In RSA-2819-2007(O&M)- PUNJ HC – In terms of illustration (b) to Sec 202 of Indian Contract Act, agency in which agent himself has interest is neither terminated by insanity nor death of principal: P&H HC Justice Anil Kshetarpal [05-07-2022]

Read Order: SMT. PARKASH DEVI V.

RAJINDER KUMAR (SINCE DECEASED) THROUGH HIS LRS. AND ORS.

Monika Rahar

Chandigarh, July 13, 2022: The High Court of Punjab and Haryana has recently held that it is evident that illustration (b) to Section 202 of the Indian Contract Act, 1872, itself explains that the agency in which the agent has an interest is neither terminated by insanity nor death of the principal.

The Bench of Justice Anil Kshetarpal also held that a registered power of attorney may be proved by its production without further proof when, on the face of it, it purports to have been  executed in the Court before the Registrar and is authenticated by him.

In this case, the plaintiff filed a suit for possession by ejectment of the defendant from one of his shops, on the ground that the tenancy in favour of the defendant was terminated.

In his written statement, the defendant denied the relationship of landlord-tenant and claimed that the premises was owned by his wife who constructed the shop in dispute and the nearby shops. The defendant averred that the land was purchased by him from the plaintiff’s father under an agreement to sell.

It was also claimed that the father of the plaintiff also executed a registered Will, registered General Power of Attorney, registered Special Power of Attorney and an affidavit in 1984. Thereafter, on the basis of the aforesaid General Power of Attorney, the defendant transferred the property in favour of his wife.

In replication, the plaintiff claimed that his father did not execute any instrument mentioned above and if at all any General Power of Attorney was executed, the same would cease to be effective from the date of his death.

The trial court passed a decree in favour of the plaintiff. The First Appellate Court upheld the said decree and apart from stating the reasons stated by the Trial Court, also stated that the late defendant was never the owner of the property and he failed to examine the scribe as well as the attesting witnesses of the various documents including the General Power of Attorney.

The defendant’s wife hence approached the High Court.

The first and foremost argument of the counsel for the appellant was with reference to Section 202 of the Indian Contract Act, 1872. He submitted that where the agent himself has an interest in the property which forms the subject matter of the agency, the agency cannot be terminated, in the absence of a contract to the contrary. He also submitted that in the present case, the General Power of Attorney was executed on receipt of the entire sale consideration, therefore, the agent, namely the defendant, had an interest in the subject matter i.e. 5 biswas of plot including the suit property.

On the contrary, the  counsel representing the plaintiff (respondent herein) contended that the power of attorney, even if admitted, ceased to exist or ceased to remain effective on the death of his father in 1984.

Addressing this argument, the Court opined that it is evident that illustration (b) to Section 202 of the Indian Contract Act, 1872, itself explains that the agency in which the agent has an interest is neither terminated by insanity nor death of the principal.

Thus, the Court held that the agency created in favour of the late defendant, vide registered General Power of Attorney, continued to remain in force even after the death of the plaintiff’ father.

Further, the Bench observed that a registered power of attorney may be proved by its production without further proof when, on the face of it, it purports to have been  executed in the Court before the Registrar and is authenticated by him.

“Section 33(4) of the Registration Act, 1908, provides that the power of attorney may be proved by its production in the Court particularly when it has been executed before and authenticated by the Registrar“, held the Court. 

Moreover, Justice Kshetarpal added that Section 85 of the Indian Evidence Act, 1872, provides for a rebuttable presumption of law in favour of the power of attorney holder, whereby the Court presumes that every document purporting to be a power of attorney has been duly executed before or authenticated by a Registrar or was so executed and authenticated.

Additionally, it was held, “The registration of a document is a solemn act to be performed in the presence of a competent official appointed to act as the Registrar… All acts done before him in his official capacity and verified by his signatures shall be presumed by the Court to have been carried out in a proper manner by virtue of Section 85 of the Indian Evidence Act, 1872. Where an endorsement made on a document by the Sub-Registrar shows that it was presented for registration by the executant, there is a presumption in favour of the correctness of this endorsement.”

Next, the Court addressed the question of whether the registered General Power of Attorney, registered Special Power of Attorney and the Will have been duly proved or not?

Regarding this, the Court held at the very outset that the General Power of Attorney and Special Power of Attorney are not required to be attested by witnesses.

Further, the Court held that undoubtedly the propounder of the documents is required to prove the same, but the registered documents carry a presumption that they were genuinely executed, therefore, the defendant discharged her primary onus by producing the documents and examining the witnesses and the onus shifted on the plaintiff to prove that his father never executed all these five documents.

In these circumstances, the Court came to the conclusion that both Courts erred while recording the finding that the defendant failed to prove the aforesaid documents.

The Court held that both the Courts erred in decreeing the suit. Consequently, the appeal was allowed.