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Petitioner: ALI MUHAMMAD AND 2 OTHERS VS Respondent: GULFAM AND ANOTHER
Court Name: Sindh High Court Judge(s): Saleem Akhter Title: ALI MUHAMMAD AND 2 OTHERS vs GULFAM AND ANOTHER Case No.: Suit No, 1 of 1972 and Suit No, 606 of 1977 S Date of Judgment:1982-06-11 Reported As: PLD 1983 Karachi 99 Result: Order accordingly
JUDGMENT
JUDGMENT ' By this judgment Suit No, 1/72 and Suit No, 606/77 will be disposed of. Suit No, 1/72 has been filed for declaration, cancellation of Deed of Conveyance and redemption of mortgage. Briefly the facts are that plaintiffs Nos. 1 and 2 are joint owners of the plot and building bearing No, 421/3 Garden East. The plaintiff No, 1 is the brother of plaintiff No, 3, plaintiff No, 2 is the brother-in-law of plaintiff No, 1. The plaintiffs Nos. 1 and 2 had appointed plaintiff No, 3 as their attorney. The plaintiff No, 3 was in need of funds and he approached the defendant No, 1 who promised to advance Rs, 30,C00 subject to execution of irrevocable general power of attorney, promissory note for Rs, 14,400 and deposits of all documents. The plaintiff No, 3 being in need of money executed all the document3 that were prepared by the defendant No, 1 and Rs, thirty thousand were paid to him. However, it is alleged that Rs, 14,400 were not paid. The plaintiffs have stated that plaintiff No, 3 repaid Rs, 10,200 to the defendant No, 1 for which no receipt was issued by him. The plaintiff No, 3 after disposing of his business went to the defendant No, 1 several times and offered Rs, 19,800 towards the payment of the loan but the defendant No, I avoided to accept it and ultimately a legal notice dated 5-11- 1971 was served. The plaintiff No, 3 for the first time by a notice sent to him came to know that the defendant No, 1 had sold the property by a registered sale dated 4-5-1971 to defendant No, 3. The plaintiffs have pleaded that in the transaction of loan advanced by defendant No, 1 to plaintiff No, 3 title documents of property bearing No, 421/3 Garden East were deposited by way of security. The deposit of title deeds was in the nature of equitable mortgage and the defendant No, 1 did not have a right to sell the property. The plaintiffs have further pleaded that the plaintiffs Nos. 1 and 2 had appointed plaintiff No, 3 as their attorney but power of delegation was not conferred upon him and, therefore, the defendant No, 1 did not have any authority to sell the property. It has been pleaded
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that the defendants Nos. 1 and 2 in collusion have got the sale-deed registered on 4-5-1971 for Rs, 50,000 which is void. The plaintiff has further claimed redemption of the equitable mortgage against payment of Rs, 19,800 or any amount found due and for declaration that the conveyance deed dated 4th May, 1971 in favour of defendant No, 2 is void and without authority. The defendants have filed written statement separately. The defendant No, 1 has taken the plea that the plaintiff No, 3 had absolute authority to dispose of the property in suit by virtue of General Power of Attorney executed by plaintiffs Nos. 1 and 2. The plaintiff No, 3 had approached defendant No, 1 for friendly loan of Rs, 44,400 which was advanced to him. Rs, 30,000 were advanced against the Mortgage deed dated 27-11-1979, receipt dated 27-11-1969 and the general power of attorney executed on 27- 11-1969. Rs, 14,400 were advanced by way of loan under an agreement dated 27-11-1969 and also a receipt of the same date. Additionally a pronote was also executed for the same amount by way of collateral security. In this way of Rs, 44,400 was advanced as a friendly loan. It has been stated that thc plaintiff No, 3 did not pay a single penny towards his debt. It has been pleaded that the property in suit having been sold by defendant No, 1 to defendant No, 2 all claims and notices have no legal sanctity. It has been averred that the defendant No, 1 called upon plaintiff No, 3 by notice dated 16-1-1971 to pay all the debts failing which he was warned that he would proceed with the sale of the property on the basis of the irrevocable general power of attorney in his favour executed by plaintiff No, 3 but in vain. As the plaintiff No, 3 did not discharge his obligation he was notified through press and ultimately the property was sold to the defendant No, 2. It has been denied that the plaintiffs are entitled to cancellation of the sale-deed or the redemption of the property. The defendant No, 2 has pleaded that the plaintiffs Nos. 1 and 2 have ceased to be the owners of the property in suit and cannot file the suit. He has likewise pleaded that the defendant No, 1 by virtue of irrevocable power of attorney executed by plaintiff No, 3 had the authority to sell it. In addition to this the plaintiff No, 3 had executed the mortgage deed in favour of the defendant No, 1 on 27-11-1969 and on the basis of these documents the defendant No, 1 was fully competent to sell the property in suit and, therefore, sale in his favour