attorney did not have the authority to enter into arbitration agreements regarding the land, leading to the nullification of all related transactions

The unique point in this case is that the attorney did not have the authority to enter into arbitration agreements regarding the land, leading to the nullification of all related transactions.

The main story of the case revolves around a dispute over the ownership of a piece of land. The petitioners claimed that their predecessor-in-interest had not authorized any transactions regarding the land and that the transfer of ownership through an arbitration award obtained by the respondents' predecessor was fraudulent. The court found that the attorney representing the respondents did not have the authority to enter into arbitration agreements regarding the land. Consequently, the court set aside all transactions related to the land conducted on the basis of the power of attorney and ruled in favor of the petitioners.

The case you provided, Memon v. Mst. Irshad Begum, revolves around a dispute over property ownership. The petitioners claimed that their predecessor-in-interest had been fraudulently misrepresented in transferring the property through an arbitration award obtained by the respondents' predecessor, who was acting under a general power of attorney. The court found that the attorney did not have the authority to enter into arbitration agreements regarding the property. Additionally, the court emphasized that fraud vitiates even the most solemn proceedings and that attorneys cannot exceed the scope of their powers. As a result, the court set aside all transactions related to the property conducted on the basis of the general power of attorney and decreed the suit in favor of the petitioners.

Memons

2016 C L C 248

April 21, 2017

2016 C L C 248

[Lahore]

Before Ali Akbar Qureshi, J

ABDUL MAJEED and another----Petitioners

Versus

Mst. IRSHAD BEGUM and 10 others----Respondents

C.R. No.1022 of 2007, heard on 23rd June, 2015.

(a) Specific Relief Act (I of 1877)---

----Ss. 42 & 54---Civil Procedure Code (V of 1908), S.12(2)---Suit for declaration and perpetual injunction---Fraud and misrepresentation, proof of---General power of attorney---Scope---Arbitration agreement beyond power of attorney---Permissibility---Plaintiffs application under S.12(2) of C.P.C. and suit for declaration and perpetual injunction, were dismissed by both trial and appellate courts---Plaintiffs claimed that predecessor of defendants, being general power of attorney of their predecessor, had fraudulently and through misrepresentation transferred suit land in favour of his brother by obtaining decree on basis of arbitration award---Contention raised by plaintiffs was that said attorney was not empowered to enter into any arbitration agreement---Validity---All transactions, that were arbitration proceedings, announcement of award and making of award rule of court, were based on registered general power of attorney---Even if said power of attorney was admitted to be correct, attorney had not been given power to enter into any type of arbitration to dispose of suit property---Agreement for referring matter to arbitrator, award and filing of petition had been made on same day, which was sufficient to show fraud and misrepresentation on part of predecessor of defendants---Fraud vitiated even most solemn proceedings or order---General or special attorney could not go beyond scope of terms of power of attorney---General power of attorney, in order to transfer suit and in favour of his own brother, had to obtain permission from principal, predecessor of plaintiffs, which was missing in the present case---Courts below did not peruse record, particularly power of attorney, which was basis of all subsequent misdeeds and frauds---Appellate court, instead of appreciating and evaluating record, had dismissed appeal in very summary and slipshod manner, which was not warranted by law---Appellate court was expected to correct irregularities and illegalities committed by trial court---High Court, setting aside impugned judgment and decree along with all transactions conducted on basis of general power of attorney with regard to suit land, decreed the suit---Revision petition was allowed in circumstance.

Malik Riaz Ahmed and others v. Mian Inayat Ullah and others NLR 1992 SCJ 587; Unair Ali Khan and others v. Faiz Rasool and others PLD 2013 SC 190; Rashida Begum v. Ch. Muhammad Anwar and others PLD 2003 Lah. 522; Muhammad Jan v. Arshad Mehmood and 3 others 2009 SCMR 114; Rehmatullah and others v. Saleh Khan and others 2007 SCMR 729; Nasir Abbas v. Manzoor Haider Shah PLD 1989 SC 568 and Muhammad Nawaz alias Nawaza and others v. Member Judicial, Board of Revenue and others 2014 SCMR 914 rel.

