In a groundbreaking decision, the Supreme Court has clarified the hierarchy between conflicting clauses in legal deeds. The Court held that if an inconsistency arises between the earlier and later clauses of a deed, with the later clause nullifying the obligations set by the former, the later clause is deemed repugnant and is to be rejected. The earlier clause is asserted to prevail in such circumstances.
Contrary to the rulings of the High Court and Trial Court, Justices Vikram Nath and Ahsanuddin Amanullah overturned the findings. Their decision emphasized that when the clauses in a deed cannot be reconciled, precedence is given to the earlier clause(s) over the later clause(s) during the interpretation of deeds or contracts.
This significant legal precedent arose from a case involving the interpretation of clauses in a Power of Attorney (PoA), executed by landowners in favor of individuals from whom the appellant purchased land on August 24, 2000.
The contentious clauses in question were 3, 11, and 15 of the PoA. While clauses 3 and 11 granted authority to the PoA holder to execute deeds, including sales, and receive consideration on behalf of the landowners, clause 15 authorized the presentation and registration of sale deeds or documents signed by the landowners.
Allegations of criminal acts, including misuse of the PoA, misappropriation of property, and fraudulent sale deeds, were made against the appellant. The Supreme Court, rejecting the FIR filed under various sections of the Indian Penal Code, emphasized the need to harmoniously interpret the clauses.
The court scrutinized the clauses, emphasizing the necessity to render all three effective without rendering any of them redundant. After a thorough examination, the court concluded that there was no contradiction between clauses 3 and 11 and clause 15. Instead, clause 15 was deemed an addition to clauses 3 and 11, not in derogation of them.
Referring to legal precedents, the court highlighted the principle that if a later clause destroys the obligation created by an earlier clause, the later clause is repugnant and the earlier clause prevails. This interpretation is consistent with the case of Forbes v Git and was subsequently endorsed by the Supreme Court in Radha Sundar Dutta v Mohd. Jahadur Rahim.
In conclusion, the Supreme Court granted relief to the appellant, quashing the criminal proceedings. The court held that no criminal case was made out against the appellant, as they had no involvement in the execution of the PoA or any misconduct by the PoA holder concerning the landowners. The ruling emphasized the duty of the court to protect litigants against vexatious and unwarranted prosecution, aligning with the precedent set in Vishnu Kumar Shukla v State of Uttar Pradesh.
This landmark decision, encapsulated in the case of *Bharat Sher Singh Kalsia versus State of Bihar & Anr.*, sets a clear precedent for the prioritization of earlier clauses in the interpretation of legal deeds.
