consensus ad idem to sell the property. The
points are answered accordingly.
22. However, as it is admitted by the plaintiff that she received Rs.10
lakhs as loan, she is bound to pay the amount. Though no counter claim has
been raised in this regard, as the amount has been received by the plaintiff, the
plaintiff cannot take undue advantage and cannot be permitted to become unjust
enrichment. In such view of the matter, though the defendants have not raised
claimed any counter claim, since the very sale deed itself is set aside. This
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Court in order to do complete justice to all invoking power of Appellate Court
provided under Order 41 Rule 33 of Code of Civil Procedure, pass a decree in
favour of the defendants for a sum of Rs.10,00,000/- with interest at the rate of
12% per annum from the date of agreement till the date of suit and thereafter at
6% till the date of realization.
23. In the result, this Appeal Suit is partly allowed. Only in respect of
money decree passed above. The trial Court's decree and judgment setting aside
the sale deed dated 04.04.2014 is confirmed. No costs. The plaintiff is directed
to deposit a sum of Rs.10,00,000/- [Rupees ten lakhs only] to the credit of the
suit before the trial Court, along with interest at the rate of 12% per annum from
the date of agreement dated 09.04.2012 till the date of suit and thereafter, at the
rate of 6% per annum till the date of realization. On such deposit, the
defendants are at liberty to withdraw the same on filing appropriate application
before the trial by paying necessary Court Fee.
24. It is stated by the learned counsel appearing for the plaintiff that now
defendants have inducted two persons as tenants. In such view of the matter,
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the defendants shall not claim any right on that basis. It is well open to the
plaintiff to treat them as her tenants though they are inducted by the defendants.
Any advance received from the tenants shall be refunded to the them by the
defendants. Till the decree amount as indicated above is realized in favour of
the defendants, there shall be charge over the property.
01.04.2025
Index : Yes / No
Internet: Yes
Speaking/non speaking order
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To,
1. The Principal District Judge, Tiruppur.
2. V.R.Section, High Court, Madras.
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N. SATHISH KUMAR, J.
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01.04.2025
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