JUDGMENT : This is plaintiff’s appeal under Section 96 CPC, challenging the judgment and decree dated 07.06.2022 passed by learned Additional Senior Civil Judge, New Tehri, Tehri Garhwal, in Original Suit No. 55 of 2017, whereby his suit for cancellation of gift deed was dismissed with cost. 2. The suit was filed by the plaintiff/appellant in the year 2017 under Section 31 Specific Relief Act with the averment that defendant no.3, on instructions from defendant no. 2, executed an unregistered agreement to sell in his favour in respect of a plot of land situate in Village Tapovan, Patti Dhamandsyu, District Tehri Garhwal. In the plaint, he stated that defendant no. 1 is owner of the said land while defendant no. 2 was his power of attorney holder. (i) It was further stated that price of the land was settled at Rs. 58,24,000/-and plaintiff paid Rs.6,00,000/-, as advance, through cheque to defendant no. 3 which was deposited in the account of defendant no.2. (ii) As per the plaint allegation, plaintiff paid Rs.14,00,000/- in cash to defendant no. 3 and the remaining amount was to be paid to defendant no. 3 upto 15.07.2006; defendant no. 3 had assured him that sale deed would be executed in his favour before 15.07.2006, however, the deadline for paying balance sale consideration was extended in view of pendency of litigation, by another agreement executed on 15.07.2006 wherein it was mentioned that sale deed would be executed after vacation of the stay granted by Hon’ble Court. It was further pleaded that when sale deed was not executed by defendant nos. 2 & 3, even after decision in the pending litigation, plaintiff sent a notice for executing sale deed, but, defendant nos. 2 and 3 did not give any reply and when he personally met defendant no. 3, then he started misbehaving with him and threatened him of dire consequences and ultimately, at the instance of plaintiff, a criminal case was registered against defendant no. 3 in police station Muni-ki-Reti, under Section 420 & 506 IPC, in which charge-sheet is filed and case is pending before Judicial Magistrate, Narendranagar. (iii) It was further stated in the plaint that a gift deed in respect of land in question has been executed by defendant no. 2, as power of attorney holder of defendant no. 1, in favour of defendant no. 4. In paragraph no.
(iii) It was further stated in the plaint that a gift deed in respect of land in question has been executed by defendant no. 2, as power of attorney holder of defendant no. 1, in favour of defendant no. 4. In paragraph no. 14 of the plaint, plaintiff further stated that apprehending encroachment upon the land in question, he filed a suit for injunction which is registered as civil suit no. 49 of 2017, and is pending. (iv) Based on these pleadings, plaintiff sought cancellation of registered gift deed executed by defendant nos. 1 & 2 in favour of defendant no. 4, which was registered in the office of Sub Registrar, Devprayag on 12.06.2015. 3. Learned Trial Court issued notice to the defendants. Since defendants were not represented on the date fixed, therefore, on 05.05.2022, learned trial Court ordered that the suit shall be proceeded ex-parte against the defendants. 4. Learned Trial Court considered the pleadings made in the plaint and also the statement made by plaintiff as PW-1 and dismissed the suit, vide judgment dated 07.06.2022 by holding that defendant no. 3 had no right to execute agreement to sell in respect of a property owned by defendant no. 1 as only the owner of property (defendant no. 1) or power of attorney of the owner (defendant no. 2) were competent to execute an agreement to sell. Learned Trial Court observed that no one can transfer a title better than what he has. Learned Trial Court held that there is nothing on record to show that the power of attorney (defendant no. 2) instructed defendant no. 3 to enter into agreement to sell with the plaintiff, on his behalf. Learned Trial Court further observed that if power of attorney is executed by owner of a property, then the power of attorney holder alone will have the authority to deal with the property, however, defendant no. 3 is neither owner nor power of attorney, thus, he does not have any right to deal with the property. Learned Trial Court further held that power of attorney, executed by defendant no. 1 in favour of defendant no. 2, is not placed on record, therefore, it is not clear whether defendant no. 2 was given right to execute agreement to sell in respect of the suit property.
