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Introduction
This paper critically analyzes the legal provisions and case laws
pertaining to revocation of a power of attorney. revocation of power of
attorney. It aims at finding out what are the conditions that decide
whether a power of attorney is revocable or irrevocable.
Revocation of power is as important as delegation of power itself
otherwise it might be to the prejudice of the parties themselves. In
deciding whether the agency can be revoked or not two conflicting
interests are to be reconciled and a suitable middle way is to be formed
so that none of the parties suffer unjustly. The interest of the one who
has delegated power is in conflict with that to whom the power is given.
But before we start our search for an answer to the problem that we have
chosen it is mandatory to have a brief idea about the fundamentals of a
power of attorney.
Defining A Power Of Attorney
Power of Attorney is a document of agency whereby the principal appoints
an agent to do and execute certain acts or deeds on his behalf. Various
can be found in different enactments like according to the Bombay Stamp
Act it is defined as "any instrument empowering a person to act for and
in the name of the person executing it and includes an instrument by
which a person a not being a legal practitioner is authorized to appear
on behalf of any party in proceedings before any court tribunal or
authority"
The Indian Stamps Act defines it "any instrument empowering any
specified person to act for and in the name of the person executing it"
Though there is a specific act pertaining to Power of attorney but it is
a very precise and brief one , the basic principles of these document
are governed by the law of agency as provided for in the Indian Contract
Act. A power of attorney may be of two types-
1) General 2) Specific-
The test to determine under which category a given document falls is as
to what is the subject matter in respect of which power is given and if
it is restricted to some specific matter it is specific else it is
general.
Construction of a power of attorney- There are two main rules in
construing a power of attorney
.1) The operative part of the deed is controlled by the recitals
wherever there is any ambiguity
2) Where authority is given to do particular acts followed by general
words the general words are restricted to what is necessary for the
performance of the particular acts
Situations Where Law Permits Revocation Of Power Of Attorney- A Case
Study Approach
The statutes are silent as to when a power of attorney can be revoked
and therefore we have to r3ely on case laws to determine in what
circumstances a power of attorney be revoked.
Therefore in the following pages various cases decided by the Hon'ble
Supreme Court and High Courts of various states have been analyzed to
determine what is the test laid down to decide whether a power of
attorney can be revoked or not. After this case analysis only we would
be a position to arrive at an answer to this issue regarding revocation
of power of attorney.
Loon Karan
v.
Iva John
Material Facts- The appellants was indebted to the bank . he executed a
power of attorney in favor of the bank authorizing the bank to execute a
decree obtained by the debtor against a third person and credit the
realizations to the debtors account. The power of attorney inter alia
recited as follows " I am heavily indebted to the bank of Jaipur Ltd.
and my liability is partly secured by the pledge of my goods and where a
major part of my liability is unsecured and I have agreed to appoint
Jaipur Bank to be my true and lawful attorney to execute the deed which
may be passed in my favor and do things on my behalf and credit to my
account the sum which may be realized in execution of the said decree. I
irrevocably nominate and constitute bank of Jaipur to represent me, to
proceed in execution of the decree of the Agra Suit and to realize and
recover the decreetal amount.. To withdraw any amount deposited in court
with regard to the said decree".
The decree was passed in favor of the appellants . Thereafter the bank
levied execution of the decree The execution application was signed by
the bank manger though it was in the name of the appellant as his
attorney6 holder. The appellants objected to it saying that the power of
attorney relied by the defendants have been obtained by false
representation and assurances. The assurances were alleged to be
promises by the bank to lend the appellants certain sum of money which
the did not eventually lend. Therefore no sum is payable to the bank The
objection was overruled by the trial court.
Issue Involved-
The only question in appeal was whether the power of
attorney executed in favor of the bank was a power coupled with interest
and therefore irrovacble u/s 202 of the Indian Contract Act. And whether
in view of the said power the bank can be held to be an assignee of the
interest in the decree.The trial court as well as the High Court decided in favor of the
defendant
Judgment-
It was decided that the power given was one coupled with intrest and therefore cannot be withdrawn. moreover the transaction
entered into under that document amounted to be an equitable assignment
of decree in favor of the bank to the extent necessary to discharge the
appellants debt to the bank.
