Power of Attorney

Power of Attorney

A power of attorney is a formal arrangement by which one person ('the donor') gives another person ('the attorney') authority to act on his behalf and in his name.
A power of attorney is an instrument in writing whereby one person, as principal, appoints another as his agent and confers authority to perform certain specified acts or kinds of act on behalf of principal. It includes any instrument empowering a specified person to act for and in the name of the person executing it.

Sources of law

The subject of power of attorney is specifically or incidentally referred to in several statutes. A power of attorney is a type of agency, and law relating to the powers of attorney forms part of the general law of agency. The law of agency in India is contained in Chapter X, sections 182 to 238 of the Indian Contract Act, 1872.

The statutory provisions concerning the powers of attorney are found in the Powers of Attorney Act, 1882.

Who can give a power of attorney?

a. Individuals

b. Partnership firms

c. Companies

Who can be appointed as an attorney?

Any person may become an agent (attorney), but no person who is not of the age of majority and of sound mind can become an agent (attorney), so as to be responsible to his principal (donor).

In case several persons are appointed as attorneys, in the absence of an express provision in the power of attorney authorizing any of them to act severally, all of them are supposed to act jointly and any act done by one or more of them short of all, will be beyond the scope of the power.

Types of Power of Attorney

There are two types of Power of Attorney:

(i) General Power of Attorney - This type of Power of Attorney gives general powers to the person in whose favour the document is executed. The person who is given the powers is called a "Constituted Attorney" and he is authorized to perform all kinds of acts and to execute any document on behalf of the person who has so executed that document.

(ii) Special Power of Attorney - Such Power of Attorney gives the person, power/s only for specified act/s or transactions. In this case the power has to be strictly adhered to and the Constituted Attorney cannot do anything for which he is not duly empowered by the

Formalities:

1. Execution

A power of attorney need not be attested or registered, but if it authorizes a person to present a document at the registration office for registration, it must be executed before and authenticated by the Registrar or Sub-Registrar within whose district or sub-district the principal resides, if the principal at the time of executing the power of attorney resides in any part of India. If however, the principal at the time aforesaid does not reside in India, it must be executed before and authenticated by a Notary Public, or any Court, Judge, Magistrate, Indian Consul or Vice Consul, or representative of the Central Government in the country in which the donor is residing at the time of executing a power of attorney.

Additionally, it is possible under Section 4 of the Powers of Attorney Act, 1882 to deposit a power of attorney, its execution being verified by affidavit, statutory declaration or other sufficient evidence, along with the said affidavit or declaration if any, in the High Court or the District Court within the local limits of whose jurisdiction the instrument may be. A separate file is kept of the instruments so deposited and any person is entitled to take search of that file and inspect every instrument so deposited. A certified copy thereof is also delivered on request. A certified copy of an instrument so deposited is, without further proof, sufficient evidence, of the contents of the instrument and of the deposit thereof in the High Court or District Court.

Partnership Firms

In case of a partnership, the power of attorney in favour of any partner or outsider must be executed by all the partners but if one or more partners hold a general power attorney executed by all partners with a power to delegate, then one or more partners can execute a power of attorney in favour of a third person for and on behalf of the firm or other partners. A power of attorney executed by one or more partners in favour of a third person, even in the name of and for and on behalf of the partnership would not be valid as it would not be binding on the other partners. In such a case, at least the written consent of other partners should be obtained to confirm the power of attorney executed by one or more, but not all partners of the firm.

Companies

Section 48 of the Companies Act, 1956 provides that a company may by writing and under its common seal empower any person as its attorney to execute deeds on its behalf.

Power of Attorney executed abroad

As far as the power of attorney executed outside India is concerned it should be ensured that it is authenticated by Indian Consul, Vice-Consul or a representative of the Central Government in that country and not by any Notary Public except in the case of the three Countries i.e. Belgium, New Zealand and Ireland, which have been notified under Section 14 of [The] Notaries Act, 1952.

2. Authentication

Under Section 85 of The Indian Evidence Act, 1872 there is a presumption that every document purporting to be a Power of Attorney, and to have been executed before and authenticated by, a Notary Public or any Court, Judge, Magistrate, Consul, or Vice-Consul or representative of the Central Government was so executed and authenticated. The authentication is not merely attestation, but something more. It means that the person authenticating has assured himself of the identity of the person who has signed the instrument as well as the fact of execution. It is for this reason that a power of attorney bearing the authentication of a Notary Public or an authority mentioned in Section 85 of The Indian Evidence Act, 1872 is taken as sufficient evidence of the execution of the instrument by the person who appears to be the executant on the face of it.

3. Stamp Duty

(A) The Indian Stamp Act, 1899

A power of attorney is defined under Section 2 (21) of the Act to include "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." The stamp duty payable under the Act is prescribed in Article 48.

