How NRI can manage Assets/liabilities in India without being present

Indians planning to immigrate from India are normally worried as to how there affairs in India would be handled in their absence from India.  They may appoint someone to act for and on their behalf, during their absence from India and ensure the smooth running of the day-to-day affairs in connection with their assets and liabilities in India. The obvious question, which comes to mind, is as to the meaning and implications of a ‘power of attorney’ and the modalities for its execution.

1) What is a Power of Attorney?

A power of attorney is an instrument in writing empowering a specified person to act for and in the name of a person executing it. In other words, a power of attorney (POA) is an authorisation to act on someone else’s behalf in a legal or business matter. The person authorising the other to act is the grantor/principal of the power and the one authorised to act is the attorney/agent. It is a unilateral document signed and executed only by the grantor or principal. A power of attorney may be revoked at the instance of the grantor or due to his death or incapacity. A power of attorney is usually construed very strictly.

A power of attorney conferring on the agent the authority to act in a single transaction in the name of the principal is a Special Power of Attorney. If the power of attorney authorises the agent to act generally or in more than one transaction in the name of a principal, it is a General Power of Attorney.

A single act or transaction is meant to imply either a single act or acts so related to each other as to form one judicial transaction for example power of attorney for sale of a particular property.

2) How to Execute a Power of Attorney, If you are within India or Outside India?

  • The name of the person executing the power of attorney should reveal his identity. In case he is an individual, the father’s name and address should be given. In the case of a corporation, the power of attorney should mention the place of incorporation and the address of the principal place of business/registered office of the company.
  • The date and place of execution of the power of attorney is to be mentioned.
  • The power of attorney should be duly signed by the person executing the same. Where the same is being executed by a company, it should bear the signature of the authorised signatory and the common seal of the company
  • The power of attorney may be accepted by the person in whose favour it is drawn. Where the same is being accepted by a firm, the Partners/individuals so authorised on behalf of the firm should sign individually.
  • The power of attorney should be duly attested by two witnesses.
  • In case the power of attorney is drawn in favour of the firm it should mention the constitution of the firm i.e. partners/specific individuals authorised on behalf of the firm.
  • The power of attorney should be duly executed on a non-judicial stamp paper per prescribed stamp duty, if executed within India. The power of attorney is chargeable to stamp duty at the time of its execution in India as per the Indian Stamp Act, 1899. A power of attorney executed outside India, but which relates to any property situated in India or to any matter or thing to be done in India or received in India is chargeable to stamp duty under the Indian Stamp Act, 1899. The power of attorney is executed outside India on a plain paper without any stamp. The same is required to be stamped within three months after it is received in India by the Collector of Stamps.
  • The power of attorney should be duly executed before and authenticated by a Notary Public, or any court, Judge, Magistrate, Indian Consul or Vice Consul or representative of the Central government in case executed within India. `Authentication’ implies that the above-mentioned persons i.e. Notary Public, court, Judge, Magistrate, Indian consul or Vice Consul or representative of the Central government assure themselves of the identity of the person who has signed the attorney as well as the fact of its execution. The act of authentication creates a presumption under the Indian Evidence Act, 1872 that the document purporting to be an attorney was so executed and is valid.
  • A power of attorney executed outside India has to be executed before and authenticated by a Notary Public and also consularised/apostilled by the Indian Consulate present in the country of execution. In international law, consularisation is the act of authenticating any legal document by the consul office of the country in which it is to be used, by the consul signing and affixing a red ribbon to the document for it to be acceptable in the country of use. Foreign countries, who are party to the Hague Convention, require the bearer of a document to obtain an apostille from authorities of the country in which the document was issued. An apostille involves the addition of a certificate, either stamped on the document itself or attached to the document. It certifies the country of origin of the document, the identity and capacity in which a document has been signed and the name of any authority which has affixed a seal or stamp to the document. The apostille enables the presenter to bypass further certification and immediately send or take the documents to the country of intended use. Only certain countries will accept the apostille. Such a power of attorney so authenticated is recognised as valid under the Indian Evidence Act, 1872. The same will also be valid / recognisable under the Registration Act, 1908 for purpose of registration of a document by an agent of a person, or a representative or an assign (where the person executing the document cannot be present for registration).
  • A power of attorney to be used for the specific purpose of registration of a document in respect of an immoveable property of value more than R. 100 by an agent of a person, or a representative or an assign (where the person executing the document cannot be present for registration) has to be executed before or authenticated by the Registrar or Sub-Registrar within whose district or sub-district the principal resides. This is as per the requirements of the Registration Act, 1908. This being an exception, no other power of attorney, either special or general requires registration under the Registration Act, 1908.

3) Other Noteworthy Points

Sometimes the process of notarization and consularisation may be cumbersome in case of attorneys executed outside India, but it is important to note that only a “valid power of attorney” can validate the act performed by the agent/attorney on behalf of the principal/grantor. The governments may think in terms of easing the process of consularisation as many a time, an Indian consulate may be thousands of miles away from the place of execution of a power of attorney thus causing unnecessary delays and costs for the grantor.

As cross border business and legal transactions increase, the delays caused by such cumbersome requirements need to be addressed and reduced. Perhaps the governments would take some much needed steps and define a simpler procedure for execution of documents outside India

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