was valid. It is stated that the plaintiff No, 3 had full knowledge of the sale as it was published in the newspaper. On these grounds the prayer is opposed. ' On these facts Muhammad Saghir the defendant No, 2 in Suit No, 1/72 has filed Suit No, 606/77 against Qurban Ali, Ali Muhammad, Muhammad Ali and Gulfam for possession and mesne profits. On the basis of the pleadings the following Issues were framed : Issues in Suit No, 1/72 : I.1) Whether the suit is barred under section 115 of the Evidence Act, 1872? (2) Whether the plaintiff No, 3 secured a loan of Rs, 44,000 or of Rs, 30,000 from the defendant No, 1? (3) Whether the pronote of Rs, 14,400 is devoid of consideration? (4) Whether the plaintiff No, 3 out of the loan received, paid Rs, 10,200 to the defendant No, 1 as alleged ? (5) Whether or not the plaintiff No, 3 by virtue of the execution of General Power of Attorney by the plaintiffs Nos. 1 and 2 in his favour had the authority to sell the property in suit and whether the plaintiff No, 3 was competent to delegate the power to sell, mortgage or/and pledge, what is its effect? (6) Whether or not the defendant No, 1 as a result of failure on the part of the plaintiff No, 3 to repay the loan, was competent to sell without intervention of Court the property in suit by virtue of the execution (1) Mortgage Deed dated 27-11-1969, (2) Loan Agreement dated 27-11-1969 and (3) Irrevocable General Power of Attorney dated 27-11-1969 by the plaintiff No, 3 if so whether the defendant No, 1 was competent to appropriate the sale proceeds to his own account? (7) Whether the Sale Deed in respect of the property in suit executed on 4-5-1971 by the defendant No, 1 in favour of the defendant No, 2 is fake, without consideration, collusive and void.
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(8) Whether the plaintiff No, 3 has any authority to file the present suit on behalf of the plaintiffs Nos. 1 and 2 sign pleadings on their behalf? (9) To what relief/reliefs are the plaintiffs entitled? Issues in Suit No, 606/77: (1) Whether the defendant No, 1, by virtue of the power of attorney dated 14-10-1963, was competent to appoint the defendant No, 4 as his agent/attorney, delegating all the powers which he himself was authorised to exercise thereunder? (2) Whether the defendant No, 1 executed a general power of attorney on 29-11-1969 in favour of the defendant No, 4 in his personal capacity and by way of security for the amount advanced? (3) Whether the defendant No, 4 by virtue of the irrevocable general power of attorney dated 29-11- 1969, was competent to transfer/sell the property in suit to the plaintiff? (4) Whether the sale of the property in suit by the defendant No, 4 to the plaintiff by executing a registered sale-deed on 4-5-1971 is fake and fictitious? (5) Whether the defendant No, 1, at the time of the transfer of the property in suit, delivered possession of a considerable portion thereof to the plaintiff? If so, what is its effect? (6) Whether the suit is under-valued, as alleged? If so, what is its effect? (7) To what relief or reliefs is the plaintiff entitled? I will first deal with Issues in Suit No, 1/72. Issue No, 1.-Plaintiff No, 3 is admittedly an attorney of plaintiffs Nos. 1 and 2. The power of attorney Exh. 9/1 authorised the plaintiff No, 3 to mortgage and sell the property. To secure the loan of Rs, 30,000 the plaintiff No, 3 had executed the agreement of mortgage by deposit of title deeds and a receipt and the mortgage deed were executed as attorney for and on behalf of defendants Nos. 1 and 2. The irrevocable general power of attorney Exh. D-13 was executed by the plaintiff No, 3 in favour of defendant No, 1. The learned counsel for the defendant Mr. S. Sarni Ahmad has contended that having executed all these documents the plaintiff No, 3 cannot resile and say that they are not binding upon him. On the other hand the learned counsel for the plaintiffs has cont9nded that the powers of attorney authorised the plaintiff No, 3 to execute the mortgage and sale-deed only for the benefit of the plaintiffs Nos. 1 and 2 and for the management of the property. The plaintiff No, 3 was not authorised to mortgage the property or sell it for his own benefit. The plaintiffs are not denying the existence of power of attorney. The plaintiffs Nos. 1 and 2 are disputing that the plaintiff No, 3 could not mortgage the property for his own benefit or delegate his power to defendant No, 1. In order to attract the provision of section 115 of the Evidence Act and apply the principle of estoppel it is necessary that it may be established that a representation was made to the other side and on the basis of that representation the other party has altered his position. In these circumstances an estoppel will be created against the person making the representation. In the present case the question of making representation does not arise. From the evidence it is clear that the plaintiff No, 3 was seeking a loan as he was in difficulties. The defendant No, 1 asked for the title documents. All