Report No. 67
Articles 48 to 50
45.1. Article 48-Introductory.-
Article 48, which deals with powers of attorney1, is divided into seven clauses, which prescribe a stamp duty ranging from 50 P. to Rs. 10 and over. The material difference between some of the categories of instruments provided for in these clauses, and the actual range of duty-for example, between clauses (a) and (c)-is so small (50 P.) that it would be convenient if some of these clauses could be combined. A suggestion for such re-grouping will be made at the proper place.
1. For definition, see section 2(21).
45.2. General and special powers.-
To some extent, the differences in stamp duty as prescribed in the various clauses of the article are based on the difference1 between general powers of attorney, and special powers of attorney. In Halsbury, the following explanation of these powers is given under "agents". A special agent is one who has authority to act for some special occasion or purpose which is not within the ordinary course of his business or profession. A general agent is one who has authority arising out of, and in the ordinary course of, his business or profession to do some act or acts on behalf of his principal in relation thereto or one who is authorised to act on behalf of the principal generally in transactions of a particular kind or incidental to a particular business. In Bouvier's Law Dictionary2, it is stated that "a general power authorises an agent to act generally on behalf of the principal, a special power is one limited to a particular act."
1. See Venkataramana lyer v. Narsinga Rao, 1915 ILR 38 Mad 134 (136).
2. See Venkataramana Iyer v. Narsinga Rao, 1915 ILR 38 Mad 134 (136).
45.3. Clauses (a) and (c)-"Single transaction".-
Some of the various clauses, if examined minutely, reveal a few common features. The common feature in clauses (a) and (c) is that of "single transaction". Clause (a) relates to an authority for procuring the registration of a document or documents in relation to a single transaction or admitting the execution of one or more of such documents for registration). Clause (c) relates to acting "in a single transaction" otherwise than under clause (a). The expression "a single transaction", according to the Madras High Court1, applies "either to a single act or to acts so related to each other as to form one juridical transaction, such as, all the acts necessary to perfect a mortgage or a sale of a particular property." This interpretation would be in accordance with the distinction between a special agent and a general agent, as set forth in the authorities already referred to2. In view of the common features mentioned above, it may be convenient to merge clause (a) and clause (c).
1. Venkataramana lyer v. Narsinga Rao, 1915 ILR 38 Mad 134 (137).
2. Halsbury's, 3rd Edn., Vol. 1, pp. 150-151.
45.4. Clause (b) of the article charges duty on instruments which are required for proceedings under the Presidency Small Cause Courts Act, 1882. Under that Act, such Courts are set up in Calcutta, Madras and Bombay.1
Under section 2(21) of the Stamp Act, such powers of attorney as are chargeable with court-fees, such as, Vakalatnamas under the Court Fees Act, 1870, are exempted from stamp duty. But the Court Fees Act2 did not apply to Presidency Small Cause Courts, and therefore such instruments relating to these particular courts are chargeable under the Stamp Act.3 But, in the State of Maharashtra, under the Bombay Court Fees Act, 1959, Court fee has been imposed on these instruments; and hence the instruments would not be chargeable under the Stamp Act. Since clause (b) appears to be of a special character, and the individual States can (by State Acts) levy duty on such instruments covered by the Presidency Small Cause Courts Act,4 there is no need to have this clause separately in the Central Stamp Act. Clause (b) should, therefore, be omitted, leaving the States concerned to deal with the matter in the Court Fees Act in the manner they think proper. This will simplify Article 48.
1. Section 5, Presidency Small Cause Courts Act, 1882.
2. Section 3(3), Court-Fees Act.
3. Hormusji K. Bhabha v. Nana Appa, AIR 1934 Born 299.
4. Constitution, 7th Schedule, State List, item 63.
45.5. Clause (d) and clause (e).-
Clause (d) speaks of an authority given to not more than five persons "to act jointly or severally in more than one transaction or generally". Clause (e) relates to a similar authority to more than five but not more than ten persons. Both the clauses relate to general powers of attorney. Taking advantage of this common feature, one could conveniently combine the two clauses. It may be noted that these clauses take no account of the number of persons executing a power of attorney.1. The Explanation to clause (e) provides that more than one person belonging to a firm will be deemed to be one person.
1. Jogi Ram v. Mohammed Rafi, AIR 1925 Oudh 172.
45.6. Clause (f) deals with a power of attorney given for consideration, authorising the Attorney to sell immovable property. We shall later make a recommendation1 concerning the duty to be charged on the sale deed which may be executed in pursuance of the power of attorney.
1. Para. 45.12, infra.
45.7. Clause (g).-
Clause (g) deals with powers of attorney in other cases. This clause has to be read with clause (e). When so read, it means that if there are more than ten persons authorised to act jointly or severally in more than one transaction or generally, then the stamp duty payable is according to the number of persons. (The duty is, at present, one rupee for each person authorised). This clause needs no change, in substance.
