The
Supreme Court of India, in M. S. Ananthamurthy & Anr. v. J. Manjula
& Ors. (Civil Appeal Nos. 3266–3267 of 2025), examined the legal effect
of a General Power of Attorney (GPA) and an unregistered agreement to sell
executed in respect of immovable property, and whether such instruments confer
any right, title or interest or survive the death of the executant by virtue of
Section 202 of the Indian Contract Act, 1872.
The
dispute concerned a site originally owned by one Muniyappa, who, in 1986,
executed a GPA and an agreement to sell in favour of A. Saraswathi after
receiving full consideration and delivering possession. The GPA was described
as irrevocable. After the death of the original owner in 1997, the GPA holder
executed a registered sale deed in 1998 in favour of her son. Subsequently, the
legal heirs of the original owner executed registered sale deeds in favour of
third parties, culminating in a registered gift deed in favour of the
respondent, who claimed lawful ownership and possession.
The
appellants contended that the GPA was coupled with interest and therefore
irrevocable under Section 202 of the Contract Act, and that the authority of
the GPA holder did not come to an end on the death of the principal. The
respondents argued that neither a GPA nor an agreement to sell conveys title,
that the agency stood terminated upon the death of the principal under Section
201 of the Contract Act, and that the subsequent registered conveyances in
their favour were valid.
The
Supreme Court undertook an extensive analysis of the law of agency under the
Contract Act, the nature of powers of attorney, and the concept of “agency
coupled with interest.” The Court reiterated that a power of attorney creates
only a principal–agent relationship and is a document of convenience
authorising the agent to act on behalf of the principal. It does not, by
itself, transfer any right, title or interest in immovable property.
The Court
held that mere execution of a GPA and an agreement to sell, even if
contemporaneous and even if full consideration is paid or possession is
delivered, does not create an interest in the property in favour of the agent
so as to attract Section 202 of the Contract Act. For an agency to be
irrevocable under Section 202, the authority must be given for the purpose of
effectuating a security or protecting or securing an existing proprietary
interest of the agent in the subject-matter of the agency. Mere remuneration,
prospective benefit, or expectation of ownership does not constitute such
interest.
The Court
further held that the use of the expression “irrevocable” in a GPA is not
determinative. Unless the power is genuinely coupled with interest, the agency
stands terminated by operation of law upon the death of the principal under
Section 201 of the Contract Act. Consequently, any sale deed executed by the
GPA holder after the death of the principal is void and conveys no title.
Reaffirming
the principles laid down in Suraj Lamp & Industries Pvt. Ltd. v. State
of Haryana (2012) 1 SCC 656, the Supreme Court held that GPA sales or
transfers based on agreement to sell do not convey ownership in immovable
property and cannot prevail over valid registered conveyances executed by the
lawful owners or their legal heirs.
Accordingly,
the Supreme Court dismissed the appeals, upheld the findings of the Trial Court
and the High Court, and confirmed the respondent’s lawful ownership and
possession of the suit property.
Source- https://api.sci.gov.in/supremecourt/2020/13961/13961_2020_13_1501_59775_Judgement_27-Feb-2025.pdf
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