Learned Trial Court further held that power of attorney, executed by defendant no. 1 in favour of defendant no. 2, is not placed on record, therefore, it is not clear whether defendant no. 2 was given right to execute agreement to sell in respect of the suit property. Learned Trial Court further held that as per the own showing of the plaintiff, only a part of suit property was gifted to defendant no. 4, and plaintiff’s rights are not affected by the gift deed. 5. Heard learned counsel for the parties and perused the record. 6. Learned counsel for plaintiff/appellant contends that the judgment and decree passed by learned Trial Court is unsustainable in the eyes of law; defendant nos. 1 & 2 lost their right to execute gift deed in favour of defendant no. 4, after executing an agreement to sell in favour of the plaintiff/appellant. Thus, he submits that learned Trial Court erred in not decreeing the suit by cancelling the gift deed executed in favour of defendant no. 4. 7. Learned counsel for respondent no. 4, however, submits that plaintiff’s suit was rightly dismissed and there is no force in this appeal. 8. Learned Trial Court has considered and discussed the case set up by plaintiff/appellant in detail. Learned Trial Court held that power of attorney executed by owner in favour of defendant no. 2 is not placed on record; the agreement to sell, relied by plaintiff/appellant is executed by a person having no authority to deal with the property; as regards the averment that plaintiff/appellant had paid substantial amount as advance for purchasing the land, learned Trial Court observed that filing of criminal case by plaintiff/appellant against defendant no. 3 is an admission that he was cheated by defendant no. 3. 9. Thus, the following point for determination falls for consideration in this appeal:- Whether plaintiff/appellant acquired any right, title or interest over the suit land on the strength of an unregistered agreement to sell, allegedly executed in his favour by defendant no. 3, who is neither owner nor power of attorney of the owner so as to seek cancellation of registered gift deed executed by the power of attorney holder? 10. A party, seeking cancellation of a written instrument has to file a suit under Section 31 of Specific Relief Act, 1963.
3, who is neither owner nor power of attorney of the owner so as to seek cancellation of registered gift deed executed by the power of attorney holder? 10. A party, seeking cancellation of a written instrument has to file a suit under Section 31 of Specific Relief Act, 1963. The conditions, in which such suit can be filed, are enumerated in the said Section, which is reproduced below:- “31. When cancellation may be ordered.—(1) Any person against whom a written instrument is void or voidable, and who has reasonable apprehension that such instrument, if left outstanding may cause him serious injury, may sue to have it adjudged void or voidable; and the court may, in its discretion, so adjudge it and order it to be delivered up and cancelled. (2) If the instrument has been registered under the Indian Registration Act, 1908 (16 of 1908), the court shall also send a copy of its decree to the officer in whose office the instrument has been so registered; and such officer shall note on the copy of the instrument contained in his books the fact of its cancellation. 11. A full Bench of Andhra Pradesh High Court in the case of Yanala Malleshwari v. Smt. Ananthula Sayamma, reported in 2006 SCC OnLine AP 909, while dealing with a similar question held that where a property is sold by a person who is not the owner and who does not sell under the authority or consent of the real owner, then buyer acquires no title to the property better than the seller had. Paragraph nos. 34, 35, 36 & 37 of the said judgment are reproduced below:- “34. The discussion, thus far would show that even in the matter of transfer of immovable property, there could be two situations. One, where the owner himself executes a registered transfer deed, but later feels that such instrument is void or voidable for any of the reasons as per TP Act or Contract Act. The second situation is where the true owner never executed transfer deed but such transfer (transaction) materialized between two strangers one impersonating vendor and another as vendee, where there is a possibility to presume fraud in the transaction. Conveyance to deny creditors their due is another species of fraud.
