1992 PLP 1488 (SCMR)

SALEEM AKHTAR, J.

The appellant, with the leave 'of the Court, challenged the judgment of the High Court, Lahore, passed in R.F.A. No.39 of 1989 whereby their appall against the judgment and decreed passed by the learned Trial Court for specific performance of the agreement has been dismissed. Respondent No.l filed suit for specific performance of agreement of sale dated 8-6-1976 against the appellants and respondent No.2. The suit was decreed by the learned Civil Judge directing respondent No.l to deposit in Court Rs.9,00,000 being the balance sale consideration.

2. The dispute relates to bungalow No.lI-E/ii, Gulberg III, Lahore. The predecessor-in-interest of the appellant and respondent No.2, Malik Ghulam Abbas was the owner of the property of which respondent No.l was a tenant on monthly rent of Rs.1,

100. On 8-6-1976, respondent No.2 entered into an agreement for sale on his behalf and on behalf of co-owners- namely the appellants from whom he held powers of attorney. It may be mentioned that appellant No.l (Malik Riaz Ahmed Khan) had executed a power of attorney in favour of respondent No.2 while appellants 2 to 6 had executed a separate power of attorney in his favour. In the suit filed by respondent No.l the appellants filed written statement pleading, that they had never offered to sale the bungalow in occupation of respondent No.l as a tenant and they had not executed any agreement dated 8-6-1976 nor had authorised respondent No.2 to sell the same to. respondent No.l. They denied having received part of the sale consideration of Rs.1,50,000 alleged to have been paid by respondent No.l. They categorically denied that they had authorised or given any power of attorney to the respondent No.2 for the purposes of sale of the said property. It was pleaded that the original power of attorney had always remained with the appellants and was never acted upon Respondent 146.1 had been in arrears for a very long time and had created the situation to avoid eviction. They further pleaded collusion between the respondents and denied the claim. Respondent No.2 filed a separate written statement in which he pleaded that he had entered into an agreement with respondent No.l on his behalf alone and not on behalf of the appellants. He had never undertaken that he would persuade to the appellants to agree to sell the house. The amount of Rs.1,50,000 was received but towards the arrears of rent which was due from respondent No.l. It was further pleaded that it was agreed that if the appellants did not agree to sell the house Rs.1,50,000 will be adjusted towards the arrears of rent. He further stated that the original power of attorney executed in 1967 was never delivered to him (respondent No.2) and was never acted upon.

3. The plea raised by the appellants and respondent No.2 was not accepted by the learned trial Court. In the first appeal decree was modified whereby besides the sale consideration respondent No.l agreed to pay Rs.3,85,000 on account of arrears of rent and interest at the rate of 10% per annum from 1-1-197.7 to 31-12-1990 amounting to Rs.12,60,

000. Respondent No.1 was, therefore, directed to deposit Rs.16,45,000 in addition to Rs.9,00,000 which had already been deposited. In the impugned judgment the learned Judges held that respondent No.l had the power of attorney and the authority on behalf of the appellants to sell their property including the bungalow. This finding was rendered by the learned Judges after examining the correspondence and the two powers of attorney placed on record.

4. Leave was granted to consider whether the power of attorney granted by appellants 2 to 6 which includes three Pardahnashin ladies authorised respondent No.2 to sell bungalow and whether protection available to female owners was taken into consideration. As regards power of attorney granted by Malik Riaz Ahmed (appellant No.l) it was to be considered whether it contained the power to sell the bungalow. It was further to be considered whether owner who is not aware of his property rights in a particular property could have intended, in fact and law, to execute a power of attorney for its disposal. Mr. Zakiuddin Pal, the learned counsel for the appellants, contended that the appellants had not granted power of attorney vesting respondent No.2 with the authority to sell the bungalow. On the other hand Mr. A.R. Shaikh, the learned A.S.C. for respondent No.l contended that from the power of attorney and the correspondence between the parties it is clear that respondent No.2 was full authority and had power to sell the bungalow.

