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Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter.
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AI Drafter - (New and Powerful) ✕ Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter.
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Issues: Whether the sale deeds executed by the attorney-holder were void on the ground that the powers of attorney had been tampered with and, if not, whether the transactions bound the plaintiff under the doctrine of apparent authority.
Analysis: The challenge to the sale deeds was founded on alleged interpolation in the powers of attorney, but the Court held that the evidence did not establish complicity or knowledge of forgery on the part of the purchasers. It further held that Section 52 of the Transfer of Property Act, 1882 was inapplicable on the facts because the later sale was not a private alienation during pendency in the manner contemplated by that provision. Applying Section 237 of the Indian Contract Act, the Court reasoned that where the principal, by his conduct, clothes an agent with apparent authority and thereby induces third parties to act on that belief, the principal is bound by the agent's acts as against bona fide third parties. Since the plaintiff had executed the power of attorney and enabled the transaction to proceed, the sale could not be avoided against innocent purchasers.
Conclusion: The sale deeds were held to bind the plaintiff, and the challenge to their validity failed.
Ratio Decidendi: A principal who, by words or conduct, induces third parties to believe that an agent is authorised is bound by the agent's acts under Section 237 of the Indian Contract Act, and a bona fide third party is protected despite internal fraud or unauthorised conduct by the agent.
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