Introduction

Power of Attorney (POA) is an instrument that empowers a specified person to act on behalf of the person executing it. The person executing the power of Attorney is called the “Principal” and the person on whose name the Power of Attorney is executed is called the “Attorney” or “POA Holder” or “Agent”. The Agent can represent the Principal in transactions related to business or some private matters. This relationship between the Principal and Agent is called Agency. Sometimes, due to certain factors like old age or illness, or physical incapacity, it gets necessary to have someone else act on your behalf. It is also pertinent to note that the Agent may be given broad or limited authority to make decisions.

Types of Power of Attorney

Power of Attorney can be broadly classified into two types:

General Power of Attorney (GPA):

A General Power of Attorney grants wide powers to the Agent, allowing the Agent to do all acts associated with a particular transaction. In General Power of Attorney, a Principal empowers the Agent to act on his behalf in general and is not restricted to a specific case. For example, the Principal can execute a General Power of Attorney and give the Agent vast powers for several purposes like renting, entering into an agreement to sell, raising a loan, paying for and discharging debts, executing or registering any document, etc. in relation to a particular property. This clearly demonstrates that the word ‘general’ is used in the context of the subject matter not in terms of power. The powers are not general, but tasks delegated to the Agent in relation to a particular estate are.

Special Power of Attorney/ Limited Power of Attorney:

As is apparent from the name it bestows specific or limited powers to the attorney generally restricted to a limited number of tasks or purposes. A Special Power of attorney is used for giving a specific right to the Agent, or for a specific right like the sale of property, renting a property, recovering debts, presenting documents for registration, etc. The Special Power of Attorney must be very specific and there should not be any generalization of powers granted. The nature of work assigned to the Agent must be clearly stated.

Who can be the Principal?

Any person competent to contract can give power of attorney and appoint an agent. Thus it can be said that any person above the age of 18 and of sound mind can act as a Principal and make a power of attorney. Earlier, under the Powers of Attorney Act of 1882 a married woman though a minor could appoint an attorney on her behalf u/s 5 of the Act, but after the Amendment Act of 1982, the concept of ‘full age’ has been introduced, i.e. she must be a major above the age of 18 years.

Who can be the Agent?

As per section 184 of the Indian Contract Act, 1872, any person may become an agent, but no person who is not of the age of majority and of sound mind can become an agent, so as to be responsible to his principle according to the provisions in the Indian Contract Act. Therefore it is evident that the conditions to become a Principal and Agent are the same.

Power of Attorney by more than one Person

In case a property is in the name of more than one person and now the persons want to sell the property but all of them are not able to collectively complete the transaction. In such a case, all the persons can grant the POA to one person and the person will be able to act on all the owners collectively and complete the transaction.

Is Registration of Power of Attorney Mandatory?

As per the Powers of Attorney Act, 1882 execution of any instrument creating a power of attorney must be verified by affidavit, statutory declaration, or other sufficient evidence. Moreover, as per provisions provided under the Indian Evidence Act, 1872 if any person executes the Power of Attorney in front of a Notary Public, or any Court, Judge, Magistrate, Indian Consul or Vice Consul, or representative of the Central Government, and the same is authenticated by these persons/offices, then the Court shall presume that the POA is executed and authenticated. Thus it becomes important to at least get the POA notarized. But a POA attested by Notary Public is not valid for registering any document in the registrar’s office for the transfer of any property. Any POA giving the right to an Agent to dispose of a property through a sale deed or conveyance deed, gift deed, relinquishment deed, etc. needs to be mandatorily registered. Instruments of Power of Attorney relating to the sale of immovable property have to be compulsorily registered.

Illustration:  A executes a POA in the name of his son B giving his son the power to execute a sale deed on his behalf. The POA is also notarized by a Notary Public, but B shall not be able to execute the sale deed on the behalf of POA as the same is not registered.

A POA also needs to be registered in a case where it creates an interest in any immovable property, e.g. creating authority of the agent to recover rent of any property for his own benefit or when it gives the Agent the right to sell any property for satisfying his debt given to the Principal. The purpose for which the POA is being executed will be the determining factor of whether it needs to be registered.

The registration should be done at the office of the sub-registrar within whose jurisdiction the person giving the power resides. If the person resides abroad, the power should be attested by the Indian consulate in that country. Such power of attorney should be used within 3 months from the date of its execution.

Can a Property be Sold using Power of Attorney?

