Regd.Society-availing loan/Resolution/POA
nishad
(Querist) 10 March 2010
This query is : Resolved
Hi All,
I got an issue to be resolved.Solicit your expert advise.
A society registered under the Karnataka Society Act.It runs three educational institutions.The society approached a bank for a loan to construct a building in one of the institutions run by the society.
The society vide its resolution of the governing body authorized the Administrator of the institution[where building is constructed] to execute loan documents and to operate loan account in the bank.
My question is whether a POA to be executed in favour of the Administrator of the institution to act on behalf of the society? or a resolution of the governing body will suffice? Please advise
nishad
(Querist) 10 March 2010
Further on a broader level under what circumstances a company or regd.society need to execute a POA in favour of its own employees to act on its behalf?
nishad
(Querist) 10 March 2010
this does not involve any immovable property transcation
A V Vishal
(Expert) 10 March 2010
A resolution of the governing body will suffice.
Raj Kumar Makkad
(Expert) 10 March 2010
In the given facts it shall be better to just pass a resolution and provide powers in favour of any employee or any person to execute a specific work/job/action.
In reply to your second question, I am of the view that POA is a very confidential matter and it is provided only to the most confident persons to perform a specific work. The possibilities of misuse of POA generally occur so it is advised to just pass a resolution in favour of such persons to perform any specific job. POA requires registration whereas resolution is an internal matter which can even be changed at any time.
Parveen Kr. Aggarwal
(Expert) 10 March 2010
Corporate Bodies are not natural persons but treated as separate legal entities by virtue of legal provisions. Such artificial persons cannot act personally. So they act through authorised persons. Governing Body or the Executive Committee (or by whatever name called) of such Bodies are competent to take decisions. It is generally said that Corporate Bodies speak and act through resolutions. It is sufficient to authorise a person through resolution passed by Governing Body to execute loan documents on behalf of the Society. No Power of attorney is required. However, for operating bank account generally provision is made in the Rules and Regulations (or Articles of Association) of the Society. If there is no such provision in the Rules and Regulations, then a resolution of Governing Body authorising any office bearer will serve the purpose. For the purposes of executing of loan documents and operating of bank account on behalf of the society there is no necessity of execution of power of attorney.
Kumar Thadhani
(Expert) 11 March 2010
I do agree with expert.Mr.Parveen.
nishad
(Querist) 11 March 2010
Thanks all..but under what circumstances a POA is required to be executed in favour of its employees.Is there any specific act which requires POA and cannot be authorised by board resolution.
For example POA will be given to branch managers of a bank to act on behalf of the bank.why is that not possible to authorise the same vide resolution and requires a POA?
requesting ur help to understand things on macro level
Parveen Kr. Aggarwal
(Expert) 12 March 2010
There is no specific act for which Power of Attorney is required. A resolution of the Governing Body is sufficient. However, Power of Attorney is granted to branch managers because they have to prosecute and defend multiple litigation on behalf of the Society at different places and in case of resolution minute book is to be produced in the court for inspection during the evidence to prove resolutions which is practically difficult whereas power of attorney carries presumption with it under section 85 of the Indian Evidence Act, 1872 which is reproduced below:
"85. Presumption as to powers of attorney:- The Court shall presume that every document purporting to be a Power of Attorney, and to have been executed before, authenticated by, notary public, or any Court, judge, Magistrate, Indian Consul, or Vice Consul, or representative of the Central Government, was so executed and authenticated."
