Legal Quotations

images (2)

The Law … is perfection of reason.

It is impossible to tell where the law stops and justice begins.

Laws grind the poor, and rich men rule the law.

If you have ten thousand regulations you destroy all respect for the law.

If there were no bad people, there would be no good lawyers.

It is the trade of lawyers to question everything, yield nothing, and talk by the hour.

Law, without force, is impotent.

In a state where corruption abounds, laws must be very numerous.

 

 

E-BANKING SYSTEM IN THE BANKING SECTOR

e-bankingE-BANKING SYSTEM IN    THE BANKING SECTOR

 1.      Introduction: The process of globalization and liberalization has virtually transformed the way of business across the globe. The technological innovation of improvements in the communication networking helped the banking sector activities through re-engineer its works. E-Banking is considered as an important input for rapid growth of economic development by providing mechanism of electronic inputs to the banking sector. E-banking is the banking of new era. The term Internet Banking or E-Banking Internet both are used as supplement. E-Banking system makes the banking transactions easy for the bankers as well as customers in the modern world where all persons are busy with their hectic schedule. In fact, banks have been using electronic and telecommunication networks for delivering a wide range of value added products and services. The devices have been telephone, personal computers including Automated Teller Machines (ATM).

 2.       Development of E-Banking System: The wind of globalization has affected each and every sector of its economy and entered into all the activities of the banking sector. Though the E-Banking system developed in the late ‘1980s and referred to the use of a terminal, keyboard and TV (or monitor) to access the banking system using a phone line. ‘Home banking’ can also refer to the use of a numeric keypad to send tones down a phone line with instructions to the bank. Online services started in ‘New York’ in 1981 when four of the city’s major banks (Citibank, Chase Manhattan, Chemical and Manufacturers Hanover) offered home banking services using the videotex system, television system and telephonic system. The UK’s first home online banking services were set up by the ‘Bank of Scotland’ in year 1983. The system (known as ‘Homelink’) allowed on-line viewing of statements, bank transfers and bill payments. In order to make bank transfers and bill payments. Though E-Banking system was more popularized amidst of the foreign countries later on in the early 1990’s E-Banking system developed in India too and development was not possible without creating sufficient infrastructure or presence of sufficient number of users. The experience of ICICI Bank Ltd. and HDFC Bank Ltd. shows that the number of transactions carried out on the internet is very limited in India.

 3.      Meaning of E-Banking: E-Banking refers to electronic banking and it is an automated delivery of new and traditional banking services which provides electronic facility for business and commercial transactions to its customers. E-banking is the easiest way to carry out banking transactions in today’s hectic schedule. E-Banking is also called as i.e. Internet Banaking, Net Banking, Virtual Banking or Online Banking. E-Banking (or I-banking) means any user with a personal computer and a browser can get connected to his bank’s website to perform any of the virtual banking functions. In internet banking system the bank has a centralized database that is web-enabled. All the services that the bank has permitted on the internet are displayed in menu. The fact is that many services that are now being offered with online banking are almost impossible to avail of in regular banking.

 4.       Services covered under E-Banking: E-Banking has numerous benefits to offer. Nowadays, all banks provide online banking facility to their customers as an additional advantage. Gone are the days, when one has to transact with a bank which was only in his local limits. Online banking has opened the doors for all customers, to operate beyond boundaries. The popular services covered under E-banking include :-

  • Ø  Automated Teller Machines(ATM)
  • Ø  Credit Cards
  • Ø  Debit Cards
  • Ø  Smart Cards
  • Ø  Electronic Funds Transfer (EFT) System
  • Ø  Cheques Truncation Payment System
  • Ø  Mobile Banking
  • Ø  Internet Banking
  • Ø  Telephone Banking

5.      Problems While Using E-Banking Facilities:  E-Banking system removes the traditionally geographical basis as it could reach out to all the customers of different countries and regions. The popularity of internet banking is growing rapidly as the transactions are becoming faster and more convenient. Internet banking is the latest development that has added a new dimension to banking transactions by making it more convenient, which has eliminated the long wearisome queues. But, there are some serious problems that a customer may encounter while banking through the internet, due to which many still prefer to go directly to the banks instead of availing this facility. There are certain problems of E-Banking system which are as follows:

