The Gujarat High Court dismissed second appeals challenging a decree that declared a sale deed executed via power of attorney null and void, holding the power of attorney was not irrevocable as no interest was created in favor of the agent, thereby validating the plaintiffs' right to cancel the agency and upholding the subsequent sale to a bona fide purchaser.
Background & Facts
The Dispute
The suit property comprising Block/Survey No. 952 (0-50-59 Hectares-Are-sq.meters) and Block/Survey No. 950/2 (0-37-42 Hectares-Are-Sq.meters) at village Uvarsad, Taluka and District Gandhinagar was originally owned by Jivabhai Mathurbhai. After his demise, the property mutated to Naranbhai Jivabhai. Parshottambhai Jorabhai, a tenant, purchased the suit property under the Gujarat Tenancy and Agricultural Lands Act, 1948 for Rs.5,689/- and executed a Will in favor of Ratibhai Bhulabhai Patel. Ratibhai died on 22/07/2000, and plaintiffs Nos. 1 to 4 (his legal heirs) had their names mutated in revenue records.
Key Facts
- Ratibhai executed a notarized sale agreement and power of attorney dated 29/11/1990 in favor of defendant No. 2
- Ratibhai executed an irrevocable power of attorney dated 17/09/1999 in favor of defendant No. 1
- The suit property was new tenure land under Section 43 of the Tenancy Act, restricting transfer without Collector's permission
- Defendant No. 2 transferred the property via unregistered sale deed in 1990, leading to Tenancy Case No. 23 of 1997
- Mamlatdar and ALT, Gandhinagar set aside the transfer on 13/01/1998 and ordered vesting in Government
- Defendant No. 2 appealed to the highest Revenue Authority, which partly allowed revision on 06/05/2008, directing restoration of possession
- On 26/05/2008, plaintiffs Nos. 1 to 4 executed an agreement with defendant No. 1 (via POA) to cancel the aforesaid sale
- Mamlatdar recorded this agreement on 31/07/2008 and ordered mutation of plaintiffs' names in revenue records
- Plaintiffs Nos. 1 to 4 executed a fresh power of attorney in favor of defendant No. 1 on 05/03/2007, titled as an 'irrevocable power of attorney' (POA)
- Plaintiffs Nos. 1 to 4 executed a notarized agreement to sell in favor of plaintiff No. 5 on 20/10/2008
- Defendant No. 1 executed a registered agreement to sell in favor of defendant No. 2 on 15/12/2008
- Plaintiffs Nos. 1 to 4 issued a notice of termination of the POA dated 05/03/2007 to defendant No. 1 on 06/01/2009
- Defendant No. 1 replied on 12/01/2009, stating plaintiffs received Rs. 8,00,000/- as part consideration from his client (defendant No. 2)
- Plaintiffs Nos. 1 to 4 executed a registered agreement to sell and a registered power of attorney in favor of plaintiff No. 5 on 10/08/2009
- Defendant No. 1, acting on the strength of the POA dated 05/03/2007, executed a sale deed on behalf of plaintiffs Nos. 1 to 4 in favor of defendant No. 2 on 30/07/2009
- The sale deed dated 30/07/2009 was presented for registration but remained unregistered due to stamp duty deficiency; registration was completed on 19/05/2011
- Collector, Gandhinagar converted the suit property from new tenure to old tenure via order dated 14/03/2011, lifting transfer restrictions
- After conversion, plaintiffs Nos. 1 to 4 sold the land to plaintiff No. 5 via a registered sale deed on 18/06/2012
Procedural History
- Plaintiffs instituted Special Civil Suit No. 118 of 2014 before the Principal Senior Civil Judge, Gandhinagar, seeking declaration that plaintiff No. 5 is the owner and that defendant No. 1's sale deed to defendant No. 2 is null and void
- The Trial Court dismissed the suit
- Feeling aggrieved, plaintiffs preferred Regular Civil Appeal No. 66 of 2019 before the District Court, Gandhinagar
- 27/04/2026: The Appellate Court (District Court) allowed the appeal, set aside the Trial Court's judgment, declared the sale deed dated 30/07/2009 executed by defendant No. 1 in favor of defendant No. 2 as null and void, declared the sale deed dated 18/06/2012 in favor of plaintiff No. 5 as legal and valid, and restrained defendants from transferring or interfering with plaintiffs' possession