Power of Attorney executed outside India

If a power of attorney is executed outside India but relates to any property situate or to any matter or thing to be done in India and is received in India, it must be stamped with the appropriate stamp duty within three months of its arrival in India.

Stamp Duty on Revocation

There is no Article in The Indian Stamp Act, 1899 levying duty on revocation of a power. Such an instrument is chargeable under Article 15 - Cancellation, if attested i.e., signed in the presence of a witness and not otherwise provided for.

4. Registration

A power of attorney is not required to be registered under the Registration Act, 1908.

Clause (c) of section 32 of the Registration Act, 1908 requires that where a document is presented for registration by the agent of a person entitled to present it for registration, such agent must be "duly authorised by power-of-attorney executed and authenticated in manner hereinafter mentioned"; and the manner of execution and authentication of such a power-of-attorney is prescribed in section 33 of that Act.

Duties of the Attorney

Duties of an Attorney are the same as those of an agent as enumerated under the Indian Contract Act, 1872.

Remuneration of the attorney

Like any other agent, an attorney is entitled to be remunerated for his services if the terms of his appointment expressly or impliedly make provision for such payment. Whether or not the power of attorney expressly provides for his remuneration, an attorney is entitled to be indemnified by the donor in respect of advances made or expenses properly incurred by him in carrying out his functions under the instrument.

Construction Of Power Of Attorney

It has been consistently held that a power of attorney must be strictly construed and are interpreted as giving only such authority as they confer expressly or by necessary implication. A power of attorney is subjected to strict interpretation because it delegates powers which are to be interpreted in strict terms and, in such a way, as would be necessary to carry into effect the authority that is expressly given.

The following are the most important rules of construction:

a) The operative part of a deed is controlled by the recitals where there is ambiguity

b) Where authority is given to do particular acts, followed by general words, the general words are restricted to what is necessary for the proper performance of the particular acts.

c) General words do not confer general powers, but are limited to the purpose for which the authority is given, and are construed as enlarging the special powers only when necessary for that purpose.

d) The deed must be construed so as to include all incidental powers necessary for its effective execution.

Where an act purporting to be done under a power of attorney is challenged as being in excess of the authority conferred by the power, it is necessary to show that on a fair construction of the whole instrument the authority in question is to be found within the four corners of the instrument, either in express terms or by necessary implication.

The well known principles of interpretation of a document (power of attorney, in the instant case) are: firstly that, a word used in a document has to be interpreted as a part of or in the context of the whole; secondly, that, the purpose of the powers conferred by the power of attorney have to be ascertained having regard to the need which gave rise to the execution of the document, the practice of the parties, and the manner in, which the parties themselves understood the purpose of the document and thirdly, that, powers which are absolutely necessary and incidental to the execution of the ascertained objects of the general powers given must be necessarily implied. Perhaps the most important factor in interpreting a power of attorney is the purpose for which it is executed. The purpose must appear primarily from the terms of the power of attorney itself and, it is only if there is an unresolved problem left by the language of the document, that one needs to consider the manner in which the words used could be related to the facts and circumstances of the case or the nature or course of dealings. The document has to be construed as it stands. It is only in the case of ambiguity in the document that it is possible to look at the circumstances surrounding the execution of the power of attorney, as well as antecedent correspondence or the conduct of parties.

Duration, Termination / Revocation And Cancellation Of The Power Of Attorney

1. Duration

A general power of attorney unless expressly or impliedly limited for a particular period, continues in force until revoked or determined by the death of either party. A special power of attorney to do an act is determined when the act is done. If it is desired that the power should continue for a particular period or until a certain event happens, an express provision to that effect should be made.

A power of attorney appointing attorneys without terms limiting the duration of their power but with a recital that the principal was going abroad and, was desirous of appointing attorney during his absence, was held to be an appointment limited to the time during which the principal was abroad.

Where the principal just before leaving India executed a power of attorney authorizing the agent to act in his absence from India and subsequently came to India and again left it but did not execute a new power before so leaving: Held that the power of the agent did not terminate and the agent had power to act for the principal during his absence.

2. Termination / Revocation

The provisions of the Indian Contract Act, 1872 relating to termination of Agency are applicable equally to termination of power of attorney, law relating to power of attorney being specie of the law of agency. Reproduced herein below are the provisions of the Indian Contract Act, 1872 relating to termination of agency.

(i) Termination of agency

A power of attorney may be terminated / revoked:

a).        by the donor revoking the attorney's authority; or

b).        by the attorney renouncing his authority; or

c).        by the business of agency being completed; or

d).        by either the donor or attorney dying or becoming of unsound mind; or

e).        by the donor being adjudicated an insolvent.

(ii) Irrevocable power of attorney / termination of agency, where agent has an interest in subject matter

Where the agent has himself an interest in the property which forms the subject matter of agency, the agency cannot, in the absence of an express contract, be terminated to the prejudice of such interest

Where the authority of an agent is given by deed, or for valuable consideration, for the purpose of effectuating any security, or of protecting or securing any interest of the agent, it is irrevocable during the subsistence of such security or interest.

