Supreme Court of India
MAYA DEVIversusLALTA PRASAD
- Citation
- 2014 INSC 116
- Decided
- 19 February 2014
- Disposal
- Appeal(s) allowed
- Bench
- K S RADHAKRISHNAN
Holding
The Supreme Court held that the objection under Order XXI Rule 58 must be allowed; the registered GPA is a genuine conveyance giving the appellant ownership, and the execution court cannot attach her property.
Summary
The appellant, Maya Devi, filed an objection under Order XXI Rule 58 to execution proceedings initiated by the decree holder, Lalta Prasad, who had obtained an ex‑parte money decree for Rs 3.40 lakh based on an alleged agreement for sale dated 3 Nov 2003 between him and the judgment debtor, Prem Chand Verma. Maya Devi claimed ownership of the disputed property through a registered General Power of Attorney (GPA) dated 12 May 2006 executed by the judgment debtor’s wife, Nirmal Verma, and asserted possession since that date. The trial and appellate courts dismissed her objection, relying on the Suraj Lamp decisions. The Supreme Court held that the GPA was a genuine transaction conferring title on the appellant, that the decree holder failed to disprove her title, and that the penalty clause (double earnest money) was unenforceable under the Indian Contract Act. Consequently, the execution court erred in attaching her property; the decree may be executed against the judgment debtor but not against the appellant’s property. The appeal was allowed and the impugned orders set aside.
Issues considered
- The validity and effect of a registered General Power of Attorney executed in 2006 on the title of a third‑party claimant in execution proceedings.
- Whether an objection under Order XXI Rule 58 CPC can be allowed when the objector is a third party not named in the original suit.
- The applicability of the Suraj Lamp judgments to the present transaction and whether they operate prospectively.
- The enforceability of a clause stipulating double earnest money as liquidated damages or a penalty under the Indian Contract Act.
- Whether execution of a money decree can be directed against property belonging to a third party who is not a party to the decree.
Legislation cited
- Code of Civil Procedure, 1908s. Order XXI Rule 100, s. Order XXI Rule 101, s. Order XXI Rule 103, s. Order XXI Rule 58, s. Order XXI Rule 97, s. Order XXI Rule 98, s. Section 151
- Indian Contract Act, 1872s. Section 73, s. Section 74
Subjects
execution proceedingsOrder XXI Rule 58General Power of Attorneythird‑party rightsliquidated damagespenalty clauseIndian Contract Actex‑parte decreeproperty attachmentcivil procedure
Judgment
[2014) 2 S.C.R. 1129
MAYA DEVI A
v.
LALTA PRASAD
(Civil Appeal No. 2458 of 2014)
FEBRUARY 19, 2014
B
[K.S .. RADHAKRISHNAN AND VIKRAMAJIT SEN, JJ.]
Code of Civil Procedure, 1908: · Order XX/ r. 58 -
Execution proceedings - Suit for recovery of money sought
to be realized on a property covered by an agreement for sale C
- Suit claim based on the stipulation in the contract that double
the amount of earnest money would be payable in the event
the contract was not performed - Suit decreed ex parte -
Objection by appellant-objector before executing court that in
respect of the said property a registered power of attorney in D
2006 was already executed between objector and wife of
Judgment Debtor (JD) and possession was handed over to
objector - Executing court dismissed the objection - Held:
Power of Attorney executed in favour of objector was a
genuine transaction - The ex parte decree was obtained by E
Decree Holder (DH) to get over the registered power of
attorney executed in favour of objector - DH could not
disprove the title of objector - Documents purportedly in
favour of DH were unregistered and alleged payment made
by JD was in cash - Also, objector was in possession of F
property in question since 2006 -Imposition and recovery of
penalty on breach of contract is legally impermissible under
the Indian Contract Act - No evidence was led by DH that
claim for twice the amount of earnest money was a fair
estimate of damages - Conjoint reading of Order XX/ Rule
58 and the fascicu/us of Order XX/ comprising Rules 97 to G
104 would show that all questions raised by the Objector
should have been comprehensively considered on their
merits - Decree from which the execution proceedings
1129 H
1130 SUPREME COURT REPORTS [2014] 2 S.C.R.
A emanated was not one for delivery of possession, but was a
simple money decree - The objector was a third party and was
brought into the tis as her property was sought to be attached
with the intention of satisfying a decree in which she was not
directly or intrinsically concerned - The objections ought to
8 have been allowed without disturbing the decree, leaving all
other remedies open to the DH including proceedings.against
the estate of the JD.
A suit for recovery of Rs.3.40 lacs was filed by the
respondent against one PCV which was sought to be
C realized on the property covered by agreement for sale
dated 3.11.2003 executed between them. The suit was
decreed ex parte. The appellant filed objection petition
before the executing court on the ground that a
registered Power of Attorney was already executed
D between the appellant anGI NV who was wife of Judgment
Debtor. The executing court dismissed the objection
petition. The High Court upheld the same.
In the instant appeal, it was contended for the
E appellant that the decree was obtained by collusion and
practicing fraud on the court; that she became the
absolute owner of the suit property by virtue of a
registered General Power of Attorney dated 12.5.2006
and that she has been in actual physical possession of
F the suit property.
Allowing the appeal, the Court
HELD:
G K.S. RADHAKRISHNAN. J.
1. The Executing Court as well as High Court have
committed a grave error in not properly appreciating the
objections filed by the appellant. The registered Power of
Attorney was executed by none other than the wife of
H
MAYA DEVI v. LALTA PRASAD 1131
Judgment Debtor and the appellant on 12.5.2006 in A
respect of the property in· question for a sale
consideration of Rs.70,0001-, which was received by NV
in cash in advance and she acknowledged the same
before the Sub-Registrar, Delhi. On the same day, NV,
wife of Judgment Debtor handed over physical vacant B
possession of the land and building situated thereon and
from 12.5.2006 onwards, the appellant was in possession
of the property. A decree was obtained by the respondent
without any proper contest and the court proceeded
against Judgment Debtor ex-parte. These facts speak for c
itself. Evidently, the collusive decree was obtained by the
respondent to get over the registered Power of Attorney
executed in favour of the appellant. The Power of Attorney
executed on 12.5.2006 in favour of the appellant by the
wife of Judgment Debtor was a genuine transaction 0
executed years before the judgment of Suraj Lamp. Facts
will clearly indicate that the Agreement for Sale dated
3.11.2003 was created by none other than the husband·
of NV, who had executed the General Power of Attorney
and possession was handed over to the appellant. That
being the fact situation, the Objection filed by the E
appellant under Order 21 Rule 58 in execution has to be
allowed. The executing court can execute the decree but
without proceeding against the property referred to in
registered Power of Attorney dated 12.5.2006. [paras 5'to
7, 9] [1141-E, G-H; 1142-A-C; 1143-A-D] F
Suraj L:1mp and Industries Private Limited Through
Director v. State of Haryana & Anr. (2009) 7 SCC 363: 2011
(11) SCR 848; Suraj Lamp and Industries Private Limited (2)
Through Director v. State of Haryana & Anr. (2012) 1 SCC G
656 • relied on.
