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M/s. Vashi Pari Villas, a Registered Partnership Firm, duly represented by its Managing Partner, T. Kamakshi v/s M/s. Pandian Real Estates, duly consisting of its partners, P.S. Kumar & Others

    C.S. No. 396 of 2010
    Decided On, 02 September 2022
    At, High Court of Judicature at Madras
    By, THE HONOURABLE MRS. JUSTICE V. BHAVANI SUBBAROYAN
    For the Plaintiff: A. Govaradhan Rao, Advocate.For the Defendants: D1, D5, R. Manickavel, Annusuya Balaji (For Mr. Ralph V. Manohar), D7, Poovendhan, Advocate.


Judgment Text
(Prayer:- This Civil Suit filed under Order IV Rule 1 of O.S. Rules and Order VII Rule 1 of C.P.C. praying for the following reliefs:

(a) the Defendants 1 to 7 are jointly and severally liable to pay a sum of Rs.1,13,49,319/- (One Crore Thirteen Lakhs Forty Nine Thousand Three Hundred and Nineteen Only) together with interest at 6% per annum from the date of plaint till date of decree and thereafter till date of realization, and

(b) for the costs of this suits and

(c) Pass such orders accordingly.)

This suit has been filed by the plaintiff against the defendants seeking for:

(a) the Defendants 1 to 7 are jointly and severally liable to pay a sum of Rs.1,13,49,319/- (One Crore Thirteen Lakhs Forty Nine Thousand Three Hundred and Nineteen Only) together with interest at 6% per annum from the date of plaint till date of decree and thereafter till date of realization, and

(b) for the costs of this suits and

(c) Pass such orders accordingly.

2. The brief facts of the case is as follows:

2.1. The plaintiff and the 1st defendant are the registered Partnership Firms. The Defendants 2 to 4 are the partners of the 1st defendant/firm. Defendants 1 to 4 have executed a power of attorney in favour of the 5th defendant. The 5th defendant is stated to have entered into an agreement of sale with the plaintiff in which a sum of Rs.80,00,000/- has been received as an advance for the agreement of Sale from the plaintiff.

2.2. Later on, the defendants 1 to 4 cancelled the Power of Attorney executed in favour of the 5th defendant and executed a fresh power of attorney in favour of the 6th defendant. Since sale was not effected in terms of agreement of sale, the 6th defendant had issued two cheques for a sum of Rs.1 Crore in favour of the plaintiff towards the discharge of liability. The cheques issued by the 6th defendant on behalf of the other defendants have been returned with an endorsement as "insufficient fund". Hence, the plaintiff had initiated proceedings under Section 138 of the Negotiable Instruments Act against the 6th defendant before the XI Metropolitan Magistrate, Saidapet in C.C. No.239/2009. Since the 6th defendant was dragging the aforesaid case and limitation period of Civil suit was getting close to expiry, the plaintiff has filed this Civil suit seeking a claim for a sum of Rs.1 Crore as against the defendants with interest.

3. The learned counsel for the plaintiff would submit that the plaintiff had entered into an agreement of sale dated 23.9.2006 with first defendant, claimed to be a partnership firm and second to fourth defendants claimed to be partners of the firm and signatory to the agreement of sale, for purchase of the lands of an extent of 46 acres and 24 cents, comprised in various Survey numbers situated at Pillaipakkam Village, Sriperumbadur Taluk, Kancheepuram District, for a sale consideration of Rs.6,47,36,000/-. The Plaintiff paid a sum of Rs.80,00,000/- as an advance amount on various dates viz., 23.9.2006 and on 5.12.2006 to the Defendants 1 to 5 and all of them agreed to complete the sale within 45 days from the date of agreement of sale.

4. It has been further submitted that initially Power of attorney was executed in favour of the 5th Defendant for the aforesaid transaction of sale, for dealing with the plaintiff with regard to the sale of the suit property. Subsequently, the Defendants cancelled the Power of Attorney executed in favour of the 5th Defendant and a fresh Power of Attorney was executed in favour of the 6th Defendant namely, Mr. T.Ravi vide Power of Attorney dated 18.1.2007 by registered document in No.225 of 2007, on the file of the District Registrar, Chennai North, and thus the 6th Defendant was dealing with the plaintiff with absolute knowledge of all the defendants who are the principals of the Power of Attorney dated 18.1.2007.

5. The learned counsel for the plaintiff would further submit that as per the aforesaid agreement executed between the plaintiff and the defendants, the plaintiff was ready and willing to complete the sale by paying the balance amount as per the agreement. However, the Sale could not be completed within the stipulated period as the defendants could not obtain "No Objection Certificate" from the Government Authorities as enshrined in clause 11 of the Agreement and defendants agreed to extend the time till they get "No Objection Certificate" from the Government Authorities.

6. It has further been submitted by the learned counsel for the plaintiff that contrary to their aforesaid undertaking, they were trying to sell the suit property to third parties. The clandestine dealings of the defendants came to the knowledge of the plaintiff and the plaintiff insisted the defendants for fulfillment of the performance of the agreement of sale and obtained a Bank draft from UTI Bank dated 05.03.2007, for a sum of Rs.5,97,36,000/- being the balance amount of the sale consideration and insisted the defendants to complete the sale process. However, the defendants requested the plaintiff not to insist on completion of the sale but to receive a sum of Rs. 2,00,00,000/- (Rupees Two Crores only) by way of refund of the advance amount inclusive damages as compensation to be paid by them with in one month from the date of execution of Memorandum of Agreement 23.03.2007 which is marked as Ex.P8 in view of defendants inability to fulfill the agreement of sale dated 23.09.2006 and accordingly an agreement dated 23.3.2007 was entered between the plaintiff and defendants which has been duly signed by the 6th defendant being the Power of attorney holder on behalf of 2nd to 4th defendants. In pursuant to the said agreement dated 23.3.2007, the 6th defendant representing 2 to 4th defendants had also handed over a Pay Order dated 22.03.2007 for a sum of Rs.50,00,000/- as initial payment and issued three Post Dated Cheques bearing Nos.534700, 534698 dated 15.10.2007 and 534699 dated 25.10.2007 drawn on Indian Overseas Bank for Rs.50,00,000/- each totaling of Rs.1,50,00,000/- (Rupees One Crore and Fifty Lakhs only) specifically representing the same will be honoured on presentation.

7. The learned counsel for the plaintiff would further submit that in the meanwhile, the 6th defendant paid a sum of Rs.50,00,000/- by way of cash on 20.12.2007 and took back the Cheque No.534700 drawn on Indian Overseas Bank and assured the plaintiff that the other two cheques bearing Nos.534698 and 534699, dated 15.10.2007 and 25.10.2007 will also be honored and that the payments will be completed and account will be settled as agreed. The Cheques were issued by the defendants in the name of Mr.T.Chandrasekar, one of the partners of the Plaintiff firm. As per the instructions of the defendants, the Cheques No.534699 dated 25.10.2007 drawn on Indian Overseas Bank was presented with the plaintiff's bankers namely, Oriental Bank of Commerce on 1.3.2008 and the defendants' bankers Indian Overseas Bank returned the cheque by its return memo dated 3.3.2008 with an endorsement as "Funds Insufficient" and this was intimated by the plaintiff's Bankers on 3.3.2008. Further, the Cheque No.534698 drawn on Indian Overseas Bank dated 15.10.2007 was presented with the Bankers of the plaintiff namely Oriental Bank of Commerce on 15.3.2008 and the defendants bankers namely, Indian Overseas Bank returned the cheque on 17.3.2008 with an endorsement as "Funds Insufficient" and this was intimated by the Plaintiff's Bankers on 17.3.2008. Thus the two cheques for Rs.50,00,000/-each totaling to Rs.1,00,00,000/- (Rupees One Crore only) remains due and payable by the defendants.

