5 Things NRIs Must Know About Power Of Attorney

In the absence of the power of attorney (PoA) instrument, non-resident Indians (NRIs) would have found it almost impossible to manage their various assets in the country of their origin. This instrument assists them in managing their wealth in India.

“Power of attorney is a legal instrument that provides ease of doing business to people who may otherwise not able to do so,” explains Himanshu Yadav, a lawyer practicing at the Supreme Court.

Now, let us talk about some specific points that NRIs must keep in mind while executing a PoA.

Execution

Is physical presence necessary at the time of execution?

An NRI does not have to be present in India in order to execute the PoA. This can be done in the country of their domicile, too. For this purpose, the NRI must get the document executed in the presence of a public notary and then get it authenticated by an official of the Indian Embassy in that country. Another document, also known as an apostille, would be executed that would verify the signature/seal of the person who authenticated the PoA. Such a POA is needed to be stamped within three months from the date of receipt of the PoA in India.

Registration

Is it necessary to register a PoA?

Registration of a PoA is mandatory under Section 48, Schedule-I of the Indian Stamp Act. Only a registered PoA document is legally valid in India. Notarisation alone is not enough.

Purposes

Can you sell property through PoA?

A PoA could be used to carry out specific (special power of attorney) and general (general power of attorney) works. In real estate, a PoA could be executed for the purpose of renting, leasing, borrowing, dispute settlement, etc.  Do note here that a property sale through a PoA is illegal. According to the Supreme Court, a power of attorney is not an instrument of transfer in regard to any right, title or interest in an immovable property.

Revoking

When does a PoA get revoked?

The legal validity of the PoA extends until the life of the principal. They can revoke it in their lifetime, too, if the purpose of the PoA is solved. Do note here that the PoA would stand invalid if the principal is declared insolvent. While revoking, the principal must follow the same process as was done at the time of executing i.e. he has to go to the Sub-Registrar’s office along with two witnesses to get the document revoked.

Accountability

Is an NRI responsible for fraud committed by a representative?

The NRI cannot be held accountable if the legal representative commits a fraud using the PoA, if the crime was committed without his knowledge. The principal would, however, need to prove his ignorance about the matter in the court of law, if the matter reaches court.