TERMPAPER

Name – Anikesh Sareen

Course Name – Commercial Law

Reg No.- 11003277

Section - S1009

Roll No. – RS1009B29

Submitted to – Mr Roktim Sarmah

Date of Allotment – 26/8/2010

Date of Submission – 15/11/2010

DECLARATION

I Anikesh Sareen under the guidance and supervision of Mr. Roktim Sarmah. He
guided me for doing this work with our ability. He is our commercial law lecturer
and he is the lecturer of department of management in LOVELY
PROFESSIONAL UNIVERSITY

CASE 1
Birat Chandra Dagara vs Taurian Exim Pvt. Ltd. And Anr. on 18/3/2005

1. This appeal is directed against the order dated 17-5-2003 passed by the learned
Civil Judge (Senior Division), Rairangpur restraining the appellant from managing,
operating, raising, extracting Iron Ores from Suleipat Mines and from interfering
with the management, operation, raising, extraction of iron ores from the Suleipat
Mines in terms of Power of Attorney dated 9-7-2002 till disposal of the suit.

2. Respondents have filed Civil suit No. 38 of 2003 in the Court of the learned civil
Judge (Senior Division), praying for a declaration that the deed of revocation dated
16-7-2002 is void, illegal and inoperative and for further declaration that in view of
the registered Irrevocable Power of Attorney dated 9-7-2002 executed by the sole
defendant in favour of the plaintiff No.l and backed by payments as indicated in
the plaint, the plaintiff-respondents are entitled to operate the suit schedule mine as
described in Schedule-A and for permanent injunction. In this an application was
filed by the respondents for restraining the appellant from managing, operating,
raising or extracting iron ore from the said mines and also to restrain the appellant
from interfering with the management, operation, raising or extraction of Iron Ores
from the said mines. Said application filed by the respondents having been
allowed, the present appeal has been preferred by the defendant.
3. Case of the plaintiffs-respondents is that the defendant appellant had been
granted mining lease in respect of Suleipat Iron Ore Mine covering an area of
1527.10 acres or 618 Hectares for the purpose of mining. Said defendant -appellant
was not able to operate the mine for want of technical know-how, paucity of funds
and as such persuaded the plaintiff-respondents to advance a sum of rupees ninety
eight lakhs and operate the mine under an Irrevocable Power of Attorney. The
plaintiff respondents agreed to the suggestion and the defendant appellant also
agreed that in lieu of advance he shall execute an irrevocable Power of Attorney in
favour of the plaintiff No. 1 - Company and alternatively suggested that he is ready
and willing to transfer permanently his leasehold right in respect of Schedule-A
mine after obtaining due permission from the authority and that during the
interregnum period, i.e. from the date of advancement/execution of Irrevocable
Power Attorney till the date of execution and registration of final document of
transfer, the absolute right to manage, operate the Mine in question, raise, transport
and sale the ore shall rest with the plaintiffs on the basis of the Irrevocable Power
of Attorney. The Plaintiffs-respondents accepted such suggestion of the defendant-
appellant and accordingly advanced a sum of rupees seventy six lakhs in between
21 -6-2002 and 26-7-2002. Apart from the above amount, the plaintiff-respondents
also paid Rs. 22 lakhs in cash on different dates making it total amount of Rs.
98.00 lakhs in total. The defendant appellant in due procedure of law executed a
general Irrevocable Power of Attorney and registered the same on 9-7-2002, Under
the terms of the said Power of Attorney the plaintiffs respondents were to take
possession, manage works, raise, dispatch and sell minerals from the said mine.
However, after receipt of the aforesaid amount and execution of the Irrevocable
Power of Attorney suddenly the defendant appellant revoked the Power of
Attorney on 16-7-2002. Challenging the said revocation a suit was filed for the
relief as stated earlier.

4. The defendant-appellant entered appearance in the suit and filed written

statement denying the allegations made in the plaint in general though execution of
the registered power of Attorney and revocation thereof were admitted. It is
specific case of the defendant-appellant that though Irrevocable Power of Attorney
was executed on 9-7-2002 before the same was acted upon it was revoked on 16-7-
2002 and therefore the plaintiffs have not acquired any right under the Power of
Attorney to maintain the suit or seek for injunction. Apart from the above ground,
the defendant-appellant has also Challenged the maintainability of the suit on the
ground that the Mining department of the Government of Orissa being the owner
of the mine in question should have been made a party to the suit and in absence of
Mining department the suit is not maintainable. Similar averments were also made
in the objection filed by the plaintiffs-respondents to the petition filed under Order.
The trial Court on consideration of the cases of the parties as well as the documents
produced before it found prima facie case in favour of the plaintiffs respondents
and held that unless an order of Injunction is granted the plaintiffs-respondents
shallput to irreparable loss.

