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Power of Attorney and Laws: An overview

Power-Of-Attorney is well-known as deed of Convenience rather deed of Conveyance

As man became busier in the present world and it becomes more necessary for him to depend upon other to do those acts for which he himself is not able to do at the same point of time. Therefore, during these hectic activities of businessmen/ industrialists or for any particular reasons they have made the execution of power-of-attorney to delegate of his functions and eventually in the present economic world it became an inevitable modus Operandi for them.

Definition of Power Of Attorney:

Halsbury's Laws of England1 A Power- Of-Attorney is a formal instrument by which one person, the donor of the power, confers on another, the donee, power to act on the behalf of the donor in the performance of specified act or classes of act or generally.

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. The donor of the power is called principal or constituent; the donee is called attorney. The latter is not entitled to exercised such power for his own benefit.

Section 1A of The Powers-Of-attorney Act, 1882 Power of Attorney includes any instrument empowering a specified person to act for and in the name of the person executing it.
Section 2(21) Indian Stamp Act 1899 Power-of-attorney includes any instrument (not chargeable with a fee under the law relating to court-fees for the time being in force) empowering a specified person to act for and in the name of the person executing it.

In simple language the term Power of Attorney means an authority given by an instrument under the name and seal of person called as donor or principal empowering the another person called as donee or agent, to do some act or acts on behalf of the principal which otherwise could only be done by the principal himself. Mean to say Power of attorney is a document of creation of agency whereby the certain powers are conferred by the principal to his agent to do and execute certain acts or deeds on his behalf.

Nature and Scope: Power of Attorney as an Agency

A power of Attorney holder is nothing but an agent as to S. 182 of the Indian Contract Act, 1872. The authority of an agent is his power to affect his principal position by doing acts on his behalf and the actual authority is that legal relationship between the principal and agent which has been created by them with their consensual agreement. In case of State of Rajasthan vs. Basant Nehata 2 this Court held, grant of power of attorney is essentially governed by Chapter X of the Contract Act.

S. 2 of the Powers-Of-Attorney Act, 1882 provides that everything done by the donee shall be as effectual in law as if it has been done by the donee of the power in the name and with signature of the donor. i.e empowers the donee to execute or to do anything, in and with his own name and signature by the authority of the donor of the power.

In case of Suraj Lamp & Indu. Pvt. Ltd. Vs state of Haryana 3 held that a The power of attorney is creation of an agency whereby the grantor authorizes the grantee to do the acts specified therein, on behalf of grantor, which when executed will be binding on grantor as if done by him.

In case of State of Rajasthan vs. Basant Nehata 4 also held that the agent derives a right to use his name and all acts, deeds and things done by him and subject to the limitations contained in the said deed, the same shall be read as if done by the donor.

Single power of attorney: In the case of Chandigarh Admn. Vs Johnsons paints & Varnish Co.5 Stated that Power-Of-Attorney must be executed in favour of single person/donee for single transaction it cannot be executed in favour of several persons for same act or single specific transaction. But a power of attorney can be executed by more than one principal in favour of single person.

Donee act in excess of power does not bind principal: Donee acts in fiduciary capacity. Any act of infidelity or breach of trust is a matter between the donor and the donee. The donee in exercise of his power under such attorney only acts in place of donor, subject to the power conferred to him. If the power does not authorize the donee to do an act, nay act done by him in excess of such authority will not bind the principal.

Types of Power-of-Attorney:

General power of attorney: It is a broad authorization of power to the agent. The agent entitled to make medical decisions, legal acts, financial or contractual dealings or property dealings on behalf of his principal.

Special power of attorney:

It is narrow mandate authorization. The agent is restricted to act only specific/particular matters or transaction for the principal.You can even make several different POAs, with different agents for each. The power of the agent expires on the completion of the transaction.

