Drafting and Conveyancing Relating to Various Deeds and Documents-II – Drafting, Pleadings and Appearances Important Questions
Question 1.
Comment on the following statements; Essentials of a Promissory Note.
OR
Anil took a loan of 10 lakh from JF Financial Corporation (A registered financial company) for purchasing a one-bedroom flat on an agreed rate of interest of 16% per annum. Along with agreement papers, a promissory note (P/N) was signed by Anil which read Anil has taken lo2h whenever JF financial corporation demands its return Anil shall payback in ten instalments to them or to bearer of this P/N. After one year Anil defaulted in return of loan on demand by JF Financial Corporation.
Consequently, a summary suit was instituted by JF Financial Corporation against Anil in the court of civil judge. After scrutiny, the court .dismissed the suit holding that the P/N was void. What drafting precautions ought to have been taken by JF Financial Corporation when Anil was executing the P/N payable on demand? Cite the relevant case law, if any.
Answer:
Meaning: Promissory note is a signed document containing a written promise to pay a stated sum to a specified person or the bearer at a specified date or on-demand. It is one of the negotiable instruments recognized under the Negotiable Instruments Act, 1881.
According to Section 4 of the Negotiable Instruments Act, 1881:-
A “promissory note” is an instrument in writing (not being a bank¬note or a currency-note) containing an unconditional undertaking signed by the maker, to pay a certain sum of money only to, or to the order of, a certain person, or to the bearer of the instrument.
Parties to a Promissory Note:-
The maker: the person who makes or executes the note promising to pay the amount stated therein.
The payee: one to whom the note is payable.
The holder: is either the payee or some other person to whom he may have endorsed the note’.
The endorser: A person who endorses the promissory note
The endorsee: A person to whom a promissory note is transferred by endorsements.
Essentials of a promissory note:-
a. It must be in writing. An oral promise to pay will not do.
b. It must contain an express promise or clear undertaking to pay. A mere acknowledgement of debt is not sufficient.
c. The promise or undertaking to pay must be unconditional. A promise to pay “when able”, or “as soon as possible”, or “after your marriage to D”, is conditional.
But a promise to pay after a specific time or on the happening of an event which must happen is unconditional.
For example; “I promise to pay 11000 ten days after the death of B”, is unconditional as death of a person is bound to happen.
d. The maker must sign the promissory note in token of an undertaking to pay to the payee or his order.
e. The maker must be a certain person, i.e., the note must be clear; ‘ who is the person engaging himself to pay.
f. The payee must be certain. The promissory note must contain a promise to pay to some person or persons ascertained by name or designation or to their order.
g. The sum payable must be certain and the amount must not be capable of contingent additions or subtractions.
For example: “A promises to pay ₹ 100 and all other sums which shall become due to him”. This instrument is not a promissory note.
h. Payment must be in legal money of the country. For example; “A promise to pay ₹ 500 and deliver 10 quintals of rice” is not a promissory note.
i. It must be properly stamped in accordance with the provisions of the Indian Stamp Act.
ii. It must contain the name of place, number and the date on which it is made. However, their omission will not render the instrument invalid.
Conclusion: In the light of the above, JF Financial Corporation ought to have taken the above precautions at the time of execution of Promissory note (P/N).
Question 2.
Distinguish between the following; Promissory Note and Bill of Exchange.
Answer:
| BASIS | PROMISSORY NOTE | BILL OF EXCHANGE |
| 1. Meaning | A promissory note is an instrument in writing containing an unconditional undertaking, signed by the maker to pay a certain sum of money only to, or to the order of, a certain person, or to the bearer of the instrument. | A bill of exchange means a bill drawn by a person directing another person to pay the specified sum of money to another person. |
| 2. Section | A promissory note is defined by Section 4 of the Negotiable Instruments Act. | A bill of exchange is defined by Section 5 of the Negotiable Instruments Act. |
| 3. Issued by | A promissory note is issued by a debtor. | A bill of exchange is issued by a creditor. |
| 4. Number of parities | Number of parties It involves only two parties:- Drawer/maker Payee |
It involves three parties:- Drawer/maker Drawee Payee |
| 5. Acceptance | Need not be accepted by drawee to be valid and legally binding. | Must be accepted by the drawer before paying to be valid and legally binding. |
| 6. Order/Promise | It is a promise, to pay. | It is an order to pay. |
| 7. Example | I promise to pay B or order ₹ 500. | X orders Y to pay t 50000 for 90 days after date and Y accepts this order by signing his name, then it will be a bill of exchange. |
Question 3.
