IMPORTANT POINT
Termination of power on the death of one of Principals is not automatic.

JUDGMENT

R. Subramanian, J.—This appeal is before us on a reference made by a Hon’ble Single Judge of this Court by order dated 24.08.2011, wherein, the Hon’ble Single Judge had referred the following question to be answered by a Larger Bench:

“Whether the General Power of Attorney executed jointly by more than one Principal will survive even after the death of one of the Principals and if so, under what circumstances?”

2. The Hon’ble Judge felt compelled to reserve the question for consideration by a Division Bench since he felt that the law on the point is a little nebulous and it requires a clarification by a Larger Bench of this Court. The statutory provisions which relate to powers of attorney are found in the Indian Contract Act, 1872 and the Powers of Attorney Act, 1882. Chapter X of the Indian Contract Act, 1872, deals with Agency. While Sections 182 to 189 deal with Agency, Sections 190 to 195 deals with Sub-agents. Sections 201 to 210 deal with termination of agency or revocation of authority. One of the circumstances in which the agency gets terminated is when the Principal dies. Section 201 of the Indian Contract Act, 1872, reads as follows:

“201. Termination of agency.—An agency is terminated by the principal revoking his authority; or by the agent renouncing the business of the agency; or by the business of the agency being completed; or by either the principal or agent dying or becoming of unsound mind; or by the principal being adjudicated an insolvent under the provisions of any Act for the time being in force for the relief of insolvent debtors.”

3. If the statutory provisions namely, Sections 201 to 210 do not deal with a situation where there are multiple Principals and one of them dies or becomes insane, we will have to necessarily fall back upon precedents to decide the said question. Since the appellant went un-represented, we had appointed Mr. Srinath Sridevan, learned Senior Counsel of this Court to assist us in answering the question that has been referred to us.

4. Mr. V. Raghavachari, learned Senior Counsel appearing for the respondents 3 and 4 would submit that the very appeal has abated since the appellant himself is no more and as such nothing survives for consideration in the appeal on merits.

5. No doubt, we will have to necessarily dismiss the appeal as having abated, but the question that has been referred to us being an important question and the Courts are faced with such situation in the light of development of Commerce, we deem it fit to answer the question referred to us. We have already enumerated the statutory provisions that deal with the termination of agencies. A agency can be created either by a contract or by operation of law. There can be several principals or several agents. Termination happens either by act of parties, within and beyond their control, or by operation of law. An agency normally gets terminated on the death of either the principal or the agent. The exception is made where the agent himself has an interest in the contract. If it is a case of one principal, there is no issue arising out of such termination. Difficulty arises only where there are several principals having different interests in the property, subject matter of agency and one of them dies.

6. If we are to look at the precedents on the issue, the earliest decision traceable is Re Sital Prosad and others, Insolvents, Badrinarain Agarwalla vs. Raja Brijnarain Roy and another reported in 1916 SCC Online Cal 212 : AIR 1917 Cal 436. That was a case where, three out of four brothers who formed a Coparcenary, had authorised the fourth brother to mortgage their interests in the joint family property through a power of attorney deed. One of the brothers died prior to the execution of the mortgage. A Division Bench of Calcutta High Court held that the question whether the power of attorney came to an end by death of one of the principals depends upon the construction which is to be put upon the terms on the