Power of Attorney

What is ‘Power of Attorney’?  

The term ‘Power of Attorney’ refers to a legal instrument that allows an individual (the principal) to delegate authority to another person (the agent or attorney-in-fact) to act on their behalf. This delegation can encompass a broad range of actions, from managing financial matters to executing specific transactions.

Official Definition of Power of Attorney.

Section 2(21) of the Indian Stamp Act, 1899, defines a Power of Attorney as "any instrument empowering a specified person to act for and in the name of the person executing it."

Similarly, the Powers of Attorney Act, 1882, establishes it as a written instrument granting legal authority for another individual to act on behalf of the grantor.

Power of Attorney as defined in case laws:

In Suraj Lamp & Industries Pvt. Ltd. v. State of Haryana (2011), the Supreme Court ruled that a Power of Attorney cannot be used as an instrument for transferring property titles. A GPA (General Power of Attorney) is a legal tool to authorize someone to act on behalf of the principal for specific purposes, such as managing property or signing documents, but it does not create or transfer ownership rights.

Jugraj Singh v. Jaswant Singh (1971) clarified the procedural requirements for executing and attesting Powers of Attorney under Indian law. The case involved a property transaction where the first Power of Attorney, executed in California, was challenged for not being properly authenticated under Section 33 of the Indian Registration Act. During litigation, a second Power of Attorney, duly authenticated by a Notary Public in California, was executed. This second document ratified the earlier defective one, curing its defects retroactively under the doctrine of ratification, as per the legal maxim “Omnis ratihabitio retrotrahitur et mandato priori aequiparatur” (ratification relates back to the original act). The Court validated the sale deed and its registration, dismissing the appellants’ claim and affirming the vendees' right to redeem the mortgage.

The Supreme Court in Church of Christ Charitable Trust & Educational Charitable Society v. Ponniamman Educational Trust (2012) emphasised that Powers of Attorney must be strictly construed. For a Power of Attorney to authorise a sale, it must expressly include provisions empowering the agent to:

1. Execute a sale agreement or sale deed.
2. Present the document before the Registrar.
3. Admit the execution of the document before the Registrar.

The plaintiffs in Manik Majumder & Ors. v. Dipak Kumar Saha (2023) challenged the legality of a real estate deal on the grounds that the owner, who was reportedly living overseas, had signed a Power of Attorney. Because the plaintiffs failed to provide the original Power of Attorney as required by Section 33(1)(c) of the Registration Act of 1908, the courts rejected the case. By emphasizing that statutory presumptions under Section 60 of the Act cannot be applied in the absence of adherence to fundamental conditions, such as appropriate authentication for Powers of Attorney executed outside of India, the Supreme Court endorsed this conclusion.

In Shri Harbas Singh v. Smt. Shanti Devi (1997), the Delhi High Court elaborated on the term “interest” under Section 202 of the Contract Act. The Court clarified that Powers of Attorney executed primarily for the benefit of the agent or a third party are irrevocable to safeguard the beneficiary's rights. It ruled that when the agent holds an interest in the property, the principal cannot revoke the Power of Attorney to the agent's detriment.

Lastly, in A.C. Narayanan v. State of Maharashtra (2013), the Court held that a general Power of Attorney holder cannot delegate their authority to another person unless the Power of Attorney explicitly permits such delegation. This ensures the integrity of the original delegation of authority.

Legal Provision relating to Power of Attorney:

Section 84 of the Bharatiya Sakhsya Adhiniyam, 2023 creates a presumption of validity for documents executed by a notary public or magistrate, including Powers of Attorney.

Section 182 of the Indian Contract Act, 1872 defines an agent as a person authorised to act on behalf of the principal, and Section 185 specifies that no consideration is required to create such an agency.

Under Section 202, a power of attorney coupled with interest is irrevocable unless agreed otherwise. This principle was upheld by the Supreme Court in Seth Loon Karan Sethiya v. Mr. Evan E John, emphasizing that such irrevocability ensures the agent’s security or effectuates a pledged interest.