Distinguish between the following; Power of Attorney and Letter of AuthorIty.
Or
Write notes on the following; Letters of authorIty.
Or
Comment on the following; A letter of authority is nothing but a power of attorney.
Answer:
The following are the differences between Promissory Note and Bill of Exchange:
1. A power of attorney is a written document that grants one person the authority to act on behalf oÍ another. it is made by “donor” authorising another, who is called the attorney of the person or “donee”, appointing him to do any lawful act instead of the donor.
2. As defined by Stroud, a power of attorney as an authority whereby one is asset in turn, stead or place” of another to act for him.
3. As per Section 2(21) of the Indian Stamp Act, 1899, TM Power of Attorney” includes any instrument (not chargeable with fee under the law relating to Court fees for the time being in force) empowering a specified person to act for and in the name of the person executing it.
4. As per Section lA of the Powers-of-Attorney Act, 1882. “Power of attorney includes an instrument empowering a specified person to act for and in the name of the person executing it.
5. A power of attorney can be executed:
- By any person, who can enter into a contract i.e. a person of sound mind who has attained majority.
- Only in favour of a major.
6. Agent vs. Principal: While functioning as an attorney, the donee is acting as an agent of the donor i.e. the executor of the power of attorney, who is the principal.
7. Applicability of Section 2 of the Powers-of-Attorney Act, 1882 clearly specifies that the signature of the agent will be deemed to be the signature of the principal.
8. Form: Power of attorney is executed in the form of Deed Poll, usually in the first person. It begins as:
By This Power Of Attorney, I, Etc.” Know All. Men By These Presents That I Etc.’
Letter of Authority:
Following are the key points on letter of authority:
- A letter of authority is nothing but a power of attorney.
- They are executed on plain paper and not on stamp paper.
- Usually, these are issued for collection of some documents, papers, dividends, interests etc. by one person on behalf of another.
- By and large, the law relating to power of attorney will also apply to the letters of authority.
Question 4.
Distinguish between the following; Special and General Power of Attorney.
Answer:
Meaning: A “power of attorney” is a legal document that authorizes a person called an “agent” to act on behalf of the person who created the power of attorney, known as the “principal”.
Types: A power of attorney can be classified into two types; special power of attorney and general power of attorney.
Following are the differences between the two:
Special Power of Attorney – “Special power of attorney” is a power of attorney executed for the purposes of a specific act. It is also called a “particular power of attorney”. A specific act is meant to imply either a specific act or acts related to each other as to form one judicial transaction, such as all the acts necessary to perfect a mortgage or a sale of a particular property.
Duration: A general power of attorney will continue to be in force until expressly revoked or determined by the death of either party or expressly or impliedly limited for a particular period.
Judicial Precedent: In the case of Fowler v. Broode P.N. Light & Co., (1893) 1 Ch. 724, the Court held that-
“In the case of a company, the power of attorney executed by the directors ceases to be operative as soon as an order for winding up is made as the directors cease to function.”
Question 5.
Write notes on the following; Revocable and Irrevocable power of attorney.
Answer:
”Power of attorney” includes any instrument empowering a specified person to act for and in the name of the person executing it. The donor may execute either a revocable power of attorney or irrevocable power of attorney in favour of the donee.
- Revocable Power of Attorney A power of attorney executed in favour of a person can always, at the discretion of the donor thereof, be revoked as the donee of a power of attorney is an agent of the donor.
- Irrevocable Power of Attorney A power of attorney executed, in which the donee himself has an interest, is irrevocable.
As per Section 202 of the Indian Contract Act, 1872 “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.”
It is clear from the analysis of the above-stated section; if a donee himself has an interest in the matters covered by the power of attorney, which forms the subject matter thereof, the power of attorney in the absence of express contract cannot be terminated to the prejudice of such interest.
Irrevocable powers of attorneys are executed in favour of the financial institutions by accompanying who offer financial assistance to the latter.
Through such irrevocable powers of attorney, powers arc given to the financial institutions for executing a security document for securing the financial assistance in the event of a company failing to execute such a document by a certain date.
Irrevocable power of attorney will need registration.
Agency coupled with interest cannot be terminated without the consent of the other party.
Question 6.