VIKRAMAJIT SEN. J.
1. A perusal of the evidence of the Decree Holder
showed that he has failed altogether to disprove the title H
1132 SUPREME COURT REPORTS [2014] 2 S.C.R.
A of the appellant, and he has maintained that the
DefendanUJudgment Debtor was the owner, which was
admittedly not the actual legal position. If the Decree
Holder has been defrauded by the DefendanUJudgment
Debtor, largely because of the farmer's careless disregard
9 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 NV, the courts below
erred in proceeding against her property. Both the courts
C 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. The
documents purportedly in favour of the Respondent/
D Decree Holder were unregistered and the alleged
payment made by him to PCV was in cash. Therefore,
there was no justification for favouring the view that the
alleged transaction between Judgment Debtor and the
Respondent/Decree Holder was genuinely prior in time
E to the execution of the registered Power of Attorney in
favour of the appellant by NV, and the former
simultaneously and contemporaneously was put into
possession of the property by the latter. [paras 3, 4) [1146-
B-G]
F
Suraj Lamp and Industries Private Limited Through
Director v. State of Haryana & Anr. (2009) 7 SCC 363: 2011
(11) SCR 848 - relied on.
2. There can be no gainsaying that when the
G probative value of documents is to be assessed, specially
those dealing with the creation of any interest in property
or its transfer, of a value exceeding Rs.100/-, obviously
documents which have been duly registered regardless
of whether or not that was legally mandatory, would
H score over others. A perusal of the judgment showed that
MAYA DEVI v. LALTA PRASAD 1133
whether the sum of Rs.1, 70,000/- allegedly paid by the A
Plaintiff to PCV was in cash or through a traceable Bank
transaction or through a registered acknowledgment has
not been cogitated upon. It was not controverted that the
appellant was in possession of the property in question
from May, 2006. A reading of the judgment by which the B
suit was decreed for a sum of Rs.3,40,000/- did not shed
any light on the circumstances which made the Plaintiff
wait to initiate legal action till after the property was sold
and its possession delivered to the appellant. Therefore,
the so-called "Deed of Agreement for Earnest Money" C
allegedly executed almost three years earlier on
03.11.2003 does not appear genuine. The veracity of the
document dated 3.11.2003, looking upon the Power of
Attorney and other documents appear mala fide. It is not
disputed that the title and possession of the property
which has been brought within the sweep of the D
execution proceedings, was never held in any capacity
by the Defendant/ Judgment Debtor, but by his wife, NV.
To give even a semblance of a case to the Plaintiff-
respondent, the Deed of Agreement for Earnest Money
should have been between the Plaintiff/Decree Holder/ E
Respondent and NV. [para 5] [1146-G-H; 1147-A-F]
3. 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 F
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 G
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 likely to arise in case of breach of the
contract. No evidence whatsoever has been led by the H
1134 SUPREME COURT REPORTS [2014] 2 S.C.R.
A Plaintiff to prove that the claim for twice the amount of
earnest money was a fair measure or pre-estimate of
damages. [Para 6) [1148-A-D]
4. Returning to the facts of the instant case, the so
called Deed of Agreement for Earnest Money inasmuch
B as it postulates the payment of twice the sum received
ought not to have been decreed as firstly, the contract
itself could not have been specifically enforced since the
Defendant was devoid of title; and secondly, the Plaintiff
had not proved that he had suffered any damages and
c facially the stipulated sum was in the nature of a penalty.
[Para 11) [1153-E-F]
5. The Execution proceedings were initiated by the
Respondent/Decree holder on 27.10.2007 under Order
XXI Rule 11, CPC. Objection application under Order XXI
D Rule 58 read with Section 151, CPC was preferred by the
appellant pleading, inter alia, that the Decree Holder had
wrongly scheduled her property in the Execution
Application; that she was the absolute and real owner
thereof having purchased it on 12.05.2006 from NV, wife
of Judgment Debtor; that she has no other connection .
E or concern with the Judgment Debtor or with his wife in
any manner whatsoever. In the Execution proceedings,
the Plaintiff/Decree Holder/Respondent in cross-
examination of the appellant has only suggested that the
documents were fabricated in collusion with NV. This was
F noy possible, since they were duly registered documents.
The other question put in cross-examination was that NV
was never the owner of the property; and that the
appellant's Objections were filed at the behest of NV. All
these suggestions were denied. If NV had no title, the
G consequence would be that the property would revert to
her predecessor-in- title, thereby placing the property
beyond the pale of the Execution proceedings. [para 14)
[1155-E-H; 1156-A-D]
6. NV had also participated in the Execution
H proceedings and had filed her affidavit asseverating
MAYA DEVI v. LALTA PRASAD 1135
therein that she had sold the property to the appellant by A
executing a registered General Power of Attorney,
Agreement to Sell, Affidavit, Receipt, Possession Letter,
Will Deed, which were duly notorised on 12.05.2006. She
further stated that she had purchased the property by
means of similar documentation all of which were handed B
over by her to the appellant at the time of selling of the
said property. She stated that her husband PCV I
Judgment Debtor had expired on 8.10.2008. As Order XXI
Rule 97 to Rule 101 of CPC envisage the determination
of all questions in Execution proceedings and not by way C
of an independent suit, the Executing Court was duty
bound to consider and decide the Objections filed by the
Appellant with complete care and circumspection. This
was not done. This showed that the Executing Court
ignored and overlooked the important submission of the
appellant stating that she was the absolute owner of the D
suit property and that she had no truck whatsoever either
with the Judgment Debtor or his wife NV beyond
purchasing the subject property from the latter. What has
also escaped the attention of the Court was that Suraj
Lamp case has prospective operation, thereby rendering E
it inapplicable to the subject 2006 transaction. Secondly,
if the General Power of Attorney in favour of the appellant
was bereft of legal efficacy, the ownership of NV would
also be invalid, and sequentially the property would have
no connection whatsoever with the Judgment Debtor
F
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 was the actual owner of the suit G
