GPA FOR PROPERTY TRANSACTIONS
Power of Attorney is one of the documents which is being executed most extensively pertaining to the transactions involving transfer of properties, irrespective of modes of conveyance. The main reason being inability of the person, either the transferee or the transfer-or to be present at different place at the same time. In order to complete such transactions, in his/her absence, General Power of Attorney is executed, authorizing another person to do acts or certain acts on his/her behalf. Such an instrument empowering a specified person to perform such act in his absence is termed as General Power of Attorney, as envisaged in the Power of Attorney Act 1882.
The instrument of Power of Attorney is based on the concept of Law of Agency, wherein the Principal, i.e., the person who executes Power of Attorney, authorizes his Agent, i.e., the person in whose favour such Power of Attorney is executed, to do all such necessary acts specified in the Power of Attorney on his behalf and further ratifies such acts of the Agent and the said concept has been recognized under the statute thereby giving legal sanctity.
Competency of the Parties:
The following are the mandatory requirements before executing Power of Attorney:
Majors: It is necessary that both the Principal and the Agent must have attained the age of majority because contract entered between two parties, wherein, either of the one is a minor, is not recognized under Law. Hence, it is very important that both the parties should be above 18 years of age.
Sound Mind: It is also important that both the Principal and the Agent must be of the sound mind since the contract with the person of unsound mind does not bind the parties to such a contract.
Types of Power of Attorney:
There are two types of Power of Attorney. They are:
-> General Power of Attorney: General Power of Attorney gives wide power to the agent to do various acts on behalf of the Principal, without any specifications.
-> Special Power of Attorney: Special Power of Attorney is executed in those cases wherein the agent is empowered to do such acts specified in such Power of Attorney. In this kind of Power of Attorney, the power given to the agent will be revoked as soon as that particular act, for which the power of attorney is executed, is performed and once such an act is completed, Power of Attorney does not subsist.
Sub-delegation of power:
The general principal is that an agent can neither sub-delegate his powers to a Sub-agent nor can appoint another power of attorney. The said principle is well expressed in Latin maxim “Delegate non protest delegate”, which means a person who is delegated with certain powers cannot delegate such powers to a third person. But, section 190 of the Indian Contract Act provides certain exceptions, wherein the agent can appoint sub-agent. However, such sub-delegation must be done in connivance with the Principal, who has to ratify all the acts done by the agent on his behalf. The following are the circumstances under which Sub-delegation is permitted:
1. The nature, custom of the trade is such that it requires the appointment of sub-agents.
Power of Attorney is one of the documents which is being executed most extensively pertaining to the transactions involving transfer of properties, irrespective of modes of conveyance. The main reason being inability of the person, either the transferee or the transfer-or to be present at different place at the same time. In order to complete such transactions, in his/her absence, General Power of Attorney is executed, authorizing another person to do acts or certain acts on his/her behalf. Such an instrument empowering a specified person to perform such act in his absence is termed as General Power of Attorney, as envisaged in the Power of Attorney Act 1882.
The instrument of Power of Attorney is based on the concept of Law of Agency, wherein the Principal, i.e., the person who executes Power of Attorney, authorizes his Agent, i.e., the person in whose favour such Power of Attorney is executed, to do all such necessary acts specified in the Power of Attorney on his behalf and further ratifies such acts of the Agent and the said concept has been recognized under the statute thereby giving legal sanctity.
Competency of the Parties:
The following are the mandatory requirements before executing Power of Attorney:
Majors: It is necessary that both the Principal and the Agent must have attained the age of majority because contract entered between two parties, wherein, either of the one is a minor, is not recognized under Law. Hence, it is very important that both the parties should be above 18 years of age.
Sound Mind: It is also important that both the Principal and the Agent must be of the sound mind since the contract with the person of unsound mind does not bind the parties to such a contract.
Types of Power of Attorney:
There are two types of Power of Attorney. They are:
-> General Power of Attorney: General Power of Attorney gives wide power to the agent to do various acts on behalf of the Principal, without any specifications.
-> Special Power of Attorney: Special Power of Attorney is executed in those cases wherein the agent is empowered to do such acts specified in such Power of Attorney. In this kind of Power of Attorney, the power given to the agent will be revoked as soon as that particular act, for which the power of attorney is executed, is performed and once such an act is completed, Power of Attorney does not subsist.