Is it necessary to get the Power of Attorney attested?
Answer:
A “power of attorney need not be attested. However, it would be advisable to execute the power of attorney before and have it authenticated by a Notary Public or any Court Judge/Magistrate, Consul or Vice-Consul,or representative of the Central Government.
Effect of attestation:
If a power of attorney is authenticated, Courts shall presume the execution of the power of attorney according to the section given below:
Section 85 of the Indian Evidence Act, 1872: The Court shall presume that every document purporting to be a power of attorney, and to have been executed before and authenticated by a Notary Public or any Court, Judge, Magistrate, Indian Consul or Vice-Consul or representative of the Central Government, was so executed and authenticated.
Section 33(1) of the Registration Act, 1908: If a power of attorney gives authority to present documents for registration under Section 32 of the Registration Act, 1908 it must be executed before and authenticated by the following if the principal at the time of executing the power-of-attorney:
Resides in any part of India where Registration Act, 1908, Is in force: -Before Registrar or Sub-Registrar within whose District or Sub-District the principal resides.
Resides in any part of India where Registration Act 1908, is not In force: Before any Magistrate.
Does not reside in any part of India i.e. if ills executed outside India:-Before a Notary Public, or any Court, Judge, Magistrate, Indian Consul or Vice-Consul or representative of the Central Government.
A power of attorney empowering an agent to execute a deed conveying an immovable property and get the deed registered thereby perfecting the transaction of conveyance, need not be executed before the Officer appointed to authenticate and register.
Question 7.
Briefly discuss the legal position as to duration of Power of Attorney with reference to case law on the subject.
Answer:
A power of attorney is a written document that grants one person the authority to act on behalf of another. It is made by “donor” authorising another, who is called the attorney of the person or “donee”, appointing him to do any lawful act instead of the donor.
Following are the provisions of duration of power of attorney:-
Duration of general power of attorney:
A general power of attorney will continue to be in force until expressly revoked or determined by the death of either party.
Duration of special power of attorney:
A special power of attorney to do an act is determined when the act is done.
Judicial Precedent: In the case of Fowler v. BroodeP.N. Light & Co., (1893) 1 Ch. 724, the Court held that-
“In the case of a company, the power of attorney executed by the directors ceases to he operative as soon as an order for winding up is made as the directors cease to function.”
In case it is desired that the power should continue for a particular period or until a certain event happens, an express provision to that effect should be made in the deed itself.
Question 8.
‘B’ has filed a title suit against ‘A’ in the court of City Civil Judge (S.D.) as a long cause suit. Pending its hearing, ‘B’ executed a power of attorney j in favour of ‘D’ and got it registered. Later on, without consulting ‘D’, ‘B’ signed a compromise deed with ‘A’. ‘D’ challenged the compromise as it was entered into without informing him or obtaining his consent, and so it prejudiced his rights. Would ‘D’ succeed? Cite case law.
Answer:
Following are key points on power of attorney:
As defined b Stroud, a power of attorney is an authority whereby one is “set in turn, stead or place of another to act for him.
Revocation of power of attorney:
As per Section 207 of Indian Contract Act:
Revocation or renunciation may be expressed or may be implied in the conduct of that principal or agent respectively.”
Illustration: A empowers B to let A’s house. Afterwards, A lets it | himself. This is an implied revocation of B’s authority. A empowers B to let A’s house. Afterwards, A lets it himself. This is an implied revocation of B’s authority.”
Judicial precedent on revocation of power of attorney:
Deb Ratan Biswas & Other v. Anand Moyi Devi & Other AIR 2011 SC page 1653 wherein Supreme Court held that:
“It is well settled that even after execution of a power of attorney the principal can act independently and does not have to take the consent of attorney. The attorney is after all only agent of the principal Even after executing a power of attorney the principal can act on his own.”
Conclusion:
In the present case ‘B’ is principal and ‘D’ is attorney. D being an attorney cannot claim an independent capacity in the proceedings. When the principal B signed compromise petition, in the law it amounts to implied revocation of power of attorney in favour of D vide illustration to section 207 of the Indian Contract Act. The principal B is not bound to consult his attorney D before signing a compromise petition.
Question 9.
Write notes on the following; Principles governing the construction of a power of attorney.
Or
Comment on the following; A power of attorney must be strictly construed.
Answer:
Principles governing the construction of a power of attorney: A power of attorney can be construed by applying principles of construction.
