What is a power of attorney (POA)?

 A Power of attorney (POA) is a written instruction by which one person is empowered to act on behalf of another. That is to say, to do any lawful act or series of lawful acts on behalf of the principal person by his agent. The  Power of Attorney can be made in two types, special and general. Special power of attorney is given for the special purpose and general power of attorney is given for general purpose being intended to operate for a length of time. A Power of attorney is to be stamped in accordance with the provisions of the Indian Stamp Act and also according to various amendments effected by States. It must be duly notarised and not necessarily be registered with the Registrar of Assurances. A Power of attorney executed outside India for use in India should be executed before the Indian Embassy/High Commission in the country in which it is executed and it must be stamped according to the Indian Stamp act within three months of its receipt in India.The Power of attorney shall not contain provisional or conditional clauses like during my absence; during my illness etc. and such clauses are not acceptable to banks. The Power of attorney must contain definite conditions.

In all cases, where accounts are opened with Power of Attorney, the principal should give an undertaking in writing that he shall, in addition to the public notice, notify the bank about cancellation/revocation of power of attorney.

In 2011, the Supreme Court, in the case of Suraj Lamp & Industries Private Limited vs. State of Haryana (SLP No. 13917 of 2009), issued notices to the governments of Delhi, Haryana, Punjab, and Uttar Pradesh and sought their responses on the discontinuance of such a practice. The four states confirmed that execution of a sale agreement and power of attorney will alone not amount to the sale unless proper deeds of conveyance are executed and registered. Accordingly, final orders were passed by the Supreme Court on October 11, 2011. The Apex Court ruled that property sale through power of attorney (PoA) is illegal and only registered sale deeds provide any legal holding to property transactions. To transfer property titles, a sale deed must be completed, after which the buyer must pay stamp duty and registration fees.(Read full story: Whether the sale of property through power of attorney is valid?)

In its latest judgment dated 30th January 2022, in the case of AMAR NATH– APPELLANT(S) VERSUS GIAN CHAND AND ANR. … RESPONDENT(S)[ (CIVIL APPEAL NO. 5797 OF 2009,], the Supreme Court observed that the production of the original power of attorney is not necessary if the document is presented for registration by the power of attorney holder of the principal. The Registration Act does not contemplate inquiry into whether PoA Holder who executed document had valid Power Of Attorney, it said.
It means, the registration of sale of land was valid as oral cancellation of POA has no validity before the law, the POA holder merely is required to produce a copy of the document and that original was not necessary.(Read full story:Original Power of attorney is not needed to sell the property,copy enough: Supreme Court)

Conclusion:

The customer may authorise the bank to operate his account by a certain named person by way of mandate and power of attorney. Similarly, the Banks are conferred with the right to retention of goods or security (such as cheques, bills of exchange, deposits, etc.)  By way of general lien until some claim attaching to it, is satisfied or discharged. The lien extends to all such documents under which money will or may be payable to the customer. Further, the banker has the right of appropriation and right of set-off when the money owed to the bank is a certain sum, which should be due at the time of set-off and there shall not be an agreement, express or implied to the contrary.

To know them in detail read the following articles.

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