An agency is legally terminated by the principal revoking their authority, by the agent renouncing the business of the agency, by the business of the agency being completed, or by either the principal or agent dying or becoming of unsound mind. An agency is also terminated by the principal being adjudicated an insolvent under the provisions of any applicable insolvency law.
Statutory Powers & Jurisdiction: In corporate restructuring, banking operations, and commercial contracts, the automatic termination of agency upon insolvency or corporate dissolution immediately freezes the agent's authority to bind the principal's estate.
Statutory Commencement & Effective Date: Under the Insolvency and Bankruptcy Code (IBC), the commencement of the Corporate Insolvency Resolution Process (CIRP) and appointment of an Interim Resolution Professional (IRP) suspends the powers of the board of directors and terminates general agency powers, centralizing operational control in the resolution professional.
Key Landmark Precedents:
Syed Abdul Khader v. Rami Reddy (1979) 2 SCC 601: The Supreme Court held that a power of attorney terminates upon the death of the principal under Section 201, and any subsequent conveyance executed by the attorney is void ab initio, unless protected as an agency coupled with interest under Section 202.
Suraj Lamp & Industries Pvt Ltd v. State of Haryana (2012) 1 SCC 656: The Supreme Court affirmed that powers of attorney executed as part of customary property sales are revocable and automatically terminate upon the principal's death under Section 201.
Legal Commentary:
Purchasers who buy real estate through General Power of Attorney (GPA) face severe title risks under Section 201. If the principal dies before the execution and registration of a formal conveyance deed, the GPA terminates instantly, leaving the buyer without legal title.
Legal Commentary & Landmark Judgments: Section 201
An agency is legally terminated by the principal revoking their authority, by the agent renouncing the business of the agency, by the business of the agency being completed, or by either the principal or agent dying or becoming of unsound mind. An agency is also terminated by the principal being adjudicated an insolvent under the provisions of any applicable insolvency law.
Purchasers who buy real estate through General Power of Attorney (GPA) face severe title risks under Section 201. If the principal dies before the execution and registration of a formal conveyance deed, the GPA terminates instantly, leaving the buyer without legal title.