Article

The issue regarding the revocation of a registered power of attorney (“PoA”) was addressed most recently in the matter of Amar Nath v. Gian Chand [2022 SCC OnLine SC 102] decided on January 28, 2022 by the Hon’ble Apex Court. In the said matter the plaintiff had executed a special power of attorney in favour of the Defendant No. 2 for the sale of plaintiff’s property in favour of Defendant No. 1. The Defendant No. 1, however, was not in a position to arrange for money and Defendant No. 2 PURPORTEDLY surrendered the original power of attorney to the plaintiff and the plaintiff drew a cut line on the document and wrote ‘cancelled’. According to plaintiff he also told Defendant No. 1 that the same stood cancelled. Subsequently Defendant No. 2, allegedly in collusion with Defendant No. 1, applied for the copy of the power of attorney, and fraudulently executed the sale deed in between themselves for a consideration of Rs. 30,000/-. The mutation was also sanctioned. On becoming aware of it, the plaintiff challenged the sale deed by filing a suit for declaration by way of permanent injunction mainly on the grounds firstly that the Defendant No. 2, during the registration of the sale deed, could not have produced the original PoA before the registering officer under Registration Act and secondly, the sale deed was executed without authority since special power of attorney was deemed to have been cancelled.

The trial court declined to grant relief of declaration by way of permanent injunction. The first Appellate court held that the sale deed was valid and the case of the plaintiff, that the power of attorney was cancelled was unsustainable. The High Court proceeded to set aside the findings of the lower courts and held that the mutation showing the sale in favour of the Defendant no. 1 was null and void as per Section 18 (meant to actually refer to 18A) of the Registration Act, 1908. As per section 18A, it was necessary for the Registering Authority to see the true copy of the special power of attorney. Since original power of attorney was cancelled, the same could not be relied upon by the Registering Authority for the purpose of execution of the sale deed.

The Apex Court started by looking into the relevant provisions of Registration Act. The Court observed that Section 18A contemplates the production of a true copy of a document which is sought to be registered. In the present case it was the sale deed and the production of the sale deed is not in question. The Court then went on to analyse the applicability of other provisions under section 32, 33 and 34 of the Registration Act. As per section 32, every document to be registered must be presented by person executing or the representative or an agent of such person. Section 34 deals with enquiry before registration by registering officer. It requires the persons executing the document to be present in person at the time of registration. It has been decided in Rajni Tandon v. Dulal Ranjan Ghosh Dastidar (2009) 14 SCC 782 that section 32 of the Registration Act mandates the presence of the actual persons who executed the document sought to be registered.  It was held that “Where a person holds a power of attorney which authorises him to execute a document as agent for someone else, and he executes a document under the terms of the power of attorney, he is, so far as the registration office is concerned, the actual executant of the document and is entitled under Section 32(a) to present it for registration and get it registered.”

Drawing a parallel, the Court observed that in the present matter there was a true copy of power of attorney which authorised Defendant No. 2 and if it was not cancelled and he had executed the sale deed, he is within his rights to present the documents before the registering officer. The Court also observed that the duty of the Registering Officer extends only to enquire and find that such person is the person who has executed the document he has presented and further be satisfied about the identity of the person. He is duty bound to satisfy himself of a right of such a person to so appear. In case of an agent, thus, he is bound to produce the power of attorney to the Registering officer. Section 33(4) of the Act further states that once the same has been produced, power of attorney is proved and requires no further proof.

The Court after dissecting the relevant provisions of the Registration Act, concluded that if the registering Authority is satisfied about the identity of the person and that he admits the execution of the document, the officer may not need to enquire further. The court therefore rejected the argument of the plaintiff that the non-production of the original power of attorney by the Defendant No. 2 was fatal to a valid registration of the sale deed.

The Court then turned on to the contention of the plaintiff that original power of attorney was cancelled by cutting it and writing on it ‘cancelled’ and thus Defendant No. 2 had no authority thereafter.

The Court, in this regard, observed that the power of attorney was registered. The only question therefore which required to be answered was whether the power of attorney was cancelled before the execution of the sale deed. If yes, whether the cancellation was effected in a valid and legal manner and finally, whether it was made known to not only to the Defendant no. 2 i.e. the agent but also to the Defendant no. 1 i.e. the third party.

The Court then analysed the provisions of Chapter X of the Indian Contract Act, 1872. The Court taking note of Section 208 of the Indian Contract Act, observed the principles of contract of agency that a termination of such contract, even if valid, shall not operate against a third party who was not notified. The third party who in good faith entered into contract with the agent in ignorance of the revocation shall be protected. The Court appreciated the facts where the plaintiff had asserted that the deed of PoA was surrendered. The Defendant No. 2 on the other hand stated that the PoA was misplaced and he had to apply for a certified copy. The Court further appreciated that although the oral evidence may be contradictory, and may not be of much help, the letter of the plaintiff to Defendant No. 2 written subsequent to the alleged dated of surrender of the PoA clarifies that the PoA was not surrendered on the date asserted by the plaintiff. In the said letter, the plaintiff has made reference to the PoA and asked the Defendant No. 2 to do the needful and send the money on selling the property. The Defendant No. 2 also informed the plaintiff of the sale by his letter although he could not immediately meet and give the money to the plaintiff due to personal difficulties.

On the aspect of cancellation, the Court was of the opinion that the plaintiff neither did get the power of attorney cancelled at the Sub-Registrar Office nor did he send any notice of cancellation. The Court clarified that “This we say as even in the absence of a registered cancellation of the power of attorney, there must be cancellation and it must further be brought to the notice of the third party at any rate as already noticed.”