Court Asserts Termination of Agency on Death; Gift Deed Declared Void Ab Initio
In a notable verdict, the Gujarat High Court has set aside a registered Gift Deed executed by a power of attorney holder after the principal's death, reaffirming that such acts are void and have no legal standing. The Division Bench, comprising Justices Ilesh J. Vora and R. T. Vachhani, delivered the judgment in the case of Purshotam Ranchhodbhai Pankhania v. Harihar Ambalal Patel.
The plaintiffs, led by Purshotam Ranchhodbhai Pankhania, challenged the dismissal of their suit by the Vadodara Civil Court, which had refused to cancel the Gift Deed executed on January 5, 2011. The Gift Deed in question was executed by Harihar Ambalal Patel, the power of attorney holder, in favor of his son and daughter-in-law, defendants in the case, after the death of the principal, Ramaben Purshottambhai Pankhania, on July 21, 2010.
The court underscored the principle enshrined in the Indian Contract Act, 1872, particularly Sections 201 and 208, stating that the agency relationship automatically terminates upon the death of the principal. The court clarified that any act done by an agent post the principal's death is void ab initio. The judgment also highlighted that a power of attorney must be construed strictly, and any general authority does not permit acts beyond those explicitly stated.
The defendant's contention that the Gift Deed was executed in good faith and without knowledge of the principal's death was rejected by the court, which emphasized the fiduciary nature of the principal-agent relationship and the necessity for the agent to act within the bounds of authority granted. The court further noted that the Gift Deed lacked explicit authorization within the power of attorney, rendering the transaction invalid.
This judgment reiterates the legal boundaries within which power of attorney holders must operate, reinforcing the principle that authority ceases with the death of the principal unless specifically coupled with an interest. The decision underscores the judiciary's commitment to upholding the sanctity of agency law and protecting property rights.
Bottom line:-
Power of Attorney - Authority of the agent ceases upon the death of the principal unless specifically coupled with an interest - Acts done by the agent post the death of the principal are void and have no legal standing.
Statutory provision(s): Indian Contract Act, 1872 Sections 201, 202, 208; Powers-of-Attorney Act, 1882 Section 3.
