Power of Attorney

A Power of Attorney means the power or authority given to a person (agent) by an individual (principal) to act on his behalf or on behalf of a group of individuals in business matters or any other matter.

It plays a vital role in transferring the lawful ownership of immovable property like land, building, water source, from one person to another. The person who holds the power is called the Power of Attorney Holder. He is employed by the principal to take care of his dealings with third persons.

A person competent to contract can execute a power of attorney. He can appoint one person or several persons to act on his behalf. Where several persons are appointed as attorneys, it is advisable to mention as to how they will act jointly or independently. If this is not mentioned, then they are at liberty to act jointly.

Power of Attorney, generally speaking, is of two types. Power of Attorney for a single specific purpose is known as “special power of attorney” and the one involving more than one work or transaction is called “General Power of Attorney.”

The duration of a special power of attorney may be for a particular period or for an indefinite period until the task is completed. A general power of attorney may continue to be in force until it is revoked or by death of either party. A registered power of attorney can be revoked by a cancellation deed.

Though, in general, a power of attorney is revocable, it cannot be done so in matters pertaining to debt security till the debt is cleared even though the debtor is not alive. It can be revoked if the principal becomes of unsound mind or he is declared insolvent. It cannot be revoked if it is irrevocable. However it should be registered by paying applicable stamp duty.

Power of Attorney attracts various provisions of The Indian Stamp Act, Powers of Attorney Act, Registration Act, The Indian Contract Act, and Indian Partnership Act, and The Indian Evidence Act.

A power of attorney is divided into ten categories according to the stamp duty payable.
It is significant to note that a power of attorney by a promoter to a builder for construction of apartments under flat ownership scheme, attracting stamp duty according to the value of the property, has been added by an amendment to the Stamp Duty Act. In Karnataka, presently stamp duty is 2% plus registration charges 2% for the promoter GPA.

A power of attorney is given for a court case, for appointing one attorney in place of another, for collection of debts and for admitting execution, and a general power of attorney is given for selling shares, to execute a sale deed, to prepare a layout and sell plots, to raise money through mortgage of property, to recover rents and many other acts.

A power of attorney need not be registered except where an immovable property is involved. According to the Registration Act if, a power of attorney gives power to present documents for registration, then it must be executed before and authenticated by the Registrar or the Sub-Registrar.

If the Registration Act is not in force at a place where the executants lives, then a Magistrate’s authentication is necessary.

If the power of attorney is registered outside India a Notary Public, any Court Judge, Magistrate of that country, or Indian Consul or Vice-Consul or a representative of Central government must authenticate it.

A power of attorney is executed in the form of a legal document generally in the first person and begins either as “Know all men by these presents that I…” or “By this power of attorney I,…”.

After a brief introduction, the operative part is brought in. Thereafter, the specific powers given to the person are mentioned in separate paragraphs. After these a general clause is added empowering the attorney to do such lawful acts and deeds, as he deems fit and proper in the performance of his duties.It is the duty of the agent, the power of attorney holder, to act honestly and faithfully on behalf of his principal, the giver. He is legally bound to perform the tasks according to the wishes of the principal. If the agent acts otherwise and the principal suffers any loss, he must compensate the principal. He is bound to keep all accounts in a proper manner and produce it to the principal on demand. An agent possessing authority to carry on business has authority to do every lawful thing necessary for the purpose.

Being a legal document, a power of attorney must be strictly interpreted and understood. Therefore special care must be taken while drafting the clauses.

TERMINATION OF GENERAL POWER OF ATTORNEY

A person may not be able to be personally present to execute any document, due to various reasons such as living in a foreign country, old age, sickness, weak or otherwise busy. In such circumstances, the owner of the property may entrust the job of maintaining and managing the property in his absence, to any third person through a G.P.A. He may also authorize the GPA Holder to negotiate for sale of the property on his behalf. Such an instrument empowering a third person to perform certain general or specific acts in his absence is termed as General Power of Attorney.

There are two types of Power of Attorney. They are: General Power of Attorney & Special Power of Attorney.

General Power of Attorney is given in the circumstances where the Principal, that is, the person who executes the General Power of Attorney authorizes his Agent, the GPA Holder, to undertake all the acts which are necessary in order to accomplish the object for which power of attorney is executed.
Special Power of Attorney is executed in those cases wherein the agent is empowered by his principal to do such acts specified in such Power of Attorney. In this type of power of attorney, the authority to do specify acts will be revoked soon after that particular act is accomplished.

