POWER OF ATTORNEY: TO BE OR NOT TO BE

Power of Attorney means a formal instrument by which one person empowers another to represent him, or act in his stead, for certain purposes. The donor of the power is called the principal or constituent; the donee is called the attorney or agent. The latter is not entitled to exercise his powers for his personal benefit at any point of time.

In the case of Associated Cement Co. Ltd. v. Keshvanand ((1998) 1 SCC 687), it has been held by Supreme Court that the complainant has to be a corporeal person who is capable of making a physical appearance in the court. If a complaint is made in the name of an incorporeal person (like a company or corporation) it is necessary that a natural person represents such juristic person in the court. It is held that the court looks upon the natural person to be the complainant for all practical purposes. It is held that when the complainant is a body corporate it is the de jure complainant, and it must necessarily associate a human being as de facto complaint to represent the former in court proceedings.

Thus body corporate or incorporeal person necessarily has to act through the power of attorney holder for filing the complainant or civil cases in terms of Order III, rule 2 of the CPC, 1908.

The Supreme Court in Janki Vashdeo Bhojwani v. Indusind Bank Ltd. 2005 (2) SCC 217, held as follows:

Order III, Rules 1 and 2 CPC, empowers the holder of power of attorney to “act” on behalf of the principal. In our view the word “acts” employed in Order III, Rules 1 and 2 CPC, confines only in respect of “acts” done by the power of attorney holder in exercise of power granted by the instrument. The term “acts” would not include deposing in place and instead of the principal. In other words, if the power of attorney holder has rendered some “acts” in pursuance of power of attorney, he may depose for the principal in respect of such acts, but he cannot depose for the principal for the acts done by the principal and not by him. Similarly, he cannot depose for the principal in respect of the matter which only the principal can have a personal knowledge and in respect of which the principal is entitled to be cross-examined.

In A.C. Narayanan vs State Of Maharashtra & Anr (Criminal appeal no. 73 of 2007 and Criminal appeal no. 2724 of 2008), the Hon’ble Supreme Court laid following rule after reconciling the various conflicting decision:

26) While holding that there is no serious conflict between the decisions in MMTC (supra) and Janki Vashdeo Bhojwani (supra), we clarify the position and answer the questions in the following manner:

(i) Filing of complaint petition under Section 138 of N.I Act through power of attorney is perfectly legal and competent.

(ii) The Power of Attorney holder can depose and verify on oath before the Court in order to prove the contents of the complaint. However, the power of attorney holder must have witnessed the transaction as an agent of the payee/holder in due course or possess due knowledge regarding the said transactions.

(iii) It is required by the complainant to make specific assertion as to the knowledge of the power of attorney holder in the said transaction explicitly in the complaint and the power of attorney holder who has no knowledge regarding the transactions cannot be examined as a witness in the case.

(iv) In the light of section 145 of N.I Act, it is open to the Magistrate to rely upon the verification in the form of affidavit filed by the complainant in support of the complaint under Section 138 of the N.I Act and the Magistrate is neither mandatorily obliged to call upon the complainant to remain present before the Court, nor to examine the complainant of his witness upon oath for taking the decision whether or not to issue process on the complaint under Section 138 of the N.I. Act.

(v) The functions under the general power of attorney cannot be delegated to another person without specific clause permitting the same in the power of attorney. Nevertheless, the general power of attorney itself can be cancelled and be given to another person.

The Hon’ble Apex Court in the case of S. Kesari Hanuman Goud Vs. Anjum Jehan & Ors reported in (2013) SCCR 420 wherein it has been held as under:

  1. It is a settled legal proposition that the power of attorney holder cannot depose in place of the principal. Provisions of Order III, Rules 1 and 2 CPC empower the holder of the power of attorney to “act” on behalf of the principal. The word “acts” employed therein is confined only to “acts” done by the power-of-attorney holder, in exercise of the power granted to him by virtue of the instrument. The term “acts”, would not include deposing in place and instead of the principal. In other words, if the power-of-attorney holder has preferred any “acts” in pursuance of the power of attorney, he may depose for the principal in respect of such acts, but he cannot depose for the principal for acts done by the principal, and not by him. Similarly, he cannot depose for the principal in respect of a matter, as regards which, only the principal can have personal knowledge and in respect of which, the principal is entitled to be cross-examined. (See: Vidhyadhar v. Manikrao & Anr., AIR 1999 SC 1441; Janki Vashdeo Bhojwani v. Indusind Bank Ltd., (2005) 2 SCC 217; M/S Shankar Finance and Investment v. State of A.P & Ors., AIR 2009 SC 422; and Man Kaur v. Hartar Singh Sangha, (2010) 10 SCC 512).