Sub-delegation of power:
The general principal is that an agent can neither sub-delegate his powers to a Sub-agent nor can appoint another power of attorney. The said principle is well expressed in Latin maxim “Delegate non protest delegate”, which means a person who is delegated with certain powers cannot delegate such powers to a third person. But, section 190 of the Indian Contract Act provides certain exceptions, wherein the agent can appoint sub-agent. However, such sub-delegation must be done in connivance with the Principal, who has to ratify all the acts done by the agent on his behalf. The following are the circumstances under which Sub-delegation is permitted:
1. The nature, custom of the trade is such that it requires the appointment of sub-agents.
2. The recitals in such power of attorney authorizes the agent to sub-delegate his powers to another agent.
Registration and Notarization:
Under Section 17 of the Registration Act, if any transaction involves transfer, assignment or creation of right, title and interest over the immovable property and the value of such property is Rs.100 or more, then registration of such documents is mandatory.
As regards execution of Power of Attorney, if the principle assigns right, title and interest over the immovable property in favour of the agent and authorize the agent to execute any document on his behalf, in such case registration of the power of attorney is preferable. However, if the agent is delegated with the powers which does not involve any kind of assignment or transfer of interest over the immovable property, then power of attorney notarized before Notary Public or even before the Magistrate, is considered to be authenticated documents.
Thus for example, if a person executes Power of Attorney, authorising the Power of Attorney Holder to execute sale deed on his behalf before the proper registering officer, then it is advisable to get such power of attorney registered. On the other hand, if Power of Attorney is executed, authorizing the power of attorney holder to prosecute or defend the suit, then GPA can be notarized before Notary Public. However, the Court shall presume that 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 was so executed and authenticated. If the Power of Attorney is not signed and sealed as required under law, it is nothing more than a waste paper.
In either of the case, each page of the document, whether registered or notarized, has to bear official stamp of the Sub-Registrar office or Notary Public and must disclose the registration number, Book number and signature of the Sub-Registrar or Notary. If the same is notarized, then, apart from the above, appropriate Notary Stamp has to be affixed.
Outside India:
Section 85 of the Indian Evidence Act applies equally to documents authenticated by Notaries Public of other countries. However, the same has to be done by the designated Officers. So any power of attorney executed outside India shall be authenticated by notary of such country or Indian Consul/Embassy.
Stamp Duty:
Power of attorney, executed and notarized in any country in favour of Power of Attorney Holder, residing in India, has to be duly stamped within four months from the date of receipt of the same and the stamp duty in such case has to be at the District Registrar’s office. However, if the same is executed in India, the same has to be executed on the document sheet, duly stamped.
Stamp duty in either of the case will be Rs.100- if the same is executed in favour of one to five of them and if power of attorney is given to more than five persons, then the actual stamp duty payable is Rs.200/-.
Cancellation of G.P.A:
Power of Attorney can be cancelled by either of the parties to the said contract. However, the same has to be done by giving proper notice to the other, clearly mentioning the intention of the person to revoke the said Power of Attorney and notice to that effect has to be given to the public. However, the Principal cannot cancel the agency after the agent exercises his powers partially. If the power of attorney is given only for the specific purpose and that purpose is fulfilled or if either of them dies or becomes unsound, then such an instrument automatically gets cancelled. Nevertheless, proper notice is a must.
If the agent himself has any interest in the property which is the subject matter of the agency, then the same cannot be cancelled unless the agent agrees.
Representation of Owner:
In Bangalore, there are many instances wherein it is seen that the Power of Attorney Holder, in his individual capacity, representing himself as the owner instead of the actual owner will convey immovable property, which act does not confer any kind of right over the purchasers since the document itself is void and not binding on the parties. So it is very important to verify as to whether the conveyance has been made by the GPA Holder, duly representing his Principal/Owner.
In the recent times, with the growing boom of real estate in Bangalore, the instrument of General Power of Attorney is playing a major role, not only in regard to sale or purchase of the property, but also in all other related fields. However, abundant caution has to be taken at the time of executing Power of Attorney and also cancellation of the same because the same can also be used as a weapon involving acts of fraud or conspiracy to misguide and cheat public.
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