6. ‘X’ helds a lease from Y, terminable on 3 months’ notice. ‘Z’ an athorised person gives a notice of termination to ‘X’. Can the notice be ratified by Y.

1. Facts of the Case

• ‘X’ holds a lease from ‘Y’, the owner of certain property.
• The lease agreement is terminable upon three months’ notice by either party.
• ‘Z’, an unauthorized person, issues a notice of termination of the lease to ‘X’, purporting to act on behalf of ‘Y’.
• Z, however, had no prior authority from Y to serve this notice.
• Later, Y seeks to ratify the notice issued by Z.
• The question arises whether such a notice given without authority can be ratified by Y so as to make it legally effective against X.

2. Issues in the Case

1. Whether an unauthorized act (issue of termination notice by Z) can be ratified by the principal (Y) under Indian Contract Law.
2. Whether ratification can validate an act that was void or ineffective at the time it was done.
3. Whether a notice to terminate a lease given by an unauthorized person is capable of ratification after being served.
4. Whether such ratification relates back to the date of the unauthorized act or takes effect from the date of ratification.

3. Legal Principles Covered

a) Doctrine of Ratification

• Section 196 of the Indian Contract Act, 1872 provides that:
  “Where acts are done by one person on behalf of another, but without his knowledge or authority, he may elect to ratify or to disown such acts.”
  When ratified, such acts have the same effect as if they were originally done by the principal’s authority.
• However, ratification is valid only when:
  1. The act was lawful at the time it was done.
  2. The person professed to act as agent for the principal.
  3. The principal was in existence and competent to authorize the act at that time.
  4. The third party’s legal position is not unfairly affected by the ratification.

b) Acts Incapable of Ratification

• Section 200 of the Indian Contract Act, 1872:
  “An act done by one person on behalf of another, without such other person’s authority, which, if done with authority, would have the effect of subjecting a third person to damages or terminating any right or interest of a third person, cannot, by ratification, be made to have such effect.”
• Hence, an act that terminates or prejudices another person’s legal rights, such as ending a lease, cannot be ratified if the person who did it lacked authority at the time.
• The notice of termination, having been given by an unauthorized person, cannot be validated later because it affects X’s vested leasehold rights.

c) Case Law References

1. Keighley, Maxsted & Co. v. Durant (1901) AC 240 (HL):
   Ratification is possible only when the agent purported to act on behalf of a principal. If the agent acted on his own, later ratification is invalid.
2. Grover & Grover Ltd. v. United Bank of India (1957) AIR Cal 29:
   Ratification cannot be used to retroactively validate acts that affect third-party rights if those acts were done without authority.
3. Bolton Partners v. Lambert (1889) 41 Ch D 295:
   Ratification relates back to the time of the act only when no third-party rights have been adversely affected in the meantime.

d) Principle of Protection of Third Party Rights

• Ratification cannot operate retrospectively to the prejudice of third parties (in this case, X), who were entitled to assume that the notice was invalid when served.
• Since Z’s notice was void for want of authority, Y’s later ratification cannot make it valid ab initio (from the beginning).

4. Possible Judgement

• The court would likely hold that the notice of termination given by Z is invalid, and cannot be ratified by Y.

Reasons:

1. Z had no authority to act on behalf of Y at the time the notice was issued.
2. The act of giving a notice to terminate a lease directly affects the legal rights of a third party (X).
3. Under Section 200 of the Indian Contract Act, 1872, such an act cannot be made effective by ratification, as it would unfairly terminate X’s existing leasehold rights.
4. Ratification cannot relate back so as to validate an invalid act that prejudiced another person’s rights.

• Therefore, Y must issue a fresh notice of termination himself (or through a duly authorized agent) to make it legally binding.

Final Decision:

The notice of termination issued by Z is void and ineffective, and cannot be ratified by Y.
Under Sections 196 and 200 of the Indian Contract Act, 1872, ratification cannot operate to the prejudice of third-party rights, such as X’s leasehold interest.
Hence, the lease continues to be valid, and Y must serve a new notice if he wishes to terminate the lease lawfully.

Supporting Provisions:

• Section 196 – Effect of Ratification
• Section 200 – Ratification Cannot Injure Third Parties
• Section 237 – Liability of Principal for Unauthorized Acts of Agent

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