M.S. Ananthamurthy v. J. Manjula: Mere Word ‘Irrevocable’ Does Not Make a POWER OF ATTORNEY Irrevocable

Saji Koduvath, Advocate, Kottayam.

Abstract

  • If only an ‘interest’ is Created in favour of the Power Holder (Donee), then only a PoA becomes Irrevocable. It must have been to secure a proprietary interest.
  • Document requires Registration if ‘interest’ is created in an immovable property.
  • It is also pointed out – in an injunction suit, where there are necessary pleadings and appropriate issue, and the matter involved is simple and straightforward, then only the court would decide upon the issue regarding ‘title‘.

Power of Attorney: Basis in Law

It is that of the fiduciary relationship between ‘Principal & Agent’.

Chapter X of the Contract Act provides for “Agency” in general.  Sections 1A and 2 of the Powers of Attorney Act, 1882 specifically deals with Powers-of-Attorney.  Section 1-A of the Powers-of-Attorney Act defines power of attorney to include any  instruments empowering a specified person to act for and in the name of the person executing it. 

Section 2 of the owers of Attorney Act, 1882 reads as under:

  • “2. Execution under power of attorney—The donee of a power of attorney may, if he thinks fit, execute or do any instrument or thing in and with his own name and signature, and his own seal, where sealing is required, by the authority of the donor of the power; and every instrument and thing so executed and done, shall be as effectual in law as if it had been executed or done by the donee of the power in the name, and with the signature and seal, of the donor thereof.
  • This section applies to powers of attorney created by instruments executed either before or after this Act comes into force.”

In M.S. Ananthamurthy v. J. Manjula, 27 February, 2025; 2025 INSC 273, it is held as under: 

  • “27. A power of attorney derives its basic principles from Chapter X of the Contract Act which provides for “Agency” along with Sections 1A and 2 respectively of the Powers of Attorney Act, 1882. Agency is a fiduciary relationship between two persons, where one explicitly or implicitly agrees that the other will act on their behalf to influence their legal relations with third parties, and the other similarly agrees to act in this capacity or does so based on an agreement. The relationship between the executant of a general power of attorney and the holder of the power is one of principal and agent. A principal is bound by the acts done by an agent or the contracts made by him on behalf of the principal. Likewise, power of attorney in the nature of contract of agency authorizes the holder to do acts specified by the executant, or represent the executant in dealings with third persons.”

Power of Attorney: Genesis in Contract

In Syed Abdul Khader v. Rami Reddy, (1979) 2 SCC 601, the Supreme Court held that the relation between the donor of the power and the donee of the power is one of the principal and agent having its genesis in a contract. It is held as under:

  • “10. The first contention of the appellant is that it was impermissible in law for three persons to jointly grant a power of attorney in favour of Defendant 34. Barring the ipse dixit of the learned counsel nothing was shown to us to make such a joint power impermissible in law. The relation between the donor of the power and the donee of the power is one of the principal and agent and the expression “agency” is used to connote the relation which exists where one person has an authority or capacity to create legal relations between a person occupying the position of principal and third parties. The relation of agency arises whenever one person called the agent has authority to act on behalf of another called the principal and consents so to act. The relationship has its genesis in a contract. If agency is the outcome of a contract between the principal and the agent, in order to show that three principals jointly constituting an agent by a deed called “Power of Attorney” was impermissible, provisions of Contract Act or the general law of contract should have been shown as having been violated by such a contract.
  • Nothing of the kind was pointed out to us. On the contrary, in Halsbury’s Laws of England, Vol. I, 4th Edn., para 726, the following proposition has been stated:
  • “Co-principals may jointly appoint an agent to act for them and in such case become jointly liable to him and may jointly issue him.” We are in agreement with this view and, therefore, three principals could jointly appoint an agent.” (Quoted in  M.S. Ananthamurthy v. J. Manjula, 27 February, 2025; 2025 INSC 273)

In State of Rajasthan v. Basant Nahata, (2005) 12 SCC 77, it is observed as under:

  • “13. Power of attorney: A grant of power of attorney is essentially governed by Chapter X of the Contract Act. By reason of a deed of power of attorney, an agent is formally appointed to act for the principal in one transaction or a series of transactions or to manage the affairs of the principal generally conferring necessary authority upon another person. A deed of power of attorney is executed by the principal in favour of the agent. The agent derives a right to use his name and all acts, deeds and things done by him and subject to the limitations contained in the said deed, the same shall be read as if done by the donor. A power of attorney is, as is well known, a document of convenience.” (Quoted in  M.S. Ananthamurthy v. J. Manjula, 27 February, 2025; 2025 INSC 273)

No Termination, If Agent has an Interest

Section 201 of the Contract Act reads as under:

  • 201. Termination of agency– An agency is terminated
    • by the principal revoking his authority, or
    • by the agent renouncing the business of the agency; or
    • by the business of the agency being completed; or
    • by either the principal or agent dying or becoming of unsound mind; or
    • by the principal being adjudicated an insolvent under the provisions of any Act for the time being in force for the relief of insolvent debtors.

