Substituted Power of Attorney in India

The Legal Edifice of Substituted Power of Attorney in India: An Analytical Review

Introduction

A Power of Attorney (PoA) is a significant instrument in legal and commercial transactions, enabling a person (the principal or donor) to authorize another person (the attorney or donee) to act on their behalf. A nuanced aspect of this delegation is the concept of a "substituted power of attorney," wherein the original attorney, in turn, delegates their powers, wholly or partially, to another individual (the substitute attorney). This practice raises fundamental questions regarding the principle of *delegatus non potest delegare* (a delegate cannot further delegate) and the conditions under which such substitution is permissible under Indian law. This article undertakes a scholarly analysis of the legal framework governing substituted powers of attorney in India, drawing upon statutory provisions, primarily the Indian Contract Act, 1872, and the Powers of Attorney Act, 1882, and critically examining judicial precedents to elucidate the principles, requirements, and implications of such substitution.

The General Principle: Delegatus Non Potest Delegare in Agency Law

The foundation of agency law, which encompasses powers of attorney, generally presumes that authority delegated by a principal to an agent is personal to that agent. The maxim *delegatus non potest delegare* encapsulates this principle, signifying that an agent, being a delegate of the principal, cannot ordinarily delegate the duties entrusted to them to another person. This rule is rooted in the trust and confidence the principal reposes in the chosen agent's skill, discretion, and integrity. However, this is not an absolute rule and is subject to several exceptions, which are critical for understanding the validity of substituted powers of attorney.

Statutory Framework for Substitution in India

The Indian Contract Act, 1872, primarily governs the relationship of agency, including the appointment of agents and sub-agents. The Powers of Attorney Act, 1882, is a more specific enactment dealing with certain aspects of powers of attorney but does not extensively cover the issue of substitution, for which one must revert to the Contract Act.

Section 190, Indian Contract Act, 1872: When Agent Cannot Delegate

Section 190 of the Indian Contract Act, 1872, codifies the maxim *delegatus non potest delegare*. It states: "An agent cannot lawfully employ another to perform acts which he has expressly or impliedly undertaken to perform personally, unless by the ordinary custom of trade a sub-agent may, or, from the nature of the agency, a sub-agent must, be employed."

This section lays down the general prohibition against delegation by an agent but also carves out exceptions:

  • Where the ordinary custom of trade permits the employment of a sub-agent.
  • Where the nature of the agency necessitates the employment of a sub-agent.
  • Where the principal has expressly consented to the delegation.
  • Where the acts to be done are purely ministerial and do not involve the exercise of discretion or skill.

Section 194, Indian Contract Act, 1872: The "Substituted Agent"

A crucial distinction exists between a "sub-agent" (as defined in Section 191) and a "substituted agent." Section 194 of the Indian Contract Act, 1872, addresses the latter: "Where an agent, holding an express or implied authority to name another person to act for the principal in the business of the agency, has named another person accordingly, such person is not a sub-agent, but an agent of the principal for such part of the business of the agency as is entrusted to him."

A substituted power of attorney, when validly created, typically results in the appointment of such a "substituted agent" who derives authority directly from the original principal, although named by the original attorney. The original attorney, in this scenario, acts merely as a conduit for appointment, exercising a power to name conferred by the principal.

Section 2, Powers of Attorney Act, 1882

Section 2 of the Powers of Attorney Act, 1882, provides that the donee of a power of attorney may execute or do any instrument or thing in their own name and signature by the authority of the donor. It states: "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 principle extends to acts performed by a validly appointed substitute attorney, as their acts are deemed to be the acts of the principal (HILARY FELSON v. M/S POWERLINK BUILDERS PVT. LTD, Kerala High Court, 2024, Ref 15).

Judicial Pronouncements on Substituted Power of Attorney

Indian courts have consistently emphasized that the authority to substitute or sub-delegate must be clearly established, typically through express provision in the original power of attorney document.