(b) Civil Procedure Code (V of 1908)---

----S. 12(2)---Contract Act (IX of 1872), S.182---Application under S.12(2), C.P.C.--- Power of attorney--- Scope--- Fraud and misrepresentation-Determination---Attorney, in the present case, had not been given power to enter into any type of arbitration to dispose of suit property---Agreement for referring matter to arbitrator, award and filing of petition had been made on same day, which was sufficient to show fraud and misrepresentation.

----S. 115----Revisional jurisdiction of High Court---Scope---Concurrent findings---Principles---Court observed that even in case of concurrent findings of courts below, where courts below had acted with material irregularity and legal infirmity, High court could take cognizance of the matter under S.115 of C.P.C.

Nasir Abbas v. Manzoor Haider Shah PLD 1989 SC 568 and Muhammad Nawaz alias Nawaza and others v. Member Judicial, Board of Revenue and others 2014 SCMR 914 rel.

(d) Fraud---

----Fraud vitiates even most solemn proceedings or order.

Rehmatullah and others v. Saleh Khan and others 2007 SCMR 729 rel.

(e) Power of Attorney---

----General or special attorney cannot go beyond scope of terms of power of attorney.

Malik Riaz Ahmed and others v. Mian Inayat Ullah and others NLR 1992 SCJ 587; Unair Ali Khan and others v. Faiz Rasool and others PLD 2013 SC 190 and Rashida Begum v. Ch. Muhammad Anwar and others PLD 2003 Lah. 522 rel.

(f) Administration of Justice---

----Appellate jurisdiction---Duty of appellate court---Appellate court is always expected to correct irregularities and illegalities committed by trial court.

Malik Noor Muhammad Awan for Petitioners.

Nemo for Respondents.

Date of hearing: 23rd June, 2015.

JUDGMENT

ALI AKBAR QURESHI, J.--- This civil revision calls in question the judgment and decree dated 14.12.2006 and 23.06.2001, whereby the learned Courts below through this single judgment dismissed the application under section 12(2) of Code of Civil Procedure, 1908, and suit (No.204/91) for declaration and for perpetual injunction.

2. The necessary facts for the disposal of this revision petition are that, the suit land was originally allotted to one Jan Muhammad predecessor-in-interest of the petitioners and proprietary rights were finally transferred through sale deed dated 07.04.1989; that the said Jan Muhammad remained in possession being owner of the suit land till his death, and after his death by operation of law, the petitioners being successors-in-interest came into the possession. Allegedly the predecessor of the respondents obtained a decree on the basis of an arbitration proceedings and the said decree was also given effect in the revenue record through mutation No.146, attested on 18.08.1989. The petitioners while filing the suit and the application under section 12(2) of Code of Civil Procedure, 1908, alleged that their predecessor had not entered into any type of the transaction qua the suit land, neither received any consideration, therefore, the impugned decree on the basis of the arbitration oh the statement of special attorney of Jan Muhammad deceased is product of fraud and misrepresentation as the alleged power of attorney in favour of predecessor of the respondents is forged and fabricated. Lastly prayed, that the judgment and decree passed on the basis of arbitration proceeding and mutation along with special power of attorney be declared illegal, unlawful.

The suit was contested vehemently by the respondents on legal as well as factual grounds.

The learned Courts below out of divergent pleadings of the parties framed necessary issues, recorded evidence of respective parties and finally dismissed the application under section 12(2) of Code of Civil Procedure, 1908, as well as the suit for declaration and perpetual injunction on 23.06.2001. Against which an appeal was filed, which too was dismissed vide impugned judgment and decree 14.12.2006. Hence, this revision petition.

3. Learned counsel for the petitioners submits, that all the documents and particularly the general power of attorney allegedly executed by the predecessor-in-interest of the petitioners is forged and product of fraud and misrepresentation. Further pointed out, that if for the sake of arguments the general power of attorney is admitted correct, that no such power to enter into arbitration is mentioned, therefore, even on this ground all the proceedings are liable to be quashed.

4. Conversely, no one has entered appearance on behalf of the respondents despite publication in the newspaper, therefore, respondents have already been proceeded ex-parte vide order dated 23.06.2014.

