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A Power of Attorney (POA) is a legal instrument/document through which a person (principal) authorises another person (agent) to make decisions on his/her behalf in certain matters. The Power of Attorney Act, 1882 defines POA as any instrument empowering a specified person (agent) to act for and in the name of the person executing it (principal). The agent is also referred to as the attorney-in-fact or POA holder.
The POA grants the agent the legal authority to make decisions for the principal in matters relating to property, finances or medical care on their behalf. It establishes a principal-agent relationship, and thus, the person who has given the POA (principal) is legally bound for the agent’s acts done under the powers granted under the POA. The POA is generally revocable. However, there are irrevocable POAs as well.
There are two types of POA in India, which are as follows:
General Power of Attorney
The general POA gives the agent the authority to act on behalf of the principal on all matters permitted under law. The agent may be authorised to sell property, appear in court in any dispute, sign cheques, lease property, buy stocks, appoint caretakers for assets, etc., on behalf of the principal.
Specific Power of Attorney
The specific POA grants the agent the authority to deal with a specific subject or matter on behalf of the principal. For example, the specific POA may state that the agent is only allowed to collect rents from a property. In such a case, the agent cannot sell the property or extend the property’s rental duration. An agent who has been granted a specific POA cannot overstep and make decisions relating to general matters of law.
The process for registration of a power of attorney is specified in the Registration Act. The registration process is as follows:
There are many situations where the general or specific POA can be revoked/cancelled. However, the laws governing POA and contracts in India does not provide any rules for revoking POA. Hence, the courts have decided on the circumstances where the POA can be cancelled/revoked. Some of the ways in which the POA can be revoked are as follows:
By the Acts of the Principal
There are many situations where the principal can revoke and end the principal-agent relationship. The principal may revoke the POA in the following situation:
Breach of Contract
The principal can revoke a POA when there is gross mismanagement on the agent’s part, the agent breaches the contract terms, or acts beyond his/her scope of powers. In such cases, even an irrevocable POA can be revoked by issuing a revocation notice. If required, the principal can also approach the court of appropriate jurisdiction to revoke such irrevocation POA.
Where the agent has an interest in the subject matter of the POA, the POA cannot be revoked without the agent’s consent. Section 202 of the Indian Contract Act provides that where the agent develops an interest in the subject matter of the POA, then the principal cannot revoke the POA as it harms the interest of the agent.
The following is the process to revoke or cancel a POA:
The POA automatically gets cancelled or revoked in case of the principal or agent’s death, insanity or insolvency, or in such cases where the primary purpose of the POA has come to an end.
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