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HOW TO REVOKE/CANCEL A POWER OF ATTORNEY

CommonMan, Specific Contracts

A power of attorney is an instrument which is a creature of contract of agency executed between two or more parties authorising the agent to act in on behalf of the principal(s) and act for the benefit of the principal(s). It is called “a document of convenience”[1]. Any act done or document executed by the agent under the strength of power of attorney will be deemed to be the act of or execution by the principal.[2]

A power of attorney (“PoA”) may be revocable or irrevocable[3]. Moreover, a PoA may be general or for a specific purpose. Interestingly, a deed of power of attorney does not require consideration. As per section 185 of the Indian Contract Act, 1872, no consideration is necessary to create an agency. PoA is therefore, an exception to sections 10 r/w 23 of the Contract Act which provides that consideration is an essential ingredient of a lawful agreement.

The law regarding power of attorney (“PoA”) is primarily governed by Power of Attorney Act, 1882 (“1882 Act”) and the Indian Contract Act, 1872 (“Contract Act”).  The Stamp Act, 1899 and Registration Act, 1908 also make provisions for the stamping and registration of the instrument.

The Law

The PoA is defined under section 1A of the 1882 Act. According to section 1A, “power-of-attorney” includes any instrument empowering a specified person to act for and in the name of the person executing it.” Section 2(21) the Indian Stamp Act, 1899 also defines the term. It is further governed by Chapter X of the Contract Act where Section 182 of the Contract Act defines ‘agent’. Chapter X is on contract of agency, the effect of it and its termination.

The effect of execution of power of attorney has been succinctly captured under section 2 of the 1882 Act which has been reproduced herein below:

2. Execution under power-of-attorney.—The donee of a power-of-attorney may, if he thinks fit, execute or do any instrument or thing in and with his own name and signature, and his own seal, where sealing is required, by the authority of the donor of the power; and every instrument and thing so executed and done, shall be as effectual in law as if it had been executed or done by the donee of the power in the name, and with the signature and seal, of the donor thereof. This section applies to powers-of-attorney created by instruments executed either before or after this Act comes into force.

Section 4 of the 1882 Act lays down a few requirements for the instrument to be sufficient evidence. As per section 4 of the 1882 Act, it must be supported by an affidavit, statutory declaration or other sufficient evidence which shall be deposited in the High Court/District Court and another set must be maintained for inspection by any person. The copy so deposited may be stamped or marked as a certified copy, and, when so stamped or marked, shall become a certified copy which shall be sufficient evidence of the contents of the instrument and of the deposit thereof in the High Court or District Court, without further proof. The relevant provision of 1882 Act is reiterated herein below:

4. Deposit of original instruments creating powers-of-attorney.— (a) An instrument creating a power-of-attorney, its execution being verified by affidavit, statutory declaration or other sufficient evidence, may, with the affidavit or declaration, if any, be deposited in the High Court 9 [or District Court] within the local limits of whose jurisdiction the instrument may be.

(b) A separate file of instruments so deposited shall be kept; and any person May search that file, and inspect every instrument so deposited; and a certified copy thereof shall be delivered out to him on request.

(c) A copy of an instrument so deposited may be presented at the office and may be stamped or marked as a certified copy, and, when so stamped or marked, shall become and be a certified copy.

(d) A certified copy of an instrument so deposited shall, without further proof, be sufficient evidence of the contents of the instrument and of the deposit thereof in the High Court 1 [or District Court].

(e) The High Court may, from time to time, make rules for the purposes of this section, and prescribing, with the concurrence of the State Government, the fees to be taken under clauses (a), (b) and (c).

g) This section applies to instruments creating powers-of-attorney executed either before or after this Act comes into force.

