Let us understand what id Power of Attorney ( POA) ?
The term POA is defined in the Power of Attorney Act,1882 and it says Definition.—In this Act, “Power-of-Attorney” includes any instruments empowering a specified person to act for and in the name of the person executing it.
1A. Definition.—In this Act, “Power-of-Attorney” includes any instruments empowering a specified person to act for and in the name of the person executing it.
It means that definition is inclusive and any document which empowers to act on behalf of executor is POA.
It attracts Stamp Duty and in certain cases if property is transferred by virtue of POA, than Stamp Duty is attracted as on Deed of Conveyance.
Scope of Power of Attorney
A power of attorney is not an instrument of transfer in regard to any right, title or interest in an immovable property. The power of attorney is creation of an agency whereby the grantor authorizes the grantee to do the acts specified therein, on behalf of grantor, which when executed will be binding on the grantor as if done by him (see section 1A and section 2 of the Powers of Attorney Act, 1882). It is revocable or terminable at any time unless it is made irrevocable in a manner known to law. Even an irrevocable attorney does not have the effect of transferring title to the grantee.
In State of Rajasthan v. Basant Nehata – 2005 (12) SCC 77, Court held:
A grant of power of attorney is essentially governed by Chapter X of the Contract Act. By reason of a deed of power of attorney, an agent is formally appointed to act for the principal in one transaction or a series of transactions or to manage the affairs of the principal generally conferring necessary authority upon another person. A deed of power of attorney is executed by the principal in favour of the agent. The agent derives a right to use his name and all acts, deeds and things done by him and subject to the limitations contained in the said deed, the same shall be read as if done by the donor. A power of attorney is, as is well known, a document of convenience.
Execution of a power of attorney in terms of the provisions of the Contract Act as also the Powers-of-Attorney Act is valid. A power of attorney, we have noticed hereinbefore, is executed by the donor so as to enable the donee to act on his behalf. Except in cases where power of attorney is coupled with interest, it is revocable. The donee in exercise of his power under such power of attorney only acts in place of the donor subject of course to the powers granted to him by reason thereof. He cannot use the power of attorney for his own benefit. He acts in a fiduciary capacity. Any act of infidelity or breach of trust is a matter between the donor and the donee.-
An attorney holder may however execute a deed of conveyance in exercise of the power granted under the power of attorney and convey title on behalf of the grantor.
A question came up before Supreme Court in the matter of Suraj Lamp & Industries (P) Ltd.Thru.DIR. Versus State of Haryana & Anr. 2009 AIR(SC) 3077 = 2009 AIR(SCW) 4944 = 2009 (9) Scale 36 = 2009 (7) SCC 363
The issue addressed was avoidance of execution and registration of deeds of conveyance as the mode of transfer of freehold immovable property by increasing tendency to adopt Power of Attorney Sales, that is execution of sale agreement/ general power of attorney/will (for short SA-GPA-Will transactions) instead of execution and registration of regular deeds of conveyance, on receiving full consideration. This method adopted has the following variants:
(i) Execution of an agreement of sale, one or two powers of attorney, with or without a will, all unregistered.
(ii) Execution of an agreement of sale, power/s of attorney and will, registering either all of them, or any two of them, or any one of them.
Thereafter the matter was referred to three judges Bench. 2012 AIR(SC) 206 = 2012 (1) All.M.R. 464 = 2012 (1) Bom.C.R. 293 = 2011 (12) JT 564 = 2011 (11) Scale 438 = 2012 (1) SCC 656
It was observed that :
Recourse to SA/GPA/WILL transactions is taken in regard to freehold properties, even when there is no bar or prohibition regarding transfer or conveyance of such property, by the following categories of persons:
(a) Vendors with imperfect title who cannot or do not want to execute registered deeds of conveyance.
(b) Purchasers who want to invest undisclosed wealth/income in immovable properties without any public record of the transactions. The process enables them to hold any number of properties without disclosing them as assets held.
(c) Purchasers who want to avoid the payment of stamp duty and registration charges either deliberately or on wrong advice. Persons who deal in real estate resort to these methods to avoid multiple stamp duties/registration fees so as to increase their profit margin.
