In the case of Shikha Properties Pvt Ltd versus S Bhagwant Singh & Others reported in 74 (1998) DLT 113 and Harbans Singh versus Smt. Shanti Devi reported in 1997 RLR 487, it has been held by the Hon’ble High Court of Delhi that Section 202 of the contract Act would make a power of attorney executed for consideration irrevocable. It cannot be cancelled. In the case of Ramesh Chand (supra), the Hon’ble High Court was pleased to reiterate that by virtue of the provisions of Section 202 of the Contract Act, a power of attorney executed for consideration would remain valid even after the death of the executants because the same had elements of a commercial transaction which cannot be allowed to be frustrated on account of death of the executants. Section 202 of the Contract Act provides that such an agency cannot, in the absence of an express contract, be terminated to the prejudice of such interest.
Sh. Bidhan Chand Biswas vs Sh. Prakash Chand Bansal & Ors.[ Delhi High Court-RSA No.131/2014- DT 20 May, 2014]
Indian Contract Act-1872
202. Termination of agency, where agent has an interest in subject-matter
Where the agent has himself an interest in the property which forms the subject-matter of the agency, the agency cannot, in the absence of an express contract, be terminated to the prejudice of such interest.
Illustrations
(a) A gives authority to B to sell As land, and to pay himself, out of the proceeds, the debts due to him from A. A cannot revoke this authority, nor can it be terminated by his insanity or death.
(b) A consigns 1,000 bales of cotton to B, who has made advances to him on such cotton, and desires B to sell the cotton, and to repay himself out of the price, the amount of his own advances. A cannot revoke this authority, nor is it terminated by his insanity or death.
_________________________
Irrevocable Agency
An agency in the absence of an express contract to the contrary cannot be terminated by the Principal if the agent has himself an interest in the property which is the subject-matter of agency. ‘Agent’ has been defined in Section 182 of the Indian Contract Act, 1872, to mean a person employed to do any act for another or to represent another in dealings with third persons. The person for whom such act is done, or who is so represented, is called the ‘principal’. Section 185 of the Contract Act suggests that no consideration is necessary to create an agency. Besides the Indian Contract Act, the Power of Attorney Act, 1882 deals with the subject. Section 1-A of the Power of Attorney Act defines power of attorney to include any instruments empowering a specified person to act for and in the name of the person executing it. Section 2 of the said Act provides that the donee of a power-of-attorney may, if he thinks fit, execute or do any instrument or thing in and with his own name and signature and his own seal, where sealing is required, by the authority of the donor of the power and every instrument and thing so executed and done, shall be as effectual in law as if it had been executed or done by the donee of the power in the name, and with the signature and seal, of the donor thereof. This section applies to powers-of-attorney created by instruments executed either before or after this Act comes into force. Thus, the donor of a power of attorney has every right to revoke the same at any time after the execution of such power except in a case where Section 202 of the Contract Act is attracted. [Smt. Shamali Das vs Swadesh Ghosh & Ors DATED-10 July, 2009]
A Brief Survey of The Registration Act.
Amar Nath Vs. Gian Chand and Anr. [ Supreme Court of India] –
[Civil Appeal No. 5797 of 2009]
12. We must make a survey of the relevant provisions of the Registration Act. Section 17 deals with the documents which are compulsorily to be registered. The consequences of a compulsorily registrable document not being registered are spelt out in Section 49 of the Act.
Section 18 deals with documents, which are optionally registrable. In other words, they are documents, which do not attract the wrath of Section 49 of the Act. In the state of Himachal Pradesh from where this case arises, Section 18A has been inserted (vide Vide Himachal Pradesh Act 2 of 1969, s. 3). It reads as follows:
“18-A. Documents for registration to be accompanied by a true copy.-
Notwithstanding anything contained in this Act, the registering officer shall refuse to register any document presented to him for registration unless such document is accompanied by a true copy thereof.”
13. The argument of the first defendant, based on Section 18A, is as follows:
Section 18A contemplates the production of the certified copy of the power of attorney and therefore the production of the certified copy of the power of attorney along with the original of the sale deed was fully justified.
The High Court, in the impugned judgment, has referred to Section 18 (apparently Section 18A) and held that it is evident from the said provision that it was necessary for the Registering Authority to see the true copy of the special power of attorney.
Impact of Section 18A
14. What Section 18A contemplates is the production of a true copy of a document, which is sought to be got registered. The document, which is sought to be registered in this case was the sale deed executed by the second defendant in favour of the first defendant. We are not called upon to decide the case that the true copy of the sale deed was not produced.
15. In fact, our view finds support from the Statement of Objects and Reasons to be found in the Indian Registration (Punjab Amendment Bill), 1961.Section 18A was first introduced in Punjab and it, is thereafter, that it was also made applicable in respect of the State of Himachal Pradesh. The Statement of Objects and Reasons to the Punjab Bill reads as follows:
“According to section 52(1)(c) of the Indian Registration Act, 1908, all documents registerable under the Act, are copied in the relevant Bahis before they are returned to the executant. It takes a considerable time to copy out these documents in the relevant Bahis and the delay causes considerable loss to the litigant people.
Similarly, there is no check on the writing of deeds and to give relief to the public on these two accounts. Applications under this Act, and also on the fees charged by deed-writers. Often, people with little. experience and knowledge of the laws on Stamp Registration are. writing out these documents at very high rates. This Bill seeks to give relief to the public on these two accounts.”
