Ishan Baranwal
A power of attorney is an authorized legal document that allows a principal to appoint an agent to act for them incapacitated.
Here, Principal means the person who authorizes is called as Principal. Sometimes Principal is also known as Grantor, Donor.
Agent means the person who gets the authority to do certain task is called as Agent. Sometimes Agent is also known as Grantee, Attorney.
The Powers-of-Attorney Act, 1882 was enacted to amend the law relating to powers of attorney.
WHY POWER OF ATTORNEY WAS REQUIRED?
The agent can have broad legal authority or limited authority to make legal decisions about the principal’s property, finances or medical care. The power of attorney can be regularly used in the event of a principal’s illness or disability, busy, travel restrictions, busy or when the principal can’t be present to sign necessary legal documents for financial transactions.
Example – Disability and Physically handicap – If the principal is not feeling well and
can’t go to court room then he can appoint an agent who can take decision on his/ her behalf.
Travel Restrictions – If the Principal stays in Australia and he has a property in India, He can appoint an agent in India who can be trustworthy person either relative or a friend to sell out his property. So Principal can give power of attorney to Agent.
Busy – This is mainly happening in business, if the business owner is quite busy in handling many other tasks, so he can give power of attorney to another person that is his agent, so agent can handle all these stuffs.
Elderly- If the principal is an elderly person, he may not be able to take personal or financial decision on his own, so he can appoint his children, relative or friend, who can take care of his need.
POWER OF ATTORNEY CAN BE REVOKED.
A power of attorney can end for a number of reasons, such as when the principal dies, the principal revokes it, a court invalidates it, the defined responsibilities.
TYPES OF POWER OF ATTORNEY
- General power of attorney
- A general power of attorney is a broad document that can be used by the principal to authorize agent to take multiple responsibilities.
- Multiple responsibilities can be – to conduct all decision related to business, real state or personal care.
- Special power of attorney
- A special power of attorney is a limited document.
- It is given to execute the particular task by the agent.
For example – If the principal wants only to sell out his property, and he wants to appoint an agent only for the particular task. He can sign special power of attorney for this specific part of job.
WHO CAN CREATE POWER OF ATTORNEY?
The answer is very simple only mentally sound person can create power of attorney. And if the principal losses mental ability after power of attorney, it will become invalid in courts of law.
If the principal wants Power of Attorney remains valid even after when principal becomes mentally incapacitated, well in that case a special power of attorney is signed, which is called as Durable power of attorney.
Durable power of attorney mainly happens in between elderly people, who wants their care, financial related affairs, so they appoint trustworthy person.
Mentally Incapacitated person cannot create power of attorney. And even if such a power of attorney is created by such means it will be held invalid in courts of law.
What happens in cases where a person is already incapacitated and has not executed for durable power of attorney earlier, well in that case the only way for another person to act on his behalf is to have a court, impose a conservative or guardianship. So basically, his relative and trustworthy people to go to the court to take person to act on his behalf.
HOW TO BECOME a POWER of ATTORNEY AGENT?
- The only legal requirements to be an agent are the person is so of sound mind and at least eighteen years of age.
- He must be trustworthy.
- Agent has the legal obligation to act in interest, to keep records of transactions, not to mix property.
WHAT IS A POWER OF ATTORNEY AGENT RESPONSIBLE FOR?
- A person who acts under a power of attorney is a fiduciary.
- A fiduciary is someone responsible for managing some or all of another person’s affairs.
- The fiduciary must act prudently and judicious and in a way that is fair to the person whose affair he or she is managing.
- If agent violates his/ her duties can face criminal charges or can held liable in a civil lawsuit.
CAN I APPOINT MULTIPLE POWERS OF ATTORNEY?
- While Principal can appoint multiple agents, decide whether these agents must act jointly or separately in making decisions.
- Multiple agents can ensure more sound decisions, acting as checks and balances against one another.
- The downside is that multiple agents can disagree and one person’s schedule can potentially delay important transactions or signings of legal documents.
- If you appoint only one agent, have a backup. Agents can fall ill, be injured, or somehow be unable to serve when the time comes.
LEGAL IF: –
- Signed and dated by the principal. This is the minimum condition to be required.
- Notarized (some jurisdiction), it is a good practice that document should be publicly notarized, but not compulsion.
VALIDITY AND DURATION
Invalid when:
- Specified task is completed.
- Revoked by Principal or Agent (in writing).
- Validity period is over.
- Principal turns incapacitated, bankrupt or dies.
- Divorce or judicial separation.
DRAWBACKS: [CAUTION]
- Misuse by agent
The document can be act as proxy to steal money from the Principal.
The agent may also use the document to transfer property and other assets to himself or to a third party without the knowledge of Principle.
PRECAUTIONS: –
- For better result, appoint honest and trustworthy person, be it your relative or friend or whoever you know.
