Power of Attorney

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Power of Attorney: Under section 2 of the Powers-Of-Attorney Act, 1882, everything done by the donee has the same legal effect as if it had been done by the donee in the name and with the signature of the donor.

Today, as man becomes busier, it becomes more necessary that he rely on others to perform acts that he is not able to accomplish himself at the same time. Therefore, during these hectic activities of businessmen/industrialists or for any particular reasons they have executed the execution of power-of-attorney to delegate of his functions, and eventually in the modern economic world it has become an inevitable modus operandi.

Power of Attorney definition

Powers-of-Attorney are formal instruments by which one person, the donor of the power, grants another, the donee, the authority to act on behalf of the donor in the performance of specified acts or classes of acts.

  • According to Osborn’s Concise Law Dictionary,7th Edn. A Power-of-Attorney means a formal instrument with which one person empowers another to represent him, or act in his stead, for certain purposes, usually in the form of a deed poll, and attested by two witnesses. Powers are given by a principal or constituent, and donee by an attorney. It is not permissible for the latter to exercise them for his own benefit.
  • As defined in Section 1A of The Powers-Of-attorney Act, 1882, a Power of Attorney includes any instrument that empowers someone to act on behalf of and in the name of another.
  • In Indian Stamp Act 1899 section 2(21), power-of-attorney includes any instrument (not chargeable with a fee under the law relating to court-fees at the time) empowering a specific person to act on behalf and in the name of the person executing it.
  • In other words, Power of Attorney is a legal document which enables one party to grant authority to another person to act on their behalf. It allows the agent to perform specified tasks for the principal, such as signing documents or contracts which would otherwise need to be signed by the principal personally.
Power of Attorney as an Agency: Nature and Scope

According to Section 182 of the Indian Contract Act, 1872, a power of attorney holder is nothing more than an agent. By acting on behalf of his principal, an agent has the power to affect his principal’s position, but the actual authority is the legal relationship between the principal and agent which has been established by their mutual agreement. The Court ruled that Chapter X of the Contract Act governs the grant of power of attorney in the case of State of Rajasthan vs. Basant Nehata.

As provided in Section 2 of the Powers-Of-Attorney Act, 1882, everything done by the donee is legally as if it had been done by the donee with the donor’s signature and name. By the authority of the donor of the power, the donee may execute or do anything in and with his own name and signature. The case of Suraj Lamp & Indus. Pvt. Ltd. vs state of Haryana held that a power of attorney creates an agency through which the grantor authorizes the grantee to act on behalf of the grantor in a way that is binding upon the grantor as if the grantor had performed the act himself. It was also held in State of Rajasthan vs. Basant Nehata that every act, deed, and thing done by the agent, subject to the limitations contained in the said deed, will be considered as if done by the donor.

The Chandigarh Administration vs Johnson’s Paints & Varnish Co.5 decision held that power of attorney must be executed in favour of a single person/donee for a single transaction and it cannot be executed in favour of several people for the same act. There is, however, the possibility of more than one principal executing a power of attorney on behalf of a single individual. Acts of excess power by the donee do not bind the principal: Donees act in fiduciary capacity. Any act of infidelity or breach of trust is between the donor and the donee. The donee in exercise of his power under such an attorney only acts in the place of the donor, subject to the authority conferred upon him. A donee acting in excess of his authority will not be binded by the principal if the power does not authorize him to do so.

There are several types of powers of attorney:

Generally, a general power of attorney authorizes the agent to perform legal acts, financial transactions, and property transactions on behalf of his principal.

Power of attorney: Agents are restricted to acting only on specific/particular matters or transactions for the principal in this type of authorization. You can even create multiple POAs, with different agents for each. The power of the agent expires at the conclusion of the transaction.

Steps to follow in executing it;

  • Prepared the Power of Attorney deed.
  • Principal’s signature and name.
  • The principal’s signature and the names of two witnesses who will attest the execution of the deed.
  • Paper for stamping:  For General Powers of Attorney in Punjab, Stamp Duty is Rs 2000/- with registration fees of Rs 400/- and for Special Powers of Attorney, Stamp Duty is Rs 1000/- with registration fees of Rs 100/-. For a valid power of attorney, stamp duty is mandatory.
  • Deed must be notarized, i.e. authenticated by a Notary Public: Registration of deed. (Optional) However, Power-Of-Attorney deeds are not included in section 17 of the Indian Registration Act, 1908.
Position on the law:

Section 183 and 184 of The Indian Contract Act 1872 stipulate that any agency must be created between two people who are both above the age of 18 and have sound minds at the time of its formation. The Judicature of Bombay High Court’s case concerning Clara Auroro de Vs Sylvia Angela Alvares provided insight into the validity of a power of attorney executed by a lunatic, which they declared to be a nullity. Married women, however, can execute powers of attorney while being minors. Companies and firms executing powers of attorney must ensure conformance with Articles of Associations as well as the inclusion of their common seal. Ultimately, it is important for those giving power to others to act in accordance with legality so that there are no issues with the instrument or deed.