16. It is, therefore, clear that the true copy of the document presented for registration is to be produced under Section 18A.It is only to avoid the delay resulting from having to copy the document, that Section 18A was inserted.
The Other Provisions
17. The argument of the plaintiff would appear to be that it is imperative, having regard to Sections 32 and 33 of the Act, that the original power of attorney should be produced. In view of this, we consider it necessary to advert to Sections 32 and 33 of the Act, which read as follows:
“32. Persons to present documents for registration `Except in the cases mentioned in sections 31, 88 and 89 every document to be registered under this Act, whether such registration be compulsory or optional, shall be presented at the proper registration office-
(a) by some person executing or claiming under the same, or, in the case of a copy of a decree or order, claiming under the decree or order, or
(b) by the representative or assignee of such a person, or
(c) by the agent of such a person, representative or assign, duly authorised by power-of-attorney executed and authenticated in manner hereinafter mentioned.”
33. Power-of-attorney recognisable for purposes of section 32
(1) For the purposes of section 32, the following powers-of-attorney shall alone be recognised, namely:-
(a) if the principal at the time of executing the power-of-attorney resides in any part of India in which this Act is for the time being in force, a power-of-attorney executed before and authenticated by the Registrar or Sub-Registrar within whose district or sub-district the principal resides;
(b) if the principal at the time aforesaid resides in any part of India in which this Act is not in force, a power-of-attorney executed before and authenticated by any Magistrate;
(c) if the principal at the time aforesaid does not reside in India, a power-of-attorney executed before and authenticated by Notary Public, or any court, Judge, Magistrate, Indian Consul or vice-consul, or representative of the Central Government:
PROVIDED that the following persons shall not be required to attend at any registration-office or court for the purpose of executing any such power-of-attorney as is mentioned in clauses (a) and (b) of this section, namely-
(i) persons who by reason of bodily infirmity are unable without risk or serious inconvenience so to attend;
(ii) persons who are in jail under civil or criminal process; and
(iii) persons exempt by law from personal appearance in court.
Explanation: In this sub-section “India” means India, as defined in clause (28) of section 3 of the General Clauses Act, 1897.] Section 33 (2) In the case of every such person the Registrar or Sub-Registrar or Magistrate, as the case may be, if satisfied that the power-of-attorney has been voluntarily executed by the person purporting to be the principal, may attest the same without requiring his personal attendance at the office or court aforesaid.
Section 33 (3) To obtain evidence as to the voluntary nature of the execution, the Registrar or Sub-Registrar or Magistrate may either himself go to the house of the person purporting to be the principal, or to the jail in which he is confined, and examine him, or issue a commission for his examination.
Section 33 (4) Any power-of-attorney mentioned in this section may be proved by the production of it without further proof when it purports on the face of it to have been executed before and authenticated by the person or court hereinbefore mentioned in that behalf.”
18. We also consider it necessary to refer to Section 34 of the Act. It reads as follows:
“34. Enquiry before registration by registering officer.-
(l) Subject to the provisions contained in this Part and in sections 41, 43, 45, 69, 75, 77, 88 and 89, no document shall be registered under this Act, unless the persons executing such document, or their representatives, assigns or agents authorized as aforesaid, appear before the registering officer within the time allowed for presentation under sections 23, 24, 25 and 26:
Provided that, if owing to urgent necessity or unavoidable accident all such persons do not so appear, the Registrar, in cases where the delay in appearing does not exceed four months, may direct that on payment of a fine not exceeding ten times the amount of the proper registration fee, in addition to the fine, if any, payable under section 25, the document may be registered.
(2) Appearances under sub-section (1) may be simultaneous or at different times.
(3) The registering officer shall thereupon-
(a) enquire whether or not such document was executed by the persons by whom it purports to have been executed;
(b) satisfy himself as to the identity of the persons appearing before him and alleging that they have executed the document; and
(c) in the case of any person appearing as a representative, assign or agent, satisfy himself of the right of such person so to appear.
(4) Any application for a direction under the proviso to sub-section (1) may be lodged with a Sub-Registrar, who shall forthwith forward it to the Registrar to whom he is subordinate.
(5) Nothing in this section applies to copies of decrees or orders.
19. The argument of the plaintiff that for a proper and legal presentation of a document, the first defendant was obliged to produce the original power of attorney, does not appear to be sound. In fact, the matter itself is not res integra. This Court in Rajni Tandon v. Dulal Ranjan Ghosh Dastidar and another (supra), held, inter alia, as follows:
“19. In view of the aforesaid situation, the issue that falls for our consideration is whether a person who executes a document under the terms of the power of attorney, is, insofar as the registration office is concerned, the actual executant of the document and is entitled under Section 32(a) to present it for registration and get it registered.
21. Section 32 deals with persons who are eligible to present documents for registration before the proper registration office. Section 32 specifies three categories of persons who can present documents for registration.
The use of the word “or” between the clauses of Section 32 demonstrates that the legislature intended the said clauses to be read disjunctively and not conjunctively. It is settled law that the use of the word “or” is used to signify the disjunctive nature of a provision. In this regard reference may be made to the decision of this Court in State of Orissa v. State of A.P. [(2006) 9 SCC 591]
22. Clause (a) of Section 32 specifies that a document can be presented for registration by:
(i) by the person executing the document;
(ii) any person claiming under the document presented for registration; and
(iii) in the case the said document is a copy of a decree or order, any person claiming under the decree or order.
