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This article has been written by Arushi Agarwal, pursuing the Diploma in Advanced Contract Drafting, Negotiation and Dispute Resolution from LawSikho. This article has been edited by Prashant Baviskar (Associate, Lawsikho) and Smriti Katiyar (Associate, Lawsikho). 

Introduction

A power of attorney is a legal document that allows a person to appoint another entity or person to act on their behalf to manage their affairs. The person authorizing the other to act on his behalf is known as the principal, grantor, or donor. The person to whom the powers are given is known as the power of attorney (POA) holder or done or attorney or agent. 

The powers conferred by the principal may be broad or limited. The agent can take decisions on matters such as business, financial, property etc., where the principal cannot be present based on the powers given to him under the power of attorney.

Why is the  power of attorney executed?

Power of Attorney is executed when the principal is not available or is not capable of carrying out their dealings. This may be due to the unavailability of the person in the specific geographical region where something needs to be done or due to the mental or physical incapacity of the person. Here, persons include natural as well as legal persons. A person who is incompetent to contract cannot validly execute a power of attorney. Some of the common circumstances where Power of Attorney can be executed are:

  1. Non Residential Indians who have purchased a property in India and cannot visit India to deal with the property can execute Power of Attorney and authorize the agent to sign on their behalf and secure registration of the relevant documents. 
  2.  The elderly members of a family who have become incapacitated due to their old age can execute a power of attorney and authorize their children as agents to carry out transactions concerning their business, immovable properties and other purposes on their behalf.

Special Power of Attorney

A special or specific or limited power of attorney is a legal document executed by the principal by which an agent is authorized to do some specific acts on his behalf. For E.g. an agent can be authorized to perform specific business-related tasks, close or operate business accounts etc.

The power of attorney becomes a special power of attorney when it is limited to specific responsibilities. The document will provide the agent with the target tasks and responsibilities that the agent has to perform for the principal.

Difference between General Power of Attorney and Specific Power of Attorney

S. No. General Power of AttorneySpecific Power of Attorney
1.The tasks carried out by the agent are limitless and broad.The tasks carried out by the agent are specific.
2. The authority conferred to the agent is not limited to a specific task. The power is ineffective once the task has been completed by the agent.
3.It can still be effective on the death of the principal.It comes to an end once the principal is incapacitated or dead.

What principal should consider before issuing a special power of attorney?

  1. The Principal must choose the agent carefully because the principal would be held accountable for any hasty decision taken by the agent.
  2. Financial details must be included in the agreement if the agent is paid for the services.
  3. It is not necessary to get the agreement notarized.

Sample problem

XYZ Pvt. Ltd. wants to file a criminal complaint in Delhi for cheating by Cleanup LLP. For this purpose, XYZ Pvt. Ltd. will be authorizing Mr Amit Dave, the branch head of their Mumbai office to represent it and appear on its behalf in the respective courts as may be necessary. XYZ Pvt. Ltd. also wants Mr. Sudip Das, Deputy Manager of the Mumbai branch, the power to act on its behalf in times when Mr Amit Dave cannot appear himself on behalf of the company. Draft a special power of attorney in favour of Mr. Dave. 

Sample draft-

POWER OF ATTORNEY

TO ALL TO WHOM THESE PRESENTS SHALL COME WE, XYZ Pvt. Ltd., a company incorporated under the Company’s Act, 2013, having its registered office at New Delhi, and CIN number ______, hereinafter referred to as the “Grantor” (which expression shall, unless repugnant to the subject, meaning or context thereof, be deemed to include its successors in interest and assigns) of one part; 

NOW KNOW YE AND THESE PRESENTS WITNESS THAT WE do hereby nominate, constitute and appoint Mr. Amit Dave, having Aadhar No. ______, resident at Andheri, Mumbai, _________, currently works as the branch head of the Mumbai office of the Grantor; hereinafter referred to as “Attorney holder” of the other part; as lawful Attorney in its name and on its behalf to do, perform and execute with respect to the Criminal Complaint from time to time all or any of the following acts, deeds and things, that is to say:

WHEREAS:

The Grantor has to file a criminal complaint at Mumbai (the “Complaint”) against Cleanup LLP, a business partner of the Grantor, and in pursuant the Criminal Complaint, it is desirous of appointing the Attorney holder who shall represent him before the appropriate authorities in relation the Complaint and appropriate procedures thereafter in Mumbai. 