Requirement of Express Authority for Sub-delegation

The Supreme Court, in *A.C Narayanan v. State Of Maharashtra And Another* (Supreme Court Of India, 2013, Ref 8, and reaffirmed in 2015, Ref 11), explicitly addressed the issue of sub-delegation by a PoA holder. The Court clarified:

"However, whether the power of attorney holder will have the power to further delegate the functions to another person will completely depend on the terms of the general power of attorney. As a result, the authority to sub- delegate the functions must be explicitly mentioned in the general power of attorney. Otherwise, the sub-delegation will be inconsistent with the general power of attorney and thereby will be invalid in law. Nevertheless, the general power of attorney itself can be cancelled and be given to another person."
This pronouncement underscores the necessity of an express clause within the PoA instrument authorizing the attorney to appoint a substitute.

The Karnataka High Court in *M/S. Recondo Ltd. v. Board Of Trustees* (Karnataka High Court, 1984, Ref 22, 24) examined a situation where an original PoA holder appointed a "substitute power of attorney." The court scrutinized the original PoA to determine if it empowered the attorney "to appoint any substitute or substitutes for all or any of the purposes stated in the power of attorney." Finding such an empowering clause, the court upheld the validity of the acts performed by the substitute attorney. The judgment noted, "From the aforesaid para-9 of the power of attorney, it is clear that Sri Bakht Karamchand Ajwani is also empowered to appoint any substitute or substitutes... and accordingly, he had appointed Sri A.M Sadasivan as the substitute power of attorney." This case serves as a practical illustration of the principle requiring explicit authorization.

Construction of PoA for Authority to Substitute

Powers of attorney are generally subject to strict construction. As observed in *Syed Abdul Khader v. Rami Reddy And Others* (1979 SCC 2 601, Supreme Court Of India, 1978, Ref 6), while discussing the scope of a joint PoA, the principle of strict construction is paramount. This principle implies that any authority to substitute must be clearly discernible from the terms of the PoA and will not be readily inferred if the language is ambiguous.

Acts of Substituted Attorney: Binding Effect

Once a substitute attorney is validly appointed in accordance with Section 194 of the Indian Contract Act, 1872, and the terms of the original PoA, their acts within the scope of the delegated authority bind the principal as if the principal had performed them directly. This aligns with Section 2 of the Powers of Attorney Act, 1882, which states that acts done by the donee "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" (HILARY FELSON v. M/S POWERLINK BUILDERS PVT. LTD, Kerala High Court, 2024, Ref 15).

Substitution in Legal Proceedings

The issue of substituting a PoA holder during ongoing legal proceedings has also come before the courts. In *MR. T. ANAND v. MRS. V VARALAKSHMI* (Karnataka High Court, 2021, Ref 21), the court considered an application to substitute a General Power of Attorney holder who was unable to attend court for cross-examination. The court, while allowing the substitution, noted the contention that the application did not specify whether the new GPA holder had knowledge of the transaction, a matter to be elicited during trial. Similarly, in *D.DEVI PADMANABHAN, v. AMARAVATHI FIANCE AND* (Madras High Court, 2022, Ref 23), where an original PoA holder died after examination-in-chief, another PoA holder was substituted and subjected to cross-examination. These cases suggest that substitution may be permissible for practical reasons, but the substituted attorney must meet the requisite legal standards, including personal knowledge if they are to depose on facts. The Madras High Court in *DEPARTMENT OF ATOMIC ENERGY, v. Assistant Controller of Patents and Designs* (Madras High Court, 2024, Ref 17) dealt with substitution of a fresh power of attorney in patent proceedings, indicating the procedural acceptance of such substitutions when compliant.