Clauses (b) and (c) deal with cases where the document is presented not by any person mentioned in (i), (ii) and (iii) above but by their agent, representative or assign. This is so because the use of the words “such person” in clauses (b) and (c) can be understood to mean only persons as referred to in (i), (ii) and (iii) above.
23. It may also be mentioned herein that the scope of clauses (b) and (c) in Section 32 may to an extent overlap one another. However, we do not propose to deal with the same as it is not relevant for determination of the issue before us.
It is suffice to say that insofar as clause (c) of Section 32 is concerned the agents, representatives or assigns of the persons referred to in (i), (ii) and (iii) above can present the said document for registration only if they are duly authorised by the power of attorney executed and authenticated in the manner hereinafter mentioned.
24. The words “executed and authenticated in manner hereinafter mentioned” in Section 32(c) would mean the procedure specified in Section 33. This is clear from the opening words of Section 33 which reads “for the purposes of Section 32, the following power of attorney shall alone be recognised”.
Section 32 refers to documents presented for registration by a holder of “power of attorney” in clause (c) and it therefore follows that the procedure specified under Section 33 would be attracted where a document is presented by a person holding “powers of attorney” of the persons mentioned in clause (a) of Section 32.
25. The aforesaid position makes it explicitly clear that Section 32 of the Act requires the documents sought to be registered, to be presented, inter alia by the person executing it. In other words, the said expression requires presence of the actual person executing the document. The basic principle underlying this provision of the Act is to get before the Sub-Registrar the actual executant who, in fact, executes the document in question.
In fact, the ratio of the decision in Ram Gopal [AIR 1960 Punj 226] has laid down a similar proposition on the conjoint reading of Section 32 and Section 33 of the Act and after referring to all the judgments noted hereinbefore. Same view has been expressed earlier by the Bombay High Court in Ratilal Nathubhai v. Rasiklal Maganlal [AIR 1950 Bom 326].
26. It is important to bear in mind that one of the categories of persons who are eligible to present documents before the registration office in terms of Section 32 of the Act is the “person executing” the document.
The expression “person executing” used in Section 32 of the Act, can only refer to the person who actually signs or marks the document in token of execution, whether for himself or on behalf of some other person. Thus, “person executing” as used in Section 32(a) of the Act signifies the person actually executing the document and includes a principal who executes by means of an agent.
Where a person holds a power of attorney which authorises him to execute a document as agent for someone else, and he executes a document under the terms of the power of attorney, he is, so far as the registration office is concerned, the actual executant of the document and is entitled under Section 32(a) to present it for registration and get it registered.
28. In the facts of the present case, it is quite clear that Indra Kumar Halani, was given the full authority by Nandlal Tantia under the power of attorney to transfer the suit property and to execute the necessary document. It is an accepted position that the said document had been executed by Indra Kumar Halani in the name and on behalf of Nandlal Tantia thereof.
Therefore, for the purposes of registration office under Section 32(a) of the Act Indra Kumar Halani is clearly the “person executing” the document. Therefore, it follows that the said sale deed which was executed and authenticated by Indra Kumar Halani could be presented for registration by him. We are of the considered view that Indra Kumar Halani acted in the aforesaid manner mandated under Section 32(a) of the Act.
29. The object of registration is designed to guard against fraud by obtaining a contemporaneous publication and an unimpeachable record of each document. The instant case is one where no allegation of fraud has been raised.
In view thereof the duty cast on the registering officer under Section 32 of the Act was only to satisfy himself that the document was executed by the person by whom it purports to have been signed. The Registrar upon being so satisfied and upon being presented with a document to be registered had to proceed with the registration of the same.”
20. In other words, when a person empowers another to execute a document and the power of attorney, acting on the power, executes the document, the power of attorney holder can present the document for registration under Section 32(a). Section 32(a) of the Registration Act deals with the person executing a document and also the person claiming under the same.
It also provides for persons claiming under a decree or an order being entitled to present a document. Section 32(b) speaks about the representative or assignee of ‘such a person’. The word such a person in Section 32(b) is intended to refer to the persons covered by Section 32(a).
Finally, Section 32(c) provides for the agent of ‘such a person’ which necessarily means the persons who are encompassed by Section 32(a). Besides agent of the person covered by Section 32(a), Section 32(c) also takes in the agent of the representative or assignee.
Now the words representative or assignee are to be found in Section 32(b). Thus, Section 32(c) deals with agents of the persons covered by Section 32(a) and agents of the representative or assignee falling under Section 32(b).
It is in respect of such an agent that there must be due authorisation by a power of attorney, which in turn, is to be executed and authenticated in the manner provided for in Section 33.
However, the person, who has actually signed the document or executed the document for the purpose of Section 32(a) does not require a power of attorney to present the document. It may be open to the principal, who has entered obligations under the document, to present the document. Section 32(c) must alone be read with Section 33 of the Act.
Thus, when Section 32(c) of the Registration Act declares that a document, whether it is compulsorily or optionally registrable, is to be presented, inter alia, by the agent of such a person, representative or assignee, duly authorised by power of attorney, it must be executed and authenticated in the manner and hereinafter mentioned immediately in the next following section.
Section 33 by its very heading provides for power of attorney recognisable for the purpose of Section 32. Section 32(a) cannot be read with Section 33 of the Act. In other words, in a situation, if a document is executed by a person, it will be open to such a person to present the document for registration through his agent.
