Friday, 12 March 2021

Everything about Execution of Power of Attorney

 A Power of Attorney (POA) is legal document that enlists the powers and responsibilities a person i.e. the principal that he wishes to share with his POA holder. It is mostly used by NRIs (Non-Resident Indians) for effective administration of their property in India. This is done by conferring the authority on some other person, known as the agent to undertake any responsibilities and actions in the absence of the principal.


Need for a POA


A POA reduces security concerns for the principal as it simplifies the decision making even when the true owner is absent. A POA makes it convenient to do property planning and representation in case of business development and trade transactions.


This article will help you better your understanding about the POA, its execution and more-


Types of POA

General POA- This gives wider powers to the agent carrying out various responsibilities on behalf of the principal. These powers are determined as per the deed and not limited to any specific act, subject or project.

Specific POA- In cases of a single specific responsibility, a specific POA is conferred. As soon as the purpose for which the POA given is fulfilled, it automatically gets revoked.


Importance of notarizing a Power of Attorney


Even though the law does not prescribe any special way to execute the POA, it is recommended to notarize it. Notarize means to authenticate, verify, certify or attest any instrument/ document. It is governed by the Notaries Act and managed by the State or Central Government.


Additionally, as per the Indian Evidence Act a POA is presumed to be in accordance with law if it is executed before a Notary and verified by it.


Is execution of POA from abroad valid in India?


Section 14 of the Notaries Act states that the Central Government has the power to accept notaries done legally from other nations. For this purpose the Government has notified three nations, being New Zealand, Belgium and Ireland.


In this matter, the Calcutta High Court has observed that it is not compulsory to notify POA under Section 14 and that Section 85 of the Indian Evidence Act can also apply for notification of documents from different nations.


However, it is best recommended that in cases of execution of POA from outside India, it must be certified by a Central Government Representative due to lack of consistency between the various High Courts in India. It can also be certified by the Indian Consul or Vice- Consul and not by any other notary.


Need for Authenticating POA for Presentation of a Document for Registration


Registration Act, 1908 governs the registration of a document for authenticating a POA. This can be done by two methods-

By the person himself, executing the POA

By the principal’s duly appointed agent, exercising his power within the scope of law.


Further, S. 32 of the Registration Act provides conditions to be fulfilled for the legal recognition of a POA. S. 33 of the Act stipulates the conditions under S. 32-

If the Principal is a resident of India at the time being of the execution of the POA, where the Act is applicable. The Registrar or the Sub-Registrar within whose jurisdiction the principal is a resident of, shall be responsible for the execution of the POA, as well as for its authentication.

If the Principal is a resident of India at the time being of the execution of the POA, where the Act is NOT applicable. The Magistrate within whose jurisdiction the principal is a resident of, shall be responsible for the execution of the POA, as well as for its authentication.

In cases where the principal is NOT  a resident of India at the time of execution of the POA, then it shall be registered before as well as authenticated by either a court, notary, Indian Consul or Vice-Consul, Judge, Magistrate or by a representative of the Central Government.

However, in certain cases, the law bars in-person representation of principals for execution of a POA. These include-

A person suffering from a bodily infirmity or any kind or inconvenience or risk to attend.

A person undergoing criminal proceeding or in jail.

A person whom the law exempts to make any in-person appearance

If the principal is himself the executrix of the POA, he is not required to make an in-person appearance.


Registering a POA


Following features must be noted about registration of a POA-

It is not compulsory to register all POAs

A deed of POA is presumed to be registered in cases where-

The POA is in regard to the transfer of an immovable property

The possession of the immovable property is or has been handed over to the attorney holder.

Where the final POA in association of the property has been made.

Even though the registration of all other POAs is voluntary, it is recommended to get it registered as it gives a presumption of authenticity.


Payment of Stamp Duty


It is governed by S. 48 of Schedule I of the Indian Stamp Act. It prescribes the consequences associated with the non-payment of various kinds of POAs-  

A POA with an unpaid stamp duty would not be admitted as evidence or be submitted to any public authority.

It can be seized or forced for payment of stamp duty.

To convert an under stamped or an unstamped POA into a legally valid POA, a penal stamp duty ten times the value of original amount has to be paid.

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