MRS. UMADEVI NAMBIAR versus THAMARASSERI ROMAN CATHOLIC DIOCESE REP BY ITS PROCURATOR DEVSSIA’S SON REV. FATHER JOSEPH KAPPIL on 1 April 2022

[2022] 5 S.C.R. 579

MRS. UMADEVI NAMBIAR

v.

THAMARASSERI ROMAN CATHOLIC DIOCESE REP BY ITSPROCURATOR DEVSSIA’S SON REV. FATHER JOSEPHKAPPIL

(Civil Appeal No. 2592 of 2022)

APRIL 01, 2022

[HEMANT GUPTA AND V. RAMASUBRAMANIAN, JJ.]

Transfer of Property Act, 1882: ss. 41, 3 – Power of Attorney– Alienation of Property – In the instant case the appellant executeda general Power of Attorney in favour of her sister – After sometimethe said power of attorney was cancelled by the appellant – But inthe meantime the appellant’s sister executed four different documentsin favour of third parties, assigning/releasing some properties –Thereafter the appellant filed suit against the assignees/releaseesand the same was decreed but later the appellant came to know thatthe latter had sold the property to the respondent – Appellant filedanother suit seeking partition and separate possession of her sharein the suit property and the same was decreed – The respondentpreferred appeal against the decision before the High Court andthe same was allowed on the ground that the appellant failed toseek relief of setting aside the document of tranfer even though theappellant has constructive notice of such alienation u/s 3 of the Actand therefore the appellant was not entitled to a decree of partitionand the fact that the transferee cannot be held to have excercised‘reasonable care’ as required by the Proviso to s. 41 of the Act is ofno help as the appellant has acquiescenced to such alienation bynot seeking the relief of setting aside the document of transfer –Hence instant appeal – Held: It is a fundamental principle of lawof transfer of property that ‘no one can confer a better title thanwhat he himself has’ (Nemo dat quod non habet) – There wasconcurrent finding of both the trial court and the High Court thatthe respondent did not excercise reasonable care as required by theProviso to s. 41, which if they had excercised they could have easilyfound out that there was no power of sale with the holder of thepower of attorney – Since the drafting of power of attorney wasplain and simple by which the holder was empowered to lease out Athe property, power to execute document offering property as securityfor any borrowal and there was no mention of any express power tosell and therefore the alienation made the appellant’s sister (Holderof Power of Attorney) was illegal and as the vendors of therespondent did not have any title they had nothing to convey –High Court order is set aside and order of trial court is restored.B

Transfer of Property Act, 1882 – s. 3, Explanation I and II –Interpreatation Clause – Constructive Notice – Legal Position –Two things are important for the interpretation clause to come intoeffect so far as ‘constructive notice’ is concerned (i) wilful abstentionfrom an enquiry or search; and (ii) gross negligence – ExplanationCI and Explanation II under the interpretation clause are applicableto the person acquiring an immovable property, the transactionrelating to which is required by law to be effected by a registeredinstrument.

Suit of Partition – Cancellation of alienation – WhenDnecessary – Legal Position – It is not always necessary for a plaintiffin a suit for partition to seek the cancellation of the alienations –There are several reasons behind this principle – One is that thealienees as well as the co- sharer are still entitled to sustain thealienation to the extent of the share of the co-sharer – It may alsoEbe open to the alienee, in the final decree proceedings, to seek theallotment of the transferred property, to the share of the transferor,so that equities are worked out in a fair manner.

Allowing the appeal, the CourtHELD: 1. The deed of general Power of Attorney executedFby the appellant in favour of her sister on 21.07.1971, did notspecifically contain any power of sale. Therefore, the trial Courtas well as the High Court held in no uncertain terms that theappellant’s sister was not competent to sell the property to thepredecessor-in-interest of the respondent. It remains a plain andGsimple fact that the deed of Power of Attorney executed on21.07.1971 contained provisions empowering the agent: (i) togrant leases under Clause 15; (ii) to make borrowals if and whennecessary with or without security, and to execute and ifnecessary, register all documents in connection therewith, under H

Clause 20; and (iii) to sign in her own name, documents for andon behalf of the appellant and present them for registration, underClause 22. But there was no clause in the deed authorizing andempowering the agent to sell the property. The argument thatthe deed was drafted by a doyen of the Bar, is an argument not infavour of the respondent. This is for the reason that the draftsmanhas chosen to include, (i) an express power to lease out theproperty; and (ii) an express power to execute any documentoffering the property as security for any borrowal, but not anexpress power to sell the property. Therefore, the draftsmanappears to have had clear instructions and he carried out thoseinstructions faithfully. The power to sell is not to be inferred froma document of Power of Attorney. The trial Court as well as theHigh Court were ad idem on the finding that the document didnot confer any power of sale. [Paras 8, 9][585-E-F, H; 586-A-D]

