Our Ref: LJ/PJ/12/2005
Dated: December 15, 2005
Senior Assistant Vice President
45, Dilkusha Commercial Area
RE: LEGAL OPINION, A/C. COMPANY 1.
We refer to your letter dated 21.11.2005 and our opinion dated 09.12.2004 on the above subject.
We have perused the contents of your letter dated 21.11.2005.
It appears that Mr. M and Mr. N appointed Company 1 (Attorney) vide IGPA dated 14.07.2003 as their true and lawful attorney empowering the attorney inter alia to mortgage and sell the land, but no provision has been incorporated entitling sub-delegation of the power under that IGPA.
It further appears that the Attorney has mortgaged the land with the Bank and also executed an IGPA in favour of the Bank to sell the mortgaged property.
Now the Bank has sought our opinion as to whether the above IGPA executed by the Attorney in favour of the Bank is valid, if not what would be the Bank’s best course of action.
We are of the view that as the IGPA is executed by the Attorney without any express authority from the other Landlords/Principal, this IGPA cannot bind the Landlords/Principal. Hence, the Bank may face legal complication in the event the Bank in future intends to sell the mortgaged property on the strength of this IGPA.
However, by virtue of section 196 of the Contract Act 1872, if the Landowners ratify such unauthorised act of the Attorney then the IGPA may bind the Landowners and shall then be deemed as if the Attorney had been performed by his authority.
We therefore enclosed herewith a draft Letter of Confirmation/Ratification to be issued by the other Landowners ratifying the unauthorised act of the Attorney. Such Letter of Ratification is advised to be executed before a Notary Public.
Should you have any further query, do not hesitate to contact the undersigned.