16. ‘P’ gives authority to ‘A’ to sell ‘P’s laud to pay himself, out of the proceeds, the debt due to him from ‘P’. Subsequently ‘P’ revokes the Authority given to ‘A’. Advise ‘P’

1. Facts of the Case

• ‘P’, the principal, owes a debt to ‘A’.
• To repay the debt, P authorizes A to sell his land and pay himself the amount due out of the sale proceeds.
• Later, before the land is sold, P attempts to revoke the authority that was granted to A.
• The question arises whether P can legally revoke A’s authority after granting him the power to sell the land for repayment of A’s own debt.

2. Issues in the Case

1. Whether the authority given by P to A is a simple agency or an agency coupled with interest.
2. Whether P can revoke the authority of A after authorizing him to sell the property and pay himself from the proceeds.
3. Whether A’s authority continues to be valid and irrevocable even after P’s revocation or death.
4. What are the legal rights and protections available to A under the Indian Contract Act, 1872.

3. Legal Principles Covered

a) Section 182 – Definition of Agent and Principal

“An agent is a person employed to do any act for another or to represent another in dealings with third persons.”

• Here, A is an agent of P, authorized to sell land on behalf of P.

b) Section 185 – Consideration Not Necessary

“No consideration is necessary to create an agency.”

• Even if no fresh consideration passes between P and A, the agency relationship is valid.

c) Section 202 – Termination of Agency Where Agent Has an Interest in Subject-Matter

“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.”

Explanation:

• If the agent’s authority is coupled with an interest, i.e., the agent has a beneficial interest in the subject-matter of the agency, the principal cannot revoke the authority to the detriment of that interest.
• This kind of agency continues even after the death, insanity, or insolvency of the principal.

Application:

• In this case, A is not merely an agent but also a creditor who has been given the right to recover his debt from the proceeds of sale of P’s land.
• Therefore, A’s authority is coupled with interest and cannot be revoked by P.

d) Relevant Case Laws

1. Smart v. Sandars (1848) 5 CB 895
   • Held: When the agent has an interest in the property, his authority cannot be revoked to the prejudice of that interest.
2. Poonoo Bibi v. Fyaz Buksh (1874) 21 WR 320
   • Facts: A power of attorney was given to sell property for repayment of a loan.
   • Held: The authority was irrevocable, being coupled with interest.
3. Ramanathan Chettiar v. Muthukaruppan Chettiar, AIR 1969 Mad 405
   • Held: An agency given to sell property and pay oneself from the sale proceeds for the debt owed by the principal is irrevocable under Section 202.
4. Seth Loon Karan Sethia v. Ivan E. John, AIR 1969 SC 73
   • Held: The authority of an agent cannot be revoked if it is coupled with an interest; such an authority survives even after the death of the principal.

e) Legal Reasoning and Application

• A’s authority to sell P’s land was not given merely to act as an agent, but to secure repayment of P’s debt to A.
• Thus, A has a beneficial interest in the subject matter (land and sale proceeds).
• Under Section 202, P cannot revoke the authority to the prejudice of A’s interest.
• The agency continues until A’s interest is satisfied — i.e., until his debt is repaid from the sale proceeds.
• Revocation of authority in such circumstances would be invalid and unenforceable in law.

4. Possible Judgement

Findings:

1. The authority given by P to A was not a mere authority but an authority coupled with interest, as A was authorized to recover his debt from the proceeds of sale.
2. Under Section 202 of the Indian Contract Act, 1872, such authority cannot be revoked by the principal to the prejudice of the agent’s interest.
3. The revocation attempted by P is therefore invalid in law.
4. A’s authority to sell the land remains in force until his debt is fully satisfied.

Judgement:

The court would hold that the revocation of authority by P is invalid, since the authority given to A was coupled with an interest under Section 202 of the Indian Contract Act, 1872.
Therefore, A is entitled to sell the land and repay himself the debt from the sale proceeds.
The agency cannot be terminated by P until A’s interest is discharged.

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