5. Heard. Record perused.

6. It is revealed from the record, that all the transactions i.e. arbitration proceedings, announcement of award and making the award rule of the court, are based on a registered general power of attorney allegedly executed by the predecessor of the petitioners. Although the validity of general power of attorney has seriously been questioned by the petitioners but to find out the truth, the contents of general power of attorney dated 15.10.1981 (Ex.D1) were perused and examined, from where it is found, that even if this document is admitted correct, the attorney has not been given the power to enter into any type of the arbitration to dispose of the property. The relevant part of the power of attorney is reproduced hereunder:-

7. As evident from the record, that the agreement to refer the matter to the arbitrator, the award and filing of the petition all were made on the same day, which is sufficient to show the fraud and misrepresentation on the part of predecessor of the respondents. Further by way of the alleged arbitration and award, the predecessor of the respondents finally transferred the suit land in favour of his real brothers.

8. It is settled law that the attorney i.e. general/special attorney cannot go beyond the scope of the terms of the power of attorney. Reliance is placed on "Malik Riaz Ahmed, etc. v. Mian Inayat Ullah, etc." (NLR 1992 SCJ 587), wherein the Hon'ble Supreme Court of Pakistan, has observed that:-

"8. It is 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 No.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 of Respondent No.2 to discharge his duty in this regard.

9. Section 214 of the Contract Act provides that it is 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 instruction in cases of difficulty. The determination whether a particular case will be covered by the expression 'case 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."

The Hon'ble Supreme Court of Pakistan, while dealing with the same proposition in the judgment titled "Unair Ali Khan and others v. Faiz Rasool and others" (PLD 2013 SC 190), laid down that:-

"3. It is settled law that power of attorney should be construed strictly and only such powers, which are expressly and specifically mentioned in the power of attorney, must be exercised by the agent as considered to have been delegated to him (for reference see PLD 2002 SC 71). "

In another judgment delivered by this Court cited as "Rashida Begum v. Ch. Muhammad Anwar and others" (PLD 2003 Lahore 522), it has been observed that:-

"8. Attending to argument raised by the learned counsel for the appellant that the powers of attorney Ex.R-13, did not authorize Muhammad Nazir to enter into any arbitration agreement and thus the agreement and the award based thereupon are invalid. It is fundamental rule of law that the power of attorney must be strictly construed. If any reference in this behalf is required, reliance can be placed on the case reported as Muhammad Yasin and others v. Dost Muhammad and others (PLD 2002 SC 71). Applying this principle, I have gone through the power of attorney and find that though there are general powers conferred upon the attorney, to conduct the cases before the Courts and also to alienate the property, but there is no specific power given to him to enter into any arbitration agreement on behalf of ladies, for the reference of the matter to the arbitrator. The general powers mentioned above, cannot in any manner be construed, the intention of the ladies to authorize their agent to seek the resolution of the dispute through arbitration. If the ladies intended to confer such power, nothing prevented them to have specifically empowered the attorney, in this behalf. This conspicuous omission of authority in the power of attorney clearly indicates that Muhammad Nazir was never authorized to enter into the arbitration agreement, therefore, notwithstanding whether Muhammad Nazir factually executed the arbitration agreement on behalf of the daughters of Muhammad Bakhash with the respondents and had agreed for the appointment of Muhammad Asghar, even on the principle of acquiescence on his part such an agreement, would not bind the appellant and the other ladies."

9. As regard the transfer of suit land by the attorney in result of the so called arbitration in favour of his own brother, it is also settled proposition of law that the general attorney in this situation had to obtained the permission from the principal i.e. predecessor of the petitioner which is missing in this case. Reliance is placed upon the judgment of the Hon'ble Supreme Court of Pakistan i.e. "Muhammad Jan v. Arshad Mehmood and 3 others" (2009 SCMR 114). The relevant paragraph of this judgment is reproduced hereunder:-

"In the case of Jamil Akhtar (supra) the question pertained to registration of transfer of property by an attorney in his own name where registered general power of attorney did not authorized such a transfer. It is settled principle of law that whenever a general attorney transfers the property of his principal in his own name or in the name of his close fiduciary relations, he has to take special permission from the principal. Therefore, the case is distinguishable from the present petition."

