Supreme Court Upholds Sale Deed Executed by Power of Attorney Holder: Amar Nath vs. Gian Chand (28 January 2022)

Date of the Judgment: 28 January 2022

Citation: 2022 INSC 68

Judges: K.M. Joseph, J., Pamidighantam Sri Narasimha, J.

Can a sale deed executed by a power of attorney holder be invalidated if the principal claims to have cancelled the power of attorney before the sale? The Supreme Court of India recently addressed this critical question in a property dispute case, clarifying the legal position on the validity of such transactions. This case revolves around a property sale where the original owner claimed that the power of attorney granted to the seller was cancelled before the sale took place.

The Supreme Court, in this judgment, examined the interplay between the Registration Act, 1908, and the Indian Contract Act, 1872, to determine the validity of a sale deed executed by an agent holding a power of attorney. The bench comprised Justices K.M. Joseph and Pamidighantam Sri Narasimha, with the majority opinion authored by Justice K.M. Joseph.

Case Background

The case involves a property dispute concerning land owned by the plaintiff, Gian Chand. Gian Chand, a junior engineer, entered into an oral agreement to sell his land for ₹55,000. When the initial buyer couldn’t arrange the funds, Gian Chand executed a special power of attorney in favor of the second defendant, Yash Pal Singh, a deed writer, to sell the property for ₹55,000.

Gian Chand claimed that when the sale negotiation with the first buyer fell through, Yash Pal Singh surrendered the original power of attorney, and Gian Chand informed the first defendant that the power of attorney was cancelled. However, Yash Pal Singh allegedly obtained a copy of the power of attorney and fraudulently, in collusion with the first defendant, Amar Nath, executed a sale deed on 28 April 1987, for ₹30,000. Gian Chand then filed a suit seeking a declaration that he was the owner of the property, and that the sale deed was void.

Timeline:

Course of Proceedings

The Trial Court initially ruled in favor of the defendants, holding that the sale deed was valid but ordered the second defendant to render accounts to the plaintiff for the agreed sale price of ₹55,000. The First Appellate Court upheld this decision, finding the sale deed valid and the power of attorney not effectively canceled.

However, the High Court reversed these concurrent findings. It held that the power of attorney was cancelled on 02.02.1987, and thus, the second defendant was not competent to execute the sale deed. The High Court declared the sale deed null and void and restored the plaintiff’s ownership and possession of the land. The High Court also held that there was non-compliance with the mandatory provisions of Section 18A, 59 and 61 of the Registration Act.

Legal Framework

The case primarily involves the interpretation of the Registration Act, 1908, and the Indian Contract Act, 1872. Key provisions include:

• Section 17 of the Registration Act, 1908: Deals with documents that are compulsorily registrable.
• Section 18 of the Registration Act, 1908: Deals with documents that are optionally registrable.
• Section 18A of the Registration Act, 1908: (Himachal Pradesh Amendment) Requires that documents for registration be accompanied by a true copy. The source specifies: “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.”
• Section 32 of the Registration Act, 1908: Specifies who can present documents for registration. The source specifies: “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.”
• Section 33 of the Registration Act, 1908: Outlines which powers of attorney are recognized for the purposes of Section 32. The source specifies: “(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 34 of the Registration Act, 1908: Mandates an inquiry by the registering officer before registration. The source specifies: “(1) 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.”
• Section 35 of the Registration Act, 1908: Deals with the procedure on admission or denial of execution of a document.
• Section 201 of the Indian Contract Act, 1872: States that an agency can be terminated by the principal revoking the agent’s authority.
• Section 202 of the Indian Contract Act, 1872: Provides an exception to the principal’s power to revoke the agency where the agent has an interest in the subject matter of the agency.
• Section 207 of the Indian Contract Act, 1872: States that revocation may be express or implied.
• Section 208 of the Indian Contract Act, 1872: Specifies when the termination of an agent’s authority takes effect. The source specifies: “The termination of the authority of an agent does not, so far as regards the agent, take effect before it becomes known to him, or, so far as regards third persons, before it becomes known to them.”

