SUPREME COURT HOLDS THAT IN CASE OF CONFLICTING CLAUSES OF A DEED, THE EARLIER CLAUSE TAKES PRECEDENCE OVER THE LATTER

A two-Judge Bench of the Supreme Court comprising of Justice Vikram Nath and Ahsanuddin Amanullah passed a Judgement dated 31-01-2024 in the matter of Bharat Sher Singh Kalsia vs. State of Bihar & Anr. Criminal Appeal No. 523 / 2024 and held that if a deed contains clauses that contradict each other and the latter clause completely cancels out the obligation created by the earlier clause, then the latter clause is considered invalid or “repugnant” to the earlier clause. In such cases, the earlier clause is considered to prevail over the latter clause.

FACTS:

i) That the aforesaid Appeal filed before the Supreme Court by one, Bharat Sher Singh Kalsia (Appellant) against the State of Bihar and one Maharaj Kumar Man Vijay Singh (Respondents), challenged the Order of the Hon’ble High Court of Judicature at Patna, (High Court) which dismissed the prayer for quashing the First Information Report (FIR) 87 of 2011, dated 19.03.2011 that was registered at Dumraon Police Station, Buxar, Bihar, under Sections 467 of the Indian Penal Code (IPC),1860 (Forgery of valuable security, will, etc), 468 IPC (Forgery for purpose of cheating), 469 (Forgery for purpose of harming reputation) and 471 IPC (Using as genuine a forged document or electronic record).

ii) That the Respondent No. 2, also known as Man Vijay Singh, took the initiative to approach the Station House Officer at Dumraon Police Station and submitted a comprehensive written statement. The essence of the statement revolved around serious allegations against one, Raj Kumar Karan Vijay Singh, the son of Group Captain Late Maharaj Kumar Ran Vijay Singh. According to the Respondent No. 2, Raj Kumar Karan Vijay Singh had engaged in the sale of properties that rightfully belonged to five individuals from the Informant’s family, including Man Vijay Singh himself.

iii) The crux of the matter lay in a Power of Attorney (PoA) that had been executed on 12.04.1994. The Informant, along with his family members, which included Maharaja Kamal Singh’s sons, Maharaj Kumar Man Vijay Singh and Kumar Chandra Vijay Singh, Smt. Sangeeta Kumari, Indumati, Ran Vijay Singh (the Informant’s father’s sister), and the Informant’s father’s sisters and aunt, had granted this PoA to Raj Kumar Karan Vijay Singh. This PoA bestowed upon Raj Kumar Karan Vijay Singh the responsibility of managing and maintaining their extensive property portfolio, encompassing specific Khasras (plots of land) in Village Karbari Grant, Tehsil Vikasnagar, Pargana Pachwain, District Dehradun, namely Khasras No.459G, 472, 474, 475, 476, and 478B, along with Khasra No.459E.

iv) The PoA explicitly stipulated that the PoA Holder, in this case, Raj Kumar Karan Vijay Singh, was authorized to pursue legal actions, including initiating litigation and filing plaints after obtaining the required signatures from the landowners/principals of the PoA. Further, the Informant alleged that a portion of the aforementioned property had been sold to the present Appellant without proper authorization or consent.

v) Thereafter, the Informant sent a Legal Notice to the PoA Holder, Raj Kumar Karan Vijay Singh. In the said Notice, he demanded that Raj Kumar Karan Vijay Singh provide detailed information about the sale that he had made in collaboration with the Appellant. The Notice also called for the revocation of the Power of Attorney. However, Raj Kumar Karan Vijay Singh did not respond to the Legal Notice or provide any information, which made the situation worse.

vi) Consequently, a criminal case was initiated, implicating the Accused, including the Appellant, in various criminal acts. These acts included the misuse of the Power of Attorney, misappropriation of property, failure to provide an account of transactions, and the execution of a fraudulent Sale Deed without obtaining the necessary signatures from the landowners/principals of the PoA-Holder.

vii) Following an investigation, the Police submitted a final report identifying offences under Sections 409 IPC (criminal breach of trust by a public servant, banker, merchant, or agent), 467 IPC, 468 IPC, 471 IPC, and 420 IPC (cheating and dishonestly inducing delivery of property). The Ld. Chief Judicial Magistrate, Buxar (Trial Court), took cognizance of these offences on 18.11.2014, in GR No.515 of 2011.

viii) During the legal proceedings, specifically during the pendency of Criminal Miscellaneous No.42776 of 2013 in the High Court, the Appellant originally filed for quashing the First Information Report (FIR) and further, filed Interlocutory Application No.1261 of 2017, seeking an amendment of the prayer to include the quashing of the Trial Court Order dated 18.11.2014. This step added another layer of complexity to the ongoing legal dispute.

