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: Civil Appeal No. 5797 of 2009

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

Can a registered power of attorney be considered cancelled if it is marked as “cancelled” on the original document but not through a formal registration process? The Supreme Court of India recently addressed this question in a property dispute case, focusing on the validity of a sale deed executed by a power of attorney holder. The core issue revolved around whether the sale deed was valid given that the original power of attorney was allegedly cancelled, but a certified copy was used for registration. The judgment was delivered by a two-judge bench comprising Justice K.M. Joseph and Justice Pamidighantam Sri Narasimha, with Justice K.M. Joseph authoring the opinion.

Case Background

The case involves a property dispute over a piece of land measuring 2 Kanals and 10 Marlas, owned by the plaintiff, Gian Chand. Gian Chand, a junior engineer, entered into an oral agreement to sell the property for Rs. 55,000. However, the buyer, the first defendant, could not arrange the funds immediately. Gian Chand then executed a special power of attorney in favor of the second defendant to sell the property for Rs. 55,000. The plaintiff claimed that when the first defendant failed to arrange the money, the second defendant returned the original power of attorney, and the plaintiff marked it 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 on 28 April 1987 for Rs. 30,000. The plaintiff contended that the sale deed was invalid because the second defendant did not have the original power of attorney and that the power of attorney was cancelled.

Timeline

Course of Proceedings

The Trial Court dismissed the plaintiff’s claim for declaration and permanent injunction, finding that the sale deed was valid. It did, however, order the second defendant to render accounts to the plaintiff. 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 second defendant was not competent to execute the sale deed because the power of attorney had been cancelled. The High Court declared the plaintiff as the owner of the property and declared the sale deed null and void.

Legal Framework

The judgment discusses 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 documents to be accompanied by a true copy for registration. The court clarifies that this section pertains to the document being registered (the sale deed in this case), not the power of attorney.
  
  “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, including the person executing the document or their agent authorized by a 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 which power of attorneys are recognized for the purpose 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.”
• Section 34 of the Registration Act, 1908: Outlines the inquiry to be conducted by the registering officer before registration.
  
  “(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.”
• Section 4 of the Power of Attorney Act, 1882: Deals with the deposit of original instruments creating powers of attorney.
  
  “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 [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.”
• Section 201 of the Contract Act: States that an agency can be terminated by the principal revoking the authority of the agent.
• Section 202 of the Contract Act: Provides an exception to the power of the principal to revoke the agency where the agent has an interest in the subject matter of the agency.
• Section 207 of the Contract Act: Declares that revocation may be express or implied.
• Section 208 of the Contract Act: Deals with the time when termination of the agent’s agency takes effect.
  
  “208. When termination of agent’s authority takes effect as to agent, and as to third persons. —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) 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 support the plaintiff’s claim that the consideration was settled at Rs. 55,000.
• The first defendant was put in possession of the property upon execution of the sale deed.
• A registered power of attorney can only be cancelled by a registered document, not by a mere marking on the original document. The appellant relied on Daya Shanker & Ors. v. Rajendra Kumar & Ors. [(2016) 118 ALR 62] (Allahabad High Court) and a judgment of the Madras High Court (Madurai Bench) dated 11.12.2019 in Second Appeal No. (MD) 652 of 2015.
• Registration of a document brings it into the public domain, and cancellation must follow the same procedure. The appellant relied on Ratilal Nathubhai & Anr. v. Rasiklal Maganlal & Ors. [AIR 1950 Bom. 326] (Bombay High Court).
• Section 32(a) of the Registration Act contemplates a situation where a power of attorney holder is authorized to execute a sale deed and can present it for registration. The appellant relied on Rajni Tandon v. Dulal Ranjan Ghosh Dastidar and Another [(2009) 14 SCC 782] (Supreme Court of India).
• 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] (Supreme Court of India) and Madhukar Vishwanath v. Madhao & Ors. [(1999) 9 SCC 446] (Supreme Court of India).

Respondent’s (Plaintiff) Arguments:

• The High Court was justified in interfering under Section 100 of the CPC due to fraud and collusion, and non-consideration of relevant evidence.
• Construction of a document of title raises a question of law, and the High Court can interfere in cases of extreme perversity.
• Improper presentation of a document is not a mere defect, and the provisions of Sections 32, 33, and 34 of the Registration Act are intended to prevent forgery and fraud. The respondent relied on Jambu Parshad v. Muhammad Nawab Aftab Ali Khan & Anr. [AIR 1914 PC 16] (Privy Council) and Ma Shwe Mya v. Maung Ho Hnaung [AIR 1922 PC 359] (Privy Council).
• Section 33(4) requires the original power of attorney to be produced at the time of presentation of the sale deed, which was not done in this case.
• The first defendant was not a bona fide purchaser, and the entire procedure of obtaining a copy of the power of attorney showed fraud and collusion between the defendants and the sub-registrar.
• There was an oral agreement to sell the property for Rs. 55,000, and the second defendant surrendered the power of attorney on 02.02.1987 after the first defendant failed to arrange the funds.
• The plaintiff did not receive any money from the defendants and there is no equity in the case of the first defendant.

Issues Framed by the Supreme Court

The Supreme Court did not explicitly frame issues in a separate section. However, the core issue that the court addressed was:

• Whether the sale deed executed by the second defendant, as a power of attorney holder, was valid, given the plaintiff’s claim that the original power of attorney was cancelled before the execution of the sale deed.

