Who is a power of Attorney?
A Power of Attorney is a legal document that gives a certain individual the authority to act on behalf of and in the signer’s name. The person who executes the document is referred to as the “principal,” and the person who acts on behalf of the principal in interactions with third parties is referred to as the “agent.” An agent is formally designated to represent the principal in a single transaction, a series of transactions, or to manage his or her affairs under a deed of power of Attorney. The authorizations listed in the document, as well as the restrictions within, are the source of the agent’s rights.
The concept of the power of Attorney is discussed under the Powers of Attorney Act, 1882, and the Indian Stamp Act, 1899. These legislations define POA as an instrument empowering a specified person to act on behalf of the person executing the transaction. There are two types of POA: General Power of Attorney (GPA) and Special Power of Attorney (SPA).
The agent’s appointment is in a fiduciary capacity. Thus they are not permitted to utilise the power of Attorney for their own gain. It is typically reversible at the discretion of the principal, with the exception of situations when the power of Attorney is combined with interest (or executed for consideration).
Time period for validity of power of Attorney
Power of Attorney is typically valid until the purpose for which it was executed unless a time limit is included in the document. It is advisable to have a statement from the principal stating that the power of attorney deed is still valid and in effect, if the powers given under it are being used after a period of time has passed.
Registration of transfer via power of Attorney
Power of Attorney does not provide or revoke any ownership interest in real property. Hence it is typically not required to be registered. However, the Madras High Court has ruled that the power of Attorney must be compulsorily registered when an agent wants to transfer immovable property worth more than 100. Therefore, for the transaction of all properties, registration of power of Attorney is mandatory.
Sale of property by an agent
The agent is given authority by the power of attorney deed, and he or she should exercise that authority precisely within the parameters of those powers. All activities taken by the agent within the scope of his or her power shall be legal and enforceable against the principal.
Such a sale made by the agent will be lawful, is binding on the principal, and will convey a proper title to the purchaser if the deed of power of Attorney authorises power to sell the principal’s property and to execute and register relevant documents in that regard (s).
Legality of selling property with power of Attorney
A deed of power of Attorney and the sale agreement were regarded as finalising or confirming the sale for several years, which was a common practice in some Indian States. There were no recorded sale deeds transferring the properties. There cannot be a valid conveyance under a sale agreement or power of Attorney because, as courts have repeatedly held, these alone do not confer any right or title over immovable property.
The Supreme Court sought comments from the governments of Delhi, Haryana, Punjab, and Uttar Pradesh about the cessation of such a practice in the matter of Suraj Lamp & Industries Private Limited vs. State of Haryana. The four states agreed that the execution of a power of attorney and sale agreement alone does not constitute a sale; valid deeds of conveyance must also be signed and registered. As a result, on October 11, 2011, the Supreme Court issued final orders. The Supreme Court explicitly said in its decision that the ruling will not in any way impact legitimate transactions carried out in accordance with power of attorney and sale agreements.
As a result, transactions carried out within the parameters of a deed of power of Attorney, an agreement for sale, or a sale deed (or any other deed of conveyance or transfer) would be legal, enforceable, and binding on the parties involved.
By Ananya Bhat