property having purchased it for valuable consideration,
and being a third party not connected in any mala fide
manner with the Judgment Debtor, and not having
received prior notice of any action of PCV was imperious
to Execution proceedings. A miscarriage of justice, of H
1136 SUPREME COURT REPORTS [2014] 2 S.C.R.
A monumental proportions, took place on an un-
substantiated presumption that one of the assets of "the
Judgment Debtor had been illegally transferred to defeat
the decree. The appellant had no other recourse than to
file Objections under Order XXI Rule 58 CPC. [paras 15
B to 17] [1156-G-H; 1157-A-H; 1158-A-D]
Sir Chunilal V. Mehta & Sons Ltd. vs Century Spinning
and Manufacturing Co. Ltd. AIR 1962 SC 1314: 1962 Suppl.
SCR 549; Fateh Chand vs Balkishan Dass AIR 1963 SC
1405: 1964 SCR 515; Phulchand Exports Limited Vs 0.0.0.
C Patriot 2011 (1 O)SCC 300: 2011 (15) SCR 1129; Mau/a Bux
vs Union of India 1969 (2) SCC 554: 1970 (1) SCR 928; UO/
vs Raman Iron Foundry 1974 (2) SCC 231: 1974 (3) SCR
556; BSNL vs Reliance Communication Ltd. 2011 (1) SCC
394:2010 (15) SCR 705; Shanti/al Guiabchand Mutha vs
o Tata Engineering and Locomotive Company Limited, (2013)
4 sec 396 - relied on.
7. The plaint contained an averment thatthe suit
property had already been sold. The Judgment Debtor,
(his wife NV was not impleaded) had appeared in the trial
E court and filed his Written Statement in which, whilst
admitting the documentation executed between the
parties, he had denied that he had been served with any
legal notice and set up the defence that he was entitled
to forfeit the amount received by him because the
F Plaintiff/Decree Holder had failed to pay the balance sale
consideration as envisaged in the Deed of Agreement for
Earnest Money. After filing his Written Statement he
stopped appearing, and the suit proceeded ex-parte.
Significantly, the Deed of Agreement for Earnest Money
G as well as the Written Statement predicate Defendant's
title on a Will, and in this context there is no evidence on
record that it had taken effect because of the death of the
Testator. In the event, as is to be expected, no appeal
against the judgment and decree came to be filed, and,
therefore, the decision was not testi:td before or
H
MAYA DEVt v: LAI.TA PRASAD 1137
scrutinized by the Appellate Court. The absence of the A
Defendant does not absolve the trial court from fully
satisfying itself of the factual and legal veracity of the
Plaintiffs claim; nay, this feature of the litigation casts a
greater responsibility and onerous obligation on the trial
court as well as the Executing Court to be fully satisfied .
8
that the claim has been proved and substantiated to the
hilt by the Plaintiff. [para 18] [1158-E-H; 1159-A-B]
8. The appellant has not taken any steps for setting
aside the ex parte decree against Judgment Debtor. This
was only to be expected since the Appellant/Objector had C
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 0
endeavour to defeat the decree. On a conjoint reading of
Order XX.I Rule 58 CPC and the fasciculus of Order XX.I
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 E
proceedings emanate is not one for delivery of
possession, but is a simple money decree. Order XXI
prescribes the filing of a separate suit and prescribes that
all relevant questions shall be determined by the Court.
Objection under Order XX.I should be meaningfully heard F
so as to avoid the possibility of any miscarriage of justice.
Rule 103 ordains that where any application has been
adjudicated upon under rule 98 or rule 100, the order
made thereon shall have the same force and be subject
to the same conditions as to an appeal or otherwise, as G
if it were a decree. The appellant is a third party and has
been brought into the lis by a side wind in that her
property is sought to be attached with the intention of
satisfying a decree in which she was not directly or
intrinsically concerned. The appellant/Objector who has H
1138 SUPREME COURT REPORTS [2014) 2 S.C.R.
A approached the Court under Order XXI Rule 58 is more
advantageously or favourably placed inasmuch as she
is a third party so far as the decree is concerned, and her
property is not the subject-matter of the decree. It is thus
clear to me that the courts below have in a hurried, if not
prejudiced manner, rejected the Objections merely
8 because of some sympathy towards the Decree Holder.
The Objections deserved to be allowed without disturbihg
the decree, leaving all other remedies .op~n to the Decree
Holder/Respondent, including proceedings against the
Estate of the Judgment Debtor. [para 19) [1159-E-H; 1160-
C A-C, D-G]
Brahmdeo Chaudhary vs Rishikesh Prasad Jaiswal,
(1997) 3 SCC 694, Shreenath vs Rajesh, (1998) 4 SCC 543,
and Tanzeem-e-sufia vs Bibi Haliman, (2002) 7 SCC 50 -
referred to.
0
Halsbury's Laws of England (4th edn Reissue, 1998)
Vol 12(1), para 1065; Corpus Juris Secundum, Volume
25A (2012) - referred to.
E K. S. RADHAKRISHNAN, J.
Case Law Reference:
2011 (11) SCR 848 Relied on Para 2
(2012) 1 sec 656 Relied on Para 3
F
VIKRAMAJIT SEN, J.
· Case Law Reference:
1962 Supp SCR 549 Relied on Para 7, 8
G
2010 (15) SCR 705 Relied on Para 7, 8
1964 SCR 515 Relied on Para 7
2011 (15) SCR 1129 Relied on Para 12
H 1970 (1) SCR 928 Relied on Para 13
MAYA DEVI v. LALTA PRASAD 1139
1974 (3) SCR 556 Relied on Para 13 A
2010 (15) SCR 705 Relied on Para 13
(2013)-4 sec 396 Relied on Para 18
(1997) 3 sec 694 Relied on Para 19
B
(1998) 4 sec 543 Referred to Para 19
(2002) 1 sec 50 Referred to Para 19
CIVIL APPELLATE JURISDICTION : Civil Appeal No.