Reasoning -
It was decided so by the Supreme Court on the following
grounds-
It was clear from the tenor of the document as well as the terms that
was a power coupled with interests. According to section 202 of the
Indian Contracts Act if the agent ahs an interest in the property that
forms the subject matter of the agency sought to be created via the
power of attorney in dispute the agency cannot be terminated to the
prejudice of such an interest. Moreover where an agency is created for
valuable
and authority is given to effectuate a security the authority cannot be
revoked.
Palaani Vanan
v.
Krishna Swamai Konar
Material Facts-
There was a preliminary decree in a mortgage suit in
favor of one Sethu Madhav Rao against amongst others the present
appellants. There was a decree a final in August Next year the decree
was assigned by Sethu Mdahav Rao to one Govinda Kanan on 19th july1939.
Govind Kanan executed a Power Of Attorney to one Vedayascahar
authorizing him to execute the decree .On 3rd February Govind Kanan
assigned the decree to Krishna swami the present respondents. Later
Govind Kanan sent a notice to the judgment debtor and to Vedyasachar
revoking the Power Of Attorney. The execution petition before the lower
court was to recognize the assignment dated 3rd February.
Issue Involved-The issue to decided was whether the notice served on Vedayshar was a valid and has the effect of revoking the Power Of
Attorney?
Judgment -
The court recorded that it was argued that the Power Of
Attorney is irrevocable it being a power of attorney creating an agency
coupled with interest under section 202 . This section recites what the
English courts have to say on this point Kouch CJ, in 1896 said " where
an authority/power is coupled with interest it is irrevocable unless
there is an express stipulation to the contrary ; but the right of the
agent to renumeration.
Although stipulated for in the form of the part of a property to be
produced by the exercise of power is not an interest in this sense"
Again in 1848 Wilde CJ, "But it is said a factor for sale has an
authority as such to sell and when after wards comes under advances he
thereby acquires an interest may thus have an authority and an interest
, the authority thereby becomes irrevocable. The doctrine here implied
that wherever there vests in the same person an authority and an
interest the authority is irrevocable, is not to admitted without
question" The learned judge also cited from the book by Bowstead on law
of agency the relevant parts where it is said "where the authority of an
agent is given for the purpose of effectuating any security or of
protecting any interest of the agent it is irrevocable during the
subsistence of such security" this court said was the test to determine
whether an authority is irrevocable or not.. Court also refereed to the
wordings of the power of attorney " I shall not for whatever reason
cancel without paying the amount expanded by you" The primacy of the
object the court decided was to recover on behalf of the principal the
fruits of his decree. It contained incidentally a provision for the
employment of the agent in order to realize that decree. It provides
that his remuneration shall be ½ of the proceeds recovered by him. But
the object is not to secure any interest of the agent . The document
itself shows that it can be revoked under the two circumstances
1) By consent of both the parties
2) By payment of that amount out of pocket.
There fore this not an agency coupled with interest.
M. John Kotiah
v.
A Divakar
Material Facts-This suit was originally filed for the grant of an
injunction restraining the defendants from interfering with the
plaintiffs possession and management of the properties and from
demolishing one of these properties The two properties are a double
storied building and a vacant premises. in Hyderabad. Pending the suit
the petitioner prayed for the issue of a temporary injunction . The
trial court denied the injunction but thought it fit to appoint an
advocate receiver. The appeal was made and it was upheld for the reason
that the power of attorney was created an interest in the immovable
property in favor of the petitioner. The court came to the conclusion
that the power of attorney was not an irrevocable one An appeal was
preferred against this order and it was contended that the attorney is
an irrevocable one since it recited that the power cannot be revoked for
a period of ten years.. It was also argued that the document created an
interest in favor of the petitioner which was different from an interest
in immovable property therefore no registration was required.
Issue Involved-
whether the power of attorney creates an interest
coupled with power and is therefore irrevocable?
