An Idea In Mind Of Principal To Revoke Cannot Be Construed As Implied Revocation Or Renunciation Of Agency U/S 208 Contract Act: SC

For attracting the consequence of revocation, the Court explained that the revocation of the agent’s authority must be made by the principal in a manner that clearly implies that the principal had withdrawn the authority to act on his or her behalf by the agent.

A Bench of Justice C.T. Ravikumar and Justice S.V.N. Bhatti observed, “Section 208 infers and gives effect to revocation upon the twin conditions being satisfied, (i) communication to the agent and (ii) knowledge to a third party i.e., one who deals with or is likely to deal with the agent. Then, the revocation of authority becomes known to the agent and the said third parties. In other words, an idea in the mind of the principal to revoke cannot be construed as implied revocation or renunciation of agency.."

Sr. Advocate V. Chitambaresh represented the appellant, while AOR Radha Shyam Jena appeared for the respondents.

A property was purchased by two siblings through a sale deed. The appellant who was working abroad executed a Power of Attorney in favour of her sister (respondent), authorising her to manage and sell the property if necessary. However, the respondent first sold a portion of the property and later transferred the remaining property to her husband through a sale deed.

The appellant, who had been residing abroad since 1966, filed a suit seeking to declare the sale deed executed by her sister as void ab initio. The appellant that the Power of Attorney was revoked when the respondent co-executed the sale deed making any further transactions unauthorised and illegal.

The trial court initially supported the appellant’s claim, recognising her as the half-owner of the property and invalidating the sale deed executed by the respondent to her husband. However, the decision was challenged in the Kerala High Court, which did not agree with findings of the trial court.

The Supreme Court had to determine whether the execution of a sale deed before the respondent transferred the property to her husband amounted to implied revocation under Section 207 read with Section 208 of the Indian Contract Act, 1872 (the Act).

The Court explained, “In the absence of a particular mode suggested for revocation of the authority of an agent, the manner adopted by the principal to revoke the authority of the agent must be one which clearly and unequivocally communicates to the parties i.e., to be affected by such revocation, that the agent’s authority has been withdrawn. In the framework of Sections 207 and 208 of the Act, the revocation/renunciation of authority may be made by express words or may be implied from the words and conduct of the principal, viz., which is inconsistent with the continuance of the agency.”

Consequently, the Bench directed, “It would be legal and equitable to direct the Trial Court first to explore the possibility of determining the market value of the Appellant’s half share in the suit schedule property and subject to the Respondents paying the current market value to the Appellant towards her half share, a final decree be passed accordingly.”

Accordingly, the Supreme Court allowed the appeal.

Cause Title: Thankamma George v. Lilly Thomas & Anr. (Neutral Citation: 2024 INSC 494)

Appearance:

Appellant: Sr. Advocate V. Chitambaresh; AOR Vipin Nair; Advocates Nikhil Menon, M.B. Ramya, Karthik Jayashankar, Mohd Aman Alam, Govind Venugopal and P.B. Sashaankh

Respondents: AOR Radha Shyam Jena

Click here to read/download the Judgment