The second situation is where the true owner never executed transfer deed but such transfer (transaction) materialized between two strangers one impersonating vendor and another as vendee, where there is a possibility to presume fraud in the transaction. Conveyance to deny creditors their due is another species of fraud. In at least fifty per cent of this batch of cases, there are allegations by alleged true owners that the registered sale deeds were brought into existence by playing fraud by persons who had no such authority and who are not entitled to transfer the immovable property. There are also cases where allegation of non-payment of sale consideration is made. Insofar as first category of cases is concerned, the second point for consideration would cover the same. The ensuing discussion is regarding second category of cases. 35. The purchaser of immovable property can get the title that is passed on under the deed of conveyance by the vendor. If the title passed on is defective, the law gives the option to the purchaser to avoid such sale and sue for recovery of consideration and/or damages for breach and misrepresentation. In a situation there could also be a criminal charge against the spurious vendor for cheating under Penal Code, 1860. Even in a case where the vendor has no title at all but the purchaser was made to believe that what is passed on is a valid title in the property demised under the instrument, the vendee has remedy in civil law as well as criminal law. This remedy, however, is not available to a purchaser who is negligent in not inspecting the title of the vendor and who does not insist upon such covenant or warranty. The principle of caveat emptor (let the purchaser beware), however, has no application if vendor has practised fraud to induce the purchaser to accept the offer of sale [‘A Selection of Legal Maxims’ : Herbert Broom; Tenth edn., (1939) Sweet & Maxwell, pp. 528-529.] . In case of fraud, the vendor cannot maintain any action against the purchaser. The legal maxim ‘ex dolo malo non oritur actio’ applies and the vendor who knowingly committed an act declared by the law to be criminal cannot maintain action against the purchaser who refuses to take the title conveyed under the deed. The maxim ‘dolus malus’ vitiates all transactions effected by fraud [Ibid pp. 497; 540.].
The legal maxim ‘ex dolo malo non oritur actio’ applies and the vendor who knowingly committed an act declared by the law to be criminal cannot maintain action against the purchaser who refuses to take the title conveyed under the deed. The maxim ‘dolus malus’ vitiates all transactions effected by fraud [Ibid pp. 497; 540.]. Insofar as the buyer is concerned, as observed by Herbert Broom in his compilation of Legal Maxims (p. 540), he may abide by the contract induced by fraud and bring an action for deceit (i.e. cheating in Indian law), for the damages sustained by the fraud. The buyer may also rescind the contract returning the goods if already accepted and recover the price paid. 36. What would be the remedy for the person who actually and factually holds a valid title to a property in respect of which a fraudulent transfer was effected by deceitful vendors and vendees or deceitful vendors and genuine vendees, who parted with consideration. The legal maxims ‘nemo dat quod non habet’ and ‘nemo plus juris ad alium transferee potest quam ipse habet’ postulate that where property is sold by a person who is not the owner and who does not sell under the authority or consent of the real owner, the buyer acquires no title to the property than the seller had. The Indian law recognizes this principle in various provisions of various statutes which in pith and substance deal with Contracts, Transfer of property and Specific relief (See Sections 17, 18, 19, 20, 23, 25 and 29 of the Contract Act; Sections 6(h), 7, 25, 38, 42 to 48, 52, 53 and 55 of TP Act and Sections 13, 15, 17, 21, 31 and 34 of the Specific Relief Act). Dealing with this aspect of the matter, one of us Justice V.V.S. Rao in A.K. Lakshmipathy (died) by LR v. R.S. Pannalal Hiralal Lahoti Charitable Trust, 2005 (5) ALD 658 : AIR 2006 NOC 497, after making reference to Section 55 of TP Act and Section 13 of Specific Relief Act pointed out the following remedies for the transferees under fraudulent sale contracts or transfer vitiated by fraud.
