TMI Blog2014 (2) TMI 1424X X X X Extracts X X X X X X X X Extracts X X X X ..... ted 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 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 - Appeal allowed. As per Vikramajit Sen, J The Appellant has not taken any steps for setting aside the ex parte decree against late Shri Prem Chand Verma. This is only to be expected since the Appellant/Objector has 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 endeavour to defeat the decree - On a conjoint reading of Order XXI Rule 58 Code of Civil Procedure and the fasciculus of Order XXI comprising Rules 97 to 104, it becomes clear that all questions raised by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Through Director v. State of Haryana and Anr. (2009) 7 SCC 363. The Executing Court vide its order dated 23.7.2010 dismissed the Objection Petition filed by the 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 confer 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 has been preferred by the Appellant. 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 is reported in Suraj Lamp and Industries Private Limited (2) Through Director v. State of Haryana and Anr. (2012) 1 SCC 656, this Court has clarified the posi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and 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 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 the land and building situated thereon and 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 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 perspective, we have to understand and apply the ratio laid down by this Court in Suraj Lamp and Industries ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 v. State of Haryana (2009) 7 SCC 363, which 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 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 question has been dealt with by my esteemed Brother most comprehensively. 12. 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 favour by Smt. Nirmal Verma (the wife of the judgment Debtor Shri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... perty. It is wrong to suggest that Sh. Prem Chand Verma was never the owner 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. RO and AC Brijesh Kumar Garg ADJ Central-18 DELHI/29.01.10 It discloses that the Decree Holder has failed altogether to disprove the title of the Appellant, and he has maintained that the Defendant/Judgment Debtor was the owner, which is admittedly not the actual legal position. If the Decree Holder has been defrauded by the Defendant/Judgment Debtor, largely because of the former's careless disregard 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 Smt. Nirmal Verma, the Courts below erred in proceeding against her property. 14. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Holder/Respondent and Smt. Nirmal Verma. 16. The Trial Court had framed the following issues in Suit No. 407/2007, from which subject of proceedings emanates: (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 (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 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 determine that they are not in the nature of a penalty, but rather as a fair pre-estimate of what the damages are li ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Contract Act and where such a right is found 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 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 maximum and upper limit of damages awardable by the Trial Court. 18. The judgment of the Constitution 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 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. Whilst the aspect of the liquidated damages being in the n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore turning to the question about the compensation which may be awarded to the Plaintiff, it is necessary to consider whether Section 74 applies to stipulations for forfeiture of amounts deposited or paid under the contract. It was urged that the section deals in terms with the right to receive from the party who has broken the contract reasonable compensation and not the right to forfeit what has already been received by the party aggrieved. There is however no warrant for the assumption made by some of the High Courts in India, that Section 74 applies only to cases where the aggrieved party is seeking to receive some amount on breach of contract and not to cases where upon breach of contract an amount received under the contract is sought to be forfeited. In our judgment the expression the contract contains any other stipulation by way of penalty comprehensively applies to every covenant involving a penalty whether it is for payment on breach of contract of money or delivery of property in future, or for forfeiture of right to money or other property already delivered. Duty not to enforce the penalty clause but only to award reasonable compensation is statutorily imposed upon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a breach or nonperformance of the contract. 196-In examining whether a liquidated-damages provision is enforceable, courts consider whether the damages stemming from a breach are difficult or impossible to estimate or calculate when the contract was entered and whether the amount stipulated bears a reasonable relation to the damages reasonably anticipated. 198-Liquidated damages must bear a reasonable relationship to actual damages, and a liquidated-damages clause is invalid when the stipulated amount is out of all proportion to the actual damages. 200-A penalty is in effect a security for performance, while a provision for liquidated damages is for a sum to be paid in lieu of performance. A term in a contract calling for the imposition of a penalty for the breach of the contract is contrary to public policy and invalid. This position also finds elucidation in the following paragraph from American Restatement (Second) of Contracts 1981: 356. Liquidated Damage and Penalties (1) Damages for breach by either party may be liquidated in the agreement but only at an amount that is reasonable in the light of the anticipated or actual loss caused by the breach and the difficulties of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s a CIF contract, the consignment having been belatedly boarded on the Vessel, which Vessel thereafter sailed later than the time agreed upon by the parties, and which Vessel did not have the contracted destination Novorossiysk as the first port of call, could not have been in conformity with the contract, and hence the goods could not be viewed as having passed to the Buyer thereby shifting to it the liability of the lost shipment. The other question that was raised was whether the stipulation in the contract envisaging the reimbursement of the consideration received by the Seller in the event of non-performance of the contract was in the nature of a penalty. It was in this context that Sections 73 and 74 of the Contract Act came to be considered. This Court held that the clause requiring the refund of the price of the Rice consignment could not be viewed as a penalty which is not legally recoverable in India and therefore the Award was impervious to jural interference as it was not against the public policy of India even in terms of the interpretation given in ONGC Ltd. v. Saw Pipes Ltd. (2003) 5 SCC 705. 23. After recording that the opinion of the two Constitution Benches sti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llusion with Smt. Nirmal Verma. How this was possible, since they are duly registered documents, is difficult to comprehend. The other question put in cross-examination was that Smt. Nirmal Verma was never the owner of the property; and that Smt. Maya Devi's Objections were filed at the behest of Smt. Nirmal Verma. All these suggestions had been denied. If Smt. Nirmal Verma had no title, the consequence would be that the property would revert to her predecessor-in-title, thereby placing the property beyond the pale of the Execution proceedings. 25. The following issues were framed in the Execution proceedings: (i) Whether the objector/applicant Smt. Maya Devi is the absolute owner of the disputed property No. X-20, Gali No. 5, Brahampuri, Delhi? If so its effect? OP Applicant. (ii) Whether the judgment and decree dated 6.10.2007 are executable against the objector Smt. Maya Devi? OP DH. Smt. Nirmal Verma had also participated in the Execution proceedings and had filed her affidavit dated 22.10.2008 by way of evidence, asseverating therein that she had sold the property to Smt. Maya Devi by executing a registered General Power of Attorney, Agreement to Sell, Affid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o 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 is (i) the actual owner of the suit property having purchased it for valuable consideration, and (ii) being a third party not connected in any mala fide manner with the judgment Debtor, and (iii) not having received prior notice of any action of late Shri Prem Chand Verma, was imperious to Execution proceedings. A miscarriage of justice, of monumental proportions, has taken place on an unsubstantiated presumption that one of the assets of the judgment Debtor had been illegally transferred to defeat the decree. The Appellant before us had no other recourse than to file Objections under Order XXI Rule 58 Code of Civil Procedure. 28. Finally another aspect which has come to the fore, is the approach of the Trial Court in the adjudication of the suit. The plaint contains an averment that the suit property had already been sold. The Defendan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant 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 endeavour to defeat the decree. In these circumstances, my in-depth analysis of the law pertaining to decreeing what is essentially a penalty clause may, on a perfunctory or superficial reading, be viewed as non essential to the context. This, however, is not so. On a conjoint reading of Order XXI Rule 58 Code of Civil Procedure and the fasciculus of Order XXI 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 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 proscribes the filing of a separate suit and prescribes that all relevant questions shall be determined by the Court. Objection under Order XXI should be meaningfully heard so as to avoid the possibility of any miscarriage of justice. It is significant in this regard that Rule 103 ordains that where any application has been adjudicated upon under Rule 98 or Rule 100, the order made thereon sha ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