  • Ø  Computer and Internet knowledge is very much required for using the facility of E-Banking by the customer because of which limits number of persons willing to avail this facility. Therefore it is the major problem in the country like India where literacy ratio is low.
  • Ø  While banking through the internet, you have to be careful about the security of your internet bank account. The security of your internet bank account depends to a great extent on the security of your computer, password and pin number. Any leakage of information regarding your password or pin number and banking transactions can allow computer hackers to gain access to your bank account, which is the most common internet banking problem. This can even lead to unauthorized and criminal transactions being conducted without your knowledge. By the time you get your bank statement and detect such transactions, it may be too late.
  • Ø  Some proxy websites can easily access customer’s bank account, if they can crack one’s user name, password or pin number. Due to such security problems, many people are apprehensive about internet banking.
  • Ø  Though E-Banking system saves the time of customers but it is very difficult to use this facility by customers who do not have computer knowledge.
  • Ø  Lack of trust on d machines provided by the banks may be another problem as there is no safety of money through online banking.
  • Ø  Technical problems with respect to the computers and internet facilities may be one of the problems which must be taken into consideration.
  • Ø  Customer is always in problem with respect to the security of its password, pin number and bank related information.
  • Ø  Customer care service also does not provide accurate information always as numbers of transactions are increasing along with customers.

 6.      Advantages of E-Banking System: E-banking system has gained wide acceptance internationally and it can be considered as a remarkable development in the banking sector. In India also the things are changing fast and most of the banks are providing      E-Banking services to their customers and there are many advantages of using E-Banking service to the customers which are as follows:

  • Ø  Paying Bills Online is the major advantage to the customer’s who can pay bills i.e. telephone, electricity, shopping, loans amount (EMI) and payment of tickets booking online.
  • Ø  Time saving and easy to get information of bank account.
  • Ø  Customers are no longer required to wait in those long and crowded queues of the banks to request a financial transaction or statement.
  • Ø  E-Banking offers convenience to the customers as they are not required to go to the bank’s premises.
  • Ø  E-Banking provides monthly e-statement facilities to the customers which saves the time of bankers as well as customers.
  • Ø  Low incidence of errors increases the number of users/customers of E-Banking which results in the great advantage.
  • Ø  The customers can obtain funds at any time from ATM machines.
  • Ø  The credit cards and debit cards enables the Customers to obtain discounts from retail outlets.
  • Ø  Reduction in the administrative costs and paperwork related to the transactions. Besides, banks can also cater to the needs of thousands of customers at the same time. All these factors have significantly increased the profit margins of commercial banks by lowering their operating costs.
  • Ø  Transactions of transferring of funds from one person account to another person’s account became much more faster and convenient both national and international level.
  • Ø  Accessing bank account information at any day or any time irrespective of banks off working hours.
  • Ø   Quickest way to check and see if a transaction has cleared your account. This can help you to find out the amount of a transaction after you have lost your receipt.
  • Ø  E-Banking also allows customers to find out about unauthorized transactions of their accounts more quickly and to resolve the issues more quickly.

 7.      Disadvantages of E-Banking System: In today’s cyber world where when people do not have much time even for their personal work, E-Banking appears as a boon. Internet banking has become very popular in the recent years, as it is quick and easy. Though E-Banking provides more advantages than traditional banking however, it has some disadvantages too which are as listed:

  • Ø  Setting up an account in the bank may take time though the E-Banking facility is provided by the banks.
  • Ø   Internet account of customer with an Internet Service Provider (ISP) which may be another hectic experience.
  • Ø  Banking sites can be difficult to navigate at first by the customers who do not have knowledge of computer and internet so getting acquitted with the banking sites software may require some time to read the tutorials in order to become comfortable in persons virtual lobby. There may be some difficulties to the customer for learning these activities of E-Banking.
  • Ø  Some alterations or changes made in the banks sites due to technological advancement may lead to a problem to customers who have to provide all the personal information once again through online transaction.
  • Ø  E-Banking is time consuming for the customers, though there is option of online transactions, in the end customers have to run to the ATM for withdrawing the cash.  
  • Ø  No personal contact with any of the bank staff, and if talk to any bank staff through the telephone, there is no guarantee to the customers that they had talked with a right person or not.
  • Ø  “Hackers” who may access customer’s bank account is the main disadvantage to the customers who takes E-Banking facility very casually.
  • Ø  Security concern is the important issue as cybercrimes activities are clutching up which decreases the number of customers to avail the benefit of E-Banking.
  • Ø  Technical breakdowns where online banking websites sometimes go down. If this happens then, if customer wishes to close his bank account then he will definitely go penniless.
  • Ø  Switching banks due to technical faults can be a major disadvantage of using          E-Banking system to the customer.
  • Ø  Increasing online frauds and attacks i.e. Trojan horse (Remote Attacker) are a major disadvantage of using E-Banking.
  • Ø  However, in the case of Internet banking, one will find oneself making endless calls to the customer service department. There have been cases, where the person is put on hold or has been passed around from one person to another.
  • Ø  Hackers and crackers attack on the bank account of customer by stealing passwords or using fake credit cards to cheat a person which will cause loss to the customer’s wealth.

