What is an irrevocable power of attorney?

An irrevocable power of attorney is a power of attorney (general or special) that cannot be revoked by the principal unilaterally usually because it is coupled with an interest (the agent has a financial stake in the property or transaction) or because the principal has contractually agreed not to revoke it.

When Is a POA Irrevocable?

• Coupled with interest: Agent has a financial interest in the subject matter e.g., lender who has a mortgage.
• Security purpose: Given as security for a loan or contractual obligation.
• Development context: Developer given irrevocable authority to sell units on the landowner's behalf in a JDA.

Legal Basis in India

Section 202 of the Indian Contract Act, 1872 provides that a power of attorney made to secure an interest cannot be revoked to the prejudice of such interest. This is the statutory basis for irrevocable powers of attorney in India.

An irrevocable power of attorney is a powerful legal instrument that significantly constrains the principal's freedom over their property. It should be granted only when there is a genuine, documented interest in favour of the agent and always with independent legal advice, given its far-reaching consequences.