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Section 203: When principal may revoke agent's authority

Indian Contract Act • Official Statutory Text & Practice Guide

Statutory Regulation
Legal Standard
Competent Court / Tribunal
Act 1872
Section 202 All 266 Sections of Indian Contract Act Section 204

Legal Commentary & Landmark Judgments: Section 203

Section 203 affirms the principal's inherent right to revoke an agent's authority at any time before the authority has been exercised so as to bind the principal, subject only to the statutory exception of an agency coupled with an interest under Section 202.

  • Inherent Power of Revocation: Agency is generally a revocable fiduciary relationship; the principal may unilaterally withdraw, cancel, or revoke the mandate at his absolute discretion.
  • Temporal Boundary of Revocation: Revocation must occur before the agent has exercised the authority in a manner that creates binding legal obligations with third parties.
  • Statutory Exception of Section 202: Revocation is legally barred where the agency is coupled with an interest (i.e., where the agent has a personal proprietary or security interest in the subject matter under Section 202).
Key Landmark Precedents:
  • State of Rajasthan v. Basant Nahata (2005) 12 SCC 77: The Supreme Court affirmed that a power of attorney is inherently revocable at will under Section 203 unless it falls strictly within the ambit of an agency coupled with an interest under Section 202.
  • Seth Loon Karan Sethiya v. Ivan E. John AIR 1969 SC 73: The Supreme Court held that where authority is given to secure a debt owed to the agent, it creates an agency coupled with an interest under Section 202, disabling the principal from revoking the power under Section 203.
Courtroom Practice & Strategic Litigation Guidance:

When advising a principal seeking to terminate a problematic agent or power of attorney holder, ensure notice of revocation under Section 203 is served immediately, before the agent executes pending agreements. Simultaneously, notify all relevant registries, banks, and prospective third parties to prevent ostensible authority from binding the principal.

Section 202 All 266 Sections of Indian Contract Act Section 204