In this blog post, Yash Koshal from RDVV-Jabalpur, talks in detail about the power of attorney (POA).

What is Power of Attorney?

A power of attorney is basically the authority given by a person or grantor regarding his property to the agent or agents.

It is given by signing the paper by the grantor stating that the authority for the prescribed property is given to the agent on behalf of the grantor and the agent will have the same power as the grantor has regarding the property.

Many people get confused between the power of attorney and the will but there is a difference between both of them and their functions are also different.

Many people get confused between the POA and the Will but there is a difference between both of them and their functions are also different.

• The Will takes effect after the person dies whereas, on the other hand,
• The POA is only valid when the person is alive and ceases to operate when the person dies.

Different Kinds of Power of Attorney

• General Power of Attorney

It is the authority in which the principal/grantor authorizes the agent to perform a certain task on behalf of the grantor/principal.

The authority to the agent is given by performing some legal paperwork.

The word “GENERAL” means that the authority or power given by the principal/grantor should be general regarding the subject matter and not specific.

If the subject matter is not general and is having restriction mentioned while doing the paperwork then it will not be considered as a general power of attorney, it will otherwise be called as a limited power of attorney.

• Special Power of Attorney

It is the authority in which the person is authorized by the principal/grantor to do some act/acts. In this act, the agent has to perform the work assigned to him in the name of the principal/grantor.

• Durable Power of Attorney

It is a power of attorney which specifically mentions that the agent or the agents become unauthorized to perform work assigned by the principal/grantor if the principal/grantor become mentally incapacitated.

But if there is any mentioning in the legal paper that the power of attorney will remain valid in the future, if the principal/grantor becomes mentally incapacitated then it is known as durable power of attorney.

Registration of Power of Attorney (POA): Is it Necessary?

It is not mandatory to get POA registered unless it creates an interest in any immovable property i.e. change in favor of the power of attorney holder.

In India, registration of POA is optional. If power of attorney is given in respect of immovable property valuing more than INR 100 it must be registered. Getting the POA registered authenticates the deed of power of attorney, so it is advisable to get a POA registered always.

Language used in the POA Document

The language used in the legal document should be easy and simple which can be easily understood by the giver of the power of attorney.

• If the principal giving the POA is an illiterate person then clerk and identifier should explain the contents of the legal document in the language which is known by the grantor and then it has to be certified by the grantor that all the content of the legal document has been understood by him and then he has to put the thumb impression on that legal document.

• A sign and seal has to be put by the administrative officer after complete verification of the document.

Stamp Duty Payable on Power of Attorney

Under section 48 of schedule 1 of the ‘Indian Stamp Act 1899’, the power of attorney is chargeable. And it is mandatory to pay stamp duty by the principal/grantor in the jurisdictional registrar’s office.

Stamp duty payable in different states

Grantor’s Capacity

A Grantor is a person who creates the POA. He can only do so when he is mentally fit to do it.

If the grantor becomes mentally unfit after granting the power of authority then the power of authority will no longer be valid. But exceptions are always there.

• A grantor may state in a legal document to take effect even if he/she becomes mentally unfit. This is called as durable power of attorney as stated above.

• If a person is already mentally unfit then it is not possible for him to execute a valid power of attorney for him.

• If a person is mentally unfit and on the other hand, he also does not have durable power then, the only option left for the other party to act on his/her behalf is when the court imposes conservatorship or guardianship.

It is the responsibility of the principal/grantor to appoint a person as an agent who can take the responsibility with utmost good faith.

An ideal attorney is that who act in the utmost good faith and also who is impartial. The attorney should be loyal to his principal/grantor and should not disclose any personal matter of the principal/grantor.

Can Power of Attorney be Given Orally?

Depending upon the authority, a POA may be oral or in writing (depending upon the situation). Many institutions require power of attorney to be in writing and they usually keep the photocopy of the original for their records.

Duties of Power of Attorney Holder

The person to whom the authority has been granted is known as the authority holder.

• The person granted authority must not exceed the limit of authority given to him/her.

• If the person who has been granted the authority exceeds the limit then, he/she may be liable for the damages suffered by the grantor.

• The attorney holder is only required to do the work which is assigned to him and in a specific manner if there is any mention in the legal document to do the work with the particular method.

• If there is a breach of condition by the authority holder then, he shall be liable to the grantor/principal except in the condition where he has done it reasonably.

• An attorney can also pass his powers and duties to the other person only if he is allowed to do it by power of attorney.

Two or More Power of Attorney Holder

A POA may be discharged by two or more persons jointly in support of one or more persons. A clause should also be included in the legal document of the power of attorney that all the attorneys should act separately or jointly.

Also read: Legal issues in Joint development agreement

Duration

Generally, a POA remains in force unless it is expressly revoked or determined by the death of the either party (grantor/principal or agent/attorney holder).

Duration of power also depends on the type of the attorney or there may be fixed period of time granted by the grantor to the agent to perform the particular act.

Power of Attorney Revocation

The principal is free to revoke the power of attorney granted to the agent by giving a written notice to the agent (if it is for the fixed period).

• The principal can revoke the POA if the work for which the agent was appointed is over.
• If the principal has named his wife as the agent, the authority of his wife will automatically be terminated, if both of them get divorced.

Consequences of Giving a Power of Attorney

While the POA is a very useful instrument on the one hand but on the other hand, there are some consequences of giving power of attorney to your agent or the person known to you.

• He/She can change their mind after getting POA and start acting in a manner which can be harmful to your property.

For example, your agent may do your banking work if it is authorized by you and can also do fraud with you by taking out money from the bank or can buy property by taking a loan from that bank.

• You have no direct control over the agent whom you have granted the POA. The agent has to follow your direction to perform work and has to act accordingly. He/She can also misuse the authority or may even commit fraud. The power of attorney is used by the agent on your behalf, so you don’t have any immediate control over him/her.

For example, you ask your agent to withdraw money from the bank. He/she can withdraw extra money from your bank account or even can withdraw money at any time without your permission as they have the POA. In such case, the bank cannot be held responsible for any transaction done by the agent with or without your permission as the POA is given to him/her for that particular purpose.

• In the case of revocation of power of attorney, after you withdraw the POA from the agent, then, your agent cannot act on your behalf for the work assigned by you to him/her. Revocation rules vary from state to state. It is then the duty of the principal to inform every third party that the agent is no more authorized to perform the specified task. If you don’t inform, then, your agent may still carry on the transaction with the third party on behalf of the principal and any loss suffered by the principal then the third party would not be held liable.

POA has some advantages as well as some disadvantages. Firstly, starting with the advantages –

• Establishing POA is very cheap a small paperwork is required which contains the specific work provided by the principal to the agent in a very easy language which can be understood by both the principal as well as the agent.

• Family members can also act as an agent if you give power of attorney to them.

Now coming on to the disadvantages, after power of attorney is made in the favor of the family members they may change their mind and starts betraying the principal.

• If the powers conferred upon the agent are too general, he/she may even start abusing it.

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