Decision- To arrive at the judgment the court discussed the power of
attorney in question in great detail clause by clause. To mention
briefly - clause one states that the plaintiff is to manage control and
supervise the development of the property. Clause 2 says that he can
rent or lease any part of the property. The most relevant clause here is
clause 10 which reads as follows " The principal hereby undertakes not
to revoke this power of attorney till all the disputes are pending in
his name for and on behalf of the principal and until all his dues and
the renumeration of 5% of the total value of the property is fully
discharged and paid to the attorney and further undertake not to revoke
this power of attorney for the next ten years"
After this the court analyzed the statement given in this regarding
Bowstead On agency where the author clearly points out that the mere
fact that a power is declared in the instrument granting it to be
irrevocable does not make it so. Irrevocability requires something
further. Next the learned judge had quoted from "
CORPUS JURIS SECUNDUNM"
" The interest to which an gent gets in the estate or property must be
simultaneous with the power given to him in order to give him a power
coupled with an interest and nor .this reason an interest in the result
of the exercise of the power as distinguished from an interest in the
subject matter of the power itself, is insufficient for if the agents
interest exists only in the proceeds arising from an execution of power
the power an the interest cannot be simultaneous in point of time since
the power in order to produce the interest must be exercised and by its
exercise it is extinguished"
Thus it will be seen that if the interest created in the agent in the
result or proceeds arising after the exercise of the power then the
agency is revocable and cannot be said to be an irrevocable agency.
They also said that if o a construction of the document and in the light
of the facts the document does not prima facie satisfy the condition for
the creation of a power coupled with interest than merely because the
document itself describes the agency to be an irrevocable one it does
not become so. The provision of the Indian contract act were cited where
in other remedies are provided where the agency is revoked within a
period for which it was said to be irrevocable but that does nor make
these documents irrevocable. They said that incases in where a document
creates a power coupled with interest it is irrevocable in law still the
parities can by agreement make it revocable but in cases where it is
revocable it cannot be irrevocable merely by writing the same in the
agreement .In light of all these reasoning the court decided that the
document was a revocable power of agency.
Smt. Nagari Nayak
v.
D.C. Tumkur
Material Facts-
The plaintiff is a hotel owner at tumkur. She had
applied for loan to the Cannara Bank local Branch. She had done so
against the security of the properties which were mentioned the power of
attorney in question. The bank required an irrevocable power of attorney
in addition to any other security which might have been taken from
The plaintiff. When the document was given for registration it was
impounded for reasons of being improperly stamped. under section 34 of
the stamps act. The sub registrar treated this document as a deed of
mortgage. And keeping that in mind he levied a fees of Rs. 8305 and laos
a penalty of Rs. 6,805.An appeal was made and it was found that this
document was a owner of attorney and that too an irrevocable and
therefore it required to be stamped as per the requirements under entry
4.this is an appeal against that decision.
Issue Involved- The nature of the document( whether it created an
interest and was therefore irrevocable or not) had to be determined in
order to decide what was the prescribed fees for that document?
Judgment- The court decided that it was an irrevocable power of
attorney.
It was argued that the loan was advanced against other security offered
by the plaintiff. The power of attorney was issued only at the instance
of the bank and hence it cannot be called as irrevocable. The court
quoted the relevant passage from the disputed document which is being
reproduced ere "and whereas the principal has sought a loan of Rs15000
from the attorney against the security of the scheduled properties to
construct an office and shops etc. ad whereas the attorney has required
the principal to execute an irrevocable power of attorney in favour of
the attorney.- to sell, alienate and mortgage or otherwise deal with the
property at a price deemed fit and reasonable by the attorney at his
sole discretion and appropriate the same proceeds first towards the
interest costs and than reduction of the liability".
The court then cited section 202 of the Indian Contract Act and decided
that as per that section no agency can be terminated where the agent has
an interest in the property which forms the matter of agency in this
case they decided that an interest is definitely created in favor of the
bank Therefore it cannot be unilaterally revoked.
Hence this document falls in the category of the document which are to
be stamped as per the provisions of entry 4 of the Indian Stamps Act.
Govindkoss Krishna Koss
v.
