Summary
The Supreme Court held that a general power of attorney executed alongside an unregistered agreement to sell did not create an agency coupled with interest under Section 202 of the Contract Act merely because it was called irrevocable, so it ended on the principal's death under Section 201, and the sale deed the attorney later executed in favour of her son passed no title. Read together, the documents would create an interest in immovable property needing registration under Section 17(1)(b) of the Registration Act. The respondent's injunction decree was upheld.
Issues
- Whether the holder of a general power of attorney and an agreement to sell had any right, title or interest in the property that survived the principal's death, so as to validly execute a registered sale deed in favour of her son after the principal died.
- Whether a power of attorney described as 'irrevocable' and executed alongside an agreement to sell is an agency coupled with interest under Section 202 of the Contract Act.
- Whether the respondent, in her suit for injunction, had to separately challenge the power of attorney, the agreement to sell and the sale deed in the appellants' favour.
Provisions considered
- Section 201, Indian Contract Act, 1872Agency ends, among other ways, on the death of the principal. As the power of attorney was not coupled with interest, the agency ended when the principal died in 1997, and the attorney had no authority to execute the 1998 sale deed. (¶¶ 33, 46)
- Section 202, Indian Contract Act, 1872An exception to Section 201: where the agent has an interest in the property that is the subject-matter of the agency, the agency cannot be terminated to the prejudice of that interest. The Court held the authority must be given to secure the agent's interest, and the power of attorney here was not executed for that purpose, so the provision did not apply. (¶¶ 33, 34, 35, 36, 39, 45, 46)
- Sections 17(1)(b) and 49, Registration Act, 1908If the power of attorney and agreement to sell were read together as giving the holder an interest in the property, the document would compulsorily need registration under Section 17(1)(b); being unregistered, under Section 49 it could not affect the property, so the holder could not claim title to convey. (¶¶ 50, 51, 52, 53, 55)
- Section 54, Transfer of Property Act, 1882Relying on Suraj Lamp, an agreement to sell is not a conveyance and does not create any interest in or charge on the property; immovable property of the value of Rs. 100 or more can be transferred by sale only by a registered instrument. (¶¶ 47, 53, 56)
- Sections 1A and 2, Powers of Attorney Act, 1882Noted, with Chapter X of the Contract Act, as the source of the law on powers of attorney: the relationship is one of principal and agent, and acts of the donee bind the donor as if done by him. (¶¶ 27, 29, 30)
Held
- A power of attorney creates an agency: the executant is the principal and the holder is the agent, and acts done by the agent within the power bind the principal. (¶¶ 27, 28, 29, 30, 31)
- Section 202 applies only where there is a principal-agent relationship and the agent has an interest in the subject-matter of the agency, that is, where the authority is given to secure or effectuate the agent's interest. An agent's right to remuneration, or a mere interest in exercising the power, is not enough. (¶¶ 34, 35, 36, 37, 38, 39)
- A power of attorney is construed from its contents and the parties' intention, read as a whole, not from its title. Merely calling a power of attorney 'irrevocable' does not make it so if it is not coupled with interest; conversely, a power coupled with interest is irrevocable even without such words. (¶¶ 41, 42, 44, 45)
- Read on its own, the power of attorney here was general, conferring management and dealing powers without being executed to secure any interest of the holder, so it was revocable and ended on the principal's death. An agreement to sell does not convey ownership, so the holder had no title to pass. (¶¶ 40, 46, 47, 48)
- That the power of attorney and agreement to sell were executed together in favour of the same person does not by itself show an interest in the subject-matter. Even if read together as transferring an interest in the property, the document would need registration under Section 17(1)(b) of the Registration Act; without it the holder could not claim right, title or interest to execute the sale deed. Transfers by 'GPA sale' do not convey title, as held in Suraj Lamp. (¶¶ 53, 55, 56)
- No separate prayer for declaration was needed in the respondent's injunction suit. Where title is directly and substantially in issue, a specific issue on title is framed and the finding on possession rests on title, the court may decide title in a suit for injunction; here the trial court framed an issue on the appellants' ownership and decided it. (¶¶ 57, 58, 59, 60, 61)
Result
Appeals dismissed; High Court judgment affirming the decree of permanent injunction in favour of the respondent and dismissing the appellants' suit for declaration and possession upheld; parties to bear their own costs.