In practice, the power of attorney is executed in front of two witnesses and a notary public. Notarisation has the effect of registration. This shall essentially change if it is a special power of attorney executed say, for sale of property. Registration shall become mandatory in such cases and the parties will also be liable to pay the stamp duty as per Article 48 of the Schedule of the Stamp Act. As per the judgments of the Apex Court, a PoA is strictly construed.[4] Therefore, a deed of power of attorney needs to be very carefully worded. If it a PoA for sale of property, the power should also expressly authorise the power to agent to execute the sale deed and must include power to present the document before the Registrar and to admit execution of the document before the Registrar. 

Revocation or termination of power of attorney

As per the Contract Act, agency can be revoked by either the principal or the agent. The revocation may be expressed or implied by conduct. Such contract of agency will get automatically revoked on death of principal or agent or them becoming of unsound mind. Additionally, it is revoked by operation of law on principal being adjudicated insolvent. The only exception to it is in case where agent has an interest in subject matter of agency. As per section 202 of the Contract Act, the agency cannot be revoked to the prejudice of such interest. Further, the agency can be revoked at any time before the authority has been exercised. However, if an agency is to continue for any period of time, the party prematurely revoking the agency, without any sufficient cause, must compensate the other.

The termination or revocation of the agency may or may not immediately come into effect. Section 208 of the Contract Act stipulates that the termination of the authority of the agent will take effect only when it becomes known to the agent. Similarly, it will take effect as regards the third party when it becomes known to the third party.

These provisions equally apply in case of a PoA. The party, however, has to follow a procedure. For an express revocation, the party is required to issue a notice to the other party stating the reasons for revocation, the effective date and consequences of the revocation. In case of an unregistered PoA it is advisable that the party also issues a public notice in local newspapers. The third party, if any, is further required to be put to notice.

In case of a registered deed of PoA, the party must register the deed for cancellation/revocation after preparing the cancellation deed which must again state the reasons for revocation, the effective date and consequences of the revocation. The principal is then required to serve the copy of the cancellation deed to the agent/attorney. In case of registered PoA also, one is advised to make a newspaper publication of such cancellation.

The aspect of cancellation is crucial since the veracity of documents executed by an agent on the strength of the PoA come into question on the ground of him not having a valid PoA because of alleged termination/cancellation of PoA before the time when the agent executed such document.

The issue regarding the revocation of a registered PoA was addressed most recently in Amar Nath v. Gian Chand [2022 SCC OnLine SC 102] by the Hon’ble Apex Court. In the said matter the plaintiff had executed a special power of attorney in favour of the Defendant No. 2 for the sale of plaintiff’s property in favour of Defendant No. 1. The Defendant No. 1 was not in a position to arrange for money. Therefore, Defendant No. 2 surrendered the original power of attorney to the plaintiff and the plaintiff drew a cut line on it and wrote ‘cancelled’. He also told Defendant No. 1 that the same stood cancelled. Subsequently, Defendant No. 2, allegedly in collusion with Defendant No. 1, applied for the copy of the power of attorney, and fraudulently executed the sale deed in between themselves for a consideration of Rs. 30,000/-. The mutation was also sanctioned. On becoming aware of it, the plaintiff challenged the sale deed by filing a suit for declaration by way of permanent injunction mainly on the grounds firstly that the Defendant No. 2, during the registration of the sale deed, could not have produced the original PoA before the registering officer under Registration Act and secondly, the sale deed was executed without authority since special power of attorney was deemed to have been cancelled.

The lower courts declined the relief sought by the plaintiff.  The High Court proceeded to set aside the findings of the lower courts and held that the mutation showing the sale in favour of the Defendant no. 1 was null and void. The High Court relied on Section 18A of the Registration Act and held that it was necessary for the Registering Authority to see the true copy of the special power of attorney. Since original power of attorney was cancelled, the same could not be relied upon by the Registering Authority for the purpose of execution of the sale deed.

