The concept of granting authority or delegating is not new to India, in fact, it can be traced back several hundred years. This concept of bestowing power on a person, by another person, to do things in a formal manner is called a ‘power of attorney’. Power of Attorney is widely used in personal and business transactions, as well as in conducting litigations before courts. The person granting the power is called the ‘principal’ and the one who acts on behalf of the principal is an ‘agent’ or ‘attorney’ of the principal. An act done by the agent, pursuant to the powers granted, binds the principal as if the principal himself has done it.
The Supreme Court in Umadevi Nambiar v. Thamarasseri Roman Catholic Diocese, represented by its procurator Devssia’s son Rev. Father Joseph Kappil[i], examined the extent of an agent’s authority and settled the issue on the implied authorisation in a power of attorney.
In the instant case, a property was originally owned by Ullattukandiyil Sankunni. Post his demise, the property devolved upon his two daughters, Umadevi Nambiar and Ranee Sidhan. Umadevi Nambiar (the “Principal”) had executed a power of attorney in favour of her sister, Ranee Sidhan (the “Attorney Holder”), in 1971, and the same power of attorney was cancelled in 1985. In the interim, however, the Attorney Holder executed certain deeds, releasing the Principal’s rights in the subject property to a third party. The third party, thereafter, transferred the property to Thamarasseri Roman Catholic Diocese (the “Transferee”). The Principal disputed the transfer of property by the Attorney Holder in a civil suit.
The matter was first heard by the trial Court, which came to the conclusion that the power of attorney did not contain or confer specifically the power on the Attorney Holder to sell the property, and therefore, the sales carried out by the Attorney Holder were null and void. Additionally, the trial court also held that consequently, the sale in favour of the Transferee was invalid.
The High Court, however, reversed the order of the trial court, while holding that the Principal was not entitled to a partition decree, since the Principal had failed to seek specific relief on the cancellation of the release and sale deeds executed by the Attorney Holder. The High Court was of the view that the failure of the Principal to specifically seek relief of setting aside documents of transfer and recovering possession of the subject property was fatal to the case.
The Supreme Court, thereafter, examined the judgments of the trial court and the High Court and the arguments advanced by the Transferee, specifically on the power to execute a document and present such documents for registration, being understood to mean the power to execute documents requiring registration in light of Section 49 of the Registration Act, 1908; and further that a bona fide purchaser like the Transferee should not be made to suffer.
The Supreme Court in disagreement with arguments advanced by the Transferee, held that the power to sell cannot be inferred from a power of attorney and further that the trial Court and High Court were ad idem on the power of attorney not conferring any powers of sale on the Attorney Holder. Further, the Supreme Court noted that if the purchaser had exercised reasonable care, the Transferee could have ascertained that the Attorney Holder did not have any powers of sale.
The Supreme Court reiterated the maxim nemo dat quod non habet (no one can confer a better title than what he himself has) and observed that the seller to the Transferee could not have derived valid title to the property since the Attorney Holder did not have any powers of sale and accordingly, the Transferee could not have acquired valid title.
To sum up, a power of attorney should expressly authorise the agent to (i) execute a sale deed on behalf of the Principal, (ii) present the sale deed for registration, and (iii) admit execution before the Registering Authority. In other words, if a contract is executed or an act is committed as an agent, however, without any explicit authority, the agent cannot bind his/ her principal by the contract or such act.
For further information, please contact:
Abhilash Pilla, Partner, Cyril Amarchand Mangaldas
abhilash.pillai@cyrilshroff.com
[i] 2022 LiveLaw (SC) 338.
