Power of attorney: India

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Court judgements

Authority limited to what is granted

Jehangir B Gai, May 24, 2021: The Times of India

(The author is a consumer activist and has won the Govt.of India's National Youth Award for Consumer Protection. His email is jehangir.gai.columnist@ outlook.in)

Carl DeSouza had executed a general power of attorney appointing his father Dr. DJ DeSouza as his constituted attorney. The father approached Bank of Baroda, Margao branch, to open a joint account along with his son, and sign on his son’s behalf. But the bank refused to consider the power of attorney valid to open an account.

Alleging this to be a deficiency in service, a consumer complaint was filed before the South Goa District Commission seeking a direction to the bank to open the account. The bank contested the case, contending that the power of attorney did not vest the father with the authority to open an account in the son’s name. The district commission upheld the bank’s contention and dismissed the complaint, so an appeal was filed challenging the order.

The Goa State Commission relied on a Supreme Court decision where a power of attorney was defined to mean an instrument or document executed to empower a specific person (agent or constituted attorney) to act for and in the name of the person executing it. So the agent could exercise only those powers that are conferred upon him. It illustrated that a power of attorney could vest a person with the right to purchase a property without conferring any right to sell it.

In view of this interpretation, the state commission observed that the crux of the dispute was whether the general power of attorney vested the father with the authority to open a bank account.

It noted that the power of attorney permitted signing of documents, letters, mutual funds, IPOs, from public and private sector banks and to pay insurance premiums. Since there was no clause empowering the father to open a bank account in the son’s name, the state commission concluded the bank was justified in refusing to open an account.

By its order of January 14, the Goa State Commission dismissed DeSouza’s appeal. The father was advised to obtain a fresh power of attorney from his son rather than waste time in litigation.

SC: Original PoA not needed, copy enough to sell property

Dhananjay Mahapatra, January 31, 2022: The Times of India

New Delhi: In a big warning to property owners who intend to sell their assets through a power of attorney (PoA) holder, the Supreme Court has ruled that the PoA holder can sell the property and register the sale by merely producing a copy of the PoA and that the original was not mandatory for registration of the sale. 
 This means, if the property owner orally cancels the PoA and takes back the original document without entering into a written agreement on cancellation of the PoA, it would still allow the PoA holder to sell the property or land with the help of a copy of the original PoA document.

A bench of Justices K M Joseph and P S Narasima said, “On an analysis of the provisions (of the Registration Act), we have no hesitation in rejecting the argument of the plaintiff that the nonproduction of the original power of attorney by the second defendant was fatal to a valid registration being effected. ”

In the case in hand, the owner of the property (plaintiff) had entered into an agreement with a person for sale of his land for Rs 55,000 in1987. As he was transferred out of the place, he executed a PoA for concluding the sale. The sale, however, didn’t materialise. So, he took back the original PoA and told the person that the PoA stood terminated. But the erstwhile PoA holder applied for a copy of the registered PoA and went ahead with the sale for Rs 30,000 to the same defendant, who had earlier agreed to buy it for Rs 55,000. He went to the Registrar’s office and got the sale registered with a copy of the PoA. The Himachal Pradesh high court cancelled the registration of the sale saying non-production of original PoA document was fatal to the sale and restored the property to the owner.

The SC set aside the HC order and said the registration was valid as oral cancellation of PoA has no validity before the law and that for registration of sale of land, the PoA holder merely is required to produce a copy of the document and that original was not necessary.

Writing the judgment, Justice Joseph said, “. . . The inquiry contemplated under the Registration Act, cannot extend to question as to whether the person who executed the document in his capacity of the power of attorney holder of the principal, was indeed having a valid power of attorney or not to execute the document or not. ”

Justice Joseph said, “Section 35 of the Registration Act gives authority to the registering authority to satisfy himself that the persons appearing before him are the persons they represent to be. . . the aforesaid provision deals with situations inwhich theregistering authority refuses the registration. If the registering authority is satisfied about the identity of the person. . . , it may not be part of the Registrar’s duty to enquire further. ”

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