Clarifying the Irrevocability of GPA: Supreme Court’s New Rule on Section 202 of the Contract Act

Introduction

In the case of M.S. Ananthamurthy v. J. Manjula Etc. Etc. (2025 INSC 273), decided on February 27, 2025, the Supreme Court of India clarified critical aspects of general powers of attorney (GPA), agreements to sell, and the scope of Section 202 of the Indian Contract Act, 1872. The judgment addresses when a power of attorney (ostensibly termed “irrevocable”) truly becomes irrevocable, and it also sets boundaries on how GPA-cum-agreement-to-sell transactions are treated if they are not properly registered according to Sections 17 and 49 of the Registration Act, 1908.

The dispute involved two sets of transactions concerning the same property: one side claimed ownership based on an “irrevocable” GPA and an agreement to sell coupled with a subsequent registered sale deed; the other side claimed title through registered sale deeds executed by the lawful heirs and subsequent transfers culminating in a gift deed. Through this ruling, the Supreme Court has reinforced the principle that a GPA holder’s interest in a property—if not explicitly secured by a proper, enforceable, and registered document—may end upon the death of the grantor.

Below is a structured discussion covering the background, essential rulings, precedents, and broader impact of the Supreme Court’s decision.

Summary of the Judgment

The Supreme Court dismissed the appeals of the original GPA holders (the appellants) who sought to challenge a High Court decision upholding the validity of two registered sale deeds and a subsequent gift deed in favor of the respondent (J. Manjula). The appellants claimed their right through an irrevocable GPA executed by the original owner, coupled with an agreement to sell which they argued gave the GPA holder a vested “interest” protected under Section 202 of the Contract Act.

However, the Court found that none of the documents—the power of attorney or the unregistered agreement to sell—explicitly conferred any legal title or interest in the subject property upon the agent (GPA holder). Further, the so-called “irrevocable” GPA could not override the rule that the agent’s authority typically terminates upon the death of the principal unless the GPA truly secures an interest in the property. Because the property’s title had not been effectively transferred to the GPA holder (no validly registered document showing transfer of title), the Court held that the heirs’ subsequent registered sale to another buyer took precedence.

In essence, the Court reiterated that GPA-sales or unregistered agreements to sell do not by themselves create valid title in the transferee. This ruling confirmed that the respondent’s chain of registered documents was more credible, resulting in her being the lawful owner of the suit property.

Analysis

Precedents Cited

The judgment relies heavily on the Supreme Court’s decision in Suraj Lamp & Industries Pvt. Ltd. v. State of Haryana, which prominently held that immovable property cannot be validly transferred merely through GPA or an agreement to sell. This earlier decision clarified that a lawful transaction of sale must be concluded through a duly stamped and registered sale deed. The Court further referred to Prahlad & Ors. v. Laddevi & Ors. (High Court of Rajasthan) and Wajid Pasha v. The Chairman, Bangalore Development Authority (High Court of Karnataka), both affirming that powers of attorney ordinarily terminate on the death of the principal, unless the GPA is genuinely coupled with interest under Section 202 of the Contract Act.

Additional citations discussed the distinction between a “general” and “special” GPA, as well as how a mere statement of “irrevocability” in the GPA is not sufficient to sustain the authority of the agent if that authority does not truly secure the agent’s own interest in the property. These precedents, read together, fortify the Supreme Court’s stance that bare GPA/Agreement to Sell arrangements lack the necessary legal effect of a valid transfer without proper registration.

Legal Reasoning

At the heart of the Court’s legal reasoning is Section 202 of the Indian Contract Act. This provision ensures that if the agent has a vested interest in the property — specifically, if the power of attorney serves to protect or secure a benefit of the agent — that arrangement cannot be revoked or terminated to the prejudice of that agent’s rights. However, to invoke Section 202, the agent’s interest in the property itself must be explicit and integral to the creation of that agency.

The Court meticulously analyzed the text of the GPA in question, finding that: (a) the principal had neither explicitly nor implicitly conferred any direct property right onto the agent; (b) the GPA only granted powers to manage and transfer property on the principal’s behalf; (c) the reference to it being "irrevocable" was insufficient in itself to prove an actual security interest. Because the property was never formally conveyed to the GPA holder (nor was the agreement to sell legally registered for property transfer), the attorney’s authority terminated at the original owner’s death.

Furthermore, the Court emphasized that the original owner’s heirs, by executing validly registered sale deeds, created a legal chain of title that the appellants were unable to displace.

Impact on Future Cases and on the Area of Law

This judgment clarifies and cements the Supreme Court’s position that GPA-based transfers and agreements to sell, without due registration, cannot create full, legal ownership rights in immovable property. As property transactions remain a significant area of litigation, this ruling will deter parties from relying on informal or nominally “irrevocable” GPA sales to claim ownership. Instead, it encourages clearer transactions by requiring that any intended interest in property for an attorney-holder be properly recorded and registered.

In the broader context, practitioners and laypersons alike must note that to avail the protection of Section 202 of the Contract Act, the property interest must be unambiguously conferred and the document must satisfy registration norms. Hence, the decision further aligns with earlier Supreme Court guidance, improving certainty and reducing the risk of property fraud.

Complex Concepts Simplified

Power of Attorney (POA) and Agency: A “power of attorney” is a form of an agency agreement. The “principal” authorizes an “agent” (attorney) to act on his or her behalf in specified transactions. If this POA does not grant a real, legally recognized property interest to the attorney, it normally ends when the principal dies.
Irrevocable POA Under Section 202: Section 202 of the Indian Contract Act protects an agent’s authority only if the POA truly secures a personal interest the agent already has in the subject-matter. Merely labeling a POA as “irrevocable” is not enough to keep it alive after the death of the principal.
Registration Requirements: To create or convey any ownership rights in immovable property, Indian law mandates proper registration. An unregistered agreement to sell, even when coupled with a GPA, will not convey valid title.
SP (Specific Performance) vs. Full Transfer: An agreement to sell can be a stepping stone to seeking specific performance if the seller reneges; however, it does not by itself serve as a valid conveyance. The final sale deed must be duly registered for ownership to vest.

Conclusion

The Supreme Court’s verdict in M.S. Ananthamurthy v. J. Manjula reinforces the principle: an irrevocable GPA must be demonstrably coupled with an actual interest in the property for it to survive the principal’s death. A bare power of attorney—even if labeled “irrevocable”—and an unregistered agreement to sell do not, in themselves, suffice to transfer ownership or protect the agent’s claim to title.

Overall, the judgment upholds the integrity of registered conveyances and highlights the importance of strict compliance with the contract and property laws. This decision adds to the Supreme Court’s consistent stance against GPA-sales of immovable property and will serve as critical precedent for courts and litigants tackling similar property disputes.