Introduction
The Supreme Court of India recently reaffirmed that a sale transaction executed under a valid Power of Attorney (PoA) remains legally binding even if the PoA is subsequently revoked. The Court clarified that once a PoA is lawfully granted and exercised, its later cancellation does not affect past transactions carried out under its authority.
Context
The case arose when the plaintiff sought to challenge sale deeds executed between 2004 and 2009, arguing that the PoA under which they were executed had been canceled in 2015. The Supreme Court upheld the Trial Court’s decision that rejected the suit as time-barred and overturned the High Court’s ruling, which had erroneously computed the limitation period from the date of cancellation of the PoA.
Facts of the Matter
The plaintiff executed a General Power of Attorney on October 15, 2004, in favor of the first respondent, authorizing transactions related to certain properties.
Acting under this authority, the first respondent executed multiple sale transactions between 2004-2006 and again in 2009.
The plaintiff filed a suit in 2018 seeking to declare these sale deeds null and void, claiming he only became aware of them on September 21, 2015, and arguing that the suit was within the three-year limitation period from that date.
The plaintiff also contended that the PoA had been canceled on September 22, 2015.
The defendant challenged the suit under Order VII Rule 11 of the Civil Procedure Code (CPC), asserting that the suit was barred by limitation.
The Trial Court found that the plaintiff had prior knowledge of the transactions and rejected the plaint as time-barred.
The High Court overturned the Trial Court’s ruling, arguing that the limitation period should be counted from the date of cancellation of the PoA.
The defendant appealed to the Supreme Court.
Supreme Court Observations
The Supreme Court Bench, comprising Justice Sudhanshu Dhulia and Justice K. Vinod Chandran, ruled in favor of the defendant and restored the Trial Court’s decision. The Court made several key observations:
Validity of Transactions Executed Under a Power of Attorney
The Supreme Court emphasized that transactions executed under a valid PoA remain binding even after its cancellation.
The revocation of a PoA does not retrospectively affect transactions carried out before its cancellation.
The Court clarified that the plaintiff’s challenge to sales executed between 2004 and 2009 was an attempt to unsettle settled transactions merely because the PoA was revoked in 2015.
The Bench stated: “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.”
No Allegations of Fraud or Misuse
The Supreme Court noted that there were no allegations of fraud, coercion, or misuse of authority by the power holder.
The transactions were executed when the PoA was valid, and their legality remained intact despite the later revocation.
The Court firmly held that a person who grants a PoA cannot later challenge transactions executed under its authority simply because they later revoked the PoA.
Limitation Period
The Supreme Court found that the High Court had wrongly computed the limitation period from the date of cancellation of the PoA.
The Court clarified that since the sale transactions took place between 2004 and 2009, any challenge to these transactions should have been made within the prescribed limitation period, which begins when the sales occurred, not from the date of PoA cancellation in 2015.
The Court emphasized that limitation laws exist to prevent delayed claims that could disrupt settled transactions.
The Bench stated: “The power of attorney has been executed in 2004 and the conveyances having been made in the years between 2004-09, there cannot be any cause of action ferreted out on the basis of the cancellation of the power of attorney, after more than 11 years.”
Supreme Court’s Final Decision
The Supreme Court upheld the Trial Court’s decision and dismissed the plaintiff’s suit as time-barred. It ruled that:
Once a PoA is validly executed and exercised, its subsequent cancellation does not impact transactions lawfully carried out under its authority.
Accordingly, the appeal was allowed, and the High Court’s order was set aside.
Referred Judgment
The Supreme Court referenced the case of Suraj Lamp & Industries Pvt. Ltd. v. State of Haryana (2012) 1 SCC 656, which held that:
A Power of Attorney is not an instrument of transfer in itself and cannot be used as a mode of transferring property ownership.
However, when a PoA is validly executed and acted upon, transactions completed before its revocation remain legally binding.
Conclusion
This ruling clarifies that once a Power of Attorney is exercised validly, its later revocation does not affect past transactions. It reinforces the principle that legal certainty must be maintained in property transactions, and claims seeking to challenge long-settled transactions will not be entertained merely due to a subsequent PoA revocation. The judgment serves as a crucial precedent in ensuring the stability of property transactions executed under a validly conferred PoA.
Case Details
Case Name: V. Ravikumar v. S. Kumar Special Leave Petition (CIVIL) NO. 9472 OF 2023
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