Whatever be the intention, the consequences are disturbing and far reaching, adversely affecting the economy, civil society and law and order. Firstly, it enables large scale evasion of income tax, wealth tax, stamp duty and registration fees thereby denying the benefit of such revenue to the government and the public. Secondly, such transactions enable persons with undisclosed wealth/income to invest their black money and also earn profit/income, thereby encouraging circulation of black money and corruption.
This kind of transactions has disastrous collateral effects also. For example, when the market value increases, many vendors (who effected power of attorney sales without registration) are tempted to resell the property taking advantage of the fact that there is no registered instrument or record in any public office thereby cheating the purchaser. When the purchaser under such power of attorney sales comes to know about the vendors action, he invariably tries to take the help of musclemen to sort out the issue and protect his rights. On the other hand, real estate mafia many a time purchase properties which are already subject to power of attorney sale and then threaten the previous Power of Attorney Sale purchasers from asserting their rights. Either way, such power of attorney sales indirectly lead to growth of real estate mafia and criminalization of real estate transactions.-
It also makes title verification and certification of title, which is an integral part of orderly conduct of transactions relating to immovable property, difficult, if not impossible, giving nightmares to bonafide purchasers wanting to own a property with an assurance of good and marketable title.
It was held that:
SA/GPA/WILL transaction does not convey any title nor create any interest in an immovable property. The observations by the Delhi High Court, in Asha M. Jain v. Canara Bank – 94 (2001) DLT 841, that the !concept of power of attorney sales have been recognized as a mode of transaction- when dealing with transactions by way of SA/GPA/WILL are unwarranted and not justified, unintended misleading the general public into thinking that SA/GPA/WILL transactions are some kind of a recognized or accepted mode of transfer and that it can be a valid substitute for a sale deed. Such decisions to the extent they recognize or accept SA/GPA/WILL transactions as concluded transfers, as contrasted from an agreement to transfer, are not good law.
An immovable property can be legally and lawfully transferred/conveyed only by a registered deed of conveyance. Transactions of the nature of GPA sales or SA/GPA/WILL transfers do not convey title and do not amount to transfer, nor can they be recognized or valid mode of transfer of immoveable property. The courts will not treat such transactions as completed or concluded transfers or as conveyances as they neither convey title nor create any interest in an immovable property. They cannot be recognized as deeds of title, except to the limited extent of section 53A of the TP Act. Such transactions cannot be relied upon or made the basis for mutations in Municipal or Revenue Records. What is stated above will apply not only to deeds of conveyance in regard to freehold property but also to transfer of leasehold property. A lease can be validly transferred only under a registered Assignment of Lease. It is time that an end is put to the pernicious practice of SA/GPA/WILL transactions known as GPA sales.
Genuine transactions can still be valid for Registration purposes, provided provisions of Registration Act is followed despite of this Judgment.
By Registration (Maharashtra Amendment) Act, 2010 Irrevocable Power of Attorney and is now part of Section 17 of the Registration Act, 1908 and needs compulsory registration when relating to transfer of immovable property in any way, executed on or after the commencement of the Registration (Maharashtra Amendment) Mah. Act, 2010.The Act received Presidential assent on 25th May, 2012.
Registration of Document by POA holder:
Provisions of Registration Act,1908
32. Persons to present documents for registration
Except in the cases mentioned in [sections 31, 88 and 89], every document to be registered under this Act, whether such registration be compulsory or optional, shall be presented at the proper registration office-
(a) by some person executing or claiming under the same, or, in the case of a copy of a decree or order, claiming under the decree or order, or
(b) by the representative or assignee of such a person, or
(c) by the agent of such a person, representative or assign, duly authorised by power-of-attorney executed and authenticated in manner hereinafter mentioned.