Arguments

Appellant’s (Amar Nath) Submissions:

• The High Court erred in exercising jurisdiction under Section 100 of the Code of Civil Procedure, 1908, as the questions were purely factual.
• The registered power of attorney could only be canceled by a registered document. The source mentions the appellant drew support from the judgment of the Allahabad High Court in Daya Shanker & Ors. v. Rajendra Kumar & Ors. (2016) 118 ALR 62 and the Madras High Court (Madurai Bench) in Second Appeal No. (MD) 652 of 2015.
• The registration of a document brings it into the public domain and must be canceled by the same means. The source mentions the appellant relied on Ratilal Nathubhai & Anr. v. Rasiklal Maganlal & Ors. AIR 1950 Bom. 326.
• Section 32(a) of the Registration Act, 1908, allows a power of attorney holder to execute and present a sale deed for registration. The source mentions the appellant drew support from the judgment of this Court in Rajni Tandon v. Dulal Ranjan Ghosh Dastidar and Another (2009) 14 SCC 782.
• The plaintiff sought only an injunction and did not seek cancellation of the sale deed or recovery of possession. The source mentions the appellant relied on judgments of this Court in Anathula Sudhakar v. T. Buchi Reddy (dead) by LRs & Ors. (2008) 4 SCC 594 and Madhukar Vishwanath v. Madhao & Ors. (1999) 9 SCC 446.

Respondent’s (Gian Chand) Submissions:

• The High Court was justified in interfering under Section 100 of the CPC due to fraud and collusion between the defendants.
• The First Appellate Court did not properly discuss the evidence as required under Order XLI Rule 31 of the CPC.
• Non-consideration of relevant evidence justified the High Court’s interference.
• Construction of a document of title raises a question of law.
• Improper presentation of a document is not a mere defect. The source mentions the respondent relied on judgment of Privy Council in Jambu Parshad v. Muhammad Nawab Aftab Ali Khan & Anr. AIR 1914 PC 16 and Ma Shwe Mya v. Maung Ho Hnaung AIR 1922 PC 359.
• Section 33(4) of the Registration Act, 1908, requires the original power of attorney to be produced at the time of presenting the sale deed.
• The original power of attorney was with the plaintiff, having been surrendered by the second defendant.
• The first defendant was not a bona fide purchaser, as he was aware of the cancellation of the power of attorney.

Submissions Table

Issues Framed by the Supreme Court

The Supreme Court did not explicitly frame issues, but the core issues addressed were:

1. Whether the High Court was justified in interfering under Section 100 of the Code of Civil Procedure, 1908.
2. Whether the non-production of the original power of attorney at the time of registration was fatal to the validity of the sale deed.
3. Whether the power of attorney was validly cancelled before the execution of the sale deed.
4. Whether the sale deed executed by the second defendant was valid.

Treatment of the Issue by the Court

Authorities

The Supreme Court considered the following authorities:

The court also considered the following legal provisions:

• Section 17 of the Registration Act, 1908: Deals with documents that are compulsorily registrable.
• Section 18 of the Registration Act, 1908: Deals with documents that are optionally registrable.
• Section 18A of the Registration Act, 1908: (Himachal Pradesh Amendment) Requires that documents for registration be accompanied by a true copy.
• Section 32 of the Registration Act, 1908: Specifies who can present documents for registration.
• Section 33 of the Registration Act, 1908: Outlines which powers of attorney are recognized for the purposes of Section 32.
• Section 34 of the Registration Act, 1908: Mandates an inquiry by the registering officer before registration.
• Section 35 of the Registration Act, 1908: Deals with the procedure on admission or denial of execution of a document.
• Section 201 of the Indian Contract Act, 1872: States that an agency can be terminated by the principal revoking the agent’s authority.
• Section 202 of the Indian Contract Act, 1872: Provides an exception to the principal’s power to revoke the agency where the agent has an interest in the subject matter of the agency.
• Section 207 of the Indian Contract Act, 1872: States that revocation may be express or implied.
• Section 208 of the Indian Contract Act, 1872: Specifies when the termination of an agent’s authority takes effect.

Judgment

How each submission made by the Parties was treated by the Court?

How each authority was viewed by the Court?

