Property Transactions Through Attorney

(Advocate S.R. Agarwal, Vashi)

Property transaction through Attorney is a widely prevalent practice these days because of the complexity of the life or unavoidable circumstances. Not only property transactions, other transactions such as, operating bank accounts, demate accounts, investments in the bonds and securities etc., take place day in and day out through attorney or the agent appointed by a person for these purposes.

An attorney or an agent acts on behalf of another person, known as donor in the case of an attorney or a principal in the case of an agent, though the basic difference between the two is that an attorney can act only in the name of his donor, whereas an agent acts in his own name. However, both of them derive the authority and power to act as such from a written instrument and any transaction beyond that authority or the power may render a particular transaction beyond that authority or the power may render a particular transaction voidable or at least disputable. Such an instrument in the case of an attorney is, popularly, known as Power of Attorney. Section 1-A of the Power of Attorney Act, 1882, read with section 2 (21) of the Indian Stamps Act, define Power of Attorney to include any instrument empowering a specified person to act for and in the name of the person executing it. In other words, it has to be in writing and the authority or the power has to be well specified.

This Power of Attorney need not be, necessarily, attested and authenticated or registered in all the cases, except when executed out of India or for the presentation of the documents of an immovable property for registration. However, the attestation or authentication or registration of a Power of Attorney, as the case may be, is resorted to as a matter of well established practice, because Section 85 of the Indian Evidence Act raises a presumption of genuineness in favor of a Power of Attorney authenticated by a Notary Public or a Magistrate or Indian Consular in a foreign country. Therfore, such an attestation avoids the need of satisfying or proving the genuineness of the instrument of the Power of Attorney.

In terms of Section 32 of Indian Registration Act, 1908, where a document, needs to be registered, is required to be presented before the Sub-Registrar of Assurances by the person executing the document. But where it has to be presented through a representative or an agent, a Power of Attorney, duly authenticated in the manner prescribed in Section 33 of the said Act, is necessary. Therefore, if a document has been executed by an attorney himself on behalf of the donor and the attorney himself is presenting the same for the registration, such a Power of Attorney authenticated by a Notary Public or a Magistrate is acceptable, as the person (attorney), who has executed the document, is appearing before the Sub-Registrar, but where a document, executed by some one else, is presented before the Sub-Registrar by an attorney, such a Power of Attorney is to be necessarily, registered as per the provisions of sections 33 of the said Act. For example, where the Promoters, Builders or the Developers, who execute the documents such as Agreements for Sale, which are presented for registration by some one else for example by a Partner or an employee, such a Power of Attorney should always be registered.

A Power of Attorney may be classified as : a) General Power of Attorney b) Special Power of Attorney c) Irrevocable Power of Attorney. When an attorney authorized to act generally in one or more transactions, it is known as a General Power of Attorney. In terms of Section 201 of the Indian Contract Act, the authority of an agent is revocable in a couple of circumstances, such as revocation of the same by the principal or the agent himself or completion of the purpose or insolvency of the principal or the principle or the agent becoming of unsoundness of mind or the death of either the principal or the agent. With a view to ensuring that the donor or the principal has not expired or revoked the power of attorney, an affidavit is required to be shown in by the Sub-Registrar at the time of the registration of the document by an attorney and such affidavit is made a part and parcel of the document.

But a Power of Attorney, where the attorney himself has acquired the interest in the subject matter, it can not be revoked by the donor and such a Power of Attorney is called as an Irrevocable Power of Attorney, even if it is not mentioned in the instrument that it is irrevocable, as held by the Karnataka High Court in the case of Corporation Bank v/s Lalitha Holla (AIR-1994-Kant-133). A similar view has been taken by the Delhi High Court in the case of H.K. Gulati, reported as 1977-RLR-487, that where the agnt has himself an interest in the property, which from the subject matter of the agnecy, the agency can not, in the absence of an express contract, be terminated to the prejudice of such interest. This decision has been followed in the case of H.L. Malhotra v/s Nanak Jaisinghani, reported as 1986-RLR (Note)-89. This decision is based on the judgment of the Hon'ble Supreme Court of India in Loonkaran Sethiya v/s State Bank of Jaipur, reported as (1969) 1-SCR-122 wherein it has been held as:

“There is hardly any doubt that the power given by the appellant in favor of the Bank is a power coupled the the interest. That is clear both from the tenor of the documents as well as from its terms. It is settled law that where the agency is created for valuable consideration and authority is given to effectuate a security or to secure interest of the agent, the authority cannot be revoked.”

Thus, where a Power of Attorney has been given by an Owner or the Transferor of a property, on receipt of full sale consideration, such a Power of Attorney in favor of the Transferee or the Purchaser can not be revoked by the Owner or the Transferor as such power is an irrevocable one in view of the interest acquired by the attorney in such a property as a Transferee or the Purchaser. The same will be the case where such Power of Attorney has been given in favor of the Nominee of the Transferee of the purchaser.

The Power of Attorney, whether general or special in nature, may be given to one or more persons to act and a Power of Attorney in Maharashtra attracts stamp duty as per Article 48 of the Bombay Stamp Act, 1958. As on date the Power of Attorney, usually in vogue, for the purpose of the execution of the property documents or the presentation of the same attracts stamp duty @ Rs. 100.00

The Power of Attorney relating to the property transactions is a most valuable document and legally it has to be strictly interpreted about the power and authority of an attorney and the person dealing with an attorney should satisfy himself about the genuineness and enforce ability of the document to act on behalf of the donor for the binding nature of the transaction.