2458 of 2014. c
From the Judgment and Order dated 24.01.2011 of the
High Court of Delhi at New Delhi in EXFA No. 23 of 2010.
Rajesh Kumar (for Bhaskar Y. Kulkarni) for the Appellant.
D
K. Krishna Kumar (for M.A. Krishna MoorthyO for the
Respondent.
The Judgments of the Court was delivered by
K.S. RADHAKRISHNAN, J. 1. Leave granted. E
2. The appellant herein filed an Objection Petition under
Order 21 Rule 58 CPC, when the decree obtained by the
respondent in Civil Suit No.407 of 2007 was sought to be
executed. Suit was filed for the recovery of an amount of F
Rs.3,40,000/- with interest, which was sought to be reali~ed,
on the property covered by an agreement for sale dated
3.11.2003 between the judgment debtor and decree holder.
The appellant claimed that she became the absolute owner of
the suit property by virtue of a registered General Power of
Attorney dated 12.5.2006 and that she has been in actual G
physical possession of the suit property. The Petition was
contested by the decree holder/respondent stating that the
applicant/objector had no legal right, title or interest and that
the execution of the General Power of Attorney and its
registration would not confer any ownership right in favour of H
1140 SUPREME COURT REPORTS [2014] 2 S.C.R.
A the appellant/objector. Reliance was also placed on the'
judgment of this Court in Suraj Lamp and Industries Private
Limited Through Director v. State of Haryana & 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
9
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 coflfer
C 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 bas
been preferred by the appellant.
D 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 §-
E reported in Suraj Lamp and Industries Private Limited (2)
Through Director v. State of Haryana & Anr. (2012) 1 SCC
656, this Court has clarified the position that the judgment would
not affect the validity of sale agreements and powers of attorney
executed in genuine transactions and that the judgment would
operate only prospectively. Learned counsel also submitted that
F the alleged agreement executed between the respondent and
one Prem Chand Verma on 3.11.2003 was a collusive one,
subsequently created, to get over the registered Power of
Attorney executed on 3.6.1982 between the appellant and wife
of Prem Chand Verma, viz. Nirmal Verma. Learned counsel
G also pointed out that Civil Suit No.407 of 2007 was preferred
by the respondent herein against Prem Chand Verma based
on the deed of agreement dated 3.11.2003 created for the said
purpose. Referring to the above-mentioned judgment, learned
counsel further pointed out that Prem Chand Verma did not
H contest the Suit and he was declared ex-parte and a decree
MAYA DEVI v. LALTA PRASAD 1141
[K.S. RADHAKRISHNAN, J.]
was passed in favour of the respondent. Learned counsel A
pointed out that the decree was obtained by collusion and
practicing fraud on the Court and the Executing Court has
committed an error in rejecting the Objection filed by the
appellant herein, so also by the High Court by not appreciating
the facts in the correct perspective. 8
4. Shri K. Krishna Kumar, learned counsel for the
respondent, submitted that both the Executing Court and High
Court have correctly applied the principles laid down in Suraj
Lamp and Industries Private Limited (supra). Learned counsel
pointed out that any process which interferes with regular C
transfers under deeds of conveyance properly stamped,
registered and recorded in the registers of the Registration
Department, is to be discouraged and deprecated and the
Executing Court has rightly declined to give its seal of approval
to General Power of Attorney, Agreement for Sale, etc. dated D
12.5.2006.
' I am of the view that the Executing Court as well as High
5.
Court have committed a grave error in not properly appreciating
the objections filed by the Appellant. We are in this case
. concerned with the question whether we must give credibility E
to the registered General Power of Attorney executed on
12.5.2006 between Nirmal Verma and the appellant or on the
alleged Agreement for Sale executed on 3.11.2003 between
the respondent and Prem Chand Verma, husband of Nirmal
Verma. Further, we have to examine the manner in which Civil F
Suit No.407 of 2007 was decreed without contest by Prem
Chand 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 G
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 tbe land and building situated thereon and H
1142 SUPREME COURT REPORTS [2014] 2 S.C.R.
A 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
B 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
C perspective, we have to understand and apply the ratio laid
down by this Court in Suraj Lamp and Industries Private
Limited (2) (supra).
8. Paragraph 27 of the judgment of this Court in Suraj
Lamp and Industries Private Limited (2) (supra) reads as
0 follows:
"27. We make it clear that our observations are not
intended to in any way affect the validity of sale agreements
and powers of attorney executed in genuine transactions.
E For example, a person may give a power of attorney to
his spouse, son, daughter, brother, sister or a relative to
manage his affairs or to execute a deed of conveyance.
A person may enter into a development agreement with a
land developer or builder for developing the land either by
forming plots or by constructing apartment buildings and
F
in that behalf execute an agreement of sale and grant a
power of attorney empowering the developer to execute
agreements of sale or conveyances in regard to individual
plots of land or undivided shares in the land relating to
apartments in favour of prospective purchasers. In several
G States, the execution of such development agreements
and powers of attorney are already regulated by law and
subjected to specific stamp duty. Our observations
regarding "SA/GPA/will transactions" are not intended to
apply to such bona fide/genuine transactions."
H
MAYA DEVI v. LALTA PRASAD 1143
9. In the above judgment, it has been stated that the A
observations made by the Court are n~t intended to in any way
affect the validity of sale agreements and powers of attorney
executed in genuine transactions. I am of the view that the
Power of Attorney executed on 12.5.2006 in favour of the
Appellant by the wife of Prem Chand Verma is a genuine B
transaction executed years before the judgment of this Court.
Facts will clearly indicate that the Agreement for Sale dated
3.11.2003 was created 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 C
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. D
10. The appeal is allowed, as above, and the impugned
orders are set aside. There shall, however, be no order as to
costs.
VIKRAMAJIT SEN, J. 1. I have perused the judgment of E
my learned and 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 vs State of Haryana (2009) 7 SCC 363, which F
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 G
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
H
1144 SUPREME COURT REPORTS [2014] 2 S.C.R.
A question has been dealt with by my esteemed Brother most
comprehensively.