The Apex Court in the very beginning observed that Section 18A contemplates the production of a true copy of a document which is sought to be registered. In the present case it was the sale deed which was to be registered and the production of the sale deed is not in question. The Court then went on to analyse the applicability of other provisions under section 32, 33 and 34 of the Registration Act and held that there was a certified copy of power of attorney which authorised Defendant No. 2 and if it was not cancelled (as per law) and he had executed the sale deed, he is within his rights to present the documents before the registering officer. Further, the duty of the Registering Officer extends only to enquire and find that such person is the person who has executed the document he has presented and further be satisfied about the identity of the person. On the contention of the plaintiff that original power of attorney was cancelled by cutting it and writing on it ‘cancelled’ and thus Defendant No. 2 had no authority thereafter, the Court, in this regard, observed that the power of attorney was registered. The plaintiff neither did get the power of attorney cancelled at the Sub-Registrar Office nor did he send any notice of cancellation. The Court clarified that “This we say as even in the absence of a registered cancellation of the power of attorney, there must be cancellation and it must further be brought to the notice of the third party at any rate as already noticed.” Therefore, the making of a cancellation deed, its registration as well as notice to the donee/agent/power of attorney holder are equally essential for a valid revocation of power of attorney.

[1] State of Rajasthan v. BasantNahata, (2005) 12 SCC 77]

[2] It was held in A.C. Narayanan v. State of Maharashtra, (2014) 11 SCC 790 that “The power-of-attorney holder is the agent of the grantor. When the grantor authorises the attorney holder to initiate legal proceedings and the attorney holder accordingly initiates such legal proceedings, he does so as the agent of the grantor and the initiation is by the grantor represented by his attorney holder and not by the attorney holder in his personal capacity…However, we make it clear that the power-of-attorney holder cannot file a complaint in his own name as if he was the complainant. In other words, he can initiate criminal proceedings on behalf of the principal.”

[3] Suraj Lamp and Industries Private Limited vs. State of Haryana & Anr. (2012) 1 SCC 656

[4] Church of Christ Charitable Trust & Educational Charitable Society v. Ponniamman Educational Trust, (2012) 8 SCC 706

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Can a power of attorney be cancelled by simply writing ‘cancelled’ on it?

Specific Contracts

The issue regarding the revocation of a registered power of attorney (“PoA”) was addressed most recently in the matter of Amar Nath v. Gian Chand [2022 SCC OnLine SC 102] decided on January 28, 2022 by the Hon’ble Apex Court. In the said matter the plaintiff had executed a special power of attorney in favour of the Defendant No. 2 for the sale of plaintiff’s property in favour of Defendant No. 1. The Defendant No. 1, however, was not in a position to arrange for money and Defendant No. 2 PURPORTEDLY surrendered the original power of attorney to the plaintiff and the plaintiff drew a cut line on the document and wrote ‘cancelled’. According to plaintiff he also told Defendant No. 1 that the same stood cancelled. Subsequently Defendant No. 2, allegedly in collusion with Defendant No. 1, applied for the copy of the power of attorney, and fraudulently executed the sale deed in between themselves for a consideration of Rs. 30,000/-. The mutation was also sanctioned. On becoming aware of it, the plaintiff challenged the sale deed by filing a suit for declaration by way of permanent injunction mainly on the grounds firstly that the Defendant No. 2, during the registration of the sale deed, could not have produced the original PoA before the registering officer under Registration Act and secondly, the sale deed was executed without authority since special power of attorney was deemed to have been cancelled.

The trial court declined to grant relief of declaration by way of permanent injunction. The first Appellate court held that the sale deed was valid and the case of the plaintiff, that the power of attorney was cancelled was unsustainable. The High Court proceeded to set aside the findings of the lower courts and held that the mutation showing the sale in favour of the Defendant no. 1 was null and void as per Section 18 (meant to actually refer to 18A) of the Registration Act, 1908. As per section 18A, it was necessary for the Registering Authority to see the true copy of the special power of attorney. Since original power of attorney was cancelled, the same could not be relied upon by the Registering Authority for the purpose of execution of the sale deed.

