A Power of Authority is a written recognized instrument in which one person, referred to as the Donor or Principal, authorizes another person, referred to as the Donee, Attorney, or Agent, to take action on his or her behalf.  A Power of Attorney is defined in Section 1A of Power of Attorney Act, 1882, as “Any instrument authorizing any specified person to act for and in the name of the person who executes it.
A Power of Attorney usually takes effect as soon as the principal signs it. In other cases, the Principal may specify a future event that will affect when and how the Power of Attorney will become effective. Occasionally, it becomes nearly impossible for an individual to manage all of their legal and business activities; this might be due to advanced age, bad health, a lack of knowledge, or any other reason. Power of Attorney enables the individuals to appoint someone in order to perform a specific act or all acts linked with their trade, business, or employment etc. This arrangement benefits NRIs who are unable to physically manage their assets in their home country. When delegating such responsibility, the Principal must exercise extraordinary prudence; else, the effect would be detrimental. The authority is confined to acting only on certain types of transactions, or to carrying out a single legal transaction on behalf of the Principal. Power conferred upon Agent may include execution of all contracts, deeds, bonds, mortgages, notes, cheques, drafts, and money orders. An Agent cannot bind the Principal in a way that exceeds what the Power of Attorney authorizes.

General Power of Attorney is granted for one property or property or more and includes general powers pertaining to the property such as powers to sell, alienate, gift, mortgage etc, banking, registration, litigation etc.

Special Power of Attorney is granted to carry out a specific task or piece of work. The Special Power of Attorney expires only when the specific task or act is completed.

A Power of Attorney can be created by a large number of people, all of whom are empowering the same person in one document, in a situation where there are multiple NRI Principals involved. When comparing an NRI Power of Attorney to a conventional Power of Attorney, the most notable difference is in the manner in which it is legalized in the nation of residence of the NRI.

A POA should be read so that it includes all of the powers necessary to carry out the purpose. Unless explicitly stated, no further rights can be deduced from the POA, which must be interpreted strictly.

Requirements of a Power of Attorney for an NRI

To comply with the requirements governing Non-Resident alien Powers of Attorney, the first step is to draft the Power of Attorney on plain white paper with particular terms and conditions. Two witnesses must sign the Power of Attorney, both of whom must be well known to the Principal who is issuing the Power of Attorney. The Power of Attorney must have the photograph of the Principal. It is mandatory that the attorney is stamped by the Indian Embassy/High Commission/Consulate or by the Foreign Commonwealth Office.
The Stamped Power of Attorney must be embossed by the office of the Financial Commissioner/SDM/or other authority within 90 days of the attorney being signed by the Principal.

In India, the presence of an attorney is required for embossing. Upon the purpose of the attorney being fulfilled or if the attorney holder is trying to misuse the document; the Principal must immediately revoke the Power of Attorney.

Revocation of a Power of Attorney

A Power of Attorney issued by an NRI must be revoked in the same manner that it was issued. However, additional steps are taken after the revocation deed is stamped by the Indian High Commission/Consulate/Embassy. The Attorney holder must be issued a legal notice and also the notice must be published in a Newspaper.

It’s a good idea to seek guidance of legal counsel regarding the powers being granted and to ensure that all the documents comply with the mandatory legal requirements. When a client approaches the firm, the first and most important step the team takes is to determine why such a document is being created in the first place. The Power of Attorney is drafted after a thorough study and assessment of the need/objective of the Client. The draft of the Power of Attorney is then discussed with the client so that he understands what has been mentioned in the POA as well as the powers he/she as Principal would grant to the Agent through POA. Our endeavour is to ensure that the client’s interests are protected.

Contact the team now to know more about the Power of Attorney for India.