How It Is to be Executed: Steps to be followed;

  1. Drafted the deed of Power Of Attorney.
  2. Signed and Name of Principal.
  3. Singed and Name of Two Witnesses who will attested the execution of deed by the principal.
  4. Stamp paper.
    Note: In state of Punjab, the Stamp Duty has to be paid by the executor/donor for General Power of Attorney is Rs 2000/- with registration fees of Rs 400/- and charges for Special Power of Attorney is Rs 1000/ with registration fees of Rs 100/-6. Such stamp duty is mandatory for a valid power-of-attorney.
  5. Notary Attested, compulsory. i.e deed authenticated by the Notary Public.
  6. Registration of deed. (Optional) However, document of Power-Of-Attorney deed does not fall within the ambit of section 17 of Indian Registration Act 1908.

Legal Position:
Competent to Execution of Deed:
Section 183 and 184 of The Indian Contract Act 1872 provides that the agency must be created between those persons who are major and sound mind at the time of formation of an agency. i.e Principal/donor and agent/donee must be above the age of 18 years and sound mind. In the case of Clara Auroro de Vs Sylvia Angela Alvares 7the Judicature of Bombay High Court confronted the validity of a power of attorney executed by the lunatic. It has been held that the person was still a lunatic during the period of parole, when he executed a power of attorney, and hence the power of attorney was a nullity. However, the married women can execute power of attorney even if they are minors. Besides above A company /Firm while executing power of attorney must make conformity with the Article of Association and its common seal. A person must be competent to give the power to the appointed person so that it will not affect the legality of the instrument/deed of attorney.

Attorney Holder to file and appear in civil proceeding as under order3 rule2 of C.P.C

A party to the Court Proceedings may be represented by a Power-of -Attorney holder which duly authorized by the Party/Principal i.e Plaintiff or defendant. Order 3 Rule 2 of C.P.C specifies the Power-of-Attorney holder as recognized agents for the Party.

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

Indian Evidence Act 1872: Attorney holder as witness
Now the question is whether, the power of attorney holder/agent of a party can be competent witness on behalf of party, in the suit proceedings. In answer to that there is no any express provision in CPC 1908 to debar the power of attorney holder to be examined as witness on behalf of the parties to the proceedings. Also the Section 118 of The Indian Evidence Act 1872 does not preclude the holder of power of attorney as to be competent witness on behalf of his principal i.e plaintiff or defendant unless he failed to qualify the conditions provided in the same.

In the case of Kailash Devi Vs. Matadeen Agarwal 8 the court held that the holder of power of attorney is a competent witness and is entitled to appear as such. His statement in the court cannot be ignored or it cannot be said that the statement of such witness shall not be read in evidence only because of reason that he had appeared as power of attorney and the parties to suit do not choose to appear as a witness in the box.

In the case of Shambhu Dutt Shastri v. State of Rajasthan 9 High Court held that a general power-of-attorney holder can appear, plead and act on behalf of the party but he cannot become a witness on behalf of the party. He can only appear in his own capacity. No one can delegate the power to appear in the witness box on behalf of himself. To appear in a witness box is altogether a different act. A general power-of-attorney holder cannot be allowed to appear as a witness on behalf of the plaintiff in the capacity of the plaintiff.

Presumption as to execution and authentication of power of attorney as u/s 85 of Indian Evidence Act; The instrument of power of attorney is to be considered as an evidence only if it has been authenticated or attested by any Notary Public. Sec. 8(1)(a)10 provided that A notary may do all or any acts by virtue of his office; namely, verify, authenticate, certify or attest the execution of any instrument;

In the case of Electric construction and Equipment Co. ltd Vs. jagjit Electric Works, Sirsa11 Delhi high court viewed that Sec.85 of Indian Evidence Act raises a presumption about the execution of the power of attorney. Provided that conditions must be fulfilled. Firstly, it must be executed before Notary Public and secondly 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 authenticated power of attorney is to be taken as sufficient proof of the execution on face of it. The presumption, no doubt, is rebuttable. But, unless rebutted, the presumption stands and the document can be admitted in evidence as a document executed by the person alleged to have been executed.

Indian Registration Act 1908:

In case of Dr. Ashok Mishra Vs Ram Niwas 13 the Allahabad High Court held that a power of attorney is not an instrument of transfer in regard to any right, title or interest in an immovable property.