such documents as demanded by the defendant No, 1 were delivered to him who instructed his advocate to prepare necessary security documents to protect his interest. In these circumstances it is difficult to believe that any representation of any nature was made by the plaintiffs on the basis of which the defendant No, 1 has acted and altered his position. The learned counsel for the defendants has relied on AIR 1935 P C 208, PLD 1971 SC 376 and 1980 SCM R 765. All these three cases are distinguishable on facts because in every case either there was some representation or an acknowledgment made by the party and, therefore, it was held that the principle of estoppel will apply. ' Mr. S. Sami Ahmad has contended that plaintiffs Nos. 1 and 2 are estopped because (1) they had executed general power of attorney, (2) both the documents under which money was received were executed for and on behalf of plaintiffs Nos. 1 and 2 and 3 as they have joined hand with plaintiff No, 3 it should be presumed that their interest is common. The execution of general power of attorney in favour of plaintiff No, 3 does not amount to a circumstance which may create an
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estoppel because the plaintiffs Nos. 1 and 2 are not denying the execution of the power of attorney in favour of plaintiff No, 3. The fact that the receipt and the documents relating to Rs, 30,000 were executed by the plaintiff No, 3 as attorney of plaintiffs Nos. 1 and 2 is also nullified by the fact that in the pleadings as well as in the evidence the defendant No,1 has clearly stated that the loan was advanced to plaintiff No, 3. The defendant No, 1 did not state that the loan was advanced to the plaintiffs Nos. 1 and 2. In these circumstances mere execution of documents on behalf of plaintiffs Nos. 1 and 2 will not bind the plaintiffs Nos. 1 and 2 to create an estoppel. Issue No, 2.-From the evidence of the parties it is established that Rs, 30,000 were advanced to the plaintiff No, 3. The dispute is only in respect of Rs, 14,400. The defendant No, 1 in his evidence has admitted that both the amounts were advanced at the same time. The loan transaction was the same but it was bifurcated in two parts ; first was for Rs, 30,000 and the other was for Rs, 14,400. In respect of loan of Rs, 30,000 the defendant No, 1 obtained mortgage deed, receipt and a general power of attorney. But for Rs, 14,400 he obtained only an agreement, a receipt for Rs, 14,400 and a promissory note for Rs, 14,400. All these documents were prepared at the instructions of the defendant No, 1 through his own advocate. No explanation has been given by defendant No, 1 why the transaction of loan was bifurcated in two parts. The normal course of dealing between a borrower and a creditor is that the creditor wants to have full security of the entire loan that may be advanced. If the entire loan amounted to Rs, 44,400 then in the normal course the defendant No, 1 should have obtained mortgage document for the entire amount instead of restricting it to Rs 30,000 only. Security by mortgage is always considered a better security than mere execution of a pronote. It, therefore, seems that the main transaction was for securing the loan of Rs, 30,000. The plaintiff No, 3 has stated that the defendant No, 2 got second set of documents executed for Rs, 14,400 which was not paid and was only to represent the amount of interest which was to accrue on Rs, 30,000. This amount, the defendant No, 1 did not want to show in the mortgage deed and, therefore, separate set of documents was prepared. The explanation offered by the plaintiff No, 3 seems to be reasonable. In the absence of any valid reason for executing two sets of documents at the same time in respect of the same transaction, the explanation offered by the plaintiff No, 3 sound to be reasonable. The defendant No, 1 has not produced any evidence of payment of Rs, 14,400 except the agreement, receipt and the pronote. No doubt a presumption is attached to a pronote that it is with consideration but it is rebuttable and if there are circumstance and evidence to that effect which are sufficient to rebut the presumption, the burden shifts on other party to show that the pronote is with consideration. In the evidence the plaintiff No, 3 has stated that these documents were executed in the presence of Ghafoor and Sadiq Advocates and Sharifuddin was also present there. The defendant No, 1 has not denied these allegations in the evidence but failed to produce these two witnesses. Ghafoor and Sadiq advocates may have been the proper persons to give evidence as the entire transaction had been carried out and documentation was made by them. In the absence of this evidence presumption has to be drawn against the defendant No, 1. I, therefore, hold that the loan was for Rs, 30,000 and that the promissory note for Rs, 14,400 was without consideration. Issue No, 4.-The plaintiff No, 3 has stated that he had paid Rs, 10,200 to defendant No, 1 but no receipt was obtained from him. He has produced P. W. 2 but his statement does not support his contention as be does not admit that the payment to defendant No, 1 was made in his presence. The plaintiff No, 3 did not even serve a notice on the defendant No, 1 regarding payment of this amount. In these circumstances the plaintiff has failed to prove payment of Rs, 10,200. My finding is in the negative. Issue No, 5.-This issue can be divided in two parts. Firstly whether the plaintiff No, 3 was competent to sell the property and secondly whether the plaintiff No, 3 could delegate his power to sell and mortgage the property in suit. Plaintiffs Nos. 1 and 2 have contended that under the general power
