2022 S C M R 1262

11/2/23, 2:28 AM 2022 S C M R 1262
2022 S C M R 1262
[Supreme Court of Pakistan]
Present: Mazhar Alam Khan Miankhel and Jamal Khan Mandokhail, JJ
Syed ATIF RAZA SHAH---Petitioner
Versus
Syed FIDA HUSSAIN SHAH and another---Respondents
Civil Petition No. 1998 of 2018, decided on 2nd March, 2022.
(Against the judgment of the Lahore High Court, Lahore dated 22.03.2018
passed in Civil Revision No. 15075/04 of 2017)
(a) Contract Act (IX of 1872)---
----Ss. 182 & 215---Power of Attorney---Principal-agent relationship---Duties of an
agent---Scope---Agent dealing on his own account without principal's consent and
without acquainting him with all material circumstances---Right of principal to
repudiate such transaction explained.
Power of attorney is an instrument in writing, conferring authority or power by a
principal to his agent to do certain acts in a specific and limited manner. The
relation that an agent and a principal share, is a fiduciary one. Under agency, the
agent must act in a way that is advantageous and beneficial to the principal and to
safeguard his right and interest.
Under an agency, an agent has a pivotal role, as he represents the principal or
conducts business on his behalf. While dealing or entering into a transaction in
respect of the subject matter of a power of attorney, the duties that an agent has are
to use much due skill and due diligence as he can; to communicate with the
principal and to obtain his instructions at every stage of the transaction; and to
avoid conflict of interest between his duty and interest of the principal.
An agent, while dealing with the third party on his own account in regard to a
subject matter, to which he is employed, is subjected to a duty to deal fairly with
the principal and to communicate him all the material facts in connection with the
transaction, unless the principal manifests that he knows such facts, or that he does
not care to know them. The next duty of the agent is to avoid conflict of interest,
between his duty and the interest of the principal. Since trust is an essential element
of an agency, therefore, under no circumstances, should the agent put himself
before the interest of the principal. If a circumstance arises, wherein there is a
conflict of interest, that is arising in the transaction, it is the duty of the agent to
disclose any understanding that would incur him a gain, from any transaction that is
conducted with a third party. If the agent fails to do any of the duties, resulting into
either dishonest concealment of any material fact from the principal or the dealing
is disadvantageous to him, the principal has the right to repudiate the transaction,
that occurred between the third party and the agent, and the Courts can rescind the
outcome of the transaction.
(b) Contract Act (IX of 1872)---
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11/2/23, 2:28 AM 2022 S C M R 1262
----Ss. 182 & 215---Power of Attorney---Principal-agent relationship---Dishonest