8. It has been further submitted that the 6th defendant is the authorized signatory to the cheques issued by him in favour of the Plaintiff towards the Liability arising out of the written contract dated 23.03.2007 executed by the 6th defendant on behalf of the other defendants. Hence, the plaintiff had issued a legal notice dated 25.3.2008 and 3.7.2008 to all the defendants calling upon them to make the payment of Rs.1,00,00,000/- (Rupees One Crore Only), but however the defendants had given vague and inappropriate reply on 27.3.2008 and 16.7.2008.

9. The learned counsel for the Plaintiff would further submit that the 6th Defendant on behalf of the other Defendants had failed to maintain sufficient funds with the bankers to honour the above said cheques issued towards the liability arising out of the written contract i.e, Memorandum of Agreement dated 23.3.2007 entered by the Defendants with the plaintiff and having failed to pay the amount when demanded by the Plaintiff after sending notice. Hence, the defendants are liable to pay the balance amount as described in the aforesaid Cheques which had been returned due to insufficient of funds.

10. It has been further submitted that the defendants persuaded the plaintiff to enter Memorandum of Agreement dated 23.03.2007 which was specifically entered on a specific assurance of the payment of advance amount along with compensation by defendants to the plaintiff in consideration of the plaintiff forbearing to sue reliefs against them in laws and the compensation was fixed by the agreement between the plaintiff and the defendants. The defendants are aware of the above said facts and transactions and they are the principals to the Power of attorney issued in favour of the Sixth defendant. Hence, they are all bound in law and on facts to pay agreed the said amount of Rs.100,00,000 (Rupees One Crore only) along with interest @ 6% p.a.

11. The learned counsel for the plaintiff would further submit that the provisions of the Tamil Nadu Debt Relief Act 1978 (Act 40/78) do not apply to the defendants and they are not entitled to any relief under the said or any other Act.

12. It has been further submitted by the learned counsel for the plaintiff that since the 6th defendant had died on 28.10.2019, the 7th defendant namely Mr.Raja, S/o.Mr. T.Ravi/6th defendant herein being the legal heir of Mr. T.Ravi/6th defendant, has inherited the movables and immovable Properties. Hence the 7th defendant is also jointly and severally liable to pay suit claims.

13. It has been further submitted that the aforesaid letter does not contain any copy addressed to the plaintiff when the agreement dated 23.09.2006 ie. Ex.P4 was subsisting and in force. This purported letter is one created by the defendants only to evade the legitimate claim of the plaintiff arising out of Ex.P8. If the copy of the Ex.D10 was served on the plaintiff, the plaintiff would not have entered into memorandum of agreement dated 23.03.2007 which is Ex.P8 and would have sought legal remedy based on Ex.P4. Therefore, the cancellation of the power of attorney merely on the ground of issuance of Ex.D10-letter dated 15.02.2007 will not sustain and moreover, any registered document should be cancelled through proper registration before the Sub-Registrar concerned for cancellation of the documents or deeds. Therefore, the plaintiff was made to believe that the power of attorney was in force and the transactions therein will bind all the defendants for the acts, deeds and things whatsoever is committed by the power holder and this will clearly come within the purview of Sections 186, 187, 188, 203, 207 and 237 of the Indian contracts Act 1872.

14. It has been further submitted that the evidence of the defendants in the cross examination of D5 and D6 will go to show that both of them had conveniently narrated false evidence with regard to the cancellation of power attorney dated 18.1.2007 by way of letter dated 15.02.2007 and the same was acknowledged by the 6th defendant which are marked as Ex.D10 and Ex.D11.

15. The learned counsel for the plaintiff would further submit that the 5th defendant has no locus standi to give evidence on his behalf or on behalf of other defendants because his power was cancelled as per Ex.P6. When the evidence of the defendant was closed on 29.11.2013, he had preferred an A.No.6370 of 2014 to give evidence on his side and behalf of other defendants and the plaintiff filed the counter opposing it since Ex.P6 executed in favour of 5th defendant was cancelled. However, it was allowed stating that one more witness to be examined other than 5th defendant. But, other defendants have failed to give evidence on their behalf. Now examining the evidence will clearly show that the Power of Attorney was in force. Further in the chief examination of the 5th defendant, the defendant had marked Ex.D6 to Ex.D11. Subject to the plaintiff's objections to the letter dated 15.02.2007 raising that no post office seal and no postal receipt is affixed to the letter dated 15.02.2007. It was marked as Ex.D10 and the acknowledgment as Ex.D11.

16. The learned counsel for the plaintiff would further submit that the following extract of the cross examination conducted by the learned counsel for the plaintiff shows that the Ex.D10 is fabricated one.

Cross examination of 5th defendant:

1. Question: Have you been authorized either by way of authorization letter by any one of the partners or by all the partnership firm?

Answer: I have not been authorized to give evidence by the partners.

2. Question: Is it correct to state that on the basis of Ex.P5, power of attorney, we have received Rs.20 lakhs towards advance amount of sale consideration? Answer: Yes.

3. Question: Do you know the said power of attorney under Ex.P5 had been cancelled subsequently?

Answer: I do not know.

4. Question: Ex.P7, the power given to the 6th defendant was it cancelled by you or by other members/partners?

Answer: I have cancelled the power of attorney under Ex.P.7.

5. Question: You had already sent a letter dated 15.02.2007 under Ex.D10 to Mr. Ravi, D6, was it issued by personally or under instruction of other members?

Answer: I do not remember. After going through the contents of Ex.D10, witness answers Ex.D10 was not issued by me.

6. Question: Whether the signature found under Ex.D10 belongs to you?

Answer: The signature is not mine.

7. Question: Do you agree that the letter under Ex.D10 is nothing but a fraudulent letter?

Answer: I do not say that it is fraudulent letter.

8. Question: Do you say that signature under Ex.D10 does not belongs to you and you also say that it is not fraudulent letter then for what purpose, you have filed this letter as a document on your side?

Answer: I have not filed the document Ex.D10 in this case.

9. Question: You say that you have not filed Ex.D10, then who filed this document in this case?

Answer: I do not know.

10. Question: Have you filed all the document in this case other than Ex.D10?

Answer: Yes, I have filed all the documents through my advocate only.

Cross examination of 6th defendant:

11. Question: Did you execute all the Sale Deed in favour of Multi Vision Company?

Answer: Yes, the same is marked as Ex.P18 (Series 16 Nos). Witness adds: But all the deeds were subsequently cancelled by us.

Cross examination of 5th defendant:

12. Question: Have you taken any action against the 6th defendant for a wrongful acts committed by him?

Answer: We have not taken

13. Question: I put it to you that since D1 to D5 are liable to pay the claim amount to the plaintiff, you are falsely giving evidence in this case?

Answer: I deny the suggession.

Cross examination of 5th defendant conducted by Counsel for D6 which as follows:

It is correct that we informed defendant No.6 that the power given to him was cancelled through Ex.D10, letter and Ex.D11. I have alone signed in Ex.P10 letter. D2 to D5 four persons in total have executed the Ex.P.7, deed of Power of attorney.

Question: I put it to you that since the other three principals D2 to D4 are not signed in the Ex.P10, letter, it would not being other documents.

Answer: I deny. I do not have any authorization by D2 to D4 to cancel the power of attorney, Ex.P7 by letter dated 15.02.2007, Ex.D10. I have sent Ex.D10, letter through registered post with acknowledgment. I have not attached the postal receipt for sending Ex.D10, Letter to D6.

