Without knowing the nuances of creating or entrusting power and understanding its legal implications, many of us become victims by becoming a party to a Power of Attorney. They are often misguided by the non-professional people called document writers and self-styled village lawyers, who are utterly ignorant of the legal principles involved in a Power of Attorney.
Power of Attorney is a deed or document executed by a person in favor of another person entrusting with him a specific task like conveying an immovable property or properties, completing a project like house building or renovation, conducting a court proceeding and its connected activities and collection of debts etc. The person who executes the deed of Power of Attorney is known as the principal and the person in whose favor the power is executed is known as the Power of Attorney or the Power Agent.
When a person is handicapped by virtue of his age, distance and preoccupations, he or she executes a Power of Attorney in favor of a person, who is his or her close confident. If the power entrusted is for a specific purpose or task, say for building a house or conveying an immovable property, it is known as Specific Power of Attorney or Special Power of Attorney If the power conveys general powers and duties in favor of a person, it is known as the General Power of Attorney. While the Specific Power of Attorney ends as and when the task is completed, the General Power of Attorney comes to an end when the principal is dead or when the principal cancels it by issuing a notice to his agent.
In some special cases, an Irrevocable Power of Attorney is created in favor of an agent and the power given is coupled with an interest. If the principal entrusts a power of collecting a debt from a third party to his agent and also entrusts to him to discharge the debt of yet another party to which he (principal) owes a debt, the power entrusted to the agent is irrevocable until the principal's debt is discharged. It requires no consideration in creating an 'Irrevocable Power of Attorney'.
The cardinal principle of a Power of Attorney is whatever the agent does it is deemed to be the act of the principal as if he or she does it personally. Here lies a source of conflict or dispute, when the Power of Attorney or Power Agent sometimes transgresses his or her limit and also fails to honor the terms of the Power of Attorney.
Though the Power of Attorney does not require registration, when the power agent is entrusted with a power of submitting a document for registration, then the Power of Attorney requires registration. Normally an unregistered deed of power of attorney is executed in a twenty rupees stamp paper.
The Power of Attorney Act, 1872 was enacted in the pre-independent era that consists of only six sections and was not comprehensive enough. The Indian Contract Act, 1872, enumerates the powers, duties and obligations of both the principal and the power agent.
Therefore, before executing a power of attorney, it is always advisable to consult a lawyer than fall a prey to unscrupulous people who have very little knowledge about the salient features of a power of attorney.
Source:
1) The Power of Attorney Act, 1872
2) The Indian Contract Act, 1872
3) The Indian Conveyancer by Mogha
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