Report No. 67
Articles 51 to 57
46.1. Article 51.-
Article 51 levies a duty of one rupee on protest by the master of a ship, attested or certified by a notary public or other person lawfully acting as such. We have, while discussing an earlier article1, dealt with the circumstances in which a protest can be filed. We have no further comments on this article.
1. See discussion as to Article 44-Note of protest.
46.2. Article 52-Proxy-Introductory.-
Article 52 levies a duty of 15 naye paise on a proxy in certain cases. The duty is chargeable on a proxy empowering any person to vote at any one election of the members of a district or local board or of a body of municipal commissioners, or at any one meeting of-(a) members of an incorporated company or other body corporate whose stock or funds is or are divided into shares and transferable, (b) a local authority, or (c) proprietors, members or contributors to the funds of any institution.
46.3. Meaning of "Proxy".-
In legal parlance, the expression "proxy" is used in two senses. It may-(i) denote the person appointed by the share-holder (or other person) to appear at a meeting and cast the share-holder's vote, or (ii) it may denote the form (usually a printed copy), in which such an appointment is made1. The word "proxy" is a contracted form of the word 'procuracy', procurator2. A proxy is defined by Lord Hanworth M.R. in Cousins v. International Brick Co., (1931) 2 Ch 90., as-
"a person representative of the shareholder who may be described as his agent to carry out a course which the share-holder himself has decided upon."
This is the first meaning of the expression "proxy". In Article 52, however, the word "proxy" is used in the second sense, that is, the instrument by which a person is appointed so to act. In the Companies Act3, the Form of Proxy is thus prescribed-[See Article 62 of the Table A and also section 176(6)]. "General Form Name of Company, I/We of in the district of being a member/members of the above-named Company hereby appoint of in the district of or failing him, of as my/our proxy to vote for me/us on my/our behalf at the annual general meeting/general meeting (not being an annual general meeting) of the Company to be held on the day of and at any adjournment thereof.
1. Bisenberg Access to Proxy Machinery (May, 1970), 83 Harvard Law Review 1489 (1490).
2. Bouvier Law Dictionary, (1914), p. 2762.
3. Companies Act, 1956, Schedule IX.
46.4. Importance of proxies.-It is well-known that proxy voting has become the dominant mode of share-holders' decision-making in public companies. There are a number of reasons for this1. Share-holders in a such corporations are often geographically dispersed, so that a given share-holder may not be living near the place where the meeting is held. Again, share-holders often have some principal business other than investing. Physical attendance at a share-holders' meeting is, for many reason, uneconomic use of time when they can vote by proxy.2
1. Bisenberg Access to proxy Machinery, (May 1970) 83 Harvard Law Review 1489 (1490).
2. Emerson and Latcham Share-holders Democracy, (1954), pp. 14-15, cited by Bisenberg Access to Proxy Machinery, (May 1970) 83 Harvard Law Review 1489 (1490).
46.5. Four kinds of proxies.-
Coming, now, to the text of the article, we may note that it really deals with four kinds of proxies. In the first place, it charges duty on a proxy which empowers any person to vote at any one election of the members of a district local- board or a body of municipal commissioners. Secondly, it charges duty on a proxy empowering any person to vote at any one meeting of members of an incorporated company or other body corporate whose stock or funds is or are divided into shares and are transferable. Thirdly, it charges duty on a proxy empowering any person to vote at any one meeting of a local authority. Finally, it charges duty on a proxy empowering any person to vote at any one meeting of proprietors, members or contributors to the funds of any institution.
46.6. Recommendation to extend the article to elections of all local authorities.-
So far as the first portion is concerned, the question may be raised why it should mention only certain local authorities and leave out others. The reason for this appears to be primarily historical. The Stamp Act of 1879 did not contain the words "any one election of the members of a district or local board or of a body of municipal Commissioners". By a notification of the Government, a proxy executed by a female empowering any person to vote at any one election of the members of a local board held under the provisions of the Bombay Local Boards Act, was made chargeable with a one anna stamp duty-a reduced duty compared with the duty on a power of attorney. The present Act has gone a step forward, and had made the article applicable to proxies executed even by males, in respect of the election of the authorities mentioned therein. In doing so, however, the question of extending this part of the article to the election of every local authority does not appear to have been considered.