2. 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
B favour by Smt. Nirmal Verma (the wife of the Judgment Debtor
Shri Prem Chand Verma), this legal infirmity would inexorably
invalidate the title of Smt. Nirmal Verma herself, thereby
denuding any titular claim of her husband, the Judgment Debtor,
and rendering the property impervious to the subject execution
C proceedings. Additionally, there is not even a semblance of a
right in favour of the Judgment Debtor whose wife was not even
impleaded in the suit or in the execution. The impugned
judgment notes this contention but fails to address it. The
evidence of the Decree Holder has not been filed and therefore
0 the judicial records were summoned from the High Court.
3. The Statement of the Respondent/Decree Holder reads
tl:lus:-
"Ex. No. 224/2009
E
DHW-1: Sh.Lalta Prasad, S/o Sh. Naubat Ram, aged 58
years, R/o 1908, Gali Mata Wali, Chandni Chowk, Delhi-
6. .
ON S.A.
F
I, hereby, tender my affidavit in my evidence. The same_be
read as part and parcel of my statement. My affidavit is
Ex. DHW-1/A(running in 2 pages) which bears my
signatures at point A and B on page 1 & 2.
G XXXXXX by Sh. Pradeep Chaudhary Adv. for objector.
I have passed 11th standard. The affidavit Ex. DHW-1/A
was prepared in the office of my counsel. My counsel has
explained me contents of the same to me before I signed
the same. Whatever I stated to my counsel was
H
MAYA DEVI v. LALTA PRASAD 1145
[VIKRAMAJIT SEN, J.]
incorporated in Ex. DHW-1/A. The Agreement with Prem A
Chand Verma was entered on 11.11.2003. I had seen
original documents of the property at that time in
possession of Prem Chand Verma. He also gave me
some copies of the same.
Remaining cross-examination of the witness is deferred B
till 12.00 P.M.
RO&AC
BRIJESH KUMAR GARG C
ADJ CENTRAL-18
DELHI/ 29.01.10
DHW-1: Sh.Lalta Prasad, recalled for his further cross-
examination at 12.50 P.M.
D
ON S.A.
XXXXXX by Sh. Pradeep Chaudhary Adv. for objector.
I have no knowledge that Smt. Maya Devi had
purchased the suit property from Smt. Nirmal Verma. The E
documents filed by the objectors are forged and fabricated
documents. I have no knowledge that Smt. Nirmal Verma
purchased the suit property from one Sh. Rajender Kumar.
Sh. Prem Chand Verma was my friend for the last
about 30 years. It is correct that Sh. Prem Chand Verma F
had already expired on 7.10.2008. It is wrong to suggest
that Sh. Rajender Kumar was the owner of the property and
he sold the property to Nirmal Verma from whom Smt.
Maya Devi purchased the suit property. It is wrong to
suggest that Sh. Prem Chand Verma was never the owner G
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.
H
1146 SUPREME COURT REPORTS [2014] 2 S.C.R.
A RO&AC
BRIJESH KUMAR GARG
ADJ CENTRAL-18
DELHI/ 29.01.1 O"
B It discloses that the Decree Holder has failed altogether to
disprove the title of the Appellant, and he has maintained that
the DefendanUJudgment Debtor was the owner, which is
admittedly not the actual legal position. If the Decree Holder has
been defrauded by the DefendanUJudgment Debtor, largely
c 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.
D
4. 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
E Respondent, which is a perverse approach for reasons that
shall be presently explained. The documents purportedly in
favour of the RespondenUDecree Holder are unregistered and
the alleged payment made by him to Shri Prem Chand Verma
is in cash. Therefore, there is no justification for favouring the
view that the alleged transaction between Shri Prem Chand
F
Verma and the RespondenUDecree Holder was genuinely prior
in time to the execution of the registered Power of Attorney in
favour of the Appellant Smt. Maya Devi by Smt. Nirmal Verma,
and the former simultaneously and contemporaneously was put
into possession of the property by the latter.
G
5. There can be no gainsaying that when the probative
value of documents is to be assessed, specially those dealing
with the creation of any interest in property or its transfer, of a
value exceeding Rs.100/-, obviously documents which have
H been duly registered regardless of whether or not that was
MAYA DEVI v. LALTA PRASAD 1147
[VIKRAMAJIT SEN, J.]
legally mandatory, would score over others. A perusal of the A
judgment shows that whether the sum of Rs.1,70,000/- allegedly
paid by the Plaintiff in Suit No.407 of 2007, namely, Shri Lalta
.. Prasad to Shri Prem Chand Verma was in cash or through a
traceable Bank transaction or through a registered
acknowledgment has not been cogitated upon. Proof of B
payment by the Plaintiff to the Defendant/husband of the
previous owner of the property has not been adjudicated upon.
It is not controverted that the Appellant Smt. Maya Devi has
been in possession of the property in question from May, 2006.
A reading of the judgment by which the Suit was decreed for a
sum of Rs.3,40,000/- does not shed any light on the C
circumstances which made the Plaintiff wait to initiate legal
action till after the property was sold and its possession
delivered to the Appellant. I, therefore, disbelieve the
genuineness of the so-called "Deed of Agreement for Earnest
Money" allegedly executed almost three years earlier on D
03.11.2003. And, I would rather discount the veracity of the
document dated 3.11.2003, then looking upon the Power of
Attorney and other documents executed in favour of the
Appellant Smt. Maya Devi by Smt. Nirmal Verma as mala fide.
What is important is that it is not disputed that the title and E .·
possession of the property which has been brought within the
sweep of the execution proceedings, was never held in any
capacity by the Defendant/Shri Prem Chand Verma, but by his
wife, Smt. Nirmal 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 F
Holder/Respondent and Smt. Nirmal Verma.
