What is Power of Attorney?

Power of attorney is a legal document that authorizes one person to represent and take decisions on behalf of another, generally on matters related to property, finance, banking, or other matters of legal significance. It is typically executed when the individual on whose behalf the actions are taken is out of the country or is rendered incapable of taking such decisions because of illness or old age. The person who gives a power of attorney is known as the ‘Donor,’ whereas the person to whom a power of attorney is given is known as ‘Donee.’

Power of Attorney Act of 1882:

The power of attorney Act of 1882 lays down certain provisions with regards to the legality and validity of appointing a power of attorney. Section 1(A) of the Act defines power of attorney as:

1A. In this Act, “power-of-attorney” includes any instrument empowering a specified person to act for and in the name of the person executing it.[1]

A power of attorney is, therefore, a legitimate written instrument authorizing one individual to carry out actions and take decisions on behalf of the other, when the latter is indisposed or out of the country.

Indian Contract Act of 1872:

The relationship between a donor and donee of a power of attorney is equivalent to that of an agent and principal as mentioned under the Indian Contract Act of 1872. Section 182 of the Indian Contract Act lays down the definition of Agent and Principal

182. An “agent” is a person employed to do any act for another or to represent another in dealings with third persons. The person for whom such act is done, or who is so represented, is called the “principal.”[2]

It is essential for a power of attorney to be valid that the donor and donee, otherwise known as the principal or agent are of sound mind and above the age of 18. This restriction has a limitation. A married woman is capable of executing a power of attorney, even if she is a minor. [3]

Registration of a Power of Attorney:

It is important to get a power of attorney registered. Depending on its type, a power of attorney can fall under section 17 or section 18 of the Registration Act of 1908. [4]Even though it is not mandatory to get all power of attorney registered, it is advisable to do so. Registered power of attorney serves as evidence and makes it easier to prove the principal and agent relationship, thereby offering an easy solution to potential disputes relating to liability.

Types of Power of Attorney:

• General Power of Attorney: A general power of attorney is executed in a general context. This document gives the agent greater authority in executing actions on the principal’s behalf. A general power of attorney authorizes the agent to perform general tasks. There should not be any mention of a specific action in a general document. The amount of trust factor involved in the execution of a general power of attorney should also be greater than the specific power of attorney. General authorizations can be given on matters of property, banking, taxation, legal disputes, and so on.
• Specific Power of Attorney: Specific Power of Attorney or special power of attorney, on the contrary, is executed for a specific purpose. The authority given by the principal to the agent is therefore significantly lesser. A specific power of attorney is given out for completing a particular action, and as soon as the action is finished, a power of attorney comes to an end. A principal may have multiple specific power of attorney.
• Durable Power of Attorney: A durable power of attorney continues even after the death of the principal. It should be expressly mentioned in the power of attorney deed.
• Non-Durable Power of Attorney: When it is not mentioned in the power of attorney deed that it should be continued even after the principal’s death, it is by default non-durable power of attorney deed.

Revocation of a Power of Attorney:

A power of attorney may also be revoked or cancelled in most of the cases.

• Under section 201 of the Indian Contract Act, an agency can be terminated when the principal revoked his/her authority or when the agent renounces his/her business of the agency. It also mentions that an agency can be revoked if the principal or agent dies or becomes of unsound mind. [5]
• Section 202 of the Indian Contract Act talks about situations when agency cannot be revoked ‘Where the agent has himself an interest in the property which forms the subject matter of the agency, the agency cannot, in the absence of an express contract, be terminated to the prejudice of such interest.’[6]

Conclusion:

A power of attorney can, therefore, be given by anyone. It is, however, most commonly used for property matters of non-residential Indians. A power of attorney deed consists of the name and addresses of the donor and the done, the purpose of giving the power of attorney, the powers and authority that are granted to the agent and the date of incorporation and termination.

This is all about the Power of Attorney in India in brief.

[1] Power of Attorney Act (1882) section 1(A)

[2] The Indian Contract Act (1872) section 182

[3] Power of Attorney Act (1882) section 5

[4] The Registration Act (1908) section 17 and 18

[5] The Indian Contract Act (1872) section 201

[6] The Indian Contract Act (1872) section 202