A Power of Attorney is nothing but a document showing that an agent has been appointed to act on one’s behalf for certain purposes. The law relating to agency is governed by The Indian Contract Act.
Types of Power of Attorney: A General Power of Attorney deals with all types of powers, including the power to operate bank accounts, sell property, vote in meetings and manage the affairs of the person executing the power of attorney. A Specific Power of Attorney is given for a single transaction.
Stamp Duty: The Karnataka Stamp Act prescribes different rates for different types of Power of Attorney. If one to four persons are given the power to act in one or more transactions, the fee prescribed is Rs. 100. If more than five persons are given powers to act in more than one transaction, the fee is Rs. 200.
If powers are given to sell property 1) to a developer, the fee is Rs. 1000/-. 2) If the power of attorney is given to a person (in several cases it is the purchaser) authorizing him to sell the immovable property, the fee is 9.65%, i.e., the same duty payable on a sale deed. This is adjusted later on the duty payable on the sale deed between the owner and the power of attorney holder or any other person. In practice, the sub registrar often insist that the duty is adjustable only between the same parties, meaning the owner and the power of attorney holder. This contention is totally incorrect. It is also found that in practice, since a power of attorney is not compulsorily registerable, the document is usually understamped. 3) If the power is given to relatives, (father, mother, wife, husband, son, daughter, brother or sister) to sell immovable property, the stamp duty is Rs. 100/-
Registration: The Indian Registration Act does not list a Power of Attorney as a compulsorily registerable document. However, it states that if a power of attorney holder presents a document for registration as an agent of another, then it should have been authenticated. This means that the executants should have got the power of attorney authenticated (there is hardly any difference between authentication and registration for practical purposes) in the sub registrar’s office, which has jurisdiction over where he resides. If it is executed abroad, then it should be attested by a magistrate or the Indian Consulate in that country.
In practice, a power of attorney received from abroad may sometimes be sent for adjudication to the district registrar’s office prior to acceptance for registration, to determine if the proper stamp duty has been paid on it.
The courts have held that if a sale deed is signed by the power of attorney holder on behalf of the owner and presented for registration, the power of attorney need not be authenticated (registered) If the sale deed has been signed by the owner and presented for registration by the power of attorney holder, then the power of attorney should be registered.
Fraud: There is an understandable apprehension about the sale of immovable properties by power of attorney holders. To prevent fraud, it is essential to verify if the owner is alive, if he has been paid the full consideration due to him and if the power of attorney has been coupled with an agreement of sale. It is also prudent to verify if the power of attorney has been revoked or not. It is well settled law that a power of attorney given for consideration, and in consequence of which the attorney has done some further act, cannot be revoked.
Substitution or sub agency: Normally a person who has been appointed as an agent, cannot delegate his authority, unless it is customary to do so. A clause regarding substitution of the power has to be available in the power of attorney before a substitute agent can act.
Ratification: Sometimes an agent acts in a way which exceeds his authority or in ambiguous situations. In such an event, the person on whose behalf the agent has acted, may ratify the act subsequently. The ratification by the principal may be implicit or explicit. Ratification means that the act done will be deemed to have been done with the authority of the principal.
Agent acting outside the scope of his authority: When an agent acts outside the scope of this authority and the same is not ratified subsequently by the principal, the acts done by the agent is not binding on the principal. But misrepresentations made or frauds committed by an agent in the course of acting within their authority will bind the principal.
Issue BG33-34 Jan04