Now therefore this deed witnesseth:-

  1. Authorization of Power of Attorney- 

The Grantor authorized the Attorney holder the power to do the following:

  1. Sign, verify and execute the Complaint or FIR representing the grievances of the Grantor in appropriate manner and procedure before the competent authority;
  2. To represent the Grantor under Section 420 along with relevant provisions of IPC before the competent authority; 
  3. To represent the Grantor before including and not limited to the Police Stations, Courts, Tribunals, Appellate Courts and any other competent authority as required in pursuant to the complaint; 
  4. Appoint and engage a competent lawyer, legal advisor and an expert, as well as to remove the same, if any, to represent the Grantor before the competent authority; 
  5. Assist the authority by complying with all the requirements and by furnishing all the documents during the investigations and proceedings are being carried out; 
  6. Sign, verify and/or execute including and not limited to the petitions, Vakalatnama, evidence, appeals, applications and letters necessary to meet the legal requirements; 
  7. Appear and represent the Grantor before the competent authorities according to the Complaint as and when necessary;
  8. The powers given hereinbefore are not subjected to sub-delegation.
  1. Indemnity- 
  1. The Grantor undertakes to indemnify all the acts done by the Attorney holder during the Term and in pursuant to the Power of Attorney; 
  2. The Grantor shall indemnify the Attorney holder against all loss, damage and costs borne by him by virtue of his actions while exercising the authority given under the Power of Attorney;
  1. Term and Revocation
  1. The term of the Power of Attorney shall be of one year from the date of execution and it shall be “irrevocable” in nature up to that period or until the Attorney holder continues to be the branch head of the Mumbai office, whichever is earlier. 
  2. Upon revocation of the Power of Attorney, the Attorney holder becomes ineligible to represent the Grantor before any legal entity or invoke any Clause under this Power of Attorney. 
  1. Interim Substitution– 

In case the Attorney holder is absent or for any reason unavailable to perform the powers authorized under the Power of Attorney; under those circumstances, the Grantor appoints Mr. Sudip Das, Deputy Manager of the Mumbai branch, the power to act on its behalf and to act as per the authorizations given in the Power of Attorney on behalf of the Grantor according to the Complaint.

  1. Specific powers-

The Grantor establishes that the powers given under the Power of Attorney are specific  which are only limited to the specific criminal complaint to be filed by the company and shall not cover any other complaints or civil or criminal proceedings.

  1. This power of Attorney shall supersede all previously issued powers of attorney in respect of the same subject matters.
  1. This Power of Attorney is governed by, and shall be construed as per the laws of India and shall remain in full force and effect from the date of execution till it is revoked.
  1. The Grantor hereby declares that the powers hereby conferred shall not be prejudiced, determined or otherwise affected by the fact of the Grantor acting either directly or through another agent or attorney in respect of all or any of the purposes herein contained.

IN WITNESS WHEREOF WE, [_________________________] and [______] delegated signatories, acting for the Grantor have hereunto set my hand to this writing on this __ day of ______. 

SIGNED AND DELIVERED by          

________________ (Grantor)                                    

By its authorized signatory           

In the presence of          

Before me

Conclusion

The authority is restricted to act only on certain matters or only a particular kind of transaction or to carry out a specific legal transaction for the Principal.  The agent’s power of attorney expires on the completion of the transaction. If any fraud by the power agent does not bind the principal. He cannot be sued or otherwise held responsible for fraud by the agent. If the power does not authorize the agent to carry on a business except with limitations any act done by him in excess of such power will not bind the principal. A fortiori, an agent cannot by his acts bind the principal to a larger extent than he is empowered to do under the power of attorney. 

References

  1. Special Power of Attorney, Corporate Finance Institute, available at: https://corporatefinanceinstitute.com/resources/knowledge/other/special-power-attorney/
  2. Alexander Twin, Special Power of attorney, Investopedia, available at: https://www.investopedia.com/terms/s/special-power-attorney.asp
  3. Dharani Kumar, What is the difference between General & Special Power of Attorney, VakilSearch, available at: https://vakilsearch.com/advice/general-special-power-of-attorney/.
  4. Sudarshna Thapa, All you need to know about execution of Power of Attorney, Ipleaders, available at: https://blog.ipleaders.in/execution-of-power-of-attorney/
  5. Nikieta Aggawal, Power of Attorney, Ipleaders, available at: https://blog.ipleaders.in/power-of-attorney/

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