6. The Trial Court had framed the following issues in Suit
No.407/2007, from which subject of proceedings emanates:
G
"(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
H
1148 SUPREME COURT REPORTS 1[2014J-Z-S."G:R..
A (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
B 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
C determine that they are not in the nature of a penalfy, but rather
as a fair pre-estimate of what the damages are likely to arise
in case of breach of the contract. No evidence whatsoever has
been led by the Plaintiff to prove that the claim for twice the
amount of earnest money was a fair measure or pre-estimate
0 of damages. ·
7., The pronouncements of the Constitution Bench in Sir
Chunilal V. Mehta & Sons Ltd. vs Century Spinning and
Manufacturing Co. Ltd. AIR 1962 SC 1314, and later in ..Fateh
Chand vs Balkishan Dass AIR 1963 SC 1405, hold the. field,
1
E making it unnecessary to refer to any other precedent for an
enunciation of the law, except to appreciate the manner in which
the opinion of the Constitution Benches have been appfjed to
the factual matrix in later cases. With the number and volume
ofprecedents increasing exponentially each year, reference to
F all decisions make arguments excruciatingly lengthy and
judgments avoidably prolix. The first important judgment of this
Court on the question of Sections 73 and 74 of the Contract
Act is that of the Constitution Bench in Chunilal V. Mehta. The
two significant issues which arose were firstly, as to what would
G constitute a substantial question of law requiring the grant by
the High Court of a Certificate to appeal to this Court, and
secondly, the quantum of damages that can be awarded in that
case owing to the breach of the subject contract. It is the
second question which is relevant for the present purposes. The
admitted position was that the contract had been wrongfully
H
MAYA DEVI v. LALTA ·PRASAD 1149
[VIKRAMAJIT SEN, J.]
breached by the Defendant. A clause in the compact between A
the parties stipulated that in these circumstances, the Plaintiff
would be entitled to receive from the Defendant "as
compensation or liquidated damages for the loss of such
appointment a sum equal to the aggregate amount of the
monthly salary of not less than Rs.6000/- which the Firm would B
have been entitled to receive from the Company, for and during
the whole of the then unexpired portion of the said period of
21 years if the said Agency of the Firm had not been
determined." The Plaintiff had initially claimed a sum of Rs.50
Lakhs which was subsequently reduced by way of amendment
of the plaint to Rs.28,26,804/-. The Constitution Bench opined C
that "when parties name a sum of money to be paid as
liquidated damages they must be deemed to exclude the right
to claim an unascertained sum of money as damages .....
Again the right to claim liquidated damages is enforceable
under S. 74 of the Contract Act and where such a right is found D
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 E .
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 F
maximum and upper limit of damages awardable by the Trial
Court.
8. The judgment of the Gonstitution 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 G
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 nature of a H
11 ~O SUPREME COURT REPORTS [2014] 2 S.C.R.
A penalty or in terrorem did not arise in Chunilal V. Mehta, It did
so in Fateh Chand where the complaint was that the Plaintiff, ·
namely, Fateh Chand had agreed to sell an immovable property
for Rs.1, 12,500/- of which Rs.1000/- had been received/paid
as earnest money. The Agreement envisaged payment of a
further sum of Rs.24,000/- and it stipulated that if the vendee
8
failed to get the Sale Deed registered thereafter, then the sum
received i.e. Rs.25,000/- would stand forfeited. Fateh Chand
alleging a breach of the Agreement, sought to forfeit the sum
..
of Rs.25,000/- which was found to be impermissible in law. It
was in those circumstances that the Constitution Bench opined
C as follows:
"10. Section 74 of the Indian Contract Act deals with the
measure of damages in two classes of cases (i) where the
contract names a sum to be paid in case of breach and
D (ii) where the contract contains any other stipulation by way
of penalty. We are in the present case not concerned to
decide whether a contract containing a covenant of
forfeiture of deposit for due performance of a contract falls
within the first class. The measure of damages in the case
of breach of a stipulation by way of penalty is by S. 74
E reasonable compensation not exceeding the penalty
stipulated for. In assessing damages the Court has, subject
to the limit of the penalty stipulated, jurisdiction to award
such compensation as it deems reasonable having regard
to all the circumstances of tile case. Jurisdiction of the
F Court to award compensation in case of breach of contract
is unqualified except as to the maximum stipulated; but
compensation has to be reasonable, and that imposes
upon the Court duty to award compensation according to
settled principles. The section undoubtedly says that the
G aggrieved party is entitled to receive compensation from
the party who has broken the contract whether or not actual
damage or loss is proved to have been caused by the
breach. Thereby it merely dispenses with proof of "actual -
loss or damage"; it does not justify the award of
compensation when in consequence of lhe breach no
H
MAYA DEVI v. LALTA PRASAD 1151
[VIKRAMAJIT SEN, J.]
legal injury at all has resulted because compensation for A
breach of contract can be awarded to make good loss or
damage which naturally arose in the usual course of things,
or which the parties knew when they made the contract,
to be likely to result from the breach.
11. Before turning to the question about the compensation B
which may be awarded to the plaintiff, it is necessary to
consider whether S. 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 C
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 S. 74 applies only to cases
where the aggrieved party is seeking to receive some o
amount on breach of contract and not tq 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 appl!es to every covenant
involving a penalty whether it isior payment on breach of E
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 Courts by S. 74. In all cases, therefore, where there F
is a stipulation in the nature of penalty for forfeiture of an
amount deposited pursuant to the terms of contract which
expressly provides for forfeiture, the Court has jurisdiction
to award such sum only as it considers reasonable, but not
exceeding the amount specified in the contract as liable G
to forfeiture."
After reading the entire evidence that had been recorded, the
Constitution Bench found that the value of the property had not
depreciated and, therefore, no damages could be awarded.
H
'
1152 SUPREME COURT REPORTS [2014) 2 S.C.R.
A 9. This is also the manner in which this facet of the law has
been enunciated in England, as is evident from the following
passage from Halsbury's Laws of England (4th edn Reissue,
1998) Vol 12(1), para 1065 which reads as follows:-
"1065. Liquidated damages distinguished from penalties.-
B The parties to a contract may agree at the time of
contracting that, in the event of a breach, the'party in default
shall pay a stipulated sum of money to the other. If this sum
is a genuine pre-estimate of the loss which is likely to flow
from the breach, then it represents the agreed damages,
c called 'liquidated damages', and it is recoverable without
the necessity of proving the actual loss suffered. If, however,
the stipulated sum is not a genuine pre-estimate of the loss
but is in the nature of a penalty intended to secure
performance of the contract, then it is not recoverable, and
D the plaintiff must prove what damages he can. The
operation of the rule against penalties does not depend
on the discretion of the court, or on improRer conduct, or
on circumstances of disadvantage or ascendancy, or on
the general character or relationship of the parties. The rule
is one of public policy and appears to be sui generis. Its
E absolute nature inclines the courts to invoke the jurisdiction
sparingly. The bu~en of proving that a payment obligation
is penal rests on the party who is sued on the obligation".