The agency can be limited to authorising the agent for presenting the document for it is such a power of attorney, which is referred to in Section 32(c). It is in regard to a power of attorney holder, who is authorised to present the document for registration to whom Section 33 would apply.
In the facts of this case, the second defendant was armed with the power of attorney dated 28.01.1987 and if it was not cancelled and he had executed the sale deed on 28.04.1987, he would be well within his rights to present the document for registration under Section 32(a) of the Act.
21. It is no doubt true that presentation is not a matter of form. Without a valid presentation of the document, the registration would be illegal. In this regard, the observations of the Privy Council in judgment reported in Jambu Prasad v. Muhammad Aftab Ali Khan and others8 may be noticed.
“Para 8. It was decided, and as their Lordships considered correctly, by Sir John Stanley, C.J. and Sir George Knox, J. in 1966 in Ishri Prasad v. Baijnath 28A. 707 : 3 A.L.J. 743 : A.W.N. (1906) 195 that the terms of Sections 32 and 33 of Act III of 1877 are imperative, and that a presentation of a document for registration by an agent, in that case the agent of a vendee of Immovable property, who has not been duly authorised in accordance with those sections, does not give to the Registering Officer the indispensable foundation of his authority to register the document. As those learned Judges said:
His (the Sub-Registrar’s) jurisdiction only comes into force if and when a document is presented to him in accordance with law.
Para 11. One object of Sections 32, 33, 34 and 35 of Act III of 1877 was to make it difficult for persons to commit frauds by means of registration under the Act.”
However, in the facts, the IInd defendant having presented the sale deed as executant, the presentation and registration cannot be questioned.
22. Section 34 provides for the inquiry to be done by the Registering Office before he orders registration. It declares that no document shall be registered under the Act unless the persons executing such document or their representatives, assigns or agents authorised as aforesaid, appear before the Registering Authority before the time, allowed for presentation under Sections 23, 24, 25 and 26.
This is, however, subject to Sections 41, 43, 45, 69, 75, 77, 83 and 89. Appearances under Section 34(1) may be simultaneous or at different times. Section 34(3)(a) enjoins upon the Registering Officer to enquire whether or not such document was executed by the persons by whom it purports to have been executed.
Section 34(3)(b) further makes it his duty to satisfy himself as to the identity of a person’s appearing before him and alleging that they have executed the document. It must be understood and read along with Section 32(a). Section 32(a) mandates presentation of the document for registration by some person executing or claiming under the same, inter alia.
In respect of a person who presents the document, who claims to have executed the document, not only is he entitled to present the document for registration, in the inquiry under Section 34(3)(a) and 3(b), the duty of the Registering Officer extends only to enquire and find that such person is the person who has executed the document he has presented and further be satisfied about the identity of the person.
When it comes to Section 34(3)(c), the Registering Officer is duty-bound in respect of any person appearing as a representative, assign or agent to satisfy himself of a right of such a person to so appear. Section 34(3)(c) is relatable to persons covered by Section 32(b) and 32(c) of the Act.
We have already found that the word ‘agent’ is to be understood as a person who is authorised to present the document for registration. Such an agent would fall under Section 32(c). Thus, in regard to persons falling in Section 34(3)(c), it would, indeed, be incumbent on the agent, inter alia, to produce the power of attorney as such.
23. Section 33(4) of the Act must be read with Section 4 of the Power of Attorney Act, 1882. Section 33(4) reads as follows:
“33(4) Any power-of-attorney mentioned in this section may be proved by the production of it without further proof when it purports on the face of it to have been executed before and authenticated by the person or Court hereinbefore mentioned in that behalf.”
24. Sections 4(a) and (b) of the Power of Attorney Act, 1882 reads as follows:
“4. Deposit of original instruments creating powers-of-attorney. –
(a) An instrument creating a power-of-attorney, its execution being verified by affidavit, statutory declaration or other sufficient evidence, may, with the affidavit or declaration, if any, be deposited in the High Court 9 [or District Court] within the local limits of whose jurisdiction the instrument may be.
(b) A separate file of instruments so deposited shall be kept; and any person May search that file, and inspect every instrument so deposited; and a certified copy thereof shall be delivered out to him on request.”
25. For reasons, which we have indicated, Section 32(c) read with Section 33 and Section 34(2)(c) are inter-related and they would have no application in regard to the document presented for registration by a power of attorney holder who is also the executant of the document.
In other words, there is really no need for the production of the original power of attorney, when the document is presented for registration by the person standing in the shoes of the second defendant in this case as he would be covered by the provisions of Section 32(a) as he has executed the document though on the strength of the power of attorney.
To make it even further clear, the inquiry contemplated under the Registration Act, cannot extend to question as to whether the person who executed the document in his capacity of the power of attorney holder of the principal, was indeed having a valid power of attorney or not to execute the document or not.
26. Section 35 of the Registration Act provides for the procedure on admission or denial of execution. The person, who has executed the document is to be asked whether he accepts the execution of the document. Section 35(2) reads as follows:
“35(2) The registering officer may, in order to satisfy himself that the persons appearing before him are the persons they represent themselves to be, or for any other purpose contemplated by this Act, examine any one present in his office.”
