In A.S.No.565 of 2013-MAD HC-Any agreement without consideration is void as per Sec.25 of Indian Contract Act;  Unless there is valid sale consideration, it cannot be 'sale' u/s 54 of Transfer of Property Act: Madras HC
Justice D.Bharatha Chakravarthy [30-09-2022]

Read Order: J.PRABAKARAN AND ORS V. S.BABUJAN AND ORS 

Mansimran Kaur

Chennai, October 6, 2022: Unless and otherwise there is valid sale consideration, it cannot be a 'sale' within the meaning of Section 54 of the Transfer of Property Act, the Madras High Court has held.

The Single-Judge Bench of Justice D.Bharatha Chakravarthy  partly allowed the appeal suit by observing that in a  case where it  is found that the sale deed was  executed without consideration, then any agreement without consideration is void as per Section 25 of the Indian Contract Act.

The  present appeal suit was instituted by the aggrieved defendants against the judgment and decree, dated October 31, 2013 in Original Suit of 2011, in and by which, the Trial Court decreed the suit filed by the respondents/plaintiffs for declaration of their title in respect of the suit schedule property; for recovery of possession; for permanent injunction not to interfere with the possession or creating any encumbrance; for cancelling the Power of Attorney, dated  August 15, 2007 executed by the first plaintiff in favour of the first defendant; for declaring that the sale deed, dated September 5, 2008  executed by the first defendant in favour of the second defendant as null and void. 

After hearing the submissions of the pirates, the Court noted that it was  the contention of the  Senior Counsel that when there is no coercion, undue influence, fraud or misrepresentation and when the power is valid, the sale deed cannot be termed as void. However, the Court  was unable to agree with the said submissions. 

 In view of the same, the Court noted that this  is a case where it  is found that the sale deed was  executed without consideration  therefore, any agreement without consideration is void as per Section 25 of the Indian Contract Act.

 In this regard, unless and otherwise there is valid sale consideration, it cannot be a 'sale' within the meaning of Section 54 of the Transfer of Property Act, the Court observed. 

In furtherance of the same, the Court noted that even  otherwise, on a cumulative reading of the evidence of D.W.1, the written statement, the sale agreement and the sale deed, it can be seen that the action of the defendants 1 and 2 was in tandem and connivance in concealing the fact of the sale agreement on the same day of the Power of Attorney and thereafter, the execution of the sale deed, which will squarely fall within the definition of fraud as per Section 17 of the Indian Contract Act and the sale transaction was  also vitiated by fraud and therefore was void. 

Thus, the submissions of the Senior Counsel that no ground was made out for grant of relief under Section 31 of the Specific Relief Act is without any substance, the Court observed. 

As far as the plea of delay was concerned, from the evidence of P.W.1, it was  clear that he  parted with the possession of the property and only when he was in position to repay the entire principle  amount, when he confronted the first defendant, the first defendant shoved him away with the copy of the sale deed and thereafter the suit was filed. Therefore, it cannot be said that there was undue delay or any laches in filing suit. 

However, in a case of this nature, once the Court finds that the entire transaction was only for a loan and when the plaintiff had  admitted that he was  yet to pay principal amount of Rs.4,50,000/-, the Trial Court ought not to have simply decreed the suit without making provision for the first defendant to realise the amount, the Court noted. 

 In this case, the second defendant had absolutely no equity as she neither got into the box nor her husband even claimed about the sale consideration or being a bona fide purchaser, inspite of being examined by the plaintiffs and her entire written statement was absolute falsehood,the Court further stated. 

However,  in the conspectus of the present facts of the case, the relief has to be appropriately molded so as to grant the first defendant the sum due to him being a sum of Rs.4,50,000/-. 

 The first defendant was also entitled to interest, which in the facts and circumstances of the case, shall be 9% per annum from August 15, 2007 till the date of repayment, the Court noted. 

This apart, the relief of cancellation of Power of Attorney granted by the Trial Court was also not in accordance with law as the cancellation of the Power of Attorney has to be done by the party itself. 

 In this case, the deed of cancellation of Power of Attorney was already executed. Therefore, the relief of cancellation of Power of Attorney granted by the Trial Court was also not in order, the Court noted. 

In view of my above findings, the first issued framed by the Trial Court that the Power of Attorney was executed by the plaintiffs in favour of the first defendant and the same was executed as a security and in default of the payment of the sum of Rs.4, 50,000/- along with interest to be payable by the plaintiffs within three months from the date of receipt of copy of this order, the Court stated that  the Power of Attorney would be valid with rights to execute the sale deed. 

In furtherance of the same, the Court noted that upon payment of the above said sum, the sale deed will not be binding on the plaintiffs. Upon payment of the aforesaid sum, the plaintiffs will be entitled for the relief of declaration as well as the recovery of possession and permanent injunction. 

In view of the cancellation of power, there is no necessity to further cancel the Power of Attorney by the Court further observed. 

Upon payment of the amount aforesaid, the plaintiffs will be entitled for the declaration that the sale deed, dated September 5, 2008 as null and void and the issue No.9 also stands answered accordingly.

In light of the observations made above, the appeal suit was partly allowed.