Section 202 of the Contract Act reads as under:

  • 202. Termination of agency, where agent has an interest in subject-matter— Where the agent has himself an interest in the property which forms the subject-matter of the agency, the agency cannot, in the absence of an express contract, be terminated to the prejudice of such interest.”

Illustrations given to Sec. 202 explain what is ‘interest’ in Sec. 202 [viz.,  (i) to pay himself, out of the proceeds, the debts due to him from A; (ii) to repay himself out of the price the amount of his own advances].

Illustrations in Sec. 202 read as under:

  • (a) A gives authority to B to sell A’s land, and to pay himself, out of the proceeds, the debts due to him from A. A cannot revoke this authority, nor can it be terminated by his insanity or death.
  • (b) A consigns 1,000 bales of cotton to B, who has made advances to him on such cotton, and desires B to sell the cotton, and to repay himself out of the price the amount of his own advances. A cannot revoke this authority, nor is it terminated by his insanity or death.

If only ‘INTEREST’ Created, PoA becomes Irrevocable

In M.S. Ananthamurthy v. J. Manjula, 27 February, 2025; 2025 INSC 273, it was contended that the GPA was coupled with interest, and made the agency irrevocable by virtue of Section 202 of the Contract Act; for, the PoA, read with the agreement to sell an immovable property, executed on the same day to the same person, categorically stated –

  • (i) the POA was executed for a consideration, and
  • (ii) the possession of the suit property was delivered to the holder.

Analysing Sec. 202, in the light of the illustrations, the Apex Court held as under in this case (M.S. Ananthamurthy v. J. Manjula, 27 February, 2025; 2025 INSC 273):

  • “35. Therefore, the essentials of Section 202 of the Contract Act are,
  • first, there shall be a relationship in the capacity of ‘principal and agent’ between the parties and
  • secondly, there shall be agent’s interest in the subject-matter of the agency.
  • If both the conditions are fulfilled the agency becomes irrevocable and cannot be terminated unilaterally at the behest of the principal.”

In M.S. Ananthamurthy our Apex Court also points out that Section 202 of the Contract Act is an exception to the general rule  under Section 201; and that Sec. 202  prescribes – where an agent has himself an interest in the property which forms the subject-matter of the agency, the agency cannot be terminated to the prejudice of such interest unless there is an express stipulation to the contrary.

The court extracted the following from Bowstead on Agency, 14th Edition, page 423. It reads as under:

  • “(i) Where the authority of an agent is given by deed or for valuable consideration, for the purpose of effectuating any security, or of protecting or securing any interest of the agent, it is irrevocable during the subsistence of such security or interest. But it is not irrevocable merely because the agent has an interest in the exercise of it or has a special property in, or lien for advances upon, the subject matter of it, the authority not being given expressly for the purpose of securing such interest or advances;
  • (ii) Where a power of attorney, whenever created is expressed to be irrevocable and is given to secure a proprietary interest of the donee of the power, or the performance of an obligation owed to the donee, then, so long as the donee has that interest, or the obligation remains undischarged, the power is irrevocable;
  • (iii) Authority expressed by this article to be irrevocable is not determined by the death, insanity or bankruptcy of the principal, nor ……where the principal is an incorporated company, but its winding up or dissolution, and cannot be revoked by the principal without the consent of the agent.”

The Supreme Court also referred to the following decisions, in this regard –

  • Dalchand v. Seth Hazarimal, 1931 SCC OnLine MP 57,
  • Palani Vannan v. Krishnaswami Konar, 1945 SCC OnLine Mad 119,
  • Shri Harbans Singh v. Smt. Shanti Devi, 1977 SCC OnLine Del 102.

If Full Sale Consideration Paid, PoA Becomes Irrevocable

In Akbarbhai Kesarbhai Sipai v Mohanbhai Ambabhai Patel, 2019-3 GLH 523, it is observed (J.B. Pardiwala, J.) as under:

  • “Indisputably, the so called irrevocable power of attorney coupled with interest is not a registered document. I am at one with Mr. Dave that the power of attorney is in substance in the form of a sale. In the last part of the document, it is clearly stated that full sale consideration of the property is being paid to the power of attorney by the plaintiffs. There is no doubt that law does not recognize such a sale.”