33. Power-of-attorney recognisable for purposes of section 32 (1) For the purposes of section 32, the following powers-of-attorney shall alone be recognised, namely:-
(a) if the principal at the time of executing the power-of-attorney resides in any part of [India] in which this Act is for the time being in force, a power-of-attorney executed before and authenticated by the Registrar or Sub-Registrar within whose district or sub-district the principal resides;
(b) if the principal at the time aforesaid [resides in any part of India in which this Act is not in force], a power-of-attorney executed before and authenticated by any Magistrate;
(c) if the principal at the time aforesaid does not reside in [India], a power-of-attorney executed before and authenticated by Notary Public, or any court, Judge, Magistrate, [Indian] Consul or vice-consul, or representative [***] of the Central Government:
PROVIDED that the following persons shall not be required to attend at any registration-office or court for the purpose of executing any such power-of-attorney as is mentioned in clauses (a) and (b) of this section, namely-
(i) persons who by reason of bodily infirmity are unable without risk or serious inconvenience so to attend;
(ii) persons who are in jail under civil or criminal process; and
(iii) persons exempt by law from personal appearance in court.
[Explanation: In this sub-section “India” means India, as defined in clause (28) of section 3 of the General Clauses Act, 1897.]
(2) In the case of every such person the Registrar or Sub-Registrar or Magistrate, as the case may be, if satisfied that the power-of-attorney has been voluntarily executed by the person purporting to be the principal, may attest the same without requiring his personal attendance at the office or court aforesaid.
(3) To obtain evidence as to the voluntary nature of the execution, the Registrar or Sub-Registrar or Magistrate may either himself go to the house of the person purporting to be the principal, or to the jail in which he is confined, and examine him, or issue a commission for his examination.
(4) Any power-of-attorney mentioned in this section may be proved by the production of it without further proof when it purports on the face of it to have been executed before and authenticated by the person or court hereinbefore mentioned in that behalf.
After the Judgment and consequent amendment, Power of Attorney granting power to admit execution, Specific Power of Attorney to execute Sale or any property documents needs mandatory registration.
Operation of NRO account by Power of Attorney holder
Powers have been delegated to the authorized dealers/banks to allow operations on an NRO account by Power of Attorney granted in favour of a resident by the non-resident individual account holder provided such operations are restricted to:
(i) All local payments in Rupees including payments for eligible investments subject to compliance with relevant regulations made by the Reserve Bank; and
(ii) Remittance outside India of current income in India of the non-resident individual account holder, net of applicable taxes.
(iii) The resident Power of Attorney holder is not permitted to repatriate outside India funds held in the account other than to the non-resident individual account holder nor to make payment by way of gift to a resident on behalf of the non- resident account holder or transfer funds from the account to another NRO account.
NRO- NRI procedure to be followed for execution and registration of POA:
Power of Attorney to be used in India received in India from a foreign country:
India has signed treaty of Hague Convention, hence power of attorney that has been notarized abroad is sufficient. However in India it is preferred to get attested from the Indian Consulate/Embassy.
Sale of property with Power of Attorney :
NRIs sending power of attorney to India from abroad for matters that concern immovable property located in India should send power of attorney in favor of their spouse or a blood relative such as parents, children, brother, sister etc.
How to get POA attested at Indian consulate/embassy
The procedure is fairly simple and somewhat standard at most Indian consulates worldwide. Generally the steps involved are:
- Power of Attorney document prepared abroad for does not require a Indian Stamp paper. It can be prepared on plain paper.
- You need two copies of the said POA. Do not put your signature on the said POA as you need to sign in front of a Consular officer at time of attestation.
- You need two witness to verify your signature and identity. They need to sign in front of Consular officer.
Documents required for Indian Consulate Attestation of POA
- Original alongwith one copy of POA prepared document;
- Original Passport + Copies of all non-blank pages including first and last page.
- Copy of Address proof in the country of your residence. For example: A bank statement, driving license, utility bill etc.
- Proof of legal status in country of residence, such as visa etc.
- Two passport size photographs
- Applicable fee at time of attestation.
- Identity proofs and documents of Witnesses
Registration of Power of Attorney in India
After the said attestation is over the same is delivered and received in India it is as we saw above the same is mandatorily needs to be registered when it is given for executing property documents. It is otherwise advisable to register the same in India.
How to Register POA in India
Original documents with self attested copies showing proof of address and proof of identity.
Two passport size photographs [Sub- Registrar will also take photo of the person concerned in whose favour POA is give along with thumb impression at the time of registration;
Two witnesses who should also have proper identification