Powers of Attorney Act 1882: Importance, Regulations & How to Revoke

 If a person has a power of attorney, they may act as the agent on behalf of his/her principal. It is because he/she is not available or capable of signing a legal/financial contract or unable to take part in legal transactions and decisions. 

Scroll through this article to have a detailed idea about the Power of Attorney Act 1882, its various types, importance and more.

This act is applicable in India and came into force on 1st May 1882. According to this act, Power of Attorney is a legal authorization vested into a designated individual, giving him/her the power to act on someone else’s behalf. However, it lapses when the person executing it dies and revokes the same. In addition, it can also come to an end when the act is invalidated by a court of law.

Another circumstance where the act might lapse is when the creator divorces their spouse charged with the power or when an agent or a similar person is unable to carry out their duties.

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Check out an article about Property Insurance

As you grow older, you might require assistance from your loved ones and near ones to get things done accordingly. To allow someone to act on your behalf, you might need to execute a power of attorney so that he/she can act properly. Power of Attorney involves making many important decisions like:

• Take Financial Decisions: Power of Attorney allows the person acting on your behalf to take financial decisions and conduct legal transactions as mentioned by the court of law.
• Assist in Medical Issues: A person has the power to act as an agent and assist his/her principal with medical issues. This happens especially for senior citizens.
• Help in Business Matters: A power of attorney is a legal document that also authorises someone to act as an agent in business matters. It helps in taking crucial business decisions to work towards progress.
• Avoid Strenuous Processes: If you become incapable of taking decisions or performing a job, your family members do not automatically gain access to take decisions on your behalf. Without a power of attorney, your family members might have to go through strenuous processes to take decisions, and this might be difficult to handle.

As you know now about the Power of Attorney Act and its importance, now let us know what are the different types of power of attorney below.

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There are five different types of power of attorney that you must know so that you can take the right decision while appointing one to act on your behalf. It includes:

1. General Power of Attorney

This conventional power of attorney is a wide concept that allows your agent or the person to have extensive power to handle your affairs as a principal. If you are an agent designated to work on your (principal's) behalf, you might require to handle several tasks. It includes signing documents, filing lawsuits, disposing of or buying real estate or venturing into business contracts on your behalf.

2. Special/Limited Power of Attorney

This type allows the individual/principal to limit the agent’s job to an extent. It is a special power of attorney where the person working on behalf must clearly know which areas they are working on or handling. Before signing the notarised document on power of attorney, you (the agent) must speak to a legal professional.

Note: You must keep in mind that the validity of this special power of attorney comes to an end as soon as the agent completes the tasks.

3. Durable Power of Attorney

A durable power of attorney is only valid till the period a person wishes to get an agent to act on their behalf. A non-durable power of attorney will come to an end as soon as it is revoked or when it passes the expiry date. In this case, one who is the principal prefers that the person acting as an agent remains active even if he/she is unable to communicate at times.

4. Medical Power of Attorney

If you become ill or have any disease, as a principal, you have the right to decide on the quality of care you require. In medical or healthcare power of attorney, agents can take decisions on behalf of the principal if the principal is incapable due to a severe illness. Generally, health power of attorney falls under a durable power of attorney as it is considered that the principal might be too ill to take any decisions.

5. Financial Power of Attorney

Power of Attorney Act also defines financial power of attorney where the agent can make important financial decisions on behalf of the principal. This includes making investments, paying bills, and indulging in housing and healthcare activities that require financial planning. Financial power of attorney is one of the most crucial types and might require the interference of a lawyer during serious cases.

In all these above instances, a principal must speak to a lawyer before finalising any decision. Besides, it is the principal’s responsibility to get the agent working on their behalf to take them through every detail so that they understand their job.

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Before knowing how to revoke a power of attorney, it is essential to know in what circumstances one can revoke a POA.

There are many circumstances where you can revoke or cancel the general or specific power of attorney. Since there is no specific law explaining the rules for revoking the contract, the court of law has come up with the following circumstances under which you can cancel or revoke:

By Acts of the Principal

A principal might revoke/cancel the principal-agent relationship when:

• The agent willingly wants to end the contract between the two due to any reason.
• When the agent becomes unsound of mind or becomes insolvent.
• When this power of attorney’s purpose has come to an end.

By Breach of Contract

A principal can cancel/revoke a power of attorney when there is:

• Mismanagement on the agent’s part.
• An agent breaches the terms of the contract.
• When the agent acts beyond their scope of power.

During such cases, even an irrevocable power of attorney can be cancelled by a lawyer who will issue a revocation notice.