Following are the principles governing the construction of a power of attorney:
- The operative part of the deed is controlled by the recitals.
- Where an authority is given to do particular acts, followed by general words, the general words are restricted to what is necessary for the performance of the particular acts.
- The general words do not confer general powers but are limited to the purpose for which the authority is given and are construed
Question 10.
“Registration of a Power of Attorney is not compulsory”. Comment.
Answer:
As per Section 4 of the Powers-of-Attorney Act, 1882, if a party wishes to get its power of attorney registered it may be deposited in the High Court or District Court within the local limits of whose jurisdiction the instrument is with an affidavit verifying its execution, and a copy may be presented at the office and stamped as the certified copy and it will then be sufficient evidence of the contents of the deed.
Therefore, a bare reading of Section 4 makes it clear that registration of a power of attorney is not compulsory however, if a party wishes to get it registered, it may do so in terms of Section 4 of the Powers-of-Attorney Act, 1882.
As per Section 17(b) of the Indian Registration Act, 1908, non-testamentary instruments which purport or operate to create, declare, assign, limit or extinguish, whether in present or in future, any right, title or interest, whether vested or contingent, of the value of one hundred rupees and upwards, to or in immovable property requires compulsory registration.
Therefore, according the aforesaid section registration of power of y attorney becomes compulsory under certain cases such as; a power which authorises the donee to recover rents of immovable property belonging to the donor for the donee’s own benefit is an assignment.
Judicial precedents on registration of power of attorney:
- Indra Bibi v. Jain Sirdar, (1908) I.L.R. 35 Cal. 845, 848:
“A power of attorney which creates a charge on the immovable property referred to therein in favour of the donee of the power requires registration - Kochuvareed v. Mariappa AIR 1954 T.C. 10, 17:
“A general power of attorney, even though it deals with immovable property, need not be registered since it does not come under Section 17”.
Question 11.
ABC Corporation (Pvt.) Ltd. incorporated under the Companies Act, 2013 purchased a five-room double-storey flat In XYZ Locality of Chennai for providing company accommodation to Its Company Secretary on the first floor and company guest house on the ground floor. For facilitating its registration, the Chairman-cum CEO (CCEO), executed the following special power of attorney:
“By this power of attorney, IXXX, Chairman of the ABC Corporation Ltd, Do hereby appoint and authorize CD, MBA, LLB and ACS – to be my agent and attorney for the purpose of executing registration of our company flat address: (XXXY, XYZ locality of Chennai) purchased by us for 80 Lakh only from KLNBuilders (Pvt.) Ltd, on this ………………… day of September 2014.
To: Alt concerned authorities.
Sd/-
XXX
CCEO”
Upon presentment, the Sub-Register, Chennai refused its bearer, CD to allow him to complete the registration procedure, holding the Power of Attorney to be void. Answer the following:
(i) Is the Sub-Registrar’s refusal legally tenable?
(ii) If not, in what form or manner should the power of attorney be framed?
(iii) How is it to be executed?
(iv) Will it make any difference if the CCEO is a married woman aged 45 years?
Answer:
(i) The due execution of documents is important to create legal binding documents. When a document is to be registered with the Registrar, the execution must be strictly complied with.
A power of attorney executed for the purpose of a specific act is called a “special power of attorney”.
Applicability of Section 22(2) of the Companies Act, 2013, makes it clear that a company may, by writing under its common seal, authorise any person, either generally or in respect of any specified matters, as its attorney to execute other deeds on its behalf in any place either in or outside India.
A deed signed by such an attorney on behalf of the company and under his seal shall bind the company.
Thus the refusal by Sub-Registrar is legally tenable as the special power of attorney is not in the prescribed manner.
(ii) A Deed of Special power-of-attorney to be filled with the Sub-Registrar, to authorise the Company Secretary to execute registration of flat is as follows:-
By This Power Of Attorney I XXX, the Chairman of the ABC Corporation (Pvt.) Ltd. having registered office at ……………… do hereby appoint CD, S/o ……….. R/o……… as my attorney for me and on my behalf to:-
- Appear for and represent me before the Sub-Registrar of ………… as many times as may be necessary.
- Present before the Sub-Registrar for registration the ………… deed dated ……. made between…
- Do any act, deed or thing as may be necessary to complete the registration of the said deed in the manner required by law and.
