With some clarity about a Power of Attorney (PoA), Mona felt equipped to understand the issues involved in revoking a PoA that her dad was considering…
She found out that a PoA can be:
Revocable: If the PoA is revocable at the will of the principal.
Irrevocable: If the PoA is not revocable at the will of the principal. This happens in situations where the PoA holder has an interest in the subject matter of the PoA. Revocation of such PoA requires the consent of the PoA holder. Similarly, in situations where the agent has partly exercised the act/s for which the PoA was given, the PoA cannot be revoked in respect of such acts that he has already done.
Mona learnt that under Section 201 of the Indian Contract Act, a PoA can be invalidated in the following situations:
If the person issuing the PoA decides to revoke the PoA
If either the person issuing the PoA or the PoA holder or both die, become of unsound mind or are adjudged ‘insolvent’ by law
If the PoA holder gives up his powers
If the business for which the PoA was granted, is completed
If the duration for which the PoA was given has expired.
Mona learnt that a person may need to revoke a PoA in the following situation:
Breach of contract: If the PoA holder breaks the terms of the contract or acts beyond his powers, the person who had issued the PoA can revoke it by issuing a notice of revocation. The court of appropriate jurisdiction could be approached to give effect to the revocation of the PoA.
Misconduct by the PoA holder: When the PoA holder uses the PoA to commit fraud or misrepresentation, beyond the authority given to him in the PoA, the PoA can be revoked. The person issuing the PoA would be responsible if such acts fall within the authority given to the PoA holder. Where the PoA holder has an interest in the subject matter and commits misconduct, a separate contract is required between the person issuing the PoA and the PoA holder for revocation of such a PoA. It is advisable to issue a public notice about the misuse by the PoA holder in at least two local newspapers, and approach the court to terminate the agency, if it happens to be irrevocable.
Points for consideration in revoking a PoA
Mona learnt that the following issues need to be considered:
Is the PoA registered? A registered Power of Attorney can only be revoked by a registered deed. An unregistered PoA can be revoked by an instrument of revocation, without registration. The person revoking his PoA would need to issue a public newspaper notice regarding such revocation.
Is the PoA jointly issued by more than one person? If the PoA is made jointly by several people, each of the persons who made the PoA needs to sign the instrument of revocation. If a partnership firm issues a PoA, the PoA is automatically revoked on dissolution of the firm.
If the PoA is made in favour of two or more persons: If the PoA is executed jointly in favour of more than one person, the PoA gets revoked on the death of any of them. If the PoA is made severally, i.e. each of the PoA holders can independently perform the authorized tasks/transactions, the remaining PoA holders can continue to exercise the authority given in the PoA.
Procedure for Revocation
Mona learnt that to revoke the PoA, her father would need to do the following:
Notice: Reasonable advance intimation (notice) is to be given to the PoA holder about the intended revocation. The reasonableness of the notice depends on the nature of powers in the PoA.
Instrument of Revocation: The person who issued the PoA and intends to revoke it, is required to send the instrument of revocation on the PoA holder. This instrument contains the effective date of revocation and the reason for revocation of the PoA. If the PoA was registered, the revocation will also need to be registered.
Intimation to persons with whom the PoA holder was dealing with on behalf of the person who issued the PoA: The intimation of revocation is to be sent to the persons with whom the PoA was dealing with on behalf of the person who issued the PoA, so that they stop any business with the PoA holder in his representative capacity.
Newspaper notice: The intimation of revocation is published in a local/national newspaper to inform the public in general.
Mona learnt that the person revoking the PoA was usually advised to ask the PoA holder to return the original PoA at the time of revocation.
She realized that proper care must be taken at the time of making the PoA to ensure that subsequent issues do not arise at the time of revocation...
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