What is power of attorney?
Power of attorney is a process of delegation of power given by formal written instrument whereby the legitimate proprietor is faced with certain situations where he cannot show his presence and therefore he authorizes someone to represent him (generally a trustworthy and honorable person) in transactions like sale, leasing, registrations, and so forth. This is been utilized by NRI to purchase/sell property in India and the acts of representative would bind the NRI.
Kinds of Power of Attorney
Special POA– special POA is transaction specific i.e., it is being executed for a particular specific purpose and the POA ceases to exist after the conclusion of transaction.
General POA– General POA is not executed for a specific purpose but it gives representative general power to take decisions in the interest of principal.
Durable POA– Durable POA is executed for a lifetime unless it is expressly revoked.
Two ways NRI can appoint power of attorney when living abroad-
- First, verification from local authorities, any legal document that is signed needs to be verified and this process is known as apostalisation. The policy was put forth by the Hague convention in 1961 and the policy helps to authenticate the document and makes sure that the document complies with the local law. Therefore, it is advisable to get the deed of POA apostilled in the country where the property is brought or sold.
- When the POA is assigned in front of judges, the documents need to be authenticated by the Indian Embassy. However, the documents do not need to be stamped at the time of assignment but within 3 months from the date when the POA is executed.
This is prescribed under Section 3 of the Diplomatic and Consular Officers (Oaths and Fees) Act, 1948. This PoA must be stamped and registered in India within three months of its execution. A stamp duty would be payable, according to Section 2(17) read with Schedule-I of the Indian Stamp Act, 1899, when the deed is presented for registration in India. The deed should be sent by a registered post to an Indian address.
NRI must follow these five steps in order to execute power of attorney-
STEP 1- first step involves NRI to draft Power of Attorney on a plain paper with his/her own signatures.
STEP 2- the next step is to visit the Indian Embassy or Consulate in that country and then get it stamped and sealed from the Indian Embassy.
STEP 3- as an alternative to second step, NRI can get the deed notarized by a Public Notary in that country which must mention the registration number of the notary with the seal on each side of the deed.
STEP 4- the next step requires the principal to send the attested deed by registered post to the Indian address in the name of any family member or a friend.
STEP 5- the last step is to get the deed registered in India by the friend/family member in India at Sub-Registrar office or Sub- divisional magistrate office by paying standard registration charges as applicable in state of India.
Revocation of Power of Attorney-
If the executor wants to revoke Power of Attorney then a set procedure has to be followed. The POA can also be revoked when the grantor dies, becomes insane or is declared insolvent. Before revoking POA, the executor must inform all parties concerned and do the cancellation as per the terms and conditions specified in the document. The same information must also be published in the local media, depending on the size of the property and impact of the decision. A notice in this regard should also be posted on the said premises, for informational purpose.
In State of Rajasthan vs. Basant Nehata 2005 (12) SCC 77, the supreme explained the powers and duties of power of attorney. The court observed that by reason of a deed of attorney, an agent is formally appointed to act on behalf of the principal may be for a single transaction or for series of transactions to manage the affairs of principal conferring authority upon another person. The agent when bestowed with this power derives a right to use his name and all acts, deeds and thing done by him subject to the limitations contained in the said deed, the same would be read as if being done by the principal.
Execution of power of attorney in terms of provisions of contract act and also by power of attorney act, 1882 is valid. The facility is being utilized by the principal to enable the agent to act on behalf of principal. Except in cases where power of attorney is coupled with interest, it is revocable. The agent, on the other hand, acts only on behalf of the principal and he cannot use the power of attorney for his own benefit. The agent acts in a fiduciary capacity and any act of infidelity or breach of trust is a matter between the principal and agent.
Delhi High Court in Asha Jain vs. Canara Bank 94(2001) DLT 841, held that the concept of power attorney sales by way of SA/GPA/WILL are unwarranted and not justified, unintendedly misleading the general public into believing that such transactions are some kind of a recognized or accepted mode of transfer and it can be valid substitute for a sale deed. Therefore, the court stated that immovable property can be legally and lawfully transferred/conveyed only by registered deed of conveyance.
Furthermore, the supreme court of India in landmark judgment in Suraj Lamp & Industries Pvt. Ltd. Vs. State of Haryana & Anr.2011 held that “a power of attorney is not an instrument of transfer in regard to any right, title or interest in an immovable property.” In light of this, the Supreme Court further directed the municipal authorities to neither mutate nor register properties based on such documents. However, the apex court ruled that any valid transaction that have been carried out through General Power of attorney would be legal.
The implication of this judgment is that, a number of states prohibited the registration of properties that were sold through executing GPA. However, Delhi government agreed to permit registration of properties in favor of the rightful owner’s spouses, daughters, sons, sisters, brothers as well as any other relative or individual of trust of the registered owner.
– Purti Sharma
Associate advocate/Legal coordinator
ASC Solicitors and Advocates