Validiation if sale deed

Rana Amarjit Singh (Querist) 05 September 2021 This query is : Open
Sir
A person was authorized by board resolution of Pvt, Ltd. Company having real estate business to execute any documents regarding sale of a partucular plot. That person entered into sale agreement with other person, recived consideration on behalf of company and issued special power of attorney to that person. The person to whom power of attorney was issued executed a sale deed and consideration received was squared off against amount already paid to company. Now please determine if sale deed is valid. If invalid then can it be validiated by adopting through board resolution.

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A company authorised an individual to sell a plot of land, who then issued a Power of Attorney to another person who executed the sale deed. Experts opine that the original authorised person could not delegate this power, rendering the sale deed invalid. A subsequent board resolution cannot ratify this illegal act. The company must pursue cancellation of the deed and execute a new, legally sound sale.

Dr J C Vashista (Expert) 06 September 2021
The person was authorised by principal titleholder i,e., company to execute sale deed can not further authorise and grant PoA in favour of someone else for such transaction.
If such transaction has been there is invalid and unauthorised.

K Rajasekharan (Expert) 06 September 2021
Yes, the person duly authorised by the company to sell a plot cannot authorise someone else to perform the same function.

This is based on principle of jurisprudence that a person to whom power is delegated cannot himself further delegate that power.

Rana Amarjit Singh (Querist) 06 September 2021
Sir
Can the company adopt the transaction through board resolution as consideration has been received by company

K Rajasekharan (Expert) 06 September 2021
The company cannot set it right by ratification by a resolution.

The reason is that at the point of time of execution of sale, the sale was illegal. The person executed the sale was not authorised by law under the Transfer of Property Act. A person who owns no title, even by authorisation, cannot pass on anything at all.

The company cannot validate the illegal action by a subsequent resolution. The company has do everything afresh in a legally perfect way.

P. Venu (Expert) 06 September 2021
What is the context for this query? Is there any audit objection or objection from any director/shareholder?

kavksatyanarayana (Expert) 06 September 2021
The authorised person has no power to give authorisation to another person and as such, that sale is invalid as opined by the experts. Now the Company has to file a case for cancellation of registered sale deed and if getting cancellation orders by the court, then the company may execute the sale deed.

Rana Amarjit Singh (Querist) 07 September 2021
Sir
Can the conpany execute the sale deed afresh to third person

K Rajasekharan (Expert) 07 September 2021
Theoretically it is possible as per law. But some practical aspects need to set right before that.

A new transfer document has been created and the buyer has got some bonafide interest in the property.

So, such technical matters need to be settled before doing it. Otherwise, it will end up in legal tangles and court cases that may last for long.

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