Stamp Act applicable to State of M. P. (Stamp Duty on POA when given to Non-Relative)


Court :
High Court

Brief :
Judgement of Hon’ble Mr. Lodha (J) & Mr. Gokhale (J) in Civil Appeal No. 684/2004 State of MP v/s Rakesh Kohli delivered on May 11, 2012 w.r.t. Stamp Act applicable to State of M. P. (Stamp Duty on POA when given to Non-Relative)

Citation :
Hon’ble Mr. Lodha (J) & Mr. Gokhale (J) in Civil Appeal No. 684/2004 State of MP v/s Rakesh Kohli delivered on May 11, 2012

Sub: Judgement of Hon’ble Mr. Lodha (J) & Mr. Gokhale (J) in Civil Appeal No. 684/2004 State of MP v/s Rakesh Kohli delivered on May 11, 2012 w.r.t. Stamp Act applicable to State of M. P. (Stamp Duty on POA when given to Non-Relative).

To,                                                                                 

1)  The H’ble Mr. Narendra Modi

Prime Minister of India,

South Block, Raisina Hill,

New Delhi- 110011.

2) The Hon’ble Mr. Dattu,

Chief Justice of India,

Supreme Court of India,

Tilak Marg, New Delhi 110201.

India.

Email: supremecourt@nic.in

3)  The Hon’ble Mr. M. Shah,

Chief Justice Bombay High Court,

Behind HSBC Bank,

Fort, Mumbai 400 023.

Email: hcbom.mah@nic.in

4) The H’ble Just. Mr. A.P. Shah (Retd),

Chairperson,

Law Commission of India,

Add: Law Commission of India,

14th Floor, Hindustan Times House,

Kasturba Gandhi Marg,

New Delhi-110001.

     Email: lci-dla@nic.in

5)     The Hon’ble Mr. D.V. Sadanand Gowda,

Min. Law and Judiciary,

Govt of India,

Room No. 401, 4th Floor, A-Wing,

Shastri Bhawan,

New Delhi-110 001.

6)     The Hon’ble Mr. Arun Jaitley,

Min. of Finance & Corporate Affairs,

Govt. of India,

North Block,

New Delhi-110 001.

7)      The Advocate General (India)

Mr. Mukul Rohtagi

N-234-A, Greater Kailash-I,

NEW DELHI-110048. 

TEL. 29244466/29243366,

EMAIL: mukul17855@yahoo.com

8)      Mr. Anil Singh

Adv. Gen (M’htra)

Annex Bldg., High Court, (Bombay),

Fort Mumbai 40 023

Email: anilsinghadv@yahoo.co.in

9)     The Hon’ble Ms. N. Sitaraman,

Min. of Commerce,

Govt of India,

Room No. 138, North Block,

New Delhi 110 001. 

mosfr@nic.in

nsitharaman@gmail.com

10)  Insp. Gen of Registration

& Controller of Stamps,

State of Maharashtra, Pune

Pune  411001

     

11)  The Chief Secretary

Govt of Maharashtra,

Mantralaya, Mumbai 400 032.

        

Madam/Sir/s,

Sub: Judgement of Hon’ble Mr. Lodha (J) & Mr. Gokhale (J) in Civil Appeal No. 684/2004 State of MP v/s Rakesh Kohli delivered on May 11, 2012 w.r.t. Stamp Act applicable to State of M. P. (Stamp Duty on POA when given to Non-Relative).

Sub: URGENT NEED FOR MEASURES TO CHECKMATE PREJUDICE TO LARGE SECTIONS OF GENERAL PUBLIC DUE TO LEGISLATIVE PROVISONS AND/OR COURT JUDGEMENT (INCURIAM OR STARE DECISIS and/or against settled doctrines /constitutional mandate etc).

Re: Suggestion for setting up of THINK TANK/s in the Supreme Court of India, the individual High Courts, the concerned Ministries both at the Centre and individually in the States particularly w.r.t. Law and Judiciary, Urban and Rural Development, Finance, Housing, Corporate Affairs, Commerce, Revenue.

