Sale Deed Executed Under Valid Power of Attorney Before Cancellation Notice is Binding: Madras High Court - 2025-04-30

Court Cases & Legal News.

Madras High Court Upholds Sale by Power Agent Executed Before Cancellation Notice

The Madras High Court, presided over by Hon'ble Mr. Justice V. Sivagnanam , recently dismissed appeals challenging the validity of a sale deed executed by a power of attorney agent, reinforcing the principle that acts performed under a valid power of attorney before its cancellation are legally binding. The court affirmed the trial court's decision, finding that a subsequent cancellation notice could not invalidate a prior, duly executed property sale.

Case Background

The dispute originated from two suits concerning agricultural properties. K.V. Alagesan (Appellant/Plaintiff in O.S. No. 115/2007) owned the 'A' schedule properties, while his brothers (Defendants 1-3) owned the 'B' schedule properties. Together, they executed a registered Power of Attorney (POA) on June 30, 2005 (Ex.A9), appointing S. Ponnusamy (Defendant 5) as their agent to sell both sets of properties, pursuant to an earlier sale agreement receipt (Ex.B13/B14) with a potential buyer (Defendant 4) for Rs. 22 Lakhs.

Subsequently, the POA agent ( Ponnusamy ), acting on behalf of Alagesan and his brothers, executed a sale deed on July 11, 2005 (Ex.A14), transferring the 'A' and 'B' schedule properties (along with a minor 'C' schedule property) to S. Sekar and S. Selvaraj (Defendants 6 and 7/Respondents) for Rs. 22 Lakhs.

Alagesan later claimed he had changed his mind about selling his 'A' schedule property shortly after executing the POA and had received assurances from his brothers and the agent that his property wouldn't be sold. However, he only formally cancelled the POA via a legal notice dated August 4, 2006 (Ex.A10), nearly 13 months after the sale deed was executed.

Alagesan filed O.S. No. 115 of 2007 seeking to declare the sale of his 'A' schedule properties null and void, alleging fraud, lack of consideration, and improper registration. The purchasers, Sekar and Selvaraj , filed O.S. No. 43 of 2009 seeking a permanent injunction against Alagesan interfering with their possession. The Additional District Court, Namakkal, dismissed Alagesan 's suit and granted the injunction in favour of the purchasers. Alagesan appealed both decisions to the High Court.

Appellant's Contentions

The appellant, K.V. Alagesan , argued primarily that:

1. Lack of Consideration: The sale deed (Ex.A14) was void under Section 25 of the Contract Act as consideration wasn't paid to him. The POA agent (Defendant 5) was not examined to prove payment.

2. Improper Registration: The 'A' and 'B' schedule properties fell under Joint Sub Registrar II, Namakkal, but the sale was registered at Joint Sub Registrar I by including a small 'C' schedule property, allegedly constituting fraud on registration. The transactions involving the 'C' property indicated a fictitious setup.

3. Invalid POA Action: Although the POA was executed, he intended to revoke it regarding his property shortly after signing, and the agent acted against his wishes (though the formal cancellation notice was sent much later).

4. Adverse Inference: The purchasers (Defendants 6 & 7) did not testify personally, warranting an adverse inference.

Respondents' Counter-Arguments

The respondents (purchasers Sekar and Selvaraj ) countered that:

1. Valid POA & Execution: The sale (Ex.A14) was executed under a valid, unrevoked POA (Ex.A9). The cancellation notice (Ex.A10) came after the sale and had no retrospective effect. The appellant was bound by the agent's actions (Section 226, Contract Act).

2. Consideration Paid: The sale consideration was fully paid by discharging various loans taken by the appellant and his brothers, as detailed in the sale deed (Ex.A14). This was supported by documentary evidence (Ex.B10-B14, B25) and witness testimonies (DW2-DW5), including bank/finance company representatives.

3. Valid Registration: Section 28 of the Registration Act permits registration where any part of the property is situated. Since the 'C' schedule property was within Joint Sub Registrar I's jurisdiction, the registration was valid.

4. Bona Fide Purchase: They were bona fide purchasers who verified the POA and acted in good faith.

5. Specific POA: The POA was specific, linked to a pre-existing sale agreement, limiting the agent's role primarily to executing the agreed-upon sale.

High Court's Analysis and Decision

The High Court meticulously examined the evidence and arguments. Key findings included:

Effect of POA Cancellation: The court found the appellant's claim of intending to cancel the POA immediately after execution lacked evidence. The first documented step towards cancellation was the notice (Ex.A10) dated August 4, 2006, issued long after the sale deed (Ex.A14) was executed on July 11, 2005. Relying on V. Ravikumar Vs. S. Kumar (2025 SCC OnLine SC 513), the court held: > "The power holder having exercised the authority conferred; to convey the properties in the name of the purchasers, the cancellation of the power of attorney will have no effect on the conveyances carried out under the valid power conferred."

Consideration: The court rejected the argument that the sale lacked consideration. The sale deed itself detailed how the Rs. 22 Lakhs was paid – primarily by settling loans owed by the appellant and his brothers to various financial institutions and individuals. This was corroborated by witness testimonies (DW2-DW5) and documentary evidence. The court cited Vidhyadhar Vs. Manikrao (1999) 3 SCC 573, noting that non-payment or part-payment of price doesn't invalidate a sale under Section 54 of the Transfer of Property Act if the intention to transfer ownership exists; the seller merely retains a charge for unpaid amounts (Section 55(4)(b) TPA). Cases cited by the appellant ( Kewal Krishan , J. Prabakaran ) were distinguished as consideration was proven here.

Registration Validity: The court upheld the validity of the registration, noting that Section 28 of the Registration Act allows registration where any portion of the property is situated. Since the 'C' schedule property was within the jurisdiction of Joint Sub Registrar I, Namakkal, registering the combined sale deed there was permissible.

The High Court found no reason to interfere with the trial court's findings, concluding that a valid sale deed had been executed by the POA agent before any formal cancellation of the power.

Final Outcome

The Madras High Court dismissed both appeals (A.S. Nos. 154 & 155 of 2014), confirming the trial court's judgment. The suit filed by K.V. Alagesan (O.S. No. 115/2007) remained dismissed, and the permanent injunction granted in favour of the purchasers S. Sekar and S. Selvaraj (O.S. No. 43/2009) was upheld. No costs were awarded.