2. Unfortunately after finding (i) that the Power of Attorneydid not contain authorization to sell; and (ii) that the respondentcannot claim the benefit of Section 41 of the Act, the High Courtfell into an error in attributing constructive notice to the appellantin terms of Section 3 of the Act. Two things are important for theinterpretation clause to come into effect. They are: (i) wilfulabstention from an enquiry or search; and (ii) gross negligence.Explanation I and Explanation II under the above interpretationclause are applicable to the person acquiring an immovableproperty, the transaction relating to which is required by law tobe effected by a registered instrument. The High Court has turnedthe above interpretation clause upside down and held the Principalin relation to a deed of Power of Attorney, to have had constructivenotice in terms of Section 3, of a sale effected by the agent.[Paras 12, 13][586-H; 587-A; 588-C-D]

3. It is not always necessary for a plaintiff in a suit forpartition to seek the cancellation of the alienations. There areseveral reasons behind this principle. One is that the alienees aswell as the co-sharer are still entitled to sustain the alienation tothe extent of the share of the co-sharer. It may also be open tothe alienee, in the final decree proceedings, to seek the allotment AB

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Aof the transferred property, to the share of the transferor, so thatequities are worked out in a fair manner. Therefore, the HighCourt was wrong in putting against the appellant, her failure tochallenge the alienations. [Para 15][588-F-G]

4. As a matter of plain and simple fact, deed of Power ofBAttorney did not contain a clause authorizing the agent to sellthe property though it contained two express provisions, one forleasing out the property and another for executing necessarydocuments if a security had to be offered for any borrowal madeby the agent. Therefore, by convoluted logic, punctuation markscannot be made to convey a power of sale. Even the very decisionCrelied upon by the learned counsel for the respondent, makes itclear that ordinarily a Power of Attorney is to be construed strictlyby the Court. [Para 17][589-B-C]

Delhi Development Authority v. Durga Chand Kaushish(1973) 2 SCC 825 : [1974] 1 SCR 535; Syed AbdulDKhader v. Rami Reddy and Others (1979) 2 SCC 601 :[1979] 2 SCR 424 – held inapplicable.

5. It is a fundamental principle of the law of transfer ofproperty that “no one can confer a better title than what he himselfhas” (Nemo dat quod non habet). The appellant’s sister did notEhave the power to sell the property to the vendors of therespondent. Therefore, the vendors of the respondent couldnot have derived any valid title to the property. If the vendorsof the respondent themselves did not have any title, they hadnothing to convey to the respondent, except perhaps theFlitigation. [Para 19][589-E-F]

Church of Christ Charitable Trust and EducationalCharitable Society v. Ponniamman Educational Trust(2012) 8 SCC 706 : [2012] 6 SCR 404 – relied on.

Case Law ReferenceG[1974] 1 SCR 535held inapplicablePara 16[1979] 2 SCR 424held inapplicablePara 16[2012] 6 SCR 404relied onPara 18

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MRS. UMADEVI NAMBIAR v. THAMARASSERI ROMAN CATHOLICDIOCESE REP BY ITS PROCURATOR DEVSSIA’S SON REV. FATHERJOSEPH KAPPIL

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 2592of 2022.

From the Judgment and Order dated 23.11.2016 of the High Courtof Kerala at Ernakulam in Appeal Suit No.464 of 1997.

Dushyant A. Dave, Sr. Adv., Harish Beeran, Mushtaq Salim,Usman Ghani Khan, Azhar Assess, Sayid Marzook Bafaki, Advs. forthe Appellant.

Thomas P. Joseph, Ramesh Babu M. R., Advs. for theRespondent.

The Judgment of the Court was delivered by

V. RAMASUBRAMANIAN, J.

1. Their suit for partition having been decreed by the trial Courtbut reversed by the High Court in a regular first appeal, the plaintiffshave come up with the above appeal.

2. We have heard Shri Dushyant A. Dave, learned senior counselfor the appellant and Shri Thomas P. Joseph, learned counsel for therespondent.