A)    THE ABOVE JUDGEMENT CAME TO BE PASSED EX-PARTE (THE RESPONDENTS NOT HAVING APPEARED). IT IS HUMBLY SUBMITTED THAT CERTAIN ASPECTS ON THE SUBJECT OF PAYMENT OF STAMP DUTY (SD) ON POWER OF ATTORNEY (POA) WERE PROBABLY NOT BROUGHT TO THE ATTENTION OF THE HON’BLE COURT. My submissions (made in the past too) in this behalf are hereunder put forth. THE SUBJECT MATTER HAS FAR REACHING IMPORTANCE TO THE PUBLIC AT LARGE AND HENCE MY HUMBLE PLEA THAT MY SUBMISSIONS BE PLACED BEFORE THE H’BLE JUDGES AND/OR THE MINISTER/S CONCERNED FOR THEIR CONSIDERATION AND IF FOUND APPROPRIATE TO RECONSIDER THE MATTER.

B)    1) THE LAW RELATING TO POA IS FOUND IN POWERS OF ATTORNEY ACT READ WITH THE CONTRACT ACT (LAW OF AGENCY), CONCERNED STAMP ACT AS WELL AS PROVISIONS OF SEC 32, 32A AND 33 OF THE REGISTRATION ACT. A POWER OF ATTORNEY IS EX-FACIE A MERE DEVICE OF EMPOWERMENT & NO OTHER EXCEPT WHEN GRANTED FOR CONSIDERATION AND/OR MADE IRREVOCABLE (DEEMED TO BE FOR CONSIDERATION). SEC 202 OF THE CONTRAT ACT IS OF CRITICAL IMPORTANCE WHEREUNDER A POA FOR CONSIDERATION TANTAMOUNTS TO AN ASSIGNMENT AND BECOMES IRREVOCABLE EVEN ON DEATH OF GRANTOR. Such a POA (where the grantee has paid to and/or incurred expense on behalf of the grantor and is entitled to reimburse himself by receipt of dues of the grantor in the name of the Grantee) is required by law to be duly stamped & registered particularly after introduction of Sec 17 (1A) to Registration Act w.e.f. 2000 (both on advalorem basis as defacto transfer deed).

Sec. 202 reads as follows:-

Quote:-

Section 202. Termination of agency, where agent has an interest in subject matter:- Where the agent has himself an interest in the property which forms the subject matter of the agency, the agency cannot, in the absence of an express contract, be terminated to the prejudice of such interest.

Illustrations

a)     A gives authority to B to sell A’s land, and to pay himself, out of the proceeds, the debts due to him from A. A cannot revoke this authority, nor can it be terminated by his insanity or death.

b)     A consigns 1,000 bales of cotton to B, who has made advances to him on such cotton, and desires B to sell the cotton, and to repay himself out the price the amount of his own advances. A cannot revoke this authority, nor it is terminated by his insanity or death.

Unquote.

2)     THE PROVISION OF STAMP ACT REGARDING NEED TO PAY ADVALOREM STAMP DUTY AS OF CONVEYANCE IN CASE OF POA BY AN INDIVIDUAL FAVOURING A NONBLOOD RELATIVE (even when merely for convenience, without consideration & not irrevocable)IS OPPOSED TO SETTLED PRINCIPLES OF LAW & OTHERWISE DISCRIMINATORY.

3)     A.a) In law, a person includes all legal entities such as natural persons and artificial entities (eg. Companies, Societies, Trusts, Partnerships, etc). The relationship of Grantor and Grantee of POA (other than for consideration etc.) is generally a relationship of mere empowerment, mutual trust and confidence. Under Sec 48 of the Companies Act, 1956 (now Sec 22 u/Companies Act 2013)  delegation of authority by Company needs to be by empowerment by grant of POA which reads as follows:

Quote:

Sec 48 (Act 1956) Execution of deeds

(1) A company may, by writing under its common seal, empower any person, either generally or in respect of any specified matters, as its attorney, to execute deeds on its behalf in any place either in or outside India.