(iii) When principal may revoke agent's authority

The principal may, except where the agent has himself an interest in the property which forms the subject matter of the agency, revoke the authority given to his agent at any time before the authority has been exercised so as to bind the principal.

(iv) Revocation where authority has been partly exercised

The principal cannot revoke the authority given to his agent after the authority has been partly exercised, so far as regards such acts and obligations as arise from acts already done in the agency.

(v) Compensation for revocation by principal, or renunciation by agent

Where there is an express or implied contract that the agency should be continued for any period of time, the principal must make compensation to the agent, or the agent to the principal, as the case may be, for any previous revocation or renunciation of the agency without sufficient cause.

(vi) Notice of revocation or renunciation

Reasonable notice must be given of such revocation or renunciation; otherwise the damage thereby resulting to the principal or the agent, as the case may be, must be made good to the one by the other.

(vii) Revocation and renunciation may be express or implied

Revocation and renunciation may be express or may be implied in the conduct of the principal or agent respectively.

(viii) When termination of agent's authority takes effect as to agent, and as to third person

The termination of the authority of an agent does not, so far as regards the agent, take effect before it becomes known to him, or, so far as regards third persons, before it becomes known to them.

(ix) Agent's duty on termination of agency by principal's death or insanity

When an agency is terminated by the principal dying or becoming of unsound mind, the agent is bound to take, or behalf of the representatives of his late principal, all reasonable steps for the protection and preservation of the interests entrusted to him.

(x) Termination of sub-agent's authority

The termination of the authority of an agent causes the termination (subject to the rules regarding the termination of an agent's authority) of the authority of all sub-agents appointed by him.

(xi) Partnership firm

A firm is an artificial person and upon dissolution it ceases to exist. Therefore, a contract of agency entered into by a firm stands terminated upon dissolution.

(xii) When the principal becomes old, feeble, weak and mentally infirm

A power of attorney cannot go beyond the principal. But the general principle of this rule is that a principal must be in a position to make an authorization and continue to exert his or her authority so that agent binds the principal. Where the principal was found to be old, feeble, weak and mentally infirm and not in a position to think independently, power of attorney executed would become worthless. Such an agent would be committing an immoral and an unethical act by acting on a power of attorney of a principal whom he knows is mentally unsound, weak, suffers from mental infirmity and has no legal capacity to authorize. This is like continuing to act on a power of attorney of a dead man. If the agent continues to act on the power of attorney his action will be writ large with fraud, misappropriation cheating and criminal breach of trust. The power of attorney will be declared as null and void.

(xiii) Payment by attorney under power, without notice of death etc. in good faith

Section 3 of the Powers of Attorney Act, 1882, provides that "any person making or doing any payment or act in good faith, in pursuance of a power of attorney, shall not be liable in respect of the payment or act by reason that, before the payment or act, the donor of the power had died or become lunatic, of unsound mind, or bankrupt or insolvent, or had revoked the power, if the fact of death, lunacy, unsoundness of mind, bankruptcy, insolvency or revocation was not, the time of payment of act, known to the person making or doing the same. The section leaves unaffected the rights of any person entitled to the money against the person to whom the payment is made.

(xiv) Suit by an attorney on behalf of a dead principal

A suit instituted in the name of the Plaintiff who was dead on the date of the institution of the suit by her power of attorney holder would be nullity though the fact regarding the death of the Plaintiff was discovered later at the time of pendency of an appeal arising out of decree passed in that suit and therefore the appeal and all proceedings arising out of the suit would also be a nullity.

(xv) Joint Power of attorney

In the case of joint power of attorney, death of one of them will not revoke the power of attorney.

(xvii) Future acts consequential to the previous acts

The power of attorney once utilized would not terminate or cease in relation to future acts which are only consequential to the previous acts, already done.

(xvii) Where principal is of unsound mind

Where a person of unsound mind when released on parole from the mental hospital executed a power of attorney in favour of a person to execute a deed of partition in respect of specific properties, the Court held that the power of attorney would be a nullity in absence of order of discharge of lunatic under S.34 of Lunacy Act and the onus is on defendant to prove that executant was in period of lucidity while executing power of Attorney.

3. Cancellation

Section 31(1) of the Specific Relief Act, 1963 provided that any person against whom a written instrument is void or voidable, and who has reasonable apprehension that such instrument, if left outstanding may cause him serious injury, may sue to have it adjudged void or voidable; and the court may, in its discretion, so adjudge it and order it to be delivered up and cancelled.

4. An Advocate is not entitled to act in a professional capacity as well as constituted attorney of a party in the same matter or cause. An Advocate cannot combine the two roles. If a firm of Advocates is appointed as Advocates by a Suitor, none of partners of the Advocates' firm can act as recognised agent in pursuance of a power of attorney concerning the same cause.