27. This provision gives authority to the Registering Authority to satisfy himself that the persons appearing before him are the persons they represent to be or for any other purpose contemplated under the Act. Towards this end, Registering Officer can examine anyone present in his Office. Section 35(3) reads as follows:
“(3) (a) If any person by whom the document purports to be executed denies its execution, or
(b) if any such person appears to the registering officer to be a minor, an idiot or a lunatic, or
(c) if any person by whom the document purports to be executed is dead, and his representative or assign denies its execution, the registering officer shall refuse to register the document as to the person so denying, appearing or dead: Provided that, where such officer is a Registrar, he shall follow the procedure prescribed in Part XII: 50
[Provided further that the 51 [State Government] may, by notification in the 52 [Official Gazette], declare that any Sub-Registrar named in the notification shall, in respect of documents the execution of which is denied, be deemed to be a Registrar for the purposes of this sub-section and of Part XII.]”
28. Thus, the aforesaid provision deals with situations in which the Registering Authority refuses the registration. If the registering Authority is satisfied about the identity of the person and that he admits the execution of the document, it may not be a part of the Registrar’s duty to enquire further. The registration by itself will not bring the curtains down on questions relating to title to the property.
The very purport of the Law of Registration is to usher in and maintain a transparent system of maintaining documents relating to property rights. It puts the world on notice about certain transactions which are compulsorily registrable Section 17 interalia. The law also makes available facility of registering documents at the option of the person (Section 18).
29. Section 57 of the Act provides for keeping Books No. 1 and 2 and the Index relating to Book No.1 open for inspection to any person applying to inspect the same. Book No.1, it must be noticed, as provided in Section 51, is a register of non-testamentary documents relating to immovable property. Book No.2 is a record of reasons for refusal to register.
30. Section 58 of the Act deals with the procedure on admitting a document to registration.
“58. Particulars to be endorsed on documents admitted to registration. –
(l) On every document admitted to registration, other than a copy of a decree or order, or a copy sent to a registering officer under section 89, there shall be endorsed from time to time the following particulars, namely: –
(a) the signature and addition of every person admitting the execution of the document, and, if such execution has been admitted by the representative, assign or agent of any person, the signature and addition of such representative, assign or agent;
(b) the signature and addition of every person examined in reference to such document under any of the provisions of this Act; and
(c) any payment of money or delivery of goods made in the presence of the registering officer in reference to the execution of the document, and any admission of receipt of consideration, in whole or in part, made in his presence in reference to such execution.
(2) If any person admitting the execution of a document refuses to endorse the same, the registering officer shall nevertheless register it, but shall at the same time endorse a note of such refusal. State Amendments Tamil Nadu:
In section 58, – (i) in sub-section (1), after item (a), the following item shall be inserted, namely:-
“(aa) in the case of a document for sale of property, the signature and addition of every person admitting the claim under such document, and, if such claim has been admitted by the representative, assign or agent of any person, the signature and addition of such representative, assign or agent;”;
(ii) in sub-section (2), after the expression “execution of a document”, the expression “and in the case of a document for sale of property, any person admitting the execution of such document, or any person admitting the claim under that document” shall be inserted. [Vide Tamil Nadu Act 28 of 2000].”
31. Section 71 provides for reasons for refusal to register to be recorded. Section 72 provides for an appeal to the Registrar against an Order of the Sub-Registrar refusing to register. Section 77 contemplates a Suit against refusal by the Registrar within 30 days of his Order.
Precedent from Supreme court of India
Suraj Lamp and Industries Pvt. Ltd. vs. State of Haryana and Another (2012) 1 SCC 656,
The scope of power of attorney has been explained in the following words:
“20. A power of attorney is not an instrument of transfer in regard to any right, title or interest in an immovable property. The power of attorney is creation of an agency whereby the grantor authorises the grantee to do the acts specified therein, on behalf of grantor, which when executed will be binding on the grantor as if done by him (see Section 1-A and Section 2 of the Powers of Attorney Act, 1882). It is revocable or terminable at any time unless it is made irrevocable in a manner known to law. Even an irrevocable attorney does not have the effect of transferring title to the grantee.
21. In State of Rajasthan v. Basant Nahata, (2005) 12 SCC 77. this Court held: (SCC pp. 90 & 101, paras 13 & 52) “13. A grant of power of attorney is essentially governed by Chapter X of the Contract Act. By reason of a deed of power of attorney, an agent is formally appointed to act for the principal in one transaction or a series of transactions or to manage the affairs of the principal generally conferring necessary authority upon another person. A deed of power of attorney is executed by the principal in favour of the agent. The agent derives a right to use his name and all acts, deeds and things done by him and subject to the limitations contained in the said deed, the same shall be read as if done by the donor. A power of attorney is, as is well known, a document of convenience.
* * *
52. Execution of a power of attorney in terms of the provisions of the Contract Act as also the Powers of Attorney Act is valid. A power of attorney, we have noticed hereinbefore, is executed by the donor so as to enable the donee to act on his behalf. Except in cases where power of attorney is coupled with interest, it is revocable. The donee in exercise of his power under such power of attorney only acts in place of the donor subject of course to the powers granted to him by reason thereof. He cannot use the power of attorney for his own benefit. He acts in a fiduciary capacity. Any act of infidelity or breach of trust is a matter between the donor and the donee.”
An attorney-holder may however execute a deed of conveyance in exercise of the power granted under the power of attorney and convey title on behalf of the grantor.”
