POWER OF ATTORNEY

MEANING AND SCOPE:

Delhi High Court Shri Ramesh Chand vs Suresh Chand & Anr. on 9 April, 2012

13. A power of attorney is not an instrument of transfer in regard to any right, title or interest in an immovable property. The power of attorney is creation of an agency whereby the grantor authorizes the grantee to do the acts specified therein, on behalf of grantor, which when executed will be binding on the grantor as if done by him (see Section 1A and Section 2 of the Powers of Attorney Act, 1882). It is revocable or terminable at any time unless it is made irrevocable in a manner known to law. Even an irrevocable attorney does not have the effect of transferring title to the grantee. In State of Rajasthan v. Basant Nehata MANU/SC/0547/2005 : 2005 (12) SCC 77 this Court held:

"A grant of power of attorney is essentially governed by Chapter X of the Contract Act. By reason of a deed of power of attorney, an agent is formally appointed to act for the principal in one transaction or a series of transactions or to manage the affairs of the principal generally conferring necessary authority upon another person. A deed of power of attorney is executed by the principal in favor of the agent. The agent derives a right to use his name and all acts, deeds and things done by him and subject to the limitations contained in the said deed, the same shall be read as if done by the donor. A power of attorney is, as is well known, a document of convenience.

Besides the Indian Contract Act, the Power of Attorney Act, 1882 deals with the subject. Section 1A of the Power of Attorney Act defines power of attorney to include any instruments empowering a specified person to act for and in the name of the person executing it. Section 2 of the said Act reads, thus:

"Execution under power-of-attorney The donee of a power-of-attorney may, if he thinks fit, execute or do any instrument or thing in and with his own name and signature, and his own seal, where sealing is required, by the authority of the donor of the power; and every instrument and thing so executed and done, shall be as effectual in law as if it had been executed or done by the donee of the power in the name, and with the signature and seal, of the donor thereof.

This section applies to powers-of-attorney created by instruments executed either before or after this Act comes into force."

Execution of a deed of power of attorney, therefore, is valid in law and subject to the provisions of the Act is not compulsorily register able.

Execution of a power of attorney in terms of the provisions of the Indian Contract Act as also the Power of Attorney Act is valid. A power of attorney, we have noticed herein before, is executed by the donor so as to enable the donee to act on his behalf. Except in cases where power of attorney is coupled with interest, it is revocable. The donee in exercise of his power under such power of attorney only acts in place of the donor subject of course to the powers granted to him by reason thereof. He cannot use the power of attorney for his own benefit. He acts in a fiduciary capacity. Any act of infidelity or breach of trust is a matter between the donor and the donee.

CANCELLATION OF POWER OF ATTORNEY

IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 29/04/2003,SECOND APPEAL NO. 1080 of 1998 and SECOND APPEAL NO. 1081 of 1998 Samba Sivam.and others Vs Mr.Gunasekaran, It was held:

“20. Needless to mention that no regular deed or other authenticated record need be necessary nor be registered for cancellation of the power of attorney and a mere notice of information to the power of attorney agent regarding cancellation is sufficient,” and it was further held:

“the owner of the property, who appointed the agent under the power, is at liberty to cancel the same at any moment. It should never be forgotten that the agent is acting only for and on behalf of the owner of the property and for his convenience and benefits and with no vested interests entrusted with the agent and as against the interest of the owner, the power of attorney agent cannot act. It is always relevant to seek from the agent whether he has acted in the manner expected by law or the purpose that is sought to be achieved by giving such power of attorney has been really achieved”

REVOCABLE AND IRREVOCABLE

The power of attorney is revocable or terminable at any time unless it is made irrevocable in a manner known to law

Section 202 of the Contract Act, 1872 provides that the Power of Attorney coupled with interest is irrevocable and cannot be revoked/terminated even upon the death of the principal. Section 202 of the Contract Act is reproduced hereunder:-

"SECTION 202. 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 the agency, the agency cannot, in the absence of an express contract, be terminated to the prejudice of such interest.

Illustrations

(a) A gives authority to B to sell A's land, and to pay himself, out of the proceeds, the debts due to him from A. A cannot revoke this authority, nor can it be terminated by his insanity or death.

(b) A consigns 1,000 bales of cotton to B, who has made advances to him on such cotton, and desires B to sell the cotton, and to repay himself, out of the price, the amount of his own advances. A cannot revoke this authority, nor it is terminated by his insanity or death."