 8.      Guidelines By Reserve Bank of India: Reserve Bank of India being the highest authoritative bank and main head of all the nationalized banks in India, had set up a ‘Working Group on Internet Banking’ to examine different aspects of Electronic Banking (E-banking). The Group had focused on three major areas of E-banking, i.e. (i) technology and security issues, (ii) legal issues and (iii) regulatory and supervisory issues. Accordingly, the following guidelines are issued for implementation by banks. Banks are also advised that they may be guided by the original report, for a detailed guidance on different issues. These issues can be defined as:

  • Ø  Technology and Security Issues: Banks should designate a network and database administrator with clearly defined roles as indicated in the Group’s report. Banks should have a security policy duly approved by the Board of Directors. There should be a segregation of duty of Security Officer exclusively with information systems security and Information Technology Division which actually implements the computer systems. Further, Banks should also adopt and implement some new policies relating to security check ups and should inform customers about new technologies concerning E-Banking. Banks should also take steps to
  • Ø  Legal Issues: There is always an obligation on the parts of banks to keep the proper records of its customers manually as well as electronic. While opening an account of customer by internet a complete identification documents must be collected by the customer and a physical verification need to be done so that it will assist bank to avoid any legal risk. From a legal prospective, security procedure adopted by banks for authenticating users needs to be recognized by law as a substitute for signature. There must be strict rules regarding instructions by the customers for stop-payment and banks should clearly state the consequences in which stop-payment instruction could be accepted by the bank.
  • Ø  Regulatory and Supervisory Issues: Only such banks which are licensed and supervised in India and have a physical presence in India will be permitted to offer Internet banking products to residents of India. The products and schemes of the bank should be limited to the account holders only but not to the extra territorial jurisdictional account holders. Indian overseas banks must be permitted to offer internet services. A supervisory authority need to be appointed so that it will assist in avoiding any illegal transactions.

 9.      Risk Involved In Using E-Banking: E-Banking poses some different risks as compared to the traditional banking. These risks are more pronounced in the case of Internet banking. Firstly, the risk of technological changes has to be carefully watched. This is essential to update technologies and remain cost effective and customer friendly. The banks have to be careful about risks involved in agreements with third parties. The security is an important area of risk. In fact it will be very crucial for the expansion of Net Banking. Another important area will emerge out of cross-border implications as           ‘E- Banking’ breaks the geographical boundaries. Imposing regularity conditions on such transactions will be a difficult task.

10.  E-Banking Frauds: Fraudsters are continuing their switch from traditional card fraud to raiding online bank accounts. According to the new research Fraud losses on UK credit and debit cards totalled £440m in 2009 – a drop of 28% compared with the previous year – the UK Cards Association said. But the number of “phishing” attacks rose by 16% in the same period. This is when fraudsters trick people into entering their personal details on a website or in e-mails. As there is expansion in the illegal activities of the hackers, crackers and Trojan horse there must be a strict law to punish such criminals. Online frauds are very common nowadays because it is easy to access or to obtain password, pin code and account number of customers by hackers. Recently there is a case which is known as ‘ICICI Bank Fraud Case’ where Rs/- 150000 was stolen by the person’s bank account and it was a heavy loss of money to the account holder though the complaint was filed by the account holder but banks are still silent on that issue as banks too have no idea how these activities are taking place.

 11.  Preventive Measures: As E-Banking is an important aspect for the bankers and customers as well, there must be some measures and policies which should be adopted by the banks before providing E-Banking facilities to the customers which can be taken as precautionary measure. A best preventive measure is that the account holder of the bank must be aware of increasing bank frauds and cybercrimes, and he should not give his password, pin number and credit cards number to anyone by using E-Banking facility. “As it is recognise that cards will always be targeted by criminals, so we are determined not only to continue to prevent, detect and deter those who are behind this type of crime, but also to make sure that innocent victims do not lose out,”. There is always necessity that “Customers need to protect themselves on their computer, remaining vigilant and using good security software.”

                                    “A better-educated consumer is less likely to fall foul of phishing attacks” this saying has its own importance because consumer is the king with respect to the Indian trade and market but here while using E-Banking facilities a consumer need to be more careful of online frauds, so a consumer must take some necessary precautions while opting out for E-Banking facilities.

