2015 PLP 615 (SCMR)

JAWWAD S. KHAWAJA, J.

We have heard this case at length and have also gone through the record and the impugned judgment with the assistance of learned counsel for both sides.

2. This case arises from proceedings in an application under section 12(2), C.P.C. filed before the learned Additional District Judge, Jhelum by the appellant. In order to appreciate the points involved in the case it is necessary to set out the background leading to the filing of the present appeal. The respondent/plaintiff filed a suit for pre-emption against the present appellant on 23-2-1998. The said suit was dismissed on the ground that the respondent had failed to fulfil the requirements of section 13 of the Punjab Pre-emption Act relating to Talbs. Feeling aggrieved the respondent filed an appeal which was heard by the learned District Judge, Jhelum and the same was allowed on 17-1-2001 on the basis of a purported compromise.

3. Although the record of the case is extensive, the relevant facts for disposal of the appeal are relatively simple. The above referred compromise was recorded by the learned Appellate Court on the basis of a statement made by one Ghazanfar who happens to be the behnoi of the appellant Raja Muhammad Arshad. It is the case of the respondent that the said Ghazanfar was a duly authorized attorney of the appellants and was fully authorized to make the statement which he did, on the basis of which the appeal of the respondent was accepted and his pre-emption suit, as a consequence, was decreed.

4. Slightly more than one month after the compromise decree dated 17-1-2001 the appellant filed an application under section 12(2), C.P.C. on 19-2-2001. According to this application, the relevant contents of which will be considered shortly, the appellant alleged that the compromise dated 17-1-2001 was invalid because Ghazanfar had no authority to make a statement binding the appellant.

5. Two main points have arisen which were emphasized by the learned counsel for the appellant in support of his case. The appellant did not deny that a registered power-of-attorney Exh.A/7 was indeed executed by him in favour of Ghazanfar on 15-10-1995. His case, however, was that the said power-of-attorney was cancelled on 4-2-1998 vide Exh.A/1. The said cancellation is neither registered nor is it on stamp paper. In fact the document Exh.A/1 is on a plain piece of paper.

6. Based on the above, learned counsel for the appellant argued firstly that the power-of-attorney although registered under the Registration Act could have been cancelled through writing on a plain piece of paper. We are afraid this contention is misconceived. We have examined the two cases titled Raza Munir and another v. Mst. Sardar Bibi and 3 others (2005 SCMR 1315) and the case titled Muhammad Ali Razi Khan v. Muhammad Ali Zaki Khan and others (2007 MLD 54) from the Karachi jurisdiction cited by learned Advocate Supreme Court for the appellant. Both cases have been seen in the light of the relevant provisions of the Contract Act i.e. sections 201, 208 and

215. The said three sections are, for ease of reference reproduced hereunder:-- "

201. Termination of agency. An agency is terminated by the principal revoking his authority; or by the agent renouncing the business of the agency; or by the business of the agency being completed; or by either the principal or agent dying or becoming of unsound mind; or by the principal being adjudicated an insolvent under the provisions of any Act for the time being in force for the relief of insolvent debtors." "

208. When termination of agent's authority takes effect as to agent, and as to third persons. The termination of the authority of an agent does not, so far as regard the agent, take effect before it becomes known to him, or so far as regards third persons, before it becomes known to them." "215, Right of principal when agent deals on his own account, in business of agency without principal's consent.

If an agent deals on his own account in the business of the agency, without first obtaining the consent of his principal and acquainting him with all material circumstances which have come to his own knowledge on the subject, the principal may repudiate the transition, if the case shows either that any material fact has been dishonestly concealed from him by the agent, or that the dealings of the agent have been disadvantageous to him."

7. Section 208 is directly relevant in the present case because the respondent/vendee was a third person who had no notice of the cancellation of the power-of-attorney granted in favour of Chazanfar. The first cited case is also distinguishable inasmuch as there was a proper public notice published in a newspaper which had notified the public at large that the power-of-attorney in question in that case had been cancelled. In the present case admittedly no such notice was given and the facts on record show that the respondent in fact did not have any notice of such cancellation. The cited case is, therefore, distinguishable on facts. Furthermore, the case referred to is only an order of this Court in which a civil petition was dismissed and leave to appeal was declined. The said refusal to grant leave cannot constitute a precedent in this case. The second case Muhammad Ali Razi Khan v. Muhammad Ali Zaki Khan and others (2007 MLD 54) is also clearly distinguishable. It is only through the remarks made obiter that an observation has been made. The said case in any event is by a learned Single Bench of the Sindh High Court and did not consider section 208 of the Contract Act reproduced above. At this point we may also reproduce illustration No.(d) of section 208 of the Contract Act which is as follows:-- "(d) When A trades as B's agent with B's authority (even though the business be carried on in A's name, if the agency is known in fact), all parties with whom A makes contracts in that business have a right to hold B liable to them until B gives notice to the world that A's authority is revoked; and it makes no difference if in a particular case the agent intended to keep the contract on his own account." Based on the above, there remains no doubt in our mind that the respondent could not be burdened with any notice of any cancellation of the power-of-attorney Exh.A/7.

9. We would also like to note at this stage the contents of the application filed by the appellant under section 12(2), C.P.C. In para 2 thereof it has been asserted that Ghazanfar had colluded with the respondent while making the statement before the learned District Judge, Jhelum on 17-1-2001 conceding the appeal of the respondent. In para 3 sub-paras (ii) and (v) are also significant and are reproduced as under:--

10. Considering the foregoing contents of the application under section 12(2), C.P.C. we find it quite extraordinary that Ghazanfar Ali was examined as A.W.1 having been produced by the appellant in his own support, without there being any summons issued for his appearance. Secondly, the assertion which was made before us that the power-of-attorney granted to Ghazanfar did not authorize him in respect of the land in dispute is also without force because this assertion has not been pleaded in the application under section 12(2), C.P.C.

11. In addition to the above we have noted that Ghazanfar was not impleaded as a party in the application under section 12(2), C.P.C. Learned counsel for the appellant argued that this was not necessary. This submission, we are afraid is wholly misconceived. Section 12(2), C.P.C. is a substitute for a separate/independent suit for setting aside of a decree. This law was brought about in 1980. In the circumstances an application under section 12(2), C.P.C. has all the relevant attributes of a suit and therefore, the person against whom an allegation of fraud is made is a necessary party and must be impleaded in the application as a respondent. Far from being impleaded Ghazanfar, as noted above, actually appeared on his own without being summoned to give testimony in favour of the appellant.

12. The above circumstances are quite sufficient for the purpose of dismissing this appeal. We may just add that learned counsel for the appellant referred to a number of cases but the same are not required to be commented upon in view of the factual/legal position noted above.

13. In view of the forgoing discussion, this appeal is dismissed with costs throughout. MWA/M-8/SC Appeal dismissed.