Gopesjhwar lalaji Maharaj
Material Facts-This case has come as a second appeal to the high court.
n the year 1896 one Ganga Bai widow of the plaintiffs paternal
grandfathers brother built a temple for a local deity in Madras .In the
year 1900 she executed a Bhot ptara in which she mentioned the facts of
her having built the temple and also getting the idols of the deity that
were to be worshipped in that temple getting them installed therein and
setting aside a fund of Rs 40000 for their Sva puja and other festivals
of the temple and for the salaries of the temple servants. The sum was
left with the plaintiffs father Krishnadas and he was to a pay monthly
Rs 200 for the expenses she then added a sum of 5000 to the original
fund. She then mentioned that all the property was worth Rs 45000. these
were delivered to the family deity Guru shri Krishanvati. She also
provided that the successors of the gurus shall perform the seva and the
ceremonies of the temple and the property was not to be used for any
other purpose besides that of the templ.In 1904 the said Krishnaavati
created a power of attorney to Krishanads giving him certain powers to
manage the property since he had to be constantly absent from Madras
where the temple was located. In 1906 the attorney holder died and the
agency was terminated. The said lady Krishna vati then executed a power
of attorney in favor of the deceased son who stepped into his fathers
shoes and continued to mage the property In 1914 the principal died ,
her son then executed afresh power of attorney in favor of the
plaintiff. This power of attorney ahd scheduled which said that the
original fund had now been reduced to 39000.Then the same principal
executed another power of attorney in favor of the plaintiff giving him
more powers than earlier. After some time a dispute arose between these
two and the power of attorney was sought to be revoked. he suit was
therefore filed by the plaintiff.
Issue Involved-
Can the defendants revoke this power of attorney
unilaterally
Decision-
The court decided that this power of attorney was a revocable
one.
The court said that looking at the wordings of the instrument which were
as follows "that a power of attorney though irrevocably granted shall b
revocable on strong proof of gross mismanagement on the part of the said
attorney" it is clear that the document is not an irrevocable power of
attorney but it was a power of attorney irrevocable on certain grounds
only but not on all other grounds. This means that it is merely an
instrument coupled with a condition that it will no be revoked except on
certain grounds. Such a promise is not an enforceable one. Therefore it
does not become irrevocable merely by that being written on the power of
attorney. The second contention of the plaintiff was that this agency
was a n irrevocable one also because the contract of agency was coupled
with some interest of the agent. That the fact that the temple itself
was built for the benefit of plaintiff's family was also alleged. But
this was not accepted as it could not be shown by any evidence that he
formed a joint family with the builder of the temple or that the sum of
money used was in any way joint property of these two. All the
properties that were used were exclusively in her name. The argument put
forward was that the temple was made for the spiritual and other worldly
benefit of her family members as she had orally recited on many
occasions. The court rejected this argument and said that if it was so
the spiritual benefit does not amount to an interest within the
definition of interest under section 202 of the Indian Contract Act. The
object of the agency was not to enable the agent to realize any of his
interests.
Observations On The Basis Of Case Analysis
After discussing the view of the courts on the question of revocability
of power of attorney which is unanimously same irrespective of the court
or the judge we are now in a position to summaries the basic premise and
the legal principle that is involved in this concept. Following common
conclusions can be derived from all these cases-
# If the power given to the attorney is coupled with an interest it is
irrevocable
# To decide whether a given power is coupled with interest or not
regards are to be given to the facts of each case and the wordings of
the instrument itself.
# The following have been considered to be 'power coupled with interest'
in the above discussed cases.
# The right of an agent to remuneration though stipulated in the form of
property to be produced by exercise of power is not an interest in the
required sense.
# If the power is irrevocable as per the test laid down the parties are
nevertheless free to make it revocable by an express stipulation to the
contrary.
# If the power is revocable than the parties cannot make it irrevocable
merely by writing that the instrument is irrevocable.
# The position in our country is the same as that in England.
# A power of attorney is automatically terminated if- One of the parties
to the instrument dies or becomes insane, The principal becomes
insolvent or bankrupt, any specific condition in the instrument is
breached, the business comes to an end.
" Courts refer to Indian Contract Act provisions to determine this
question
Conclusion
The conclusion that can be arrived at the end of the paper is that the
position with regard to the revocability of power of attorney is well
settled in our country. The test laid down here seems to be a
well-established principle in common law as various English jurist have
also expressed the similar opinion on this point. Not only this the test
laid down also seems to be very just and fair. None of the parties are
wrongly prejudiced if the test is applied objectively. Such well-
settled principles lend certainty to business transactions and day to
affair. Now since the position is so well settled the masses on an
advice from their legal advisors shall know in an instant how to frame
their instrument in such a manner and the objectives ( whatever they may
be behind creating a power of attorney) are attained and they do not
suffer later on account of uncertainty in law.
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