Question: I put it to you that Ex.D11, acknowledgment alleged to have sent by defendant No.6 does not contain any post office seal and it is not at all the acknowledgment acknowledged by Defendant No.6 and it is fabricated one?

Answer: I deny. I have not specifically mentioned in Ex.P7, letter that it is sent by registered post with acknowledgment. (the meaning of it is in the letter Ex.D10, Ex P7 is not mentioned specifically.)

Question: I put it to you that since you have not property and duly cancelled the power of attorney Ex.P7, it would remain in force and the acts done in pursuant of the power of Deed will bind the defendants No.2 to 5?

Answer: I deny the suggession.

By reading the aforesaid evidence of the defendants 5 and 6, it clearly shows that there was no termination/cancellation of power given to the 6th defendant. Further, in the cross examination of the 5th defendant, he clearly stated that no action was taken against the 6th defendant for his acts after acknowledging the receipt of Ex.D10. In view of the aforesaid extraction of cross examination of the Defendants 5 and 6, it makes clear that the letter is fabricated one and no proper evidence was put forth to prove the contention of the defendants that the Ex.P7-Power of attorney was cancelled by Ex.D10-Letter.

17. In support of his arguments, the learned counsel for the plaintiff has relied on the Judgment of the Madras High Court in the case "B. Raghumaran Vs. Mrs. Pushpabai and another wherein it is observed as follows:

....

9. Ex.A7 is the returned envelope. On the face of the envelope, it is endorsed by the postal employee "as returned to sender". On the reverse of the envelop, it is endorsed as under:

10.03: "Door Locked 11.03:"Door Locked 12.03:"Door Locked

.....

11...

Mr. A. Kannan, who was the absolute owner of the property had executed a registered power of Attorney Deed (Ex.B1), dated 15.12.2006, authorizing the 2nd defendant Mr. M Thangaraj, as his power Agent to deal with the suit properties. On account of some personal reasons, the Principal Mr. A. Kannan, had cancelled the above said Power of attorney deed dated 15.12.2006 by a registered cancellation deed dated 09.03.2007 and the act of cancellation of Power Deed was also duly communicated to the 2nd defendant through post on the very same date ie. on 09.03.2007. Simultaneously, the said Kannan had executed a registered General Power of Attorney Deed on the very same dated viz.09.03.2007, authorizing one Barathidasan as his power agent. After coming to know about the cancellation of Power Deed, the 2nd defendant had illegally executed a registered Sale Deed dated 21.03.2007 in favour of the 1st defendant with dishonest intention. According to the plaintiff, the said Sale Deed was executed when there was no authorization in favour of the 2nd defendant and equally it was not executed for any valid consideration".

....

70. According to the defendants, Mr. Kannan, who was then residing at Singapore was informed about the sale transaction in favour of the 1st defendant through telephone as well as by fax message. Therefore, according to the defendants Ex.B2, Sale Deed was executed in favour of the 1st defendant for proper sale consideration. This fact was known to Mr. A. Kannan,. But as stated in the foregoing paragraphs Mr. Kannan was not at all examined. As per the case of the plaintiffs due to personal reasons,A. Kannan had cancelled the power of Attorney Deed dated 15.12.2006 (Ex.B1), which was executed in favour of the 2nd defendant Thangaraj by a registered cancellation deed dated 09.03.2007. The act of cancellation was also communicated to the 2nd defendant by post on the very same day. As discussed above, the cancellation of power of attorney deed dted 15.12.2006 by Mr. A. Kannan was proved to be not intimated to Mr. Thangaraj. The letter of revocation dated 09.03.2007 was not at all sent through the registered post and in the absence of sufficient proof with regard to the service of letter of cancellation of Power of attorney deed dated 15.12.2006, it cannot be heard to say that the letter of revocation dated 09.03.2007 was duly communicated or duly served on the 2nd defendant."

132. As discussed in the body of the Judgment, Ex.A7, the envelope was returned with an endorsement as "door locked". In the absence of due service of cancellation letter on the second defendant, the presumption is that the second defendant was not at all informed about the cancellation of his Power of Attorney Deed dated 15.12.2006 before the authority given under the Power of Attorney Deed (Ex.B1). It further lead the Court to presume that the second defendant would be under the impression that the Power of Attorney executed under Ex.B1, by the Principal A. Kannan was in force and therefore, he happened to execute the impugned Sale Deed under Ex.B1 dated 23.01.2007 in favour of the 1st defendant. But after five days, the plainitff had purchased the property from Mr. A. Kannan under Ex.A8, the registered General Power of Attorney Deed dated 09.03.2007. When the letter of revocation was not at all communicated to the second defendant, the execution of another registered power deed in favour of Mr.R. Bharathidasan under Ex.A8 is not valid and further the sale deed under Ex.A10, said to have been executed by Mr. A. Kannan, through his so-called power agent R.Bharathidasan in favour of the Plaintiff cannot be construed as genuine and valid. Further, it also cannot be construed that the 2nd defendant had not handed over the entire sale consideration to his principal. It is absolutely wrong to say that Ex.B2 was created only to defeat the legitimate right of the second defendant's principal."

18. Relying on the Judgment passed by the Apex Court in the case "M/s.Womb Laboratories Pvt. Ltd. Vs. Vijay Ahuja" the learned counsel for the appellant has pointed out the following observation of it.

.... "5. We say so because, handing over of the cheques by way of security per se would not extricate the accused from the discharge of liability arising from such cheques".

19. Further, he has relied on another Judgment passed by the Apex Court in the case "Bir Singh Vs. Mukesh Kumar" wherein it has been observed as follows:

40. Even a blank cheque leaf, voluntarily signed and handed over by the accused, which is towards some payment, would attract presumption under Section 139 of the Negotiable Instrument Act, in the absence of any cogent evidence to show that the cheque was not issued in discharge of a debt".

In view of the aforesaid Judgment of the Hon'ble Apex Court and this Court, as this is one of quasi in civil and criminal, the above judgments can be relied in this case for the recovery of the cheque amounts from the defendants issued by the Power holder on behalf of principal D2 to D4. Thus, the plaintiff has substantiated the pleadings both on facts and law and hence prays this Court to grant decree and Judgment as prayed for.

20. Per contra, the learned counsel for the defendants 1 to 5 would submit that the suit is not maintainable as the plaintiff has approached two forums for the same relief. The plaintiff has suppressed the fact that the 138 proceedings filed by the plaintiff against the 6th defendant on the file of the IX Metropolitan Magistrate Court, Saidapet in C.C. No.239 of 2009 was quashed by this Court in Crl. O.P. No.9919 of 2019 by its order dated 11.04.2019. Against the dismissal, the plaintiff has filed an SLP against the 6th defendant in SLP.(Crl.) Diary No.4712 of 2020 and the same is pending before the Registrar of Hon'ble Supreme Court. The defendants have nothing to do with the alleged cheque and they are not parties to the cheque and the cheque was not issued under their instruction or on their behalf and therefore the present suit based on the cheque allegedly issued by the sixth defendant is not maintainable.

21. It has been further submitted that while reading the evidence of P.W.1, the plaintiff himself has stated that "I am aware that the power of attorney executed in favour of the 6th defendant had been cancelled". Hence, there is nothing more proof is required that the Power of Attorney issued to 6th defendant was cancelled.

