Power of Attorney in India: Scope, Manner and purposes
Introduction
In the contemporary age of globalization, individuals are often expected to handle multiple tasks and perform various types of work within a short timeframe. Additionally, engaging in contracts and agreements related to business and other transactions has become a common and essential aspect of daily life. However, it is not always feasible to personally execute all tasks, necessitating the delegation of functions to others. This delegation, facilitated by a legal instrument known as a 'Power of Attorney,' becomes crucial.
The individual granting authority through this instrument is referred to as the Principal, while the person authorized to act on behalf of the principal is termed the Agent. The agent possesses the authority to make decisions on financial, property-related, and other matters where the principal may be absent or incapacitated, as governed by the Powers of Attorney Act of 1882.
Definition of Power of Attorney
According to Halsbury's Laws of England, a Power of Attorney is a formal document in which one person, the donor, grants another person, the donee, the power to act on the donor's behalf in performing specific acts or classes of acts.
Sections 1A of the Powers of Attorney Act, 1882 provides “Power of Attorney includes any instrument empowering a specified person to act for and in the name of the person executing it.” and
Section 2(21) of the Indian Stamp Act, 1899, provides legal definitions of Power of Attorney as “any instrument empowering a specified person to act for and in the name of the person executing it”
Power of Attorney can be categorized into two types:
1. General Power of Attorney: Grants broad authorization to the agent, allowing them to make decisions on medical, legal, financial, or contractual matters.
2. Special Power of Attorney: Provides a narrow mandate, restricting the agent to specific matters or transactions on behalf of the principal.
Legal Powers Granted by the Power of Attorney
A Power of Attorney grants the agent all powers possessed by the principal, including the authority to execute contracts, manage real estate matters, sell securities, and make health-care decisions.
The broad powers that can be given through this instrument can be recognized as “To carry out the execution of all contracts, deeds, bonds, mortgages, notes, checks, drafts, money orders, and similar financial instruments. This includes managing, negotiating, settling, and handling all matters related to real estate. Additionally, the authority extends to leasing, collecting rents, granting, bargaining, selling, borrowing, and mortgaging real property. The agent is empowered to sell any and all shares of stocks, bonds, or other securities. Moreover, the agent is authorized to file and sign all tax returns, insurance forms, and any other necessary documents. The scope of authority also encompasses entering into contracts and performing any contractual obligations. The agent has the authority to make, sign, execute, and deliver agreements, and to acknowledge any contracts or agreements on behalf of the principal. Furthermore, the agent is entrusted with making health-care decisions for the donor and their minor children. Lastly, the agent is authorized to represent and sue on behalf of the principal in legal matters.”
Who is Competent to Execute Power of Attorney
Any competent individual, above the age of 18 and of sound mind, can execute a Power of Attorney. Married women can also do so, even if they are minors. Companies must adhere to their 'Articles of Association' and common seal when executing a Power of Attorney.
Execution of Power of Attorney outside India
NRIs can execute a Power of Attorney outside India for property, banking transactions, or other matters in India. The document must be authenticated/attested by the Indian Embassy/consulate where executed.
Authentication of Power of Attorney
A Power of Attorney in India must be properly framed, signed, and notarized by a certified notary advocate. Registration is not compulsory under the Indian Registration Act of 1908.
Duration and Revocation of Power of Attorney
The duration of a Power of Attorney depends on its type or may be for a fixed period specified by the principal. It remains in force until revoked by the principal, completion of the specified act, or other conditions outlined in the instrument.
i. In the event that the Principal personally withdraws the authority granted to an agent.
ii. If either the 'Principal' or 'Agent' becomes incapacitated.
iii. When a competent court of law with jurisdiction declares either the 'Principal' or 'Agent' insolvent.
iv. When the holder/agent of the 'POA' voluntarily relinquishes the agency.
v. Upon the completion of the purpose or business for which the 'POA' was executed.
vi. In the event of the death of either the Principal/Donor or Agent/Donee.
vii. Instances specified in the terms of the 'POA' executed between the parties where 'Implied Revocation' occurs.
Landmark Judgments Supreme Court on Power of Attorney:- Click on the Judgment to read:-
- GHANSHYAM VERSUS YOGENDRA RATHI- CIVIL APPEAL NOS.7527-7528 OF 2012
- Suraj Lamp & Industries Pvt. Ltd. Vs. State of Haryana & Anr. SLP (C) NO.13917 OF 2009
- State of Rajasthan vs. Basant Nehata CIVIL APPEAL- 7800/2001
- Manik Majumder and Ors Versus Dipak Kumar Saha (Dead) through Lrs. & Ors CIVIL APPEAL NO. 2965 OF 2022
- AMAR NATH VERSUS GIAN CHAND AND ANR. CIVIL APPEAL NO. 5797 OF 2009