Power of attorney is letter of authorization in which one person “principal” or “grantor” gives another person “agent” authority to act on behalf of former. It is of two types. If power of attorney is given to an advocate to appear in any court, tribunal or forum, we say that power of attorney has been given to attorney-in-law. In India, this type of power of attorney is called Vakalatnama. If power of attorney is given to any other person to do anything other than represent principal, we say that power of attorney has been given to attorney-in-fact or an agent. Power of attorney gives agent authority to act as per terms and conditions mentioned in power of attorney. The laws relating to Power of attorney vary from country to country and state to state within India.
In India, law relating to power of attorney is governed by The Powers of Attorney Act, 1882. Section 1A of this Act provides inclusive definition to power of attorney – “Power-of-Attorney” includes any instruments empowering a specified person to act for and in the name of the person executing it. Under the Act, the most important characteristic of an agent is that he has power to change legal relations of his principal with third persons and between the principal and himself.
The grantor determines the amount of power which he wants to give to his agent. He may empower agent to act only on a particular issue or all legal and financial matters of principal. Whatever the type of power of attorney granted, it is the duty of agent to keep accurate records of all transactions that he or she makes on behalf of the grantor. Grantor may empower agent to make financial decisions, gift wealth or even appoint a guardian.
Normally the agent is paid some remuneration for his services rendered to principal. The most important duty of agent is that he must act in good faith on behalf of principal. It is essential that power of attorney holder is a trustworthy person because all actions of agent are considered to be of principal. The principal should not tell anyone who the agent is, except the agent himself. There are exceptions like court cases where agent has to be named.
Power of Attorney is of two types – General Power of Attorney and Special Power of Attorney. General Power of Attorney is that Power of Attorney in which subject matter of Power of Attorney is mentioned but it is not specified as to what an agent can or cannot do. For example – in a GPA for property sale and purchase, it may not be mentioned as to what limitations an agent has. Special Power of Attorney is that Power of Attorney in which agent is authorized to do a specific act only. For example – SPA of NRI to file property dispute appeal in a High Court. SPA or GPA may not be registered – it is enough if it is notarized. However, if Power of Attorney is for sale of immovable property worth more than Rs. 100, it must be registered.