45.8. Recommendation for regrouping of clauses.-
On the basis of the above discussion, we recommend the following changes in the grouping of the clauses of Article 48:
(i) Clauses (a) and (c) should be combined into one clause, which will apply when one or more persons are authorised to act in a single transaction-whether the transaction consists of a single act or of acts so related to each other so as to form one jural transaction.1 Clause (b) should be omitted2.
(ii) Clauses (d) and (e), which relate to a general power of attorney, should be combined.3 The difference in duty imposed under each of the two clauses at present depends on the number of persons appointed, i.e., Rs. 5 for five persons and Rs. 10 for ten persons. The duty should be revised, so that one duty is imposed for a general power of attorney given to not more than, say, ten persons, (the rate being one rupee per person).
(iii) Clauses (f) and (g) may be retained.4 Clause (f) may be modified, on the lines indicated below5. Clause (g) needs no modification of substance.6
1. Para. 45.3, supra.
2. Para. 45.4, supra.
3. Para. 45.5, supra.
4. Para. 45.6, supra.
5. Paras. 45.9 to 45.12, infra.
6. Para. 45.7, supra.
45.9. Points of detail-Meaning of "consideration" in clause (f).-
A few points of detail relating to individual clauses may now be discussed. Clause (f) contemplates a power of attorney which is given for the purpose of sale of any immovable property and for consideration. The duty on a conveyance 'under Article 23' for the amount of the consideration charged is the same. The Allahabad High Court has held1: "a consideration in relation to power of attorney can only mean a valuable onsideration and not good consideration". In that case, the executants of the power of attorney were indebted to a certain Bank on account of two equitable mortgages. The Bank filed suits for the recovery of the amount by sale of the property mortgaged. After the filing of the suit, there was a compromise between the parties, and a power of attorney was executed in favour of the Bank in compliance therewith. Under the instrument, the Bank was authorised to sell the property covered by the mortgage decrees, for the purposes of appropriation of the sale proceeds towards the decretal amount.
The balance (after such appropriation) was to be paid to the executants. The question before the court was whether this instrument was a power of attorney given for consideration. It was held that the compromise was for a good consideration so far as the contract of agency or attorney was concerned. But it was not a valuable consideration. It was held that "consideration" in relation to clause (f) of Article 48, means a valuable consideration, and not a good consideration as it may mean in relation to any other contract. In these circumstances, it was held that the power given was for the appointment of an agent, and not for any valuable consideration. Therefcre, the instrument was not chargeable under Article 48(f). It was also held that there was no transfer of any property in consideration of any debt under section 24, and, therefore, there was no stamp duty chargeable on the amount of the consideration on account of the two equitable mortgages.
1. Chief Inspector of Stamps v. Murlidhar, AIR 1970 All 599 (603), para. 9.
45.10. It would appear, however, that there was valuable consideration in this case, constituted by the compromise of litigation which raised triable issues. In any case, the instrument would fall under Article 48, clause (c), as the Bank was authorised to sell the immovable property by public auction for payment of the amount due, to grant a receipt for the purchase money paid by the auction purchase, to appropriate from the sale proceedings so received a sum representing the total decretal amount and to pay the balance to the executants. All this could be considered as belonging to one jural transaction, namely, the appropriation of sale proceeds towards the decretal amount; and on this basis, Re. 1 ought to have been charged as stamp duty.
45.11. With reference to Article 48(f), the following explanation was given in the Statement of Objects and Reasons1:-
"It has been found that sales and mortgages were sometimes effected through the medium of power of attorney and thus the stamp duty, payable as a conveyance was evaded. A provision is, therefore, introduced in this article to charge such powers as a conveyance."
The Select Committee limited the clause to cases of powers authorising sales of immovable property2.
Sir James Westland, in his speech presenting the report of the Select Committee to be Legislative Council in 1898, explained the object of his clause as
"The reason of this was that it was found as a fact that what amounted to a conveyance was sometimes effected by means of a power of attorney. A, in selling B property, instead of conveying it to him by a regular deed of conveyance, simply transferred it to him without any conveyance at all, but gave him a power of attorney authorising him to sell the property. This, so far as B is concerned, enabled him to dispose of the property to the same extent as if he were the owner of it. We, therefore, provided that if a power-of-attorney was given for a consideration and gave authority for the sale of the property affected, the duty should be levied in the same way as upon a conveyance. In the objections that have been made to this provision, apparently some persons have thought that we levy this duty upon a power-of-attorney given for affecting a sale, and they fail to observe that it was levied purely upon a power-of-attorney given for a consideration."
1. Statement of Objects and Reasons of the Bill (1897), Article 48.
2. Report of the Select Committee (1898), Article 48.