A Power of attorney (POA) is a legal instrument in which the special powers are bestowed by a grantor, known as Principal upon another person known as an Agent or Attorney to act in a particular manner which is specifically mentioned in the POA itself.
These powers are granted by the principal to an agent out of some health issues or distinct so that the legal, financial, or real estate transactions can be conducted undeniably.
It is always advisable to designate someone a position in which he/she can manage your property and financial matters before you meet with any sudden illness or accident.
The various statutes which govern the power of attorney in India are the Power of Attorney Act, Indian Contract Act, Registration Act, and Indian Stamp Act (including the corresponding state-level acts).
|But the question arises that can we revoke these powers once granted? Can a Power of Attorney be cancelled and all the powers granted to an agent retaliate back to the principle?|
The answer to these questions is affirmative. A power of attorney is revocable at the will of the principal. However, while drafting the document of power of attorney, a clause can be added which specifically states that this power of attorney is not revocable at the will of the principal. If such a clause is not present in the POA, then the principal has the power to revoke the same at any time and the agent can no longer act on behalf of the principal after the revocation of the POA.
Irrevocable power of attorney can be made if the document contains the provision of irrevocability i.e. the principle has no power to revoke the power of attorney or indicates that the principle gives up the right of revocation. However, the irrevocable power of attorneys is hardly ever used because they are limited to specific purposes only.
What are the reasons behind the cancellation of Power of Attorney?
As discussed above, the Power of Attorney can be cancelled at any time at the will of the principal, but have you ever wondered why someone after granting the powers takes those powers back? There are various reasons which deal with this question ranging from person to person. Some of the reasons are as follows:
- The principal had trust issues with an agent and doesn’t want him/her to perform the functions mentioned in the Power of Attorney because he/she is not trustworthy at all. In such a case, the Power of Attorney can be cancelled immediately.
- With a change in time, things are becoming increasingly commercial and complicated, and the tasks are burdensome, especially legal tasks which are difficult to be handled by one person. Hence, this leads to cancellation of the Power of Attorney, and the powers are transferred to another person who can deal with all complicated situations efficiently.
- In the case of specific Power of Attorney, which is created for specific purposes and in completion of those purposes, the Power of Attorney can be cancelled at any time.
- Sometimes, there are personal biases and political interference which leads to the cancellation of the Power of Attorney by the principal and bestows those powers to another person.
When can the Power of Attorney be Cancelled?
Though the cancellation of the Power of Attorney has not been exclusively mentioned in either the Indian Contract Act or the Power of Attorney Act, the courts have interpreted from time to time the general principles for applying the situations to cancel the PoA. Hence, the Power of Attorney can be cancelled:
1. By an act of Principal
There are numerous situations in which the principal-agent relationship can be terminated by the principal at his own will. Some of them are: when the business of the agency is completed or the purpose for which the instrument of PoA is created has been accomplished when the principal cancels the PoA by his authority, and when either the principal or an agent or both has become insolvent or of unsound mind or incapacitated to carry on the Power of Attorney.
2. When the Agent has an interest in the agency
It is provided in section 202 of the Indian Contract Act, 1872, that when a personal interest has been developed by an agent in the subject matter of the agency, then the same cannot be terminated without an express contract or consent of an agent.
3. Breach of Contract by an agent
Originally when made, the Power of Attorney is irrevocable but can be revoked in case of gross mismanagement on behalf of an Agent. When an agent does not comply with the terms of the contract or has acted beyond the powers mentioned in the contract, then the powers granted to him can be restored back by the principal at any time by cancelling such Power of Attorney.
Procedure for Cancellation of Power of Attorney
Certain steps need to be followed in a particular manner to revoke or cancel the Power of Attorney in the eyes of law. The following steps are:
- First, a letter of authority or a deed of revocation should be issued to the respective Authority to cancel the Power of Attorney which is revocable and is notarized by a certified notary advocate. The letter of revocation should mention the specific reason for which the power is being revoked, the effective date of revocation, and the consequences thereon.
- A notice of this letter of authority of revocation should be duly served upon the Attorney or an Agent to provide him/her the reasonable opportunity to present in the proceedings of revocation.
- Additionally, the notice of revocation should also be published in a local or national newspaper so that all the persons who have been dealing with the Attorney or public, in general, are well informed that his/her powers have been revoked and he/she will no longer participate on behalf of the principle.
- The letter of revocation or a deed of revocation should be registered by the same authority who registered the Power of Attorney i.e. the registrar or sub-registrar.
- After the registration of the letter of revocation, the copy of the same should be conveyed to the Attorney and other persons to whom he/she was interacting so that they can be intimated about the same.
- In the case of irrevocable Power of Attorney which is difficult to revoke, especially when an agent or attorney has an interest in the subject matter, but the same can be revoked in case of breach of powers by the attorney. If that happens, then a notice of revocation can be issued against him, and in special cases, even a court of appropriate jurisdiction could be approached for such revocation.
- In the case of durable Power of Attorney, it will be automatically cancelled in case of death, insolvency, incapacity, or insanity of either principal or an agent or both.
The Power of Attorney is a very powerful document that could be misused if it falls into the wrong hands. Therefore, it is always advisable to revoke the Power of Attorney if the above reasons for cancellation are satisfied. Non-compliance with revocation will lead to serious consequences for the principal and business. A wrong attorney after the exploitation of powers can usurp all wealth and properties, which will not be in the best interests of the principal.