The Hon’ble Supreme Court in the case of P. Seshareddy (D) Rep. By His Lr. Cum Irrevocable Gpa Holder & Assignee Kotamreddy Kodandarami v. State Of Karnataka & Ors. dealt with Section 201 and 202 of the Indian Contract Act, 1872 (“ICA”) and emphasized the effect of the two being read in tandem with each other.

The Supreme Court observed that the death of the original contractor does not prevent the agent (holding power of attorney) from initiating proceedings related to the contract, provided the agent’s interest in the contract is explicitly mentioned in the contract.

The court stated that when an agent with power of attorney has an interest in the contract, the agency does not automatically terminate upon the principal contractor’s death under Section 201 of the ICA. Section 201 cannot be considered in isolation by ignoring Section 202, when the agent holds an interest in the contract.

Setting aside the findings of the High Court of Karnataka in its judgment and order dated 12.11.2019, the Supreme Court noted as under:

“The learned Single Judge failed to take into consideration that on account of the assignment deed, an interest accrued in the said contract in favour of the appellant. Indisputably, the said contract was the subject matter of the agency and as such in the absence of an express provision to the contrary, the appellant was entitled to continue with the said agency.”