Power Of Attorney Lacking Explicit Interest Is Revocable Regardless Of 'Irrevocable' Label: Gujarat High Court

"The mere saying that the power of attorney is an irrevocable power of attorney coupled with interest is not the end of the matter... [A] document has to be construed as a whole." Gujarat High Court, in a judgment dated 11 September 2026, held that a Power of Attorney (POA) document that does not explicitly create a proprietary interest in the agent in favour of the subject matter cannot be considered "irrevocable," regardless of its nomenclature.

 Justice Maulik J. Shelat observed that for a POA to be deemed irrevocable under Section 202 of the Indian Contract Act, 1872, it must be coupled with an interest, and in the absence of such registered interest, the principal retains the absolute right to terminate the agency.

The litigation involved a suit property in Uvarsad, Gandhinagar, which was originally held as "new tenure" land under the Gujarat Tenancy and Agricultural Lands Act, 1948. The original owners (Plaintiffs 1–4) had executed a POA in favour of Defendant No. 1, which was titled "irrevocable." Subsequently, the plaintiffs cancelled the POA via legal notice in 2009. Despite this, Defendant No. 1 executed a sale deed in favour of Defendant No. 2 (his father) using the revoked POA. The trial court initially dismissed the plaintiffs' suit, but the Appellate Court set aside that judgment, leading to the present Second Appeal.

The primary question before the court was whether the POA dated 05/03/2007 was an "agency coupled with interest" under Section 202 of the Indian Contract Act, 1872, rendering it irrevocable. The court further examined whether a principal is barred from revoking a POA under Section 204 if the agent has "partly exercised" the authority, and whether such revocation is valid against third parties without notice.

POA Nomenclature Not Determinative

The Court clarified that the title or nomenclature of a document is not the litmus test for its legal effect. Relying on the Supreme Court’s decision in M.S. Ananthamurthy v. J. Manjula, the bench emphasized that a court must look at the substance and the terms of the instrument. "The mere saying that the power of attorney is an irrevocable power of attorney coupled with interest is not the end of the matter," the Court stated, noting that no part of the sale consideration was allocated to the agent, nor was any specific interest in the property created in his favour.

No Interest Created Without Registration

The Court underscored that for an agency to be irrevocable under Section 202, the agent must have a proprietary interest in the subject matter. Citing the requirement for compulsory registration under Section 17(1)(b) of the Registration Act, 1908, the Court observed that in the absence of a registered instrument transferring such interest, the agent cannot claim irrevocability. "It is evident that... nowhere it has been mentioned that any interest was created in favour of defendant No. 1 qua the suit property," the bench noted.

Scope of Section 204 of the Contract Act

Addressing the appellants' reliance on Section 204, which prohibits revocation once an agency is "partly exercised," the Court held that this provision only protects acts already done and obligations already incurred. While the agent’s execution of a prior agreement to sell was a binding obligation on the principal, it did not render the entire POA irrevocable for all future transactions. The Court clarified that the right of the principal to revoke the agency remains intact for any acts not yet performed.

Protection of Bona Fide Purchasers

The Court further observed that the subsequent purchasers could not claim the protection of being bona fide purchasers for value without notice. Given that the plaintiffs had already registered a sale deed in favour of Plaintiff No. 5 in 2012, the subsequent purchasers of 2021 had a duty to verify the title. "The principle of caveat emptor would squarely apply to them," the Court remarked, affirming that they could not derive a better title than their vendor, who had acquired the property through an unauthorized sale deed.

The High Court dismissed the Second Appeals, confirming the Appellate Court’s judgment which declared the sale deed executed by the defendant as null and void. The Court held that since the POA was validly revoked, the agent acted without authority, and the subsequent transaction was legally unsustainable.

Date of Decision: 11 September 2026