Power of Attorney under TPA

Source: Supreme Court  

Why in News? 

Recently, Justices Aravind Kumar and Sandeep Mehta held that immovable property title cannot be transferred without a registered sale deed, setting aside a Delhi High Court ruling that had upheld ownership based on an agreement to sell, GPA, and other unregistered documents. 

• The Supreme Court held this in the matter of Ramesh Chand (D) Thr. Lrs. v. Suresh Chand And Anr.(2025). 

What was the Background of Ramesh Chand (D) Thr. Lrs. v. Suresh Chand And Anr.(2025) Case? 

• Brothers Suresh Chand (plaintiff) and Ramesh Chand (defendant) disputed over property originally owned by their father, Shri Kundan Lal, who died on 10th April, 1997. 
• Property No. 563, Ambedkar Basti near Balmiki Gate, Delhi - 110053. 
• Suresh Chand claimed title through documents dated 16th May, 1996: Agreement to Sell, General Power of Attorney, Affidavit, Receipt for Rs. 1,40,000, and registered Will. He alleged Ramesh Chand was a licensee who became a trespasser and wrongfully sold half the property to a third party. 
• Ramesh Chand claimed oral transfer in July 1973 with continuous possession since then. He challenged all plaintiff's documents as invalid and noted that plaintiff had admitted in earlier suit (OS No. 294/1996) that their father owned the property, contradicting the May 1996 purchase claim. 
• Trial court and High Court ruled for plaintiff. After Supreme Court remand due to overruled precedent, High Court again dismissed defendant's appeal on 9th April, 2012.

What were the Court’s Observations? 

• The Court observed that an Agreement to Sell does not constitute a deed of conveyance under Section 54 of the Transfer of Property Act, 1882. Such agreements merely create contractual rights and do not transfer ownership or create any interest in immovable property. The Court noted that while a sale involves transfer of ownership, a contract for sale is merely a document creating a right to obtain a registered sale deed to complete the transaction. 
• The Court observed that a General Power of Attorney does not constitute an instrument of transfer of immovable property, even where clauses are introduced making it irrevocable or authorising the attorney holder to effect sale. The Court noted that a power of attorney is essentially the creation of an agency whereby the grantor authorises the grantee to perform specified acts on behalf of the grantor. The Court found that the specific General Power of Attorney in question merely authorised management of property affairs including letting on rent and creating mortgages, but was silent on conveyance aspects. 
• The Court observed that the Will dated 16th May, 1996 was surrounded by suspicious circumstances and had not been proved in accordance with law. The Court noted that no attesting witness was examined as required under Section 68 of the Evidence Act, despite the Will being required to be attested by two witnesses under Section 63 of the Indian Succession Act. The Court observed it was highly suspicious that the testator excluded three of his four children from the bequest without any evidence of estrangement or provision of other assets to them. 
• The Court observed that the plaintiff could not claim protection under Section 53A of the Transfer of Property Act relating to part performance, as he was not in possession of the property. The Court noted that the very fact that the plaintiff filed a suit for possession demonstrated his lack of possession on the date of filing, which is an essential requirement for invoking Section 53A protection. 
• The Court observed that upon the death of Shri Kundan Lal, succession had opened up, and in the absence of a valid Will, the Class-I legal heirs would be entitled to shares in the property according to law. 
• The Court observed that the rights of the second defendant (respondent No. 2), who had purchased 50% share from the appellant, would be protected to the extent of the appellant's share only, keeping all contentions open for the parties to work out their rights in accordance with law. 
• The Court observed that the propounder of documents claiming title must prove their validity through proper evidence, including examination of attesting witnesses and removal of suspicious circumstances surrounding the execution of such documents. 

Can a Power of Attorney Serve as a Valid Instrument for Transferring Property Under Indian Law? 

Indian Contract Act, 1872: 

• Chapter X - Deals with "Agency" which governs the basic principles of Power of Attorney 
• Section 201 - Termination of Agency (covers how agency relationships end) 
• Section 202 - Termination of agency where agent has an interest in subject matter (crucial for determining irrevocable POAs) 

Powers of Attorney Act, 1882: 

• Section 1-A and Section 2 - Define the scope and nature of powers of attorney 

Transfer of Property Act, 1882: 

• Section 5 - Defines "transfer of property" 
• Section 54 - Defines "sale" and requirements for valid property transfers 
• Section 53-A - Part performance doctrine 

Key Legal Principles Established: 

The Supreme Court judgment in Ramesh Chand v. Suresh Chand (2025) and the case M.S. Ananthamurthy & Anr v. J Manjula (2025) establish several important principles: 

1. Nature of POA: A Power of Attorney creates an agency relationship, not a transfer of property rights 
2. Irrevocability: For a POA to be truly irrevocable, it must be "coupled with interest" - merely using the word "irrevocable" is insufficient 
3. No Title Transfer: A General Power of Attorney does not constitute an instrument of transfer of immovable property, even with clauses making it irrevocable 
4. Agency Termination: Under Section 201, agency normally terminates upon death of the principal, unless the agent has an interest in the subject matter (Section 202) 
5. Fiduciary Relationship: The POA holder acts in a fiduciary capacity and cannot use the power for personal benefit unless specifically authorized 

These provisions collectively establish that a Power of Attorney is primarily a document of convenience for agency purposes, not a method of property transfer, and its validity and scope are governed by the principles of agency law under the Indian Contract Act.