Treatment of the Issue by the Court

Authorities

The Supreme Court considered the following authorities:

Judgment

How each authority was viewed by the Court?

• Rajni Tandon v. Dulal Ranjan Ghosh Dastidar and Another [(2009) 14 SCC 782]*: The Supreme Court followed this authority to hold that a power of attorney holder who executes a document is considered the “person executing” under Section 32(a) of the Registration Act and can present the document for registration.
• Jambu Parshad v. Muhammad Nawab Aftab Ali Khan & Anr. [AIR 1914 PC 16]*: The Supreme Court referred to this authority to emphasize that presentation of a document for registration is not a mere formality.
• Daya Shanker & Ors. v. Rajendra Kumar & Ors. [(2016) 118 ALR 62]*: The Supreme Court did not expressly agree or disagree but noted that the appellant had relied on this case to support the argument that a registered power of attorney can only be cancelled by a registered document.
• Ratilal Nathubhai & Anr. v. Rasiklal Maganlal & Ors. [AIR 1950 Bom. 326]*: The Supreme Court did not expressly agree or disagree but noted that the appellant had relied on this case to support the argument that a registered document must be cancelled by the same means.
• Anathula Sudhakar v. T. Buchi Reddy (dead) by LRs & Ors. [(2008) 4 SCC 594]*: The Supreme Court noted that the appellant had relied on this case to argue that the plaintiff only sought injunction and not cancellation of sale deed.
• Madhukar Vishwanath v. Madhao & Ors. [(1999) 9 SCC 446]*: The Supreme Court noted that the appellant had relied on this case to argue that the plaintiff only sought injunction and not recovery of possession.
• Ma Shwe Mya v. Maung Ho Hnaung [AIR 1922 PC 359]*: The Supreme Court noted that the respondent had relied on this case to emphasize that the provisions of the Registration Act are intended to prevent forgery and fraud.

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 second defendant, as the power of attorney holder who executed the sale deed, was considered the “person executing” the document and was entitled to present it for registration.
• The lack of valid cancellation of the power of attorney: The court found that the plaintiff’s claim of cancellation was not supported by evidence, especially given the plaintiff’s letter (Exhibit-DX) which acknowledged the existence of the power of attorney.
• The purpose of Section 18A of the Registration Act: The court clarified that this section only requires a true copy of the document being registered (the sale deed), not the power of attorney.
• The conduct of the plaintiff: The court noted that the plaintiff’s actions and statements in his letter (Exhibit-DX) contradicted his claim of cancellation.

Fact:Law Ratio

The court’s reasoning was influenced more by legal considerations (60%) than factual aspects (40%). The factual aspects primarily revolved around the events and communications between the parties, while the legal aspects focused on the interpretation of the Registration Act and the validity of the power of attorney.

Logical Reasoning

The court considered the argument that the power of attorney had been cancelled, but rejected this claim based on the evidence presented. The court noted that the plaintiff’s own letter (Exhibit-DX) contradicted his claim of cancellation. The court also considered the argument that the original power of attorney was required for registration, but rejected this based on its interpretation of Section 18A of the Registration Act.

The court’s decision is based on a detailed analysis of the relevant legal provisions and the factual circumstances of the case. The court emphasized that the second defendant, as the power of attorney holder who executed the sale deed, was considered the “person executing” the document and was entitled to present it for registration under Section 32(a) of the Registration Act. The court also emphasized that the cancellation of the power of attorney was not validly done and was not brought to the notice of the first defendant.

The majority opinion was delivered by Justice K.M. Joseph. There was no dissenting opinion.

“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.”

“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.”

Key Takeaways

• A power of attorney holder who executes a document is considered the “person executing” under Section 32(a) of the Registration Act and can present the document for registration.
• For the purpose of registration, the original power of attorney is not required when the power of attorney holder is the executant of the document.
• Section 18A of the Registration Act only requires a true copy of the document being registered (sale deed), not the power of attorney.
• Cancellation of a registered power of attorney must be done formally and brought to the notice of third parties to be effective.
• The courts will not interfere with the findings of facts of lower courts unless there is perversity.

The judgment clarifies the interpretation of Sections 32(a) and 18A of the Registration Act, providing guidance on the validity of sale deeds executed by power of attorney holders. It emphasizes the importance of formal cancellation of a power of attorney and the need to notify third parties about such cancellation. This decision will likely impact future cases involving property disputes arising from the execution of sale deeds by power of attorney holders.

Directions

The Supreme Court did not give any specific directions other than setting aside the impugned judgment of the High Court.

Development of Law

Ratio Decidendi: A power of attorney holder who executes a document is considered the “person executing” under Section 32(a) of the Registration Act and can present the document for registration. The original power of attorney is not required for registration when the power of attorney holder is the executant. A registered power of attorney must be formally cancelled and the cancellation must be brought to the notice of third parties to be effective.

Change in Law: This judgment clarifies the interpretation of Section 32(a) and 18A of the Registration Act, solidifying the position that a power of attorney holder who executes a document is considered the “person executing” and can present it for registration. It also emphasizes the need for a formal cancellation of a power of attorney and the importance of notifying third parties about such cancellation. This judgment further clarifies the scope of Section 18A of the Registration Act and its application to the document being registered and not to the power of attorney.