Recent amendments to the Information Technology Act, 2000, allow the use of digital signatures for powers of attorney executed in favor of entities regulated by financial and securities authorities, further modernising execution practices.

Types of Power of Attorney

Powers of Attorney can broadly be categorised into two types: General and Special. A General Power of Attorney (GPA) grants the agent broad authority to act on behalf of the principal across various domains, such as financial transactions or property management.

In contrast, a Special Power of Attorney (SPA) limits the agent’s authority to specific tasks or transactions. For example, Mr. X wants to sell a specific property in New Delhi but is unavailable to complete the transaction personally. He executes a Special Power of Attorney in favor of Ms. X, authorising her solely to negotiate and finalise the sale of that particular property. The SPA restricts Ms. X’s authority to this single task and does not permit her to act on Mr. X’s behalf in any other matters.

A Durable Power of Attorney remains effective even if the principal becomes incapacitated, covering long-term healthcare or asset management. A Medical Power of Attorney is exclusively for healthcare decisions when the principal cannot decide, often excluding life-support-related choices. A Revocable Power of Attorney offers flexibility, allowing cancellation or modification by a mentally fit principal, often used for short-term financial or medical needs. Finally, a Financial Power of Attorney handles monetary matters such as investments, taxes, and debt management, ensuring financial responsibilities are efficiently managed in the principal’s absence.

Registration of Power of Attorney

Under the Indian Registration Act, 1908, the registration of Powers of Attorney is mandatory for instruments used in the transfer of immovable property. The principal must register the document with the Sub-Registrar's office within the property’s jurisdiction to ensure legal validity. While notarisation is sufficient for certain types of Powers of Attorney, such as those granting authority for personal or financial matters, registration is required when the document pertains to property-related transactions. This distinction ensures that critical documents have added layers of scrutiny.

Moreover, as per provisions provided under the Indian Evidence Act, 1872 if any person executes the Power of Attorney in front of a Notary Public, or any Court, Judge, Magistrate, Indian Consul or Vice Consul, or representative of the Central Government, and the same is authenticated by these persons/offices, then the Court shall presume that the Power of Attorney is executed and authenticated.

Any Power of Attorney giving the right to an Agent to dispose of a property through a sale deed or conveyance deed, gift deed, relinquishment deed, etc. needs to be mandatorily registered.

Revocation of Power of Attorney

Powers of Attorney are generally revocable by the principal at any time, provided the principal has the mental capacity to do so. Revocation must be explicit and communicated clearly to the agent and any third parties relying on the Power of Attorney. The process often involves the execution of a formal revocation document and, in some jurisdictions, notification to relevant authorities or registration bodies.

However, certain types of Powers of Attorney, such as an irrevocable Power of Attorney coupled with interest, cannot be revoked unilaterally. In such cases, revocation requires mutual consent or legal adjudication. Additionally, in many jurisdictions, a Power of Attorney is automatically revoked upon the death or incapacitation of the principal, unless it is an enduring or lasting Power of Attorney designed to remain valid under such circumstances.

International Experience

In the United States, the Uniform Power of Attorney Act (UPOAA) aims to standardise Power of Attorney laws across states, ensuring clarity about the rights and limitations of agents. This Act explicitly defines the scope of authority, mandates clear language to minimize misuse, and provides safeguards for incapacitated individuals.

In the United Kingdom, Powers of Attorney are categorised into Ordinary Power of Attorney (valid when the principal is mentally capable) and Lasting Power of Attorney (LPA), which remains valid even if the principal loses mental capacity. The LPA framework requires a registration process through the Office of the Public Guardian.

In Canada, Powers of Attorney are governed provincially. For example, Ontario’s Substitute Decisions Act, 1992, mandates that Continuing Powers of Attorney for property or personal care be signed in the presence of witnesses, ensuring accountability. Some provinces require mandatory registration to prevent fraud.