Here is a step-by-step guide explaining the process of revoking/cancelling power of attorney:

Step 1: Firstly, you must draft a notice or a revocation deed of a power of attorney. This deed must clearly mention the reasons for revoking or cancelling the power of attorney contract. Additionally, it must also state the effective cancellation date.

Step 2: You need to explain the same to your agent and then proceed with the process of revocation.

Step 3: You must publish the cancellation deed/notice of POA in a national or local newspaper. This is to inform all the persons associated with or interacting with the agent on behalf of you regarding a cancellation.

Step 4: Now, register for the cancellation of power of attorney. The same authority that registered the deed can indulge in helping with this cancellation process.

Step 5: After cancellation, you must send a copy of the cancellation deed of a power of attorney to your agent to confirm revocation.

Step 6: A paper or publication should carry the same information to inform in public that the power of the agent is revoked and the contract is now invalid.

Step 7: You can send these cancellation copies of the power of attorney deed to the people who are interacting with the agent.

It is a simple and hassle-free process but requires the interference of a lawyer.

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If you are willing to work as a power of attorney agent, here are some of the specialities you must have:

• The agent must be of sound mind and health to be able to work on behalf of a principal.
• This concerned person must be at least eighteen years of age which is the minimum eligibility.
• He/she must ensure to shoulder responsibilities of handling crucial legal, medical, and financial transactions.
• There must be no conflict of interest, and the agent must keep his/her own personal details apart from the principal.

Now let us get into the details of the power of attorney act defining how to execute one as an agent.

Depending on the terms and the regulations of this power of attorney act, an authorised agent might have specific or extensive power to handle and make legal or related decisions. This can be regarding decisions on property, financial and medical affairs.

Follow the below tips when you are selecting a power of attorney agent:

Tip 1: Try to choose a trustworthy person whom you know will efficiently take care of your affairs during your absence. Select a power of attorney depending upon the functions one needs to perform.

Tip 2: While selecting a power of attorney, you must keep in mind when to give this authority and when to end it. Also, these must be mentioned clearly in your contract.

Tip 3: Try to adhere to and abide by the rules provided by your state government when trying to draft a deed. Both parties should understand the rules and regulations of this power of attorney act and then proceed accordingly.

Tip 4: You can create a deed of power of attorney with the assistance of a property lawyer or a general lawyer.

Tip 5: Now, fill in the necessary details and after reading its terms or conditions, sign the documents.

Tip 6: Always verify the signed documents with a lawyer and get them notarised to validate your contract.

If you follow these simple tips, you can adhere to the processes without any hassle.

A principal or the person extending power needs to execute a power of attorney through the office of a sub-registrar lying within his/her jurisdiction. If you reside abroad, you must attest to the contract through an Indian consulate. Also, use it within three months from the execution date.

In case a person is staying abroad and required to buy any property in India, one can execute this contract through the following:

• Apostillisation - This is a certificate that verifies the signature of a person who authorised a power of attorney. It must be related to the Indian Registration Act 1908 and the Power of Attorney Act 1882. When power of attorney is executed outside India, it happens through this Apostillisation method.
• Legalisation - The signature of a notary before whom you sign a power of attorney needs to be authenticated by a representative of the Indian Consulate/Embassy. Furthermore, you must stamp a power of attorney in India within three months from the receipt date. Here, you only pay the stamp duty on this power of attorney when this deed requires registration in India.

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You must follow the below acts in a power of attorney:

The Dos:

• If it is related to a property, an agent can buy, sell or rent any property, repair and maintain a principal’s house and gift purchase under set rules.
• As an agent, one can manage and supervise bank accounts of the principal and make necessary bill payments.
• An agent can also indulge in investment management.
• Regarding healthcare, an agent can plan a daily routine of the principal and take necessary decisions regarding medical treatments.

The Don’ts:

• If you are an agent, you cannot give financial gifts to any other person.
• You cannot take any decision regarding discretionary funds.
• You must not mix up your personal bank details with that of your principal.
• An agent must not misuse his/her position and power to indulge in personal interest.
• The agent cannot indulge in tax planning without the supervision of any professional.
• An agent cannot restrict the freedom of a principal and take any crucial decision if your principal is mentally unstable.

Some of the necessary points to keep in mind under Power of Attorney Act includes:

• An agent cannot survive the death of a principal. As a result, your contract comes to an end.
• A registration, revocation or cancellation of power of attorney must be notified through media and in writing.
• In case you notice any wrongdoing on your agent's part, make sure to report the same or seek legal advice.

So, now you have an idea regarding the Power of Attorney Act. However, if you are willing to be an agent or make someone an agent, abide by the  terms and conditions mentioned above. This will help generate a smooth process at both ends without anyone having to indulge in legal complications due to conflicts.