Loonkaran Sethiya Vs. State Bank of Jaipur & Ors [1968] INSC 124 (25 April 1968)-1969 AIR 73 1969 SCR (1) 122
The appellant was indebted to the respondent Bank. He executed a power of attorney in favour of the bank giving it authority to execute a decree which he had obtained in his favour. The bank filed an application for the execution of the decree in the appellant’s name, the application being signed by the manager of the Bank as holding power of attorney. The appellant object to the execution. His objections were over-ruled.
(i) The power given by the appellant in favour of the Bank was a power coupled with interest and in view of s. 202 of the Indian Contract Act it was irrevocable. [126 D] (ii) The interest of the appellant under the decree could not be said to have been transferred to the Bank either in writing or by operation of law. But the power of attorney was an engagement to pay out of the particular fund the debt due to the Bank and hence the same constituted an equitable assignment of the amount due under the decree or so much of that amount as was necessary for discharging the debts due to it. [127 A C] Watson v. The Duke of Wellington, [1830] 39 E.R. 231 and Burn N. Carvalho, [1839] 41 E.R. 265, applied.
There is hardly any doubt that the power given by the appellant in favour of the Bank is a power coupled with interest.
That is clear both from the tenor of the document as well as from its terms. Section 202 of the Contract Act provides that where the agent has himself an interest in the property which forms the subject-matter of the agency, the agency cannot, in the absence, of an express contract, be terminated to the prejudice of such interest. It is settled law that where the agency is created for -valuable consideration and authority is given to effectuate a security -or to secure interest of the agent, the authority cannot be revoked. The document itself says that the power given to the Bank is irrevocable.
Shanti Budhiya Vesta Patel & Ors. Vs. Nirmala Jayprakash Tiwari & Ors. [2010] INSC 297 (21 April 2010)
The appellants contended that they had revoked the Powers of Attorney executed in favour of respondent no. 1 by executing a fresh Power of Attorney in favour of said Narendra M. Patel. A registered document has a lot of sanctity attached to it and this sanctity cannot be allowed to be lost without following the proper procedure. The Power of Attorney executed by the appellants in favour of said Narender M. Patel, by revoking the registered Powers of Attorney executed in favour of respondent no. 9 to be baseless.
Budhiya Vesta Patel had himself entered into a Development Agreement dated 12.01.1994 with respondent no. 9 whereby the former transferred his rights, title and interest in the suit property to the latter for a consideration of Rs. 2,00,000/- which was fully paid by respondent no. 9 to the Budhiya Vesta Patel and accepted by him prior to the execution of the said agreement. It 9 was further submitted that the irrevocable Powers of Attorney which were executed in favour of respondent no. 9 by Budhiya Vesta Patel and, upon his death, by the appellants made the acts, which were carried out by respondent no. 9 in the best interest of the appellants, binding on the appellants and that there existed no valid ground for setting aside the compromise arrived at between the parties and the consent decree passed by the High Court.
By executing the said Powers of Attorney in favour of the respondent no. 9, the appellants had consciously and willingly appointed, nominated, constituted and authorized respondent no. 9 as their lawful Power of Attorney to do certain deeds, things and matters. The relevant clauses are being extracted herein below: – “6. To sign Petition or present Petitions or Petition, to file suit and to sign and verify claims, written statements, pleadings, applications, returns, and to appear, act in any Court- Civil, Criminal, Court Receiver and /or Revenue, original or appellate or Revisional or before any competent authority, Officer, or Officer for in respect of or in connection with the aforesaid and with buildings etc. thereon and/or any other proceedings, suit or appeal in connection with the management and superintendence of my said lands for any purpose whatsoever necessary.
The appellants also alleged that they had revoked the Powers of Attorney executed by them in favour of the respondent no. 9 by filing complaints with the police. We are of the considered opinion that this contention of the appellants is devoid of merit. Although there is no denying the fact that three police complaints had been filed on three different dates with the police against the alleged harassment and threats by 21 respondent nos. 8 and 9, it is difficult to understand how the Powers of Attorney executed by the appellants or their predecessor-in-interest stood revoked. The record of the case reveals that each of the complaints was filed by a separate person – the first complaint was filed by the appellants themselves, the second by an Advocate and the third by one Narendra M. Patel, who is himself a builder. It is significant to note that all these complaints came to be filed when said Narender M. Patel came into the picture. Further, it is important to take note of the fact that all the Powers of Attorney executed in favour of respondent no. 9 as also all the deeds and documents entered into between the predecessor-in-interest of the appellants and respondent no. 9 were duly registered with the office of the Sub-Registrar. Neither any document nor any of the Powers of Attorney was ever got cancelled by the appellants.
.
