Report No. 67
31.1. Article 7.-
Article 7 deals with two kinds of powers, viz., (i) power to appoint trustees, and (ii) power to appoint property. It provides that an instrument, not being a will, by which such power is exercised, is chargeable with a duty of fifteen rupees. Where a person is invested with power to determine the disposition of property of which he is not the owner, he is said to have power to appoint such property.1
The case law on this article reveals no serious difficulty. An Allahabad case2 decides what is an "appointment".
A Bombay case3 holds that where the executors of a will, holding property in trust for a charity, execute a deed appointing the property to an orphanage, the deed is chargeable under this Article. A Calcutta case4 decides that where the Panch of a community is given power to remove a Shebait and to appoint new Shebaits, duty is chargeable, when a new Shebait is appointed. We have no further comments on the article.
1. See section 69, Explanation, Indian Succession Act, 1925.
2. Reference under section 57, Stamp Act (in re:), AIR 1956 All 25 (SB).
3. Abdulla Haji Dawood Bomla Orphanage (in re:), 1911 ILR 35 Bom 444.
4. Amritlal v. Gossain Ganpat, AIR 1919 Cal 730 (736, 737).
31.2 Article 8.-
Article 8 levies duty on appraisement or valuation. An appraisement is distinguished from an ward1 though the duty is the same on both. An award requires a judicial determination, which an appraisement does not.
Exemption (a) to the article is based on an early English decision,2 that an appraisement made for the information of one party only and not in any manner binding between the parties is not liable to stamp duty. In the same case3 Lord Ellenborough C.J. said:
"An 'appraiser' is a person who values or appraises any estate or property real or personal, or any interest, in possession or otherwise in any estate or property, or any goods, merchandise or effects, for or in expectation of any hire, gain, fee or reward (46 Geo. III, c. 43, S. 4). This has been interpreted to mean a person who bears the character or follows the calling or occupation of an appraiser."
No changes are required in this section on which there is very little Indian case-law.
1. Article 12.
2. Atkinson v. Fell, (1860) 5 M&S 240; also see Jackson v. Stopherd, (1838) 3 LJ Exch 95.
3. Atkinson v. Fell, (1860) 5 M&S 240.
31.3. Article 9-Apprenticeship deed.-
Under Article 9, an apprenticeship deed is chargeable to duty (5 rupees). It includes every writing relating to service or tuition of any apprentice or servant, placed with any master to learn any profession, trade or employment. A deed of articles of clerkship by which a person is articles to any attorney, is chargeable with a much higher duty1 (Rs. 250).
Recommendation.-The exemption under Article 9 refers to the Apprentices Act, 1850, which has been replaced. The proper reference should be substituted by the Apprentices Act, 1961. Magistrates no longer work as apprentices, and this part of the exemption should be omitted. We recommend that the article should be so amended.
1. Article 11.
31.4 Article 10.-
Article 10 levies duty on the articles of association of a Company. It has been held1, that a special resolution altering the articles of association of a company is not liable to duty, even if the special resolution supersedes all the articles, and substitutes another set of articles in their place. Another article in the Schedule levies duty on a memorandum of association2. That article prescribes a lower rate of duty when the memorandum of association is accompanied by articles of association.
1. New Egerton Mills (in re:), 1900 ILR 12 All 131.
2. Article 39.
The exemption below Article 10 refers to "Articles of any Association not formed for profit and registered under section 26 of the Indian Companies Act, 1882". This should now refer to section 25, Companies Act, 1956, which is the provision corresponding to section 26, Companies Act, 1882. We recommend that Article 10 should be so amended.
31.6. Article 11 to be deleted.-
Article 11 levies a duty of 250 rupees on Articles of clerkship or contract whereby any person first becomes bound to serve as a clerk in order to his admission as an attorney in any High Court. Now that the system of attorneys is being abolished, this article should be deleted. We recommend accordingly1.
1. Latest amendment to the Advocates Act, 1961.
31.7. Article 12.-
Article 12 levies duty on an "Award", that is to say, any decision in writing by an arbitrator or umpire, not being an award directing a partition, on a reference "made otherwise than by an order of the Court in the course of a suit". The article is silent on the question whether a written agreement of arbitration, is required. It would be of interest to note that section 2(a) of the Arbitration Act, 1940, defines an arbitration agreement as a written agreement to submit present or future differences to arbitration, whether an arbitrator is named thereunder or not. Section 2(b) of the Arbitration Act defines an "award" as meaning an arbitration award. Thus, under the Arbitration Act, there can be no award without an agreement for arbitration is writing1. Every decision by an arbitrator is not an award. It must be a decision in a written arbitration agreement.
This aspect of the matter is not brought out very clearly in Article 12 and the result is that controversy arises as to whether an arbitrator's award in writing, given on an oral agreement for reference, falls within the article. This question usually arises where there is a family arrangement as a result of an awards. It is proper that the expression "award" in Article 12 should be given the same meaning as under the Arbitration Act. That in fact, has been the judicial interpretation2 in a recent case. It is also obvious that in Article 12 the words "on a reference made otherwise than by an order of the Court in the course of a suit" govern the whole article, and are not to be read merely with "award directing a partition".
1. Mohanlal v. Bishashar La!, AIR 1947 Born 268.
2. See G. Chinna Kondaiah v. G. Redda Kondaiah, AIR 1974 AP 238 (issue).
31.8. Recommendation.- In the light of the above discussion, we recommend that Article 12 should be revised as under:
"12. Award, that is to say, any decision in writing by an arbitrator or umpire, on a reference made otherwise than by an order of the Court in the course of a suit, being an award made as a result of a written agreement to submit present or future differences to arbitration and not being an award directing a partition.".
Most replies to our Questionnaire favour such an amendment.1
1. Q. 80 of the Questionnaire.