i) Where the seller transfers the property with imperfect title and subsequently acquires interest in the property, the buyer has a right to compel the vendor to make good the contract out of such interest; if necessary by compelling concurrence of other persons. Section 18 of the Specific Relief Act, 1877 except for minor variations is in pari materia with Section 13 of the New Act. The Courts have held that a defect of title is one which exposes the purchaser to adverse claims to the land and have pointed out (a) restrictive covenants, (b) encumbrances, (c) liable for the property to be satisfactorily acquired, (d) existence of partition decree allotting a portion to the co-sharer, (e) title being voidable at the option of third party and (f) the absence of concurrence of persons whose consent is necessary to validate the transfer as defects of title. ii) The second situation deals with a case of mortgage. When the vendor sells mortgaged property professing the same to be unencumbered, the purchaser has a right to compel the vendor to redeem the mortgage, obtain valid discharge and also ask for conveyance from the mortgagee of the property. iii) In a case where the specific performance of contract cannot be enforced and the suit is dismissed by the Court on a ground of want of title or imperfect title, the buyer has a right to the return of the deposit with interest thereon and shall also have a lien in the property to the extend of the deposit, interest and costs of the suit.” 37. The position of transferee under a fraudulent instrument of conveyance is different from the true owner of the title to the property in question. Section 31 of the Specific Relief Act provides one remedy, namely, cancellation of the instrument by showing to the Court that such instrument is void or voidable and that if such instrument is allowed to outstanding, it would cause serious injury. The injury referred to in Section 31 need not be with reference to the person i.e., the true owner of the title, but can as well encompass the property involved.
The injury referred to in Section 31 need not be with reference to the person i.e., the true owner of the title, but can as well encompass the property involved. Indeed, subsection (2) of Section 31 of the Specific Relief Act requires the Court trying a suit for cancellation of instrument to send a copy of the decree to the registering officer, who shall note on the copy of the instrument contained in the books of registration the fact of its cancellation. This would only show that the law is anxious to protect the title to the immovable property from all deceitful encumbrances. Should there be a fraudulent transfer or a transfer vitiated by misrepresentation and collusion between two unconcerned persons, does the law expects the true owner to file a suit only under Section 31 of the Specific Relief Act or to file a suit for declaration of his title again and again? That in all cases, the true owner of the immovable property cannot seek the remedy of cancellation under Section 31 is already discussed supra. If a person has enjoyed the property as a true owner for considerable length of time, merely because there is a fraudulent transfer of his property, by one incompetent person to another person, should we compel the true owner to file a suit for declaration of title again and again? Does it not render the registration of the transfer of title, which he had obtained much earlier, useless, unfruitful and meaningless? Whether the present dispensation of law is in such ineffective state containing vacuum or is it the duty of this Court to interpret the existing statute law taking into consideration the phenomenal changes in the society and also fast changing values in the society to mould the existing policy in statute law so as to render fraudulent transfers ineffective without recourse to common law remedy?” 12. In the case of Yanala Malleshwari v. Smt. Ananthula Sayamma (supra), full Bench of Hon’ble Andhra Pradesh High Court further held as under:- “43. The rule is nemo dat quod non habet; no one can give what he does not have. Thus, if a person has a right in the property and some one else transfers it without the consent of the owner, the right in that property still continue to subsist in the true owner and the transfer has no effect on such title.
Thus, if a person has a right in the property and some one else transfers it without the consent of the owner, the right in that property still continue to subsist in the true owner and the transfer has no effect on such title. The person is still the owner of the property. Indeed, the very concept of title is excisability against the third parties. A property right is a right in rem and therefore, will not be destroyed even if right comes into hands of a third party under a fraudulent transfer. In common law, there is no exception to the rule nemo dat in favour of all persons, who allegedly purchased in good faith for value. Even an innocent bona fide purchaser will be bound by the pre-existing common law property rights in the land. As we presently show the registration of a transfer deed, which is illegal, fraudulent, obtained by coersion and misrepresentation are no exceptions to these settled rules of right to property. This reiteration of common law principles leads to one thing i.e., the person who has a title to the property and the person who continues to enjoy such right can always take such steps available in law to remove the encumbrances on the property and to evict trespassers by resorting to remedies in civil law, criminal law and seeking redressal before appropriate administrative and statutory authorities.” 13. The judgment rendered in Yanala Malleshwari v. Smt. Ananthula Sayamma (supra) was approved by Hon’ble Supreme Court in the case of Deccan Paper Mills Company Limited v. Regency Mahavir Properties and others, (2021) 4 SCC 786 . By relying upon its earlier judgment rendered in the case of Suhrid Singh v. Randhir Singh, (2010) 12 SCC 112 Hon’ble Supreme Court held as under:- 31. Also, in an instructive judgment of this Court in Suhrid Singh v. Randhir, in the context of the Court Fees Act, 1870 this Court held : (SCC p. 114, para 7) “7. Where the executant of a deed wants it to be annulled, he has to seek cancellation of the deed. But if a non-executant seeks annulment of a deed, he has to seek a declaration that the deed is invalid, or non est, or illegal or that it is not binding on him.
