Source: Supreme Court 

Why in News? 

A bench of Justice JB Pardiwala and Justice R Mahadevan held that mere use of the word ‘irrevocable’ in Power of Attorney does not make it ‘irrevocable’.  

• The Supreme Court held this in the case of M.S. Ananthamurthy & Anr v. J Manjula Etc (2025). 

What was the Background of M.S. Ananthamurthy & Anr v. J Manjula Etc (2025) Case?   

• The dispute involves a property (Site No. 10, out of Sy. No. 55/1, in Chunchaghatta Village, Bangalore) originally owned by Muniyappa @ Ruttappa. 
• On 4th April, 1986, Muniyappa allegedly executed an irrevocable power of attorney (POA) and an unregistered agreement to sell in favor of A. Saraswathi for Rs. 10,250/-. 
• The original owner (Muniyappa) died on January 30, 1997. 
• On 1st April, 1998 (after the original owner's death), A. Saraswathi executed a registered sale deed in favor of her son (appellant no. 2) for Rs. 84,000/-. 
• On 21st March, 2003, the legal heirs of the original owner sold the same property to respondent no. 7 for Rs. 76,000/-. 
• Respondent no. 7 sold the property to respondent no. 8 on 29th September, 2003, for Rs. 90,000/-. 
• On 6th December, 2004, respondent no. 8 executed a registered gift deed in favor of her daughter (the answering respondent). 
• On 2nd January, 2007, appellant no. 1 (father of appellant no. 2) visited the property and found strangers in possession, leading to a police complaint. 
• The answering respondent filed O.S. No. 133/2007 seeking permanent injunction against appellant no. 2 from interfering with her possession. 
• Appellant no. 2 filed O.S. No. 4045/2008 seeking declaration that the sale deeds of 2003 and the gift deed of 2004 were null and void. 
• The Trial Court decreed in favor of the answering respondent and dismissed appellant's suit on the grounds that: 
  • The answering respondent was in possession of the property 
  • The sale deed executed by the POA holder after the original owner's death was invalid 
  • The registered sale deeds and gift deed in favor of the answering respondent were legal 
  • The suit filed by appellants was barred by limitation (should have been filed within 3 years) 
• The matter went to the High Court and it was held by the High Court that: 
  • The answering respondent had lawful ownership and possession of the property through valid registered documents (sale deeds dated 21st March 2003 and 29th September 2003, and gift deed dated 06th December 2004) 
  • The sale deed executed by A. Saraswathi (POA holder) on 01st  April 1998 was invalid as it was executed after the death of the original owner (Muniyappa), and Section 202 of the Contract Act did not apply since the POA did not create any interest in favor of the holder. 
• The matter was subsequently before the Supreme Court. 

What were the Court’s Observations? 

• There were two issues that the Court determined in this case: 
  • Whether the agent, A. Saraswathi, by virtue of being a holder of the General Power of Attorney along with Agreement to Sell had any right, title or interest in the subject-matter of the agency, to execute the registered sale deed dated 01st April 1998 in favour of her son i.e., the appellant no. 2, after the death of the principal, on 30th January 1997? 
  • Whether it was obligatory for the answering respondent to challenge the execution and validity of the General Power of Attorney and the Agreement to Sell dated 04.04.1986 and a further prayer to declare that the registered sale deed dated 01.04.1998 is invalid, non-est factum or illegal in O.S. 133/2007? 
• It was the case of the party that the power of attorney executed in this case was an irrevocable power of attorney.  
  • It was submitted that the two documents agreement to sell and the power of attorney were executed on the same day in the favour of the same person and hence must be read harmoniously.  
  • Thus, as per Section 202 of the Indian Contract Act, 1872 (ICA) the power of attorney executed in this case is irrevocable. 
• The Court laid down a very important principle that where a power of attorney is coupled with an interest it metamorphoses to an irrevocable agency unless expressly stated otherwise. 
• Further, it was observed by the Court that it is important to determine if the power of attorney is general or special. 
  • In order to determine the same the Court is endowed with the duty to see the contents of the documents and the intention of the parties can be gathered from the terms of the document and the circumstances in which it was entered into by the parties.  
  • The import of the word “general” in a POA refers to the power granted concerning the subject matter. 
  • The test to determine the nature of POA is the subject matter for which it has been executed.  
  • 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 
  • Likewise, a ‘special power of attorney’ may confer powers that are general in nature concerning the subject matter.  
  • The essence lies in the power and not in the subject-matter. 
• The Court held that in the present facts the power of attorney executed is not irrevocable. The holder of the POA could not be said to have interest in the facts of the present case. 
• The Court held that an agreement to sell does not create an interest or confer ownership right or title. 
• Thus, even though the General Power of Attorney and the agreement to sell were contemporaneous documents executed by the original owner in favour of the same beneficiary, this cannot be the sole factor to conclude that she had an interest in the subject-matter. 
• The Supreme Court therefore upheld what was laid down by the High Court. 

What is the Power of Attorney? 

• A power of attorney derives its basic principles from Chapter X of the ICA 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. 
• Section 201 of ICA: Termination of Agency 
  • The ways in which agency can end are: 
    • Principal withdraws authorization 
    • Agent abandons responsibilities 
    • Completion of designated tasks 
    • Death of either party 
    • Mental incapacity of either party 
    • Principal's bankruptcy declaration under applicable statutes 
• Section 202 of ICA: 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 
• The Essentials of Section 202 of ICA: 
  • 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