1977 (9) TMI 122 - HC - Indian Laws

Summary

Issues Involved:
1. Validity of the cancellation of general and special powers of attorney.
2. Interpretation of "interest" under Section 202 of the Contract Act.
3. Irrevocability of the powers of attorney.
4. Obligation under the agreement of sale.
5. Payment of interest on the unpaid purchase money.

Detailed Analysis:

1. Validity of the Cancellation of General and Special Powers of Attorney:
The appellant argued that he had validly cancelled both the general and special powers of attorney executed in favor of Shri H.K. Gulati. The notice of cancellation (Exhibit D-2) was ambiguous and defective as it did not clearly specify which power of attorney was being cancelled. The court found that the notice referred to "the said power of attorney" without distinguishing between the general and special powers of attorney. According to Section 93 of the Evidence Act, evidence cannot be given to explain or rectify the ambiguity in the notice. Therefore, the notice was ineffective in cancelling either of the powers of attorney.

2. Interpretation of "Interest" under Section 202 of the Contract Act:
Section 202 of the Contract Act states that an agency cannot be terminated if the agent has an interest in the property forming the subject-matter of the agency. The term "interest" is broadly interpreted to include any advantage or benefit. In this case, the respondent had a legally enforceable right and interest in the property due to the agreement of sale. The court held that the respondent's interest in the property made the powers of attorney irrevocable under Section 202.

3. Irrevocability of the Powers of Attorney:
The general power of attorney was expressly stated to be irrevocable, while the special power of attorney did not have such a stipulation. However, the court ruled that both powers of attorney were irrevocable under Section 202 of the Contract Act because they were given for valuable consideration and to secure the interest of the agent (Shri Gulati) and the respondent. The court cited the case of Loonkaran Sethiya v. State Bank of Jaipur, where it was held that a power of attorney given for valuable consideration to effectuate a security or protect the agent's interest is irrevocable.

4. Obligation under the Agreement of Sale:
The appellant was under an obligation to execute the sale deed in favor of the respondent. The court noted that the appointment of Shri Gulati as the attorney was to facilitate the transaction of sale, and the appellant could not terminate this agency without causing prejudice to the respondent's interest. The court emphasized that the agency was created for the benefit of the respondent and her nominee, Shri Gulati, making it irrevocable.

5. Payment of Interest on the Unpaid Purchase Money:
The trial court had ordered the respondent to pay interest on the unpaid purchase money. However, Section 55(4)(b) of the Transfer of Property Act states that interest is payable only if possession of the property is delivered to the buyer. Since the possession had not been delivered to the respondent, the court held that the interest was not payable. The cross-objection was allowed, and the direction for the payment of interest was deleted from the trial court's judgment.

Conclusion:
The appeal was dismissed with costs, and the cross-objection was allowed. The court upheld the irrevocability of both the general and special powers of attorney under Section 202 of the Contract Act, and the respondent was not required to pay interest on the unpaid purchase money.