3. The suit schedule property originally belonged to oneUllattukandiyil Sankunni. After his death, the property devolved upon histwo daughters, one of whom is the appellant herein. The appellant hereinexecuted a general Power of Attorney on 21.07.1971, registered asDocument No.35 of 1971, in favour of her sister Smt. Ranee Sidhan.However, the said power was cancelled on 31.01.1985. But in themeantime, the appellant’s sister was found to have executed four differentdocuments in favour of certain third parties, assigning/releasing someproperties. Therefore, the appellant first filed a suit in O.S.No.16 of1986 followed by another suit in O.S.No.27 of 1988 against the assignees/releasees. Though a preliminary decree was passed in the second suiton 7.01.1989, the appellant came to know later that the assignees/releasees had sold the property to the respondent herein.

4. Therefore, the appellant filed yet another suit in O.S No.130 of1989, seeking partition and separate possession of her half share in thesuit property. The trial Court granted a preliminary decree in favour ofthe appellant. However, the regular appeal filed by the respondent herein A

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Awas allowed by a Division Bench of the High Court by the judgment anddecree impugned in this appeal. Therefore, the appellant has come upwith the above appeal.

5. At the outset, it should be stated that the respondent herein didnot dispute the fact that the suit schedule property originally belonged toBthe father of the appellant and her sister and that the appellant and hersister were entitled to equal shares in the property. But the respondentcontested the suit on the grounds inter alia (i) that in view of two priorsuits for partition, namely, O.S. No.16 of 1986 and O.S.No.27 of 1988,the suit was barred under Order II Rule 2 of CPC; (ii) that the generalPower of Attorney executed by the appellant in favour of her sister,Cauthorized the agent to sign all documents and present them forregistration; (iii) that by virtue of the said power, the appellant’s sistertransferred the suit schedule properly to four persons, for the purpose ofdischarging the debts incurred in the family business; (iv)that thosetransferees, in turn, sold the property to the respondent herein for aDvaluable consideration; (v) that though the appellant was earlier residingin England, she came back to India and was staying in a house just 1 km.away from the plaint schedule property; (vi) that the appellant wastherefore aware of all the transfers including the transfer in favour ofthe respondent and the development made by the respondent over thesuit property; (vii) that, therefore, the appellant is guilty of acquiescence;Eand (viii) that the respondent has actually developed a commercialcomplex on the suit property and hence entitled at least to the value ofimprovements, in the event of a decree being passed.

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6. The trial Court framed as many as 23 issues for considerationin the suit. The objection on the basis of Order II Rule 2 of CPC wasFrejected by the trial Court on the ground that the appellant’s sister hadcommitted a fraud and that the cause of action for the present suit wasdifferent from the cause of action for the previous suits. The contentionthat the appellant was guilty of acquiescence was rejected by the trialCourt on a factual finding that the appellant was not aware of the transfer.GOn an examination of the recitals contained in the Power of Attorney, thetrial Court came to the conclusion that the document did not confer anypower to sell the property and that, therefore, the appellant’s sister wasnot entitled to alienate the property. Since the original alienations made in1981 and 1982 by the appellant’s sister were null and void on account oflack of express power to sell, the subsequent sale made by those alieneesH

MRS. UMADEVI NAMBIAR v. THAMARASSERI ROMAN CATHOLICDIOCESE REP BY ITS PROCURATOR DEVSSIA’S SON REV. FATHERJOSEPH KAPPIL [V. RAMASUBRAMANIAN, J.]

in favour of the respondent herein was also held to be invalid. On thebasis of these findings, the trial Court decreed the suit, as prayed for.

7. While reversing Judgment and decree of the trial Court, theHigh Court held: (i) that the failure of the appellant to seek the relief ofsetting aside the documents of transfer and/or recovery of possession ofthe property was fatal to her case; (ii) that though the principle behindOrder II Rule 2 CPC may not be applicable to suits for partition, theappellant must be held to have had constructive notice of the alienationsmade by her sister, in view of Section 3 of the Transfer of Property Act,1882 (hereinafter referred to as “the Act”); (iii) that once constructivenotice is attributed to the appellant, any relief for cancellation of thedocuments of alienation would have already become time barred, by thetime the Power of Attorney was cancelled; (iv) that since the deed ofgeneral Power of Attorney filed as Exhibit A-1 did not contain any expresspower to sell the suit property, the transferee cannot be held to haveexercised ‘reasonable care’ as required by the proviso to Section 41 ofthe Transfer of Property Act, 1882; and (v) that despite this fact, theappellant was not entitled to a decree for partition, in view of her failureto seek the cancellation of the alienations, in spite of having constructivenotice of the alienations.