- 03/02/2026: Defendants Nos. 1 and 2 and subsequent purchasers (appellants of Second Appeal No. 424 of 2026) were joined as respondents Nos. 3 and 4 in Regular Civil Appeal No. 66 of 2019
- 09/03/2026: Matter reserved for judgment by the Appellate Court
- 27/04/2026: Impugned judgment and decree passed by the Appellate Court
- Defendants Nos. 1 and 2 and subsequent purchasers filed Second Appeals No. 423 and 424 of 2026
- 11/09/2026: Present judgment pronounced by the High Court of Gujarat at Ahmedabad
Relief Sought
Appellants (defendants Nos. 1 and 2 and subsequent purchasers) sought to set aside the impugned judgment and decree dated 27/04/2026 passed by the Appellate Court, restore the Trial Court's dismissal of the suit, and obtain costs.
The Legal Issue
The central question was whether the power of attorney dated 05/03/2007 executed by plaintiffs Nos. 1 to 4 in favor of defendant No. 1 was irrevocable under Section 202 of the Indian Contract Act, 1872, such that plaintiffs Nos. 1 to 4 lacked the right to cancel it after defendant No. 1 had partly exercised authority by executing a registered agreement to sell in favor of defendant No. 2 on 15/12/2008.
Arguments Presented
For the Appellant/Petitioner
Appellants (defendants Nos. 1 and 2 and subsequent purchasers) contended that the POA dated 05/03/2007 was irrevocable because: (i) it was titled as irrevocable; (ii) defendant No. 1 had partly exercised authority by executing a registered agreement to sell on 15/12/2008, triggering Section 204 of the Act, 1872, which bars revocation after partial exercise; (iii) the interest of defendant No. 1 was created through the part consideration of Rs. 8,00,000/- received by plaintiffs; (iv) reliance was placed on M.S. Ananthamurthy v. J. Manjula (2025) 10 SCC 596 regarding interest in POA; and (v) the Appellate Court erred in applying Section 43 of the Tenancy Act, as the suit property had been converted to old tenure by 14/03/2011, preceding registration on 19/05/2011.
For the Respondent/State
Respondent (plaintiff No. 5) argued that: (i) the POA dated 05/03/2007 created no interest in favor of defendant No. 1, as plaintiffs were not entitled to receive any part of sale consideration or other benefit; (ii) mere title of 'irrevocable' does not confer irrevocability without actual interest; (iii) Section 202 requires an express contract to prejudice interest, absent here; (iv) reliance on M.S. Ananthamurthy was misplaced, as the POA holders there were deceased at sale deed execution, unlike the living plaintiffs here; (v) the POA was unregistered, and under Section 17(1)(b) of the Registration Act, 1908, interest in immovable property requires registration; (vi) plaintiffs validly cancelled the POA on 06/01/2009, leaving defendant No. 1 without authority to execute the sale deed on 30/07/2009; and (vii) the Appellate Court's findings were neither perverse nor contrary to settled law.
The Court's Analysis
The Court began by noting that the facts were not in dispute. It examined whether the POA dated 05/03/2007 was coupled with interest in favor of defendant No. 1. A bare reading of the POA showed no clause entitling defendant No. 1 to receive part of sale consideration or any other interest in the suit property. The Court held that merely labeling a POA as 'irrevocable' does not make it so; irrevocability under Section 202 of the Act, 1872 requires the agent to have an interest in the subject matter. Citing M.S. Ananthamurthy v. J. Manjula (2025) 10 SCC 596, the Court emphasized that interest must be derived from the principal-agent relationship for securing the agent's benefit, not merely from the agent's right to remuneration. Here, defendant No. 1 was authorized to execute agreements but had no vested interest in the property or proceeds.