REVOCATION OF POWER OF ATTORNEY :

The Principal has got every right to revoke, terminate or cancel the Power of Attorney. The following are few of the circumstance wherein the power of attorney can be revoked:

If one of the parties to the Power of Attorney viz., the Principal or his G.P.A. holder dies, then the Power of Attorney will be revoked. For e.g., if Power of Attorney is executed for presentation of a document in the Sub-Registrar office by the G.P.A. holder and the Principal dies prior to the presentation of the document, then the of Power of Attorney automatically gets revoked. But, if the Agent transacts the business on behalf of the Principal and the Principal dies after the execution of the same, the legality of document executed on behalf of the Principal is not affected. However, all further transactions by the Agent representing the Principal would be null and void;
If the Power of Attorney is given for a particular period, on the expiry of the period stipulated in the instrument;
Where the Principal is adjudicated as an Insolvent by the Court of Law;
If the business of agency is complete for which the Power of Attorney is executed;
The Power of Attorney holder renounces his powers;
The Principal revokes the authority of the Power of Attorney Holder;
When either of the parties to the instrument would become persons of unsound mind.
Implied revocation.

PROCEDURE FOR TERMINATION OF POWER OF ATTORNEY :

Power of Attorney can be revocable or irrevocable. However, in either case, there is a specific procedure to be followed in order to terminate the Power of Attorney.

REGISTERED POWER OF ATTORNEY :

In case the Power of Attorney is registered, the revocation can be brought about only by a registered deed of revocation, the reason being that any registered document can be cancelled or revoked only by executing a registered instrument.

UNREGISTERED POWER OF ATTORNEY :

Power of Attorney need not compulsorily be registered. In case the Power of Attorney is unregistered, revocation of the same can be done only by an unregistered instrument of revocation, in which case the Principal can take back the Power of Attorney from the agent through an unregistered instrument of revocation. Apart from an unregistered instrument of revocation, it is also necessary that the fact of revocation has to be published in the local newspapers clearly mentioning the fact of revocation of the said Power of Attorney which operates as notice to the public. This is necessary because registered instrument operates as notice while unregistered document does not.

POWER OF ATTORNEY EXECUTED JOINTLY :

Where several persons execute Power of Attorney jointly appointing a person as their Power of Attorney Holder/Agent, the act of revocation of Power of Attorney by one of the Principals is void in the absence of the consent of others joint principals. However, if the Power of Attorney is executed jointly and severally, revocation by one Principal is sufficient for termination of the same. On the other hand, if Power of Attorney is executed in favour of two persons jointly and if one of them dies, the survivor alone cannot exercise the authority under the Power of Attorney.

NOTICE :

A reasonable notice must be given before revocation of Power of Attorney for the reason that both the parties must be aware about the subsistence or otherwise of the Power of Attorney. If the party who revokes the Power of Attorney fails to issue notice to the other party then any damage that may subsequently be caused on account of this will have to be made good by the person who failed to give notice.
However, reasonable notice may differ from one instrument to the other which can be ascertained from the recitals in the instrument.
Revocation of Power of Attorney may be implied or express. If it is expressed, necessary notice has to be given conveying the intention of revocation of the Power of Attorney to the other which may not be necessary if it is implied.

EXCEPTIONS FOR REVOCATION OF POWER OF ATTORNEY :

Though Principal has got discretionary powers to revoke the Power of Attorney, there are certain exceptions which restrain the Principal from revocation, which are explained below:

When the Power of Attorney Holder himself has an interest in the property, which forms the subject matter of the power of attorney. In such cases, the same cannot be revoked by the Principal alone without obtaining consent from the Power of Attorney Holder.
When the Power of Attorney Holder has partly exercised the act for which the Principal has authorized, authority as regards the acts already exercised cannot be revoked.
When the Power of attorney is given for due consideration and forms part of the transaction.

POWER OF ATTORNEY BY FIRM :

The execution of Power of Attorney by a Firm for exercising certain acts on behalf of the firm, which includes purchase or sale of the immovable property, would get terminated on the dissolution of partnership firm.

Two persons appointed jointly

If the authority is given for two or more persons to act jointly or severally, exercise of the act by either of the Power of Attorney Holders is sufficient. However, in cases where authority is given for two or more persons to act jointly and on the death of one of them, the authority cannot be acted upon by the surviving power of attorney holders.
Power of Attorney is most extensively used document being executed by the owner due to his inability to perform many acts. However, the required procedure also has to be followed for termination of the same.
Thus, before proceeding to negotiate for sale or purchase of the property and if either of the parties for the negotiations is being represented by their GPA holder it is very important to investigate the subsistence of the GPA which depends upon various factors.