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My uncle sold some land on April 2007 through a general power of attorney that had been established in March 1997. This power of attorney was made by three people, of whom one died in June 1998. Is the power of attorney valid even now?

—Ganesh Shivan

A power of attorney (PoA) gives rise to a relationship of principal and agent and the person who issues a power of attorney is called the donor/principal and the person in whose favour it is issued is called the donee/agent.

The question raised is unfortunately a little unclear, but we are assuming that the PoA in question was issued by three principals (donors) and that your uncle was the agent (donee).

Any act done by an agent under the PoA binds the principal as long as the agent does not exceed the authority conferred on her. However, authority given to the agent under a PoA stands terminated immediately on the death of the principal (as per Section 201 of the Indian Contact Act, 1872, called ‘Act’), except where the agent herself has an interest in the property, which forms the subject matter of the agency (as per Section 202 of the Act).

For example, if A issues a PoA in favour of B to sell a particular immoveable property owned by A and keeps certain portion of the price paid on the sale as repayment of some dues owed by A to B, then the PoA issued by A to B is irrevocable. Therefore, if your uncle did not have any personal interest in the PoA, the sale deed executed by him subsequent to the death of one of the principals could be held to be invalid.

However, it must be noted that although Section 201 of the Act lays down that an agency is terminated by either the principal or the agent dying, a reading of Section 208 of the Act indicates that such termination of authority is conditional.

This is clear from illustration (c) of Section 208 of the Act, which inter alia sets out that if A issues a PoA in favour of B and directs B to pay C thereunder, if B after A’s death but before becoming aware of it pays C, then the payment is good against the executor of A’s will or the administrator of A’s estate.

Therefore, in the absence of evidence that your uncle was acting upon the authority conferred on him despite knowing that one of the principals had died, then the acts of your uncle cannot be held to be bad in law.

Queries and views at mintmoney@livemint.com

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