concealment of material facts by agent---Conflict of interest---Misconduct and
misuse of authority by the agent---In the present case, the agent by exercising the
authority conferred upon him, had transferred the property in question by way of a
purported gift deed, in the name of his son (the petitioner), without first disclosing
all the material facts and getting permission or consent of the principal---Mutation
of the property was effected in the name of the petitioner on 4.9.2012, whereas, the
principal had revoked the power of attorney on 5.9.2012, which shows that the
principal was no more willing for the agent to continue as his agent---No evidence
was available to prove that before entering into the transaction, the agent ever
informed the principal in this behalf---Since there was dishonest concealment of
material facts, therefore, it resulted into a conflict of interest, as such, the dealing
was disadvantageous to the right and interest of the principal---Under such
circumstances, the transfer of the property by the agent in the name of his son was a
classic example of misconduct and misuse of authority by an agent---Transaction in
respect of the plot in question effected between the agent and his son (the
petitioner) had rightly been repudiated at the request of the principal---Petition for
leave to appeal was dismissed and leave was refused.
Muhammad Yasin and another v. Dost Muhammad through LRs and another
PLD 2002 SC 71 and Ahmad and others v. Salman Ali PLD 2003 SC 31 ref.
Mudassar Khalid Abbasi, Advocate Supreme Court and Syed Rifaqat Hussain
Shah, Advocate-on-Record for Petitioner.
Nemo for Respondents.
Date of hearing: 2nd March, 2022.
JUDGMENT
JAMAL KHAN MANDOKHAIL, J.---The petitioner filed a suit for possession
through partition before the Civil Judge 1st Class, Kharian, whereas, the respondent
No.1 filed a suit for declaration and permanent injunction by questioning the sale
mutation bearing No. 7280 attested on 04.09.2012, effected in favour of the
petitioner. The suit of respondent No.1 was decreed, whereas the suit filed by the
petitioner was dismissed through a consolidated judgment and decree dated
27.04.2016, as the subject matter of both the suits was the same. The petitioner
filed an appeal, which was dismissed by the Additional District Judge, Kharian,
vide judgment and decree dated 31.01.2017. Feeling aggrieved, he filed a Civil
Revision before the Lahore High Court, Lahore which was dismissed in limine
through the impugned order dated 22.03.2018, hence this petition. It is a case of the
respondent No.1 that he was living abroad, therefore, the respondent No.2 was
appointed as his attorney to look after his property in his absence. According to the
respondent No.1, the respondent No.2 by misusing his authority, transferred the
property in question in the name of his son the petitioner, without his consent and
knowledge, which is an illegality. It is further contended that the respondent No:2
was verbally asked that he was going to revoke the power of attorney in his favour,
so he may not use the same any more, but prior to proper revocation, the
11/2/23, 2:28 AM 2022 S C M R 1262
respondent No.2 fraudulently got attested a sale mutation in the name of petitioner,
his son.
2. Heard the learned counsel for the petitioner and perused the record. Power of
attorney is an instrument in writing, conferring authority or power by a principal to
his agent to do certain acts in a specific and limited manner. The relation that an
agent and a principal share, is a fiduciary one. Under agency, the agent must act in
a way that is advantageous and beneficial to the principal and to safeguard his right
and interest. The right of a principal is protected by section 215 of the Contract Act,
which is as under:
"215. Right of principal when agent deals, on his own "account, in business of
agency without principal's consent, without first obtaining the consent of his
principal and acquainting him with all material circumstances which have
come to his own knowledge on the subject, the principal may repudiate the
transaction, if the case shows either that any material fact has been
dishonestly concealed from him by the agent, or that the dealings of the
agent have been disadvantageous to him.
Illustrations
(a) A directs B to sell A's estate. B buys the estate for himself in the name of C,
A, on discovering that B has bought the estate for himself may repudiate the
sale, if he can show that B has dishonestly concealed any material fact, or
that the sale has been disadvantageous to him
(b) ......................................"
3. An agency basically is divided into three essential components; principal,
agent and third party. Under an agency, an agent has a pivotal role, as he represents
the principal or conducts business on his behalf. While dealing or entering into a
transaction in respect of the subject matter of a power of attorney, the duties that an
agent has, to use much due skill and due diligence as he can; to communicate with
the principal and to obtain his instructions at every stage of the transaction; and to
avoid conflict of interest between his duty and interest of the principal. Two
conditions are annexed to the right of a principal to repudiate the transaction, where
the circumstances mentioned in the above-referred section along with the
illustration "a" exist. They are (i) dishonest concealment of material facts; and (ii)
dealing being disadvantageous to the principal's right and interest. Thus, an agent,
while dealing with the third party on his own account in regard to a subject matter,
to which he is employed, is subjected to a duty to deal fairly with the principal and
to communicate him all the material facts in connection with the transaction, unless
the principal manifests that he knows such facts, or that he does not care to know
them. The next duty of the agent is to avoid conflict of interest, between his duty
and the interest of the principal. Trust is since an essential element of an agency,
therefore, under no circumstances, should the agent put himself before the interest
of the principal. If a circumstance arises, wherein there is a conflict of interest, that
is arising in the transaction, it is the duty of the agent to disclose any understanding
that would incur him a gain, from any transaction that is conducted with a third
party. If the agent fails to do any of the duties, resulting into either dishonest
11/2/23, 2:28 AM 2022 S C M R 1262
concealment of any material fact from the principal or the dealing is

disadvantageous to him, the principal has the right to repudiate the transaction, that
occurred between the third party and the agent, and the Courts can rescind the
outcome of the transaction.
4. In the case in hand, the respondent No.2 by exercising the authority conferred
upon him, has transferred the property in question by way of a purported gift deed,
in the name of his son (the petitioner), without first disclosing all the material facts
and getting permission or consent of the respondent No.1. The mutation of the
property was effected in the name of the petitioner on 04.09.2012, whereas, the
respondent No.1/principal had revoked the power of attorney on 05.09.2012, which
shows that the respondent No.1 was no more willing the respondent No. 2 to
remain his agent. There is no evidence to prove that before entering into the
transaction, the respondent No.2 ever informed the respondent No.1 in this behalf.
Since there was dishonest concealment of material facts, therefore, it resulted into a
conflict of interest, as such, the dealing was disadvantageous to the right and
interest of the respondent No.l. Under such circumstances, the transfer of the
property by the respondent No.2 in the name of his son is a classic example of
misconduct and misuse of authority by an agent. Reliance has been placed in the
cases reported as Muhammad Yasin and another v. Dost Muhammad through LRs
and another (PLD 2002 SC 71) and Ahmad and others v. Salman Ali (PLD 2003 SC
31). The learned High Court has rightly upheld the concurrent findings of facts
arrived at by the Courts below, whereby, the transaction in respect of the plot in
question effected between the respondent No.2 and his son (the petitioner) has been
repudiated at the request of the respondent No. 1. The learned counsel for the
petitioner has failed to point out any illegality or irregularity in the impugned
judgment of the learned High Court, warranting interference in the concurrent
findings of facts.
Thus, in view of above, the petition is dismissed and leave to appeal is refused.
MWA/A-18/SC Petition dismissed.
11/2/23, 2:28 AM 2022 S C M R 1262

2022 S C M R 1262

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11/2/23, 2:28 AM 2022 S C M R 1262

----Ss. 182 & 215---Power of Attorney---Principal-agent relationship---Dishonest

concealment of any material fact from the principal or the dealing is

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