Mrs. Umadevi Nambiar vs. Thamarassery Roman Catholic Diocese
Background
The appellant and her sister jointly inherited a property from their father. The appellant gave her sister a general Power of Attorney in 1971 (later cancelled in 1985), but in the meantime the sister sold parts of the property to third parties who eventually sold it on to the respondent Diocese. The appellant sued for partition of her half-share, and the trial court ruled in her favour, holding the Power of Attorney never actually authorized a sale. The Kerala High Court reversed this on appeal, holding that the appellant was deemed to have "constructive notice" of the sale and had lost her right to challenge it by not seeking cancellation of the sale documents in time.
Decision Breakdown
The Supreme Court held that the Power of Attorney document, though it expressly empowered the agent (the sister) to lease the property and to mortgage it for loans, contained no clause authorizing her to sell it, and a power to sell cannot simply be inferred or read into a Power of Attorney. Since the sister had no authority to sell, her sale was invalid, and under the basic legal principle "nemo dat quod non habet" (no one can give what they don't have), the buyers who purchased from her, and in turn the respondent Diocese who bought from them, never acquired valid title either. The Court found the High Court had wrongly invoked "constructive notice" under Section 3 of the Transfer of Property Act against the appellant (the principal), when in law an agent's unauthorized sale does not amount to the principal losing possession or being deemed aware of it; it also held that a plaintiff seeking partition need not always first sue to cancel the unauthorized sale deeds. The trial court's decree restoring the appellant's rightful half-share was reinstated.
Lesson Learnt
A Power of Attorney must expressly and specifically authorize a sale. Courts will not infer a power to sell from general clauses about leasing, borrowing, or signing documents; and a buyer who does not verify this exposes themselves to losing the property even after paying for it, since no one can pass on a better title than they themselves hold.