"Bai’at" means "to be sold". When one becomes Mureed of a Murshid, he sells his heart, life and wealth to his Murshid. After this sale he no longer has a say in these matters nor can he do as he pleases.
A’la Hazrat, Imam Ahmed Raza Khan (radi Allahu anhu) writes that it is mentioned in "Suba Sanabil" that a person was sentenced to death by an Emperor. As the executioner unsheathed a sword to behead the person, the person faced the grave of his Murshid. The executioner said, " At times like this you should face the Qiblah." The person answered: "Do your duty, I have faced the Qiblah. It is true that the Kaaba is the Qibla of the body, and the Qibla of the heart and soul is the Murshid." This is real Iraadah (to become a disciple). If one persists with one’s Sheikh with this kind of sincere devotion then benefits will definitely be received.
If the Sheikh is lacking, the Sheikh’s Sheikh may not be inadequate. Otherwise, Ghausul A’zam (radi Allahu anhu), who is the source of spiritual grace and fountain of lights, will provide you with grace as long as the Silsilah (spiritual chain) is authentic. (Malfoozaat A’la Hazrat, pg.189)
A’la Hazrat (radi Allahu anhu) has mentioned that people regard Bai’at as a custom and do not really comprehend it’s meaning. A good example of Baiat is that of a certain Mureed of Sheikh Yahya Munayri (radi Allahu anhu). This Mureed was about to drown when Khizr (alaihis salaam) appeared to him and said, " Give me your hand so that I can rescue you". The Mureed replied, "I have already given this hand to Sheikh Yahya Munayri. Now I will not give it to anyone else". Khizr (alaihis salaam) disappeared and Sheikh Yahya Munayri (radi Allahu anhu) appeared and rescued him from drowning. (Malfoozat A’la Hazrat, pg.164)

TYPES OF BAI’AT

There are two types of Bai’at - Bai’atul Barakah and Bai’atul Iraadah:

Bai’atul Barakah (Allegiance of Blessing):

One pledges Bai’atul Barakah by joining a Sisilah (spiritual order) for attaining Barakah (spiritual grace). Bai’atul Barakah is more widely pledged. However, one must be absolutely sincere in pledging to this Bai’ah. For the Bai’atul Barakah to be complete, it is necessary that the four conditions of a Sheikhul Itisaal be met. (The four conditions has been explained). This Bai’ah is also very auspicious. To be amongst those who are loved by Allah Ta’ala and linking to their spiritual order is an honour itself.

Bai’atul Iraadah (Allegiance of Devotion)

In Bai’atul Iraadah one pledges to detach oneself completely from one’s self-will wholly, and unconditionally place oneself in the hands of the Murshid such that one may be moulded through the ways of Tariqah (the path to Allah through spiritual training). No action or decision may be taken without the consent and approval of the Sheikh. This Bai’ah is pledged and carried out by the Saalikeen (Travelers on the path of Tasawwuf), hence it is also called Bai’atus Saalikeen. It is also the purpose of the Mashaa’ikh and a conveyance to Allah Ta’ala. The Holy Prophet Muhammed (sallal laahu alaihi wasallam) took this Bai’ah from the Noble Sahabah (radi Allahu anhum).
The Noble Companion, Abaada Ibnu Saamit Al Ansaari (radi Allahu anhu), narrates: "We pledged Bai’ah to the Holy Prophet (sallal laahu alaihi wasallam) in all our matters of good and misfortunes, in all trials and tribulations. We pledged to consult the Holy Prophet (sallal laahu alaihi wasallam) in all our matters and to unflinchingly follow his orders and not to query his commands". (Fatawa Afriqa by A’la Hazrat, pg.135) From this discussion one can deduce that Bai’ah should be done on the hands of such a person who is worthy and meets with the criteria of a Murshid.