What is Power of Attorney [PoA]: Power of Attorney is an written instrument executed
by a person, authorizing the person named therein, to do some specified acts on
behalf of the executor, such acts which otherwise could be done by executor
only. The person who gives the power / authority is called the “Donor” or
“Principal” and to whom the power is given is called the “Donee” or the
“Attorney”. The said Attorney acts as an
agent of the Principal.
Power of Attorney is a very
important instrument, which facilitates in the running and conducting of businesses,
prosecuting and representing legal cases in the Court of law and also making due
representations before various statutory authorities, including tax and revenue
authorities. It is also a very important medium in effecting the transfers of
immovable properties.
PoA ordinarily are of two types: General and Special. A General PoA
authorizes the Attorney to act on behalf of his Principal in all matters of a
particular nature, or generally in respect of a particular business. A Special
PoA authorizes the Attorney to represent his Principal only in respect of some
particular specified acts mentioned in the document so executed in that behalf.
Nature and extent of authority of the Attorney: Section 188 of the
Indian Contract Act, 1872 provides that an
agent having an authority to do an act, is deemed to have authority to do every
lawful thing, which is necessary in order to do such act. Section 237 of the Indian Contract Act, 1872 provides
that when an agent, without authority, has done acts or incurred obligations to
third persons on behalf of his principal, the principal is bound by such acts
or obligations, if the principal has by his words or conduct induced such third
persons to believe that such acts and obligations were within the scope of the
agent's authority.
Interpretation of terms of
Powers which are set out in the instrument: The nature of powers which are conferred under the instrument of Power of
Attorney are always strictly construed, that is to say, they are construed
as giving only such authority as they confer expressly or by necessary
implication. The following are the most important rules of construction.
Purposes for which PoA may be executed: The list stated hereinafter
is only an illustration under which PoA may be executed. (a) Execution of Sale
deed (b) Presenting documents before Registering authorities (c) Conducting /
Representing in Court / Tribunals / any other legal proceeding before any
Public authority (d) Conducting businesses (e) to receive Rent, etc.
Both Civil and Criminal proceedings may be instituted and prosecuted
through Power of Attorney: However, it must be bear in mind that the
concerned legal proceedings must be instituted in the name of Principal only,
for, the power of attorney holder is merely the agent of the Principal. In so
far as criminal complaints are concerned, which are filed before Magistrates
Court u/s 200 of CrPC, 1973, if the Power of
Attorney Holder is volunteering to be examined before the Magistrates Court u/s
200, then in the body of the Complaint it must set out that the Power of
Attorney Holder is personally aware of the transaction in question for which
the present complaint is filed. In so far filing / giving of evidence
and deposing on behalf of principal is concerned, the power of attorney holder
cannot depose for the principal for the acts done by the principal nor can he be
cross-examined on those facts which are to the personal knowledge of the
principal.
A perusal of Section 85 of
Indian Evidence Act, 1872, shows that the court must presume that a PoA duly
authenticated by a Public Notary or any court, Indian Consul or representative
of the Central Govt, was validly executed and authenticated.
Registration of PoA: A PoA is a document within the meaning of
Section 17 of the Indian Registration Act, 1908 which provides certain kinds of
documents must be registered before the competent Registrar to get its validity
and sanctity in the eyes of law. Therefore, all PoA which falls within the
subjects of Section 17 of Indian Registration Act, 1908, would require to be
registered, failing which they are not valid.
Notice to Attorney is Notice to Principal: Any Notice given to Attorney
is presumed to be Notice given to the Principal, The test is – Notice was given
during his agency; in his capacity as an agent; in the course of an agency; and
in the matter material to his agency business, that is, the knowledge derived
from the Notice must be material to his business for which the agent was
employed; it would be the duty of the Agent to communicate the fact to the
Principal.
Mode of execution of Power of Attorney: A PoA may be executed in
the like manner MoU / Agreement are entered into between two parties.
Photograph of both the donor and donee are to be affixed in the end and they
both have to put their left thumb impression along with the signature against
their respective photographs. A PoA needs to be attested by two witnesses.
Usual mode of execution of POA is that the donor of power first executes the
document in the presence of two witnesses and then the Donee accepts the power
and signs it. The PoA then is required to be notarized.
A foreign national or an
Indian living outside India and who wish to execute a PoA, may execute the same
by – (a) the “donee” (receiver) of power residing in India, according to the
instructions of the “Donor”, would prepare the instrument of PoA, would affix
the applicable Stamp duty on the instrument, would affix his photo, and would
send the document to the Principal living abroad; (b) the Principal living
abroad may execute the said PoA by affixing his photograph and would sign the
said PoA and put left thumb impression, in the presence of Indian Consul or
representative of the Central Govt, and in the presence of two witnesses; (c)
and would send back said PoA to the “donee”; (e) the donee on receiving the
said PoA, may execute the same before Notary, by signing and putting his/her
left thumb impression.
Stamp duty on PoA: The execution of PoA attracts Stamp duty, and
the amount of stamp duty would depend upon the nature of powers which are
sought to be conferred by virtue of said instrument of Power of Attorney.
Whereas levying of stamp duty is a State subject, and therefore the liability
of Stamp duty would vary depending upon the place where the instrument of PoA
is executed. An ordinary instrument of PoA authorizing to prosecute legal
proceedings in the court of law may attract a stamp duty of Rs.100 to Rs.500.
Further, stamp duty rate changes every financial year. An instrument of PoA
which confers the power to deal and dispose of any immovable property may even
attract the stamp duty which is otherwise paid on conveyance of immovable
property. Therefore whilst drafting the instrument of PoA, due care must be
taken in articulating the nature of powers which are sought to be given by
virtue of the instrument of PoA, and accordingly the requisite Stamp duty must
be paid. In Maharashtra, the Stamp duty rates of instrument of PoA are
governed by Article No.48 of Schedule 1, Maharashtra Stamp Act, 1958.
Consideration as to their relationship: Section 185 of the Indian
Contract Act, 1872 provides that no consideration is necessary to create
an agency, i.e. to say, the legal relationship between the principal and the
Attorney may be completely gratuitous.
Retrospective ratification of acts done by PoA holder: When certain
acts are done by a person on behalf of another, but without his knowledge and
authority, the principal may elect to ratify those acts in the instrument of
PoA which would be executed. At the same time, the law doesn’t allow the
ratification where the ratification would have the effect of subjecting a third
person to damages, or where the ratification would have the effect of
terminating any right or interest of a third person.
Joint execution of PoA: A PoA must be executed in favour of a
single person. It cannot be executed in favour of several persons. However,
two or more persons may jointly execute an instrument of PoA in favour of a
single person.
Termination and Revocation of PoA: The
mere use of the word “Irrevocable” in the instrument of PoA will not make the
PoA irrevocable. However, the PoA cannot be revoked in cases where (a) Some
interest is created in favour of the Attorney; or (b) Valuable consideration
was paid pursuant to execution of PoA. Such PoA can only be revoked with the
concurrence of the Attorney. The powers given under PoA would also comes
to an end on the death of the donor, or where the donor is declared insolvent /
bankrupt, or where the donor incurs some legal disability, or has become of
unsound mind.
Mumbai.
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