Unauthorized Sale Deeds by Attorney After POA Cancellation Are Null and Void: Gujarat HC

The Gujarat High Court has reinforced the sanctity of principal-agent relationships, ruling that any sale deed executed by a power of attorney holder after the revocation of their authority is a legal nullity, even if an agreement to sell was executed during the subsistence of the agency.

Justice Maulik J. Shelat, presiding over the Second Appeal, adjudicated a complex property dispute involving conflicting sale deeds. The Court examined whether an 'irrevocable' power of attorney could be unilaterally cancelled and the subsequent validity of transactions made by an agent whose authority had been terminated. The dispute arose from the land situated at village Uvarsad, Gandhinagar, where the original owners had cancelled a Power of Attorney (POA) granted to the first defendant, who nevertheless proceeded to execute a sale deed in favor of his father.

Legal Scrutiny of Irrevocable Agency

The Court analyzed the nature of the POA dated 05/03/2007, which was titled 'irrevocable'. It observed that for an agency to be truly irrevocable under Section 202 of the Indian Contract Act, 1872, the agent must have a personal interest in the property itself. Paraphrasing the principle from M.S. Ananthamurthy v. J. Manjula, the Court noted that a mere right to remuneration or the authority to sell does not constitute an 'interest' in the subject matter. Furthermore, since the document attempted to create an interest in immovable property, its non-registration under Section 17 of the Registration Act, 1908 proved fatal to the claim of irrevocability.

The Court's Rationale on Section 204

The appellants argued that because a registered agreement to sell was executed while the POA was valid, the authority had been 'partly exercised,' making it irrevocable under Section 204 of the Indian Contract Act, 1872. The Court rejected this, clarifying that while the principal is bound by the specific obligations incurred during the agency (such as being liable for specific performance of the agreement to sell), the agent does not gain an absolute right to execute a final sale deed after the POA is revoked. The Court, in its reasoning, observed: "According to my considered view, what was saved by virtue of Section 204 of the Act, 1872, was that the registered agreement to sell dated 15/12/2008 in favour of defendant No.2 was an act and obligation of the agent during the subsistence of the agency (POA) and the same was binding on the principal (plaintiff Nos.1 to 4) and such act and obligation could not have been revoked by them. Any other interpretation than the above would render Section 202 of the Act, 1872, otiose."

Impact of the Tenancy Act

While the Appellate Court had initially found the sale deed hit by Section 43 of the Gujarat Tenancy and Agricultural Lands Act, 1948, the High Court focused on the lack of authority. It noted that since the POA was cancelled on 06/01/2009, the execution of the sale deed on 30/07/2009 by the agent was inherently void.

The Court has following directions:
"[3] sale deed executed by respondent No.1 (defendant No.1) in favour of respondent No.2 (defendant No.2) dated 30.07.2009 vide registration No.7906, which was registered on 19.05.2011 is hereby ordered to be null and void.

[4] sale deed executed by appellant No.1 (plaintiff No.1) in favour of appellant No.5 (plaintiff No.5), dated 08.06.2012 vide registration No.8155 is hereby declared as legal and valid. Plaintiff No.5 is declared as bonafide purchaser."

Background

The litigation involved two competing sets of transactions for the same suit property. Initially, Ratibhai (predecessor of Plaintiffs 1-4) entered into various agreements with Defendant No.2 and appointed Defendant No.1 (son of Defendant No.2) as his attorney. After Ratibhai's death, the plaintiffs executed a fresh POA in 2007. However, following disputes and the restoration of the land's possession to the owners by revenue authorities, the plaintiffs cancelled the POA in January 2009. Despite this, Defendant No.1 executed a sale deed in favor of Defendant No.2 in July 2009. The owners subsequently sold the land to Plaintiff No.5 in 2012 via a registered deed. The Trial Court dismissed the owners' suit, but the First Appellate Court reversed the decision, declaring the 2009 deed void. The High Court, relying on M.S. Ananthamurthy v. J. Manjula and Swaminathan and Ors. Vs. Alankamony (Dead) Through Lrs. ( "2022 SCC Online SC 539": 2022 CaseBase(SC) 1238), upheld the Appellate Court's findings, emphasizing that the agent acted without authority and the subsequent purchasers from Defendant No.2 could not claim better title than their vendor.

Case Details:
Case No.: R/SECOND APPEAL NO. 423 of 2026
Neutral Citation: 2026:GUJHC:57486
Case Title: Mukeshbhai Kantibhai Prajapati & Anr. Versus Viren Ratilal Patel & Ors.
Appearances:
For the Petitioner(s): Mr. Mihir Thakore, Senior Counsel; Mr. Amar Bhatt, Senior Counsel; Mr Shakti S Jadeja; Mr. Tirth Nayak
For The Respondent(S): Mr Rusi B Trivedi

Source: 2026 CaseBase(GUJ) 21511