Supreme Court quashes criminal case against land buyer in Power of Attorney dispute: Bharat Sher Singh Kalsia vs. State of Bihar (2024) INSC 77 (31 January 2024)

Date of the Judgment: 31 January 2024
Citation: (2024) INSC 77
Judges: Vikram Nath, J., Ahsanuddin Amanullah, J.
Can a person who buys land from a Power of Attorney (PoA) holder be held criminally liable if there is a dispute between the original owners and the PoA holder? The Supreme Court of India recently addressed this question, clarifying the extent of a buyer’s responsibility in such transactions. The court quashed a criminal case against a land buyer, emphasizing that disputes between the original owners and the PoA holder do not automatically implicate the buyer in criminal wrongdoing. This judgment was delivered by a two-judge bench comprising Justice Vikram Nath and Justice Ahsanuddin Amanullah, with the majority opinion authored by Justice Ahsanuddin Amanullah.

Case Background

The case involves a dispute arising from the sale of land using a Power of Attorney (PoA). The informant, Maharaj Kumar Man Vijay Singh, and his family members had given a PoA to Raj Kumar Karan Vijay Singh on 12 April 1994, for the management of their property in Dehradun. This PoA authorized the holder to manage and maintain the property, pursue litigation, and file plaints on behalf of the owners.

Subsequently, the PoA holder sold a portion of this property to Bharat Sher Singh Kalsia, the appellant, on 24 August 2000. The informant alleged that this sale was done without the consent of the original owners, and that the PoA holder had misappropriated the funds. Following this, the informant sent a legal notice to the PoA holder, seeking details of the sale and revoking the PoA. When no information was provided, a criminal case was filed.

The police, after investigation, filed a final report, leading to the Chief Judicial Magistrate taking cognizance of offences under Sections 409, 467, 468, 471 and 420 of the Indian Penal Code, 1860 (IPC). The appellant then sought to quash the FIR and the cognizance order in the High Court of Judicature at Patna, which was dismissed, leading to the present appeal before the Supreme Court.

Timeline

Course of Proceedings

The appellant initially filed a petition in the High Court of Judicature at Patna to quash the FIR. During the pendency of this petition, the appellant filed an interlocutory application to include the quashing of the order dated 18 November 2014, where the Chief Judicial Magistrate took cognizance of the offences. The High Court dismissed the petition, leading to the present appeal before the Supreme Court.

Legal Framework

The case primarily revolves around the interpretation of the Power of Attorney (PoA) and the application of Sections 467, 468, 469, and 471 of the Indian Penal Code, 1860 (IPC). These sections deal with offenses related to forgery and using forged documents.

The relevant sections of the Indian Penal Code, 1860 (IPC) are:

• Section 467, IPC: Deals with forgery of valuable security, will, etc.
• Section 468, IPC: Deals with forgery for the purpose of cheating.
• Section 469, IPC: Deals with forgery for purpose of harming reputation.
• Section 471, IPC: Deals with using as genuine a forged document or electronic record.

The Supreme Court also considered the clauses of the Power of Attorney (PoA), specifically Clauses 3, 11 and 15, to determine the extent of the PoA holder’s authority.

• Clause 3: “To execute any type of deed and to receipt consideration, if any, on our behalf and to get the Registration done of the same.” This clause authorizes the PoA holder to execute deeds, receive consideration, and complete registration.
• Clause 11: “To sell moveable or immoveable property including land, live stock, trees etc. and receive payment of such sales on our behalf.” This clause grants the PoA holder the power to sell property and receive payments.
• Clause 15: “To present for registration all the sale deeds or other documents signed by us and admit execution thereof before the District Registrar or the Sub-Registrar or such other Officer as may have authority to register the said deeds and documents as the case may be and take back the same after registration.” This clause authorizes the PoA holder to present documents signed by the owners for registration.

Arguments

Appellant’s Arguments:

• The appellant argued that he was merely a buyer of land based on a valid PoA.
• The sale deed was executed on the basis of the PoA, which was neither forged nor withdrawn at the time of the sale.
• The PoA authorized the holder to execute any type of deed, receive consideration, and get the deed registered.
• The appellant had paid valuable consideration for the land.
• The dispute was civil in nature, relating to whether the PoA holder paid the money to the original owners.
• The sale deed was executed in Dehradun, and the land was also located there, thus the courts at Buxar would not have jurisdiction.
• A civil suit filed by the original owners in Dehradun to set aside the sale deed was dismissed, upholding the PoA holder’s right to sell the property.

Respondent’s Arguments:

• The respondent argued that the appellant purchased land knowing that the PoA required the consent of the original owners for the sale.
• Clause 15 of the PoA required the PoA holder to present sale deeds signed by the owners for registration.
• The issue of territorial jurisdiction was not fundamental, but a matter of administrative convenience.
• If the court were to grant relief, it should be limited to the appellant, and the trial court should be allowed to summon the appellant if evidence warrants under Section 319 of the Code of Criminal Procedure, 1973 (CrPC).

State of Bihar’s Arguments:

• The State of Bihar justified the prosecution of the appellant based on the FIR filed.

Issues Framed by the Supreme Court

The Supreme Court did not explicitly frame issues in a separate section but dealt with the following key issues:

1. Whether the appellant, as a buyer of land from a PoA holder, could be held criminally liable for a dispute between the original owners and the PoA holder.
2. Whether the PoA authorized the holder to execute the sale deed without the signatures of the original owners.
3. Whether the courts at Buxar had the territorial jurisdiction to entertain the matter.

