Sale Deed Invalid After Revocation of Power of Attorney: Madras High Court

Sale Is Incomplete Without Registration: Invalid Sale Deed Cannot Convey Title - Madras High Court dismissing a Second Appeal challenging the concurrent findings of the Trial Court and First Appellate Court. The Court declared that a Sale Deed executed by a power agent after the revocation of a General Power of Attorney (G.P.A.) was invalid and does not confer any title to the purchaser.

The Court held: “Under Section 54 of the Transfer of Property Act, 1882, a sale of immovable property worth ₹100/- or more is incomplete without registration. The Sale Deed in question was presented for registration after the revocation of the G.P.A. and is therefore not binding on the plaintiffs.”

While upholding the plaintiffs’ title and possession of the property, the Court granted liberty to the second defendant (purchaser) to file a Suit for Specific Performance based on the Sale Agreement and the unregistered Sale Deed.

"Power of Attorney Revocation Validly Communicated: Sale Deed Cannot Be Sustained"

The case concerned a dispute over a 2-acre property in Erode District, where the plaintiffs sought a declaration that the Sale Deed executed by the first defendant (power agent) in favor of the second defendant (purchaser) was invalid due to the revocation of the G.P.A.

The plaintiffs alleged that the G.P.A., executed as security for a loan, was revoked through a registered Cancellation Deed on July 26, 2002, and the cancellation was duly communicated to the Sub-Registrar, Bhavani, on July 29, 2002. However, the first defendant executed a Sale Deed in favor of the second defendant on August 2, 2002, which the Sub-Registrar refused to register, citing the cancellation of the G.P.A.

The Trial Court and the First Appellate Court held that the Sale Deed executed after revocation of the G.P.A. was invalid, and the plaintiffs were entitled to retain possession and title over the property.

Justice Sakthivel concurred with the lower courts, stating: “The G.P.A. was validly revoked by a registered Cancellation Deed, and its revocation was communicated to the Sub-Registrar. Even if the defendants claimed lack of prior notice, they indisputably became aware of the revocation when the Sale Deed was presented for registration. A power agent cannot act after revocation of the G.P.A.”

"Power Coupled With Interest Must Include Possession to Be Irrevocable"

The appellants argued that the G.P.A. was irrevocable under Section 202 of the Indian Contract Act, 1872, as it was coupled with interest. They contended that possession of the property had been handed over to the power agent.

The Court rejected this argument, holding that no evidence supported the claim of possession transfer to the power agent. Relying on precedent, the Court observed: “Possession of the property is a crucial requirement for a power of attorney to be considered irrevocable under Section 202 of the Indian Contract Act. In this case, the plaintiffs continued to possess and enjoy the property, making the G.P.A. revocable.”

"Sale Deed Incomplete Without Registration: Remedy Lies in Specific Performance"

The Court emphasized that under Section 54 of the Transfer of Property Act, 1882, the sale of immovable property worth ₹100/- or more is complete only upon registration. The Sub-Registrar’s refusal to register the Sale Deed was lawful, as the G.P.A. had been revoked.

Justice Sakthivel noted: “The Sale Deed was presented for registration after the G.P.A. was revoked and the revocation came to the defendants’ notice. As such, the Sale Deed is invalid and does not convey title to the second defendant. The purchaser’s remedy lies in filing a Suit for Specific Performance based on the Sale Agreement and unregistered Sale Deed.”

"Cancellation of Power of Attorney Registered at Different Office: No Fraud Established"

The appellants contended that the cancellation of the G.P.A., registered at a Sub-Registrar’s Office (S.R.O.) different from where the G.P.A. was registered, amounted to fraud. The plaintiffs countered that the Registration Act permitted such registrations.

The Court upheld the validity of the cancellation, stating: “Under Sections 64–66 of the Registration Act, 1908, and Rule 116 of the Tamil Nadu Registration Rules, a Cancellation Deed can be registered at a different S.R.O., provided the cancellation is communicated to the jurisdictional Sub-Registrar. There is no evidence to suggest procedural irregularity or fraud in this case.”

The Court further observed that the Sub-Registrar, Bhavani, was duly notified of the cancellation, fulfilling the statutory requirement for effective revocation.

"Liberty to File Suit for Specific Performance: Remedy for the Purchaser"

The Court provided a clear remedy to the second defendant (purchaser) by granting liberty to file a Suit for Specific Performance based on the Sale Agreement and the unregistered Sale Deed. The judgment noted: “In such a Suit, both parties are entitled to raise all their contentions and pleas, including seeking exclusion of time spent in the present proceedings under Section 14 of the Limitation Act, 1963.”

This direction ensures that the second defendant can pursue legal recourse without being barred by limitation due to the time spent in the current proceedings.

The Madras High Court dismissed the Second Appeal, affirming the plaintiffs’ title and possession of the property and declaring the Sale Deed invalid. By granting the second defendant liberty to file a Suit for Specific Performance, the Court balanced the equities between the parties while upholding the legal principles governing power of attorney, property transfers, and registration.

This judgment reinforces the sanctity of registration laws and underscores the need for compliance with statutory requirements in property transactions.

Date of Decision: 20/01/2025