Precedent from High Courts
Ashok Kumar Jaiswal vs Ashim Kumar Kar (Calcutta High Court)
CO No. 1358 of 2010 – (13 February 2014)
If we look to Section 202 of the Indian Contract Act 1872, we would find, when the agent had interest in the property under the agency agreement in absence of an express provision the contract could not be terminated to the prejudice of such interest. Section 203 would permit the principal to revoke the authority of his agent subject however; when the agent partly exercised his authority such revocation would not be permissible under Section 204. If we read these three provisions together and try to answer the second query made to us by His Lordship we would find, the Power of Attorney so revoked by the owner should not be looked at in an isolated manner. The Power of Attorney generally issued to the developer, was in continuation of the original agreement for the development of the property meaning thereby, the developer who was entrusted to develop the property would be given authority to do further act as per the contract including dealing with the property to the extent permissible under the contract. Hence, the Power of Attorney was nothing but an agency agreement executed in furtherance of the original contract. If the original contract creates an interest in favour of the developer even if the Power of Attorney is revoked such interest would not evaporate. Hence, the analogy under the Contract Act would also lead to the conclusion;
Development Agreement
The first difficulty that arises in dealing with the questions referred is that neither a “developer” nor a “development agreement” is defined in the 1963 Act. Such expressions may not have been defined in any other statute and, in any event, even if they were defined in any other statute, such definitions may have been of little use in assessing the legal issues that arise herein. In the absence of a “developer” or a “development agreement” being defined, it is imperative that the nature of an agreement which is the subject-matter of a suit has to be assessed to ascertain whether such agreement is merely “a contract for the construction of any building or the execution of any other work on land” within the meaning of the expression in Section 14(3)(c) of the 1963 Act. It must first be appreciated that the questions that have been referred to this Bench arise in course of interlocutory proceedings in a suit and not at the trial of the suit. This is of immense significance as the considerations at the interlocutory stage and at the trial are qualitatively distinct and, arguably, may not overlap. Thus, the discretion of the court that may be exercised under Chapter II of the 1963 Act would be irrelevant at the interlocutory stage though a separate kind of discretion as recognised, for instance, in Order XXXIX of the Code would come into play. Again, jurisprudentially, the nature of the discretion that the court exercises under Chapter II of the 1963 Act is different from the nature of the discretion ordinarily exercised in interlocutory proceedings in a suit.
This leads to the unavoidable discussion as to what may be regarded as a development agreement as referred to in the questions framed for the reference and the judgments of this court cited by the parties. Without intending the discussion to be an exhaustive treatise on development agreements of all hues, it may be recognised there can be several agreements which can be loosely described as development agreements in the sense that such expression has been used in the judgments cited in course of the present proceedings. An owner without any funds or the independent resources to construct a new building on such owner’s land may engage another for such purpose with the consideration for the construction being paid by allocation of a part of the constructed area. There could be several variants of the same basic structure of a development agreement with the agreement either providing for the owner being entitled to a sum of money in addition to a specified share in the constructed area or with a developer being required to rid the land of its encumbrances, whether monetary or otherwise, prior to the construction being taken up. There may be other similar agreements under which the developer is required to temporarily relocate an existing tenant or occupant and ultimately provide the tenant or occupant a part of the constructed area. In the context in which certain agreements pertaining to the construction of new buildings contemplate the construction to be undertaken or orchestrated by a person other than the owner of the land, whether upon the demolition of the existing structure or otherwise, with such person other than the owner having a share in the constructed area, such agreements have now come to be regarded as development agreements. Whether or not such agreements are in the nature of collaboration or joint venture, they are loosely referred to as development agreements in several judgments. Such agreements are not merely for the construction of any building or for the mere execution of any other work on the land. The developer is not merely a contractor engaged to undertake the construction; the developer is, under the agreement with the owner, promised a part of the constructed premises as owner thereof together with the proportionate area of the land. In the context in which certain agreements are referred to as development agreements and the non-owner party to such an agreement is regarded as the developer qua the nature of the work envisaged under the agreement, the developer always has a share in the building or the area proposed to be constructed – which implies a proportionate share of the piece of earth – and such agreement envisages the developer to have a share of, and interest in, the final product which is the outcome of the agreement.
In such sense, a development agreement which envisages the party thereto other than the owner being responsible for ensuring the construction of a building on the subject land and having a share therein, there is an inescapable contract to transfer immovable property. In form, a development agreement which envisages the developer to have a share in the building proposed to be constructed in terms of the agreement, the agreement may appear to be somewhat not resembling an agreement for transfer of an immovable property; and, indeed, it is not an agreement simpliciter for sale of an immovable property. In law, however, a development agreement of the kind described herein entails the transfer of immovable property in the sense that the developer or an assignee of the developer, at the instance of the developer, would be entitled not only to a part of the constructed area but the proportionate share of the land on which the construction is made.
Understood in the sense that a development agreement has been in such context, the agency created by a power of attorney executed by the owner in favour of the developer may be seen to recognise an interest of the developer in the property which forms the subject-matter of the agency. But to stop here in answering the second question in the reference would be an abject failure to recognise the implication of the question. If the limited answer thus far given in response to the second question implies that such agency can never be annulled; it would make a mockery of the legal position on such aspect.
To begin with, Section 202 of the Contract Act, in the context of a power of attorney executed by an owner in favour of a developer pursuant to a development agreement, has to be reconciled with Section 54 of the Transfer of Property Act; particularly, as at least two of the judgments cited speak of a power of attorney executed in pursuance of a development agreement creating an agency coupled with an interest in favour of the developer-agent. Indian law does not recognise the equitable title to land of a person who has entered into an agreement to purchase the same. Thus, the final paragraph of Section 54 clarifies that an agreement for sale of an immovable property does not, of itself, create any interest in or charge on such land. Section 202 of the Contract Act, on the other hand, recognises an interest in the property which forms the subject-matter of the agency. The word “property” in Section 202 of the Contract Act would not mean the same “property” in the final paragraph of Section 54 of the Transfer of Property Act. In an agreement for sale of a land, the property is the land itself. In a power of attorney executed in pursuance of a development agreement of the kind that is referred to herein, the property which forms the subject-matter of the agency is not necessarily the part of the land that is envisaged to be transferred to the developer; it is the project itself.