10. The position that obtains in the United. States, obviously
F because of its Common Law origins and adherence, is
essentially identical as is evident from these extracted
paragraphs of Corpus Juris Secundum, Volume 25A (2012)~
192- Liquidated damages are a specific sum stipulated
to and agreed upon by the parties in advance or when they
G enter into a contract to be paid to compensate for injuries
in the event of a breach or nonperformance of the contract.
196-ln examining whether a liquidated-damages provision
is enforceable, courts consider whether the damages
stemming from a breach are difficult or impossible to
H estimate or calculate when the contract was entered and
MAYA DEVI v. LALTA PRASAD 1153
[VIKRAMAJIT SEN, J.]
whether the amount stipulated bears a reasonable relation A
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
8
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 contractis contrary to public policy and invalid. This
position also finds elucidation in the following paragraph
from American Restatement (Second) of Contracts 1981 :- C
"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 D
actual loss caused by the breach and the difficulties
of proof or loss. A term fixing unreasonably large
liquidated damages is unenforceable on grounds
of public policy as a penalty."
E
11. Returning to the facts of the present case, the so called
Deed of Agreement for Earnest Money inasmuch as it
postulates the payment of twice the sum received ought not to
have been decreed as firstly, the contract itself could not have
been specifically enforced since the Defendant was devoid of F
title; and secondly, the Plaintiff had not proved that he had
suffered any damages and facially the stipulated sum was in
the nature of a penalty.
12. In Phulchand Exports Limited Vs 0. 0. 0. Patriot
2011 (1 O)SCC 300, the Appellant (Seller) entered into a G
contract with the Respondent (Buyer) relating to the sale/
purchase of 1000 MT of Indian polished rice for a total
consideration of INR 12,450,000/-. The Seller loaded the rice
16 days late and the Vessel freighted by the Sellers left port
(Kandla) 38 days later than the contractually stipulated time of H
1154 SUPREME COURT REPORTS [2014] 2 S.C.R.
A departure. The specified destination, the port of Novorossiysk,
Russia, was to be the first port of discharge, and even in this
regard there is a finding that the Vessel on which the shipment
had been consigned was not sailing directly to the said port,
leave aside Novorossiysk being its first port of call. The ship
B suffered an engine failure which resulted in its requiring salvage
operations near Turkey, and the entire cargo on board,
including the subject consignment of rice was sold pursuant to
Admiralty proceedings to compensate the cost of the rescue
of the Vessel. The Insurance Company maintained that the lien
of the cargo to compensate the costs of the rescue of the
C Vessel was not covered in the policy. Arbitration proceedings
under the aegis of the International Court of Commercial
Arbitration at the Chamber of Commerce and Industry of the
Russian Federation culminated in the passing of an Award
which directed the sharing of the price of the rice consignment
D equally between the parties. In the Award it has been opined
that the Buyer had failed to forward the shipping documents and
the Insurance Certificate to the Seller and thus was equally
blameworthy. The defence of the Seller was that the goods had
passed to the Buyer, who had already paid the entire sale price
E on negotiation of documents by the Seller with the concerned
Bank. This Court held that despite the fact that it was 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,
F 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
G 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
H is not legally recoverable in India and therefore the Award was
MAYA DEVI v. LALTA PRASAD 1155
[VIKRAMAJIT SEN, J.]
impervious to jural interference as it was not against the public A
policy of India even in terms of the interpretation given in ONGC
Ltd. vs Saw Pipes Ltd. (2003) 5 SCC 705.
13. After recording that the opinion of the two Constitution
Benches still hold the field, I have nevertheless mentioned
Phulchand Exports only for adverting/clarifying that views of this B
Court have remained constant till now. I must immediately clarify
that it would require a Bench larger than a Five-Judge Bench
to alter the legal position from what has been enunciated in
Chunilal V. Mehta and Fateh Chand. The decisions of smaller
Benches are relevant only for the purpose of analysing the C
verdict in a part!cular case on the predication of the elucidation
of the law laid down by the Constitution Benches. This would
include an oft-quoted decision in Mau/a Bux vs Union of India,
1969(2)SCC 554, as well as UOI vs Raman Iron Foundry,
1974(2)SCC 231, and BSNL vs Reliance Communication Ltd., D
2011 (1) sec 394, etc.
14. Now I come to the next aspect of the case. The
Execution proceedings were initiated by the RespondenU
Decree holder on 27.10.2007 under Order XXI Rule 11 of the
Code of Civil Procedure ('CPC' hereinafter). It transpired that E
Attachment Orders came to be passed. The application dated
3.7.2008, being Objections under Order XXI Rule 58read. with
Section 151 CPC was preferred by the Appellant Smt. Maya
Devi pleading, inter alia, that the Decree Holder had wrongly
scheduled her property in the Execution Application; that she F
was the absolute and real owner thereof having purchased it
on 12.05.2006 from Smt. Nirmal Verma, wife of Prem Chand
Verma (Judgment Debtor); that she has no other connection
or concern with the Judgment Debtor or with his wife in any
manner whatsoever. The Appellant, therefore, respectfully G
·. , prayed that her aforesaid property may kindly be released from
/
the Schedule. Plaintiff/Decree Holder Shri Lalta Prasad,
Respondent before us, countered by pleading that the
Objections had been filed at the behest of the Judgment Debtor
to avoid the satisfaction of the decree; that the AppellanU
H
1156 SUPREME COURT REPORTS [2014] 2 S.C.R.
A Objector was not the absolute and real owner of the suit
property; that the duly registered General Power of Attorney
executed by Smt. Nirmal Verma was forged and fabricated; that
Smt. Nirmal Verma was none else than the wife of the
Judgment Debtor. The Appellant has supported her stance by
filing her own affidavit. In the Execution proceedings, the
8
Plaintiff/Decree Holder/Respondent in cross-·examination of the
Appellant has only suggested that the documents were
fabricated in collusion 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
C 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
D predecessor-in- title, thereby placing the property beyond the
pale of the Execution proceedings.
15. The following issues were framed in the Execution
proceedings:-
E (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
F
are executable against the objector Smt. Maya
Devi?