 12.  Conclusion: E-banking offers a higher level of convenience for managing one’s finances even from one’s bedroom. However, it continues to present challenges to the financial security and personal privacy. Many people have had their account details compromised, as a result of online banking. Thus, if one is going to use it for financial transactions, he should be aware of the risks involved. Awareness of the risks and problems enables him to take precautions for a more secured online banking experience. E-Banking system is not only popular nationally but also internationally where a person can transfer money through any part of the world. E-banking system is useful for the bankers as well as customers of banks.

 

DHAWESH PAHUJA

ADVOCATE

BANGALORE

MOB: 09008793791

E-mail:advocatedcp@yahoo.com

POWER OF ATTORNEY

vmh-POWER-OF-ATTORNEYPOWER-OF-ATTORNEY

1.      Introduction: In the modern world where commerce and industry have assured large and long roles to play , the need for entering into contracts of agreements in relation to business and other transactions have become a common and necessary feature of daily life. As man became busier it became more and more necessary for him to depend on others for getting his things done. The hectic activities of the businessmen and industrialists have made the execution of power of attorney for delegating his functions. Granting a Power of Attorney is a legal process that involves the drafting of a document which assigns to another person the power to act as your legal representative. Principal should be careful while authorising an agent as attorney to avoid inconvenience and expense of any legal proceedings in the future.

2.      The Statute: This act may be called as “POWER OF ATTORNEY ACT, 1882”, which was passed in the year 1882 on 24th feb and the act came into force on first day of May, 1882. This act applies to the whole of India except State of Jammu & Kashmir. The main aim of passing this statute is to make it easy for your designated attorney to access your finances and, in that way, take care of your property.

3.       Definition: According to the ‘Section: 1A’ of “POWER OF ATTORNEY ACT, 1882”, “A ‘Power Of Attorney’ includes any instruments empowering a specified person to act for and in the name of the person executing it”.

4.      Meaning:  The term ‘Power Of Attorney’ is an authority given by an instrument by one person, called as the donor or principal, authorising another person, called donee or agent to act on his behalf. There may be possibility of giving ‘Power Of Attorney’ by two or more persons jointly to one or more persons. Here a legal authority is given by the principal to the agent which may be broad or limited and an agent can take all necessary decisions i.e. financial, property related matters and all other matters where principal cannot be present to sign or in the case of principal’s illness and disability. A paper signed by principal giving powers to an agent is sometimes itself called a power of attorney. A paper giving a power of attorney should be clear and understandable.

5.      Importance of Power of Attorney: A power of attorney document is an extremely important part of estate planning yet one of the most misunderstood. It is often convenient or even necessary to have someone else act for you as there is advancement in the business and commerce transactions. As many people confuse the power of attorney (POA) with a will (Probate), but these documents are two very different things and have two very different functions. A will comes into effect on the day person die. A POA applies during a person’s lifetime and ceases to apply when he dies. So you actually need both a POA and a will as they complement, and do not overlap, each other. To add a twist to the subject, there are two types of POA: one for property and one for personal care. These two types are completely separate. They deal with different areas of your life and both are required for effective estate planning.

6.      Classification of Attorney: The Power of Attorney can be classified into two categories which includes:

                                I.            General Power of Attorney: A general power of attorney is one by which an instrument is executed by the principal authorising the agent to do certain acts in general on his behalf. The word ‘General’ here means that the power must be general regarding the subject matter and not general with regard to powers in respect of a subject matter. If the subject matter is not general but restricted to something either specific or specifically mentioned by the principal while drafting an instrument then it will not constitute a general power of attorney. It is otherwise called as limited power of attorney.

                              II.            Special Power of Attorney: A special power of attorney is one by which a person is appointed by the principal to do some specified act or acts. In this type of power of attorney, an agent conferred with a power to do specific act in a single or specified transactions in the name of the principal.

                            III.            Durable Power of Attorney: A Power of Attorney which specifically says otherwise, agent’s power ends if principal become mentally incapacitated. However, a power of attorney may say that it is to remain in effect in the event of future incapacity of the principal.  A power of attorney that says this is called a durable power of attorney.

To ascertain whether power of attorney is of general or special in   nature, the subject matter in respect of which power is conferred Is to be seen accurately. The power of attorney is the unilateral document wherein donor or the principal gives authoritative power to the agent by signing the document and the agent’s sign is not always required.