HIGH COURT

The High Court, vide Order dated 12.03.2021, dismissed the prayer for quashing the FIR No. 87 of 2011, dated 19.03.2011 that was registered at Dumraon Police Station, Buxar, Bihar, under Sections 467 IPC, (Forgery of valuable security, will, etc), 468 IPC (Forgery for purpose of cheating), 469 (Forgery for purpose of harming reputation) and 471 IPC (Using as genuine a forged document or electronic record)..

SUPREME COURT

Aggrieved by the Order dated 12.03.2021 of the High Court, the Appellant filed Criminal Appeal No. 523 / 2024 before the Hon’ble Supreme Court, which was registered on 31.01.2024. The Apex Court, vide Order dated 31.01.2024, made the following observations:

ISSUES

I) The primary issue before the Supreme Court is the interpretation and application of a Power of Attorney (PoA) executed on 12.04.1994, by landowners/principals, including Respondent No.2 and others. The case revolves around the subsequent sale of property by the PoA-Holder to the Appellant on 24.08.2000, and the registration of the Sale Deed in Dehradun. The central question is the proper understanding of specific clauses in the PoA, particularly Clauses 3, 11, and 15.

II) Whether the actions of the PoA-Holder and the subsequent legal proceedings against the Appellant are justified in light of these clauses.

OBSERVATIONS

1) The Bench has acknowledged that there is a strong case for interference. The undisputed facts, as highlighted by the Supreme Court, revolved around the execution of the Power of Attorney (PoA) on 12.04.1994, by the landowners/principals, including Respondent No.2. The subsequent execution and registration of a Sale Deed by the PoA-Holder in favour of the Appellant on 24.08.2000, in Dehradun, were crucial aspects of the case.

2) The Apex Court focused on interpreting specific clauses within the PoA, particularly Clauses 3, 11, and 15. Clause 3 granted the PoA-Holder authority to execute any type of deed, receive consideration, and undertake registration on behalf of the landowners/principals. Similarly, Clause 11 provided authorization for the PoA-Holder to sell movable or immovable property, including land, and receive payment on behalf of the landowners/principals. Clause 15, according to the Supreme Court’s understanding, allowed the PoA-Holder to present sale deeds or other documents for registration. The Bench observed that there was no contradiction or conflict amongst the said three Clauses of the PoA and that all three clauses could be construed to operate effectively without rendering any of them redundant. Thus, the PoA Holder was well authorised to execute the sale deed with the Appellant.

3) Further, if at all there is any conflict between Clauses 3 and 11 of PoA on one hand and Clause 15 on the other hand, the Court will take a holistic approach to harmonize these Clauses i.e. Clauses 3 and 11 would prevail over Clause 15, in adherence to the principal that earlier clauses prevail over latter ones, when reconciliation is not possible.

4) The Bench carefully considered the jurisdictional aspect in the case which primarily concerned a Sale Deed executed in Dehradun for property located thereat. The Bench emphasized that this specific issue should be examined by the Courts in Dehradun and not in Buxar, where the criminal case was instituted, as it did not give rise to any cause of action in Buxar.

5) Subsequently, the Apex Court observed that the criminal proceedings against the Appellant were unwarranted. Therefore, the Impugned Judgment was set aside, and the FIR, order taking cognizance, and consequential acts related to the Appellant were quashed. The Supreme Court allowed the Trial Court discretion under Section 319 of the Code of Criminal Procedure, 1973 (Cr.P.C) (Power to proceed against other persons appearing to be guilty of an offence) but inserted a caveat that it should act in accordance with the law.

6) Further, the Apex Court underscored the limited role of the Appellant, who had no involvement in the PoA’s execution or any misdeeds by the PoA-Holder. The Bench also noted that the entire consideration amount had been paid by the Appellant to the PoA-Holder.

CONCLUSION

Based on the aforementioned observations, the Supreme Court carefully considered the case, and highlighted the crucial facts, emphasizing upon the execution of the Power of Attorney (PoA) on 12.04.1994, by the landowners/principals, including Respondent No.2. Consequently, through a meticulous interpretation of Clauses 3, 11, and 15 of the PoA, the Court observed that there was no contradiction in the said Clauses, as they all provided authority to the POA Holder to execute the sale deed on behalf of the Principal.

Further, the Apex Court allowed the Trial Court discretion under Section 319 of the CR.P.C and stressed that the dispute primarily centred around the Sale Deed executed in Dehradun, necessitating examination by Dehradun Courts. Considering the criminal proceedings against the Appellant unwarranted, the Supreme Court set aside the Impugned Judgment of the High Court dated 12.03.2021, thereby, quashing the FIR and the Trial Court Order dated 18.11.2014.

Hence, the Apex Court has allowed the Appeal due to the limited role of the Appellant, the absence of involvement in the execution of PoA or any wrongdoing, and the dismissal of a previous lawsuit in Dehradun.

 

Sakshi Raghuvanshi

Legal Associate

The Indian Lawyer