22. It has been further submitted that the alleged agreement dated 23.09.2006-Ex.P4, was not executed under the instruction of the defendants 1 to 5. This defendants have instructed the sixth defendant that he should not proceed on the general power of attorney given to him on 18.01.2007 because all the three transactions made by the power agent, sixth defendant was not materialized but because of the three agreements entered into by the power agent, the principals namely the defendants 1 to 5 only suffered loss and damage. Even in respect of the present transaction with the plaintiff, she paid a total sum of Rs. 80,00,000/- and the amount was paid on different dates to the power agent but this defendants had to return Rs. 1,00,00,000/- by way of refund of advance, because of the loss of Rs.20,00,000/-, there was a serious dispute between the defendants 1 to 5 and consequently, the power of attorney was cancelled which was given to the 6th defendant to deal with the suit property.

23. The learned counsel for the defendants would submit that the entire lands were taken over for SIPCOT and nothing more survived. M/s.M.K.Multivision Software Private Ltd., also has landed the defendants 1 to 5 to several number of litigations and they suffered loss one after another and now the property is taken over by the SIPCOT and the lands are in several number of Legal disputes and they are not paid the sale consideration and they are unable to receive the compensation in view of the pending litigations. Under these circumstances, they have lost faith in the sixth defendant-power agent and hence they have terminated the power. Therefore any agreement executed by the sixth defendant is not binding on them and the cheque allegedly issued by him cannot bind the defendants 1 to 5 in any manner. This defendants 1 to 5 are not liable for any transaction made by the sixth defendant after terminating the power. The power of attorney was terminated on 15.02.2007 by letter sent in registered Post and the subsequent transactions were made only by the sixth defendant in his own right and not as the power agent of the defendants 1 to 5. The defendants 1 to 5 have received an acknowledgment for the letter terminating the power of attorney and the sixth defendant also has given an undertaking that he will not involve himself in any transaction in respect of the suit property in any manner. Therefore the defendants 1 to 5 are no way liable for any transaction made by the sixth defendant from 15.02.2007 onwards.

24. The learned counsel for the defendants would further submit that it is admitted fact that the plaintiff had entered into an agreement of sale on 23.09.2006 for the purchase of the lands measuring 42:26 Acres for a sale price of Rs.14,00,000/ (Rupees Fourteen Lakhs Only) per acre and paid a total sum of Rs.80,00.000/- (Rupees Eighty Lakhs Only) on various dates as advance under the agreement of sale and as per the terms of the agreement, the plaintiff should pay the balance sale consideration within 45 days from the date of the agreement of sale. However, the plaintiff did not pay the balance sale consideration even after 18 months from the date of the agreement. For all these 18 months, the plaintiff has been prolonging the payment under one pretext or other but repeatedly harassing and torturing the defendants by repeatedly advertising in the news papers that they have an agreement of sale and no one should purchase the property. Because of the conduct of the plaintiff, the defendants were put to unbearable hardship and dispute in the family.

25. It has been further submitted that since the plaintiff did not honour the agreement of sale and pay the balance sale consideration but indulging in dilatory tactics and trying to sell the defendants property to third parties without paying the sale consideration to the defendants, the defendants were unable to perform the marriage of the defendants' daughters and carry out their commitments in the family.

26. The learned counsel for the defendants would further submit that the plaintiff had entered into the agreement of sale with full knowledge about the proposal of the SIPCOT to acquire the said lands belonging to the defendants and she had specifically agreed to get an NOC from the SIPCOT and complete the transaction. But after the agreement, the plaintiff did not take any steps or move with the SIPCOT to get the clearance from the SIPCOT as agreed, but the SIPCOT by their letter dated 18.12.2006 in Ref No. SD/SIPCOT/RTI/2006 and the Revenue Department, Government of Tamil Nadu through their Secretary in their letter No.56078/LAI(1)1/06-2 dated 02.12.2006 has confirmed that there is an Administrative sanction for the acquisition of the said lands for the use of SIPCOT. They have also published in the news paper that the registration was banned in respect of the said Survey numbers.

27. The learned counsel for the defendants would further submit that the plaintiff was called upon by their letter dated 24.01.2007, to take necessary steps to get the NOC and clearance from the SIPCOT and complete the sale transaction as agreed as the time granted in the agreement of sale had already expired. Then after receiving the above letter from the SIPCOT and the government, they have once again sent notice dated 07.02.2007 duly informing the above communication from the SIPCOT and the government about the land acquisition and the plaintiff's total failure to perform their obligations under the agreement and also informed that their agreement dated 23.09.2006 has to be only cancelled and the defendants were ready and willing to refund the advance amount.

28. It has been further submitted that even after receipt of the said notices, the plaintiff did not take any steps either to obtain NOC or to pay balance sale consideration and complete the sale transaction as per the agreement of sale dated 23.09.2006. In spite of several exchange of notices and letters, the plaintiff has been only interested in keep on advertising that the suit lands is covered by the agreement of sale dated 23.09.2006 and they are the agreement holders in respect of the said lands and no one should purchase the lands. The plaintiff had given the above paper publication in all the leading news papers more than three or four times spending substantial amount on the paper publication but she never showed any interest to purchase the property as per the terms of the agreement.

29. It has been further submitted that the defendants had lawfully cancelled the agreement of sale dated 23.09.2006, after sending a legal notice and effecting a paper publication duly. In spite of the cancellation of the agreement of sale, in the manner above said, the plaintiff was preventing any third party from transacting with the defendants for the sale of the said lands. In view of the defendants were under dire necessity to sell the lands in the existing condition, as the defendants could no longer remain joint and all of them required funds to perform their family commitments.

30. The learned counsel for the defendants would submit that the defendants were negotiating with the third party purchasers to sell the property in the existing condition and with great difficulty, one of the Sister company of Reliance companies namely Himadri Enterprises Pvt. Ltd., came forward to purchase the lands agreeing to give the necessary NOC from the SIPCOT from the acquisition and when the plaintiff became aware of the transaction, they produce the cancelled sale agreement and effectively prevented the Reliance Company from buying the lands. When the transaction was in the offing, the plaintiff caused two paper publications informing about their agreement of sale and requesting the general public that no one should purchase the lands.

31. It has been further submitted by the learned counsel for the defendants that while another company namely M/s.M.K.Multivision Software Private Ltd., came forward to purchase the lands in the existing condition and approached the sixth defendant. This defendants reliably learn that the said company agreed to get the necessary NOC or get a direct allotment from the SIPCOT. The plaintiff also approached the said company and tried to prevent them from buying the lands by producing the cancelled agreement of sale. When the said purchaser attempted to proceed with the transaction ignoring the plaintiff's paper publication and caution notice only then the plaintiff sent a telegram dated 09.03.2007 as if he was ready with the balance sale consideration of Rs.5,97,36,000/- and she has taken a pay order for the said amount. She has also mentioned in the telegram that she was ready and willing to purchase the property for the first time. By then this defendants had terminated the power of attorney given to the sixth defendant.