A power of attorney does not require compulsory registration U/S 17(1)(b) for the simple reason that the donor by the execution of the document only authorizes the donee to act on his behalf and the instrument itself does not create, declare, assign, limit or extinguish any right, title or interest to or in immovable property. It has also been held that execution of deed of power of attorney is valid in law and subject to provision of the Act, is not compulsory registrable.

In case of Rajni Tandon Vs Dual Ranjan Ghosh 14 Hon'ble Supreme Court held a person holding of power of attorney, which is not registered document, has an authority to the sell the property of the owner under the terms of power of attorney and to execute the necessary documents on behalf of the owner.

The sale deed of the property was executed and registered by the attorney holder on the behalf of the owner. Therefore, Power of attorney is not registered but the attorney holder is entitled to sell the property of the owner and is also entitled to present the sale deed for registration before Registrar. He will be considered actual executant of document as under section 32 of Registration Act 1908.

Section 32 of the Indian Registration Act provides the categories of those persons who are entitled to present the document (like POA, sale deed, will, etc.) for its proper registration. These are; by the person who executing or claiming the same or by the representative , agent authorised by duly executed and authenticated power of attorney.

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

When it is to be Registered:

As per sec 23 of Indian Registration Act no document other than the ‘will' shall be accepted for registration by the concerned registrar within four months from the date of its execution.

Power of attorney executed outside India:

Related to property, banking transaction or any other matter or thing have to be done in India, an NRI may execute deed of power of attorney, even by staying outside india without having to come to India for that purpose, in favour of his any family member, relative or friend who resides in India presently.

The power of attorney executed outside India shall be authenticated/attested by that Indian Embassy/consulate and notarized where it has been executed. Afterword, the person in whose favour it has been executed, has to be authenticated/embossed before the concerned lawful authority by making the payment of necessary charges.

Section 18 of The Indian Stamp Act 1899 stated that every instrument which is chargeable has to be stamped with duty with in three months after it has been first received in India. Otherwise any person if failed to pay specified stamp duty than as per section 35 of the Stamp Act such document (like power of Attorney) is not to be admitted in evidence for any purpose.

Revocation/cancellation of Power of Attorney:

There are a number of situations where the relationship of principal–agent between the attorney holder and the donor/principal has come to an end and there is no explicit law governing the same. Moreover Section 3 of The Power-Of Attorney Act 1882 also does not define that how a power of attorney can be revoked or cancelled. But it doesn't mean we have no any law, principles or provisions to remove such chaotic situation. There are many provisions which have been drawn from the Indian Contract Act, 1872 and number of courts in India have interpreted general principles of law and applied to the situation of POA.

These are as following:
Sec 201 of the Indian Contract Act, 1872 provide with certain conditions for termination of agency. These are as under:
  1. When the Principal himself revoked the authority given to an agent.
  2. When either of the ‘Principal' or ‘Agent' becomes unsound.
  3. When either of the ‘Principal' or ‘Agent' declared to be insolvent by a competent court of law having jurisdiction.
  4. When the holder/agent of the ‘POA' renounce the agency.
  5. When the purpose or business for the execution of such ‘POA' is completed.
  6. On the death of either Principal/Donor or Agent/Donee.
  7. Situations where there is ‘Implied Revocation' mentioned in the terms of such ‘POA' executed between the parties.
Sec 202 of the Act states that if the agent in a principal-agent relationship has an interest in the agency then, the power of attorney cannot be revoked without the consent of the agent.

Related Case Laws
Daily Telegraph Newspaper Co. Vs. Mc Laughin 15 It was held that a mentally incompetent person can only appoint an agent during a lucid interval. A power-of -Attorney executed by a person while of unsound mind is a nullity.

Prahlad Vs Laddevi
16 a power of attorney granted by the donor to donee is operative and effective only during the life time of donor. Power-of-attorney cannot be operative or not be effective after the demise of donor.

In the case of Govindkoss Krishna Koss v Gopesjhwar lalaji Maharaj, the court established that a power of attorney though irrevocably granted shall be revocable on strong proof of gross mismanagement on the part of the said attorney. \
This also implies if the appointed attorney (or agent) has somehow broken the terms of the contract between the principal and agent then, the principal can revoke the power of attorney.

