Basics of Powers of Attorney

[*The relevant sections and statutes have been mentioned in brackets]

Q.1 What is a power of attorney?

Ans: Power of attorney includes any instrument empowering a specified person to act for and in the name of the person executing it. [Section 1A of The Powers of Attorney Act, 1882]

By a power of attorney, one person appoints and authorises another to act for him/her.

Q.2 Who can make a power of attorney?

Ans: A power of attorney is a species of the law of agency (law of contract). Any person competent to contract, i.e. above the age of 18 and of sound mind can make a power of attorney. The person making the power of attorney is called the donor.

Q.3 Who can be appointed as a donee?

Ans: The person who would exercise the powers under the power of attorney is called the donee or attorney. Any person above the age of 18 and of sound mind can be appointed as a donee. [Section 184 of the Indian Contract Act, 1872.

Q.4 When/why is a power of attorney made?

Ans: A power of attorney is made when the donor is unable to do certain acts or it is more convenient for the donor to act through a donee.

Q.5 What is the effect of making a power of attorney?

Ans: Every instrument executed and thing done by the donee in exercise of his powers under the power of attorney, shall be as effectual in law as if it had been executed or done by the donee of the power in the name, and with the signature and seal, of the donor thereof. [Section 2 of The Powers of Attorney Act, 1882]

Q.6 Does a power of attorney have to be executed on stamp paper?

Ans: Yes.

Q.7 Does a power of attorney have to be notarized?

Ans: Yes. Section 4 of the Powers of Attorney Act, 1882 requires that the execution of an instrument creating a power of attorney must be verified by affidavit, statutory declaration or other sufficient evidence.

Section 85 of the Indian Evidence Act, 1872 states that there is a legal presumption of the execution and authentication of a power of attorney that has been executed before, and authenticated by, a notary (or any Court, Judge, Magistrate, Indian Consul or Vice Consul or representative of the Central Government).

Section 57 of the Indian Evidence Act, 1872 lists down the facts of which a court must take judicial notice and sub section 6 includes the seal of a notary.

Q.8 Does a power of attorney have to be registered?

Ans: The purpose for which the power of attorney is being executed will determine whether or not it requires to be registered. Further, the state in which it is executed and the law applicable to registration of documents in that state will also have to be looked at.

In Maharashtra, an irrevocable power of attorney relating to transfer of immovable property in any way must be registered. [Section 17 of the Registration Act, 1908 as amended by the Registration (Maharashtra Amendment) Act, 2010]

Q.9 What is a general power of attorney and special power of attorney?

Ans: A general power of attorney grants a wider set of powers to the agent as compared to a special or limited power of attorney that specifically sets out the powers of the agent and is usually confined to a restricted set of circumstances/transaction.

Q.10 What laws govern the making of powers of attorney?

Ans: The Powers of Attorney Act, 1882, The Indian Contract Act, 1872, The Indian Stamp Act, 1899 (or the applicable state Stamp Act) and the Registration Act, 1908.

Q.11 What is the effect of the death of the donor on the power of attorney?

Ans: The agency granted under a power of attorney would normally terminate on the death of the donor except where the agent himself has an interest in the subject matter of the agency. [Sections 201 and 202 of the Indian Contract Act, 1872]

Q.12 How does a power of attorney come to an end?

Ans: The power of attorney comes to an end if (a) the donor revokes his authority, (b) the donee renounces the business of agency, (c) the business of agency is completed, (d) the principal or agent die or are no longer of sound mind or (e) the donor is adjudicated an insolvent under applicable law. [Section 201 of the Indian Contract Act, 1872]