8. As could be seen from the judgments of the trial Court and theHigh Court, the deed of general Power of Attorney executed by theappellant in favour of her sister on 21.07.1971, did not specifically containany power of sale. Therefore, the trial Court as well as the High Courtheld in no uncertain terms that the appellant’s sister was not competentto sell the property to the predecessor-in- interest of the respondent.However, the learned counsel appearing for the respondent argued, (i)that while construing a document, all punctuation marks should be givendue weightage; (ii) that the deed of Power of Attorney was drafted bya doyen of the Bar; (iii) that Clause 22 of the deed of Power of Attorneyconferred upon the agent, the power to execute and register all documents;(iv) that the power to execute a document and present the same forregistration, should be understood to mean the power to executedocuments requiring registration in the light of Section 49 of theRegistration Act, 1908; and (v) that, therefore, a bonafide purchaserlike the respondent should not be made to suffer.

9. But we do not agree with the above submissions of the learnedcounsel for the respondent. It remains a plain and simple fact that the AB

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Adeed of Power of Attorney executed by the appellant on 21.07.1971 infavour of her sister contained provisions empowering the agent: (i) togrant leases under Clause 15; (ii) to make borrowals if and whennecessary with or without security, and to execute and if necessary,register all documents in connection therewith, under Clause 20; and(iii) to sign in her own name, documents for and on behalf of the appellantBand present them for registration, under Clause 22. But there was noclause in the deed authorizing and empowering the agent to sell theproperty. The argument that the deed was drafted by a doyen of theBar, is an argument not in favour of the respondent. This is for thereason that the draftsman has chosen to include, (i) an express power toClease out the property; and (ii) an express power to execute any documentoffering the property as security for any borrowal, but not an expresspower to sell the property. Therefore, the draftsman appears to havehad clear instructions and he carried out those instructions faithfully.

The power to sell is not to be inferred from a document of Power ofDAttorney. The trial Court as well as the High Court were ad idem on thefinding that the document did not confer any power of sale.10. In fact the High Court rejected even the refuge sought by therespondent under Section 41 of the Transfer of Property Act whichreads as follows:

E“Transfer by ostensible owner.- Where, with the consent,express or implied, of the persons interested in immoveableproperty, a person is the ostensible owner of such propertyand transfers the same for consideration, the transfer shallnot be voidable on the ground that the transferor was notauthorised to make it:FProvided that the transferee, after taking reasonablecare to ascertain that the transferor had power to make thetransfer, has acted in good faith.”

11. The High Court has held and in our view rightly so, that if theGrespondent had exercised reasonable care as required by the proviso toSection 41, they could have easily found out that there was no power ofsale.

12. Unfortunately after finding (i) that the Power of Attorney didnot contain authorization to sell; and (ii) that the respondent cannot claimHthe benefit of Section 41 of the Act, the High Court fell into an error in MRS. UMADEVI NAMBIAR v. THAMARASSERI ROMAN CATHOLICDIOCESE REP BY ITS PROCURATOR DEVSSIA’S SON REV. FATHERJOSEPH KAPPIL [V. RAMASUBRAMANIAN, J.]

attributing constructive notice to the appellant in terms of Section 3 ofthe Act. The relevant interpretation clause in Section 3 of the Act readsas follows:

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-“Interpretation Clause

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“a person is said to have notice” of a fact when he actuallyknows that fact, or when, but for wilful abstention from an enquiryor search which he ought to have made, or gross negligence, hewould have known it.

Explanation I-Where any transaction relating toimmoveable property is required by law to be and has beeneffected by a registered instrument, any person acquiring suchproperty or any part of, or share or interest in, such property shallbe deemed to have notice of such instrument as from the date ofregistration or, where the property is not all situated in onesub-district, or where the registered instrument has been registeredunder sub-section (2) of section 30 of the Indian Registration Act,1908 (16 of 1908), from the earliest date on which anymemorandum of such registered instrument has been filed by anySub-Registrar within whose sub-district any part of the propertywhich is being acquired, or of the property wherein a share orinterest is being acquired, is situated:

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Provided that--

(1) the instrument has been registered and its registrationcompleted in the manner prescribed by the IndianRegistration Act, 1908 (16 of 1908) and the rulesmade thereunder, F

(2) the instrument or memorandum has been duly enteredor filed, as the case may be, in books kept undersection 51 of that Act, and

(3) the particulars regarding the transaction to which theGinstrument relates have been correctly entered in theindexes kept under section 55 of that Act.

