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Andhra High Court · body

2002 DIGILAW 777 (AP)

Bhoom Raj v. State Of A. P.

2002-06-25

S.R.K.PRASAD

body2002
( 1 ) THE petitioners who are the accused in c. C. (SR) No. 2025 of 2000 on the file of the judicial First Class Magistrate East and North ranga Reddy District and in Crime No. 55 of 2000 on the file of the Kushaiguda Police station, seek quashing of the proceedings by invoking inherent powers of this court. ( 2 ) BACKGROUND of the facts which are necessary for appreciation of the contentions are as follows: the first petitioner is the President of bhavanarishi Co-operative House Building society Limited, Hyderabad at the relevant time. The said society has purchased the land in question under an agreement of sale in the year 1984. Subsequently, an irrevocable general Power of Attorney was executed by kasula Balaiah i. e. , father of the 2nd respondent, who is de facto complainant in favour of Suryanarayana Murthy and T. V. Rama Rao, office bearers of the society and padma Rao vide registered GPA No. 1578/87 dt 16-11-1987. Pursuant to the said GPA the 2nd petitioner executed sale deed in favour of the society in respect of the land in question. In the meanwhile, the 2nd respondent de facto complainant and his brothers said to have sold away the property in question to third parties namely Taj Constructions and others. It is also alleged that the petitioners are not aware of the death of Kasula Balaiah and there is no notice to that effect. As matters stood thus, the society has also filed a suit o. S. No. 485 of 1997 on the file of the i Additional Subordinate Judge, Ranga reddy District against Kasula Balaiah, father of the complainant in respect of the land in question and an order of interim injunction is said to have been granted in the said suit. The society is also said to have filed LGC no. 23/2000 on the file of the Special Court under A. P. Land Grabbing (Prohibition) Act against the complainant and other third parties, who alleged to have purchased the land. Thereafter, a private complaint was said to have been presented by the 2nd respondent before the Judicial First Class magistrate, East and North, Ranga Reddy district and the same has been forwarded to the police and the concerned police i. e. , kushaiguda Police registered it as Crime no. 55 of 2000 under Section 420 IPC and have taken up investigation. 55 of 2000 under Section 420 IPC and have taken up investigation. As matters stood thus, the petitioners rushed to this court seeking quashing of the proceedings. ( 3 ) SRI K. Rama Krishna Reddy, learned senior counsel appearing for the petitioners assailed the proceedings on two grounds. Firstly, he contends that irrevocable General power of Attorney has not come to an end as some more interest is there for the agent. The second contention is that the matter is seized by the Civil Court and the Land Grabbing court and it is civil in nature. He has drawn my attention to Section 202 and also illustration (a), of the Indian Contract Act, 1872. Reliance is also placed on a decision reported in Seth Loon Karan v. I. E. John and also para 4 of the said judgment. ( 4 ) LEARNED Public Prosecutor however, contends that it is not a case where inherent powers have to be exercised and General power of Attorney will come to end soon after the death of the executant. ( 5 ) THE 2nd respondent did not advance any arguments before this court. ( 6 ) COMING to the first contention canvassed by the learned senior counsel for the petitioner, Section 202 of the Indian contract Act, 1872 reads as follows: "202. Termination of agency where agent has an interestin subject-matter:-Where the agent has himself an interest in the property which forms the subject-matter of the agency, the agency cannot, in the absence of an express contract, be terminated to the prejudice of such interest. Illustrations: (A) A gives authority to B to sell A s land, and to pay himself, out of the proceeds, the debts due to him from A. A cannot revoke this authority, nor can it be terminated by his insanity or death. (B) A consigns 10,000 (sic. 1000} bales of cotton to B, who has made advances to him on such cotton, and desires B to sell the cotton and to repay himself out of the price, the amount of his own advances. A cannot revoke,this authority nor is it terminated by his insanity or death. " it is mentioned in CHITTY ON contracts, Twenty Sixth Edition, volume II, Specific Contracts, at para 2629 as follows: "irrevocable authority. A cannot revoke,this authority nor is it terminated by his insanity or death. " it is mentioned in CHITTY ON contracts, Twenty Sixth Edition, volume II, Specific Contracts, at para 2629 as follows: "irrevocable authority. Though an agent s authority is, as stated above, normally revocable at will (without prejudice to his right, if any, to damages for breach of contract) there are some cases where this is not so. If there is an interest coupled with the authority, that is, if an agreement is entered into by deed or on a sufficient consideration, whereby an authority is given for the purpose of providing a security, such an authority is irrevocable, even by death, mental disorder or bankruptcy. This is in fact hardly a case of agency at all, since the donee of the authority acts in his own interest, and the authority is an essential part of the security. Thus, in a sub- underwriting contract, the authority givenby the sub-underwriter to apply in his name for such shares as he is bound by the terms of his contract to take up is an authority coupled with an interest and is irrevocable. But an authority to sell goods is not irrevocable merely because the agent has made advances to his principal on the credit of the goods, unless the authority was given in order to secure such advances. Nor is the appointment for five years of an agent to collect debts on commission an authority coupled wit0068 an interest. " it is also mentioned in anson s LAW OF contract , 27th Edition, at page 657 under the head "irrevocable Authority" and the head (b) Powers of Attorney, which reads as follows:"ii. Irrevocable Authority: the authority given to an agent may become irrevocable in three main instances, (a) when it is coupled with an interest, (b) when it is contained