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Mutharasu Thevar v. Mayaandi Thevar And Others.

Madras High Court

Feb 22, 1967

Judgment

Subsequent
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Factual and Procedural Background

The matter arises during the pendency of an appeal in the District Court, Ramanathapuram. Respondents 1 to 7 and 9 in that appeal (hereafter, the principals) filed an application under Order 3, Rule 4, Civil Procedure Code seeking to revoke a vakalat (vakalatnama) given by their power-of-attorney agent, Muthuraja Thevar, to the advocate then on record. The principals had executed a general power-of-attorney (Ex. A-1 dated 29-7-1961) appointing the agent to manage family litigation and properties. The instrument recited that the agent had already incurred expenses in S.145 Cr.P.C. proceedings before the Revenue Divisional Officer and authorised him to act in civil, revenue and criminal courts and to mortgage or sell family properties to recoup expenses.

The principals later cancelled the power-of-attorney, alleging loss of confidence in the agent and that the agent had not accounted for Rs. 700 drawn from Court (purportedly costs of a suit instituted by the agent on their behalf). The agent contended that the power-of-attorney was irrevocable because it was coupled with an interest within the meaning of Section 202 of the Indian Contract Act. The primary legal question considered by the court was whether the agency created by Ex. A-1 was irrevocable.

Legal Issues Presented

Whether the agency created by Ex. A-1 (the power-of-attorney dated 29-7-1961) is irrevocable by reason of being "coupled with an interest" within the meaning of Section 202 of the Indian Contract Act.
Whether the principals retain the right to revoke a vakalat given by their agent and, relatedly, the extent to which an agent may dictate the choice of counsel for the principals' litigation.

Arguments of the Parties

Principals' Arguments

The principals cancelled the power-of-attorney on grounds that they had lost confidence in their agent.
They alleged that the agent failed to account for Rs. 700 which he had drawn from Court as costs relating to a suit he had instituted on their behalf.
Implicit in their application under O.3, R.4, C.P.C. was the contention that they were entitled to revoke the vakalat given by the agent to the advocate on record.

Agent's Arguments

The agent asserted that Ex. A-1 created an irrevocable agency because it was "coupled with an interest" and therefore protected by Section 202 of the Indian Contract Act.
The agent relied on the instrument's provision that he could mortgage or sell properties to recoup expenses as support for the contention that he had an interest in the subject-matter of the agency.

Counsel's Submissions (as to terminology)

There was a dispute about the meaning of the term "urudi" used in the instrument: counsel for the petitioner (agent) contended it meant "security", while counsel for the respondents (principals) contended it meant "assurance". The judge noted he would address this point in the judgment and concluded that in the circumstances of the case "urudi" meant "assurance" rather than "security".

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Venkanna v. Achutaramanna, AIR 1938 Mad 542	Interpreting Section 202: that S.202 applies where authority is given for the purpose of being a security or part of security, not where an interest arises subsequently.	The court relied on the passage to support the proposition that an interest must exist contemporaneously with the agency; a subsequent or incidental interest does not render the agency irrevocable.
Palanivannan v. Krishnaswami Konar, AIR 1946 Mad 9	Test for determining whether an agent's interest in an instrument makes an agency irrevocable; distinguish between primary object and incidental provisions.	The court applied the test articulated in this decision to conclude that provisions in Ex. A-1 for the agent's recoupment were incidental and did not show the power was granted to protect or secure any interest of the agent.
Bowstead on Agency, 12th Edn. (textbook authority)	Formulation: authority given by deed or for valuable consideration to protect or secure an agent's interest is irrevocable during subsistence of such security or interest; mere incidental provisions do not create an irrevocable authority.	The court quoted and adopted the principle as a descriptive formulation of when an agency will be irrevocable and used it to frame the analysis of Ex. A-1.
Section 202, Indian Contract Act	"Where the agent has himself an interest in the property which forms the subject-matter of the agency, the agency cannot, in the absence of an express contract, be terminated to the prejudice of such interest."	The court interpreted S.202 to require that the agent must have an interest in the subject-matter contemporaneously with the agency; applying this, the judge held Ex. A-1 did not create such an interest and therefore was not an irrevocable agency under S.202.

Court's Reasoning and Analysis

The court's analysis proceeded in discrete steps:

The court first emphasised a fundamental practical and public-policy principle: a principal has the right to choose his own counsel and is not to be compelled to continue litigation through an advocate imposed by an agent. The agent cannot have the sole right to decide which advocate represents the principal; to allow that would unduly restrain the principal and potentially stifle prosecution of a lawful suit.
Turning to the substantive legal question under Section 202, the court examined whether the power-of-attorney (Ex. A-1) created an interest in the agent in the subject-matter such that the agency could be treated as irrevocable. The court held that an agent's interest must be created contemporaneously and explicitly in the instrument of agency; it must be express and leave no room for doubt or inferential construction.
The court found that Ex. A-1 authorised the agent to incur expenditure and, for the purpose of recoupment, to mortgage or sell properties. However, the judge concluded that these provisions were incidental arrangements for reimbursement (an assurance or mode of realising dues), not the creation of a security or an interest in the subject-matter at the time the agency was created.
The judge resolved the contested meaning of the word "urudi" in the instrument, concluding that in the context it meant "assurance" rather than "security". Because no security interest was created contemporaneously, the necessary "interest" under Section 202 was absent.
The court surveyed and relied on authorities to support its view: Bowstead's statement of the rule, the decision in Venkanna v. Achutaramanna (that S.202 applies where authority is given for the purpose of being a security and not where interest arises later), and the Division Bench decision in Palanivannan v. Krishnaswami Konar (which distinguished between a primary object to secure an agent's interest and incidental provisions for recoupment).
Concluding the analysis, the court held that incidental powers enabling reimbursement do not amount to a contemporaneous interest in the subject-matter that would render the power-of-attorney irrevocable. The judge acknowledged that if principals irrationally divest an agent of incidental rights to recoup expenses, the agent may have a separate cause of action for damages to secure recoupment; but that separate remedy does not affect the question whether the agency itself is irrevocable under S.202.
On these grounds the court found the order of the lower court (which permitted the principals to revoke the vakalat) to be well founded.

Holding and Implications

Final Holding: Revision dismissed. The civil revision petition was dismissed and there was no order as to costs.

Implications:

The principals retained the right to revoke the vakalat given by their agent and to choose counsel of their own choice; an agent cannot unilaterally dictate which advocate must conduct the principal's litigation.
Ex. A-1 did not create an irrevocable agency under Section 202 of the Indian Contract Act because it did not create a contemporaneous, explicit interest in the subject-matter in favour of the agent; its provisions for reimbursement were held to be incidental assurances rather than the creation of security.
The agent may still have a separate cause of action (for example, a claim for damages or to enforce reimbursement) arising from the principals' actions, but that remedy is distinct from the question whether the agency itself is irrevocable.
The opinion applies and explains existing principles (statute and precedents) to the facts; it does not purport to establish a novel legal rule beyond those applications.

Show all summary ...

ORDER (1) The respondent in the lower Court is the petitioner before me. During the pendency of an appeal in the District Court, Ramanathapuram, respondents 1 to 7 and 9 in the said appeal filed an application under O. 3, R. 4, Civil P. C., to revoke the vakalat given by their power-of-attorney agent Muthuraja Thevar, tot he advocate now on record in the Court as above are hereinafter referred to by me as principals. Muthuraja Thevar will be referred to as the agent. The principals under Ex. A-1, dated 29-7-1961, appointed an against to be in charge of their family litigation. Even by the time Ex. A-1 was executed, the agent incurred certain expenses on behalf of the principals to conduct certain proceedings under S. 145, Crl. P. C., before the Revenue Divisional Officer. In consideration of such services in the past and the initiate further legal proceedings in connection with the family and its properties, the principals appointed the agent under a general power-of-attorney dated 29-7-1961. A translation of the same is extracted as it would be necessary in the case.

"In view of the fact that we are unable to unitedly manage and improve the income of the said properties which is now insufficient for the family and to conduct the litigation with reference to the said properties and set them right, we requested you to conduct our litigation and manage our properties. We have accordingly given you this general power. In C.C. No. 3 of 1960, on the file of the Revenue Divisional Officer, which were S. 145 proceedings, we were counter-petitioners. In the said proceedings you helped us and it went against us. It is urgent and necessary that civil proceedings have to be taken for setting aside that order. We have not got the necessary funds and do not know all that details. Besides conducting the said proceedings, in view of the fact that you need 'urudi' for repaying to you the amount which you have hitherto spent for the said proceedings and for spending in future, we have executed this power. We have given you authority through this to act for us as plaintiff or defendant or petitioner or respondent, give and to conduct proceeding in Civil, Revenue and Criminal Courts. you will incur the expenses therefor and in the matter of managing our family properties and clearing the encumbrances thereon you can do things according to you discretion without our permission. For the purpose of recouping yourself all the expenses, we authorise you to mortgage or sell our family properties."

I should immediately mention that there was some difference of opinion as to what exactly the word 'urudi' connotes. Whereas the learned counsel for the petitioner would state that it would mean security, the learned counsel for the respondents would state that it would mean assurance. I shall presently refer to this in the course of my judgment.

(2) The power-of-attorney was cancelled by the principals as they alleged that they lost confidence in their agent. It is also specifically alleged that the agent has not accounted for a sum of Rs. 700 which he has drawn from Court and which represented the costs of the suit originally instituted by the agent on behalf of the principals. The agent, however, took up the position that on a fair reading of the power-of-attorney subsisting in his favour, it is irrevocable as it should be deemed to be and is coupled with an interest within the meaning of S. 202 of the Indian Contract Act.

(3) The primary question argued before me is whether such an agency as contemplated in Ex. A-1, which is the power-of-attorney is irrevocable.