Explanation II.--Any person acquiring any immoveableproperty or any share or interest in any such property shall bedeemed to have notice of the title, if any, of any person who is forthe time being in actual possession thereof.

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Explanation III.--A person shall be deemed to have hadnotice of any fact if his agent acquires notice thereof whilst actingon his behalf in the course of business to which that fact is material:

Provided that, if the agent fraudulently conceals the fact,the principal shall not be charged with notice thereof as againstBany person who was a party to or otherwise cognizant of thefraud.”

13. Two things are important for the above interpretation clauseto come into effect. They are: (i) wilful abstention from an enquiry orsearch; and (ii) gross negligence. Explanation I and Explanation IICunder the above interpretation clause are applicable to the personacquiring an immovable property, the transaction relating to which isrequired by law to be effected by a registered instrument. The HighCourt has turned the above interpretation clause upside down and heldthe Principal in relation to a deed of Power of Attorney, to have hadconstructive notice in terms of Section 3, of a sale effected by the agent.D

14. The reasoning given by the High Court for holding that theappellant ought to have challenged the alienations, is that the appellantwas out of possession. Here again, the High Court failed to appreciatethat the possession of an agent under a deed of Power of Attorney isalso the possession of the Principal and that any unauthorized sale madeEby the agent will not tantamount to the Principal parting with possession.

15. It is not always necessary for a plaintiff in a suit for partitionto seek the cancellation of the alienations. There are several reasonsbehind this principle. One is that the alienees as well as the co- sharerare still entitled to sustain the alienation to the extent of the share of theFco-sharer. It may also be open to the alienee, in the final decreeproceedings, to seek the allotment of the transferred property, to theshare of the transferor, so that equities are worked out in a fair manner.Therefore, the High Court was wrong in putting against the appellant,her failure to challenge the alienations.

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16. The learned counsel for respondent relied upon the decisionof this Court in Delhi Development Authority vs. Durga ChandKaushish[1], in support of his argument about the rule of interpretation tobe adopted while construing Exhibit A-1, the deed of general Power of MRS. UMADEVI NAMBIAR v. THAMARASSERI ROMAN CATHOLICDIOCESE REP BY ITS PROCURATOR DEVSSIA’S SON REV. FATHERJOSEPH KAPPIL [V. RAMASUBRAMANIAN, J.]

Attorney. He also relied upon the Judgment of this Court in Syed AbdulKhader vs. Rami Reddy and Others[2]for driving home the question asto how the deed of Power of Attorney should be construed.

17. We do not know how the ratio laid down in the aforesaiddecisions could be applied to the advantage of the respondent. As amatter of plain and simple fact, Exhibit A-1, deed of Power of Attorneydid not contain a clause authorizing the agent to sell the property thoughit contained two express provisions, one for leasing out the property andanother for executing necessary documents if a security had to be offeredfor any borrowal made by the agent. Therefore, by convoluted logic,punctuation marks cannot be made to convey a power of sale. Even thevery decision relied upon by the learned counsel for the respondent,makes it clear that ordinarily a Power of Attorney is to be construedstrictly by the Court. Neither Ramanatha Aiyar’s Law Lexicon norSection 49 of the Registration Act can amplify or magnify the clausescontained in the deed of Power of Attorney.

18. As held by this Court in Church of Christ Charitable Trustand Educational Charitable Society vs. Ponniamman EducationalTrust[3]the document should expressly authorize the agent, (i) to executea sale deed; (ii) to present it for registration; and (iii) to admit executionbefore the Registering Authority.

19. It is a fundamental principle of the law of transfer of propertythat “no one can confer a better title than what he himself has”(Nemo dat quod non habet). The appellant’s sister did not have thepower to sell the property to the vendors of the respondent. Therefore,the vendors of the respondent could not have derived any valid title tothe property. If the vendors of the respondent themselves did not haveany title, they had nothing to convey to the respondent, except perhapsthe litigation.

20. Therefore, the appeal is allowed, the impugned judgment ofthe High Court is set aside and the Judgment and preliminary decreepassed by the trial Court are restored. There will be no order as to costs.

Devika Gujral(Assisted by : Mahendra Yadav, LCRA)

Appeal allowed.

2 (1979) 2 SCC 6013 (2012) 8 SCC 706

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