 

In Nandhini vs M/S.Vinayaga Textiles, (CRL.R.C.No.1233 of 2011 and M.P.No.1 of 2011), the Hon’ble Madras High court has held that:

  1. In the light of the decisions of the Hon’ble Supreme Court stated supra, power of attorney can adduce evidence on the facts relating to issuance of cheque, dishonour, issuance of notice and filing of complaint, and these facts can be deposed with documents. He comes into picture, only after all the legal requirements for instituting a complaint, are met and authorised to speak about the above said facts. Power of attorney is given to institute a complaint under Section 138 of the Negotiable Instruments Act, 1881, and to conduct the case. It cannot be contended that, whatever transpired between the parties is within the personal knowledge of the power of attorney. On the facts of this case, he cannot speak as to what transpired in the Crime Branch Police Station, Tiruppur, regarding payment, stated to have been made by the drawer, towards the cheque amount. The above said fact can be spoken to, only by the complainant and not by the power of attorney.

In Oil and Natural Gas Commission vs. Offshore Enterprises Inc. AIR 1993 Bombay 217, the Hon’ble Bombay High Court observed as follows:

  1. It is unfortunate that a totally wrong practice has grown up in our Court where one or the other partner of a solicitors’ firm signs pleadings and affidavits on behalf of a foreign client in pursuance of authorisation contained in the power of attorney and the same firm of Advocate/Solicitors acts, appears and pleads in a professional capacity. The said practice is not sanctioned by law. To my mind such a practice is opposed to law.

Baker Oil Tools (India) Pvt. Ltd. vs Baker Hughes Ltd. & Anr., 2011 (47) PTC (Del), the Hon’ble Delhi High Court had raised the following two issues beside others:

  1. Whether the respondents succeeded in proving the authority of Mr. Sameer Oberoi to sign, file, verify and institute the suit on behalf of the respondents based on the two Power of Attorneys filed by him?
  2. Whether the respondents had duly proved the execution and authentication of two Power of Attorneys by notary public so as to claim raising of presumption in their favour under Section 85 of the Indian Evidence Act?

It was answered in following manner:

  1. It would be thus seen from all the aforesaid judicial pronouncements that the Courts have been consistently taking a view that once the execution and authentication of the Power of Attorney by a Notary Public is proved on record, then Section 85 mandates the Court to draw a presumption in favour of due and valid execution of such a Power of Attorney. The Courts have also taken a view that the use of expression “authentication” in Section 85 of the Evidence Act must be accorded its due meaning, not merely comparing the same with the expression “attestation”. The authentication of a Power of Attorney or any document by the Notary Public necessarily would mean that Notary Public has duly satisfied himself about the competence of the Officer and his authority to execute such a Power of Attorney or other document. The purpose of Section 85 has thus been rightly held to eliminate the cumbersome evidence which in the absence of the said provision on the statute book would be required to prove the minutes book and Board Resolution etc. for proving the due and valid execution of the Power of Attorney. Looking into the growing international trade and the world economy, any other interpretation of Section 85 of the Evidence Act would unnecessarily burden the parties to bring the witnesses from abroad just to prove the Board Resolutions and minute books etc. However, having said that, one cannot lose sight of the fact that such presumption is not a conclusive presumption as the same being rebuttable. Once a party who seeks to take advantage of Section 85 of the Evidence Act proves the Power of Attorney, its due execution and authentication by the Notary Public with due affixation of necessary seals on such a document then the onus would shift on the other party to disprove or rebut such a presumption arising in favour of the first party.

Principal Agent’s Agent (sub-Agent):

The Order III rule 1 and 2 of the CPC, 1908 reads as follows:

  1. Appearances, etc., may be in person, by recognized agent or by pleader— Any appearance, application or act in or to any Court, required or authorized by law to be made or done by a party in such Court, may, except where otherwise expressly provided by any law for the time being in force, be made or done by the party in person, or by his recognized agent, or by a pleader appearing, applying or acting, as the case may be, on his behalf:

Provide that any such appearance shall, if the Court so directs, be made by the party in person.

  1. Recognized agent— The recognized agent of parties by whom such appearances, applications and acts may be made or done are—

(a) persons holding powers-of-attorney, authorizing them to make and do such appearances, applications and acts on behalf of such parties;

(b) persons carrying on trade or business for and in the names of parties not resident within the local limits of the jurisdiction of the Court within which limits the appearance, application or act is made or done, in matters connected with such trade or business only, where no other agent is expressly authorized to make and do such appearances, applications and acts.

The rule 2 of Order III of the CPC, 1908 deals in recognized agent and their empowerment by party and it further elaborate that recognized agent be of party (not of Party’s agent or Power agent)

In case of Mr.K.Santhanam vs Mr.P.Chinniah (CIVIL REVISION PETITION (PD) (MD) NO.745 OF 2010 & MP.NO.1 OF 2010) of Madurai bench of Madras High Court with regard to sub Agent of Power Agent it was held that:

  1. By an order dated 14.8.2007, this Court allowed the said revision petition holding that under Order III Rule 2 (wrongly typed as Order V Rule 2 in the order in CRP(PD)(MD)No.101 of 2007, an agent can be appointed only by means of an instrument signed by the principal and that the principal Mrs.Kavitha (plaintiff in the suit) had not executed any instrument appointing Mr.P.Chinniah as power agent.