Treatment of the Issue by the Court

Authorities

The Supreme Court considered the following authorities:

The Supreme Court also considered the following legal provisions:

Judgment

How each authority was viewed by the Court?

• Mukul Agrawal v State of Uttar Pradesh, (2020) 3 SCC 402: The Supreme Court relied on this case to emphasize that a civil court’s finding that a document was not forged makes the criminal complaint baseless.
• K G Premshankar v Inspector of Police, (2002) 8 SCC 87: The Court used this case to interpret the relevance of civil court decisions in criminal proceedings, as per Sections 40-43 of the Indian Evidence Act, 1872.
• Smt. Raj Kumari Vijh v Dev Raj Vijh, (1977) 2 SCC 190: This case was cited to support the view that territorial jurisdiction is primarily for administrative convenience and does not go to the root of the matter. However, the court distinguished the facts of the present case.
• Forbes v Git, [1922] 1 AC 256: The principle from this case was used to interpret the clauses of the PoA, stating that earlier clauses prevail over later clauses if they cannot be reconciled.
• Radha Sundar Dutta v Mohd. Jahadur Rahim, AIR 1959 SC 24: This case was cited to approve the principle laid down in Forbes v Git.
• Priyanka Mishra v State of Madhya Pradesh, 2023 SCC OnLine SC 978: The Court cited this to highlight the need to protect against unwarranted criminal prosecution.
• Vishnu Kumar Shukla v State of Uttar Pradesh, 2023 SCC OnLine SC 1582: This case was cited to emphasize the need to protect against unnecessary trials.

What weighed in the mind of the Court?

The Supreme Court’s decision was influenced by several factors, primarily focusing on the interpretation of the Power of Attorney (PoA) and the nature of the dispute. The court emphasized that the dispute was essentially civil in nature, stemming from disagreements between the original land owners and the PoA holder. The court found that the appellant, as a buyer, had no direct involvement in this dispute and had acted in good faith by purchasing the land based on a valid PoA. The court also considered the fact that the civil suit filed by the original owners to cancel the sale deed had been dismissed, further indicating that the sale was valid. The court was also mindful of preventing the misuse of criminal proceedings to settle what was essentially a civil dispute.

The court’s reasoning was based on a harmonious interpretation of the clauses of the PoA, ensuring that none of the clauses were rendered ineffective. The court also considered the principle that earlier clauses in a deed prevail over later clauses if they cannot be reconciled.

Logical Reasoning

The court considered the argument that Clause 15 of the PoA required the signatures of the original owners for the sale deed. However, it rejected this interpretation, stating that Clause 15 was an additional provision, not in derogation of the PoA holder’s authority to execute the sale deed under Clauses 3 and 11. The court also noted that the civil suit filed by the original owners to cancel the sale deed had been dismissed, further indicating that the sale was valid.

The Supreme Court also considered the issue of territorial jurisdiction and concluded that the courts at Buxar did not have jurisdiction as the sale deed was executed in Dehradun and the land was also located there.

The court quoted the following from the judgment:

• “Thus, in the instant case, had it been a situation where the land-owners/principals had executed a Sale Deed in favour of any third party prior to the Sale Deed executed and registered by the PoA-holder with regard to the property in question, and the PoA-holder had not presented the said Sale Deed and had gone ahead with himself executing and getting registered a different or a subsequent Sale Deed in favour of the appellant, the matter would be entirely different.”
• “In sum, the dispute, if any, is between the land-owners/principals inter-se and/or between them and the PoA-holder. We think it would be improper to drag the appellant into criminal litigation, when he had no role either in the execution of the PoA nor any misdeed by the PoA-holder vis-à-vis the land-owners/principals.”
• “On an overall circumspection of the entire facts and circumstances, we find that the Impugned Judgment needs to be and is hereby set aside.”

The court did not have a minority opinion. The judgment was delivered by a two-judge bench, with Justice Ahsanuddin Amanullah authoring the opinion.

Key Takeaways

• A person who buys land from a Power of Attorney (PoA) holder cannot be automatically held criminally liable for disputes between the original owners and the PoA holder.
• The interpretation of the PoA is crucial in determining the extent of the PoA holder’s authority.
• Criminal proceedings should not be used to settle what are essentially civil disputes.
• Territorial jurisdiction is an important factor in determining which court can hear a case.

Directions

The Supreme Court directed that the Trial Court will act in accordance with law if it decides to exercise its power under Section 319 of the Code of Criminal Procedure, 1973 (CrPC) against the appellant.

Development of Law

The ratio decidendi of this case is that a bona fide purchaser of land from a Power of Attorney holder cannot be held criminally liable for disputes between the original owners and the PoA holder, especially when the PoA authorizes the sale and the buyer has no direct involvement in the dispute. This judgment reinforces the principle that criminal proceedings should not be used to resolve civil disputes.

Conclusion

The Supreme Court’s judgment in Bharat Sher Singh Kalsia vs. State of Bihar (2024) INSC 77, quashed the criminal case against the appellant, a land buyer, clarifying that a buyer cannot be held liable for disputes between the original owners and the PoA holder when the sale is based on a valid PoA. The court emphasized the civil nature of the dispute, the need for a harmonious interpretation of the PoA, and the importance of territorial jurisdiction.