Power of Attorney

A power of attorney is one of the documents which play an important role in conveyancing. Power of attorney is a document of agency. It is a document whereby the principal appoints an agent to do and execute several acts and deeds for and on behalf of the principal. A Power of Attorney is a formal arrangement by which one person (donor- principle) gives another person (the Attorney-agent) authority to act on his behalf and in his name. Every act performed by attorney within the authority of the Power of Attorney is legally binding upon the persons granting it, so at the time of granting Power of Attorney the principal must be competent, alert and aware of the consequences of his/her decision.

A person who has attained majority may execute power of attorney in favour of another person who has attained majority including family members like brother, sister, father and mother to act on his behalf.

Even after executing Power of Attorney, principal himself can do those acts and things, while the power of attorney is subsisting, unless there is an expression to that effect in the power of attorney.

If a power of attorney is given jointly by two or more persons, the death of any of them will not automatically revoke the power of attorney of remaining living persons.

In general;

  1. Power of attorney should be strictly construed.
  2. An agent cannot by his acts bind the principal to a larger extent than he is empowered to do under the power of attorney.
  3. Fraud by the agent does not bind the principal. He cannot be sued or otherwise held responsible for fraud by the agent
  4. The agent cannot delegate his powers unless authorized
  5. The agent cannot put himself in a position where his duties as attorney conflict with his    own personal interest or the interest of the third party
  6. The agent should not take advantage of his position to obtain any benefits to himself
  7. The agent should not accept secret commission
  8. The agent should  keep the donor's money separate from his own and
  9. The agent should give account to the donor.

Types of power of attorney:

  1. General Power of Attorney and
  2. Special Power of Attorney

A general power of attorney gives to the agent very broad powers to act on behalf of the Principal. It covers more than one subject matter.

A special power of attorney relates to a specific subject matter, though it may contain several powers relating to the same subject matter. The agent's power of attorney expires on the completion of the transaction

Attorney can delegate his powers if a power of attorney specifically states that the attorney has the right to delegate powers to other person. That ‘other person’ cannot get greater powers than original attorney has.

Power of Attorney can be revoked or would stand revoked if:

  1. Revoked by the principal himself.
  2. The principal die or agent dies.
  3. The principle becomes insane or becomes bankrupt.
  4. The business for which the agent was appointed is over.
  5. Mutually agreed upon by the principal and agent.
  6. The right under the power of attorney is renounced by the agent.
  7. The principal is adjudged insolvent.
  8. With the efflux of time.

Irrevocable Power of Attorney:

The Power of Attorney Act does not state when a power of attorney is irrevocable. Power of attorney creates agency and therefore the law of agency is governed by the Contract Act. Power of attorney being an agency is essentially revocable like any other contract. The mere fact that a power is declared in the instrument granting it to be irrevocable, does not make it irrevocable. Power of attorney is irrevocable under below mentioned circumstances.

  1. If such power of attorney is for an act which also affects interest of the agent.
  2. If the Power of attorney is executed for consideration in respect of property it cannot be unilaterally revoked, prejudicial to the interest of the agent.
  3. After the agent has exercised the authority given to him in respect of the acts exercised.
  4. If irrevocable power of attorney granted in relation to a subject matter in which the agent has an interest, cannot be terminated by the death, unsoundness of mind or insolvency of the principle to prejudice such interest created by the principle in favour of the agent.

Example: When Principle being the owner of a piece of land over which he has old house gives to  a developer(agent), an irrevocable power of attorney to develop such land and ultimately transfer the same in favour of a Society or Condominium or such Association of Persons. Such a power of attorney is given for a valuable consideration. In the event principle dies whilst the property is in the process of being redeveloped, such an irrevocable power of attorney granted by principle to developer cannot be revoked or terminated and developer is entitled to complete such redevelopment.

Execution of power of attorney:

The most common method to execute a power of attorney is to sign it in the presence of and get it authenticated by a Notary Public or a Judicial Magistrate. The authentication must be to the effect that "the donor appeared before me and signed in my presence and he is personally known to me or he was identified to me by one personally known to me".

Notary Public' is required to put his signature and the official seal for every act done as notary.  As far as a power of attorney executed outside India is concerned it is recognised only if it is authenticated by Indian Consul, Vice Consul or a representative of the Central Government in that country.

A power of attorney executed by more than one person in respect of their separate lands and affairs in favour of one person a valid power of attorney. It is not necessary that when several persons grant a power of attorney it must be in respect of their common transaction.

Registration and stamp:

In many cases, a general or specific power of attorney need not be registered. The question of registration arises only if a power is given for the sale of immovable properties. In Maharashtra, if a power of attorney is donated other than close family member for sell of immovable property it must registered with Registrar and not Notary. A power of attorney is to be register at the office of the sub registrar within whose jurisdiction the person giving the power resides at the time of execution of the document. Also it will impound Stamp duty @ 5% of market value of the scheduled Property. If it is Family Power of Attorney (donated to close family member -blood relative) then it should be on stamp paper of value of five hundred rupees and it must be register before Notary Public. It can be also be register at sub registrar office within whose jurisdiction the person giving the power resides at the time of execution of the document.

Under the Bombay Stamp Act (in Maharashtra) a power of attorney given to a promoter or Builder for development of property is required to be stamped as a conveyance as per the market value of the property.