7.      Persons Competent To Execute: A power of attorney can be executed by any person who is competent to enter into a contract. However, the married women can execute powers of attorney even if they are minors. A company while executing power of attorney must make conformity with the ‘Articles of Association’ and its common seal. A person must be competent to give power to the appointed person so that it will not affect the legality of the instrument/deed of power of attorney.

8.      Authentication of power of Attorney: As per Indian law, a power of attorney is a legal document that has to be properly framed, using the right legal terminology and setting out the objectives and responsibilities that you wish to authorise the appointee to carry out on your behalf. If a person wants to authorise someone to act as a power of attorney on his behalf, it must be signed and notarised by a certified notary advocate, who is able to declare that you are competent at the time of signing the document to issue the said power of attorney. You will need to show your ID to the notary advocate before he/she is able to certify and issue the document. It must be executed and authenticated by the registrar or sub-registrar of assurances as per the ‘Registration Act, 1908’.

9.      Presumption About Power of Attorney: A power of attorney is legal written document which has more legal value and the authenticated attorney will be presumed by the court as legal document under ‘Indian Evidence Act, 1872’. According to the Section: 85 of ‘Indian Evidence Act, 1872’, which provides that the court shall presume that every document purporting to be a power of attorney, and has to be clearly authenticate and executed before the notary or magistrate. If there is any issue arises concerning to the genuineness of the attorney then proof of its execution can be called for the verification.

10.  Language of The Power of Attorney: An instrument of power of attorney must always use the language known to the donor and if the donor is an illiterate person then scribe and identifier should explain all the contents of the document in the language known by the donor and it has to be certified by the donor that he has understood all the contents and then he has to put thumb mark on the document. Lastly the administrative officer will take the oath from the donor stating that he knows all the contents of the document and he knows the identifier. A sign and seal must be put by the administrative officer after complete verification of the document.

11.  Original Documents To Be Verified: A power of attorney which is accurately authenticated by the notary or any magistrate, an affidavit has to be filed with all the original documents of the power of attorney authorising an agent to do certain acts. All the documents will be verified by the court and then court will register power of attorney by putting seal and sign. It is very much essential to make the power of attorney valid.

12.  Powers of Attorney by Two or More Persons: A power of attorney may be executed by two or more persons jointly in favour of one or more persons and when there are several persons as attorneys a complete authorisation in letter to be given by one of them for acting severally. A clause should be included while drafting the deed of power of attorney that all the attorneys should act jointly or separately.

13.  Duration of Granted Power: A general power of attorney remains in force unless expressly revoked or determined by the death of either of the party. A special power of attorney will be in force until the specified act is not completed. Duration of the power will depend upon the type of the attorney or there may be a fixed period of power granted by the principal which must be included in the deed.

14.  Revocation of Power of Attorney: A power of attorney may be revoked at any time by the principal or donor by giving a written notice to the agent, unless it is for a particular fixed period. Revocation usually possible when principal dies or becomes insane or becomes bankrupt. The principal himself can revoke power of attorney if the business for which the agent was appointed is over as mutually agreed upon by the principal and agent. In case if principal has named a spouse or registered domestic partner as his agent, his or her authority to act under the power of attorney is automatically terminated in the event of divorce, legal separation or termination of the registered domestic partnership.

15.   Registration: A power of attorney is not compulsorily registrable unless it creates an interest in any immovable property i.e. charge in favour of donee.  Registration of power of attorney is optional In India, where the ‘Registration Act, 1908’, is in force, the Power of Attorney should be authenticated by a Sub-Registrar only, otherwise it must be properly notarized by the notary especially where in case power to sell land is granted to the agent. If a power of attorney is in respect of an immovable property of value more than Rs100 it must be registered. Registration of power of attorney authenticates the deed of power of attorney.

16.  Stamp Duty: A power of attorney is chargeable under Section: 48 of Schedule 1 of the ‘Indian Stamp Act, 1899’. A stamp duty has to be paid compulsorily by the principal or donor in the jurisdictional registrar’s office.

17.  Legal Powers Which Can Be Granted To The Attorney:  Broadly speaking a power of attorney provides an agent “all powers that the principal has” to manage the principal’s financial affairs or make health care decisions may be enough for many purposes. An agent may be authorised to:

i.            To execute all contracts, deeds, bonds, mortgages, notes, checks, drafts, money orders.

ii.            To manage, compromise, settle, and adjust all matters pertaining to real estate.

iii.            To lease, collect rents, grant, bargain, sell, or borrow and mortgage.

iv.            To sell any and all shares of stocks, bonds, or other securities.

v.            To file, sign all tax returns, insurance forms and any other documents.

vi.            To enter into contacts, and to perform any contract, agreement, writing, or thing to make, sign, execute, and deliver, acknowledge any contract, agreement.

vii.            To make health-care decisions for the donor or his minor children.

viii.            To sue on behalf of the principal.

