The Aryavarth Express
Agency (New Delhi): The Supreme Court held that the death of the original contractor does not prevent the agent (holding a power of attorney) from initiating proceedings related to the contract if the agent has an interest in the contract expressly mentioned within it. This ruling overturned the findings of the High Court.
The bench, comprising Justices BR Gavai and BV Nagarathna, stated that if an agent holds an interest in the property forming the subject matter of the agency, the agency contract does not terminate under Section 201 of the Indian Contract Act, 1872, upon the death of the principal.
Section 201 of the 1872 Act outlines conditions under which an agency contract is terminated, including the death of the principal contractor. However, Section 202 addresses situations where an agent has an interest in the subject matter of the agency, stating that such an agency cannot be terminated to the prejudice of the agent’s interest without an express contract to that effect.
The court emphasized that Section 201 cannot be read in isolation without considering Section 202. If the agent, as a power of attorney holder, has an interest in the contract, the agency does not automatically terminate upon the principal’s death.
In the case at hand, the principal contractor executed a power of attorney in favor of the appellant. After the principal’s death, the respondent sought to terminate the agency. The appellant argued that, due to his interest in the contract, the agency should not terminate based on Section 201. The appellant relied on Section 202, arguing that his interest in the property meant the agency could not be terminated without an express contract.
The court noted that the Single Judge should not have read Section 201 in isolation, ignoring Section 202. The Judge failed to consider that the assignment deed conferred an interest in the contract to the appellant. Thus, without an express provision to the contrary, the appellant was entitled to continue the agency.
The court’s decision allowed the appeal, permitting the appellant to continue the agency as the power of attorney holder.