In this blog post, Suprateek Neogi from Rajiv Gandhi National University of Law, Punjab, describes how to revoke power of attorney in India.
What is Power of Attorney?
Power of attorney is a legal instrument granted to a person which gives him or her the authority to make decision for the principal in certain matters.
It enables that person to act as an agent for the principal. In other words, it establishes a principal-agent relationship between the two through a legally binding contract.
The Power of Attorney Act, 1882 defines power-of-attorney as “any instruments empowering a specified person to act for and in the name of the person executing it”. In this case, the agent is called the attorney-in-fact.
Principal-agent Relationship (Illustration)
A, a businessman, permits his employee B to take decisions and implement them about the sales aspect of the business. This includes how much units to sell, how to expand market share etc. In this case, A is the principal and B is his agent.
The person who gives the power is the principal and the person to whom the power is given is the agent.
What Statutes Govern Power of Attorney in India?
- Indian Contract Act, 1972
- Power of attorney Act, 1882
- Registration Act, 1908
- Indian Stamp Act, 1899 (and the corresponding state level Acts)
Types of Power of Attorney
- General power of attorney
- Specific power of attorney
The types of powers of attorney are self-explanatory due to their titles. The differentiation is due to their subject matter.
- When a power of attorney is dealing with a particular subject as a whole, it is called a general power of attorney.
- If the power of attorney deals with a specific part of a subject, it is called a specific power of attorney.
An attorney who has been granted with a specific power of attorney cannot overstep and make decisions relating to a general power of attorney. This has been established in the case of Svenska Handelsbanken vs Indian Charge Chrome Ltd.
Why Do We Need Power of Attorney?
As the times are progressing, the commercial and legal world is becoming more and more complicated for a layman to handle individually. So, many-a-times, one has to appoint specialists to the task. For example, an engineer may give power of attorney to a Chartered Accountant to handle his Income Tax returns.
Common examples of power of attorney are found in the field of real estate. Real estate brokers are often given the rights to offer the property for sale when the principal is the seller, accept an offer for the house when the principal is the buyer etc.
Power of attorney is also a very useful for NRIs who want to deal in real estate located in the territory of India.
How to Register Power of Attorney
The process for registration of power of attorney has been specified in the Registration Act. Apart from that, a few general conventions are to be followed for the same. The steps are as follows –
- The document is firstly written by the principal. This is done on a stamp paper. The price of the stamp paper varies from state to state in India.
- In case the principal is an NRI, currently not present in India, they have to get the power of attorney attested by the Indian embassy in their country in the presence of two witnesses.
- Registration takes place in the sub-registrar’s office.
- The sub-registrar should be of a district court or high court of appropriate jurisdiction.
- Conventionally, district courts are preferred.
- The power of attorney document is dated in the sub-registrar’s office.
- The document is dated and signed in the sub-registrar’s office. Signature is done in the presence of two witnesses.
- One copy of the document is kept with the sub-registrar.
- The power of attorney document is collected after a week when it is considered registered.
When Can Power of Attorney be Revoked in India
The laws governing contracts and power of attorney in India are not self-explanatory when it comes to revoking power of attorney. Hence, it is up to the courts to decide upon the same.
There are a few case laws and landmark judgments guiding the judges about how to go about it.
- By the Acts of the Principal
The principal can terminate a principal-agent relationship or a power of attorney if –
- He revokes by his authority.
- The business of the agency is complete.
- Either the principal or agent has become of unsound mind.
- Either the principal or agent has become insolvent.
- When the Agent has Interest in the Agency
As mentioned before, the Indian Contract Act also governs power of attorney in India. Section 202 of the Act states that if the agent in a principal-agent relationship has an interest in the agency then, the power of attorney cannot be revoked without the consent of the agent.
This has been illustrated in the case of Loon Karan v Iva John –
The appellant owed the bank (defendant) an amount of money which he could not repay so, the appellant had given a general power of attorney to the bank to conduct business in the name of the appellant so as to clear his debt. The appellant felt that the bank was not following up on the contract as the required money did not reach the appellant. The court held that as per Section 202 of the Indian Contract Act since the agent also had interest in the contract, it could not be solely revoked by the principal. It requires the consent of the agent too.
- In Case of Breach of Contract
In the case of Govindkoss Krishna Koss v Gopesjhwar lalaji Maharaj, the court established that – “a power of attorney though irrevocably granted shall be revocable on strong proof of gross mismanagement on the part of the said attorney”.
This also implies if the appointed attorney (or agent) has somehow broken the terms of the contract between the principal and agent then, the principal can revoke the power of attorney.
Another such instance of the agent overreaching and making decisions beyond the scope of his or her power of attorney as conferred by the principal is found in the case of Kartar Singh (Dead) through Lrs. vs Jaswant Singh (Dead) Through Lrs.
As mentioned earlier, in the case of Svenska Handelsbanken vs Indian Charge Chrome Ltd., the defendant had made decisions which involved the powers of a general power of attorney, although the agent was only conferred with the powers of a specific one. In the case of Kartar Singh (Dead) Through Lrs. vs Jaswant Singh (Dead) Through Lrs., the agent had acted even beyond the scope of a general power of attorney.
Many such cases are available to substantiate this point. All point to one simple conclusion – breach of contract is a valid reason to revoke an irrevocable power of attorney.
Procedure to Revoke Power of Attorney
- This can be done by firstly issuing a notice in a local daily newspaper or even a national daily.
- The donor of the power of attorney will have to get a registered cancellation deed (registered from the office of the respective sub-registrar).
- After that, the principal has to give the holder of the power of attorney the registered cancellation deed, informing him or her of the cancellation.
I hope the article add value to you. Do you have anything to add in the above-mentioned information? Feel free to drop a comment & share the article.
LawSikho has created a telegram group for exchanging legal knowledge, referrals and various opportunities. You can click on this link and join: