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LEGAL CHAT

1. What is a Power of Attorney?

It is a document under which one person known as “Principal” or “Donor” grants an authority to another person, known as “Agent”, “Attorney” or “Donee,” to do or undertake the acts, deeds and things specified in the document, on behalf of the Principal or Donor.

2. What are the various types of Powers of Attorney?

A broad classification would be General Powers of Attorney and Special Powers of Attorney. The first confers substantial powers for effecting the transactions contemplated. The second is given for specific purposes only and is often restrictive in scope.

3. What are the ingredients for grant of a valid Power of Attorney?

The Principal and the Agent must be competent to contract. It has to be given voluntarily. The Power of Attorney should be given for legal purposes.

It must be duly stamped, notarised or registered or adjudicated, as the case may be. Powers of Attorney executed abroad may also be authenticated by a Consulate Officer. Minors and other persons disqualified by law cannot grant a Power of Attorney. 4. What are the acts which can be done only by persons concerned, referred to above?

Take the case of a singer or a musician contracting to perform.

The performance has to be given by the singer or musician only and obviously cannot be performed by a Power of Attorney. This is an extreme example to give a broad idea as to what the personal acts can be. 5. Is registration of Power of Attorney mandatory for exercising the powers?

A Special Power of Attorney, under which the Principal authorises the Agent to present for registration a document executed by the Principal, has to be compulsorily registered. In other cases, it is sufficient if the power is notarised or authenticated by an Indian Consul or Vice-Consul or by a Court, Judge or Magistrate. However, in respect of local Powers of Attorney, it is advisable to have the same registered as notarisation or authentication may not meet market acceptance.

6. Can a company grant a Power of Attorney?

If so authorised by its Memorandum and Articles of Association, a company can grant a valid Power of Attorney.

7. Can a Partnership Firm grant a Power of Attorney?

This can be given. Subject to the terms contained in the Partnership Deed, it may be binding on all partners, if given by one of the partners.

8. What are the important features of a Power of Attorney?

One would have noticed that in matters relating to commercial transactions, there is usually a payment or passing of consideration. For a Power of Attorney to be valid, no consideration is required. Further, many documents would be irrevocable in nature. However, a Power of Attorney can be normally revoked.

9. Is there a type of Power of Attorney called “Irrevocable Power of Attorney”?

In matters where the Agent has acquired an interest, the Power of Attorney is known as a power coupled with interest and cannot be revoked without the express consent of the Agent. This is referred to as an “Irrevocable Power of Attorney”. In certain cases, the Power of Attorney may amount to a conveyance and these Powers of Attorney can also be brought within the ambit of Irrevocable Powers of Attorney.

10. How are the wordings in a Power of Attorney construed?

This depends on the clarity of the wordings employed. The general construction is that the Agent is empowered to do or undertake only acts which are clearly authorised. However, certain incidental powers can be inferred to give effect to the terms contained in the Power of Attorney. If the Power of Attorney confers power of sale, then it can be inferred that it includes necessary powers for completing the sale transaction. In the same case, though the Agent may have the power to sell, the Agent, unless specifically authorised, will not be entitled to mortgage the property.

12.What are the matters to be noted in respect of Powers of Attorney executed abroad?

The Power of Attorney can be executed in a green sheet or a white sheet and stamped or adjudicated, within three months after receipt in India. It has to be authenticated by an Indian Consul, Vice-Consul or a Notary.

In many cases, the Power of Attorney executed abroad is sent with only last page signed by the Principal. This practice is not desirable and every page has to be signed by the Principal. This will save a lot of time and avoid unnecessary delay and expense.

13.While dealing with an immovable property, is it sufficient only to take a Power of Attorney containing, among other powers, the power to sell?

Considering that the nature of the Power of Attorney is such that it can be revoked, it is advisable to back this Power of Attorney with a proper Agreement. This will be give better rights in matters relating to commercial dealings.

14.What the general precautions to be taken while granting a power?

Please check the wordings. Understand the implications. If the Power of Attorney contains power to mortgage, one has to exclude personal liabilities wherever the intention is not to undertake such personal liabilities. Try and get periodical feedback from the Agent. If you are revoking the power, consider all the facts and circumstances and the impact that this may cause before venturing into this.

15.What are the general precautions to be taken while acting as an Agent?

Understand the scope of the power. Note that you are actually acting on behalf of somebody else and protect the interest of the Principals. Do not exceed the powers granted under the document. (The author is Partner, RANK Associates, Advocates).

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