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of attorney executed by plaintiffs Nos. 1 and 2 in favour of plaintiff No, 3, the plaintiff No, 3 had the authority to mortgage and sell the property in suit but he was not competent to delegate the power to sell or mortgage. This Issue entirely depends upon the construction and interpretation of the power of attorney executed in favour of plaintiff No, 3. Mr. S. Sami Ahmad the learned counsel for the defendants has referred to para. 1 and para. 5 of the power of attorney and has contended that from these provisions coupled with the fact that there was an absolute power to sell and mortgage the suit property it can be inferred that the plaintiff No, 3 had an implied power to delegate this authority. This argument admits that there was no specific power to delegate the power. For better understanding of the contention of the learned counsel for the defendants, relevant portions of the powers of attorney are reproduced as under : "By this power of attorney given the 14th day of October, 1963, we Ali Mohamed son of Kara and Mohamed Ali son of Jamali both Khoja Muslims, adults, Merchants of Kampala, Uganda being entitled as joint owners to the property described in the schedule hereto hereby appoint Qurban Ali Kara Prorpietor of Kurban Provision Store, Saddar, Karachi, West Pakistan (hereinafter called the Attorney) to be our true and lawful attorney to manage the said property on our behalf and to sell mortgage exchange and convey the said property and we hereby confer upon the attorney the following powers and authorities : (1) For us and in our name or otherwise to receive every sum of money whatsoever which now is due arising or belonging to us upon or by virtue of any mortgage charge or other security whatsoever and on receipt thereof to make sign execute and give good and sufficient releases acquittances or other discharges for the same and also to sign seal execute make and deliver all proper and sufficient recopveyances releases and other assurances of the lands tenements and property which shall have been mortgaged as security therefor and also to consent to any such alteration or modification of the nature or conditions of the said securities or any of them as the attorney shall think fit. (5) To sell (either by public auction or privately) or exchange any part of our property for such consideration and subject to such covenants as he may think fit and to give receipts for all or any part of the purchase or other consideration money and the same or any of them with like powers to mortgage charge or pledge and also to deal with our real or personal property or any part thereof as he may think fit for the purpose of paying off reducing consolidation or making substitution for any existing or future mortgage charge or pledge thereon or thereof or any part thereof and to make or concur in any transfer of or alteration in the terms of any existing or future mortgage charge or pledge of the same or any part thereof as he shall think fit and in general to sanction any scheme for dealing with mortgage charges or pledges of our real property or any part thereof as fully and effectually as we ourselves could have done. It is a well-settled principle that the power of attorney has to be construed strictly. Reference can be made to PLD 1969 Ka. 123. A plain reading of the power of attorney particularly the clauses referred by the learned counsel for the defendants do not give the impression that it can be construed to authorise the plaintiff No, 3 to delegate his power. The attorney is always a delegatee of the authority conferred on him. It is a well-recognised principle that a delegatee cannot delegate such powers unless he has been specifically authorised to delegate it. In this regard reference has been made to Halsbury's Laws of England, 4th Edition, Volume I, page 448. Mr. Shaikh Haider the learned counsel for the plaintiffs has referred to Bowstead on Agency 14th Edition, page 101, Article 33 which reads as follows :- "(I) An agent may not delegate his authority, or appoint a sub-agent to do any act on behalf of his principal, except with the express or implied authority of the principal. (2) The authority of the principal is implied in the following cases :-
