A Power Of Attorney Is To Be Construed Strictly; Agent Cant Sell Without Express Authorisation: Supreme Court

The Honble Supreme Court held  that :

The power to sell is not to be inferred from a document of Power of Attorney .Ordinarily a Power of Attorney is to be construed strictly by the Court  and Cannot amplify or magnify the clauses contained in the deed of Power of Attorney .

The document should expressly authorize the agent, 

1. To execute a sale deed; 
2. To present it for registration; and 
3. To admit execution before the Registering Authority[1]

FACTS

 The suit schedule property originally belonged to one Ullattukandiyil Sankunni. After his death, the property devolved upon his two daughters, one of whom is the appellant herein. The appellant herein executed a general Power of Attorney on July 21 , 1971 registered , in favour of her sister Smt. Ranee Sidhan. However, the said power was cancelled on January 31, 1985. But in the meantime, the appellants sister was found to have executed four different documents in favour of certain third parties, assigning/releasing some properties. Though a preliminary decree was passed in the second suit on January 7, 1989.The appellant came to know later that the assignees/releasees had sold the property to the respondent herein. Therefore, the appellant filed yet another suit, seeking partition and separate possession of her half share in the suit property. 

The trial Court granted a preliminary decree in favour of the appellant. However, the regular appeal filed by the respondent herein was allowed by a Division Bench of the High Court by the judgment and decree impugned in this appeal. Therefore, the appellant has come up with the above appeal.

While reversing Judgment and decree of the trial Court, the High Court held: 

1. That the failure of the appellant to seek the relief of setting aside the documents of transfer and/or recovery of possession of the property was fatal to her case; 
2. That though the principle behind Order II Rule 2 CPC[2] may not be applicable to suits for partition, the appellant must be held to have had constructive notice of the alienations made by her sister, in view of Section 3 of the Transfer of Property Act, 1882 (hereinafter referred to as the Act).
3. That once constructive notice is attributed to the appellant, any relief for cancellation of the documents of alienation would have already become time barred, by the time the Power of Attorney was cancelled;
4.  That since the deed of general Power of Attorney filed as Exhibit A1 did not contain any express power to sell the suit property, the transferee cannot be held to have exercised reasonable care as required by the proviso to Section 41 of the Transfer of Property Act, 1882[3]; and 
5. That despite this fact, the appellant was not entitled to a decree for partition, in view of her failure to seek the cancellation of the alienations, in spite of having constructive notice of the alienations.

The Apex Court Observed that:

The argument that the deed was drafted by a doyen of the Bar, is an argument not in favour of the respondent. This is for the reason that the draftsman has chosen to include, (i) an express power to lease out the property; and (ii) an express power to execute any document offering the property as security for any borrowal, but not an express power to sell the property. Therefore, the draftsman appears to have had clear instructions and he carried out those instructions faithfully. The power to sell is not to be inferred from a document of Power of Attorney. The trial Court as well as the High Court were ad idem on the finding that the document did not confer any power of sale. 

Also, the Apex Court said that :

17. As a matter of plain and simple fact, Exhibit A1, deed of Power of Attorney did not contain a clause authorizing the agent to sell the property though it contained two express provisions, one for leasing out the property and another for executing necessary documents if a security had to be offered for any borrowal made by the agent. Therefore, by convoluted logic, punctuation marks cannot be made to convey a power of sale. Even the very decision relied upon by the learned counsel for the respondent, makes it clear that ordinarily a Power of Attorney is to be construed strictly by the Court. Neither Ramanatha Aiyars Law Lexicon nor Section 49 of the Registration Act[4] can amplify or magnify the clauses contained in the deed of Power of Attorney.

The Honble Apex court also noted that the reasoning given by the High Court for holding that the plaintiff ought to have challenged the alienations, is that she was out of possession. 