The Apex Court started by looking into the relevant provisions of Registration Act. The Court observed that Section 18A contemplates the production of a true copy of a document which is sought to be registered. In the present case it was the sale deed and the production of the sale deed is not in question. The Court then went on to analyse the applicability of other provisions under section 32, 33 and 34 of the Registration Act. As per section 32, every document to be registered must be presented by person executing or the representative or an agent of such person. Section 34 deals with enquiry before registration by registering officer. It requires the persons executing the document to be present in person at the time of registration. It has been decided in Rajni Tandon v. Dulal Ranjan Ghosh Dastidar (2009) 14 SCC 782 that section 32 of the Registration Act mandates the presence of the actual persons who executed the document sought to be registered.  It was held that “Where a person holds a power of attorney which authorises him to execute a document as agent for someone else, and he executes a document under the terms of the power of attorney, he is, so far as the registration office is concerned, the actual executant of the document and is entitled under Section 32(a) to present it for registration and get it registered.”

Drawing a parallel, the Court observed that in the present matter there was a true copy of power of attorney which authorised Defendant No. 2 and if it was not cancelled and he had executed the sale deed, he is within his rights to present the documents before the registering officer. The Court also observed that the duty of the Registering Officer extends only to enquire and find that such person is the person who has executed the document he has presented and further be satisfied about the identity of the person. He is duty bound to satisfy himself of a right of such a person to so appear. In case of an agent, thus, he is bound to produce the power of attorney to the Registering officer. Section 33(4) of the Act further states that once the same has been produced, power of attorney is proved and requires no further proof.

The Court after dissecting the relevant provisions of the Registration Act, concluded that if the registering Authority is satisfied about the identity of the person and that he admits the execution of the document, the officer may not need to enquire further. The court therefore rejected the argument of the plaintiff that the non-production of the original power of attorney by the Defendant No. 2 was fatal to a valid registration of the sale deed.

The Court then turned on to the contention of the plaintiff that original power of attorney was cancelled by cutting it and writing on it ‘cancelled’ and thus Defendant No. 2 had no authority thereafter.

The Court, in this regard, observed that the power of attorney was registered. The only question therefore which required to be answered was whether the power of attorney was cancelled before the execution of the sale deed. If yes, whether the cancellation was effected in a valid and legal manner and finally, whether it was made known to not only to the Defendant no. 2 i.e. the agent but also to the Defendant no. 1 i.e. the third party.

The Court then analysed the provisions of Chapter X of the Indian Contract Act, 1872. The Court taking note of Section 208 of the Indian Contract Act, observed the principles of contract of agency that a termination of such contract, even if valid, shall not operate against a third party who was not notified. The third party who in good faith entered into contract with the agent in ignorance of the revocation shall be protected. The Court appreciated the facts where the plaintiff had asserted that the deed of PoA was surrendered. The Defendant No. 2 on the other hand stated that the PoA was misplaced and he had to apply for a certified copy. The Court further appreciated that although the oral evidence may be contradictory, and may not be of much help, the letter of the plaintiff to Defendant No. 2 written subsequent to the alleged dated of surrender of the PoA clarifies that the PoA was not surrendered on the date asserted by the plaintiff. In the said letter, the plaintiff has made reference to the PoA and asked the Defendant No. 2 to do the needful and send the money on selling the property. The Defendant No. 2 also informed the plaintiff of the sale by his letter although he could not immediately meet and give the money to the plaintiff due to personal difficulties.

On the aspect of cancellation, the Court was of the opinion that the plaintiff neither did get the power of attorney cancelled at the Sub-Registrar Office nor did he send any notice of cancellation. The Court clarified that “This we say as even in the absence of a registered cancellation of the power of attorney, there must be cancellation and it must further be brought to the notice of the third party at any rate as already noticed.”

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