Case Note & Summary
The appellants/plaintiffs, Hanif Gulamali Somji and others, filed an appeal against an order of the learned VI Joint Civil Judge Senior Division, Nashik dated 22nd February 2013, which refused their application for an interim injunction. The plaintiffs claimed ownership of a suit property under a sale deed dated 5th July 2007 executed by the initial landowners in their favour for a consideration of Rs.75 lakhs. The defendant No.3 company claimed rights under a development agreement dated 25th April 2008 executed by the plaintiffs in its favour. Subsequently, defendant No.2, who was inducted as an additional Director in defendant No.3 company, allegedly removed plaintiff No.1 as Director without following legal process and executed a power of attorney dated 5th March 2010 in favour of defendant No.1 company, where defendant No.2 was also a Director. Based on this power of attorney, defendant No.3 executed a sale deed dated 10th February 2012 in favour of defendant No.1. The plaintiffs challenged these transactions as fraudulent and sought an injunction to restrain the defendants from selling the property to third parties. The trial court refused the injunction, leading to the present appeal. The High Court examined the documents and submissions, noting that the plaintiffs had made out a prima facie case of fraud and misrepresentation. The court found that the power of attorney was executed without proper authorization and that the removal of plaintiff No.1 as Director was invalid. The court also noted that the plaintiffs had paid consideration for the property, as evidenced by bank statements showing payments through cheques and demand drafts. The balance of convenience was in favour of the plaintiffs, as the property was their principal asset and irreparable loss would be caused if the sale was allowed. Consequently, the court allowed the appeal, set aside the impugned order, and granted an injunction restraining the defendants from selling, transferring, or alienating the suit property until the disposal of the suit.
Headnote
A) Civil Procedure - Interim Injunction - Prima Facie Case - The court considered whether the plaintiffs had made out a prima facie case for grant of injunction to restrain sale of property based on alleged fraudulent execution of power of attorney and sale deed - Held that the plaintiffs' ownership under a prior sale deed and the suspicious circumstances surrounding the power of attorney and subsequent sale deed established a prima facie case (Paras 1-10). B) Contract Law - Power of Attorney - Validity - The power of attorney dated 5th March, 2010 was executed by defendant No.2 as Director of defendant No.3 company in favour of defendant No.1 company, where defendant No.2 was also a Director - The court noted that the power of attorney was executed without proper authorization and appeared to be a self-serving document - Held that such execution raises serious questions about its validity (Paras 2-5). C) Property Law - Sale Deed - Consideration - The plaintiffs claimed to have paid consideration of Rs.75 lakhs under the sale deed dated 5th July, 2007 through cheques and demand drafts - The defendants disputed the payment - The court examined bank statements and found that the consideration was paid by the plaintiffs or their related entities - Held that the payment of consideration supports the plaintiffs' claim of ownership (Paras 3-6). D) Company Law - Director - Removal - The plaintiffs alleged that defendant No.2 removed plaintiff No.1 as Director of defendant No.3 company without following legal process - The court noted that such removal was not properly effected - Held that the removal was invalid and the subsequent acts of defendant No.2 as Director were suspect (Paras 2-4).
Issue of Consideration
Whether the plaintiffs are entitled to an interim injunction restraining the defendants from selling the suit property based on a power of attorney and sale deed allegedly executed fraudulently.
Final Decision
The appeal is allowed. The impugned order dated 22nd February 2013 is set aside. The defendants are restrained by an order of injunction from selling, transferring, or alienating the suit property until the disposal of the suit. Rule made absolute. Civil Application disposed of.
Law Points
- Prima facie case
- balance of convenience
- irreparable loss
- fraud
- misrepresentation
- power of attorney
- sale deed
- injunction
- ownership
- consideration