18.  Qualifications of An Attorney: It is the duty of the Principal to appoint a responsible person as agent who should act with utmost good faith. An attorney is a person who has been appointed by the donor to act on his behalf. An ideal attorney is that who must be willing to act in that capacity and he has to be impartial having integrity. An attorney should be loyal to the donor and should not disclose any confidential matters related to the business.

19.  Duties of The Attorney Holder: An attorney holder is a person who is authorised by donor legally. An attorney must not exceed the authority given under the power of attorney. If the attorney does exceed their authority, he or she may be liable for any damages suffered by the donor or others. The attorney may, however, do all those acts which are authorised, but only by a particular method, if the power of attorney so indicates. If there is a breach of any condition by the attorney then he shall be liable to the donor except in a case where he has acted reasonably. If there is some doubt as to the wording of the power of attorney, a solicitor should always be consulted. The attorney holder must also act towards the donor with the utmost good faith and tell the donor the nature and extent of any interest which may conflict with his or her duty. An attorney may pass on his or her powers and duties to another person but only if authorised to do so by the power of attorney

20.  Other Related Aspects:

  • Construction Rules: The general rule of power of attorney is that it should be strictly construed. Unless an express power is conferred on an agent to enter into contracts of guarantees on behalf of his principal or to execute or negotiate, negotiable instruments for his principal jointly with others. An agent cannot by his acts bind the principal to a larger extent than he is empowered to do under the power of attorney. He cannot be sued or otherwise held responsible for fraud by the agent. If the power does not authorise the agent to carry on a business except with limitations any act done by him in excess of such power will not bind the principal. For example power to dispose of property does not confer a power to mortgage the property. Power to manage immoveable property cannot permit principal’s ornaments which are a moveable proper.
  • Drafting of Power of Attorney: A deed of power of attorney must be construed so as to include all powers necessary for its execution. There is no legal requirement that a power of attorney be prepared or reviewed by a lawyer. However, if important powers are going to be given to an agent, it is wise to get individual legal advice before signing a complicated form. A person who signs a power of attorney without fully understanding what it means, and without considering risks and alternatives, is asking for trouble. So a power of attorney must be drafted carefully and after knowing all its clauses written in the deed document.
  • Risk Involved In Granting Power of Attorney: With a power of attorney, an agent is often entrusted with important decisions.  And the agent may have access to some or all of Principal’s money or other property.  If the agent is not trustworthy, serious problems can result.  For example, if the agent is dishonest and runs away with Principal’s money, it may be difficult or impossible to get the money back. An agent is not permitted to use principal’s property for his or her own benefit unless he is expressly authorised to do so. Also, a principal will ordinarily be bound by the agent’s acts (even foolish acts) and will be responsible for the agent’s negligence while the agent is acting for the principal.  For example, if an agent is authorized to manage your financial affairs and signs a contract to purchase something on your behalf, you will ordinarily have to pay for it, like it or not. It is obviously important to choose a trustworthy agent; if no trustworthy candidate is available, a power of attorney should not serve its purpose.
  • 21.   Conclusion: A power of attorney is very essential legal document which can be admitted as a evidence in the court of law whenever there is any breach of trust by the attorney holder. It’s therefore essential that principal has great confidence in his designated attorney. An agents must be someone principal can trust, without reservation, to use his property for him and not for themselves, or anyone else.

Dhawesh Pahuja

Advocate

Bangalore

CONVEYANCING OF SALE DEED AND ITS REQUIREMENTS

property-transferCONVEYANCING OF SALE DEED AND ITS REQUIREMENTS 

Conveyancing has been practiced as a fine art in England by a class of trained lawyers who have specialized as conveyancers after an intensive study of the law relating to contracts and real property. Though the term conveyancing used by most of the England Lawyers for drafting the documents of their clients but as the years rolled by Conveyancing got its own importance even in India too. In Modern India Draftsman plays an important role while drafting any legal documents or deeds and he can do so if he is high qualified in the field of law so draftsman must keep in mind all the legal principles before preparing any legal documents or deeds.