C.P.C. order3 rule2 requires attorney holders to file and appear in civil proceedings

A Party to Court Proceedings may be represented by a Power of Attorney holder which has been duly authorized by the Party/Principal. Order 3 Rule 2 of C.P.C specifies that Power of Attorney holders are recognized agents of the Party.

Therefore, Rule 2 empowers the power-of-Attorney holder who is authorized to act on behalf of the principal can appear, file applications, engage advocates and act on behalf of parties. An attorney can only maintain or appear in a suit on behalf of his principal, and not in its own name.

Attorney holders as witnesses under the Indian Evidence Act 1872

The question now is whether the power of attorney holder/agent of a party can provide testimony in support of that party in court proceedings. There is no specific ruling within CPC 1908 which precludes the holder of such from becoming a witness for the plaintiff or defendant, and Section 118 of The Indian Evidence Act 1872 does not disqualify them unless conditions set forth are not met.

A court ruled in Kailash Devi vs. Matadeen Agarwal 8 that a power of attorney holder is qualified to appear as a witness. He cannot be ignored in the court or it cannot be said that the statement of such witness shall not be read in evidence simply because he has appeared as a power of attorney and the parties to suit have not chosen to appear in the box as a witness.

In Shambhu Dutt Shastri v. State of Rajasthan, the High Court ruled that a general power-of-attorney holder may be able to act and plead on behalf of the party, but cannot take the witness stand while acting on their behalf. They can only appear as an individual. It is impossible to provide authority to represent oneself in such a situation. The court declared that no one can authorize a general power-of-attorney holder to perform the role of witness for the plaintiff as though it were the plaintiff themselves.

As per section 85 of the Indian Evidence Act, there is a presumption that power of attorney has been executed and authenticated; however, the instrument of power of attorney can only be used as evidence if it has been authenticated or attested by a Notary Public. By virtue of his office, a notary is entitled to perform all or any acts, including verifying, authenticating, certifying, or attesting any instrument.

In the case of Electric Construction and Equipment Co. ltd. Vs. Jagjit Electric Works, Sirsa11 Delhi high court viewed that Section 85 of the Indian Evidence Act raises a presumption about the execution of the power of attorney. However, conditions must be met. First, the document must be signed by a Notary Public and, second, it must be authenticated by a Notary Public.

The effect of Sec 85 is considered by the Kerala High Court in case of Damodaran Suran Vs. Kesavan Meenakshy 12 the authentication of power of attorney is sufficient proof of execution on face of it. There is no doubt that the presumption can be contested, but unless it is contested, the document can be admitted in evidence as a document signed by the person alleged to have been executed.

The Indian Registration Act of 1908:

According to the Allahabad High Court, a power of attorney is not an instrument of transfer for any right, title or interest in an immovable property in Dr. Ashok Mishra vs Ram Niwas 13.

Generally, a power of attorney does not require compulsory registration under Section 17(1)(b) since the donor authorizes the donee only to act on his behalf by signing the instrument, and the instrument itself does not create, declare, assign, limit or extinguish any right, title or interest in immovable property. Furthermore, the execution of a power of attorney deed is valid in law and is not compulsory registrable, subject to provisions of the Act.

A person holding a power of attorney that is not a registered document has the authority to sell the property of the owner under the terms of the power of attorney and to execute the necessary documents on behalf of the owner in the case of Rajni Tandon Vs Dual Ranjan Ghosh 14.

Attorney holder executed and registered the sale deed for the owner’s benefit. As a result, the power of attorney is not registered, but the attorney is entitled to sell the property of the owner and present the sale deed for registration to the Registrar. According to section 32 of the Registration Act 1908, he will be considered the actual executant of the document.

According to Section 32 of the Indian Registration Act, certain categories of persons may present a document (like a Power of Attorney, a Sale Deed, a Will, etc.) for registration. By the person who executes or claims the same or by the representative, agent, authorized by a duly executed and authenticated power of attorney.

The Instrument of POA regarding the transaction of immovable property is required to be registered under Amendment of Section 17 of Indian Registration (State Amended) Acts of Rajasthan, Kerala and Orissa.

Registration should be completed by:

In accordance with section 23 of the Indian Registration Act, no document other than a will may be registered within four months of its execution.

Outside India, a power of attorney is executed as follows:

Whenever there is a property transaction, a banking transaction, or any other matter that must be done in India, an NRI can execute a power of attorney, even if he is outside India, so as not to have to travel to India to do so, in favour of a member of his family, relative, or friend who lives in India.

