1955 (10) TMI 27 - SC - Companies Law

Whether the instrument in question is a single power of attorney or a combination of several of them? Held that - Appeal allowed. The instrument in question does not comprise distinct matters but comprises one matter only and that matter is the execution of a general power of attorney by the donor in favour of the donees constituting the donees his attorneys to act for him in all the capacities which he enjoys. The instrument in question cannot be split up into separate instruments each comprising or relating to a distinct matter in so far as the different capacities of the donor are concerned. A general power of attorney comprises all acts which can be done by the donor himself whatever be the capacity or capacities which he enjoys and cannot be split up into individual acts which the donor is capable of performing and which he appoints his attorney to do for him and in his name and on his behalf.

Issues Involved:

1. Interpretation of the term "distinct matters" under Section 5 of the Indian Stamp Act, 1899.
2. Applicability of Section 5 versus Section 6 of the Indian Stamp Act, 1899.
3. Determination of stamp duty on a power of attorney executed in multiple capacities.

Issue-Wise Detailed Analysis:

1. Interpretation of the term "distinct matters" under Section 5 of the Indian Stamp Act, 1899:

The primary issue in this appeal was the interpretation of the term "distinct matters" as used in Section 5 of the Indian Stamp Act, 1899. The respondent argued that "matters" in Section 5 should be synonymous with "description" in Section 6, implying that the term referred to different categories of instruments listed in the Schedule. The majority of the High Court agreed with this interpretation, holding that the instrument in question, being a power of attorney, fell under a single category regardless of the capacities in which it was executed.

However, the Supreme Court disagreed with this interpretation. It held that the term "distinct matters" in Section 5 should not be narrowly construed to mean different categories in the Schedule. The Court emphasized that the term should be understood in its popular sense, connoting different transactions or subjects, even if they fall under the same category. The Court stated, "Two transactions might be of the same description, but all the same, they might be distinct."

2. Applicability of Section 5 versus Section 6 of the Indian Stamp Act, 1899:

The Supreme Court clarified the distinct scopes of Sections 5 and 6. Section 5 applies when an instrument comprises or relates to several distinct matters, requiring the aggregate amount of duties payable on separate instruments for each matter. Section 6, on the other hand, deals with instruments that fall under two or more descriptions in the Schedule, charging only the highest duty among them.

The Court rejected the argument that the term "distinct matters" in Section 5 should be interpreted in light of Section 6. It noted that the topics covered by these sections are different. Section 5 deals with multiple transactions within a single instrument, while Section 6 addresses a single transaction that can be categorized under multiple descriptions. The Court stated, "The topics dealt with in the three sections being thus different, no useful purpose will be served by referring to section 4 or section 6 for determining the scope of section 5 or for construing its terms."

3. Determination of stamp duty on a power of attorney executed in multiple capacities:

The respondent executed a power of attorney authorizing attorneys to act on his behalf in various capacities, including individual, executor, trustee, and managing agent. The question was whether this constituted a single matter or multiple distinct matters under Section 5.

The Supreme Court held that the instrument comprised distinct matters because the respondent executed it in different capacities. The Court emphasized that the determination of whether an instrument relates to distinct matters depends on factors like the parties involved and the subject matter. It stated, "Whether it relates to a single matter or to distinct matters will, in our opinion, depend on a number of factors such as who are parties thereto, which is the subject-matter on which it operates and so forth."

The Court concluded that the power of attorney executed by the respondent in multiple capacities constituted distinct matters, requiring the aggregate stamp duty for each capacity. The Court stated, "There being no community of interest between the personal estate belonging to the executant and the trust estate vested in him, they must be held to be distinct matters for purposes of section 5."

Separate Judgment:

Dissenting Judgment by Bhagwati J.:

Justice Bhagwati dissented from the majority opinion. He agreed with the construction of Sections 4, 5, and 6 but disagreed on the application to the instrument in question. He argued that the different capacities of the donor did not constitute distinct matters. He stated, "The fact, however, that the donor of the power of attorney executes it in different capacities is not sufficient in my opinion to constitute the instrument one comprising distinct matters."

Justice Bhagwati emphasized that the instrument should be viewed as a single transaction, with the donor acting in various capacities but remaining the same individual. He concluded that the instrument did not comprise distinct matters and should be charged with a single stamp duty. He stated, "I am therefore of the opinion that the instrument in question does not comprise distinct matters but comprises one matter only."

Conclusion:

The Supreme Court, by majority opinion, allowed the appeal, holding that the instrument comprised distinct matters in respect of the several capacities of the respondent, requiring the aggregate stamp duty payable for each capacity. Justice Bhagwati dissented, arguing that the instrument should be treated as a single matter. The appeal was allowed with costs.

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