Personal Knowledge Requirement for Deposition

A PoA holder, whether original or substituted, when deposing in court, must generally have personal knowledge of the facts they attest to. The Supreme Court in *A.C Narayanan v. State Of Maharashtra And Another* (2014 SCC 11 790, Supreme Court Of India, 2013, Ref 2, 8, 11) clarified that a PoA holder can depose and verify on oath, provided they "must have witnessed the transaction as an agent of the payee/holder in due course or possess due knowledge regarding the said transactions." Further, "It is required by the complainant to make specific assertion as to the knowledge of the power-of-attorney holder in the said transaction explicitly in the complaint and the power-of-attorney holder who has no knowledge regarding the transactions cannot be examined as a witness in the case." This principle would logically extend to a substituted attorney. The Rajasthan High Court in *Shambhu Dutt Shastri v. State Of Rajasthan And Ors.* (1986 WLN 2 713, Rajasthan High Court, 1985, Ref 19) observed that a PoA holder cannot substitute for the statement of the plaintiff regarding facts within the plaintiff's personal knowledge. Similarly, the Andhra Pradesh High Court in *Smt. S. Padmavathamma v. Smt. S. Sudha Rani And Others* (Andhra Pradesh High Court, 2004, Ref 9) held that a GPA holder "is incompetent to depose about the facts which are within the exclusive personal knowledge of the party."

Formalities and Implications

Execution and Registration

The instrument appointing a substitute attorney, much like the original PoA, must comply with the general legal formalities for execution. If the original PoA required registration (e.g., if it pertains to immovable property and authorizes sale, as contemplated by amendments to registration laws in various states and discussed in *Suraj Lamp And Industries Private Limited (2) Through Director v. State Of Haryana And Another* (2012 SCC 1 656, Supreme Court Of India, 2011, Ref 5, regarding the necessity of registered deeds for property transfer)), the instrument of substitution may also require similar compliance. The presumption of due execution and authentication under Section 85 of the Indian Evidence Act, 1872, for PoAs executed before and authenticated by a Notary Public or certain other officials, would also apply to instruments of substitution executed in like manner (Jugraj Singh And Another v. Jaswant Singh And Others, 1970 SCC 2 386, Supreme Court Of India, 1970, Ref 3; *Bommisetti Vasundhara v. Pachipulusu Subrahmanyam & Others*, Madras High Court, 1992, Ref 12).

Revocability

A power of attorney is generally revocable by the principal, as affirmed in *State Of Rajasthan And Others v. Basant Nahata* (2005 SCC 12 77, Supreme Court Of India, 2005, Ref 10, 20), unless it is a PoA coupled with interest (Paras Ram Gupta By Lrs. v. Ram Asrey, 2002 SCC 10 475, Supreme Court Of India, 2000, Ref 18). The revocation of the original PoA would typically lead to the revocation of the authority of any substituted attorney appointed thereunder. The power of substitution itself, if granted, can also be revoked by the principal. The original attorney who has the power to substitute may also, depending on the terms of the original PoA, have the power to revoke the appointment of the substitute. A PoA remains valid until properly revoked (DR MRS VALENSHA SURONG v. STATE OF MEGHALAYA, Uttarakhand High Court, 2016, Ref 13; Orissa High Court, 2016, Ref 14).

Fiduciary Duties

An attorney, including a substituted attorney, acts in a fiduciary capacity towards the principal. The Supreme Court in *State Of Rajasthan And Others v. Basant Nahata* (Ref 10, 20) observed that the donee of a PoA "acts in a fiduciary capacity. Any act of infidelity or breach of trust is a matter between the donor and the donee." This duty of utmost good faith, diligence, and accountability binds any person acting under the authority of a PoA.

Conclusion

The appointment of a substituted power of attorney in India is permissible but strictly governed by the principles of agency law, primarily encapsulated in the Indian Contract Act, 1872. The cardinal rule is that an agent cannot delegate their authority unless expressly or impliedly authorized by the principal, or by custom or necessity. For a substituted power of attorney to be valid, the original power of attorney instrument must typically contain an explicit clause empowering the original attorney to appoint a substitute. Such a substitute, when validly appointed, acts as an agent of the original principal for the tasks entrusted.

Judicial precedents, notably the Supreme Court's clarifications in *A.C Narayanan*, have reinforced the necessity for express authorization for sub-delegation. Courts will strictly construe the terms of a PoA to ascertain such authority. Furthermore, any substituted attorney intending to act in legal proceedings, particularly by deposing evidence, must possess personal knowledge of the relevant transactions. The legal framework ensures that while the mechanism of substitution provides flexibility, it does not dilute the principal's control or the fiduciary obligations inherent in the attorney-principal relationship. Adherence to these legal tenets is crucial for the validity and efficacy of actions undertaken by a substituted attorney in India.