5. Challenging the aforesaid order Sri Jagannath Patnaik, learned senior counsel
appearing for the defendant-appellant submitted that whenever there is a breach of
contract the party suffering from such breach is entitled to compensation and
therefore the trial Court could not have passed an order of injunction. Apart from
the above ground, it was contended by Sri Patnaik that though Irrevocable Power
of Attorney was executed on 9-7-2002 before it was acted upon the same was
revoked on 16-7-2002 and therefore the plaintiffs-respondents did not acquire any
right at all under the said Power of Attorney and accordingly the Court should
(not) have granted an order of injunction.

Shri Indrajit Mohanty, learned counsel appearing for the plaintiffs-respondents

supporting the impugned order submitted that once an irrevocable Power of
Attorney is executed the same cannot be revoked and revocation of said Power of
Attorney is illegal and not. binding on the respondents. In course of argument Shri
Mohanty also submitted that for operating mines the plaintiffs-respondents have
already invested huge amount of money and possession having been delivered to
them pursuant to execution of Power of Attorney they have a prima facie case to
establish before the trial Court. It was further submitted by Sri Mohanty that the
undisputedly the plaintiffs-respondents have paid a sum of Rs. 98/- lakhs to the
defendant-appellant and apart from the above huge amount of money has already
been invested in the said mines pursuant to the suggestions made by the defendant
appellant and execution of Irrevocable Power of Attorney. According to Sri
Mohanty if an order of injunction is not granted the plaintiff-respondentst shall be
put to irreparable loss and they being in possession of mines, balance of
convenience lies in their favour.

6. On reading of the plaint as well as written statement it appears that the appellant
had been granted mining lease of 618 hectares of land covering ten villages. A
copy of the Power of Attorney executed on 9-7-2002 was produced before the
Court for perusal. The purpose of execution of the Power of Attorney as it appears
is to appoint persons for assisting in raising and dispatching minerals from the
mines. This is evident from the third paragraph of the Power of Attorney.
However, the contents of the Power of Attorney indicate that the respondents shall
take over possession, manage works, raise, dispatch and sell minerals from the
mines he can appoint, engage supervisor, employees and other persons for the
purpose of carrying out the above mining operation according to law and other
allied activities and shall also exercise all control over such affairs. Clauses 12 and
13 which are material for the purpose of this case are quoted below

"Clause-12 - The Power of Attorney shall remain operative till above mining lease
over Suleipat Iron Mines expires or the transfer of the same in favour of M/s.
Taurian Exim Pvt. Ltd. Takes place, whichever is earlier.

Clause-13 - This Power of Attorney shall remain operative till my above mining
rights, Title and interest exists. It shall not be revoked by me during the subsistence
of the residual period of the lease.

On reading of the two clauses of the Power of Attorney it further appears that the
appellant intended to transfer the disputed mines in favour of the respondent No. 1
and therefore a clause was introduced that the Power of Attorney shall remain
operative till lease period expires or transfer takes place, which ever is earlier.
Clause 13 also specifies that the Power of Attorney shall remain operative till the
appellant's right, title and interest over the same continues and that it shall not be
revoked during the subsistence of the residual period of the lease. In support of the
aforesaid two clauses it further appears, prima facie, that an amount of Rs. 98 lakhs
had been advanced to the appellant under various cheques and by way of cash
payments. Therefore, intention of the party as it appears from their conduct as well
as from 'the aforesaid two clauses contained in the Power of Attorney is that the
appellant Intended to transfer the lease in favour of the respondents during
subsistence of the Power of Attorney and therefore had agreed under the said
Power of Attorney that the same shall continue to operate till expiry of the lease
period or transfer of the same in favour of the respondent No. 1 which ever is
earlier. In absence of such a clause there would not have any occasion for the
respondent No. 1 to pay a huge amount of Rs. 98 lakhs to the appellant. Though in
the written statement payment of Rs. 98 lakhs appears to have been denied, during
course of argument Sri Jagannath Patnaik, learned counsel appearing for the
appellant submitted that the entire amount has been deposited in a criminal case
initiated under Section 138 of the Negotiable Instruments Act. Therefore, the
contention of Sri Mohanty, learned counsel appearing for the respondents that for
the purpose of transfer of the lease in favour of the respondents an advance of Rs.
98 lakhs had been made is acceptable.

