Document Fragment View

Matching Fragments

It has been then observed in para 6 that the principles thus set out have been embodied in Section 202 of the Contract Act and the reliance has been placed on the statutory illustration (a) under Section 202 of the Contract Act.
In the case of Goutham Surana and Sons, represented by its Karta Gouthamchand Surana v. K. Keshavakrishnan and Ors. reported in 1995 Bank Journal 687, the Madras High Court considered the case with regard to revocation of power of attorney with possession of vehicle given in favour of the financier of vehicle to whom liability was admitted. It was held that, when power of attorney is given for interest consideration, it cannot be revoked unless there is a contract to the contrary. The Court also considered the decision of the Supreme Court in the case of Loon Karan Selhiya (supra) and the Full Bench decision in the case of Board of Revenue, Madras (supra). It was categorically observed in para 14 that the power was given to secure an interest and the same could not be revoked as it was irrevocable power coupled with interest and had also been acted upon. The revocation was held to be in complete breach of the terms of the power of attorney and further that the applicant had acquired the interest by virtue of the very authority given to him under the power of attorney and, therefore, the principal could not revoke the same unless there was a contract to the contrary.
In the case of Dalchand v. Seth Hazarimal and Ors. reported in AIR 1932 Nagpur 34 it was held that the agent selling cloth and entitled to retain part of the price as remuneration has no interest in the unsold cloth within the meaning of Section 202 of the Contract Act.
In the case of Garapati Venkanna v. Mullapudi Achutaramanna and Ors. reported in AIR 1938 Madras 542 the Court was concerned with the case of the power of attorney in favour of a stranger to conduct the suit providing that when the property in suit is recovered, he would be entitled to certain share in it. The Court held that such authority was not coupled with interest and Section 202 of the Contract Act does not apply and even if such transaction is champertous third party cannot contend that assignors may have grievance against the assignee. It was held that the principle of Section 202 applies only to cases where the authority is given for the purpose being a security or a part of the security and not to cases where the interest of the donee arises afterwards and incidentally. In such cases, there is no authority coupled with an interest; but an independent authority and an interest subsequently arising.

15. The second requirement under Section 202 of the Contract Act against the termination of the agency is the absence of an express contract. In this regard, strong reliance has been placed by the learned Counsel for the defendant-appellant on Clause 17 of the MOA and an argument was raised that this Clause implies that the agreement could be unilaterally rescinded by either party at any time before the licensee of the second part had been put into possession and admittedly, the plaintiff-respondent had never been put into possession of the said property. Except Clause 17, we do not find any Clause in the MOA enabling the principal to rescind the agreement. The argument that Clause 17 impliedly authorises the principal to rescind the MOA, itself shows that there is absence of an express contract. Express contract would mean expressed by words in the terms of the agreement itself. It is the settled principle of law of Interpretation of Statute that, when the Statute itself uses a particular word, such word has to be given its full meaning in contradiction to its negative aspect. By using the word "express contract" the implied stands automatically excluded and, therefore, the authority to rescind the agreement cannot be by implication on the basis of Clause 17. Clause 17 certainly puts an express embargo against the rescinding of the agreement after the possession is handed over, but this embargo cannot be read to clothe the defendant-appellant with an express power to unilaterally rescind the agreement at any time before the possession is handed over and the same cannot be read as an express term of the contract for the purpose of terminating the agreement at any time prior to the possession. Although the learned Counsel for the plaintiff-respondent had argued that, apart from the fact that there was no express contract, this Clause does not even impliedly empower the original defendant-appellant to rescind the agreement at any time at his whim before the possession is handed over and that unless the scheme was sanctioned under Section 21 of the Ceiling Act, there was no question of handing over the possession and, therefore, this Clause 17 becomes operative only after the scheme is sanctioned and that upto the stage of obtaining the sanction, everything was to be done by the plaintiff-respondent and in fact, he by his efforts, had brought the scheme beyond the stage of approval by the specified authority and at this stage, the rescinding of the MOA could not be brought about by the defendant appellant so as to deny to the plaintiff-respondent the fruits of his labour, efforts and industriousness. It was pointedly argued on behalf of the plaintiff-respondent that even the implied authority to terminate the agreement on the basis of Clause 17 was not available because Clause 17 itself becomes operative after the handing over the possession and, therefore, at no stage, prior to the handing over of the possession of the property, the so-called implied authority on the basis of Clause 17 could be acted upon and given effect too. That may or may not be so, but the fact of the matter in the instant case is that, there is a total absence of an express term of contract. The learned Counsel for the defendant appellant cited the case of State of Rajasthan v. Raghubir Singh and Ors. reported in AIR 1979 SC 852. In this case, the Supreme Court was concerned only with a term of the agreement, i.e., neither the earnest money deposit nor the withheld amount shall bear any interest. The Supreme Court found that the provision of non-entitlement of the interest on the withheld amount implied that the interest was claimable on other amount. It was not a case with regard to the termination of the agency or the agreement itself. It was only a question of interpretation of one of the clauses relating to the claim under the agreement with regard to interest. Here is a case in which the rescinding of the contract itself is sought to be defended on the basis of an implied authority on the basis of one of the clauses of the agreement and therefore, this authority is of no avail to the plaintiff-appellant to show that there was any express contract for the purpose of termination of the agency. We thus find that the second requirement under Section 202 of the Contract Act, that is the absence of an express contract is clearly obtaining in the facts of this case.

19. No doubt, in the case of Garapati Venkanna (supra), the Madras High Court had held that, where a power of attorney has been executed by several principals in favour of a person and one of the principals having distinguished interest in subject-matter of power of attorney dies, the death terminates the power of attorney. This view was taken by the Madras High Court because, the Court found that there was no authority coupled with an interest and, therefore, the argument raised on the basis of Section 202 of the Contract Act could not prevail. Here is a case in which we have already held as above that it was a case of an agency coupled with interest. In our opinion, the position of law with reference to Section 202 of the Contract Act is, therefore, very clear that the cases in which the agency is coupled with interest and there is no express contract for termination, there cannot be any termination even by death and, therefore, the factum of death of the principal during the pendency of the suit cannot lead to the termination of the agency. The necessary ingredients required under Section 202 of the Contract Act so as to hold that the agency could not be terminated in the facts of the present case are, therefore, clearly established and we also find that even the factum of death of the principal cannot bring about the termination of the agency.