Real Estate Basics : Power of Attorney
A HOLISTIC VIEW OF POWER OF ATTRONEY :
The present article is pen downed with a
view not only to highlight the basics about document such as ‘Power
Of Attorney’ but also to give you the holistic view of such legal
documents with the support of various legal precedents of Hon’ble Apex Court’s
and other High Courts. The decision below revolves under the following heads as
under:
1) What is
Power Of Attorney?
2) Object
behind execution of Power Of Attorney?
3) What are
the types of Power Of Attorney?
4) Revocation
of Power Of Attorney?
5) Is Power
of Attorney an instrument to transfer any right, title or interest in an
immovable property?
“Thus form the above head notes one can
gather that the present article sets the parameters by addressing the confused concept
of Power Of Attorney amongst the common masses in the light of Judicial
Pronouncements”.
1)
What is
Power Of Attorney?
[NOTE: To discuss the Power Of Attorney
in its true spirit, endeavor has been made to bring the public prospective, as
well as legal prospective on the same platform, so that people in general will
have greater understanding by rectifying there notions of such documents/instruments.]
In
General
Parlances Power Of Attorney is understood as under:
(a) “A document that allows individual to
appoint a person or an organization to manage
his/her affairs.”
(b) “A document that allows individual to sign
contracts for the Principal/Doner”.
(c) “A
document that gives agent a legal authority to take decisions for the Principal
in regards to property, finances or medical care”.
(d) “A document that allows another person
to act on behalf by means of delegation or authorization, and which shall be
considered as an act of Principle.”
In Legal Parlances the definition Of Power Of Attorney
differs from one act to other but without distorting its spirit. Thus following
are the Definitions from various statute books as under:
(a) THE
POWER OF ATTORNEY ACT, 1882
Section 1A
“Power-Of-Attorney”
includes any instruments empowering a specified person to act for and in the
name of the person executing it.
(b) THE INDIAN STAMP ACT, 1899
Section 2(21)
“Power-of-attorney” includes any
instruments (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.
(c)
INDIAN CONTRACT ACT, 1872
Section 182
‘Agent”
and ‘Principal’ defined-
An ‘Agent’ is a person employed to do
any act for another, or to represent another in dealing with third person. The
person from whom such act is done, or who is so represented, is called the
‘Principal’.
Thus, by perusing both the general
prospective, as well as the definition of Power Of Attorney through legal
prospective, it seems prima facie that there is no big discrepancy in the way the
layman understand the concept of Power Of Attorney than the lawyer/judges,
however it is not so the case, and as a result of such limited/distorted understanding,
the Civil Courts are piled up with number of disputes arising out of
Agreement/Contract through POA and Criminal Courts are piled with numerous Fraud
and Criminal Impersonation cases. And as a result, it is need of time to dwell into the actual concept of this famously misunderstood instrument/document ‘Power
Of Attorney’.
2)
Object behind execution of ‘Power Of Attorney’?
There
are various objects behind execution documents such as ‘Power Of Attorney’, out
of many factors; some factors are reproduced herein as a ready reference for
the sake of better understanding the concept of ‘Power Of Attorney’. Some
examples are as under.
a)
Physical Incapacity:
A person who is
physically incapable of approaching other person may execute POA with his near
and dear ones for representation like signing the documents, opening bank
accounts, and acting for the Principal as if the Principal would have acted or
omitted. To elaborate more lets follow the example below.
‘A’ son of ‘B’ went
to Foreign Country in consonance of Higher Education or Job. Now, in such
circumstances ‘A’ may authorize ‘B’ i.e. his father or to any near or dear ones, to do all the necessary act like opening the Bank Account, to purchase
the property in the name of ‘A’ in his absences, collecting rents, to represent
him before any Quasi-judicial Authority, or Judicial Authority or do to any
other Act which the principal could have function in his presence.
b)
Age Oldness:
A person who is
senior citizen may due to efflux of time develop aliments such as Joints Pain,
Loss of Memory, Low Vision, and thus due to such physical disabilities he/she
may find themselves difficult to enter into any contract. And thus to overcome
such disabilities, it is advisable to invoke the provisions under Power
Of Attorney Act, 1882 and appoint an agent or any person form family to
look into the affairs which you could have attainted in the absence of such
Agedness.
c)
Spouses:
A wife can execute POA in favor of husband
or vice-versa, to look after their affairs like putting Signatures on Bank
Papers, to buy shares, to look after Demat Account etc.
d)
For Developing Resources:
A Principal can
appoint an Agent to act on his behalf of developing resources; the above points can be understood well by reading following illustration as under:
‘A’
a person in village owes 40R of Agricultural Land, now the said village comes
within the boundary of Municipal Corporation coupled with the notification
that, the land can be used for purpose of urbanization.
Now in such cases ‘A’ have three options,
1) To carry on the Agricultural Activities as usual 2) To sell the said land,
since the Potential Of the Land has enlarged and he can earn handsomely 3) To
develop the said land by himself.