32. The learned counsel for the defendants would further submit that the plaintiff sent the telegram only in the said circumstances to prevent the transaction and not with any real intention. No pay order was produced nor it was tendered to the defendants. This offer made after the expiry of more than 18 months from the date of the agreement and this cannot be taken as the readiness and willingness of the plaintiff. Earlier also the plaintiff and her husband had entered into an agreement of sale even before 23.09.2006 in the name of the third party but subsequently they have abandoned the previous agreement and the advance amount paid under the previous agreement was credited in the subsequent agreement dated 23.09.2006. Then even in respect of the agreement dated 23.09.2006 the plaintiff was not ready and willing to pay the sale price and sent a telegram with an ulterior motive to prevent the defendants from selling the property. Since the plaintiff realised that the new purchaser appeared to be proceeding to purchase the property in spite of the threatening of him, the plaintiff appears to have negotiated with the purchaser M/s.M.K.Multivision Software Private Ltd., and they have made some arrangements without the knowledge of this defendants and it appears the plaintiff, the new purchaser M/s.M.K.Multivision Software Private Ltd., forced the sixth defendant to sign an agreement on 23.03.2007 agreeing to pay a total sum of Rs.2,00,00,000/- as against the payment of Rs.80,00,000/- paid by the plaintiff as advance under the agreement of sale dated 23.09.2006. This compromise agreement appears to have entered into on 23.03.2007 only at the instance of the purchaser and M/S.M.K.Multivision Software Private Ltd. These dealings and transaction were not brought to the knowledge of this defendants. Subsequently they became aware that the sixth defendant paid Rs.50,00,000/- to the plaintiff by way of refund of the advance amount and the amount was paid to him by the new purchaser M/s. M.K.Multivision Software Private Ltd. The sixth defendant also appears to have paid another Rs 50,00,000/- to the plaintiff for the refund of the advance and he has also paid excess sum of Rs 20,00,000/- to the plaintiff. This defendants were kept in dark by the plaintiff, M/s.M.K.Multivision Software Private Ltd and also by the sixth defendant. Even after this defendants terminated the power of attorney, the sixth defendant abused his relationship with the fourth defendant he being the brother of the fourth defendant continued the transactions as if he was still holding the power of attorney.

33. It has been further submitted by the learned counsel for the defendants that the new purchaser M/s. M.K. Multivision Software Private Ltd., also failed to complete the transaction and pay the balance sale consideration as per the terms of the agreement of sale with the sixth defendant on the ground that the Industries Department has taken over the said land for SIPCOT. Only when the transaction with the new purchaser M/s.M.K.Multivision Software Private Ltd., failed, the sixth defendant disclosed all the above details to the defendants 1 to 5 and they have informed to the sixth defendant that they were no way liable for all these transaction as they have already terminated the power of attorney. The subsequent purchaser by making some small payment to the sixth defendant appears to have obtained even sale deeds from the sixth defendant and the sale deeds were cancelled by the order of the Hon'ble High Court now several number of litigations are pending between the new purchaser M/s.M.K.Multivision Software Private Ltd., and this defendants because of the wrongful acts of the sixth defendant.

34. The learned counsel for the defendants would further submit that the said purchaser M/s.M.K.Multivision Software Private Ltd., appears to be a fraudulent company and they have committed fraud on this defendants. The very company appears to be a fraudulent company and not at all existing and they have obtained the sale deeds from the sixth defendant on fraudulent representation and all the cheques given by the said company were bounced and dishonoured.

35. It has been submitted by the learned counsel for the defendants that the defendants 1 to 5 being the owners of the land, neither received the sale consideration either from the plaintiff nor from the new purchaser or a compensation from the government for the land acquisition. Now the property has gone into the hands of the SIPCOT but they are unable to receive the compensation because of the several number of litigations pending over it all by the purchasers including the plaintiff. The net result is the huge loss only suffered by the defendants 1 to 5, but the plaintiff who has already received Rs.1,00,00,000/ against the payment of Rs.80,00,000/- which was paid towards advance of sale consideration that too paid on various dates is still blackmailing this defendants for the commitment and wrongful act done by the sixth defendant. The defendants 1 to 5 are not liable for the agreement dated 23.03.2007 or the alleged cheque signed by the sixth defendant and it is said to have been paid to the plaintiff's husband Chandrasekar.

36. The learned counsel for the defendants would further submit that the agreement with the plaintiff was entered into by the 6th defendant only at the instance of the said purchaser M/s.M.K.Multivision Software Private Ltd., on the hope that they would complete the transaction by paying the sale consideration which was higher than agreed to with the plaintiff. The entire amount paid by them to the 6th defendant has been paid to the plaintiff. Now the third purchaser also failed to complete the transaction, but the plaintiff, who failed to purchase the land as per the agreement and having collected Rs. 1,00,00,000/ (Rupees One Crore only) as against the payment of advance of Rs.80,00,000/- (Rupees Eighty lakhs only) is harassing and black mailing the defendants 1 to 5 showing the cheques allegedly signed by the 6th defendant and the agreement signed by him without the consent and knowledge of the defendants 1 to 5 even after terminating the power of attorney.

37. The learned counsel for the defendants would further submit that the defendants 1 to 5 have verified the compromise agreement wherein it is found that the cheque is not mentioned in the compromise agreement and even the very compromise agreement allegedly signed by the sixth defendant cannot be enforced against the defendants 1 to 5. The said agreement has been made by the plaintiff, the new purchaser M/s. M.K.Multivision Software Private Ltd., and the sixth defendant with a speculative motive and therefore the defendants 1 to 5 are not liable.

38. It has been further submitted that the compromise agreement is also unenforceable because it is only a Contingency Agreement and the condition is not materialised as above said because the said Agreement dated 23.03.2007, was entered into at the instance of the purchaser company M/s.M.K.Multivision Software Private Ltd., to facilitate a sale agreement to them. Now they having failed in the transaction and 6th defendant having paid a sum of Rs. 1,00,00,000/- (Rupees One Crore only) to the plaintiff as against the payment of advance of Rs.80,00,000/- (Rupees Eighty Lakhs only) made by the plaintiff, the defendants 1 to 5 are not liable to pay any more amount to the plaintiff and the amount payable to the plaintiff under the sale agreement by way of refund of advance and compensation is already sufficiently paid to the plaintiff. This defendants 1 to 5 have paid a further sum of Rs.20,00,000/- (Rupees Twenty Lakhs only) over and above the advance amount paid by the plaintiff. Hence, the defendants 1 to 5 are under no obligation to pay any amount to the plaintiff as claimed before this Court.

39. The learned counsel for the defendants would further submit that it is true that at the time of the agreement of sale, the defendants 1 to 5 authorised the 6th defendant to deal with the suit property under the power of attorney dated 18.01.2007. Accordingly, the 6th defendant was acting on behalf of the defendants 1 to 5. But when the transactions with the plaintiff failed and the subsequent transactions also failed and the entire property is involved in several number of litigation making the defendants to suffer huge loss and in all ruins, the defendants 1 to 5 lost faith on the 6th defendant and hence they have terminated the power of Attorney. Thereafter, they directly dealt with the property to their own discretion.

40. The learned counsel for the defendants would submit that since the plaintiff was never ready and willing to complete the sale by paying the balance sale consideration, the sale could not be completed within the time stipulated in the agreement of Sale and there is no caused for not obtaining No Objection Certificate from the government authorities under Clause 11 of the agreement. Further, the plaintiff agreed to purchase the property knowing fully well that there was a proposal by the SIPCOT to acquire the land and the plaintiff has specifically agreed that they would get the NOC on their own. If that is so, the plaintiff has to explain what made them to offer a Pay Order for Rs 5,97,36,000/- on 05.03.2007 alleged in the plaint. The plaintiff was never ready to purchase the property and the said offer was made only to prevent the defendants from selling the property to a new purchaser namely the Reliance Company. When the Reliance Company came forward to purchase the property as stated above, the plaintiff effectively prevented the company from buying the property by producing the agreement of sale. The offer was one such attempt to prevent the defendants from selling the property to any third parties and there was absolutely no any genuine intention to make payment and complete the transactions. Only a telegram was sent with an offer with an ulterior motive and without any genuine intention.