• Daya Shanker & Ors. v. Rajendra Kumar & Ors. (2016) 118 ALR 62: The Court did not pronounce on the question of whether a registered power of attorney could only be cancelled by a registered document.
• Second Appeal No. (MD) 652 of 2015: The Court did not pronounce on the question of whether a registered power of attorney could only be cancelled by a registered document.
• Ratilal Nathubhai & Anr. v. Rasiklal Maganlal & Ors. AIR 1950 Bom. 326: The Court did not pronounce on the question of whether a registered document must be cancelled by the same means.
• Rajni Tandon v. Dulal Ranjan Ghosh Dastidar and Another (2009) 14 SCC 782: The Court followed this judgment, affirming that a power of attorney holder who executes a document can present it for registration under Section 32(a) of the Registration Act, 1908.
• Anathula Sudhakar v. T. Buchi Reddy (dead) by LRs & Ors. (2008) 4 SCC 594 and Madhukar Vishwanath v. Madhao & Ors. (1999) 9 SCC 446: The Court noted these judgments but did not make the relief sought in the plaint a central point of the decision.
• Jambu Parshad v. Muhammad Nawab Aftab Ali Khan & Anr. AIR 1914 PC 16 and Ma Shwe Mya v. Maung Ho Hnaung AIR 1922 PC 359: The Court distinguished these judgments, stating that the second defendant as the executant could present the document.

The Court’s reasoning was as follows:

• The High Court overstepped its limits by re-appreciating the evidence.
• Section 18A of the Registration Act, 1908, only requires a true copy of the document presented for registration, not the power of attorney.
• Section 32(a) of the Registration Act, 1908, allows the person executing the document, including a power of attorney holder, to present it for registration.
• The original power of attorney was not required to be produced when the power of attorney holder who is also the executant, presents the document for registration.
• The evidence, particularly the letters exchanged between the plaintiff and the second defendant, did not support the claim that the power of attorney was validly cancelled.
• Even if the power of attorney was cancelled, there was no evidence that the first defendant (third party) was aware of the cancellation.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by a meticulous analysis of the facts and the applicable legal provisions. The Court emphasized the importance of adhering to the procedural aspects of the Registration Act, 1908, while also recognizing the need to protect the interests of bona fide third parties. The Court’s reasoning was heavily based on the documentary evidence, particularly the letters exchanged between the plaintiff and the second defendant, which contradicted the plaintiff’s claim of cancellation of the power of attorney. The Court also focused on the fact that the second defendant, as the executant of the sale deed, was entitled to present it for registration under Section 32(a) of the Registration Act, 1908. The Court also noted that the High Court had overstepped its limits by re-appreciating the evidence, which was a task for the First Appellate Court.

Fact:Law Ratio

Final Decision

The Supreme Court allowed the appeal, setting aside the judgment of the High Court. The Court upheld the concurrent findings of the Trial Court and the First Appellate Court, declaring that the sale deed executed by the second defendant (Yash Pal Singh) in favor of the first defendant (Amar Nath) was valid. The Court held that the power of attorney was not validly canceled before the execution of the sale deed, and even if it was, there was no evidence that the first defendant was aware of the cancellation.

Flowchart

Key Takeaways

This judgment underscores the following key legal principles and practical considerations:

• Validity of Sale Deeds by Power of Attorney Holders: A sale deed executed by a power of attorney holder is valid if the power of attorney is in force at the time of execution, and the power of attorney holder is authorized to present the document for registration.
• Cancellation of Power of Attorney: The cancellation of a power of attorney must be effectively communicated to all relevant parties, especially third parties who may be involved in transactions based on that power of attorney.
• Importance of Documentary Evidence: Courts give significant weight to documentary evidence in property disputes. Oral claims without supporting documentation are less likely to be accepted.
• Limits of High Court’s Jurisdiction: High Courts should not re-appreciate evidence in second appeals under Section 100 of the Code of Civil Procedure, 1908, unless there is a substantial question of law involved.
• Procedural Compliance: Adherence to the procedural aspects of the Registration Act, 1908, is crucial for the validity of property transactions.
• Protection of Bona Fide Purchasers: Courts aim to protect the interests of bona fide purchasers who act in good faith and without knowledge of any defect in the title.