In the context of the interest of the agent that is protected under Section 202 of the Contract Act, the authority of the principal has to be regarded as a kind of security for the agent. It must also be appreciated that the mere use of the word “irrevocable” in a power of attorney would not make it irrevocable unless it creates the kind of interest that is envisaged in Section 202 of the Contract Act. It is also the nature of the interest that has to be discerned; for instance, the prospect of remuneration to the agent arising from the agency may not constitute such an interest as would prevent the termination of the agency. The authority must be seen to have been given with the object of protecting or securing the interest of the agent; and it may not be sufficient if it does so incidentally. (Pollock & Mulla on Indian Contract and Specific Relief Acts; 12th Ed.) Section 201 of the Contract Act provides, inter alia, for the termination of an agency by the principal by revoking of the authority of the agent. The pre- conditions to the exercise of the power to revoke the authority of the agent and the effect of such termination are recognised in some of the subsequent provisions of the Contract Act. The general rule is that the principal may revoke the authority of the agent; the exceptions to the rule are provided in the statute. But when an agent has not exercised the authority to bind the principal and the revocation of the agency is contested on the basis of Section 202 or 204 of the Contract Act, it must be appreciated that such provisions are to protect the agent and if the prejudice suffered or likely to be suffered is offset by any act or deed, the revocation cannot be resisted. The point is best made with the help of the illustrations in Section 202 and Section 204 of the Contract Act. According to Illustration (a) under Section 202 of the Contract Act, if A gives authority to B to sell his land, and to pay himself out of the proceeds, the debts due to him from A, then A cannot revoke the authority. But it cannot be said that if A makes over the debts due to B prior to or simultaneously with the revocation of the authority, the revocation would still be bad. The same analogy can be carried to Illustration
(a) under Section 204 of the Contract Act. Such illustration provides that if A authorises B to buy cotton on account of A and to pay for it out of A’s money with B and B buys cotton in his own name and on his liability, then A cannot revoke B’s authority for payment for the cotton. Again, if A pays for the cotton purchased by B, or makes over such money to B, prior to revoking B’s authority or simultaneously therewith, there is no prejudice to B, and, consequently, the revocation may not be regarded as impermissible.
Manubhai Chhotabhai Patel vs Manubhai Motibhai [Gujarat High Court]
C/SA/202/2015 [dated-15/06/2022]
Death of the Principal
In Bowstead and Reynolds on “Agency”, 16th Edition, at page Nos. 660-661, it has been mentioned that the authority expressed to be irrevocable is not determined by death etc. In Chitty on “Contract”, 27th Edition, Vol. 2, page 94-95, the learned Author while dealing with the “Termination of Authority” has commented that, if there is an interest coupled with the authority, that is, if the agreement is entered into by Deed or on sufficient consideration, whereby an authority is given for the purpose of providing a security, such an authority is irrevocable even by death, etc.
I am in agreement with the contention of the learned counsel Mr. Mihir Thakor for the respondent that the agency would not be terminated Under Section 202 of the Contract Act even after death of the person who has, authorized, where there is no express contract. for termination, relied upon the decision of Division Bench of this Court in the case of Her Highness Shantadevi Pratapsinh Rao Gaekwad v. Sayjibhai H. Patel reported in 1998 (2) GLR 1521, wherein it is held as under : “No doubt, in the case of Garapati Venkanna (sic) (supra), the Madras High Court had held that, where a power of attorney has been executed by several principals in favour of a person and one of the principals having distinguished interest in subject-matter of power of attorney dies, the death terminates the power of attorney. This view was taken by the Madras High Court because, the Court found that there was no authority coupled with an interest and, therefor, the argument raised on the basis of Section 202 of the Contract Act could not prevail. Here is a case in which we have already held as above that it was a case of an agency coupled with interest. In our opinion, the position of law with reference to Sec. 202 of the Contract Act is, therefore, very clear that the cases in which the agency is coupled with interest and there is no express contract for termination, there cannot be any termination even by death and, therefore, the factum of death of the principal during the pendency of the suit cannot lead to the termination of the agency. The necessary ingredients required under Section 202 of the Contract Act so as to hold that the agency could not be terminated in the facts of the present case are, therefore, clearly established and we also find that even the factum of death of the principal cannot bring about the termination of the agency.”
Interpretation process
It is well settled principles of the interpretation that process of interpretation is process of providing meaning of words and their effectiveness as medium to communicate a particular thoughts. It is by the process of interpretation that the Court interpret any statute or any given documents. It is well settled that in a process of interpretation the entire documents needs to be read as a whole. There cannot be any piece-meal interpretation of averment made in the documents or statute. The intention of the maker of the documents is to be gathered by reading the documents as a whole. If there is conflicting clauses in document or statute, then it has to be read harmoniously to avoid the situation whereby any of the provision becomes otios. The various rules of interpretation are guidelines for interpretation of statute and that of documents. Those rules do not override language of document, where the language is clear. They are only lights to enable the judges to understand what the statute is. It is compendious Rules of interpretation can only be regarded as mere to interpretation guides and ought to be applied as if there was statutory process enacted with all decisions on proviso of the legislation. The Court should invoke whichever of the rules produce a result that satisfy it sense of justice to approach before it.