Procedure for revocation:
Section 206 of Indian Contract Act provides that reasonable notice of such revocation or renunciation must be given to the principal or agent otherwise the damages thereby resulting, as the case may be, must be made good to the one by the other.

If the Power-Of-Attorney is Registered:

  1. Drafted the deed of revocation/cancellation of actual power-of-attorney.
  2. The said fresh deed shall be submitted for its registration before the same Sub-Registrar where the actual POA was registered.
  3. After such registration, a notice of the same shall be sent to all the relevant authorities/parties/people etc., annexing such registered revoked/cancelled deed.
  4. Thereafter, the person who is executing such (Revocation Deed of POA) should publish the same in the two local and regional newspapers for such information to be known to the General Public
The Hon'ble Punjab and Haryana High Court Rajiv Mahajan And Others vs Ajit Kaur And Others17 In the present case stated where the registered general power of attorney has been cancelled on 16.10.2007 by a registered cancellation deed. It is settled principle of law that once a registered document is cancelled by registered cancellation deed, then cancellation is operates as constructive public notice.

It is therefore held by Allahabad High Court in Chandrama Singh and others Vs Mirza Anis Ahmad 18 that a Notice/document dt. 20/2/73 sent by registered post being not registered under Registration Act could not nullify the registered power of attorney dt.17/3/67 while the subject matter was immovable property value of more One Hundred Rupees. Registered document dealing with rights to immovable property cannot be annulled except through proper procedure.

The registered Power of Attorney could be validly revoked/cancelled by another registered document, therefore, notice dated 20.02.1973 sent by registered post was only a communication and since it was not registered under the Registration Act 1908 it did not revoke the registered Power of Attorney dated 17.03.1967.

If the Power-Of-Attorney is not Registered. The procedure is same as above except the registration of revocation/cancellation deed is not required i.e the duly stamped and notarized revocation deed sof power of attorney is sufficient.

Transaction of immovable property by Power-Of-Attorney:

From the above details it has been concluded that any transactions by way of GPA/SPA does not convey any title nor create any interest in an immovable property.

The observations by the Delhi High Court, in Asha M. Jain v. Canara Bank 19 that:

the concept of power of attorney sales have been recognized as a mode of transaction" when dealing with transactions by way of SA/GPA/WILL are unwarranted and not justified, unintendedly misleading the general public into thinking that SA/GPA/WILL transactions are some kind of a recognized or accepted mode of transfer and that it can be a valid substitute for a sale deed.

Therefore, it is to be concluded that immovable property can only be legally and lawfully transferred/conveyed only by a registered deed of conveyance. Transactions of the nature of "GPA sales" or "SA/GPA/WILL transfers" do not convey title and do not amount to transfer, nor can they be recognized or valid mode of transfer of immoveable property. The courts will not treat such transactions as completed or concluded transfers or as conveyances as they neither convey title nor create any interest in an immovable property. They cannot be recognized as deeds of title, except to the limited extent of section 53A of the TP Act. Such transactions cannot be relied upon or made the basis for mutations in Municipal or Revenue Records.

References:
  1. 5th Edn, vol 50, para 646.
  2. 2005 (12) SCC 77.
  3. 2012 AIR SC (Civil) 91.
  4. 2005 (12) SCC 77.
  5. AIR (1996) SC 3318.
  6. As per Official Notification of Punjab Government Gazette 2019.
  7. AIR 1985 Bom 372.
  8. AIR 2001 Raj 306.
  9. 1986 2 WLN 713 Raj.
  10. The Notaries Act 1952.
  11. AIR 1984 Del 363.
  12. 1983 KLT 1013.
  13. 2018(10) ADJ 297.
  14. 2009(3) Apex Court Judgments (SC) 182.
  15. 1904 AC 776.
  16. AIR 2007 Raj 166
  17. 2014(4) RCR (Civil) 645
  18. 2011 (13) RCR (Civil) 45
  19. 2002(1) RCR Civil 543
Written By: Raminder Singh (Advocate) B.A,LL.B,LL.M. District Courts Ludhiana (Punjab)

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