- Careful when you are drafting the power of attorney, you have to pay particular attention to all the clauses written in the document.
- If you want only one specific task to be done then appoint trustworthy agent and sign only special power of attorney over general power of attorney.
CASE LAWS:-
The law relating to Power of Attorney was well elaborated by the Supreme Court in the case of Kasthuri Radhakrishnan & ors. v. M. Chinniyan & anr. (2016), wherein the Apex Court stated that the law relating to power of attorney is governed by the provisions of the Power of Attorney Act, 1982.
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 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.
Other related cases are:
- 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
THE POWERS of ATTORNEY ACT, 1882
1. Short title. —This Act may be called the Powers-of-Attorney Act, 1882. Local extent. —It applies to the whole of India 1 [except the State of Jammu and Kashmir];
(Commencement) —And it shall come into force on the first day of May, 1882.
2 [1A. Definition. —In this Act, “Power-of-Attorney” includes any instruments empowering a specified person to act for and in the name of the person executing it.]3[1A. Definition. —In this Act, “Power-of-Attorney” includes any instruments empowering a specified person to act for and in the name of the person executing it.]”
2. Execution under power-of-attorney. —The donee of a power-of-attorney may, if he thinks fit, execute or do any 3 [***] instrument or thing in and with his own name and signature, and his own seal, where sealing is required, by the authority of the donor of the power; and every 3 [***] instrument and thing so executed and done, shall be as effectual in law as if it had been executed or done by the donee of the power in the name, and with the signature and seal, of the donor thereof. This section applies to powers-of-attorney created by instruments executed either before or after this Act comes into force.
3. Payment by attorney under power, without notice of death, etc., good.—Any person making or doing any payment or act in good faith, in pursuance of a power-of-attorney, shall not be liable in respect of the payment or act by reason that, before the payment or act, the donor of the power had died or become 4 [***] of unsound mind, 4 [***] or insolvent, or had revoked the power, if the fact of death 4 [***] unsoundness of mind, 4 [***] insolvency or revocation was not, at the time of the payment or act, known to the person making or doing the same. But this section shall not affect any right against the payee of any person interested in any money so paid; and that person shall have the like remedy against the payee as he would have had against the payer, if the payment had not been made by him. This section applies only to payments and acts made or done after this Act comes into force.
4. Deposit of original instruments, creating powers-of-attorney. —
(a) An instrument creating a power-of-attorney, its execution being verified by affidavit, statutory declaration or other sufficient evidence, may, with the affidavit or declaration, if any, be deposited in the High Court 5 [or District Court] within the local limits of whose jurisdiction the instrument may be.
(b) A separate file of instruments so deposited shall be kept; and any person may search that file, and inspect every instrument so deposited, and a certified copy thereof shall be delivered out to him on request.
(c) A copy of an instrument so deposited may be presented at the office and may be stamped or marked as a certified copy, and, when so stamped or marked, shall become and be a certified copy.
(d) A certified copy of an instrument so deposited shall, without further proof, be sufficient evidence of the contents of the instrument and of the deposit thereof in the High Court 6 [or District Court].
(e) The High Court may, from time to time, make rules for the purposes of this section, and prescribing, with the concurrence of the State Government, the fees to be taken under clauses (a), (b) and (c). 6 [***]
(g) This section applies to instruments creating powers-of-attorney executed either before or after this Act come into force.
5. Power-of-attorney of married women. — 7 [A married woman of full age shall, by virtue of this Act, have power, as if she were unmarried,] by a non-testamentary instrument, to appoint an attorney on her behalf, for the purpose of executing any non-testamentary instrument or doing any other act which she might herself execute or do; and the provisions of this Act, relating to instruments creating powers-of-attorney shall apply thereto. This section applies only to instruments executed after this Act come into force.
6. Act 28 of 1866, section 39, repealed. — [Repealed by the Amending Act, 1891 (12 of 1891), section 2 and Schedule].
1. Subs. by the Part B States (Laws) Act, 1951, sec. 3 and Sch., for “except Part B States”. tc” 2. Subs. by the Part B States (Laws) Act, 1951, sec. 3 and Sch., for “except Part B States”.”
2. Ins. by Act 55 of 1982, sec. 2. tc” 3. Ins. by Act 55 of 1982, sec. 2.”
3. The word “assurance” omitted by Act 55 of 1982, sec. 3.
4. Certain words omitted by Act 55 of 1982, sec. 4.
5. Ins. by Act 55 of 1982, sec. 5. tc” 2. Ins. by Act 55 of 1982, sec. 5.”
6. Clause (f) repealed by the Lower Burma Courts Act, 1900, sec. 48 and Sch. II.
7. Subs. by Act 55 of 1982, sec. 6, for certain words (w.e.f. 22-10-1982).