A document has to be seen as a whole.

The Apex Court further pointed out that the nomenclature of the POA does not determine its nature. Even a POA termed as a ‘general power of attorney’ may confer powers that are special in relation to the subject matter.  Halsbury, Vol. 1, at page 151, is quoted:

  • “A general agent is one who has authority, arising out of and in the ordinary course of his business or profession, to do some act or acts on behalf of his principal in relation thereto; or one who is authorised to act on behalf of the principal generally in transactions of a particular kind or incidental to a particular business.”

The Court further referred the following decisions –

  • Timblo Irmaos Ltd., Margo v. Jorge Anibal Matos Sequeira, (1977) 3 SCC 474.
  • Manubhai Prabhudas Patel v. Jayantilal Vadilal Shah, 2011 SCC OnLine Guj 7028. (In this case Anantha Pillai v. Ratiinasabapatiiy Mudaliar, 1968 (2) MLJ 574, quoted which said – “The general principles regarding the construction of power of attorney are well settled. Powers of attorney must be strictly construed as giving only such authority as they confer expressly or by necessary implication.)

Document requires Registration if ‘interest’ Created in immovable property

With respect to registration of the document (under the provisions of the Registration Act, 1908) , it is stated in this decision (M.S. Ananthamurthy v. J. Manjula, 27 February, 2025; 2025 INSC 273) as under:

  • “51. Section 17(1)(b) prescribes that any document which purports or intends to create, declare, assign, limit or extinguish any right, title or interest, whether vested or contingent, of the value of one hundred rupees and upwards to or in immovable property is compulsorily registerable. Whereas, Section 49 prescribes that the documents which are required to be registered under Section 17 will not affect any immovable property unless it has been registered.”

In this regard the Apex Court referred the following decisions –

  • Suraj Lamp & Industries Pvt. Ltd. v. State of Haryana, (2012) 1 SCC 656,
  • Shyam Narayan Prasad v. Krishna Prasad, (2018) 7 SCC 646,
  • Channegowda v. N.S. Vishwanath 2023 SCC OnLine Kar 153.

Effect of Suit for Injunction Simpliciter

It was argued in this case (M.S. Ananthamurthy v. J. Manjula, 27 February, 2025; 2025 INSC 273) that the plaintiff had not challenged the validity of the GPA and the agreement. Discarding the submission it was held –

  • “Where the question of title is “directly and substantially” in issue in a suit for injunction, and where a finding on an issue of title is necessary for granting the injunction, with a specific issue on title raised and framed, a specific prayer for a declaration of title is not necessary…..To summarize, 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.”

The Apex Court relied on Anathula Sudhakar v. P. Buchi Reddy, (2008) 4 SCC 594, which, inter alia, held as under:

  • “(c) But a finding on title cannot be recorded in a suit for injunction, unless there are necessary pleadings and appropriate issue regarding title (either specific, or implied as noticed in Annaimuthu Thevar [Annaimuthu Thevar v. Alagammal, (2005) 6 SCC 202] ). Where the averments regarding title are absent in a plaint and where there is no issue relating to title, the court will not investigate or examine or render a finding on a question of title, in a suit for injunction. Even where there are  necessary pleadings and issue, if the matter involves complicated questions of fact and law relating to title, the court will relegate the parties to the remedy by way of comprehensive suit for declaration of title, instead of deciding the issue in a suit for mere injunction.
  • (d) Where there are necessary pleadings regarding title, and appropriate issue relating to title on which parties lead evidence, if the matter involved is simple and straightforward, the court may decide upon the issue regarding title, even in a suit for injunction. But such cases, are the exception to the normal rule that question of title will not be decided in suits for injunction. …”

Conclusion

M.S. Ananthamurthy v. J. Manjula, 27 February, 2025; 2025 INSC 273 is an authority for the following –

1. Sec. 202 of the Contract Act determines when a PoA becomes irrevocable. It says –

  • If only an ‘Interest’ is Created in favour of the Power Holder (Donee), then only a PoA becomes Irrevocable.

It is explained in the illustrations of Sec. 202. It must have been to secure a proprietary interest. The instances shown are the following –

  • (a) To pay (from out of the proceeds) the (prior) debts due to the power-holder (donee) from the Principal.
  • (b) To repay (the power-holder himself, from out of the price) the amount he has made as advances to the Principal.
    • A PoA will not be irrevocable merely for (i) it was executed for a consideration, and (ii) the possession of the suit property was delivered to the holder.

2. Document requires Registration if ‘interest’ created in immovable property.

3. Where there are necessary pleadings and appropriate issue, and the matter involved is simple and straightforward, then only the court would decide upon the issue regarding ‘title‘.

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