6. We have, therefore, first to consider the powers of attorney on the basis of which respondent No.2 is alleged to have the power to sell the bungalow. There are two powers of attorney, one by the appellant No.l and the other by appellants 2 to 6 executed in favour of respondent No.2. We will first take the power of attorney executed by appellant No.l. From the evidence it is clear that at the time of execution he was a college student but not a minor. The power of attorney opens with the words that the properties which are situated in different districts cannot be managed by him and neither he can give them to the farmers for cultivation nor can obtain his share in such cultivation and eject the farmers nor can appear in the Courts either to prosecute or to defend himself and; therefore, in order to look after and manage the properties which are situated in various districts and for dealing with the tenants and their ejectment from the lands the power of attorney has been given to respondent No.2. The significant aspect of this power of attorney is that it does not speak specifically about any bungalow or an urban property. It speak of farms and lands used for cultivation and tenants relating to it to whom either the land is to be given for cultivation or the landlord's share is to be obtained or they are to be ejected. All powers regarding management and proceeding in Court refer to these properties. Therefore, on a clear reading of the power of attorney no power to sell the bungalow has been given. Such power given to respondent No.2 is restricted only to the land. It is also strange that it does not mention the particulars and survey numbers of the land but only gives a general description. This power of attorney given by appellant No.l cannot be construed to authorise respondent No.2 to sell the bungalow.

7. The second power of attorney (Exh.P.47) was executed by appellants 2 to

6. Appellants 3 to 6 are Pardahnashin ladies as stated in the power of attorney itself. For that reason they have given power of attorney to respondent No.2 to manage lands and houses. Besides general power to attend the Courts and look after all the proceedings it has also been stated as follows:-- This power of attorney was executed on 12th May, 1967. From this power of attorney it seems that it authorises respondent No.2 to deal with the properties and also to sell them. The plea taken by the appellants 2 to 6 is that the original power of attorney was retained by appellant No.2 and it was never acted upon. The sale agreement was entered into in the year 1976, about 9 years after the execution of the power of attorney. Respondent No.2 has also taken the plea that he had entered into an agreement to sell his share of the property on his own behalf. According to him the sale agreement was entered into in his individual capacity and not on behalf of the appellants. In a power of attorney executed by Pardahnashin ladies the Courts are always cautious in interpreting it particularly in a circumstance when they deny it. In the present case although execution has not been denied, it has been stated that it was not acted upon and the original power of attorney had been retained by the executants. The appellants also claim that no power for sale to respondent No.2 was given and they have shown complete ignorance about this transaction. The power of attorney was executed as far back as in the year 1967 but no evidence of sale of any part of the property by the attorney has been brought on record. At best respondent No.2 might have been managing the agricultural land as well as the bungalow on behalf of appellants 2 to

6. Even in case of bungalow he had not been able to realise rent which had swollen to a huge amount. Appellant No.2 was the younger brother while appellants 3 to 6 were Pardahnashin ladies. Respondent No.2 being tile eldest male member in the family had the dominant position. Considering all these circumstances we are persuaded to hold that although the power of attrorney was executed by appellants Nos.2 to 6 in favour of respondent No.2, as he had never acted upon the power to sell the property for a very long period and prior to executing agreement to sell he did not bring it to the knowledge of appellants 2 to 6, the same could not have been validly made. Reference can be made to Fida Muhammad v. Pir Muhammad Khan and others P L D 1985 SC 341, where it has been observed as follows:-- "It is wrong to assume that every `general' power of attorney on account of the said description means and includes the power to alienate/dispose of property of the principal. In order to achieve that object it must contain a clear separate clause devoted to the said object. The draftsman must pay particular attention to such a clause if intended to be included in the power of attorney with a view to avoid any uncertainty or vagueness. Implied authority to alienate property, would not be readily deducible from words spoken or written which do not clearly convey the principal's knowledge, intention and consent about the same. The Courts have to be vigilant particularly when the allegation by the principal is of fraud and or misrepresentation. The second aspect which needs caution on question of validity of acts under a power of attorney is that notwithstanding an authority to alienate principal's property, the attorney is not absolved from his two essential obligations, amongst others:- Firstly in cases of difficulty (and it will be a case of difficulty if the power of attorney is susceptible to doubt about its interpretation) to use all reasonable diligence in communicating with the principal and seeking to obtain his instructions, and secondly, if the agent deals on his own account with the property under agency e.g. if he purchases it himself or for his own benefit, he in his own interest should obtain the consent of the principal in that behalf after acquainting him with all material circumstances on the subject, failing which the principal is at liberty, to repudiate the transaction. The following two examples given under section 215 of the Contract Act are illustrative of the intention of the law .... "

