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 1062
Judges: K.M. Joseph, J., Pamidighantam Sri Narasimha, J.
Can a sale deed executed by a power of attorney holder be deemed invalid if the original power of attorney was not presented during registration? The Supreme Court of India addressed this question in a recent civil appeal, clarifying the legal position on the matter. The case involved a dispute over a property sale where the seller claimed the power of attorney had been revoked before the sale deed was executed. The Supreme Court, in a judgment authored by Justice K.M. Joseph, overturned the High Court’s decision, upholding the validity of the sale deed. This judgment clarifies the requirements for registering a sale deed executed by a power of attorney holder.

Case Background

The case revolves around a property dispute between Gian Chand (plaintiff), the original owner of the land, and Amar Nath (first defendant), the purchaser. Gian Chand, a junior engineer, owned a plot of land measuring 2 Kanals, 10 Marlas. He initially entered into an oral agreement to sell the property for Rs. 55,000. However, when the first defendant could not arrange the funds, Gian Chand executed a special power of attorney in favor of a second defendant, Yash Pal Singh, a deed writer, to sell the property for Rs. 55,000. Gian Chand claimed that when the sale negotiations with the first defendant fell through, the second defendant returned the original power of attorney to him, which he then marked as “cancelled”. Subsequently, the second defendant, allegedly in collusion with the first defendant, fraudulently obtained a copy of the power of attorney and executed a sale deed for Rs. 30,000 on 28 April 1987. Gian Chand contended that the sale deed was invalid as the second defendant did not have the original power of attorney and was not authorized to sell the land. He filed a suit seeking a declaration that he was still the owner of the property and that the sale deed was null and void.

Timeline

Course of Proceedings

The Trial Court dismissed the plaintiff’s claim for declaration and injunction, finding the sale deed valid. However, it ordered the second defendant to render accounts to the plaintiff for the agreed sale price of Rs. 55,000 as per the agreement (P1). The First Appellate Court upheld the Trial Court’s decision. The High Court, in a second appeal, reversed the lower courts’ decisions. It held that the sale deed was invalid because the original power of attorney was not presented at the time of registration and that the power of attorney had been cancelled. The High Court declared the plaintiff as the owner of the property.

Legal Framework

The case primarily revolves around the interpretation of the Registration Act, 1908, and the Power of Attorney Act, 1882. 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): “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.” This section mandates that a true copy of the document must accompany the original for registration.
• Section 32 of the Registration Act, 1908: Specifies who can present documents for registration, including the person executing the document, their representative, or their agent authorized by power of attorney. “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: Defines the types of power of attorney that are recognized for the 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:”
• Section 34 of the Registration Act, 1908: Outlines the inquiry that the registering officer must conduct before registering a document, including verifying the identity of the persons executing the document and their authority to do so. “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.”
• Section 4 of the Power of Attorney Act, 1882: Deals with the deposit of original instruments creating powers of attorney.
• Section 201 of the Contract Act: Provides that an agency can be terminated by the principal revoking the authority of the agent.
• Section 202 of the Contract Act: States that an agency cannot be terminated if the agent has an interest in the property that is the subject of the agency.
• Section 207 of the Contract Act: Declares that revocation may be express or may be implied in the conduct of that principal or agent, respectively.
• Section 208 of the Contract Act: Deals with the time when termination of the agent’s agency takes effect. “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 (First Defendant’s) Arguments:

• The High Court erred in exercising jurisdiction under Section 100 of the Code of Civil Procedure (CPC) as the questions of law were purely factual.
• The terms of the power of attorney did not specify that the consideration was settled at Rs. 55,000.
• The first defendant was put in possession of the property after the sale deed was executed.
• A registered power of attorney can only be cancelled by a registered document. The appellant relied on the judgment of the Allahabad High Court in Daya Shanker & Ors. v. Rajendra Kumar & Ors. [(2016) 118 ALR 62] and Madras High Court in Second Appeal No. (MD) 652 of 2015.
• The registration of a document brings it into the public domain, and therefore, cancellation must also be done publicly. The appellant relied on Ratilal Nathubhai & Anr. v. Rasiklal Maganlal & Ors. [AIR 1950 Bom. 326].
• Section 32(a) of the Registration Act contemplates a situation where a power of attorney holder is authorized to execute a sale deed. The second defendant was competent to execute the sale deed and present it for registration. The appellant relied on Rajni Tandon v. Dulal Ranjan Ghosh Dastidar and Another [(2009) 14 SCC 782].
• The plaintiff only sought injunction and did not seek cancellation of the sale deed or recovery of possession. The appellant relied on 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 (Plaintiff’s) Arguments:

• The High Court was justified in interfering under Section 100 of the CPC because the First Appellate Court did not discuss the evidence after formulating points for determination under Order XLI Rule 31 of CPC.
• There was fraud and collusion, and both defendants knew the power of attorney had been withdrawn.
• Non-consideration of relevant evidence justified the High Court’s interference.
• Construction of a document of title raises a question of law, allowing the High Court to interfere.
• Improper presentation of a document is not a mere defect but a violation of Sections 32, 33, and 34 of the Registration Act, intended to prevent forgery. The respondent relied on 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) requires the original power of attorney to be produced at the time of presentation of the sale deed.
• The second defendant did not produce the original power of attorney, which was surrendered by him and was with the plaintiff.
• The first defendant was not a bona fide purchaser as he was aware of the cancellation of the power of attorney.
• The entire procedure of applying for a copy of the power of attorney showed fraud and collusion between the defendants and the Sub-Registrar.
• There was an oral agreement between the plaintiff and the first defendant to sell the property for Rs. 55,000. The plaintiff did not receive any amount from either defendant.

Submissions Table

Issues Framed by the Supreme Court

The Supreme Court did not explicitly frame issues in the judgment. However, the core issues that the court addressed were:

1. Whether the sale deed executed by the second defendant was valid, given the plaintiff’s claim that the power of attorney had been revoked.
2. Whether the non-production of the original power of attorney during registration invalidated the sale deed.
3. Whether the High Court was justified in interfering with the concurrent findings of the lower courts under Section 100 of the CPC.

Treatment of the Issue by the Court

Authorities

The Supreme Court considered the following authorities:

Judgment

The Supreme Court overturned the High Court’s decision, upholding the validity of the sale deed executed by the second defendant. The Court held that the High Court had erred in re-appreciating the evidence and that the non-production of the original power of attorney was not fatal to the validity of the sale deed. The Court emphasized that the second defendant, as the power of attorney holder, was competent to execute and present the sale deed for registration under Section 32(a) of the Registration Act.

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

How each authority was viewed by the Court?

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the following:

• The interpretation of Section 32(a) of the Registration Act: The Court emphasized that the power of attorney holder, who is also the executant of the document, is entitled to present the document for registration. This interpretation was crucial in upholding the validity of the sale deed.
• The understanding of Section 18A of the Registration Act: The Court clarified that this provision only requires a true copy of the document being registered and does not mandate the production of the original power of attorney.
• The evidence presented by the parties: The Court relied on the evidence presented by the parties and found no evidence of fraud or collusion. It noted that the plaintiff did not seek cancellation of the sale deed.
• The limits of the High Court’s jurisdiction under Section 100 of the CPC: The Court held that the High Court had overstepped its limits by re-appreciating the evidence and interfering with the concurrent findings of the lower courts.
• The principle that the cancellation of a power of attorney should be made known to third parties: The Court noted that the cancellation of the power of attorney was not brought to the knowledge of the first defendant, who was a third party.

Ratio Decidendi

The ratio decidendi of the judgment is that a sale deed executed by a power of attorney holder is valid even if the original power of attorney is not presented during registration, provided that the power of attorney holder is the executant of the document and a true copy of the document being registered is presented. The Court clarified that Section 18A of the Registration Act only requires a true copy of the document being registered and not the original power of attorney. Furthermore, the judgment underscores the importance of adhering to the limits of appellate jurisdiction under Section 100 of the CPC.

Ratio Table

Flowchart of the Case

Conclusion

The Supreme Court’s judgment in Amar Nath vs. Gian Chand (2022) is a significant clarification of the law relating to sale deeds executed by power of attorney holders. The Court’s interpretation of Section 32(a) and Section 18A of the Registration Act, 1908, provides clarity on the requirements for valid registration. The judgment emphasizes that the non-production of the original power of attorney is not fatal to the validity of the sale deed, provided the power of attorney holder is the executant and a true copy of the document is presented. This decision also serves as a reminder of the limits of appellate jurisdiction under Section 100 of the CPC. The case is a notable example of how the Supreme Court clarifies ambiguities in legal provisions and ensures the smooth functioning of property transactions. The judgment reinforces the importance of public knowledge of the cancellation of a power of attorney, especially for those who are third parties to the transaction.