Law of Registration
REG 074 General and Special Power of Attorney
The General and the Special Power of Attorney: Scope, Strict Construction, and Why the Authority to Sell Must Always Be Express
A power of attorney is an instrument of agency. It authorises one person to act for and in the name of another, and it transfers nothing. The division between a general and a special power is a division of scope, not of kind: a general power authorises a range of acts or the management of affairs generally, and a special power authorises one specified act. Both are governed by the same law, both are optionally registrable, and both must be authenticated under Section 33 if the agent is to present a document for registration. What the division actually decides is how far the agent may go, and the courts construe both kinds strictly.
The two compared, and the rule that governs both: the authority to sell must be express
1. The Common Ground
Section 1A, Powers of Attorney Act, 1882, and Sections 182 and 226, Indian Contract Act, 1872 Powers of Attorney Act, Section 1A. "Power of attorney" includes any instrument empowering a specified person to act for and in the name of the person executing it. Contract Act, Section 182. An "agent" is a person employed to do any act for another, or to represent another in dealings with third persons. The person for whom such act is done, or who is so represented, is called the "principal". Contract Act, Section 226. Contracts entered into through an agent, and obligations arising from acts done by an agent, may be enforced in the same manner, and will have the same legal consequences, as if the contracts had been entered into and the acts done by the principal in person. |
- Both are instruments of agency, governed by Chapter X of the Contract Act, Sections 182 to 238.
- Neither transfers any interest in any property. The agent acquires nothing by virtue of the power, and the principal remains the owner.
- The agent acts in the name of the principal. He signs as "A by his attorney B", and an act lawfully done within the authority binds the principal as if he had done it himself.
- Both are optionally registrable under Section 18(f) of the Registration Act, as documents not required by Section 17 to be registered, subject to State amendments.
- Both must be authenticated under Section 33 if the agent is to present a document for registration under Section 32(c). Authentication is a separate requirement from registration.
- Both terminate on the same grounds under Sections 201 to 209 of the Contract Act.
2. The Two Compared
General power of attorney | Special power of attorney | |
Scope | Authority to do a range of acts, or to manage the principal's affairs generally | Authority to do one specified act, or a defined set of acts |
Typical use | Managing property, letting and collecting rents, conducting litigation, operating bank accounts, dealing with authorities | Presenting one document for registration; selling one identified property; appearing in one case; executing one deed |
Duration | Continuing until revoked or otherwise terminated | Spent when the act is done |
Construction | Strict. General words do not confer a power to sell, mortgage or gift | Confined to the act specified, and no further |
Registration | Optional under Section 18(f), subject to State amendments requiring registration of a power authorising sale | Optional under Section 18(f) |
Authentication under Section 33 | Needed if the agent is to present a document for registration | The same; and a power given only to present is the commonest special power |
Stamp duty | Under the State article; the rate often varies with the number of persons and with whether a power to sell is given | Ordinarily a lower fixed rate |
Risk to the principal | Considerable. A wide power in the wrong hands may bind him to third parties who do not know of a revocation | Narrow, and spent on completion of the act |
Risk to a third party dealing with the agent | He must satisfy himself the act falls within the authority | He must satisfy himself the act is the one specified |
3. Strict Construction
The governing principle is that a power of attorney is construed strictly, and that general words following a recital of particular powers are read as limited to acts of the same kind. The reason is that an agent is exercising someone else's rights over someone else's property, and the law does not readily infer an authority to dispose of it.
1. The authority to sell must be express. A power to manage the property, to let it, to collect the rents, to pay the taxes and to conduct litigation does not authorise a sale, however widely the concluding words are drawn.
2. The same applies to a mortgage and to a gift. A power to sell does not by itself authorise a mortgage, and neither authorises a gift, which is a disposition without consideration and is very rarely within an agent's authority.
3. A power to sell one property does not authorise the sale of another. The property should be identified in the instrument.
4. A power to appear in a suit does not authorise a compromise unless the authority to compromise is given, and Order III Rule 1 and Order XXIII Rule 3 of the Code of Civil Procedure should be consulted.
5. The agent may not delegate, on the principle delegatus non potest delegare, codified in Section 190 of the Contract Act, except as there provided or as the power permits.
6. The agent may not deal on his own account. Section 215 entitles the principal to repudiate a transaction in which the agent dealt on his own account without the principal's knowledge and consent, and a sale by an attorney to himself or his near relations is looked at with great suspicion.
7. Ambiguity is resolved against the existence of the wider power, and a third party dealing with an agent takes the risk that the act was outside the authority.