OP DH."
G 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, Affidavit, Receipt,
H Possession Letter, Will Deed, which were duly notorised on
MAYA DEVI v. LALTA PRASAD 1157
[VIKRAMAJIT SEN, J.]
12.05.2006. She further stated that she had purchased the A
property from Shri Rajinder Parshad by means ·of similar
documentation all of which were handed over by her to Smt.
Maya Devi at the time of selling of the said property. Very
significantly, she stated that her husband Prem Chand Verma/
Judgment Debtor had expired on 8.10.2008. 8
16. In this backdrop, it needs to be kept in prospective that
Order XXI Rule 97 to Rule 101 of CPC envisage the
determination of all questions in Execution proceedings and not
by way of an independent suit. The Executing Court, therefore,
was duty bound to consider and decide the Objections filed by C
the Appellant with complete care and circumspection. I regret
to record that this has not been done. The Objections came to
be dismissed on 23.7.2010 with brevity bordering on dereliction
of duty, in the following manner:-
" .... It has been submitted by the counsel for the D
objector that the applicant is the absolute owner of the suit
property by virtue of General Power of Attorney which was
registered on 12.5.2006 and she is in actual physical
possession of the suit property but the counsel for the DH
has stated that the objector has no legal right, title or E
interest as the execution of the General Power of Attorney
and its registration does not confer any ownership right in
favour of the applicant/objector. The counsel for DH has
also relied upon the judgment of the Hon'ble Supreme
Court in case titled as Suraj Lamp and Industries Private F
Limited Vs State of Haryana and Another reported as
(2009) 7 Supreme Court Cases 363."
17. A perusal of the above will show that the Executing
Court ignored and overlooked the important submission of the
Appellant stating that she was the absolute owner of the suit G
property and that she had no truck whatsoever either with the
Judgment Debtor Shri Prem Chand Verma or his wife Smt.
Nirmal Verma beyond purchasing the subject property from the
latter. What has also escaped the attention of the Court is that
Suraj Lamp has prospective operation, thereby rendering it H
1158 SUPREME COURT REPORTS [2014] 2 S.C.R.
A inapplicable to the subject 2006 transaction. Secondly, if the
General Power of Attorney in favour of the Appellant Smt. Maya
Devi was bereft of legal efficacy, the ownership of Smt. Nirmal
Verma would also be invalid, and sequentially the property
would have no connection whatsoever with the Judgment Debtor
since he had purportedly derived· title only through a Will.
8
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
C 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
D place on an un-substantiated 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 CPC.
18. Finally another aspect which has come to the fore, is
E 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 Defendant Shri Prem Chand Verma,
(his wife Smt. Nirmal Verma was not impleaded) had appeared
in the Trial Court and fifed his Written Statement in which, whilst
F admitting the documentation executed between the parties, he
had denied that he had been served with any legal notice and
set up the defence that he was entitled to forfeit the amount
received by him because the Plaintiff/Decree Holder had failed
to pay the balance sale consideration as envisaged in the Deed
G of Agreement for Earnest Money. After filing his Written
Statement he stopped appearing, and the suit proceeded ex-
parte. Significantly, the Deed of Agreement for Earnest Money
as well as the Written Statement predicate Defendant's title on
a Will, and in this context there is no evidence on record that it
had taken effect because of the death of the Testator. In the
H
MAYA DEVI v. LALTA PRASAD 1159
[VIKRAMAJIT SEN, J.]
event, as is to be expected, no appeal against the judgment A ·
and decree came to be filed, and, therefore, the decision was
not tested before or scrutinized by the Appellate Court. The
absence of the Defendant does not absolve the Trial Court from
fully satisfying itself of the factual and legal veracity of the
Plaintiffs claim; nay, this feature of the litigation casts a greater
8
responsibility and onerous obligation on the Trial Court as well
as the Executing Court to be fully satisfied that the claim has
been proved and substantiated to the hilt by the Plaintiff.
Reference to Shanti/al Gu/abchand Mutha vs Tata
Engineering and Locomotive Company Limited, (2013) 4
SCC 396, will be sufficient. The failure to file a Written C
Statement, thereby bringing Order VI 11 Rule 10 of the CPC into
operation, or the factum of Defendant having been set ex parte,
does not invite a punishment in the form of an automatic decree.
Both under Order VIII Rule 10 CPC and on the invocation of
Order IX of the CPC, the Court is nevertheless duty-bound to D
diligently ensure that the plaint stands proved and the prayers
therein are worthy of being granted.
19. I am fully mindful of the fact that the Appellant has not
taken any steps for setting aside the ex parte decree against E
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 F
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 G
CPC 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 H
1160 SUPREME COURT REPORTS [2014] 2 S.C.R.
A 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
8
upon under rule 98 or rule 100, the order made thereon shall
have the same force and be subject to the same conditions as
to an appeal or otherwise, as if it were a decree. I shall only
advert to the decisions of this Court in Brahmdeo Chaudhary
vs Rishikesh Prasad Jaiswal, (1997) 3 SCC 694, Shreenath
C vs Rajesh, (1998) 4 SCC 543, and Tanzeem-e-sufia vs Bibi
Haliman, (2002) 7 sec 50, where proceedings were under
the aforesaid fasciculus of Order XXI comprising Rules 97 to
104, in which the Objectors had set up a.title distinct or different
from that of the Judgment Debtor and the Court had protected
D their interest. The Appellant before us is a third party and has
been brought into the lis by a side wind in that her property is
sought to be attached with the intention of satisfying a decree
in which she was not directly or intrinsically concerned.
The Appellant/Objector who has approached the Court
E under Order XXI Rule 58 is more advantageously or favourably
placed inasmuch as she is a third party so far as the decree is
concerned, and her property is not the subject-matter of the
decree. It is thus clear to me that the Courts below have in a
hurried, if not prejudiced manner, rejected the Objections merely
F because of some sympathy. towards the Decree Holder. The
Objections deserved to be allowed without disturbing the
decree, leaving all other remedies open to the Decree Holder/
Respondent, including proceedings against the Estate of the
Judgment Debtor.
G
20. I respectfully agree with my learned Brother that the
Appeal deserves to be allowed and the impugned orders
require to be set aside.
D.G. Appeal allowed.
H
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