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Legal Purview Of A Power of Attorney For Executing A Sale Deed

confirmation of agreement or sale

This article discusses two kinds of instruments which are a power of attorney (POA) and a sale deed. Both of the instruments are legally binding instruments used with the purpose of transfer of commercial interest between the contracting parties.

This article gives a legal overview when these two kinds of instruments are involved and provides a legal aspect/comment on them.

Also Read: What is The Procedure of Auction Sale Under SARFAESI Act?

Explaining power of attorney is an instrument whereby the assignor undersigns his/her legal right which is transferred to the assignee and can be executed as per the instrument agreed between the parties.

A POA is an extension of the rule of agency as per the Contract Act and the instrument is framed accordingly with the said law and the Power of Attorney Act, 1882.  It defines the “powers of attorney” to include any instrument empowering a specified person to act for in the name of the person executing it.

In common parlance, a “power of attorney” means a formal instrument by which one person empowers another to represent him or to act in his place for certain or all purposes. [1]

Whereas, a sale deed is an instrument duly registered with the intention of transfer of ownership. A sale has been defined in the Transfer of Property Act, 1882 wherein as per Section 54 sale deed means effecting transfer of ownership in exchange for a price paid or promised or part-paid or part-promised. The sale deed derives transfer of title over the property.

Uses of Power of Attorney in Executing Sale deed.

The use of the instruments can be explained with the scenario where a person living overseas and has property in his native country of origin (India) and wants to dispose of the title he received through succession. In such a situation the owner can execute a POA transferring his legal right to sell the properties for a consideration by the holder of the POA.

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The sale executed by the holder of POA will have the presumption of being executed by the original title owner of the property.

Though such executant power assigned in an instrument of POA has its limitation whereby, the law itself place sanctions in the execution in certain factual scenarios.

When Power of Attorney cannot be executed in a Sale deed?

The law enacted for implementing the instrument of POA as under the Power of Attorney Act, 1882 which means it includes any instrument empowering a specified person to act of and in the name of the person executing it.

As per Section 2 of the said Act, the donee of a POA may if he thinks fit execute or do any instrument or things 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 things 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 door thereof.

Therefore, a POA creates a principal and agent relationship executing between the parties.

However, this relation executed by the instrument can be ceased as described in Section 3 of the same act, the provision explains:

Section 3: Payment by attorney under power, without notice of death, etc., good– Any person making or doing any payment or act in good faith, in pursuance of a power of attorney, shall not be liable in respect of the payment or act by reason that, before the payment or act, the donor of the power had died or become of unsound mind or insolvent or revocation was not, at the time of the payment or act, known to the person making or doing the same.

But this section shall not affect any right against the payee of any person interested in any money so paid, and that person shall have the like remedy against the payee as he would have had against the payer, if the payment hadn’t been made by him.

The above section mentions the reasons when the POA is not executable before any act or payment by the holder where the donor:

  1. has died
  2. became unsound mind.
  3. has been declared as insolvent
  4. has revoked the power.

However, there the law also makes exemption on the basis when the holder of the POA

The POA is governed by the general principles laid under the Indian Contract Act which are binding upon the legal relationship between the principal and its agent. As decided in the case of Amutha vs M. Chakravarthy [(2011) 6 CTC 650] wherein it was opined that in a suit by the POA holder, where the principal is dead, power is terminated and the agent is not allowed to make a deal in the property. Once power is terminated, an agent cannot act on the power.

Also Read: Disputes Related to Title of Immovable Property [Latest Judgements]

Similarly, held in the U. Suresh Mallaya vs Okazaki Sekizai Company Ltd. [(2001)1 ILR 323] wherein, it was opined that a principal who has appointed a power of attorney can terminate the contract of agency either expressly or by implication. Therefore, a contract of agency is automatically terminated by the death of either of the parties.

As long as the POA is not terminated by the principal, the POA continues to represent the company for all technical process.

Adverse Findings In Such Cases

However, on various judgements, a reverse opinion has been framed by several High Courts and the Supreme Court of India, whereby, the execution of the power does exist even after the death of the holder of power of attorney.

Such as observed before the Hon’ble Delhi High Court in the case of Shri Ramesh Chand vs Suresh Chand and another [ (2012)5 ILR (Delhi) 48] opined on the question whether, POA given for consideration would stand extinguished on death of executant of power of attorney and it was held that object of giving validity of a POA given for consideration even after death of executants is to ensure that entitlement under such POA remained because same is not a regular or a routine POA but has elements of a commercial transaction which could not be allowed to be frustrated on account of death of executant of POA. 

Similarly, in Vijaykumar and Ors. vs R. Subbarayan and Ors. [(2002)3MLJ43] it is contended that once consideration is received by a person which is the subject matter of power of attorney, and such interest created for power of agent, agent should not be prejudiced because of the deat of the principal inasmuch as the principal has received whatever beneits/consideration which had to be received under the power of attorney.

So for the reasons the power of attorney deed cannot come to an end. The case evaluates power of attorney with reference to coupled with an interest.

The court view it from the commercial interest which is developed by the POA. A commerical interest is the purpose of executing a power of attorney and if such is hindered then, a sale deed or any other instrument that is is executed even after the death of holder of POA.

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[1] https://indiankanoon.org/doc/100118488/

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