Saji Koduvath & James Joseph, Advocates, Kottayam.

Did Karnataka High Court hold in Channegowda v. NS Vishwanath that (all) ‘power of attorneys for sale’ must have been registered, under Sec. 17(1)(b) Registration Act?

• No.

The learned Judge, on a precise and perfect Judgment, held that the General Power of Attorney “coupled with interest” required registration.

The court arrived at the legal attribute, “coupled with interest” in the the facts of that case (presented by the plaintiff himself), which included the following –

• (i) the power of attorney issued (made after obtaining entire sale consideration) in favour of the second plaintiff had (in fact) set-forth or effected a “sale of property” itself.
• (ii) it conferred power on the second plaintiff (as owner) to make a (further) sale to first plaintiff, and
• (iii) on this (professed) capacity as “owner”, the second defendant executed an agreement for sale in favour of the first plaintiff.

Claim of the plaintiffs

The claim of the plaintiffs in this case was –

• i. The defendants 1 to 3 were the original owners of the suit property.
• ii. They made a  “sale transaction” (or sold the property) in favour of the second plaintiff on 01.03.1991, without a sale deed (due to the Fragmentation Act), through the following documents –  
  • (a) an affidavit sworn on 01.03.1991 before the Notary stating receipt of consideration and “transfer of their vested right” with possession. The affidavit made it clear that defendants 1 to 3 received the full sale consideration; and they undertook that at no point of time, they would sell the property to any third party. It was also agreed that they would come and execute the sale deed in favour of the  second plaintiff.
  • (b) an irrevocable General Power of Attorney in favour of the second plaintiff (executed on 01.03.1991) wherein liberty was given to the second plaintiff to “deal with the property as per her will and wish, either to sell or to develop the same”.
• iii. Second plaintiff (who got the power of attorney and affidavit) entered into an “agreement of sale” in favour of the first plaintiff on 05.04.1991 and hence she requested defendants 1 to 3 to execute the absolute sale deed in her favour.

The judgement places the argument of the plaintiff, in this regard, as under:

• “Secondly, he argued by saying that based on the General Power of Attorney coupled with interest, the second plaintiff sold the property in favor of the first plaintiff.”
  • Note: 1. The concept of power of attorney is that the ‘owner’ (principal) himself is ‘getting done’ the specified acts enumerated in the Power of Attorney (in his name and on his behalf) through the power of attorney holder (agent).
  • 2. Taking a could-shoulder, property law (in some cases) recognised the ‘General-Power-of-Attorney-Sale’. But it desires all formalities of a ‘sale’ including registration .

Court Referred a Supreme Court Decision

It is pointed out that the Apex Court decision in Suraj Lamp and Industries P. Limited v. State of Haryana, (2012) 1 SCC 656, held –

• .(i) that the General-Power-of-Attorney-Sale, or Sale-Agreements  will/do not convey title and they do not amount to transfer, and
• (ii) they cannot be considered as valid modes of transfer of immovable property.

Why the Power of Attorney was Found – that it Required Registration

The General Power of Attorney considered in this case was held to be one required registration under Sec. 17 of the Registration Act, for it was “coupled with interest“.

That is, the power of attorney required registration in view of the contention of the plaintiffs that –

• (i) the Power of Attorney was a deed that (indirectly) set forth a “sale” (itself) made after obtaining entire sale consideration, and
• (ii) by virtue of the same the second plaintiff could make a further alienation (i.e., with “power of alienation”).

The Crucial Findings of the Well-Versed Judgment

In view of the contention of the plaintiffs that the Power of Attorney was a deed that set-forth a “sale” (itself) made after obtaining entire sale consideration, and by virtue of the same the second plaintiff could make a further alienation, it is held as under:

• “However, if a power has been created empowering the attorney to sell the property i.e., if a document that gives a right to the attorney holder to sell the immovable property, then it would be a document creating an interest in immovable property, which would require compulsory registration.”

In the High Court, the plaintiff’s advocate placed an alternative argument (that the second plaintiff was not as a title holder), changing his earlier stand (that there was a sale and the second plaintiff became the title holder). The High Court dealt with the argument as under:

• “An attempt is made on behalf of the plaintiffs to contend that the second plaintiff has sold the property as a General Power of Attorney Holder and not as a title holder. It is argued that the Power of attorney is not compulsorily registrable.”
• “The submission is noted with care.”
• “Suffice it to note that a deed of power of attorney is not one of the instruments specified under Section 17 of the Registration Act compulsorily registrable.”

Conclusion in the Judgment

The plaintiffs claimed that the power of attorney had effected or set-forth a “sale”. Therefore, the High Court concluded that it was “inadmissible in evidence”. It is held as under-

• “Therefore, it can be safely concluded that the declaration of facts/statement of facts (affidavit) and General Power of Attorney do not convey title”.

