Power of attorney can be further delegated if contract permits it


By Dr Rajeshwar Singh

The law of power of attorney has been clarified with the recent judgement delivered by Justice Pankaj Mithal of the Supreme Court on February 20, 2023 in the Mita India Private Limited Vs. Mahendra Jain case.

The general perception of law of Power of Attorney has been on the principle that "delegated powers cannot be further delegated". This is true for the legislative powers but whether this principle would be applicable in case of power of attorney or not stands clarified by the judgment rendered by Justice Pankaj Mithal.

A power of attorney plays an important and vital role in conveyancing and execution of several acts and deeds. When a person is unable to personally execute any act or deed, the power of attorney comes handy to appoint a capable person to do and execute such acts and deeds for and on behalf of the principal.

As stated by Butterworth, a Power of Attorney is a formal arrangement by which one person (donor) gives another person (the attorney) authority to act on his behalf and in his name. It is a type of agency and the law relating to Power of Attorney forms part of the general law of agency.

There is a difference between a servant and an agent. The agent acts as the principal and executes such acts so directed by the principal whereas the servant has to carry out works in the manner the master directs to execute a particular act. The agent and principal have been defined under Section 182 of the Indian Contract Act, 1872.

In the said judgment, Justice Mithal held that the delegation powers can be delegated further, if there is a specific clause permitting sub-delegation of power. The relevant portion of the said judgment is set out herein below:

"The law is settled that though the general power of attorney holder cannot delegate his powers to another person but the same can be delegated when there is a specific clause permitting sub-delegation. A careful reading of the general power of attorney would reveal that the appellant-company in its meeting of the board of directors held on May 1, 2010 has resolved to appoint one of its directors Kavindersingh Anand as its attorney of the company, who was specifically authorised vide paragraph 2 to appoint counsels or special attorney(s).

The language deployed, i.e., to appoint special attorneys is clear enough to indicate that the power of attorney holder has been authorised to appoint special attorneys in addition to the counsel for conducting cases and for doing other relevant and material acts in that connection. The use of the words "to appoint counsels or special attorneys" would not mean that he was authorised only to appoint counsel or special counsel for the purpose. The use of the word 'counsel' and 'special attorney' have different connotations. The use of the aforesaid words to appoint counsels or special attorneys in paragraph 2 of the power of attorney is quite distinct and refers not only to appointment of counsel but of special attorneys other than the counsel. This is implicit upon the reading of paragraph 16 of the power of attorney which specifically deals with the appointment of solicitors, counsels, advocates, other consultants or professionals, but does not refer to attorneys.

Therefore, a combined reading of paragraph 2 and paragraph 16 of the power of attorney would bring home the fact that the power of attorney holder was authorised to appoint special attorney other than the counsel for the purposes for conducting and prosecution of cases on behalf of the appellant-company. This apart, the power of attorney holder was appointed under the resolution of the board of directors of the appellant company and the draft of the power of attorney was duly approved by the board. The said power of attorney as discussed above do provide for the sub-delegation of the functions of the general power of attorney holder and thus the filing of the complaint on behalf of the appellant company through its authorised representative Ripanjit Singh Kohli is not at all illegal or bad in law."

The Powers of Attorney Act was notified on 24/02/1882. Prior to this on 25/04/1872, the Indian Contract Act was notified and Chapter X of the Indian Contract Act, 1872 dealt with Agency, appointment and authority of agents and sub-agents (Sections 182 to 238). In order to overcome the procedure of appointing agents or sub-agents, the Power of Attorney Act, 1882 was enacted.

Section 190 of the Indian Contract Act, 1872 provides when agent cannot delegate, whereas Section 191 of the Indian Contract Act defines Sub-agent, Section 192 provides for representation of principal by Sub-agent, Agent's responsibility for Sub-agent and also Sub-agent's responsibility. Section 192 of the Indian Contract Act, 1872 provides that where a Sub-agent is properly appointed, the principal represented by the Sub-agent, would be bound and responsible for the acts of the Sub-agent. That is to say that the law recognizes the Sub-agent and therefore, the principal "delegated powers cannot be further delegated" cannot universally applied.

It is in these backgrounds that the recent judgement delivered by Justice Pankaj Mithal has cleared the vacuum or uncertainty in case of rolloff agent and Sub-agent.

- Dr Rajeshwar Singh is the BJP MLA representing Sarojini Nagar constituency of Lucknow district. He is a former joint director of the Enforcement Directorate.