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(a) Where the act done is purely ministerial and does not involve confidence or discretion. (b) Where the principal knows, at the time of the agent's appointment, that the agent intends to delegate his authority. (c) Where, from the conduct of principal and agent, it may reasonably be presumed to have been their intention that the agent should have power to delegate his authority. (d) Where the authority conferred is of such a nature as to necessitate its execution wholly or in part by means of a deputy or sub-agent. (e) Where the employment of a sub-agent is justified by the usage of the particular trade or business in which the agent is employed, provided that such usage is not unreasonable, and not inconsistent with the express terms of the agent's authority. (f) Where in the course of the agent's employment unforeseen circumstances arise which render it necessary for the agent to delegate his authority." The above principle is based on Maxim delegatus non potest delegare. An agent cannot delegate his authority unless he has been specifically authorised to do so. But in special circumstances a sub-agent may be appointed provided by ordinary custom of trade a sub-agent may, or from the nature of agency a sub-agent must be employed. The present case does not fall in any of the categories mentioned above. Where a sub-agent is appointed by an agent without any authority of the principal the sub-agent is the agent of the agent and the principal has nothing to do with him. The principal can be bound down by the acts of a sub-agent only when he has been validly appointed. In order to delegate his power there should a specific authority to an agent by the principal. If the absence of an authority to delegate the power, the agent does any act to that effect it cannot be a valid act binding upon the principal. But such acts can legalised by ratification by the principal. In the present case I find that there is no ratification by the principal. ' Under section 190 of the Contract Act the principles of delegation the authority by an agent have been propounded. It provides that a agent cannot lawfully employ another to perform acts which he has express or impliedly taken to perform personally. It is permissible only where the ordinary custom of trade or from the nature of the agency it may be delegated. The defendants, therefore, in order to prove that the delegatio was proper should bring their case within the ambit of this section. The duty conferred upon the plaintiff No, 3 was to manage the property, to mortgage or sell it and, therefore, in these circumstances it is clear that the plaintiffs Nos. 1 and 2 had entirely relied upon the discretion, experience, honesty and integrity of plaintiff No, 3. They had cast a duty upon the plaintiff No, 3 to perform this duly personally and in the absence of any authority to delegate such powers, the plaintiff No, 3 had no authority to do so. In this regard reference may also be made to section 193 of the Contract Act that if any person is appointed as a sub-agent without any lawful authority then the principal is not represented by or responsible F for the acts of the person so employed. Therefore, any act done by such an unauthorised sub-agent cannot bind the principal. ' The learned counsel for the defendants has contended that as the plaintiff No, 3 had an authority to sell and mortgage the property and in pursuance thereof he has entered into mortgage for and on behalf of the plaintiffs Nos. 1 and 2 and obtained Rs, 30,000 on their behalf and as he has executed a power of attorney in favour of the defendant No, 1 it will amount to a sale of the property and, therefore, the act is authorised and cannot be objected to by the plaintiffs. The mortgage and the receipt for Rs, 30,000 no doubt stated that it was received on behalf of plaintiff No, 1 and of but in order to find out the real intention of the parties it would be necessary to look into the pleadings, documents any evidence of the parties. In Suit No, 1/72 the defendant No, 1 has admitted in his written statement that the plaintiff No, 3 approached the defendant No, 1 for friendly loan in the sum of Rs, 44,400 which was advanced to him for which two documents of Rs, 30,000 and Rs, 14,400 were executed. From the evidence it is clear that all the documents were prepared by the Advocate
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of the defendant No, 1 which included the general power of attorney executed by the plaintiff No, 3 in favour of defendant No, 1. By this document plaintiff No, 3 has appointed defendant No, 1 as his attorney. It also recites that the plaintiff No, 1 has taken the loan of Rs, 30,000 from the defendant No, 1 and to safeguard the interest of defendant No, 1 the plaintiff No, 3 was to constitute him as his general attorney till the full and final repayment of the aforestated loan. For better understanding the contention of the parties the recitals of the power of attorney executed by plaintiff No, 3 in favour of defendant No, 1 are reproduced hereunder : ' Whereas I, Qurbanali…
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