Corporate & Commercial Series
Series 1 | Article 2
A power of attorney is a legal document through which a person appoints another person and authorises such other person to act for and in the name of the person executing such an instrument.
Now before one may decide to execute a power of attorney (‘POA’) in favour of another, it may be important for them to understand if they are eligible to grant a power of attorney and the person/s to whom it may be granted.
Who may be a Grantor:
A ‘Grantor’ is the person granting the powers under a POA.
This means that a POA executed (i) by a minor (i.e., an individual below the age of 18 years) and / or a person who is of unsound mind at the time of execution of the POA; or (ii) by an entity in non-compliance of their constitutional document/s and / or applicable law, will be void (invalid). In case of minors and individuals of unsound mind, the reason for the incapacity lies in the fact that they are considered to lack the sufficient and necessary discretion to be able to choose an attorney for themselves. On the other hand, when it comes to entities, their constitutional document/s and the specific laws applicable to them, govern their operations and therefore, any act contrary to them is considered unauthorised.
Having said that, while a minor, in law, is ineligible to execute a POA themself, a guardian of such minor, who is of the age of majority and of sound mind, can, on behalf of such minor, appoint an attorney and execute a POA in respect of the affairs of such minor. See Madanlal Dhariwal versus Bherulal (AIR 1965 Mys 272).
The basic principle is that a grantor must be capable of doing in law what they want their attorney to do i.e., the grantor must have the capacity to contract or to do the act which the grantor intends on appointing the attorney for.
Points to consider:
If a guardian intends to execute a POA in respect of the property and / or affairs of a minor, such POA must state that the POA is being executed by ‘the minor through the guardian’ or ‘the guardian on behalf of the minor’. Further, it may be prudent to briefly explain how such execution is in the interest of the minor.If an individual intends to execute a POA on account of their old age or health, it is advisable to have a contemporaneous doctor’s certificate appended to the POA. A doctor's certificate will support the case against a challenge to the validity of the POA on the grounds of the mental incapacity of the individual executing the POA.A POA executed by an entity must be supported with passing of appropriate resolutions in accordance with applicable law.
Who may be an Attorney:
An ‘Attorney’ is the person in whose favour the POA is granted.
This means that a POA may be granted in favour of any person including a minor. However, such an attorney will not be liable to the grantor for their acts unless such attorney is (i) of the age of majority and of sound mind (in case of individuals); or (ii) competent to contract (in case of entities).
For instance, a grantor who meets the eligibility criteria (as explained above) may appoint even a minor as their attorney. However, if the grantor does so knowingly, they cannot later deny or claim that any act of such attorney is invalid on account of them being a minor.
The basic principle is that for a third party, any act of the attorney is nothing but the act of the grantor who appointed such attorney. Therefore, so long as the grantor meets the eligibility criteria (as explained above), any person may be appointed as attorney.
Points to consider:
Even though any person can be appointed as an attorney, it is in the interest of the grantor that they appoint a person who meets the criteria stated above. Otherwise, the grantor will not be able to hold the attorney accountable for any acts of such attorney.Even though there is no restriction on appointing an entity as an attorney, it may not be the most practical way to get a task done. This is for the reason that an entity cannot act itself and will in turn act through an authorised representative.
In the next article of this series, we will set out the purposes for which a POA may be granted.
About the Author
Mansi Jain has been with MZD Legal Consultancy since 2016 and has also been practicing law since 2016. Mansi is a part of the Real Estate, Estates & Succession Planning, and General Corporate and Commercial practices at the firm. She can be contacted at mansi@mzdlegal.in.
About MZD Legal Consultancy
MZD Legal Consultancy is a boutique law firm in Mumbai, India. The firm was established in 2011 and comprises professionally qualified lawyers with varied levels of experience and expertise in specific practice areas. To know more, click here www.mzdlegal.in
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