Power Of Attorney Must Be Construed Strictly; Agent Can't Sell Without Express Authorisation : Supreme Court

The Supreme Court observed that the power to sell is not to be inferred from a document of Power of Attorney which has to be construed strictly.The agent would have the power to sell only if the document expressly authorize him/her (i) to execute a sale deed; (ii) to present it for registration; and (iii) to admit execution before the Registering Authority, the bench comprising Justices Hemant Gupta and V. Ramasubramanian noted.The brief facts are as follows. Umadevi Nambiar, the plaintiff, had executed a general Power of Attorney on 21.07.1971 in favour of her sister Ranee Sidhan. The said power was cancelled on 31.01.1985. But in the meantime, the sister was found to have executed four different documents in favour of certain third parties, assigning/releasing some properties. Therefore, the plaintiff first filed two suits against the assignees/releasees. Thereafter, she filed another suit seeking partition and separate possession of her half share in the suit property. The Trial Court decreed this suit holding that document did not confer any power to sell the property and that, therefore, the plaintiff's sister was not entitled to alienate the property.Allowing the appeal filed by the defendant 'sister', the High Court held: (i) that the failure of the appellant to seek the relief of setting aside the documents of transfer and/or recovery of possession of the property was fatal to her case; (ii) that though the principle behind Order II Rule 2 CPC may not be applicable to suits for partition, the appellant must be held to have had constructive notice of the alienations made by her sister, in view of Section 3 of the Transfer of Property Act, 1882 (iii) that once constructive notice is attributed to the appellant, any relief for cancellation of the documents of alienation would have already become time barred, by the time the Power of Attorney was cancelled; (iv) that since the deed of general Power of Attorney did not contain any express power to sell the suit property, the transferee cannot be held to have exercised 'reasonable care' as required by the proviso to Section 41 of the Transfer of Property Act, 1882; and (v) that despite this fact, the appellant was not entitled to a decree for partition, in view of her failure to seek the cancellation of the alienations, in spite of having constructive notice of the alienations.In appeal, the Apex Court bench noted that the power of attorney deed contained i) an express power to lease out the property; and (ii) an express power to execute any document offering the property as security for any borrowal, but not an express power to sell the property. The bench observed:"As a matter of plain and simple fact, Exhibit A1, deed of Power of Attorney did not contain a clause authorizing the agent to sell the property though it contained two express provisions, one for leasing out the property and another for executing necessary documents if a security had to be offered for any borrowal made by the agent. Therefore, by convoluted logic, punctuation marks cannot be made to convey a power of sale. Even the very decision relied upon by the learned counsel for the respondent, makes it clear that ordinarily a Power of Attorney is to be construed strictly by the Court. Neither Ramanatha Aiyar's Law Lexicon nor Section 49 of the Registration Act can amplify or magnify the clauses contained in the deed of Power of Attorney. 18. As held by this Court in Church of Christ Charitable Trust and Educational Charitable Society vs. Ponniamman Educational Trust the document should expressly authorize the agent, (i) to execute a sale deed; (ii) to present it for registration; and (iii) to admit execution before the Registering Authority"The court also noted that the reasoning given by the High Court for holding that the plaintiff ought to have challenged the alienations, is that she was out of possession."The High Court failed to appreciate that the possession of an agent under a deed of Power of Attorney is also the possession of the Principal and that any unauthorized sale made by the agent will not tantamount to the Principal parting with possession.. It is not always necessary for a plaintiff in a suit for partition to seek the cancellation of the alienations. There are several reasons behind this principle. One is that the alienees as well as the cosharer are still entitled to sustain the alienation to the extent of the share of the cosharer. It may also be open to the alienee, in the final decree proceedings, to seek the allotment of the transferred property, to the share of the transferor, so that equities are worked out in a fair manner. Therefore, the High Court was wrong in putting against the appellant, her failure to challenge the alienations."While allowing the appeal, the bench further noted:It...

Power Of Attorney Must Be Construed Strictly; Agent Can't Sell Without Express Authorisation : Supreme Court

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