Revocation of Power of Attorney

This article is written by Rishabh Pandey from Guru Gobind Singh Indraprastha University, New Delhi.

Introduction: What is a Power of Attorney

If for some reason a person is unable to execute a document himself, he may authorize a third party to execute such document on his behalf by mode of granting the said third party, Power of Attorney. It is regulated by the Power of Attorney Act, 1882 and other relevant laws in India.

A Power of Attorney may be:

  • General Power of Attorney, if the principal grants the Power of Attorney holder all such powers which are necessary to accomplish the objects for which such Power of Attorney is given.
  • Special Power of Attorney, if the principal wants the Power of Attorney holder to exercise only such powers as are specified in the Power of Attorney deed.

It is important to know the procedures and legalities involved in revocation once Power of Attorney is granted to an agent, to avoid any misuse of power.

Kinds of Power of Attorney: A Perspective on Revocation

A power of attorney, depending upon the clauses of the deed executed, may be –

  • Revocable: If the Power of Attorney is revocable at the will of the principal.
  • Irrevocable: If the Power of Attorney is not revocable at the will of the principal.

Revocable Power of Attorney

Generally, the principal has the right to terminate the Power of Attorney whenever he wills to do so. Some of the conditions for revocation are ( by virtue of Section 201 of the Indian Contract Act, 1872):

  1. If the principal revokes the Power of Attorney granted to the agent.
  2. If either the principal or the Power of Attorney holder or both become unsound of mind, die or is/are adjudicated as insolvent by the court.
  3. If the Power of Attorney holder renounces his powers.
  4. If the business for which the Power of Attorney was granted gets completed.

Power of Attorney may also be revoked if there is an implied revocation of the Power of Attorney or in case of time barred agency, the term of the Power of Attorney expires.

Irrevocable Power of Attorney

A power of attorney may have a clause in it stating that such power of attorney is irrevocable.

A Power of Attorney shall not be deemed to be an irrevocable one merely because it states, in the clauses of the deed executed for grant of such Power of Attorney, of it being irrevocable. Such Power of Attorney may be revoked by the principal or the Power of Attorney holder by the procedure according to law.

For revocation of irrevocable Power of Attorney, the principal is required to issue a public notice through local newspapers, without which, the revocation shall stand void.

However, in the following cases a principal cannot revoke a Power of Attorney:

  1. Where the Power of Attorney holder, i.e. the agent himself has an interest in the subject matter of the Power of Attorney. For revocation of the Power of Attorney falling under this category, consent of the Power of Attorney holder is mandatory.
  2. Where the agent has partly exercised the act for which Power of Attorney was granted, he cannot be stripped with the right for the act which he already exercised. [1]

Suggested Reading: Power of Attorney in India – Complete Overview

Section 202 of the Indian Contract Act and Revocation of Power of Attorney

Section 202 of the Indian Contract Act, 1872 reads as:

“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.”

Therefore, by virtue of this section, a power of attorney can not be revoked by the principal without the consent of the agent if the agent has an interest in the subject matter of the Power of Attorney. Moreover, such Power of Attorney is not deemed to revoked even after death or insanity of the principal.

To understand situations where Power of Attorney can be said to be coupled with interests, the following cases may be referred to:

The Supreme Court of India, in Seth Loon Karan Sethiya v. Ivan E. John[2] held that the agency cannot be revoked where such agency is created in exchange for some valuable consideration and the authority granted by the agency is to secure the interests of the agent or to effectuate the security against such consideration. Therefore,  in a case where the agent himself has an interest in the property, the agency can not be terminated unless there is an express contract for such termination, to the prejudice of the agency holder.

In another case, Vishnucharya v. Ramachandra[3], the agent used to get his salary out the rent collected by him on behalf of the principal. The agency which authorized the agent to collect rent was held to be ‘not coupled’ with interest. Therefore, where the agency merely grants some remuneration or commission, it cannot be held to be an agency coupled with interest.