Now if in case ‘A’ chooses option 1 or 2
it make no wider difference, but if ‘A’ choose to opt for option no. 3 he has
to look for the person who is expert in Real Estate Sector, who can manage to
bring him the (i) Order of NA, (ii) who can engage architect to prepare Layouts and Sanction Plan, (iii) coupled with permission of Municipal Corporation of Commencement
Certificate.
Thus, in such cases ‘A’ may appoint an
agent for this limited purpose by registering Power Of Attorney, in the Jurisdiction
of Sub-Register’s office where the land
is situated, so that in future work can be done smoothly and efficiently since
the agent is expert and A is layman.
Thus, above are some of the head notes
which showcases factors for which execution of Power Of Attorney will be
appropriate, however it is to be born in mind that, the spirit behind the
execution of POA is that work can be done efficiently and without hindrance, in
the absence of a person. It is further, noted that, execution of POA through
registration is optional since it does not fall under S. 17 of Indian
Registration Act, however it is pertinent to note that, registration
for commercial transaction like developing resources is advisable to be
registered since its evidentiary value increases and can be proved as a
yardstick to prove the act or omission was bona-fide or authority given was
exceeded.
3)
What are types Of Power Of Attorney?
There are mainly two types of ‘Power Of
Attorney’ i.e. General Power Of Attorney and Special Power Of Attorney;
however it is observed that, people mostly get carried away by the nomenclature
used as a Prefix to Power Of Attorney. Now a days to
perform different acts different kinds of Nomenclature are used, the most commonly
used nomenclatures are as under:
1.
General
Power Of Attorney.
2.
Special
Power Of Attorney.
3.
Durable
Power Of Attorney.
4.
Revocable
Power Of Attorney.
5.
Irrevocable
Power Of Attorney.
6.
Health
Care Of Attorney.
However, it will not be an understatement to say that it is a futile
exercise in dwelling with all aforesaid concepts of Power Of Attorney, since
law stands settled by the Hon’ble Gujarat High Court in Manubhai
Vs Jayantilal in Special Civil Application No. 16056 of 2003 wherein
it as been specifically observed as “The title which as been given to the
Document read as ‘General Power Of Attorney’. However while constructing
document one cannot just go by the title to the document or the nomenclature,
but, Court owes a duty to see the substances of the document’.
It is further to be noted that, even S. 94 of the Evidence Act lays down
the rule of interpretation of the language of document.
“Thus to sum up the context above, one
needs to be careful while drafting the Documents such as Power Of Attorney, and
the terms should be very clear as to the purpose of the POA, clauses of
revocation, authority given to agent, acts which needs prior consent of
Principal etc, even a person holding General Power Of Attorney can be said to
be holding it in the manner of irrevocable Power Of Attorney if the substance
is proved to otherwise, thus the
nomenclature makes no difference but substance altogether does makes difference’.
4)
Revocation
of Power Of Attorney?
It is to be noted that,
documents/instruments such as ‘Power Of Attorney’ do not create any interest in
the property. It is mere a license to act as a agent in a good faith. And thus
there is a fiduciary relation between ‘Principal’ and ‘Agent’.
However, Principal can revoke its POA if
he losses his confidence in an Agent. It is to be noted that, revocation of POA takes
places due to many reasons. The following are some of the factors which are
enumerated for better understanding as under:
i) When POA is
for time bond manner, it may get revoke after the laps of time.
ii) When
Principal dies or becomes insane.
iii) When
Principal becomes insolvent.
iv) By mutual
agreed terms between Principal and Agent.
v) When POA
is executed for Specific Transactions, and after its accomplishment.
It is
further advised to look into the provisions of S. 201 of Indian Contract Act
1872 for better understanding on revocation.
It
is further to noted that, POA cannot be revoked if it is coupled with interest, and to substantiate the statement it
is helpful to look settle position of law on this aspect. The Hon’ble
Apex Court in Seth Loon Karan Sethiya vs Ivan E John and
Others AIR 1969 SC 73 the Supreme Court has specifically laid down
that, “The Power Of Attorney which is coupled with interest, and hence same
is not revocable”.
5)
Is POA an
Instrument to Transfer Right, Title or interest in an immovable property?
Answering to this question the Hon’ble
Apex Court constituted the Full Bench
in the year 2009, thus in the judgment of Suraj Lamp & Inds vs State Of Harayana
SLP(C) No. 13917 Of 2009 it was been held that,
“A ‘Power Of Attorney’ is not an
instrument of transfer in regards to any right, title or interest in an
immovable property. The Power Of
Attorney is creation of agency whereby the grantor authorizes the grantee to do
the act specified therein, on behalf of grantor, which when executed will be
binding on the Grantor as if done by him.”
It is further to be noted that, ‘even an irrevocable Attorney does not have
the effect of transferring the title to the Grantor’.
6)
Conclusion
The object of the present article is not
to deal with the every nook and corner of the concept Power Of Attorney, the
object was simply to give the bird view to the common masses and law students,
by projecting the rightful prospective of Legal Fraternity and convincing them
to look from that spectacles.
"This article is authored by Adv. Rushikesh R Chavan, you can reach out to him at rushichavan14@gamil.com"
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