Regarding Section 204, the Court acknowledged that partial exercise of authority binds the principal to those specific acts. However, since no interest was created, the POA was not irrevocable, and plaintiffs retained the right to cancel it. The Court found that defendant No. 1's execution of the registered agreement to sell on 15/12/2008 created an obligation binding on plaintiffs, but this did not extend to future acts like the sale deed of 30/07/2009. Crucially, plaintiffs had cancelled the POA on 06/01/2009, prior to the sale deed execution, leaving defendant No. 1 without authority.
On Section 43 of the Tenancy Act, the Court observed that while the sale deed was executed on 30/07/2009 when the property was new tenure, registration occurred on 19/05/2011 after conversion to old tenure on 14/03/2011. However, the Court deemed this academic, as the sale deed was already void for lack of authority. The Court affirmed that a sale deed executed without authority is null and void ab initio, irrespective of subsequent events.
The Court further held that subsequent purchasers could not derive better title than their vendor (defendant No. 2), who himself had no valid title due to the void sale deed. It rejected arguments about inadequate opportunity, noting the record showed plaintiffs had directed appellants-subsequent purchasers to supply documents upon joinder on 03/02/2006.
Ultimately, the Court concluded that no substantial question of law arose, as the Appellate Court's findings were correct: the POA was not irrevocable, its cancellation was valid, the sale deed lacked authority, and the subsequent sale to plaintiff No. 5 was valid.
The Verdict
The High Court dismissed the second appeals filed by defendants Nos. 1 and 2 and subsequent purchasers. The impugned judgment and decree dated 27/04/2026 passed by the Appellate Court was confirmed. No order as to costs was passed. The sale deed dated 30/07/2009 executed by defendant No. 1 in favor of defendant No. 2 remains null and void, while the sale deed dated 18/06/2012 executed by plaintiffs Nos. 1 to 4 in favor of plaintiff No. 5 is declared legal and valid. Defendants are restrained from transferring or interfering with plaintiffs' possession over the suit property.
What This Means For Similar Cases
Irrevocability Requires Substantive Interest
A power of attorney cannot be deemed irrevocable merely by labeling it as such. For Section 202 of the Indian Contract Act, 1872 to apply, the agent must have a tangible interest in the subject matter - such as a right to proceeds, security for debt, or proprietary benefit - created at the time of execution. Mere authorization to act, without any vested interest in the property or its proceeds, does not confer irrevocability. Practitioners must scrutinize POA clauses for explicit interest-creating provisions; absent such terms, the principal retains unilateral revocation rights even after partial exercise of authority.
Authority Terminates Upon Cancellation
The principal's right to cancel a power of attorney is not extinguished by the agent's prior acts, unless those acts created an irrevocable agency coupled with interest. Once the POA is validly cancelled, the agent loses all authority to act on the principal's behalf, including executing sale deeds or agreements. Any subsequent action by the agent post-cancellation is ultra vires and conveys no title. This principle protects principals from unauthorized transactions and reinforces that agency law prioritizes the principal's control over their property.
Registration Is Key for Interest in Immovable Property
Under Section 17(1)(b) of the Registration Act, 1908, any document creating interest in immovable property must be compulsorily registered to confer valid right, title, or interest. An unregistered power of attorney, even if coupled with interest, cannot create enforceable rights in the property. This judgment underscores that for POAs intended to facilitate property transactions, registration is not procedural but substantive - without it, no interest in land is transferred, leaving the agent without authority to bind the principal.
Subsequent Purchasers Stand in Vendor's Shoes
A purchaser cannot acquire better title than their vendor. If the vendor's title is void due to lack of authority, the purchaser inherits that defect, regardless of bona fide status or payment of consideration. This reinforces the nemo dat quod non habet principle in property law: no one can give what they do not have. Due diligence must extend beyond the immediate vendor to trace the root title, especially where powers of attorney or agency relationships are involved in the chain of conveyance.