(2) A deed signed by such an attorney on behalf of the company and under his seal where sealing is required, shall bind the company and have the same effect as if it were under its common seal.

NB: Similar provisions are contained in Sec 22(2) and (3) of Act 2013.

Unquote:

b)  A POA is an enabling legal convenience, egs.

i) A Natural person authorizing a relative or a non-relative person of special skills and of confidence (say Lawyer, C.A., Architect, business partners, etc. etc).

ii)  Under the Stamp Act, a POA by an Individual favouring a relative will attract SD of mere Rs. 500/- but a POA favouring a non-relative will attract advalorem SD as of Conveyance. HOWEVER POA BY AN ARTIFICIAL PERSON TO ANY PERSON NOT ASSOCIATED OR CONNECTED WITH SUCH ARTIFICIAL ENTITY, IS KEPT OUT OF THE NET.

iii)  CAN A LAW DISCRIMINATE WHEN THE GRANTOR IS AN INDIVIDUAL AS AGAINST WHEN THE GRANTOR IS AN ARTIFICIAL ENTITY?

iv)  How is one to adjudicate a GENERAL POA favouring a non-relative.

(N.B. A POA operates over properties held on the date of the POA as also to such as may thereafter be acquired)

v) It is settled law that a Company, by a mere Board Resolution, can authorize a Director to do acts on behalf of the Co, however a non-Director can only be empowered by a P.O.A.

vi) Take the case of an NRI overseas having no relative in India. Does a P.O.A. by him/her to a friend (merely for convenience) in INDIA attract advalorem S.D. Akin to above, would be the situation of persons placed in various States of India.

vii) If SD is paid on POA granted (merely for convenience and not for consideration) by Mr. A favouring Mr. B (not being a blood relative) and thereafter if B, on behalf of A, signs a Sale Deed favouring Mr. C, then will SD paid on POA between A & B be given set off/adjusted from SD payable on Sale Deed between A to C.Stamp Act makes no such provision.

viii) Consider the case if Mr. A who for convenience and without consideration, grants (when in USA) a POA to a non-relative Mr. B to complete sale of property favouring Mr. C and pays SD as the rate as of Conveyance and subsequently Mr. A himself, comes down to India and in person signs Sale Deed favouring Mr. C. (without intervention of Mr. B), then will SD paid on POA (between MR. A to Mr. B) which has not been used for Sale Deed, be refunded. Stamp Act makes no such provision.

ix) Take the case where Mr. A has himself signed an Agreement to sell (ATS) favouring Mr. B and such ATS is fully stamped and after receipt of full consideration and fulfillment of terms of ATS, Mr. A is required to execute Sale Deed favouring Mr. B and Mr. A being unable to attend, grants POA to Mr. C. Is Mr. A required to pay SD on such POA,  (between Mr. A to Mr. C) a additional levy?

x) The definition of relative is relatively narrow wherein ancestor (parent), descendant (spouse/children) and co-laterals (blood brother/sister) are contemplated; however brother-in-law, sister-in-law, nephews, niece, cousin brother etc. not being included in the said definition. WHAT HAPPENS IN CASE OF CHILDLESS WIDOW/WIDOWER WHO, FOR MERE CONVENIENCE, GIVES POA TO HER/HIS BROTHER-IN-LAW, HER/HIS NEPHEW/NIECE (EACH OF WHOM IS NOT A BLOOD RELATIVE) BUT A MEMBER OF A LARGER/EXTENDED FAMILY. Does one need to pay Stamp Duty on such POA @ as of Conveyance.

3.B) EACH OF THE ABOVE SITUATIONS DEMONSTRATE THE DISCRIMINATORY NATURE & UNTENABILITY OF THE IMPUGNED PROVISION as also the erroneous import of Judgement of HSCI in Rakesh Kohli’s case. Every whichway, the provisions of Stamp Act qua such P.O.A. will negate provisions of Contract Act (Law of agency), POA Act, Transfer of Property Act, etc. and otherwise help create grossly discriminatory & untenable ground realities.