Powers of attorney signed outside India must be authenticated/attested by the Indian Embassy/Consulate where they have been executed and notarized there. The person in whose favor the document has been executed must then be authenticated/embossed before the concerned lawful authority by paying the appropriate fees.

The Indian Stamp Act 1899 stated that every instrument that is chargeable must be stamped with duty within three months of being received in India, according to section 18. As per section 35 of the Stamp Act, any document (like a power of attorney) that is not paid stamp duty is not admissible in evidence.

Power of Attorney revocation/cancellation:

Various scenarios have occurred where the relationship between an attorney holder and a donor/principal has been terminated without any explicated legislation. Furthermore, Section 3 of The Power-Of Attorney Act 1882 does not specify how to revoke or cancel a POA. This does not imply that there are no laws, principles or provisions that would address such complicated matters. In fact, several rules drawn from the Indian Contract Act, 1872 and the precedents set by numerous Indian courts have been used to interpret general legal principles in order to resolve POA issues.

The following are some of them:

  • As per Section 201 of the Indian Contract Act, 1872, termination of agency is subject to the following conditions:
  • An agent’s authority was revoked by the Principal himself.
  • When one or both of the ‘Principal’ or ‘Agent’ becomes unsound.
  • A competent court of law declares either the Principal or Agent insolvent.
  • Renunciation of the agency by the holder/agent of the POA.
  • Once the purpose or business for executing such a POA has been fulfilled.
  • In the event of the death of either the principal/donor or the agent/donee.
  • In situations where a POA has an implied revocation clause.

According to Section 202 of the Act, if the agent in a principal-agent relationship has an interest in the agency, the power of attorney cannot be revoked without the agent’s consent.

Case Laws Related to

An agent can only be appointed by a person of sound mind during a period of lucidity. A power-of-attorney executed by a person of unsound mind is null and void. A power of attorney granted by the donor to the donee is operative and effective only during the life time of the donor. It cannot remain operative or be effective after the demise of the donor. A court ruled in Govindkoss Krishna Koss v Gopesjhwar Lalaji Maharaj that a power of attorney may be revoked on strong proof of gross mismanagement on the part of the attorney. If the appointed attorney (or agent) violates the terms of the contract between the principal and agent, the principal may revoke the power of attorney.

Revocation procedure: According to section 206 of the Indian Contract Act, a reasonable notice of revocation or renunciation must be given to the principal or agent in order to avoid damages being incurred.

The Power-Of-Attorney must be registered if:

  • I drafted the deed of revocation/cancellation of the actual power of attorney.
  • Fresh deeds must be registered with the same Sub-Registrar as the actual POA.

Registration shall be followed by a notice annexing the registered revoked/cancelled deed to all the relevant authorities/parties/people.

Afterwards, the person executing such (Revocation Deed of POA) should publish it in two local and regional newspapers so that the general public knows about it. Rajiv Mahajan And Others vs Ajit Kaur And Others17 According to the Hon’ble Punjab and Haryana High Court, the registered general power of attorney was cancelled by a registered cancellation deed on 16.10.2007. When a registered document is cancelled by a registered cancellation deed, it acts as constructive public notice under law.

Consequently, the Allahabad High Court held in Chandrama Singh and others vs Mirza Anis Ahmad 18 that a notice/document dated 20/2/73, which was not registered under the Registration Act, was not able to invalidate a registered power of attorney dated 17/3/67, since it covered immovable property worth more than one hundred rupees. A registered document relating to immovable property cannot be annulled without following a proper procedure.

Another registered document could validly revoke/cancel the registered Power of Attorney, so the notice dated 20.02.1973 sent by registered post was only a communication and did not revoke the registered Power of Attorney dated 17.03.1967 since it was not registered under the Registration Act 1908. A duly stamped and notarized revocation deed of power of attorney suffices if the power of attorney is not registered.

Power-of-Attorney transaction for immovable property: It is evident from the above details that GPA/SPA transactions do not convey any title or create any interest in a property.

According to the Delhi High Court in Asha M. Jain v. Canara Bank 19: Power of attorney sales have been recognized as a mode of transaction” when dealing with SA/GPA/WILL transactions are unwarranted and unjustified, misleading the general public into thinking that SA/GPA/WILL transactions are a valid substitute for a sale deed and are recognized as a recognized or accepted mode of transfer.

To conclude, legally and lawfully transferring immovable property can only be accomplished through a registered deed of conveyance. GPA sales, SA/GPA/WILL transfers are not regarded as transfers, as they do not pass on title nor confer an interest in the said property. Courts will also not consider these acts as completed transfers or conveyances. The sole exception to this is section 53A of the TP Act. Such transactions cannot be considered deeds of title and must not be used as a basis for any action.

 

 

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