41. The learned counsel for the defendants would further submit that the defendants requested the plaintiff not to insist on completion of the sale but to receive Rs.2,00,00,000/- by way of refund of the advance includes the damages as compensate. This defendants never contacted nor approached the plaintiff to receive Rs. 2,00,00,000/- in compensation. The aforesaid allegation of the plaintiff is false. The said agreement dated 23.03.2007 has no approval or sanction from this defendants principal and that is the reason why they lost faith on the 6th defendant and ever since they are dealing with their property without consulting any from 6th defendants.

42. The learned counsel for the defendants would further submit that the defendants 1 to 5 are not aware of anything about the cheques or the said agreement dated 23.09.2006, further, on that date they became aware of the same only subsequently. Further, the defendants 1to 5 never instructed the plaintiff to present the cheques which is said to have been issued on behalf of them. Hence, the cheque does not create any obligation or liability to this defendants. Furthermore, it denies that the cheques were not issued for any liability or for any consideration or for any services rendered and it was not even mentioned in the said agreement.

43. It has been further submitted that the 6th defendant is the signatory to the cheques issued by him in favour of plaintiff towards the liability arising out of the written contract on behalf of the defendants. The agreement was entered into only by the sixth defendant in his personal capacity only and not as the power agent. Since even when the agreement was entered into the principals namely the defendants 1 to 5 have lost faith on him and they started dealing with the property to their own discretion. Therefore neither the cheques nor the agreement was signed by the sixth defendant on behalf of the defendants 1 to 5.

44. The learned counsel for the defendants would further submit that the defendants 1 to 5 have not persuaded the plaintiff to enter into the agreement. The agreement dated 23.03.2007 is self explanatory with regard to the contents and the facts and circumstances in execution of the agreement. The defendants 1 to 5 are not bound under the agreement and they have absolutely no connections relating to the cheques handed over by the 6th defendant to the plaintiff as a security for the agreement. The defendants 1 to 5 are not liable to pay any more amount under the agreement dated. 23.03.2007 and the payment of the advance amount of Rs.80,00,000/- was paid. Hence, the defendants 1 to 5 are not liable to pay the amount nor the interest claimed in the plaint.

45. The learned counsel for the defendants would further submit that the subject matter of the suit is a Bilateral Contract arises out of mutual promises. Under Ex.P8, the plaintiff promises to give up their rights under the agreement of sale and agreed to cancel their agreement on payment of Rs.2,00,00,000/-. Therefore, there are mutual promises and obligation to both parties. Therefore, this is the case of Reciprocal Promise and covered by Section 54 of the Indian Contract Act- Reciprocal Contract. In the case of reciprocal contract, the defaulting party shall be liable to pay compensation to the other party. Therefore even assuming the defendants commits default in payment of the amount, the plaintiff is only entitled to reasonable compensation for the loss suffered by them. But in this case nowhere in the plaint or not even in the suit notice or communicated in any form that the plaintiff has given up their rights under the earlier agreement of sale. Therefore, the obligation on the part of the plaintiff was never performed and they did not perform their part of the agreement Ex.P8 even after payment of 50% of the amount mentioned in Ex.P8. Even before the suit, the 6th defendant has paid 50% of the amount mentioned in Ex.P8. But it was the plaintiff who did not perform their obligation under the agreement Ex.P8.

46. In support of his argument, the learned counsel for the defendants has relied on the Judgment passed by the Apex Court in the case" Fateh Chand Vs. Balkishan Dass reported in CDJ 1963 SC 020 wherein it is observed as follows:

8....

"....The section is clearly an attempt to eliminate the somewhat elaborate refinements made under the English Common Law in distinguishing between stipulations providing for payment of liquidated damaged and stipulations in the nature of penalty. Under the common law a genuine pre-estimate of damages by mutual agreement is regarded as stipulation naming liquidated damages and binding between the parties, a stipulation in a contract in terrorem is a penalty and the Court refuses to enforce it, awarding to the aggrieved party only reasonable compensation. The Indian Legislature has sought to cut across the web of rules and presumptions under the English common law, by enacting a uniform principle applicable to all stipulations by way of penalty.

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 (ii) where the contract contains any other stipulation by way of penalty. We are in the present case not concerned to decade 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 Sectin 74 reasonable compensation not exceeding the penalty stipulated for. In assessing the 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 the case. ......

11....... In all cases, therefore, where there 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 considerable reasonable, but not exceeding the amount specified in the contract as liable to forfeiture.

47. Further, the learned counsel for the defendant has relied on the Judgment in the case Asgar S. Patel Vs. Union of India passed by Apex Court wherein it has been observed as under:

...... The rights and obligations of the parties to the contract are governed by the ordinary law of the land including the provisions of the contract Act and the Transfer of Property Act. Section 55 of the Transfer of Property Act, 1882, provides".

55. In the absence of a contract to the contrary, the buyer and seller of immovable property respectively subject to the liabilities, and have the rights, mentioned in the rules next following, or such of them as are applicable to the property sold ..

48. The learned counsel for the defendants has further relied on the Judgment passed by the Apex Court in the case Maya Devi Vs. Lalta Prasad reported in CDJ 2014 SC 129 wherein it has been held as follows:

8....

11...... In our Judgment the expression "the contract contains any other stipulation by way of penalty" comprehensively applies to every covenant involving a penalty whether it is for payment on breach of 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 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 to forfeiture.

9....

...Liquidated damages distinguished from penalties:- The parties to a contract may agree at the time of contracting that, in the event of 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, called " liquidated damages", and it is recoverable without the general character or relationship of the parties. The rule is one of the public policy and appears to be sui generis. Its absolute nature inclines the courts to invoke the jurisdiction sparingly. The burden of proving that a payment obligation is penal rests on the party who issued on the obligation."

10. The position that obtains in the united states, obviously 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 enter into a contract to be paid to compensate for injuries in the event of a breach or non-performance of the contract. 196- In examining whether a liquidated damages provision is enforceable, courts consider whether the damages stemming from a breach are difficult or impossible to estimate or calculate when the contract was entered and whether the amount stipulated bears a reasonable relation to the damages reasonably anticpated. 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 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 contract is contrary to public policy and invalid. This position also finds elucidation in the following paragraph from American Restatement (Second) of Contracts 1981:-

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 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".

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 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."

49. The learned counsel has further relied on Judgment in the case "Kailash Nath Associates Vs. Delhi Development Authority & Another reported in 2015(4) SCC 136 passed by the Apex Court wherein it is observed as follows:

43. On a conspectus of the above authorities, the law on compensation for breach of contract under Section 74 can be stated to be as follows:-

Where a sum is named in a contract as a liquidated amount payable by way of damages, the party complaining of a breach can receive as reasonable compensation such liquidated amount only if it is a genuine pre-estimate of damages fixed by both parties and found to be such by the Court. In other cases, where a sum is named in a contract as a liquidated amount payable by way of damages, only reasonable compensation can be awarded not exceeding the amount so stated. Similarly, in cases where the amount fixed is in the nature of penalty, only reasonable compensation can be awarded not exceeding the penalty so stated. In both cases, the liquidated amount or penalty is the upper limit beyond which the Court cannot grant reasonable compensation. Reasonable compensation will be fixed on well known principles that are applicable to the law of contract, which are to be found inter alia in Section 73 of the Contract Act. Since Section 74 awards reasonable compensation for damage or loss caused by a breach of contract, damage or loss caused is a sine qua non for the applicability of the Section. The Section applies whether a person is a plaintiff or a defendant in a suit. The sum spoken of may already be paid or be payable in future. The expression "whether or not actual damage or loss is proved to have been caused thereby" means that where it is possible to prove actual damage or loss, such proof is not dispensed with. It is only in cases where damage or loss is difficult or impossible to prove that the liquidated amount named in the contract, if a genuine pre-estimate of damage or loss, can be awarded. Section 74 will apply to cases of forfeiture of earnest money under a contract. Where, however, forfeiture takes place under the terms and conditions of a public auction before agreement is reached, Section 74 would have no application.

