What is Power of Attorney?

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What is Power of Attorney?

A power of attorney (POA) is a legal document which talks about the authorization provided by one person (called principal or donor) to another person (called agent or donee) to act on his (donor) behalf. Here, the word “Power” describes the transfer of right to execute and “Attorney” means representative of the principal. Basically it is a legal procedure which grants power to the another person in order to act as his legal representative.

Key-Highlights

  1. POA is a legal instrument which gives a Legal permission to the agent on the behalf of principal.
  2. It enables the agent to make judgments on the behalf of principal in the authorized matter as per the deed of Power of Attorney.
  3. An attorney can be solicitor or someone trusted by the granter of the power.
  4. The POA is valid until the agent is alive. It can be ceased to operate when the person dies.

Law of Power of Attorney is governed by the provisions of The Power of Attorney Act, 1882. Power of Attorney is the instrument empowering a person to act for and on behalf of the person executing the same. Attorney or to say Agent is formally appointed by the principal to do some act on his behalf and to manage the affairs of the principal. Execution of Power of Attorney is valid in law and subject to the provisions of the Act.

Grant of Power of Attorney is governed by Chapter X of The Indian Contract Act. A deed of Power of Attorney is executed by the principal in favor of the agent. Power of Attorney holder is the authorized agent, appointed by executing Deed of Power of Attorney, under the provisions of Section 182 of Indian Contract Act., who got “RIGHT” to do an act on behalf of the principal. It  is  delegation of authority/Right in writing by principal who  empower someone  to do an act in the name of Principal. As defined under Section 184 of Indian Contract Act, any person, who is at the age of majority and of sound mind, can become agent.

Power of Attorney need not to be attested or registered. But if itauthorizes a person to present a document for registration under sec. 32 of Registration Act, it must be executed before and authenticated by the registrar or sub- registrar. Section 17 of The Registration Act, 1908, defines the documents, which registration is compulsory. Deed of Power of Attorney is transfer of RIGHT to someone and its registration is necessary, if and when the Right to transfer of immovable property is delegated. Attorney who got power vide unregistered Power of Attorney, is not entitled to execute Regd. Sale Deed to transfer the immovable property ( Land& Building).

Where the registration Act is not in force, it must be executed before and authenticated by any Magistrate. If executed out of India, it must be authenticated by a Notary Public or any court of Judge, Magistrate, British Council or Vice Council or representative of Govt. of India. The court before which it is produced will presume its genuineness and formal proof of education will be dispensed with; (Sec. 85 of The Indian Evidence Act., 1872).

Section 5 of The Transfer of Property Act, 1882, defines transfer of property. Execution of Power of Attorney to execute and sign sale deed on behalf of the principal is not amounting to transfer of Title over the immovable property. In the judgment passed by S.C. in the case SLP(C)13917 OF 2009, of Suraj Lamp and Industries Private Limited vs. State of Haryana &Anr. (2012) 1 SCC 656, Clearly ruled out that executing Power of Attorney is not amounting to transfer of immovable property.

Power of Attorney is also defined under S. 2(21) the Indian Stamp Act, 1899 (Indian Stamp Act) according to which Power of attorney includes any instrument (not chargeable with a fee under the law relating to the Court fees for the time being in force) empowering a specified person to act for and in the name of the person executing it.

Certified copy of Power of Attorney is provided only to the executant/ principal and/or to the attorney holder. It is not provided to third party.  Even Power of Attorney can’t be searched at the office of sub registrar by the third party. Clearly stating genuineness of Power of Attorney can’t be proved in absence of Certified Copy of said Power of Attorney.

Classification of Power of Attorney-

  1. General POA: This type of POA has a vast scope. It entitles the agent to make almost any decision in the favour of principal such as opening financial accounts, real estate deal etc. His authority over the matters is broad. This type of POA revokes when the principal becomes incapacitated or passes away.
  • Durable POA– The power of attorney which says, the agent can serve even after the principal becomes mentally incapacitated; hence it is called Durable POA. But the Durable POA only serves as per the specified purpose in the agreement.
  • Special POA– The power of attorney in which, the agent has a limited power, only for a specific task which has been mentioned by the principal in the agreement, for example selling or buying a building etc. Hence it’s known as a Special POA. In this case, after the completion of the specified role POA becomes Nul and Void.

Springing Durable POA – The power of attorney in which, the agent becomes “Representative” when the principal becomes mentally incapacitated. Hence, it’s called springing quickly to act at such times. In some US states and other jurisdictions, this kind of POA can also be seen.

Execution Procedure:

To make a Power of Attorney legally valid or applicable, it must be signed with a date by the principal. In some jurisdictions, witness, notarization or both can be required. Notarization simply strengthens the stand while a legal challenge, if required in the future. Stamp paper plays a vital role here; it should contain a clear and understandable content then signed by the principal, which assigns the power of Attorney.

  • Joint Power of Attorney– A power of attorney can be executed jointly i.e. two or more people. It can be in favour of one or more person. A statement should be enclosed in the drafted deed of Power of Attorney that all the attorneys should act jointly or separately.  
  • Language- The content of the power of attorney must use the language known to the principal. In case if the principal is illiterate then scribe and identifier should elaborate whole content in the language understandable by the principal. The principal has to certify that he has understood the content by giving thumb impression on the document.
  • Stamp Duty-. Under section: 48 of schedule 1 of the Indian Stamp Act, 1899, a power of attorney is chargeable. The specified amount of stamp duty has to be paid by the principal in the jurisdictional registrar’s office. The stamp duty amount can vary as per the location.

Conditions to be fulfilled by the Principal who Appointed POA:

  • Mentally competent – The principal should be of sound mind while signing the document.
  • Willingness- Principal must not be compelled to sign. The principal must be acting without any pressure.
  • Witness- There must be two persons unrelated to each other present while principal is signing the document. In some cases, the document should be notarized.

Revocation of the Power of Attorney

  • A POA is revocable; under this, the principal can send written notice to the agent anytime unless it is for a fixed period.
  • Legally revocation is generally possible in case of principal dies or becomes mentally ill or becomes bankrupt.
  • The principal can revoke POA with mutual agreement with the agent, once the specified duty is fulfilled by the agent.
  • In case, the spouse has been signed as the agent, his or her right to act under POA gets terminated automatically if the conditions like divorce and legal separation occurs.
  • Regd. Deed of Revocation of the Power of Attorney must to be executed, if there is registered POA
  • Irrevocable power of attorneys can also be made as per the juridical guidelines.

Conclusion: Overall basic Power of Attorney is similar in the world. In this, one should be careful about the choice of agent; it must be reliable and educated enough to full fill all the requirements.  A POA agent can have access on various things like bank accounts in order to transfer the funds, selling, donating on principal’s behalf etc. In any condition, the agent does not have the power to bind the principal in order to extend the POA after completion of the authorized work. Any kind of abuse of POA by an attorney can take him to the civil court.

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