End Notes:

Power of Attorney, Concepts in Law

In State of Rajasthan v. Basant Nehata, 2005-12 SCC 77, our Apex Court made clear the Concepts on a Power of Attorney. They are the following –

• It is governed by Chapter X of the Contract Act. It is also governed by the the Powers-of-Attorney Act.
• A power of attorney is, as is well known, a document of convenience.
• By a power of attorney, an agent is formally appointed to act for the principal.
• It is an authority upon another person; but, subject to the limitations contained in the said deed.
• The agent derives a right to use the principal’s name. The donee (agent) only acts in place of the donor .
• All acts, deeds and things done by done by the agent shall be read as if done by the donor.
• Except in cases where power of attorney is coupled with interest, it is revocable.
• The agent cannot use the power of attorney for his own benefit.
• He acts in a fiduciary capacity.
• Any act of infidelity or breach of trust is a matter between the donor and the donee.

State of Rajasthan v. Basant Nehata, 2005-12 SCC 77, laid down as under”

• “A grant of power of attorney is essentially governed by Chapter X of the Contract Act. By reason of a deed of power of attorney, an agent is formally appointed to act for the principal in one transaction or a series of transactions or to manage the affairs of the principal generally conferring necessary authority upon another person. A deed of power of attorney is executed by the principal in favour of the agent. The agent derives a right to use his name and all acts, deeds and things done by him and subject to the limitations contained in the said deed, the same shall be read as if done by the donor. A power of attorney is, as is well known, a document of convenience. Execution of a power of attorney in terms of the provisions of the Contract Act as also the Powers-of-Attorney Act is valid. A power of attorney, we have noticed hereinbefore, is executed by the donor so as to enable the donee to act on his behalf. Except in cases where power of attorney is coupled with interest, it is revocable. The donee in exercise of his power under such power of attorney only acts in place of the donor subject of course to the powers granted to him by reason thereof. He cannot use the power of attorney for his own benefit. He acts in a fiduciary capacity. Any act of infidelity or breach of trust is a matter between the donor and the donee.”

Should a Power of Attorney be Compulsorily Registered

Those Power of Attorneys that fall under clause (b) of Sec. 17(1) Registration Act alone requires registration. Sec. 17(1)(b) reads as under:

• “(b) other non-testamentary instruments which purport or operate to create, declare, assign, limit or extinguish, whether in present or in future, any
  • right,
  • title or
  • interest,
• whether vested or contingent, of the value of one hundred rupees and upwards, to or in immovable property”

Power of Attorney creates only an ‘Obligation’ on the agent

It is no doubt, true that a power of attorney does not create, declare, assign, limit or extinguish any right, title or interest; it only creates an ‘obligation‘ on the agent. The agent acts in a fiduciary capacity.

Power of Attorney, “coupled with interest”

A Power of Attorney, “coupled with interest”, requires registration.

• E.g., if the power of attorney is issued by the owner after obtaining entire sale consideration from the holder of power of attorney, and if (in fact) it set-forth a “sale of property”, it falls under the category ‘power of attorney coupled with interest’. (See as to ‘General-Power-of-Attorney-sale’: Suraj Lamp and Industries P. Limited v. State of Haryana, (2012) 1 SCC 656).

Kerala Amendment to Sec. 17(1)(g)

Registration Act, Kerala Amendment, Sec. 17(1)(g), requires registration for development, transfer etc. relating to immovable property, except for exempted categories. (It is introduced because it is not a general rule that all power of attorneys for ‘transfer‘ must have been registered.) Sec. 17(1)(g) reads as under:

• (g) Power of attorney creating any power or right of management, administration, development, transfer or any other transaction relating to immovable property of the value of one hundred rupees and upwards other than those executed in favour of father, mother, wife, husband, son, adopted son, daughter, adopted daughter, brother, sister, son-in-law or daughter-in-law of the executant.
• See: Cherryl Ann Joy v. Sub Registrar, Udumbanchola, Idukki District, ILR 2018-3 Ker 540.

But, in Lachchhiram v Imrati, 2017-2 RN 117, it is held that for registration of a deed, registered power of attorney is needed (relying on – obiter – Manjunath Anandappa Urf Shivappa Hanasi v. Tammanasa, (2003)10 SCC 390).

Read Blogs:

• No Adjudication If Power of Attorney is Sufficiently Stamped
• Notary Attested Power-of-Attorney Sufficient for Registration
• Notary-Attested Documents and Presumptions
• Permission when a Power of Attorney Holder Files Suit
• If Power of Attorney himself Executes the Document, S. 33 Registration Act will NOT be attracted
• Is Registered Power of Attorney Necessary for Registration of a Deed? No.