(4) Before I deal with the main question and probably the only question that was argued before me, I am satisfied that the principle has the right to have his counsel to conduot his litigation, notwithstanding the fact that the agency in question is irrevocable or not. The agent is engaged as a means to an end. he may have other rights under the power-of-attorney; but it appears to me that it would be a serious inroad on the liberty of a person if his agent were to dictate as to who should conduct the litigation of his principal. The agent in any circumstances cannot have the sole right to decide as to which advocate has to be engaged for the principal's case. If the principal were thus to be constrained to continue his litigation through a counsel not of his choice, not of his liking, it would tantamount to stifling the prosecution of a lawful suit and certainly therefore it will be against public policy. This decision of mine that the principals have the right to revoke a vakalat given by the agent in favour of the advocate on record in the appeal under consideration is sufficient to dismiss the present civil revision petition.

(5) But, as already stated, the question that was argued at length before me was that even if the principals had such right as above, by virtue of the fact that Ex. A-1 purports to give the agent an agency, which is irrevocable within the meaning of S. 202 of the Indian Contract Act, the principal, in such circumstances, cannot revoke the vakalat given in favour of the advocate appointed by the agent.

(6) The agent has been appointed only to expend for the litigation to be and already sponsored by him and to have the right in the future to mortgage or sell the property of the principals for reimbursement of expenses incurred by him. This in my opinion cannot create an interest in the subject-matter, which is the sine qua non to make the power an irrevocable one. If any such interest were to be created for the benefit of the agent, it should be contemporaneously provided for in the instrument of agency itself and should not only be express but also be explicit. It should not give any room for doubt, nor could it be a matter of interpretation. In my opinion, an agency to be irrevocable should, therefore, create in the agent an interest in the subject-matter contemporaneously with the document wherein such agency is created and it cannot be left to chance or guess or inference. Unless such a thing is available in the document itself, all such other powers given to the agent mainly for purpose of reimbursement of moneys spent by him for an on behalf of the principals, even if such reimbursement should be by way of mortgage of sale of the properties, would in my opinion, create only a right incidental to such agency and would not amount to the creation of any interest in the agent over the subject-matter of the litigation or the subject concerned. No doubt, an alleged irrational attempt on the part of the principals as in this case, to divest a right conferred on the agent incidentally for the purpose of reimbursement may given rise to a cause of action to the agent to sue the principals for damages and safeguard and secure his right of recoupment by setting the process of law into motion expeditiously. But this is entirely a different legal incident which has no bearing on the issue whether Ex. A-1, the power-of-attorney, is by itself an irrevocable power within the meaning of S. 202 of the Indian Contract Act on the ground that it is coupled with interest.

(7) Bowstead, in his book on 'Agency', 12th Edn., has stated the formula in such cases in these terms:--

"Where the authority of an agent is given by deed or for valuable consideration for the purpose of effectuating any security or of protecting or securing any interest of the agent, it is irrevocable during the subsistence of such security or interest. But it is irrevocable merely because he has an interest in the exercise of it or has a special property in, or lieu for advances upon, the subject-matter thereof......" S. 202 of the Indian Contract Act itself runs in these terms:

"Where the agent has himself an interest in the property which forms the subject-matter of the agency, the agency cannot, in the absence of an express contract, be terminated to the prejudice of such interest."

Even on a reading of the section it cannot be said that in the instant case the agent has an interest in the subject-matter of the agency. My attention was drawn to a decision of Venkatasubba Rao J. in Venkanna v. Achutaramanna, AIR 1938 Mad 542, where the learned Judge says that

"the principle of S. 202 applies only to cases where authority is given for the purpose of 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"

. (The underlining (bracketed herein, Ed.) is mine.) Even so, a Division Bench of our High Court in Palanivannan v. Krishnaswami Konar, AIR 1946 Mad 9, laid down the test to be applied in such cases. The power in that case was also on very similar lines with the power which is scrutinised by me. While reviewing such a document, the learned Judges observe:

"My view of the document is as follows: I think its primary object was to recover on behalf of the principal the fruits of his decree. It contained incidentally a provision for the enjoyment of the agent, Vedavyasachar, in order to realise that decree. It provides that his remuneration is to be one-half of the proceeds. It contains an indemnity clause against any out of pocket expense which he is entitled also to recover from the amount of the decree. But the object of the power-of-attorney is not for the purpose of protecting or securing any interest of the agent. I think that part of the agreement is purely incidental."

In the present case, the power-of-attorney incidentally provides for an assurance that the agent can have recourse to the properties of the principals for advances made by him. The word 'urudi', in my opinion, having regard to the circumstances of this case, would rather mean "assurance" and cannot be equated to the expression 'security.' Therefore, the recitals in Ex. A-1 do not in my opinion create an irrevocable agency in the agent entitling him to object to the relief asked for by the principals in the lower Courts. What Ex. A-1 provides for is only the mode as to how the agent can realise his dues. No security is in act created upon the execution of the instrument. No interest, therefore, is coupled with the agency.

(8) In the view that I hold, the order of the lower Court is well founded. The civil revision petition, therefore, fails and is dismissed, but, in the circumstances, there will be no order as to costs.

(9) AKJ/DVC (10) Revision dismissed.