Therefore, it can safely be observed in the light of the judgment passed by the Hon'ble Supreme Court of Pakistan cited as 'Rehmatullah and others v. Saleh Khan and others" (2007 SCMR 729), that the fraud vitiates even most solemn proceedings/order.

10. It is very strange, as appears from the findings of the learned courts below that both the learned courts have not even bothered to peruse the record and particularly the power of attorney which is in fact the basis of all the subsequent misdeeds and frauds. The learned appellate court being the first court of appeal instead of appreciating and evaluating the record in a very summery and slipshod manner had dismissed the appeal, which in any case, is not warranted by law. The learned courts below and specially the learned appellate court is always expected, that the appellate court will correct and set at right the irregularities and illegalities committed by the court of first instance.

11. Although both the learned courts below recorded concurrent finding's but the Hon'ble Supreme Court of Pakistan has observed; that the if the courts below acted with material irregularity and legal infirmity, the High Court while exercising the revisional jurisdiction conferred under section 115 of Code of Civil Procedure, 1908, can take the cognizance of the matter.

The Hon'ble Supreme Court of Pakistan in the judgment titled "Nasir Abbas v. Manzoor Haider Shah" (PLD 1989 Supreme Court 568), has observed that this type of the concurrent findings can be interfered. The relevant portion is reproduced as under:

"11. ….. It is also settled that if the lower Court, misreads the evidence on record and fails to take notice of a vital fact appearing therein, comes to an erroneous conclusion, it would be deemed to have acted with material irregularity and its decision is open to revision by the High Court. See Dwarika v. Bagawati (AIR 1939 Rangoon 413) and Fut Chong v. Maung Po Cho (AIR 1929 Rangoon 145)."

In another esteemed judgment cited as "Muhammad Nawaz alias Nawaza and others v. Member Judicial, Board of Revenue and others" (2014 SCMR 914), the Hon'ble Supreme Court of Pakistan has observed as under:

8. The argument that when all the fora functioning in the revenue hierarchy concurrently held that the appellants were occupying the land in dispute in their capacity as tenants, such finding being one of fact could not have been interfered with by the High Court under Article 199 of the Constitution of Islamic Republic of Pakistan, has not impressed us as a finding does not become sacrosanct because it is concurrent. It becomes sacrosanct only if it is based on proper appraisal of evidence. The finding of the fora functioning in the revenue hierarchy despite being concurrent was not based on proper appraisal of evidence and due application of law therefore, the High Court was well within its jurisdiction to interfere therewith. For the very condition for conferment of jurisdiction on a Court of law is to render a finding on proper appraisal of evidence and due application of law. If and when it would do otherwise, it would go outside its jurisdiction. Such order can well be quashed in exercise of Constitutional jurisdiction of the High Court. An order thus passed cannot be protected because the repository of such jurisdiction has the jurisdiction to pass it. Lord Denning in his well-known book "the Discipline of law", while commenting on orders of this nature at page 74, observed as under:-

"This brings me to the latest case. In it I ventured to suggest that whenever a tribunal goes wrong in law, it goes outside the jurisdiction conferred on it and its decision is void, because parliament only conferred jurisdiction on the tribunal on condition that it decided in accordance with law."

Another paragraph of this book at page 76 also merits a keen look which reads as under:-

"I would suggest that this distinction should now be discarded. The High Court has, and should have, jurisdiction to control the proceedings of inferior courts and tribunals by way of judicial review. When they go wrong in law, the High Court should have power to put them right. Not only in the instant case to do justice to the complainant. But also so as to secure that all courts and tribunals, when faced with the same point of law, should decide it in the same way. It is intolerable that a citizen's rights in point of law should depend on which judge tries his case, or in what court it is heard. The way to get things right is to hold thus: No court or tribunal has any jurisdiction to make an error of law on which the decision of the case depends. If it makes such an error, it goes outside its jurisdiction and certiorari will lie to correct it."

12. In view of above, this civil revision is allowed. Consequently, the judgment and decree dated 14.12.2006 and 23.06.2001, passed by the learned courts below, is set aside, all the transactions qua the suit land conducted on the basis of general power of attorney are also set aside and the suit filed by the petitioners is decreed. No order as to cost.

SL/A-141/L Petition allowed.

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