1. Power of Attorney

2. Contents Meaning Reasons for executing a PoA Types Applicable Laws Procedure for executing a PoA Registration Stamp duty requirements Termination of PoA Revocation of PoA PoA & NRIs Important Case Laws Preventing misuse of PoA Drafts

3. Meaning Powers of Attorney Act, 1882: According to section 1A, ‘a power of attorney includes any instrument empowering a specified person to act for and in the name of the person executing it.’ Bombay Stamp Act: Any instrument empowering a person to act for and in the name of the person executing it and includes an instrument by which a person a not being a legal practitioner is authorized to appear on behalf of any party in proceedings before any court tribunal or authority Simply put, a power of Attorney is a document of agency whereby the principal appoints an agent to do and execute certain acts or deeds on his behalf.

4. Why PoA? Execution of contracts in relation to transfer, maintain, mortgage, lease immovable property. To sell, purchase, assign any stocks, bonds or securities. To enable performing various functions relating to operation of bank accounts. To file, sign all tax returns, insurance forms and any other documents To represent in all matters concerning the foregoing.

5. Types of Power of Attorney General Empowers the agent to carry out all legal acts on behalf of the principal, without restricting it to a particular transaction or act. It gives the agent very broad powers. Special A special PoA is granted to carry out a specific legal transaction on behalf of the principal. The agent's power of attorney expires on the completion of the transaction

6. Revocable It is a PoA that is revocable at the discretion of the principal / donor. Irrevocable It is a PoA executed in which the donee himself has an interest.

7. Applicable legislations Powers of Attorney Act, 1882 Indian Contract Act, 1872 Registration Act, 1882 Indian Stamp Act, 1899 Regional Stamp Acts (eg.Bombay Stamp Act,1958) Code of Civil Procedures, 1908

8. Eligibility of Contracting parties The person who executes a PoA is called as the “donor” and the one in whose name it is executed is called as the “donee”. For a PoA to be valid, both the donor and the donee should be capable of entering into a contract. Thus, the contracting parties should not be: Minors (Persons below the age of majority) Persons of unsound mind

9. PoA and Firms / Body corporates A PoA issued by a partnership firm must be signed by all the partners, otherwise it is invalid. A PoA issued by a company must bear its common seal, otherwise it is not valid.

10. Registration of PoA Not mandatory under the Registration Act, 1908. Section 17 of the Act requires documents relating to transactions of immovable property to be registered. Thus, a PoA relating to: Gifts of immovable property Lease of immovable property Creation or extinguishment of any right or title to or in an immovable property will be required to be registered.

11. Registration should be done at the office of the sub registrar within whose jurisdiction the person giving the PoA (donor) resides.

12. Procedure – PoA executed outside India Executed on a stamp / plain paper as required in country of execution Authorised official – Indian embassy / consulate / trade commission attests the signature of executant / donor Attorney’s signature verified in India by a Notary public / employer / banker on a separate document All the documents registered as per the Registration Act, 1908.

13. Stamp duty requirements A PoA is liable to stamp duty under the provisions of the Indian Stamp Act, 1899. The amount of duty, however, varies from state to state, in accordance with the local laws. A PoA executed in a foreign country is required to be stamped within 3 months of its receipt in India.

14. Stamp duty rates under the Bombay Stamp Act, 1958 ParticularsAmount For sole purpose of registrationRs. 100 For suits in small causes courtRs. 100 For acting in a single transaction to one or more person Rs. 100 For acting in more than one transaction or generally to one person Rs. 100 For acting in one or more transactions or generally to one or more persons Rs. 100 Sale of Immovable Property: i) For or without consideration ii) Without consideration and given to parents, siblings, spouse, children, grand children, other close relatives: In accordance to Market value Rs. 500 For construction, development, sale etc. to a developer or promoter In accordance to Market value

15. Termination of PoA Fulfilling the specific provision of the agreement Revocation by the donor Renunciation by the donee Incapacity of the donor / donee by reason of death, mental incompetence, bankruptcy, etc.

16. Revocation of PoA No specific provisions Judgements of High Courts & Supreme Court provide guidance Basis of Courts’ judgements – provisions of the Indian Contract Act

17. Section 202 – Indian Contract Act Where the agent himself has an interest in the property which forms the subject matter of the agency, the agency cannot be terminated to the prejudice of such interest, in the absence of an express contract.

18. Revocation of PoA – Salient points If the PoA is coupled with interest, it is irrevocable. The interest which an agent gets in the property should be simultaneous with the power, in order to constitute a power of attorney coupled with interest. ** The right of an agent to receive remuneration does not amount to having an interest in the property.

19. Merely because the document states that the power / agency is irrevocable does not make the PoA so. Existence of power and interest is necessary. An irrevocable power of attorney may be made revocable by an express stipulation to the contrary.

20. PoA & NRIs Permissible Acts Operations on NRE accounts Withdrawals for local payments Remittance to the account holder himself Making investments out of proceeds of NRE accounts Non-Permissible Acts Repatriation of funds outside India otherwise than to account holder Payment by way of gift to another resident on behalf of account holder Transfer of funds to another NRE account Notification No.FEMA.133/2005-RB dated April 1, 2005 Foreign Exchange Management (Deposit) (Amendment) Regulations, 2005

21. Case laws Chet Ram Gupta Vs. Motian Devi Lamba 2008 (148) DLT 473 Point under consideration: Extent of authority conferred by the PoA Judgement: PoA has to be strictly construed as giving only that much of authority as it expressly confers or by necessary implication is conferred.

22. Janki Vashdeo Bhojwani v. Indusind Bank Ltd. 2005 (2) SCC 217 Point under consideration: Whether the PoA holder can give evidence on behalf of the donor in a Court of Law. Judgement: The PoA holder can only give evidence in respect of acts done by him on behalf of the principal. He cannot give evidence in matters in which only the principal has a personal knowledge and where the principal is to be cross-examined.

23. Preventing misuse of PoA Issue PoA to known persons Ensure PoA is revocable so as to facilitate cancellation at any time. PoA should always be registered. Avoid giving open-ended or sweeping powers in the PoA. Avoid a general PoA unless absolutely necessary. Ensure that the PoA is adequately stamped.