44. The Division Bench has gone wrong in principle. As has been pointed out above, there has been no breach of contract by the appellant. Further, we cannot accept the view of the Division Bench that the fact that the DDA made a profit from re-auction is irrelevant, as that would fly in the face of the most basic principle on the award of damages - namely, that compensation can only be given for damage or loss suffered. If damage or loss is not suffered, the law does not provide for a windfall."

50. The learned counsel for the defendant has relied on the Judgment in the case "Bharat Sanchar Nigam Ltd & Another Vs. Motorala India Pvt. Ltd. reported in 2009(2) SCC 337 passed by the Apex Court wherein it has been held as follows:

14. The appellant contended that it has the unilateral right to determine the Liquidated damages under clause 16.2 and that the quantum of Liquidated Damages decided by the appellant, even if it is exorbitant, would be final and cannot be challenged.....

17.... The provision under Clause 16.2 that qualification of the Liquidated damages shall be final and cannot be challenged by the supplier Motoralla is clearly in restraint of legal proceedings under Section 28 of the Indian Contracts Act. So the provision to the effect has to be held bad.

19. Finally, we are of the opinion that the contention of the respondent that the clause 62 referring to special clauses has an overriding effect on clause 16.2, cannot be accepted. There is in fact no conflict between clause 62 and 16.2. Clause 62 has two parts in it. One part referring to the Liquidated damages and other part refers to incentives in case the respondent/Motorolla performs its parts of the contract within time. The part dealing with Liquidated damages under clause 62 in fact refers it back to clause 16.2 dealing with the quantification of liquidated damages. So it is apparent that there is no dispute between clause 62 and clause 16.2.

51. The learned counsel for the defendant has further relied on the Judgment in the case "Indian Oil Corporation Vs. M/s. Lloyds Steel Industries Ltd. reported in 2007(144) DLT 659 passed by the High Court of Delhi wherein it has been held as follows:

41. It is clear from the above that Section 74 does not confer a special benefit upon any party, like the petitioner in this case. In a particular case where there is a clause of liquidated damages the Court will award to the party aggrieved only reasonable compensation which would not exceed an amount of liquidated damages stipulated in the contract. It would not, however, follow there from that even when no loss is suffered, the amount stipulated as liquidated damages is to be awarded. Such a clause would operate when loss is suffered but it may normally be difficult to estimate the damages and, therefore, the genesis of providing such a clause is that the damages are pre-estimated. Thus, discretion of the Court in the matter of reducing the amount of damages agreed upon is left unqualified by any specific limitation. The guiding principle is 'reasonable compensation'. In order to see what would be the reasonable compensation in a given case, the Court can adjudge the said compensation in that case. For this purpose, as held in Fateh Chand (supra) it is the duty of the Court to award compensation according to settled principles. Settled principles warrant not to award a compensation where no loss is suffered, as one cannot compensate a person who has not suffered any loss or damage. There may be cases where the actual loss or damage is incapable of proof; facts may be so complicated that it may be difficult for the party to prove actual extent of the loss or damage. Section 74 exempts him from such responsibility and enables him to claim compensation inspite of his failure to prove the actual extent of the loss or damage, provided the basic requirement for award of 'compensation', viz. the fact that he has suffered some loss or damage is established. The proof of this basic requirement is not dispensed with by Section 74. That the party complaining of breach of contract and claiming compensation is entitled to succeed only on proof of 'legal injury' having been suffered by him in the sense of some loss or damage having been sustained on account of such breach, is clear from Sections 73 and 74. Section 74 is only supplementary to Section 73, and it does not make any departure from the principle behind Section 73 in regard to this matter. Every case of compensation for breach of contract has to be dealt with on the basis of Section 73. The words in Section 74 'Whether or not actual damage or loss is proved to have been caused thereby' have been employed to underscore the departure deliberately made by Indian legislature from the complicated principles of English Common Law, and also to emphasize that reasonable compensation can be granted even in a case where extent of actual loss or damage is incapable of proof or not proved. That is why Section 74 deliberately states that what is to be awarded is reasonable compensation. In a case when the party complaining of breach of the contract has not suffered legal injury in the sense of sustaining loss or damage, there is nothing to compensate him for; there is nothing to recompense, satisfy, or make amends. Therefore, he will not be entitled to compensation See State of Kerala v. United Shippers and Dredgers Ltd. . Even in Fateh Chand (supra) the Apex Court observed in no uncertain terms that when the section says that an aggrieved party is entitled to compensation whether actual damage is proved to have been caused by the breach or not, it merely dispenses with the proof of 'actual loss or damage'. It does not justify the award of compensation whether a legal injury has resulted in consequence of the breach, because compensation is awarded to make good the 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. If liquidated damages are awarded to the petitioner even when the petitioner has not suffered any loss, it would amount to 'unjust enrichment', which cannot be countenanced and has to be eschewed.

In view of the observations made in the Judgments cited in supra, the learned counsel for the defendant submit that the claim of the plaintiff is most frivolous and violative of Section 28 and Section 74 of the Indian Contract Act and hence the suit is liable to be dismissed.

52. Heard the learned counsel for the plaintiff and the learned counsel for the defendants as well as perused the material available on record.

53. During the Trial, for the plaintiff, one of the partners of the firm was examined as P.W.1 and Ex.P1 to Ex.P18 were marked on behalf of the plaintiff. For the defendants, the 5th and 6th defendants were examined as D.W.1 and D.W.2 respectively and Ex. D1 to D11 were marked on the side of the defendants.

54. By order dated 20.12.2010 of this Court, the following issues were framed for consideration:

1. Whether the Memorandum of Agreement dated 23.03.2007 executed by the 6th defendant on behalf of the 2 to 4 defendants is valid and binding on the defendants to pay the compromise amount of the plaintiff?

2. Is not the agreement of sale dated 23.09.2006 entered by the plaintiff and the defendants 2 to 4 valid and binding?

3. Is not the Power of Attorney dated 18.01.2007 executed by the defendants 2 to 4 appointing the 6th defendant in force at the time of execution of the Agreement dated 23.03.2007?

4. Whether the cheques issued by the 6th defendant in favour of the plaintiff is towards the compromise agreement for balance payment arising out of the contract?

5. Is not the plaintiff entitled to the reliefs claimed in a sum of Rs.1,13,49,319/- from the defendants with costs.

6. To what other reliefs?

Issue Nos.1 and 3 are taken up together for consideration:

55. On a perusal of the records, it is admitted fact that the plaintiff and the defendants 1 to 4 have entered into the agreement of Sale dated 23.09.2006 for the purchase of the land for a price of Rs.6,47,36,000/- (Rupees Six Crore Forty Seven Lakh and Thirty Six Thousand only). Out of which, a sum of Rs.80,00,000/- (Eighty Lakhs Only) has been paid towards advance for the said sale proceedings and the remaining amount has to be paid at the time of the execution of the sale deed on or before 45 days from the date of obtaining NOC from the Government authorities in favour of the plaintiff as per Clause 11 of the sale Agreement which contemplates that "the sale transaction shall be completed within 45 days from the date of obtaining NOC from SIPCOT and related authorities that there is no acquisition proposal, 4(1) notification related to the schedule mentioned property"

56. Under such circumstances, the defendants 1 to 4 have executed Power of Attorney in favour of the 6th defendant after revoking earlier Power of Attorney executed in favour of the 5th Defendant to deal with the sale proceedings. While being so, a third party was willing to purchase the property for a higher sale consideration compared to the plaintiff. Hence, the 6th defendant being the General Power of Attorney Holder had executed the Memorandum of Agreement dated 23.03.2007 with the Plaintiff for payment of Rs.2 Crore as refund of advance amount payed by the plaintiff and also as damages for not proceedings with the sale agreement.