⚠ Reading a power before acting on it is the purchaser's job, not the agent's Where a person buys from an attorney, he is dealing with someone who is not the owner. He must therefore see the original power, satisfy himself that it authorises this sale of this property, that it has been authenticated under Section 33 if the agent is to present the deed, that it was subsisting at the date of the sale, and that the principal was alive and of sound mind. A purchaser who relies on a photocopy, or on the agent's assurance that the power is wide enough, is exposed: the transaction may be repudiated by the principal, and Section 226 binds the principal only to acts lawfully done within the authority. |
4. Agency Coupled With an Interest
Sections 201 to 203, Indian Contract Act, 1872, in substance 201. Termination of agency. An agency is terminated by the principal revoking his authority; by the agent renouncing the business of the agency; by the business of the agency being completed; by either the principal or the agent dying or becoming of unsound mind; or by the principal being adjudicated an insolvent. 202. Termination of agency where agent has an interest in the subject matter. Where the agent has himself an interest in the property which forms the subject matter of the agency, the agency cannot, in the absence of an express contract, be terminated to the prejudice of such interest. 203. When principal may revoke agent's authority. The principal may, save as is otherwise provided by section 202, revoke the authority given to his agent at any time before the authority has been exercised so as to bind the principal. |
- Section 202 is the source of the so called irrevocable power. Where the agent has an interest in the subject matter, the agency survives revocation and survives the death of the principal, so far as that interest requires.
- The interest must exist independently of the power. An interest created by the power itself, or a mere interest in the remuneration or in the proceeds of sale, is not an interest in the subject matter within Section 202.
- Describing a power as irrevocable does not make it so. The question is whether the agent has the interest Section 202 requires, and a recital is not the test.
- Even a power coupled with an interest conveys no title. It makes the agency durable; it does not make the agent an owner. That is the point the Supreme Court made in Suraj Lamp & Industries (P) Ltd. v. State of Haryana, (2012) 1 SCC 656.
5. Termination, and Protection of Third Parties
How the agency ends | Provision |
The principal revokes the authority | Sections 201 and 203, subject to Section 202 |
The agent renounces the business of the agency | Section 201 |
The business of the agency is completed | Section 201; this is how a special power ordinarily ends |
The principal or the agent dies or becomes of unsound mind | Section 201, subject to Section 202 |
The principal is adjudicated an insolvent | Section 201 |
By efflux of time, where the power is for a term | The terms of the instrument |
Compensation may be payable for premature revocation or renunciation | Section 205 |
Reasonable notice must be given | Section 206 |
Section 208, Indian Contract Act, 1872 208. When termination of agent's authority takes effect as to agent, and as to third persons. The termination of the authority of an agent does not, so far as regards the agent, take effect before it becomes known to him; or, so far as regards third persons, before it becomes known to them. |
1. Section 208 is why revocation must be published. A revocation kept in a drawer protects nobody, because an act done by the agent after revocation but before third parties know of it may still bind the principal.
2. A revocation should be registered where the power was registered, so that it appears on the same public record.
3. It should be notified to the agent in writing, and the original power called in.
4. It should be notified to the persons likely to deal with him, and where the power was acted on publicly, advertised.
5. Section 209 obliges the agent's representative, on the principal's death or insanity, to take reasonable steps to protect the interests entrusted to him.
6. Section 207 allows revocation by implication from the conduct of the principal or the agent.
6. Which to Use
If the principal wants | The instrument | Points to note |
One document presented for registration on his behalf | A special power, to present that document | It must be authenticated under Section 33; this is the commonest special power |
One identified property sold | A special power to sell, describing the property | The authority to sell must be express, and the property identified |
His affairs managed while he is abroad | A general power, carefully limited | Exclude the power to sell unless he means it; the State stamp article often charges more where a power to sell is given |
A relative to appear in a case | A special power, with Order III Rule 1 of the Code in mind | Include the authority to compromise only if intended |
A developer to deal with the land under a development agreement | A power coupled with an interest under Section 202 | It conveys no title; the eventual conveyances must still be registered |
To transfer property to someone | A registered sale deed or gift deed, not a power at all | A power of attorney is not a mode of transfer, Suraj Lamp |
7. The Position Stated Shortly
1. A power of attorney is an instrument of agency and transfers nothing; the agent acts for and in the name of the principal.
2. A general power authorises a range of acts or the management of affairs generally; a special power authorises one specified act.
3. Both are optionally registrable under Section 18(f), subject to State amendments.
4. Both must be authenticated under Section 33 if the agent is to present a document for registration under Section 32(c).
5. Both are construed strictly, and general words are read as limited to acts of the same kind as those enumerated.
6. The authority to sell, to mortgage or to gift must be express; a power to manage does not carry it.
7. The agent may not delegate under Section 190, and may not deal on his own account under Section 215.
8. An agency coupled with an interest under Section 202 survives revocation and the death of the principal, but still conveys no title.
9. An interest created by the power itself, or in the remuneration or proceeds, is not an interest in the subject matter.
10. Under Section 208, termination does not affect the agent before he knows of it, or third persons before they know of it, so a revocation must be registered and publicised.
11. A purchaser from an attorney must see the original power, check that it authorises this sale, that it is authenticated, and that it subsists.