Agent Acted Prejudicial To Interests Of Principal: Punjab & Haryana High Court Upholds Setting Aside Of Sale Deeds

The Punjab and Haryana High Court upheld the setting aside of sale deed executed by an agent on the basis of a General Power of Attorney (GPA) after it found that the agent acted prejudicial to the interests of the principal.

The Single Bench of Justice Vikram Aggarwal observed, "...defendant No.1, being an agent of the plaintiff, acted prejudicial to the interests of the plaintiff, and the plaintiff was, therefore, duly entitled to repudiate this act keeping in view the provisions of Section 215 of the Indian Contract Act, 1872."

Facts of the Case

The case stemmed from a complex ownership dispute over land measuring 49 kanals and 10 marlas, which included two parcels located in the revenue estates of Village Bhumal and Village Jandi, both in Tehsil Jagraon, District Ludhiana. The original plaintiff, Kuldip Singh, a resident of the United States, claimed joint ownership of this land and alleged that his brother-in-law, defendant No. 1 Balwinder Singh, misused a general power of attorney executed in his favor on June 19, 2001.

Kuldip Singh alleged that Balwinder Singh alienated significant portions of the disputed land to Avtar Singh, a relative, without authorization or legitimate consideration.

Court's Observation

The Court observed, “It cannot be held that the said power of attorney had been executed only for general maintenance of the disputed lands,” emphasizing the need to interpret powers of attorney strictly. The Court further reiterated, “The dominant purpose was, therefore, management of the property,” underscoring that any sale needed to be necessary for this management and could not simply be an act of alienation for profit.

Witness evidence was pivotal in the case, and the court noted the absence of the plaintiff in witness testimony, which was argued by the defense as a weakness in the plaintiff's case. However, the testimony of the plaintiff’s wife, Amarjit Kaur, who served as a power of attorney holder, was accepted as competent under the provisions of Section 120 of the Indian Evidence Act, 1872. The Court stated, “Once his wife stepped into the witness box, it cannot be said that the plaintiff was remiss in pursuing his case.”

The core of this case revolved around the legitimacy of the transactions executed under the power of attorney. The appellant, Nirmal Singh, who ultimately purchased a portion of the land from Avtar Singh, contended that the sale deeds executed were valid and a presumption of legitimacy must be attached to registered documents.

However, Senior Advocate Amit Jain, appearing for Respondent, highlighted that the transactions conducted by Balwinder Singh appeared suspicious and fraudulent. The Court remarked, “Nothing else would explain the alienation of the suit land by defendant No. 1 in favor of his own brother-in-law, who in turn further sold a part of the land to the brother of the plaintiff with whom the plaintiff already had a dispute.”

Adding complexity to the matter, Sukhmander Singh, a subsequent purchaser of the land, sought to be impleaded as party appellant in the case. However, the High Court dismissed this application on grounds that Sukhmander Singh was neither a necessary nor a proper party since Kuldip Singh's original transactions already encompassed the conflicting interests.

The Court stated, “The application finding no merit in the application, the same is dismissed,” closing the door on further complicating the proceedings.

Ultimately, the Court reaffirmed the first appellate court's decision, maintaining that the invalidation of the transactions arising from the misuse of the authority granted under the power of attorney rendered any transfer of ownership questionable. The Single Bench stated, “Looking from any angle, the sales appear to be suspicious and fraudulent,” highlighting the importance of scrutinizing the actions of power of attorney holders. He indicated that courts must protect the rights of property owners against misappropriation.

Cause Title: Nirmal Singh Sehmbey v. Kuldip Singh and others [Neutral Citation No. 2025:PHHC:043588]

Appearance:-

Appellant: Advocate Onkar Singh

Respondent: Senior Advocate Amit Jain, Advocates Anupam Mathur, ADS Jattana, Mandeep Singh Gill

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