Power of Attorney Holder Cannot Execute Sale Deed After Principal’s Death: Supreme Court

A Power of Attorney is Not an Instrument of Title, Nor Does It Confer Ownership - Supreme Court of India, in a significant judgment held that a General Power of Attorney (GPA) holder cannot execute a sale deed after the death of the principal. The Court dismissed an appeal challenging the Karnataka High Court’s decision, which had rejected the appellant's claim to ownership based on an unregistered Agreement to Sell and a GPA. The core issue in the appeal was whether the Power of Attorney was coupled with an interest under Section 202 of the Indian Contract Act, 1872, making it irrevocable after the principal’s death. The Court ruled that the GPA was not coupled with an interest and became void upon the principal’s death, rendering the subsequent sale deed invalid.

The dispute arose over a property situated in Chunchaghatta Village, Bangalore, originally owned by Muniyappa @ Ruttappa. On April 4, 1986, Muniyappa executed a General Power of Attorney (GPA) and an unregistered Agreement to Sell in favor of A. Saraswathi, allegedly transferring rights to the property. Saraswathi later executed a registered sale deed on April 1, 1998, in favor of her son, A. Manohar (Appellant No. 2). However, Muniyappa had passed away on January 30, 1997, before the sale deed was executed.

Several years later, the legal heirs of Muniyappa executed a registered sale deed on March 21, 2003, transferring the same property to Respondent No. 7, who subsequently sold it to Respondent No. 8, and the latter, in turn, gifted it to Respondent No. 9, J. Manjula, on December 6, 2004.

It was the case of the appellants that when Appellant No. 1 visited the property on January 2, 2007, he found strangers in possession of the property. He lodged a complaint with the police, but the authorities closed the matter, declaring it to be civil in nature. Following this, Manjula (Respondent No. 9) filed a suit for permanent injunction to restrain the appellants from interfering with her possession. The appellants responded with a counter-suit seeking a declaration of ownership and possession, claiming title based on the 1998 sale deed executed by Saraswathi. The Trial Court and the High Court of Karnataka both ruled in favor of Manjula, holding that the sale deed executed by Saraswathi was invalid. The matter was then appealed to the Supreme Court.

The Supreme Court examined the nature of the General Power of Attorney and whether it was “coupled with an interest” under Section 202 of the Indian Contract Act, 1872, thereby making it irrevocable. The appellants contended that since the GPA was executed alongside an Agreement to Sell, it constituted an irrevocable agency. The Court rejected this argument, holding that: “A Power of Attorney is an instrument of agency and does not by itself create an interest in the property unless explicitly stated. The agent’s right to remuneration or commission does not amount to an interest in the property.”

Referring to Dalchand v. Seth Hazarimal & Ors., 1931 SCC OnLine MP 57, the Court reiterated that mere expectation of commission or remuneration does not create a proprietary interest in the property itself. The Court explained: “The mere use of the word ‘irrevocable’ in a Power of Attorney does not make it so. A power of attorney is irrevocable only when it is executed to secure an agent’s interest in the property itself, which was not the case here.”

The Court further clarified that since the GPA did not explicitly mention any transfer of interest in the property, it was governed by Section 201 of the Contract Act, which states that agency terminates upon the principal’s death. The Court emphasized:

“Once the principal dies, the agent no longer has the authority to act. Any act done thereafter, including the execution of a sale deed, is null and void.”

Invalidity of a Sale Deed Executed by a GPA Holder After the Principal’s Death

The appellants relied on the 1998 sale deed executed by Saraswathi in favor of her son, Appellant No. 2, to claim ownership. However, the Court ruled that the sale deed was void ab initio, as the Power of Attorney had already terminated upon the death of Muniyappa in 1997. Citing State of Rajasthan v. Basant Nahata, (2005) 12 SCC 77, the Court observed: "A Power of Attorney is not an instrument of transfer in itself; it is only a means to facilitate the execution of legal transactions. Once the principal dies, the agent no longer has the authority to act."

Since Saraswathi had no legal authority to transfer the property after Muniyappa’s death, the 1998 sale deed was rendered legally ineffective.

An Agreement to Sell Does Not Confer Ownership

The Court further rejected the argument that the Agreement to Sell executed in 1986 conferred ownership rights. It reaffirmed that: "An agreement to sell does not constitute a conveyance under the Transfer of Property Act. Mere possession under such an agreement does not create ownership rights. A registered sale deed is required for the transfer of title in immovable property."

The Court relied on Suraj Lamp & Industries Pvt. Ltd. v. State of Haryana, (2012) 1 SCC 656, which held that GPA sales do not convey valid title and cannot be used as a substitute for a registered sale deed. The Court warned against the practice of relying on unregistered Agreements to Sell as a means to claim ownership, stating: "It is time that an end is put to the pernicious practice of GPA sales. Immovable property can be legally transferred only through a registered sale deed."

Requirement of Registration Under the Registration Act

The Supreme Court held that the Agreement to Sell and GPA relied upon by the appellants were legally insufficient as they were not registered, in violation of Sections 17 and 49 of the Registration Act, 1908. The Court explained:

"Under the Registration Act, documents affecting immovable property valued over ₹100 must be registered to have legal effect. The unregistered Agreement to Sell relied upon by the appellants is insufficient to confer ownership."

The Court further noted that even if the GPA and Agreement to Sell were read together, they could not create a valid transfer of property unless registered.

Dismissing the appeals, the Supreme Court affirmed the Karnataka High Court’s ruling, stating: “A Power of Attorney holder has no authority to execute a sale deed after the principal’s death. The property transfer must be executed through a registered sale deed, and GPA sales are legally ineffective.”

The Court reiterated that an Agreement to Sell does not create ownership and that unregistered property transactions cannot be used to claim title. The Court concluded: “Where possession is to be determined based on title, a suit for mere injunction without a declaration of ownership is not maintainable. In the present case, title was directly in issue, and the findings of the lower courts on ownership were upheld.”

This judgment reinforces the Supreme Court’s stance against property transfers through GPA and Agreements to Sell, ensuring that such transactions do not confer ownership rights. The ruling underscores the importance of proper legal documentation in property transactions, safeguarding buyers from fraudulent GPA-based sales.

Justice J.B. Pardiwala, delivering the judgment, concluded: "The law is unambiguous: Immovable property can only be transferred by a registered sale deed. Any attempt to bypass this requirement is legally untenable and unenforceable."

Date of decision: 27/02/2025