Such proxies might, perhaps, be taken as chargeable under the article relating to power-of-attonrey1. It should be noted, however, that the duty under that article is much higher than the duty on a proxy, and moreover, that article is expressed in somewhat complicated terms2. We are of the view that proxies in respect of elections of all local authorities should be brought within the scope of Article 52. No doubt, a person to whom a member gives a proxy is that member's agent for the purpose of voting3. However, since the legislature has, in this article, already dealt with a proxy in respect of elections of local bodies specifically, there is no reason why all proxies in respect of local bodies should not be brought within its scope. We, therefore, recommend that this part of Article 52 should be extended to a proxy empowering any person to vote at any one election of the members of a local authority. It may be noted, that that portion of the article which refers to a proxy in respect of meetings, specifically mentions "a local authority", words which were substituted by the present Act in place of the words "municipal commissioners" which occurred in the Act of 1879.
1. Article 48.
2. See discussion as to Article 48, supra.
3. Tata Iron and Steel Company (in re:), AIR 1928 Born 80 (86) (Crump, J.).
46.7. Recommendation to extend the article to proxies for meetings of creditors.-
The article does not mention proxies to be used at a meeting of creditors, and such instruments would apparently fall under Article 48-power-of-attorney. However, it should be stated that by a notification1 issued by the Government of India, the duty on such proxies has been reduced to the duty chargeable under Article 52. In view of this, and in order to make the article self-contained, we recommend that such proxies should also he brought within Article 52. Proxies which do not fall under the article, as amended, will continue to be governed by the article applicable to a power-of-attorney.
1. Government of India, Notification No. 6, dated 14th August, 1937.
46.8. Position in England.-
It may be noted that in England, no duty is chargeable on an instrument of proxy for use at one meeting at which votes may be given by proxy, whether the number of persons named in the instrument be one more1. The Finance Act, 1949, so provided, by amending the Schedule to the Stamp Act, 1891, entry relating to letter or power of attorney, by inserting exemption (5). The Exemption is in these terms:
"(5) Letter of power of attorney for the sole purpose of appointing or authorising a proxy to vote at any one meeting at which votes may be given by proxy, whether the number of persons named in such instrument be one or more."
We are not, of course, suggesting adoption of this English provision.
1. Finance Act, 1949, 8th Schedule, Part I, item 18.
46.9. Article 53-Introductory.-
We now come to a very important article, levying duty on receipts. Article 53 levies a duty of 20 naye paise on receipt as defined by section 2(23), for any money or other property, the amount or value of which exceeds 20 rupees. There are 8 exemptions to the article, to be found in clauses (a) to (h) of the Exemption. 46.10. Increase to Rs. 100 recommended.-Before we proceed to discuss matters of detail, we may record our view that the amount shcfuld be increased from Rs. 20 to Rs. 100. We may mention that some States have, in their replies to our Questionnaire1, agreed to the proposed increase to Rs. 100. In this particular matter, we would have been glad to have comments from the Ministry of Finance, which we have not received2.
However, we may add that we are making this recommendation after a careful consideration of all aspects and we think that there is a strong justification for it, having regard to the purchasing power of the rupee at the present day in contrast with what it was in 1899. It appears to us that in the present Act, the amount of Rs. 20 must have been fixed on some logical basis. That basis, as we conceive it, seems to be that for amounts less than Rs. 20, the aspect of revenue is over-ridden by the aspect of convenience and the aspect of poverty. Although we have no material for calculating the present amount corresponding to what was Rs. 20 in 1899, Rs. 100 would seem to be proper on a rough calculation. In any case, Rs. 20 appears at the present day to be too low an amount in a provision for taxing receipts.
1. Q. 106.
2. The Questionnaire was sent to the Ministry of Finance.