The question that arises for consideration is as to whether having executed an

irrevocable Power of Attorney, appellant can revoke the same by another
instrument. Revocation has been done by a registered instrument and copy thereof
has been produced before the Court for perusal. Ground on which revocation has
been made is that the holder of the Power of Attorney failed to come to Rairangpur
on 9-7-2002 to sign agreement with the executant in respect of the modalities of
the execution of various clauses contained in the Power of Attorney. Therefore, the
executant had no other alternative but to cancel the Power of Attorney. On perusal
of the Power of Attorney it appears that there is no such clause under which the
respondent was under an obligation to come to Rairangpur on 9-7-2002 and sign an
agreement with the appellant in respect of the modalities of the execution of
various clauses of the Power of Attorney. Therefore, the ground on which
revocation has been made does not flow from the contents of the Power of
Attorney dated 9-7-2002.

7. Section 202 of the Contract Act provides that when an agent has himself an
interest in the property which forms subject matter of the agency, the agency
cannot, in absence of an express contract, be terminated to the prejudice of such
interest. Learned counsel appearing for the respondents also cited a decision of the
Apex Court in the case of Seth Loon Karan Sethia v. Ivan E. John, to support the
contention that the respondents having an interest in the leasehold area under the
Power of Attorney the same cannot be revoked causing prejudice to the
respondents. It is clear from the Power of Attorney that the appellant intended to
transfer the leasehold area in favour of the Respondent No. l and prima facie also
as suggested by the learned counsel for the parties it appears that the appellant had
received Rs. 98 lakhs. Therefore, Tam of the view that an interest was created in
favour of the respondent No. 1 in the property and therefore such agency cannot, in
absence of any express contract, be terminated to the prejudice of such interest. I,
therefore, find prima facie case in favour of the'respondents.

8. Shri Jagannath Patnaik, learned senior counsel appearing for the appellant
referring to Section 205 of the Contract Act submitted that where there is an
express or implied contract that the agency should be continued for any period of
time, principal must make compensation to the agent or the agent to the principal,
as the case may be, for any previous revocation or renunciation of the agency
without sufficient cause. Referring to the aforesaid provision it was contended by
Sri Patnaik that under this provision the respondents are entitled to compensation
and therefore there is no irreparable loss to the respondents which cannot be
compensated. Having held that Section 202 of the Contract Act prima facie appears
to be applicable to the facts of the present case, I am of the view that no such
revocation of Power of Attorney could be made to the prejudice of the interest
created in favour of the respondents. From the reading of the plaint it appears
prima facie that pursuant to execution of Power of Attorney the respondents had
taken steps for carrying out the responsibilities conferred on them under the Power
of Attorney and therefore I am of the view that balance of convenience also lies in
favour of the respondents.

9. In view of the discussions made above, I do not find any reason to interfere with
the impugned order and accordingly the appeal is dismissed.

CASE 2
R. Sandhyarani W/O. T.A. Panduranga Setty vs M. Mylarappa S/O. Late Mylappa

1. This revision petition is filed by the petitioner challenging the order of dismissal
of the eviction petition filed by her in H.R.C. 904/01 on the file of the XII Addl.
Small Causes Judge, Bangalore, whereby the trial court dismissed the eviction
petition filed by her against the respondent Mylarappa under Section 27(2)(a) and
(r) of the Karnataka Rent Act.

2. The brief facts of the case are that the petitioner stated to be the absolute owner
of the petition schedule premises and the respondent is her tenant as per rental
agreement dated 7.6.1999. The rent was Rs. 500/- per month for a period of two
years from 7.6.1999 and thereafter the rent was enhanced to Rs. 2000/- per month.
The case of the petitioner is that her family consists of six members including her
husband, three daughters and son. The present premises in occupation of the
petitioner is an old building, hence the petitioner is intending to shift her family to
the petition schedule premises. Since the respondent is a chronic defaulter in
payment of rents, a legal notice was issued, the same was returned unclaimed.
However the certificate of posting was duly served on the respondent for which he
has sent untenable reply. Therefore, the petitioner filed H.R.C. 904/2001. The trial
court after recording the evidence and after hearing counsel appearing for both
parties directed the parties to approach competent court of civil jurisdiction for
declaration of their rights. Therefore, the petitioner has come up in this revision
petition.

3. Heard the arguments of the learned Counsel for the petitioner Sri Rajanna and
Sri R.B. Sadashivappa, for the respondent.

