Facts in brief: It is a dispute concerning title to immovable property, both appellants and respondents traced ownership through separate transactional chains — The appellants asserted that the original owner, executed a General Power of Attorney (GPA) and an Agreement to Sell in favour of his agent, who subsequently, as attorney-holder, sold the Suit Property via registered sale deed – Conversely, the respondents claimed that following the original owners’ death, his heirs rightfully sold the Suit Property. Indian Contract Act 1872 – ss.201 and 202 – Whether mere use of word ‘irrevocable’ in Power of Attorney (‘POA’) will make the said POA an irrevocable POA — The Supreme Court held that a document has to be construed as a whole to conclude that the said POA is irrevocable POA — Mere mentioning of the word ‘irrevocable’ does not make the instrument irrevocable, moreover mere entitlement to remuneration or authority to sell does not by itself confer such vested interest — The agency must be expressly created to secure the agent’s proprietary interest, which was not done in the present case: Held: Contract of agency gets automatically terminated by death of either of the parties — As soon as the executant of POA dies, the right given to the agent comes to an end. Once the agency is terminated, the agent cannot act on the basis of the power granted to him under the GPA — When a Principal-Agent relationship coupled with an interest in the subject matter of the agency, it metamorphosizes to an irrevocable agency unless expressly stated otherwise — It is not disputed that there is principal-agent relationship in the present case — But mere mentioning of word ‘irrevocable’ and right to authority to sell in the said POA does not make the POA irrevocable — A stray sentence here and there cannot be picked out to construe a document — To understand the tenor of the document and the intention of the parties, it has to be read as a whole — It is a settled principle that the agency has to be specifically meant to secure the agent’s benefit or interest, in order to make the POA irrevocable, interest of the agent can be inferred from the language of the document or from the course of business between the principal and agent — The real intention of the parties has to be construed by examining the totality of the recitals in the document — If the POA is not coupled with interest, no extraneous expression can make it irrevocable — In the present case, it is evident from the tenor of POA that is not irrevocable as it was not executed to effectuate security or to secure interest of the agent, mere entitlement to remuneration or authority to sell does not by itself confer such vested interest — The agency must be expressly created to secure the agent’s proprietary interest thus, in the case, the holder of POA could not be said to have an interest in the subject-matter of the agency. [Paras 45, 46] Registration Act – s.17 and s.49 – Compulsory registration of instrument which transfers any interest:
Held: The combined reading of the POA and the agreement to sell — Would mean that by executing the POA along with agreement to sell, the holder had an interest in the immovable property — If interest had been transferred by way of a written document, it had to be compulsorily registered as per Section 17(1)(b) of the Registration Act — In the instant case, the POA was not registered thus, it would not be open for the POA holder to content that they had a valid right, title and interest in the immovable property to execute the registered sale deed in favour of another person. [Paras 53-55]
Whether it was obligatory for a party to challenge the execution and validity of the General Power of Attorney and the Agreement to Sell and to further pray that the registered sale deed is invalid — Where title is foundational to possession, courts are competent to determine ownership without necessitating a separate declaratory action:
Held: Where a finding on title is necessary for granting an injunction and has been substantially dealt with by the Trial Court in a suit for injunction, a direct and specific prayer for a declaration of title is not a necessity — Where a finding on an issue of title is not necessary for deciding the question of possession and the grant of an injunction, or where no issue on title has been framed to decide a suit for injunction, any observation or decision on title would be incidental and collateral and will not operate as res judicata — Thus, it is not correct that the absence of a separate suit for declaration or even a specific prayer to that effect will alter the legal position of either party in the case. [Paras 58, 59]
As published in the Supreme Court Reports, Supreme Court of India. Headnotes prepared by: Gaurav Upadhyay, Hony. Associate Editor (Verified by: Shibani Ghosh). Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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