In the past, the POA was also used as an instrument to short-change the law and instead of selling the property through a registered sale deed, a general sale agreement was made between the parties along with a POA giving the buyer absolute charge of managing the property. This was done to evade the payment of stamp duty. The Hon’ble Supreme Court in Suraj Lamp Industries V/s State of Haryana has ruled that “a Power of Attorney is not an instrument of transfer regarding any right, title or interest in an immovable property,” a three-judge bench, headed by Justice RV Raveendran, said, adding that property can legally be transferred only through a registered sale deed.

Steps to Register a Power of Attorney

The following is the process for registration of a Power of Attorney.

1. Choosing the right type of POA as per your requirement. Whether you want to go for a General POA or Special POA.
2. Drafting the POA on a stamp paper, outlining all the terms.
3. Visiting the Registrar’s Office. The POA must be registered in the registrar’s office where the Principal resides or the Property is situated.
4. In most of the states you have to book an appointment online before visiting the registrar’s office.
5. The registrar’s office would require the presence of the Principal and Agent along with two witnesses to sign the Power of Attorney in front of them.
6. Carry original documents that have been self-attested, such as address evidence, as well as photocopies.
7. In the government records, the registrar will keep an image of you, the Power of Attorney holder, and the witnesses.
8. The registrar will preserve a copy of the Power of Attorney in government records and supply you with one stamped by their office.

Power Of Attorney Executed Outside India

In some cases, a person might be residing outside India and needs to complete a transaction to be carried out in India. But he is unable to visit India for the same.  In such cases, the person may execute a power of attorney and can appoint any other person to carry out that particular transaction on his behalf. A Power of Attorney executed outside India, but which relates to property situated in India or to any matter or thing to be done in India or received in India is chargeable to stamp duty under the Indian Stamp Act, 1899.  Moreover, the POA has to be attested by the Indian Consulate or Notary Public of the foreign country and it shall only be valid for registration purposes once Stamp duty on the same is paid in Delhi The following is a list of steps that are needed to be followed while doing the same:

1. Drafting of the Power of Attorney on plain white paper. The Principal has to sign all the pages of the POA.
2. Getting the Power of Attorney attested by the Indian Consulate or the Notary Public.
3. Send the POA to someone in India, the person to whom the POA is sent will get the same registered as per the appropriate state rules.

How can Power of Attorney be Revoked?

A Power of Attorney authenticated before a Registrar may be revoked by an application on a paper without any court fee. If the Principal dies, the Power of Attorney is ipso facto revoked and the Agent can no longer act on the behalf of the Principal. A POA is generally revocable but in certain cases where the same is a part of security for any debt, it is irrevocable notwithstanding the death of the debtor until the debt is paid. Let us understand this by using the following illustration:

Illustration 1: A gives authority to B to sell A’s land, and to pay himself, out of the proceeds, the debts due to him from A. A cannot revoke this authority, nor can it be terminated by his insanity or death.

Illustration 2: A consigns 1,000 bales of cotton to B, who has made advances to him on such cotton, and desires B to sell the cotton, and to repay himself, out of the price, the amount of his advances. A cannot revoke this authority, nor is it terminated by his insanity or death.”

Moreover, oral cancellation of the POA by the Principal is not valid. The Hon’ble Supreme Court in the case of Amar Nath V/s Gian Chand, where the POA holder went ahead with the sale of the property despite the property owner canceling the POA verbally, the apex court said that the POA holder could sell and register the property by producing a copy of the POA and he was not required to submit the original copy. The judgment also breaks the common misconception that once the original POA is not in possession of one of the holders, the said holder cannot execute the same. Therefore it is very clear that the canceling of the POA through a written agreement is valid, however, the cancellation cannot stop the Agent from using a copy of the same to effectuate the sale of a property.

Conclusion:

A Power of Attorney is generally executed when the individual cannot be present to execute a particular personal or commercial transaction by himself. It is a critical decision, and the individual must proceed with caution. Moreover, with the recent judgment of the Hon’ble Supreme Court in Amar Nath V/s Gian Chand, the apex court has cautioned the people intending to execute a Power of Attorney. The Principal must be very cautious while delegating any authority to the Principle, otherwise, the outcome can be trivial. The authority of the Agent is limited to acting solely on certain topics or a specific type of transaction, or to carrying out a specific legal transaction for the Principal and the authority ends after the transaction is completed. It is also pertinent to note that a POA must be revoked using a written agreement and canceling the same orally is invalid.