8. It is a settled principle governing the relationship of principal and agent that if the agent has any interest in the property or has any personal gain in the transaction he must disclose all facts to the principal. It is an admitted position that the bungalow is a joint property in which respondent No.2 is one of the co-owners. He may have intended to sell his share in the property but the possibility cannot be ruled out that the price of a small share in a joint property may not be gainful or more profitable than the price for which the entire property can be sold. Therefore, respondent No.2 may have thought it fit to sell the entire property which would have certainly benefited him materially. In such circumstances he was duty bound as the attorney of appellants Nos.2 to 6 to have brought to their notice the intended sale prior to entering into the agreement to sell. There was a complete failure on the part >f respondent No.2 to discharge his duty in this regard.

9. Section 214 of the Contract Act, 1872 provides that it is the duty of an agent, in cases of difficulty, to use all reasonable methods in communicating with his principal and in seeking to obtain his instructions. It, therefore, makes it obligatory on an agent to communicate with his principal and obtain his instructions in cases of difficulty. The determination whether a particular case will be covered by the expression `cases of difficulty' depends upon the facts and circumstances of each case. However, as the power of attorney has to be construed strictly and in cases of doubt and ambiguity, for the benefit of the executant, in the facts of this case it seems that respondent No.2 ought to have sought instructions and communicated with his principals. The facts that appellants Nos.3 to 6 are Pardahnashin ladies, the interest respondent No.2 has in the property, since the execution of the power of attorney respondent No.2 had only been managing and had not sold a single property and further that the power of attorney was executed about 7 years back and the executants have been disputing that it was acted upon which only reflects the reluctant attitude of the principals, the case was of difficulty and it was obligatory for respondent No.2 to have sought instructions from his principals.

10. The learned counsel for respondent No.l contended that from the correspondence exchanged between the parties it is clear that appellant No.l had agreed to the transaction of sale and, thus, impliedly authorised respondent No.2 to sell the bungalow which was ratified by him thereafter. From the correspondence it seems that the appellant No.l was aware of the transaction and negotiations between respondents Nos.l and 2 for the sale of the bungalow. It is possible that the transaction may have been in his knowledge and appellants 2 to 6 had not been informed or apprised of it. The mere fact that appellant No.1 had signed the sale agreement as a witness which he has denied, is not sufficient to bind him with the terms of the agreement. Marginal witnesses to the agreement only witness its execution and depending on facts, such knowledge cannot necessarily be extended to make the terms of the contract binding on him unless he executes the document as a party or confirming party. We are, therefore, of the view that respondent No.2 did not have the authority to sell the house on behalf of appellant No.l and further that agreement to sell executed on behalf of the appellants Nos.2 to 6 was not duly authorised and proper in the facts and circumstances of the case and, thus, the bungalow could not have been conveyed to the respondent No.l. Respondent No.2 admits to have executed the agreement on his behalf. He would, therefore, be liable to specifically perform the agreement to the extent of his share in the joint property. We would, therefore., modify the impugned judgment and decree and allow the suit for specific performance filed by respondent No.l against respondent No.2 to the extent of his share in the property. The suit filed against the appellants is dismissed. Respondent No.2 has deposited the following amount:-- (1) Rs.3,85,000 on account of arrears of rent. (2) Rs.9,00,000 balance sale consideration. (3) Rs.12,60,000 on account of interest at the rate of 10% per annum from 1-1-1977 to 31-12-1990. Out of the aforesaid amount Rs.12,60,000 shall be refunded to respondent No.1. Out of Rs.9,00,000 the sale consideration proportionate to the share of respondent No.2 due and payable to him shall be retained and the balance shall be refunded to respondent No.l. The arrears of rent shall be appropriated by the appellants and respondent No.2 proportionately according to their share in the property at the time of sale agreement. The appeal is partly allowed. M.BA./R-196/S Appeal partly allowed.