Revoking Power of Attorney

Some of the important things to know about the revocation of a Power of Attorney are:

  1. Notice:

In an express revocation of Power of Attorney, whoever, whether the principal or the agent requires to end the Power of Attorney, must give reasonable notice to the other party before the revocation. Upon failure to do so, all the costs of damages caused on account of such failure, incurred by the other party to whom such notice was owed, shall be made good by the party who failed to fulfill his obligation to give such notice. Reasonability of the notice differs from case to case, depending upon the clauses of the deed.

An implied revocation does not require a prior notice.

  1. Unregistered Power of Attorney vis-a-vis Registered Power of Attorney:

A Power of Attorney may be registered or unregistered. The procedure for revocation of both of them are different, as discussed below:

  • Registered:

A registered Power of Attorney can only be revoked by means of a registered deed.

  • Unregistered:

An unregistered Power of Attorney can only be revoked by an unregistered instrument of revocation. Apart from that it is required to issue a public notice regarding such revocation through local newspapers, without which, the revocation shall stand void

  1. When the Power of Attorney is executed jointly:

If the Power of Attorney is executed jointly by several people, it is not valid for one of the principals to effectuate the revocation of the agent without the consent of the others. However, if the joint execution is executed severally, revocation by one of the principals of the agent is valid.

  1. When the Power of Attorney is executed in favour of two or more people:

In a case where the Power of Attorney is executed in favour of one or more people jointly but one of the agents die, the remaining agents cannot exercise the Power of Attorney.  However, if such execution is jointly and severally, the remaining agents can validly exercise the authority granted to them by the Power of Attorney.

  1. Power of Attorney given by a Firm:

If a firm gives Power of Attorney to an agent, such power of attorney gets revoked automatically upon dissolution of the firm.

Misuse of Power of Attorney by the Agent

It is possible that the agent to whom power of attorney is given, uses such authorization to commit fraud or misrepresentation. If such fraud or misrepresentation falls within the limits of the authority provided to him, the principal shall be held liable, however, if it falls outside the limits of the authority granted by the Power of Attorney, he shall be held solely liable for such fraud/misrepresentation. The principal is not liable for any act by the agent which exceeds the authority granted to him.[4]

Therefore, a principal since cannot be held to liable for fraud/misrepresentation by the agent if it is outside the limits of the authority provided by the Power of Attorney, he may not need to revoke it.

The Power of Attorney may be revoked if it is revocable upon such misconduct by the agent.

In case where the agency is irrevocable owing to the interest of the agent in the subject matter, and he commits an act unfavorable to you, there needs to be a separate agreement/contract between the principal and the agent as per Section 202 of the Indian Contract Act regarding termination of agency upon commission or continuation of such act to enable the principal to terminate such agency, otherwise, the Power of Attorney remains irrevocable.

However, if the acts done by the agent are not in good faith and are not lawful, the principal is not liable to indemnify him. In fact, if the acts of the agent are criminal, and the principal has agreed to indemnify him, such indemnification is not valid.[5] It is advisable to issue a public notice warning the  misuse of the POA by the agent to commit unlawful acts in at least two local newspapers, and to approach the court of law to terminate the agency, even if it happens to be irrevocable.

Conclusion

As much important the concept of Power of Attorney is to facilitate the principal to carry on his work even without actually being present at the place where such work is to be done, so is the right of the principal to revoke it to avoid any harm to his interest by the agent. While in most of the cases revocation is possible, there are some exceptions to it. Before giving someone or accepting the power of attorney, the principal/agent should be aware of these conditions.

What are your views on this? Feel free to comment below & share the article.

 

Reference:

[1] Section 203 of the Indian Contract Act, 1872

[2] AIR 1969 SC 73

[3]  ILR 3 Bom. 253

[4] Section 227 of the Indian Contract Act, 1872

[5] Section 224 of the Indian Contract Act, 1872

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