Understanding Power of Attorney Validity & Its Effectiveness

A power of attorney is a legal document that empowers an individual to appoint another to make decisions on their behalf. The decisions to be made may be regarding managing one’s property, medical or financial affairs. 

The various types of poa give the attorney-in-fact, being the person who is enabled to make decisions, a varying level of control. Some power of attorneys is effective immediately once it is signed by the relevant parties, while others come into effect when the principal is incapacitated and can no more make their own decisions.

Judgment on Power of Attorney Validity

1. Facts of power of attorney validity- 

In the case of Amar Nath v. Gian Chand & Ors, an appeal was brought before the Supreme Court against a decision of the High Court declaring that the execution of a sale deed under Section 18 of the Registration Act, 1908 (“Act”) required the production of a true copy of a power of attorney (“POA”).

In the aforementioned case, the plaintiff’s 2 Kanals and 10 Marlas of land were in dispute (i.e., Gian Chand). The plaintiff and the first defendant (Amar Nath) reached an oral arrangement for the sale of the aforementioned property for a price of INR 55,000/- (Rupees Fifty Thousand Only), for which he signed a POA in favor of the second defendant (i.e., Yash Pal Singh).

The deal, however, collapsed when the first defendant was unable to secure the funding, and the plaintiff canceled the selling agreement. Despite the fact that the second defendant gave up the original POA, he requested a copy of it and, together with the first defendant, falsely executed the sale deed on April 28, 1987, for INR 30,000. (Rupees Thirty Thousand Only).

The plaintiff filed a lawsuit seeking a permanent injunction on the sale, claiming that he was the rightful owner of the subject property and that the executed sale deed was invalid because the original POA had been revoked. The second defendant was ruled ineligible to execute the sale deed by the High Court because the POA that had been given to him on January 28, 1987, had been revoked on February 2, 1987.

Further, the High Court noted that Section 18 of the Act makes it plain that the Registering Authority must view the original copy of the special power of attorney. The Court determined that the first defendant was aware of the status of the POA because he was present when it was revoked based on the testimony of PW6 (Dev Raj).

The plaintiff was pronounced the owner in possession of the land by the High Court, and the mutation indicating the sale in favor of the first defendant was declared null and void.

2. Arguments on the power of attorney validity – 

The knowledgeable attorney for the first defendant stated that the registered POA could only have been revoked through a registered document that would have made it known to the public (reliance was put on the decision in the case of Daya Shanker v. Rajendra Kumar and Ors).

The first defendant’s attorney also cited Section 32(a) of the Act to claim that the second defendant was competent to execute the sale deed in light of the POA signed by the plaintiff (reliance was put on the ruling in the case of Rajni Tandon v. Dulal Ranjan Ghosh Dastidar and others).

Conversely, the second defendant disregarded, circumvented, or violated Section 33(4) of the Act, which calls for the submission of the original POA at the time of presentation of the sale deed.

He argued that the entire procedure—the second defendant’s application for a copy, its creation, and receipt—proves that the defendants committed fraud in concert with the Sub-Registrar and employees of the Registering Authority.

3. Issue of power of attorney validity- 

The Apex Court had to decide whether or not the Registering Authority required the original Power of Attorney’s production in order to execute the sale deed.

4. Judgment of power of attorney validity – 

The Supreme Court of India pointed out that in the state of Himachal Pradesh, where the case comes from, the Government added Section 18A by amending the Act, which calls for the production of the original document in order to register a transaction.

In this instance, the selling deed rather than the POA was what needed to be registered. Because of this, the High Court erred in holding that Section 18A of the Act called for the submission of an accurate copy of the POA.

The High Court dismissed the plaintiff’s argument that a certified copy of the POA was required for the execution of the sale deed in light of the Act’s requirements. The plaintiff’s letter, dated June 16, 1987, and addressed to the second defendant, was also cited by the Apex Court.

In the letter, the plaintiff made reference to the aforementioned property and asked the second defendant to expedite the proceedings because she was in urgent need of money. The termination of the POA and its surrender on February 2, 1987, was not mentioned in the aforementioned letter.

In light of the aforementioned observations, the Apex Court came to the conclusion that the plaintiff’s claim that the POA was canceled on February 2, 1987, when it was surrendered by the second defendant, cannot be accepted. As a result, it overturned the High Court’s decision and granted the appeal.

The Apex Court has further ruled that it is crucial to remember that the “person executing” the document is one of the groups of people who may present it before the registration office under the terms of Section 32 of the Act.

The term “person executing,” as used in Section 32 of the Act, can only refer to the individual who actually signs or otherwise authenticates the document as their own or on behalf of another person.

Therefore, “person executing,” as defined in Section 32(a) of the Act, refers to the individual who actually executes the document, which includes a principal who executes through an agent. A person who has a power of attorney authorizing him to act as another person’s agent and who executes a document in accordance with the terms of that power of attorney is, in the eyes of the registration office, the document’s actual executant and is, therefore, qualified to submit the document for registration and have it registered under Section 32(a).

The goal of registration is to get a contemporaneous publication and an unimpeachable record of each document in order to prevent fraud. In the aforementioned instance, there is no claim of fraud.

As a result, the registering officer’s responsibility under Section 32 of the Act was limited to ensuring that the document was signed by the person listed as the signer. After being presented with a document that needed to be registered and being given his or her approval, the Registrar was required to begin the registration process.

The connected provisions of Sections 32(c), 33, and 34(2)(c) of the Act would not apply to the document submitted for registration by a power of attorney holder who is also the document’s executant.

In other words, “the person representing the second defendant, in this case, would be covered by the requirements of Section 32(a) since he has completed the document on the basis of the Power of Attorney, thus there is really no need for the submission of the original, general power of attorney when the document is brought for registration.”

To be more specific, the Act does not provide for the investigation of whether the person who signed the document in the principal’s name as the Power of Attorney holder actually had a legal Power of Attorney or not.

The Supreme Court ruled that it may not be the Registrar’s responsibility to make additional inquiries if the registration authority is satisfied with the person’s identification and that he acknowledges the execution of the document. The registration by itself won’t put an end to concerns over the property’s title. The Law of Registration is designed to establish and uphold a transparent system for keeping track of papers pertaining to property rights.

Conclusion 

The first step for the power of attorney validity by registration in India is to prepare a power of attorney and submit it together with the accompanying paperwork to the sub-registrar’s office – 

1. The principal’s and the agent’s identification documents (such as an Aadhar card, a voter ID, a driver’s license, etc.)
2. Address verification for the agent and the principal
3. passport-sized images of the agent and the principal
4. For any property-related POAs, power bills, or property tax receipts

The POA can be approved by the sub-registrar when the paperwork has been sent in and has been seen by two people. To know more about the procedure of drafting and to register an irrevocable power of attorney, get legal consultation.