When Two Clauses Of A Deed Are Repugnant, Earlier Clause Will Prevail Over Later Clause : Supreme Court

Recently, the Supreme Court observed that if there is a repugnancy between the earlier and later clauses of a deed, whereby a later clause destroys altogether the obligation created by the earlier clause, then the later clause is to be rejected as repugnant to the earlier clause and the earlier clause prevails.

Setting-aside the findings of the High Court and Trial Court, the Bench of Justices Vikram Nath and Ahsanuddin Amanullah noted that if the earlier and later clauses of a deed cannot be reconciled then the earlier clause(s) would prevail over the later clause(s) when construing a Deed or a Contract.

The abovementioned finding of the Supreme Court came while interpreting the clauses of the Power of Attorney (“PoA”) where PoA was executed by the landowners/principals, in favour of the persons from whom the appellant purchased the land on 24.08.2000.

For the sake of convenience, it is necessary to produce the said clauses.

“Clauses 3 and 11 of PoA together authorized the PoA-holder to execute deeds, including of/for sale, receive consideration in this regard and proceed to registration upon accepting consideration on behalf of the land-owners/principals. Whereas clause 15 authorized the PoA holders to present for registration the sale deeds or other documents signed by the land-owners/principals and admit the execution thereof.”

It was alleged by the landowners that criminal acts were committed by the PoA holders, including the appellant, by misusing the PoA and alleging that they had misappropriated the property, did not rendition the account(s) and that the Sale Deed was fraudulent as it was without obtaining the signatures of the land-owners/Principals of the PoA-holder.

Against the registration of FIR under Sections 467 (Forgery of valuable security, will, etc.), 468 (Forgery for purpose of cheating), 469 (Forgery for Purpose of Harming Reputation), and 471 (Using as genuine a forged document) of the Indian Penal Code, 1860 for which the trial has commenced, the appellant preferred a petition before the High Court for quashing of the said FIR. However, the petitioner was dismissed by the High Court.

It is against the said dismissal that the appellant preferred a criminal appeal before the Supreme Court.

Refuting the allegation labeled by the landowners, it was contended by the PoA holders that clause 15 authorized them to present for registration the sale deed(s) or other documents signed by the landowners/principals 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.

The court felt that it is required to interpret harmoniously as also logically the effect of a combined reading of the afore-extracted clauses.

“As such, our endeavour would, in the first instance, necessarily require us to render all three effective and none otiose. In order to do so, this Court would test as to whether all the three clauses can independently be given effect to and still not be in conflict with the other clauses.”

The court after harmoniously construing the clauses of the PoA reconciled the three clauses in the present case. The court records that there are no contradictions between clauses 3 and 11 and clause 15 because clause 15 is an addition to Clauses 3 and 11 of the PoA and not in derogation thereof.

“The reason to so hold is that besides the contingencies where the PoA holder had been authorized to execute any type of deed and receive consideration and get registration done, which included sale of movable/immovable property on behalf of the landowners/principals, the land owners/principals had also retained the authority that if a Sale Deed was/had been signed by them, the very same PoA holder was also authorized to present it for registration and admit to execution before the authority concerned.”

According to the court, the matter would be entirely different, if 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.

Reference was made to the case of Forbes v Git, [1922] 1 AC 256 which was subsequently approved by the Supreme Court in the case of Radha Sundar Dutta v Mohd. Jahadur Rahim, AIR 1959 SC 24.

“If in a deed an earlier clause is followed by a later clause which destroys altogether the obligation created by the earlier clause, the later clause is to be rejected as repugnant and the earlier clause prevails... But if the later clause does not destroy but only qualifies the earlier, then the two are to be read together and effect is to be given to the intention of the parties as disclosed by the deed as a whole. …”, (per Lord Wrenbury in Forbes v. Git)

Taking note of the aforesaid position of law the court observed that “if there arises a conflict between Clauses 3 and 11, on the one hand, and Clause 15 on the other, we would have to conclude that Clauses 3 and 11 would prevail over Clause 15 as when the same cannot be reconciled, the earlier clause(s) would prevail over the later clause(s), when construing a Deed or a Contract.”

The court provided relief to the appellant purchaser of the land from the criminal proceedings after finding that no criminal case is made out as 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.

This Court granted protection to the appellant purchase against unwanted criminal prosecution and from the prospect of unnecessary trial in light of Vishnu Kumar Shukla v State of Uttar Pradesh, where the court underscored the duty of the High Court in protecting the litigants against vexatious and unwanted prosecution.

Accordingly, the court allowed the appeal and quashed the FIR registered at Dumraon Police Station, Buxar, Bihar as also the order of the trial court taking cognizance and all consequential acts emanating therefrom, insofar as they relate to the appellant.

Case Details: BHARAT SHER SINGH KALSIA VERSUS STATE OF BIHAR & ANR. CRIMINAL APPEAL NO.523 OF 2024

Citation : 2024 LiveLaw (SC) 80

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