What is the meaning of Power of Attorney?
What is the Power of Attorney?
A Power of Attorney is a legal instrument whereby one person gives another person the authority to act on his or her behalf as his legal representative and to make binding legal and financial decisions on your behalf. The person authorizing the other to act is the principal and the one authorized to act is the agent or attorney. Let us analyze in-depth the meaning of Power of Attorney below
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Types of Power of Attorney
There are different types of Power of Attorney in India. They include:
General POA
Under this, broad powers are granted to the legal representative to act on behalf of the Principal. It grants the absolute power to the agent to handle various activities on behalf of the principal without any limitation or restrictions. A general POA can be used by the representative to handle personal and business decisions of the principal.
Special POA
Under this, the powers of the legal representative are limited and restricted to a specific purpose. Once the purpose is complete, the privileges granted under the power of attorney ceases. It is also known as Limited POA.
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Durable POA
Under this, the agent gets the power to handle the affair of the principal on his/her behalf if he/she becomes incapacitated i.e. mentally incompetent, or unable to take any decision. The scope of this type of POA can be General or Special in nature. This type of POA remains effective until the death of the principal unless it is rescinded when the principal is not incapacitated.
A POA is an important legal instrument and regardless of the type of POA, you decide to use, choosing a trustworthy agent/attorney is crucial since he/she will have a lot of control over your personal affairs, business, and finances.
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Contents of Power of Attorney
The following contents must be included in a Power of Attorney. Depending on your use and the type of POA, the contents may differ.
- Principal’s Name, Age & Address
- Agent’s Name, Age & Address
- Date of Execution
- Subject Matter based on the Type of POA
- Signature of Principal
- Signature of 2 Witness
Legal Requirements of POA
For a Power Attorney to be Valid, it should contain the following two essential elements:
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The Principal must be of Sound Mind while Signing POA:
A person is considered of Sound Mind as defined under the Indian Contract Act, 1872 if he/she is “capable of understanding it and forming a rational judgment as to its effects upon his interests” at the time of making a contract. Therefore, while signing the POA, the principal must be mentally competent and acting by choice. Additionally, he/she must not be under any undue pressure of influence.
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The POA must be Notarized in the Presence of Witnesses:
In India, it is necessary that a power of attorney must be Notarized and recorded by a Notary or it must be attested by a competent officer of the Government of India or of the State. Further, it is compulsory that the power of attorney must be witnessed by at least two witnesses unrelated to you and each other, and who are not named as the attorney-in-fact, must witness you sign the power of attorney.
Legal Process for Establishing Power of Attorney in India
1) Drafting a Power of Attorney
For this, consider hiring a lawyer who can draft or look over the POA you have drafted. The language of the POA must be precise and specific. There should be no room for any loopholes or personal interpretation.
2) Print your Drafted POA on a Stamp Paper
After the POA has been finalized or reviewed by your lawyer, you should get the POA printed on a non-judicial stamp paper.
3) Supporting documents
Attach the supporting documents with the POA depending on the type and nature of POA. For e.g. ID Proof, Bank Statement, Passport Photocopies, property documents, etc.
3) Get your POA Notarised
Once the document has been printed on a non-judicial stamp paper, it must be duly notarized by the appropriate officer of local Indian Embassy
4) Gather witnesses
In India, the signing of power of attorney must be witnessed by at least two witnesses.
5) Make Copies
Make copies of the POA and keep one with you and your lawyer. Give the original to the agent so he has legal proof that he is entitled to act on your behalf.
POA- Relevant Case Laws
Tmt. Kasthuri Radhakrishnan & ors. v. M. Chinniyan & anr. (2016)
Under this case, the supreme court clearly elaborated on the law and meaning of power of attorney stating that it is governed by the provisions of the Power of Attorney Act, 1982.
The apex court stated the following:
“It is well settled therein that an agent acting under a power of attorney always acts, as a general rule, in the name of his principal. Any document executed or thing done by an agent on the strength of power of attorney is as effective as if executed or done in the name of the principal, i.e., by the principal himself. An agent, therefore, always acts on behalf of the principal and exercises only those powers, which are given to him in the power of attorney by the principal.”
Therefore, it was established that any document executed or thing done by an Agent on the strength of Power of Attorney is as effective as if executed or done by the Principal himself.
Find the Complete Judgement: Tmt. Kasthuri Radhakrishnan & ors. v. M. Chinniyan & anr. (2016)
Other related cases of POA include:
- Suraj Lamp and Industries Private Limited vs. State of Haryana & Anr.
- State of Rajasthan v. Basant Nahata
- Church of Christ Charitable Trust and Educational Charitable Society vs. Ponniamman Educational Trust
How to Make Power of Attorney if you are an NRI or Person Living Abroad?
If you are staying abroad and have to handle financial transactions in India, then you can give a POA to a trustworthy and reliable person in Indian. The agent will be able to handle your financial affairs on your behalf. The said person can be a relative, friend, or trusted representative.
Steps to Make the POA
- Draft the POA deed
- The deed must be attested by the Indian embassy or consulate in that country. Any Notary from there can also attest it.
- The principal must sign all pages of the POA deed
- The attested deed must be sent to the representative in India via a Registered Post or Courier
- The representative should get it registered from the local Sub-Registrar office in India and pay the required registration charges applicable in that State.
Revocation of POA
In order to revoke a POA after the purpose for which it was made has been completed or it needs to be revoked earlier than what was initially agreed upon due to distrust between principal and agent or due to agent’s unavailability or performance then a Revocation of Power of Attorney Deed must be executed. It is a legal document that cancels the Power of Attorney initially drawn and restores the powers of the Principal. It is very important to understand the meaning of Power of Attorney and the consequences that might occur due to the revocation of the POA. If the Power of Attorney was notarized or registered, the revocation must also be registered with the sub-registrar.
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Conclusion
To sum up, it can be said that a Power of Attorney can prove to be a useful tool not only in case of an emergency where you are physically or mentally incapacitated but also in cases where it’s not possible for the principal to be physically present. It is an important legal document that clearly specifies how the vital areas of your business affairs will be handled in case you are incapacitated or absent. This act should only be exercised when one understands the true meaning of Power of Attorney and the powers conferred in this process of Authorization. Therefore, the key here is to pick a trusted person to act on behalf of the principal such that he/she will honor the wishes of the principal.