57. Be that as it may, it has to be proved that the Power of Attorney executed in favour of the 6th defendant was in force at the relevant time and Ex.D10-Letter is a valid one to be considered for cancellation of the Power of Attorney executed in favour of the 6th defendant. As regards aforesaid aspect, the Hon'ble Supreme Court in Amar Nath Vs. Gian Chand and Others reported in MANU/SC/0105/2022 observed as follows:

59. While on cancellation, we may notice that the plaintiff, in his deposition, has stated that he had cancelled the power of attorney at Mehre and there itsel

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f was the Office of the Sub-Registrar located. He has admitted that he did not get the power of attorney cancelled at the Sub-Registrar Office. Even, more importantly, he has admitted to not having sent any notice of cancellation. The only evidence consists of a statement of PW1 that the first defendant was aware of the cancellation and the statement of PW6, who had said that the first defendant was also there on 02.02.1987, when on two papers a line was drawn to signify the cancellation. The Trial Court and also the appellate court have relied upon the DX sent by the plaintiff himself, which appears to undermine the evidence about the cancellation on 02.02.1987. The High Court should not have, at any rate, disturbed the said finding in a Second Appeal. In such circumstances, the conclusion is inevitable that the case of the plaintiff that power of attorney stood cancelled, in the manner done on 02.02.1987, cannot be accepted. At any rate, we find it difficult to accept the case of the plaintiff that the first defendant, who is the third party, could be attributed any knowledge of the surrender or the alleged cancellation on 02.02.1987, even assuming for a moment that we could lend credence to the plaintiff’s version in this regard that the second defendant surrendered the power of attorney. We need not pronounce on the question whether the power of attorney being registered, it could be cancelled only by a registered power of attorney. This we say as even in the absence of a registered cancellation of the power of attorney, there must be cancellation and it must further be brought to the notice of the third party at any rate as already noticed. Such a cancellation is not made out. 58. Further, the Hon'ble Allahabad High Court in Chandrama Singh and others Vs. Mirza Anis Ahmad reported in MANU/UP/1232/2011 observed as follows: 18. It is therefore, held that the notice/document dated 20.02.1973 sent by registered post being not registered under the Registration Act could not nullify the registered Power of Attorney dated 17.03.1967. Since the subject matter was immovable property of value more than one hundred rupees. The registered Power of Attorney could be validly revoked/cancelled by another registered document, therefore notice dated 20.02.1973 sent by registered post was only a communication and since it was not registered under the Registration Act, 1908, it did not revoke the registered Power of Attorney dated 17.03.1967. The substantial question of law is answered above. 59. Having considered the aforesaid observations made by the Hon'ble Apex Court and Allahabad High Court, this Court is of the view that while the earlier Power of Attorney executed in favour of the 5th defendant was revoked by another registered document Ex.P7, the defendants 1 to 4 has sent Ex.D10-letter by registered post sans acknowledgment which is produced before the Trial, could not be considered as a valid document evidencing revocation of Power of Attorney executed in favour of the 6th defendant. Further, there is no whisper with regard to the cancellation of Power of attorney in the reply notices sent by the defendants to the plaintiff. While it is a only communication of the revocation of Power of Attorney, it has to be construed that the Power of Attorney was in force till the revocation of the same in a proper manner i.e. the same was not registered under the Registration Act, 1908. Therefore, the Memorandum of Agreement dated 23.03.2007-Ex.P8 executed by the 6th defendant on behalf of the 2nd to 4th defendant is valid and binding on the defendants to pay the compromise amount to the plaintiff. Hence, the Issue No.1 and 3 are decided in favour of the plaintiff. 60. As per the agreement of Sale dated 23.09.2006-Ex.P4, under clause 11, the sale transaction should have been completed within a period of 45 days from the date of obtaining NOC from the Government Authorities. However, "No Objection Certificate" from the Government Authorities was not obtained as enshrined in clause 11 of the said Agreement either by the plaintiff or the defendants 1 to 4. Hence, the agreement of Sale dated 23.09.2006 entered between the plaintiff and the defendants 2 to 4 is valid and binding till obtaining NOC from the Government Authorities. Accordingly, Issue Nos.2 is answered. 61. It has been learnt from the records that the defendants had attempted to sell the property without cancelling the Agreement of Sale- Ex.P8 in the manner known to law after executing Power of Attorney in favour of the 6th defendant. Thereafter, an agreement dated 23.3.2007 was entered between the plaintiff and defendants which has been duly signed by the 6th defendant being the Power of attorney holder on behalf of 2nd to 4th defendants. In pursuant to the said agreement dated 23.3.2007, the 6th defendant representing 2 to 4th defendants had also handed over a Pay Order dated 22.03.2007 for a sum of Rs.50,00,000/- as initial payment and issued three Post Dated Cheques bearing Nos.534700, 534698 dated 15.10.2007 and 534699 dated 25.10.2007 drawn on Indian Overseas Bank for Rs.50,00,000/- each totaling of Rs.1,50,00,000/- (Rupees One Crore and Fifty Lakhs only) specifically representing the same will be honoured on presentation. In the meanwhile, the 6th defendant paid a sum of Rs.50,00,000/- by way of cash on 20.12.2007 and took back the Cheque No.534700 drawn on Indian Overseas Bank and assured the plaintiff that the other two cheques bearing Nos.534698 and 534699, dated 15.10.2007 and 25.10.2007 will also be honored and that the payments will be completed and account will be settled as agreed and the repayment of advance of Rs.1 Crore has also been paid to the plaintiff which is said to have been received from M/s.Multivision Software Pvt. Ltd., after executing Sale Agreement with it on the hope that they would complete the sale transaction by paying the sale consideration which was higher than agreed to with the plaintiff. It makes clear that compromise memo has been executed with the plaintiff to compensate the loss suffered by the plaintiff for not performing the Sale agreement Ex.P4 as per the clause 11 enshrined in the agreement. Under such circumstances, the plaintiff is entitled to receive the balance amount for compensation as per Memorandum of Agreement-Ex.P8 according to settled principles. Hence, the issue No.4 is answered in favour of the plaintiff as the cheques issued by the 6th defendant in favour of the plaintiff towards the compromise agreement for balance payment arising out of contract. 62. It is evident from observing the aforesaid discussion that the Power of Attorney dated 18.01.2007 executed in favour of the 6th defendant was in force at the time of the entering into the Memorandum of Compromise dated 23.03.2007 with the plaintiff and hence, the defendants 2 to 4 are liable for the act done by their Power Agent. Hence, the plaintiff is entitled to receive a sum of Rs.1,13,49,319/- from the defendants 2 to 4. Thus, the Issue No.5 is answered accordingly. 63. In the result, the suit is decreed in the following terms:- (i) The Defendants 2 to 4 are jointly and severally liable to pay a sum of Rs.1,13,49,319/- within a period of six months from the date of receipt of copy of this Judgment. (ii) If the defendants 2 to 4 fail to pay the aforesaid amount, it shall carry an interest at 6% per annum. (iii) No Costs.
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