A sale agreement executed by a valid power agent binds principals despite subsequent cancellation, absent collusion.

The plaintiff instituted O.S. No. 12 of 2013 before the Subordinate Court, Rasipuram, seeking specific performance of an agreement of sale concerning Plot Nos. 37 and 41 in the “KKS Nagar” layout.

The property belonged to defendants 1 to 3, who had executed registered powers of attorney in favour of defendant 4. Acting as their power agent, defendant 4 executed an agreement of sale with the plaintiff on 28 January 2011, received ₹1,00,000 as advance, and agreed to complete the sale within 24 months upon payment of the balance ₹44,600.

The principals subsequently cancelled the powers of attorney. The plaintiff issued notice asserting his readiness and willingness to complete the transaction and called upon the defendants to execute the sale deed.

The Trial Court decreed the suit for specific performance. The Principal District Court, Namakkal, dismissed the defendants’ first appeal and confirmed the decree. Defendants 1 and 2 thereafter preferred the present second appeal under Section 100 of the Code of Civil Procedure, 1908.

Whether the Courts below failed to consider the legal effect and scope of the powers of attorney while decreeing specific performance?

Whether the decree was contrary to Sections 200 to 202 of the Indian Contract Act, 1872?

Whether the Courts below misappreciated the evidence in relation to the pleadings?

Whether the plaintiff established that the agreement of sale covered property within the authority granted to the power agent and demonstrated continuous readiness and willingness to perform his obligations?

The Court applied Section 100 of the Code of Civil Procedure, 1908, concerning interference in a second appeal only on substantial questions of law.

It considered Sections 200 to 202 of the Indian Contract Act, 1872, governing ratification, termination, and agency coupled with interest.

The Court held that an agreement entered into by a duly authorised power agent during the subsistence of the power of attorney binds the principals unless the transaction is shown to be collusive or otherwise unauthorised.

It further applied the principle that cancellation of a power of attorney after the agent has entered into a binding agreement does not, by itself, invalidate the prior transaction.

The Court also applied the requirement that a plaintiff seeking specific performance must establish readiness and willingness to perform the contract, which was found satisfied on the evidence.

The execution of the agreement of sale by defendant 4 and the receipt of the advance were admitted by the parties to that document.

The registered powers of attorney executed by defendants 1 to 3 were valid on the date of the agreement, and the defendants failed to establish that the disputed plots fell outside their scope or that the agreement was collusive.

The sale deeds produced by the defendants demonstrated that 2.25 acres had already been alienated in the layout, contrary to their assertion that the power of attorney covered only 2.07½ acres.

The Court also relied on the findings in the connected second appeal that the alleged retention of 15 cents was false and that the power of attorney covered the relevant extent.

The plaintiff’s notice, his attendance before the Sub-Registrar, and the documentary evidence showing availability of funds established readiness and willingness, whereas the defendants failed to complete the sale despite demand.

Consequently, the subsequent cancellation of the power of attorney could not defeat the agreement already executed by the authorised agent.

The High Court held that the agreement of sale was executed by the power agent while the powers of attorney were subsisting, covered the suit property, and was binding on defendants 1 to 3.

The second appeal was dismissed, and the judgments and decrees of the Trial Court and the First Appellate Court granting specific performance were confirmed.

The plaintiff was awarded costs throughout, and the connected miscellaneous petition was closed.