3. C) The HSCI has adjudicated on this proposition emanating from Judgement of High Court in State of M.P. IT IS SUBMITTED THAT THE RATIO LAID DOWN BY THE H’BLE HIGH COURT (MP) IS THE CORRECT POSITION & THAT STATED BY HSCI IS INCORRECT. Other States such as Maharashtra also have near similar provisions. Art 48 f (i), (ii) a and b of Sch I of B’bay Stamp Act.

Quote

48. POWER OF ATTORNEY

f) [(i) When given for consideration and authoriaing to sell an immovable property;]

The same duty as is leviable on a Conveyance under clause (a), (b), [(c) or (d)], as the case may be, of Article 25, on the market value of the property.

[(ii) When authority to sell or transfer immovable property without consideration or without showing any consideration, as the case may be,-

(a)   If give to the father, mother, brother, sister, wife, husband, daughter, grandson, granddaughter or such other close relative; and

Rupees five hundred

(b)   In any other case …

The same duty as is leviable on a Conveyance under clauses (b), (c) or (d), as the case may be, of Article 25, on the market value of the property.

 

Unquote

4. EXCEPT IN THE CASE WHERE POA IS GIVEN FOR CONSIDERATION AND WITH POWER TO THE ATTORNEY/GRANTEE TO RECEIVE MONIES HIMSELF AND/OR MADE IRREVOCABLE FOR ANY CAUSE/S AND WHICH SUCH POA IS DEEMED TO CONSTITUTE A TRANSACTION, SUCH POA THEREFORE ATTRACTS ADVALOREM STAMP DUTY AS OF CONVEYANCE/ASSIGNMENT AS PER THE PROVISIONS OF THE STAMP ACT. OTHER THAN SPECIFIC CASE AS ABOVE, ANY OTHER POA GIVEN MERELY FOR CONVENIENCE AND WITHOUT CONSIDERATION AND NOT IRREVOCABLE (BE IT SUCH POA GIVEN TO RELATIVE, NON-RELATIVE, PARTNER NON-PARTNER, DIRECTOR, NON-DIRECTOR, TRUSTEE, NON-TRUSTEE ETC. ETC.) SUCH LATER CATEGORY POA DOES NOT TANTAMOUNT TO A TRANSACTION  BUT MERELY AN ENABLING DOCUMENT WHICH MAY OR MAY  NOT BE ACTED UPON AND CANOT BE EXCISABLE TO FULL SD.

5)     MERELY BECAUSE MINISCULE NUMBER OF PERSONS , WITH OBLIQUE AGENDA TO INDULGE IN INAPROPRIATE TRANSFERS, INDULGE IN SUCH MODUS OPERANDI, ALL OTHER/S BEING PERSON DOING GENUINE/ LEGITIMATE MERE EMPOWERMENT NEED NOT BE SUBJECTED TO SUCH ONEROUS IMPOST. THE HARM & PREJUDICE CAUSED TO HONEST PERSONS FAR EXCEEDS THE MALAISE (INDULGED IN BY MINISCULE FEW) SOUGH TO BE CHECKED.

6)     Perusal of M’htra provision will prima facie reveal the starked infirmity Refer Phases such as “without consideration” or “without showing consideration” etc. Rakesh Kohli’s Case Judgement will bind citizenry of other States without being heard in the matter. This aspect also warrants consideration.  