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  1. Keeping in mind the consistent views expressed by this Court and various other Courts as well as the Supreme Court, let me now turn to the facts of this case. It is no doubt true that the Deed of Power of Attorney with which the suit was originally instituted, was executed by one Mr.A.K.Seerappan, the father and power agent of the plaintiff, in favour of his sub agents Chinniah and Duraiswamy. Since the order of the Trial Court, allowing I.A.No.177 of 2004, permitting Chinniah and Duraiswamy to prosecute the suit on behalf of the plaintiff was reversed by this Court in the previous civil revision petition, the plaintiff Kavitha executed a fresh Deed of Power of Attorney dated 20.11.2007, not only appointing P.Chinniah and C.Duraiswamy, but also ratifying all acts done by them, including the filing of the suits by them. In fact, the plaintiff had also sworn to an affidavit before the Trial Court about the appointment of P.Chinniah and C.Duraiswamy. Therefore, the Trial Court was justified in allowing the application I.A.No.226 of 2007 filed under Order III, Rule 2, CPC, since the principal has specifically ratified the acts done by P.Chinniah and C.Duraiswamy.

The Madurai Bench of Madras High Court in above case considered that the phrase ‘any person duly authorised’ by a party to sign the plaint, as appearing under Order 6 Rule 14 C.P.C. and appearing as power of attorney under Order 3 Rule 2 C.P.C. and ‘some other person’ empowered to verify the pleadings as appearing in Order 15 Rule 1 C.P.C. and held “While Order 3 C.P.C. enables ‘the holder of a power of attorney’ to appear, apply and act on behalf of a party to a suit, as his ‘recognised agent’, Order 6, Rule 14 C.P.C., enables ‘any person duly authorized by a party to sign the pleading’ if the party pleading is, by reason of absence or for other good cause, unable to sign the pleading. While Order 3, Rule 2, uses the expressions “recognised agent” and “persons holding powers of attorney”, Order 6, Rule 14, uses the phrase “any person duly authorized by him”. Rule 15(1) of Order 6 goes one step further and empowers “some other person” to verify the pleadings, if it is proved to the satisfaction of the Court that he is acquainted with the facts of the case. The Court in instant case held that an error of procedure is merely an irregularity and that the plaintiff has a right to rectify the defect and so the plaint shall not be rejected on that score.

Transfer of Immovable Property through GPA:

In Suraj Lamp & Industries Pvt. Ltd Vs. State of Haryana & Anr.( (2012) 1 SCC 656, the Apex Court had concluded following:

  1. Therefore, a 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, unintendedly 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.
  2. We therefore reiterate that 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.

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  1. We make it clear that our observations are not intended to in any way affect the validity of sale agreements and powers of attorney executed in genuine transactions. For example, a person may give a power of attorney to his spouse, son, daughter, brother, sister or a relative to manage his affairs or to execute a deed of conveyance. A person may enter into a development agreement with a land developer or builder for developing the land either by forming plots or by constructing apartment buildings and in that behalf execute an agreement of sale and grant a Power of Attorney empowering the developer to execute agreements of sale or conveyances in regard to individual plots of land or undivided shares in the land relating to apartments in favour of prospective purchasers. In several States, the execution of such development agreements and powers of attorney are already regulated by law and subjected to specific stamp duty. Our observations regarding ‘SA/GPA/WILL transactions’ are not intended to apply to such bonafide/genuine transactions.

In pursuance of the Supreme Court Order, the Delhi Government issued a circular No. F.1(92)/Regn.Br./Div.Com./2012/298 dated 27/4/2012 prohibiting all GPA sale, which was called  as violative of Fundamental Right in Pace Developers and Promoters Pvt. Ltd. Vs. Govt. of NCT through its secretary And Ors., [2013] 33 taxmann.com 99 (Delhi) has held following:

6.2 Quite clearly, the Supreme Court has not said that in no case a conveyance can be registered by taking recourse to a GPA. As long as the transaction is genuine, the same will have to be registered by the Sub Registrar. There is distinctly a specific reference to the fact that, a person may enter into a development agreement with a land developer or builder for development of a parcel of land or for construction of apartments in a building, and for this purpose a power of attorney empowering the developer to execute sale agreements, can be executed.

7. Therefore, in my view, the directions contained in the impugned circular dated 27.04.2012, are quite contrary to the observations made by the Supreme Court in Suraj Lamp & Industries (P) Ltd. Accordingly, the same are set aside.

Rajni Sinha

Advocate, Bombay High Court.