In a significant ruling, the Supreme Court of India, in the case of V. Ravikumar vs S. Kumar (arising out of SLP (Civil) No. 9472 of 2023), has held that the cancellation of a power of attorney does not affect transactions lawfully executed under it prior to its revocation. The bench comprising Justice Sudhanshu Dhulia and Justice K. Vinod Chandran overturned the decision of the High Court and reinstated the Trial Court’s ruling, which had dismissed the plaint as time-barred.
Background of the Case
The dispute revolved around a general power of attorney executed by the plaintiff, S. Kumar, in favor of the defendant, V. Ravikumar, on October 15, 2004. Based on this power, multiple sale deeds were executed between 2004 and 2009. The plaintiff filed a suit in 2018 seeking a declaration that these transactions were null and void and sought an injunction against the defendant. The defendant challenged the maintainability of the suit under Order VII Rule 11 of the Civil Procedure Code (CPC), arguing that it was barred by limitation.
The Trial Court dismissed the suit, holding that the plaintiff was aware of the transactions by January 10, 2015, when a patta (land record document) was issued, and therefore, the suit filed on September 20, 2018, was beyond the prescribed limitation period. However, the High Court reversed this decision, stating that the limitation should be reckoned from the cancellation of the power of attorney on September 22, 2015, thereby making the suit within time.
Key Legal Issues
Commencement of Limitation Period – Whether the limitation period should be counted from the date of execution of sale deeds or from the cancellation of the power of attorney.
Effect of Cancellation of Power of Attorney – Whether revocation of the power of attorney invalidates transactions executed prior to its cancellation.
Validity of Transactions Executed under Power of Attorney – Whether transactions carried out under a validly executed power of attorney can be challenged after several years.
Supreme Court’s Ruling
The Supreme Court unequivocally held that the cancellation of a power of attorney does not affect transactions already executed under its authority. The bench observed:
“The attempt of the plaintiff is to unsettle settled matters, especially on the plea that the power of attorney granted in 2004 was cancelled in 2015. The cancellation does not affect the prior conveyances made, which were clearly on the strength of the power conferred on the appellant.”
The Court further clarified that the limitation period should not be counted from the date of cancellation but from the date of knowledge of the transactions. It found no merit in the High Court’s reasoning and stated:
“There cannot be any cause of action ferreted out on the basis of the cancellation of the power of attorney, after more than 11 years.”
The Court also noted that the plaintiff had not disputed the execution of the power of attorney itself, nor had he alleged that the transactions carried out under it were beyond the scope of the authority granted. The Court emphasized that the conveyances made were based on a legitimate and validly executed document and could not be set aside merely because the plaintiff later chose to revoke the authorization.
Further, the Supreme Court found that the transactions in question involved not just a single sale but multiple transactions spanning over five years. The Court remarked that it was highly improbable that the plaintiff remained unaware of these transactions for over a decade and that such a claim was not legally sustainable. The judgment highlighted:
“The power holder having exercised the authority conferred to convey the properties in the name of the purchasers, the cancellation of the power of attorney will have no effect on the conveyances carried out under the valid power conferred.”
By emphasizing this principle, the Court reaffirmed that a power of attorney, once acted upon, cannot be retrospectively invalidated, and any challenge to such transactions must be made within the limitation period prescribed by law.
The Supreme Court set aside the High Court’s order and affirmed the rejection of the plaint as ordered by the Trial Court. The appeal was allowed, and all pending applications, if any, were disposed of accordingly.