                 The word ‘CONVEYANCING’ means lend transfer inter-vivos i.e. two living persons. Conveyancing is an art of drafting deeds and legal documents whereby any right, title or interest in tangible immovable property is transferred from one person to another. Conveyancing is not just an ordinary art but it is thoroughly based on legal knowledge and principles evolved over years. The term conveyancing is restricted to deeds and documents concerned with the transfer of property whereas drafting carries a general meaning that of preparing any legal documents or deeds or any other business oriented documents.

                  The word ‘SALE’ defined under Section 54 of “The Transfer of Property Act, 1882” is a transfer of ownership in exchange of price paid or promised or part-paid and part-promised. It means absolute transfer of tangible immovable property by the vendor to the purchaser by entering into a contract for sale wherein both the parties will settle the terms and conditions of transfer. In a sale of immovable property an ‘Encumbrance Certificate’ will be passed to the purchaser by the vendor whereby all the statutory rights i.e. easementry rights, beneficiary rights, actionable claims as well as vested interest in the immovable property will be transferred in-toto.

                                      The word ” SALE DEED”  otherwise called as ‘Conveyance Deed’ is a legal written document executed by the vendor and the purchaser which evidences the sale and transfer of ownership of the tangible immovable property. A Sale Deed which is governed by ‘The Registration Act, 1908’, always executed after the execution of the agreement to sell, based on the terms agreed between seller and buyer mutually. A sale deed is the legal document which assists in identifying the title of the seller and consideration amount agreed between parties. A sale deed acts as a main document for the further sale of the property by the purchaser as it establishes the proof of ownership of property.

 

Requirements of Sale Deed

A draftsman must include certain clauses while preparing the construction of the sale deed which are as follows:

 

v Parties to Sale Deed: An absolute sale deed must contain the names, age and respective addresses of parties to the transaction and both the parties i.e. seller and buyer must be competent to enter into a contract so that it will not affect the validity of the valid sale. It is very much important that the sale deed is duly signed and executed by both the parties with their bona-fide intention. A valid sale deed must start with clear name of the deed and description of the parties.

v Agreement to Sell: An agreement to sell which protects interest of the buyer and seller has to be executed on a non-judicial stamp paper and the same has to be duly signed by both the parties. It can be considered as legally valid evidence in a court of law. The seller must state all the material defects of a property and consideration amount paid as advance in the agreement and it is the right and duty of the buyer to investigate the title before buying the property.  A Sale consideration clause must also be included in the agreement to sell along with the mode of payment.

v Description of the Property Sold: A valid sale deed must contain full description of the property which is the subject matter of sale. It must include identification number, total plot area, construction details as well as its location with its surrounding areas. A schedule of the property must be included in the sale deed which will define the exact location where the property is actually situated.

v Passing of the Title: A sale deed should contain the clause when the   original title of the property to be passed to the purchaser. A time limit should be given to the seller for the transfer of the title. Once the title of the immovable property is transferred, all the rights will pass to the purchaser along with the possession.

v Indemnity Provision if any: A seller must clear all the statutory charges i.e. property tax, electricity charges, water bills, cess, society charges, maintenance charges and all other charges relating to the property before the execution of the sale deed. In case there is any encumbrance on the property, the seller needs to repay the loan amount and get the property papers cleared of the encumbrance.

v Execution and Testatum: A drafted sale deed shall be executed by affixing thumb impression or full signature of the parties. Each page should be signed by the seller and buyer. Any alteration, addition or deletion is to be authenticated by full signature of the parties. Execution of the sale deed requires to be witnessed by two witnesses with their addresses.

v Registration: According to Section: 17 of ‘The Registration Act, 1908’, the registration of a tangible immovable property is compulsory if the value of the property exceeds Rs: 100/- and it is the registration of the property which makes the sale valid. Both the parties must be present before the jurisdictional sub-registrar office with the original documents within four months from the date of execution. A stamp duty has to be paid by the purchaser to the sub-registrar whereby registrar will issue a certified copy of registration to purchaser.

v Original Documents: Once the property gets registered under the registration act all the original documents of the sold property to be hand over by the seller to the purchaser. All the statutory rights along with ownership, possession, title, interest will get vested in favour of the purchaser.

v Default clause: An agreement for sale of immovable property should include the clause stating if there is any default by the vendor or the purchaser then the party who rescinds the contract need to pay damages to the other party for the breach of contract so that it will not affect to the execution of the sale deed.