Where the executant of a deed wants it to be annulled, he has to seek cancellation of the deed. But if a non-executant seeks annulment of a deed, he has to seek a declaration that the deed is invalid, or non est, or illegal or that it is not binding on him. The difference between a prayer for cancellation and declaration in regard to a deed of transfer/conveyance, can be brought out by the following illustration relating to A and B, two brothers. A executes a sale deed in favour of C. Subsequently A wants to avoid the sale. A has to sue for cancellation of the deed. On the other hand, if B, who is not the executant of the deed, wants to avoid it, he has to sue for a declaration that the deed executed by A is invalid/void and non est/illegal and he is not bound by it. In essence both may be suing to have the deed set aside or declared as non-binding. But the form is different and court fee is also different. If A, the executant of the deed, seeks cancellation of the deed, he has to pay ad valorem court fee on the consideration stated in the sale deed. If B, who is a non-executant, is in possession and sues for a declaration that the deed is null or void and does not bind him or his share, he has to merely pay a fixed court fee of Rs 19.50 under Article 17(iii) of the Second Schedule of the Act. But if B, a non-executant, is not in possession, and he seeks not only a declaration that the sale deed is invalid, but also the consequential relief of possession, he has to pay an ad valorem court fee as provided under Section 7(iv)(c) of the Act.” 14. The suit filed by appellant is based on an agreement to sell, which is unregistered. Law is well settled that an agreement to sell in itself does not create any interest in the land nor does it amount to sale under Section 54 of the Transfer of Property Act. It only enables the intending buyer to claim specific performance of such agreement on proving its terms. Suit for specific performance by the appellant based on unregistered agreement to sell will not be maintainable in view of provision contained in Section 17 of Registration Act. 15.
It only enables the intending buyer to claim specific performance of such agreement on proving its terms. Suit for specific performance by the appellant based on unregistered agreement to sell will not be maintainable in view of provision contained in Section 17 of Registration Act. 15. Plaintiff/appellant himself admits that defendant no. 3 with whom he entered into an agreement to sell is neither the owner nor power of attorney of the owner; thus, respondent no. 3 had no authority to deal with the property belonging to defendant no. 1. 16. Since defendant no. 3 himself do not have any right, title or interest in the land in question, therefore, he cannot transfer a title better than he had, even if he had executed a sale deed. This aspect has been dealt with by Hon’ble Supreme Court in the case of Eureka Builders v. Gulabchand, (2018) 8 SCC 67 . Relevant paragraphs of said judgment are extracted below:- “35. It is a settled principle of law that a person can only transfer to other person a right, title or interest in any tangible property which he is possessed of to transfer it for consideration or otherwise. In other words, whatever interest a person is possessed of in any tangible property, he can transfer only that interest to the other person and no other interest, which he himself does not possess in the tangible property. 36. So, once it is proved that on the date of transfer of any tangible property, the seller of the property did not have any subsisting right, title or interest over it, then a buyer of such property would not get any right, title and interest in the property purchased by him for consideration or otherwise. Such transfer would be an illegal and void transfer.” 17. It is well settled that plaintiff in a suit for cancellation of a document or declaration of title can succeed only on the strength of the case set up by him and it is immaterial whether defendants have proved their case or not. This aspect is dealt with by Hon’ble Supreme Court in the case of Union of India and others v. Vasavi Cooperative Society Ltd. and others, (2014) 2 SCC 269 .