7) I HAVE AS EARLY AS MID 2012, WRITTEN ABOUT THE INCORRECTNESS OF HSCI JUDGEMENT TO THE THEN CJI AND THE MINISTRIES CONCERNED BUT TO NO AVAIL. The impugned provisions are undoubtedly grossly discriminatory arbitrary or unreasonable and need to be struck down. The measure is entirely pro-revenue unmindful of gross prejudice and inequities  at field levels and grossly anti-citizen. It cannot be left to Legislature to suo-motto remedy the mischief particularly now that the H.S.C.I has upheld the same and other States too will join the bandwagon and other States persons will bear the brunt without having been given the opportunity of being heard. It may be the norm that in taxation there is no equity, however such general proposition is not of universal application overriding cases of gross discrimination. Unfortunately the different hues of the entire spectrum of the matter were not brought to the attention of the H’ble Apex Court.IT IS URGED THAT THE H’BLE APEX COURT SUO-MOTTO SOONEST RECONSIDER THE MATTER OR THE GOVT. (MINISTRY) MOVE AN APPLICATION TO REVIEW THE MATTER AND SET RIGHT THE APPARENT ERROR.

8) In some countries, the course of the Courts is so tedious and the expense so high, that the remedy JUSTICE is worse than INJUSTICE the disease (Benjamin Franklin 1742) which is so true to present day India and to the Indian Justice system. Alas the Judicial system has reduced itself to mere “form” with negligible “content” within. Persons or bodies concerned (by he/she it/they lawyers litigants etc) are thriving due to sheer inefficiency or inefficacy of the justice administration system; believe you me, if the right kind of system was in place, most lawyers would be jobless and/or persons would not dare to go errant. A comment that the Judiciary (one of the most important pillars of Society) has dismally failed the nation and its citizenry would not be an inapt  one and is unequivocally self-evident to the most naïve mind.

9) I HAVE, IN THE LAST FEW DECADES, MADE SEVERAL REPRESENTATIONS REGARDING  METHODOLOGIES TO BE DEVISED FOR DOING AWAY WITH ARCHAIC LAWS AND/OR CONFLICTING PROVISIONS WITHIN A STATUTE AND/OR INTERSE BETWEEN STATUTES AND/OR CONFLICTING JUDGMENTS SO AS TO REDUCE JUDICIAL DELAYS, BRING ABOUT CERTAINTY OF LAW, EFFICACIOUS AND EFFECTIVE DISPENSATION OF JUSTICE (EG INVOKING OF PERJURY AS A MATTER OF RULE, IMPOSITION OF COSTS (MAY BE EVEN EXEMPLARY AT TIMES) ON “PROFESSIONAL” LITIGANTS, MANDATE ON DEFENDENTS/RESPONDENTS TO FILE AFFIDAVIT/ WS ect.. IN TIME BOUND MANNER, ETC; FAILING WHICH/LEST THE FUNDAMENTALS OF CIVILIZED SOCIETY INTER ALIA RULE OF LAW,  WORKINGS OF THE TEMPLE OF JUSTICE (COURTS) AND ABOVE ALL THE FAITH, FATE AND CONFIDENCE OF THE COMMON MAN WILL BE LOST AND WE WILL BECOME A SOCIETY OPERATING UNDER AND BY ANARCHY OF LAW RATHER THAN UNDER AND BY RULE OF LAW.  

10)   I AM INFORMED THAT IN UK  THERE IS A SYSTEM WHERE AN EXPERT BODY OF LEGAL ACADEMICIANS  IS SET UP WHICH REGULARLY OVERSEES THE IMPLEMENTATION AND IMPORTS OF LEGISLATIVE PROVISIONS AND/OR COURT JUDGMENTS PARTICULARLY CONFLICTING ONES IF ANY AND IF WARRANTED IN GIVEN CIRCUMSTANCES SOONEST CLARIFIES THE CORRECT IMPORT OR DEFICIENCIES OF LEGISLATIVE PROVISIONS AND/OR WHICH IS THE CORRECT JUDGMENT TO BE RELIED UPON AND WHICH IS THE INCORRECT JUDGMENT/S WHICH NEED TO BE IGNORED AND NOT RELIED UPON. SIMILAR METHODOLOGIES COULD WELL BE SET UP IN INDIA.

Yours faithfully

A. Kadiani

 

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on 13 August 2015
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