Power of Attorney Ends with Principal’s Death; Cannot Be Used to Gift Property, Supreme Court Affirms

A power of attorney does not authorise an agent to transfer or gift a principal’s property after the principal has died, the Supreme Court has affirmed while declining to interfere with a Gujarat High Court ruling in a property dispute.

 

A Bench comprising Justice Manoj Misra and Justice Vijay Bishnoi dismissed a special leave petition challenging the High Court’s decision, finding no sufficient ground to exercise the Supreme Court’s jurisdiction under Article 136 of the Constitution.

 

The dispute concerned a residential property measuring about 3,200 sq ft in Vadodara. The property had been purchased in 1999 by Purshottam Pankhania and his wife, Rama. The couple later executed a power of attorney in favour of Harihar Patel.

 

The legal controversy arose after Rama died in London on July 21, 2010. Nearly six months later, on January 5, 2011, Patel executed a registered gift deed transferring the property in favour of his son and daughter-in-law.

 

The Pankhania family challenged the transaction, arguing that Patel’s authority under the power of attorney had automatically ceased upon Rama’s death. They also contended that the power of attorney did not specifically authorise Patel to execute a gift deed.

 

The matter initially came before a civil court, which dismissed the suit seeking cancellation of the gift deed. The dispute then reached the Gujarat High Court, which overturned the lower court’s decision and held that the agency created through the power of attorney came to an end with the principal’s death.

 

The High Court observed that the termination of an agency takes place by operation of law and does not depend on the parties taking any additional step to revoke the authority.

 

General Power of Attorney Cannot Be Expanded Beyond Its Terms

The High Court also examined the wording of the power of attorney and found that it did not contain any specific authority permitting the agent to gift the property.

 

It held that a general power of attorney cannot be interpreted as granting powers that were never expressly conferred. According to the court, the authority to manage or deal with property cannot automatically be extended to include the power to transfer it by way of gift.

 

The defendants sought to justify the transaction by referring to financial dealings between the parties. The High Court rejected this argument, observing that such financial claims could not enlarge the legal authority granted under the power of attorney.

 

Protection for Good-Faith Acts Not Available

The court also examined the protection available under Section 3 of the Powers-of-Attorney Act for certain acts carried out in good faith without knowledge of the principal’s death.

 

However, it concluded that such protection did not apply in the present case. A key factor was that the gift deed had been both executed and presented for registration after the principal’s death.

 

The High Court consequently declared the January 5, 2011 gift deed void from the outset and set aside the civil court’s earlier decision.

 

By declining to interfere with the High Court ruling, the Supreme Court has reinforced an important principle of agency law: an attorney holder can exercise only those powers that are validly granted, and such authority ordinarily comes to an end upon the death of the person who granted it.

 

The ruling is significant for property transactions carried out through powers of attorney, particularly where agents seek to execute sale, gift or other transfer documents after the death of the property owner.