in a power of attorney, (c) when revocation would cause the agent personal loss. Additionally, as indicated supra, where thecommercialagentsregulationsl993 apply, although the agent s authority can be terminated, there are restrictions on the principal s ability to terminate the agency contract, at least without compensation". (A) Authority Coupled with an Interest. An authority coupled with an interest is irrevocable during the subsistence of the interest. Additionally, as indicated supra, where thecommercialagentsregulationsl993 apply, although the agent s authority can be terminated, there are restrictions on the principal s ability to terminate the agency contract, at least without compensation". (A) Authority Coupled with an Interest. An authority coupled with an interest is irrevocable during the subsistence of the interest. This rule has been explained by wilde C. J. to mean that where an agreement is entered into on a sufficient consideration, whereby an authority is given for the purpose of securing some benefit to the donee of the authority, such an authority is irrevocable. So where a principal and agent agree for valuable consideration or under seal that the agent is to have authority, for example, to collect rents in order to secure a loan, or to sell certain land and discharge a debt owed to the agent by the principal out of the purchase money, the principal thereby confers an interest on the agent and the agency cannot be revoked unilaterally by the principal or by the death, incapacity, or insolvency of the principal. But the authority must be given with the object of protecting or securing an interest of the agent, and it is not sufficient that it does so incidentally. Thus in Smart v. Sanders. (B) Powers of Attorney an instrument creating a power of attorney must be made under seal. Where a power of attorney is expressed to be irrevocable and is given to secure a proprietary interest of the donee of the power, or the performance of an obligation owed to the donee, then, so long as the donee has that interest or the obligation remains undischarged, the power cannot be revoked by the donor without the consent of the donee, or by the death, incapacity, insolvency, winding-up, or dissolution of the donor. If a power of attorney is effectively revoked, the donee of the power does not incur any liability, either to the donor or to any third party, if at the time the donee of the power does not know of the revocation. Similarly, where a third party, without knowledge of the revocation, deals with the donee of the power, the transaction between them is treated as valid as if the power was still then in existence. Subject to the statutory provisions outlined above, at common law a power of attorney is automatically revoked upon the donor becoming mentally incapable. Similarly, where a third party, without knowledge of the revocation, deals with the donee of the power, the transaction between them is treated as valid as if the power was still then in existence. Subject to the statutory provisions outlined above, at common law a power of attorney is automatically revoked upon the donor becoming mentally incapable. ( 7 ) IN Seth Loon Koran s case (1 supra), at para 5 of its judgment, it was mentioned by the Supreme Court as follows:"there is hardly any doubt that the power given by the appellant in favour of the bank is a power coupled with interest. That is clear both from the tenor of the document as well as from its terms. Section 202 of the Contract Act provides that where the agent has himself an interest in the property which forms the subject-matter of the agency, the agency cannot, in the absence of an express contract, be terminated to the prejudice of such interest. It is settled law that where the agency is created for valuable consideration and authority is given to effectuate a security or to secure interest of the agent, the authority cannot be revoked. The document itself says that the power given to the Bank is irrevocable. It must be said in fairness to shri Changla that he did not contest the findings of the High Court that the power in question was irrevocable". ( 8 ) FROM the above decisions, and contents of text books is clear that if the power is coupled with the interest it does not come to an end due to death or insanity. Learned counsel mainly contends that irrevocable power of attorney does not come to an end as it is executed in favour of the office bearers of the society and the society paid the consideration. It is further contended that as society paid the consideration, the general power of attorney does not come to an end due to death, as the authority is created coupled with interest. In any view of the matter, that has to be left open tobe adjudged by the Civil Court or the Land Grabbing court. Suffice it to say, ex facie the authority is created coupled with interest and it is irrevocable due to the subsistence of interest. In any view of the matter, that has to be left open tobe adjudged by the Civil Court or the Land Grabbing court. Suffice it to say, ex facie the authority is created coupled with interest and it is irrevocable due to the subsistence of interest. ( 9 ) COMING to the second contention canvassed by the learned Senior Counsel for the petitioner, this court is not going to decide about the validity of the documents executed and the effect of the death and validity of the general power of attorney due to death. They are purely of civil in nature to be adjudicated by the Civil Court, and in fact the matter is said to have been pending before the Civil court and the Land Grabbing Court. ( 10 ) SINCE this dispute is civil in nature and general power of attorney not come to an end due to death, it continues to survive as per Section 202 of the Indian Contract Act, 1872 and in view of the interpretation put on by me, this is a case where inherent powers of this court have to be exercised and the impugned proceedings are liable to be quashed. ( 11 ) ACCORDINGLY, the impugned proceedings are quashed by accepting the contentions canvassed by the learned senior counsel for the petitioners holding that the dispute is civil in nature and no criminal offence can be culled out on the strength of the averments found herein. Accordingly the Criminal Petition if allowed.