                                                    

DHAWESH PAHUJA                                                                                                             ADVOCATE                                                                                                                   BANGALORE 

Mob:09008793791  

E-mail:advocatedcp@yahoo.com

REVERSE MORTGAGE

sale-buy-lease-property-250x250REVERSE MORTGAGE

 A ‘Mortgage’ means transfer of an interest in a specific immovable property for the purpose of securing the payment of money advanced as a loan, an existed or future debt. The transferor is called a ‘Mortgagor’ and transferee a ‘Mortgagee’ and an instrument by which transfer is made called ‘MORTGAGE DEED’ which actually depends upon the payment of money secured as ‘Mortgage Money’ as defined under ‘Section:58’ of  ‘The Transfer Of Property Act, 1882’.                                                                                                                                                                             

              ‘Reverse Mortgage’ is the new concept in India and less effective though it is very popular in the western countries, but in India it can be seen as from the numbers of persons i.e. 150 persons have availed its benefit till now and this type of mortgage is basically helps senior citizens to get regular payments from the financial entities or banks  against the mortgage of his property. A reverse mortgage is totally a different concept from a regular mortgage process where a person pays the bank for a mortgaged property and unlike other loans, this need not be repaid by the borrower.

              ‘Reverse Mortgage’ is one of the important types of mortgage where owner of the immovable property surrenders his title of the property to a financial entity or bank. The concept is simple, a senior citizen who holds a house or property, but lacks a regular source of income can put mortgage his property with a bank or housing finance company (HFC) and the bank or financial entity pays the person a regular payment. The good thing is that the person who ‘reverse mortgages’ his property can stay in the same house for his life time and continue to receive the much needed regular payments. So, effectively owner of the property will continue to stay at the same place and also get paid for it. Any house owner over 60 years of age is eligible for a reverse mortgage and the maximum loan which can be granted is up to 60% of the value of residential property. The Reverse Mortgage is otherwise called as lifetime mortgage.

              ‘Reverse Mortgage’ loan amount based on the three things i.e. value of the property, term of the mortgage agreement and rate of payment with interest which depends upon the age of the owner of the property/ borrower of the loan amount. A mechanism for valuation and computation of the mortgage property depends upon the law of probability which will be assessed by the professionals. The loan amount can be provided through monthly, quarterly, half-yearly or annually or lump sum money based on the mutual understanding of the parties to the mortgage agreement. The maximum period of a loan which can be provided by the banks to the reverse mortgage borrower is for 15 years but the lender has to revaluate the property at least once in the 5 years so that it will assist him to get more money as a loan from the bank which is totally based on the value of the property. The value of the property is generally revisited periodically, if the value of the property increased then senior citizen will get an option to increase the loan amount.

                  An advantage of the Reverse Mortgage scheme is that the owner of property will not be liable to pay Income Tax under ‘Income Tax Act’ because in reverse mortgage transaction whatever amount has been received either in lump sum or monthly installment by the owner of the property as loan amount, will not be considered as a Income earned. A reverse mortgage scheme which is basically for the benefit of senior citizens, however in a reverse mortgage transaction any transfer of capital asset will not be considered as transfer or alienation of immovable property as it is also stated by the central government notification, hence it will not attract the provision of capital gains tax.

                     The financial entity or the bank has authoritative power to recover the loan amount, wherein it has been conferred with a right to sell the mortgage property in the case if incumbent or borrower either passes away or leaves the house. The loan amount can be repaid or prepaid by the legal heirs of the borrower at any time during the period of loan with the accumulated interest amount and have the mortgage released without resorting to the sale of property. In case if there is a sale of mortgage property by the bank for repayment of the loan amount then whatever is the additional amount received by the bank need to be paid to the heirs of the senior citizen but only after clearing the loan amount payment  by the bank.

                    The reverse mortgage scheme offered by some of the leading banks in India could bring the required answers to the suffering senior citizens. Most of the people in the senior age groups, either by inheritance or by virtue of building assets have properties in their names, but they were not able to convert it into instant and regular income stream due to its illiquid nature. The ‘Union Budget 2007-2008’ had a great proposal which introduced the ‘Reverse Mortgage’ scheme. A Reverse Mortgage scheme is always provides more benefits to the senior citizens who does not have any source of income and through this scheme owner of the property can ensure a regular cash flow in times of need and can enjoy the benefit of staying in the property as well. But a reverse mortgage scheme is a big failure in the country like India where number of persons using this scheme is very less. Reverse Mortgage thus, is very beneficial for senior citizens who want a regular income to meet their everyday needs, without leaving their houses.

DHAWESH PAHUJA

ADVOCATE

BANGALORE

MOB: 09008793791

E-mail:advocatedcp@yahoo.com