4. It is argued by the learned Counsel for the petitioner that one Hanumanthappa,
who was the original owner of the petition schedule premises has executed an
irrevocable power of attorney in favour of the respondent Mylarappa and the said
Mylarappa in turn executed a registered sale deed in favour of petitioner herein, on
7.6.1999. As a power of attorney the respondent has got every right to sell the
property on the basis of the terms and conditions of the power of attorney,
therefore the sale deed executed by the respondent is valid in the eye of law,
thereafter the respondent himself has taken the premises on lease basis to that
effect a rental agreement has been entered into on 7.6.1999, therefore, there is
relationship of landlord and tenant between the petitioner and the respondent and
the trial court has wholly erred in holding that there is no relationship of landlord
and tenant between the petitioner and respondent. In support of his contention the
learned Counsel for the petitioner has relied on a decision of this Court reported in
the case of Mohammed Podiya v. Assistant Commissioner wherein it has been
held that:

A power-of-attorney is an authority whereby one is authorised to act for another.

Power of attorney is ordinarily construed strictly and general powers are
interpreted in the light of the special powers, although they may include incidental
powers necessary for carrying out the authority granted. Where a general power is
given followed by specific powers, the generality of powers will have to be read in
the light of the specific powers granted. Where all the rights and liabilities were
made over by a power-of attorney, such power is an agency coupled with interest.

Further he relied on decision of the Apex Court reported in the case of Seth Loon
Karan Sethiya v. Ivan E. John and Ors wherein the Apex Court held that:

On the tenor of the document as well as from its terms (i) that the power given to
the Bank was a power coupled with interest and same was irrevocable in view of
Section 202 of Contract Act.

It is argued that under Section 202 of the Contract Act the agent has got every right
to sell the property even after the death of power of attorney. It is argued that the
respondent himself has filed an affidavit before the trial court stating that he being
the owner of the properly which was sold to the revision petitioner wherein he
admits that he is the vendor of the petitioner, who had sold the petition schedule
premises to her. Therefore the affidavit filed by the respondent is binding on him.

5. On the other hand the learned Counsel for the respondent submitted that
Hanumanthappa was the owner of the premises and he executed a power of
attorney in favour of the respondent Mylarappa on 10.4.1987. Hanumanthappa
died on 5.8.1987. Therefore, even if any power of attorney executed in favour of
Mylarappa he has no right or title to execute the sale deed in favour of the
petitioner herein after the death of said Hanumanthappa. Therefore, as soon as the
power of attorney dies, even if it is an irrevocable power of attorney, and any sale
of the properly by him becomes void sale. Therefore, any rent agreement and
resale agreement obtained by threat, coercion and fraud is void. Therefore the trial
court has rightly held that there is no landlord and tenant relationship between the
petitioner and the respondent. Further there is dispute with regard to the title of the
property. Hence prays for dismissal of this revision petition.

6. In support of his contention the learned Counsel relied on a decision reported in

the case of R. Shariff and Ors. V. A. Mohammed Noor and Anr. wherein this Court
held that:

Section 43 of the new Act is enacted to safeguard the interest of the tenants and
they should not be evicted by the persons who have no title to the petition schedule
property. It is no doubt true that frivolous applications are made to stall the
eviction proceedings, but however in the case on hand the fact that a series of
proceedings at undisputed point of time when the title of the vendor of the present
petitioner itself was questioned and having been denied by the Courts, the
applications maintained by the respondents in the trial court for deferring the
eviction proceedings until the title is decided cannot be said to be either frivolous
or to drag on the proceedings.

7. It is an admitted that late Hanumanlhaiah was the original owner in whose

favour the premises was allotted by the Karnataka Housing Board. During the life
lime of Hanumanthaiah he has executed a power of attorney in favour of the
respondent Mylarappa. Within a short period i.e., on 5.8.1987 Hanumanthaiah
died. Alter the death of Hanumanthaiah respondent herein executed the sale deed
in favour of the petitioner. The specific contention taken by the respondent is that
the sale deed and other documents taken by the petitioner by playing fraud and
coercion. Further it is contended that the person who has no title over the property
cannot sell or bequeath the properly to a third party.
8. The learned Counsel contended that as per Section 202 of the Indian Contract
Act, even if the principal died after execution of the power of attorney the agent
has every right to sell or bequeath the property as per the terms of the power of
attorney.

9. It is relevant to quote Section 202 of the Indian Contract Act, 1872, which reads
thus:

202. Termination of agency, where agent has an interest in subject-matter. Where

the agent has himself an interest in the property which forms the subject-matter of
the agency, the agency cannot, in the absence of an express contract, be terminated
to the prejudice of such interest.

From the plain reading of the above Section it is clear that there is no such
wordings as contended by the learned Counsel for the petitioner. Therefore, as
soon as the person, who executed the power of attorney, dies the right given to the
power of attorney holder also conies to an end. Therefore, any registered sale deed
executed by the respondent without any valid title over the property become void.
Moreover, this Court cannot go into deciding the title of the property. It is for the
Civil Courts to decide. Therefore, I do not find any good ground to interfere with
the impugned order.

10. Accordingly, revision petition is dismissed.