The High Court failed to appreciate that the possession of an agent under a deed of Power of Attorney is also the possession of the Principal and that any unauthorized sale made by the agent will not tantamount to the Principal parting with possession. 15. It is not always necessary for a plaintiff in a suit for partition to seek the cancellation of the alienations. There are several reasons behind this principle. One is that the alienees as well as the co-sharer are still entitled to sustain the alienation to the extent of the share of the co-sharer. It may also be open to the alienee, in the final decree proceedings, to seek the allotment of the transferred property, to the share of the transferor, so that equities are worked out in a fair manner. Therefore, the High Court was wrong in putting against the appellant, her failure to challenge the alienations

While Allowing the appeal, the Honble Bench noted that 

It is a fundamental principle of the law of transfer of property that no one can confer a better title than what he himself has (Nemo dat quod non habet). The appellants sister did not have the power to sell the property to the vendors of the respondent. Therefore, the vendors of the respondent could not have derived any valid title to the property. If the vendors of the respondent themselves did not have any title, they had nothing to convey to the respondent, except perhaps the litigation.

 20. Therefore, the appeal is allowed, the impugned judgment of the High Court is set aside and the Judgment and preliminary decree passed by the trial Court are restored. There will be no order as to costs.

[1] Referred to Church of Christ Charitable Trust and Educational Charitable Society vs. Ponniamman Educational Trust , (2012) 8 SCC 706 T

[2] ORDER 2, RULE 2 CPC

IN: CPC (CIVIL PROCEDURE CODE), 1908

2. SUIT TO INCLUDE THE WHOLE CLAIM.

(1) Every suit shall include the whole of the claim which the plaintiff is entitled to make in respect of the cause of action; but a plaintiff may relinquish any portion of his claim in order to bring the suit within the jurisdiction of any Court.

(2) Relinquishment of part of claim- Where a plaintiff omits to sue in respect of, or intentionally relinquishes, any portion of his claim he shall not afterwards sue in respect of the portion so omitted or relinquished.

(3) Omission to sue for one of several reliefs- A person entitled to more than one relief in respect of the same cause of action may sue for all or any of such reliefs; but if he omits, except with the leave of the Court, to sue for all such reliefs, he shall not afterwards sue for any relief so omitted.

Explanation-
For the purposes of this rule an obligation and a collateral security for its performance and successive claims arising under the same obligation shall be deemed respectively to constitute but one cause of action.

[3] Section 41 in The Transfer of Property Act, 1882

41. Transfer by ostensible owner.Where, with the consent, express or implied, of the persons interested in immoveable property, a person is the ostensible owner of such property and transfers the same for consideration, the transfer shall not be voidable on the ground that the transferor was not authorised to make it: provided that the transferee, after taking reasonable care to ascertain that the transferor had power to make the transfer, has acted in good faith.

[4] Section 49 in The Registration Act, 1908

49. Effect of non-registration of documents required to be registered.No document required by section 17 1[or by any provision of the Transfer of Property Act, 1882 (4 of 1882)], to be registered shall

(a) affect any immovable property comprised therein, or

(b) confer any power to adopt, or

(c) be received as evidence of any transaction affecting such property or conferring such power, unless it has been registered: 54 [Provided that an unregistered document affecting immovable property and required by this Act or the Transfer of Property Act, 1882 (4 of 1882), to be registered may be received as evidence of a contract in a suit for specific performance under Chapter II of the Specific Relief Act, 1877 (3 of 1877) 55, 56 [***] or as evidence of any collateral transaction not required to be effected by registered instrument.] State Amendment Uttar Pradesh: In section 49,

(i) in the first paragraph, after the words or by any provision of the Transfer of Property Act, 1882 insert the words or of any other law for the time being in force,

(ii) substitute clause (b) as under: (b) confer any power or create any right or relationship, or,

(iii) in clause (c), after the words such power, insert the words or creating such right or relationship,

(iv) in the proviso, omit the words as evidence of a contract in a suit for specific performance under Chapter II of the Specific Relief Act, 1877, or. [Vide Uttar Pradesh Act 57 of 1976, sec. 34 (w.e.f. 1-1-1977)].