This aspect is dealt with by Hon’ble Supreme Court in the case of Union of India and others v. Vasavi Cooperative Society Ltd. and others, (2014) 2 SCC 269 . In the said case, Hon’ble supreme Court observed that “it is trite law that, in a suit for declaration of title, the burden always lies on the plaintiff to make out and establish a clear case for granting such a declaration and the weakness, if any, of the case set up by the defendants would not be a ground to grant relief to the plaintiff”. Paragraph 19 of the aforesaid judgment is reproduced below:- “19. The legal position, therefore, is clear that the plaintiff in a suit for declaration of title and possession could succeed only on the strength of its own title and that could be done only by adducing sufficient evidence to discharge the onus on it, irrespective of the question whether the defendants have proved their case or not. We are of the view that even if the title set up by the defendants is found against (sic them), in the absence of establishment of the plaintiff's own title, the plaintiff must be non-suited.” 18. The law enunciated by Hon’ble Supreme Court in the case of Union of India and others v. Vasavi Cooperative Society Ltd. and others (supra) applies to the present case with full force. 19. In his capacity as plaintiff, it was incumbent upon the appellant to establish that he had a prima facie title over the suit property for claiming cancellation of the gift deed, however, the document relied by him is only an agreement to sell, which do not confer any title. Moreover, the agreement to sell relied by plaintiff/appellant is executed neither by the owner of the property nor by his power of attorney, but, is executed by a person, who had no authority in law to enter into an agreement to sell with the plaintiff. Even otherwise also, the agreement to sell relied by the plaintiff/appellant is unregistered. After amendment in Section 17 of Indian Registration Act, 1908 by U.P. Act no. 57 of 1976, an agreement to sell has to be compulsorily registered. Section 54 of Transfer of Property Act, 1882 also provides that sale of an immovable property having value of one hundred rupees or more can be made only by a registered instrument.
After amendment in Section 17 of Indian Registration Act, 1908 by U.P. Act no. 57 of 1976, an agreement to sell has to be compulsorily registered. Section 54 of Transfer of Property Act, 1882 also provides that sale of an immovable property having value of one hundred rupees or more can be made only by a registered instrument. Thus, in the absence of registration of the agreement to sell, relied by plaintiff/appellant, the same is not enforceable. Thus, the relief of cancellation of gift deed sought by the plaintiff/appellant, on the strength of an unregistered agreement to sell executed by a stranger to the property cannot be granted. Then there would be bar of Order II Rule 2 CPC also, as earlier he had filed an injunction suit, which is pending before Civil Court. 20. Thus, this Court has no hesitation in holding that plaintiff/appellant did not acquire any right, title or interest over the suit property on the strength of the agreement to sell, so as to seek cancellation of the gift deed executed by defendant no. 2 as power of attorney of the owner of the property. 21. Thus, the view taken by learned Trial Court cannot be faulted. 22. Learned counsel for the appellant contended that plaintiff/appellant was put in possession over the suit property by defendant no. 3, however, learned Trial Court erred in not considering this relevant aspect of the matter. 23. The agreement to sell, relied by plaintiff/appellant, however, do not corroborate the said stand taken by learned counsel as it only stipulates that upon payment of the entire sale consideration, it shall be open to the intending buyer to get sale deed executed in his favour/in favour of his nominee and take possession of the land. Thus, possession would be transferred only upon execution of sale deed. It is not the case of plaintiff/appellant that he has paid the entire sale consideration or that sale deed was executed in his favour, therefore, going by the recital made in the agreement to sell, plaintiff/appellant cannot claim possession over the suit property. 24. For the aforesaid reasons, the judgment and decree passed by learned Trial Court is affirmed and the first appeal is dismissed.