- Give proper receipt and discharge, when it has been returned to him after being duly registered.
And I, XXX, do hereby agree and declare that all acts, deeds and things done, executed or performed by the said CD shall be valid and binding | on me to all intents and purposes as if done by me personally which I undertake to ratify and confirm whenever required.
Signed, sealed and delivered
S/d
Witnesses.
S/d
XXX
Chairman of the ABC Corporation Ltd.
(iii) Following are the key points on Execution of power of Attorney:
A power of attorney can be executed by any person, who can enter into a contract i.e.
(a) person of sound mind.
(b) A power of attorney can be executed only in favour of a major.
Agent Principal relationship:
While functioning as an attorney the done is acting as an agent | of the donor i.e. the executor of the power of attorney, who is the j principal. Thus, in such cases there is relationship of agent and principal and such relationship can be entered into by majors and not by minors.
Section 2 of the Power of Attorney Act, 1882 provides that signature of the agent will be deemed to be the signature of the principal.
Company being an artificial person can act through agents i.e. its officers. Powers are delegated by companies to the agents through Board resolutions of through powers of attorney.
(iv) Effect of the power of attorney of a married woman:
CCEO being a married woman aged 45 will not make any difference as the power of attorney is executed in the capacity of Chairman-cum- CEO of the Company ABC Corporation Ltd. (Pvt.) Ltd. and not in the capacity of individual.
Further, even if the same would have been executed in individual capacity there would have been no effect by virtue of Section 5 of the Powers-of-Attorney Act, 1882.
Question 12.
B has filed a title suit against A in the Court of City Civil Judge (S.D) as a long-cause suit pending its hearing, B executed a power of attorney in favour of D. B signed a compromise deed with A. D’ challenged the compromise as it was entered info without information him or obtaining his consent and so it prejudiced his right. Would D’ succeed? Cite case law.
Answer:
Revocation and renunciation of an authority is governed by the Indian Contract Act, 1872. As per Section 207 of Indian Contract Act 1872:-
“Revocation or renunciation may be expressed or may be implied in the conduct of that principal or agent respectively.”
Illustration: A empowers B to let A’s house. Afterwards, A lets it himself. This is an implied revocation of B’s authority.
Judicial precedent:
In the case of Deb Ratan Biswas & Other v. Anand Moyi Devi & Other AIR 2011 SC page 1653 Supreme Court held that:-
“It is well settled that even after execution of a power of attorney the principal can act independently and does not have to take the consent of attorney. The attorney is after all only agent of the principal Even after executing a power of attorney the principal can act on his own”.
Conclusion: In the present case ‘B’ is principal and ‘D’ is attorney. D being an attorney cannot claim an independent capacity in the proceedings. When the principal B signed compromise petition, in the law it amounts to implied revocation of power of attorney in favour of D. The principal B is not bound to consult his attorney D before singing a compromise petition.
Question 13.
Excellent Corporation Ltd. incorporated under the Companies Act, 2013 purchased an independent house comprising two floor in Gurgaon in the state of Haryana for a sum of 3.5Crores for providing company accommodation to Dinesh, Company Secretary on the first floor and it was decided that the company shall have its guest house at ground floor.
For facilitating its registration Mrs. Kiran, Chairman-cum-Managing Director executed the following special power of attorney.
“By this power of attorney I, Kiran, Chairman of Excellent Corporation Ltd. do hereby appoint and authorize Dinesh to be my agent and authorize for the purposes of executing registration of the property purchased by the company from Antarctic Builders Ltd. on this 15th day of September 2015 for and on behalf of Excellent Corporation Ltd.”
On presentation of this document the Registrar refused to complete the registration procedure stating that the power of attorney is void. In light of the above answer the following:
(i) Is the action of the registrar legally tenable? State reasons.
(ii) Draft a power of attorney as you would have been the secretary.
(iii) Property registration charges are 8 % for a man and 6 % for a woman. Will you advise that the power of attorney fie executed in favour of Mrs. Kiran to derive this benefit?
Answer:
(i) The due execution of documents is important to create legal binding documents. When a document is to be registered with the Registrar, the execution must be strictly comply with.
As per Section 22(2) of the Companies Act, 2013, a company may, by writing under its common seal, authorise any person, either generally or in respect of any specified matters, as its attorney to execute other deeds on its behalf in any place either in or outside India.
A deed signed by such an attorney on behalf of the company and under his seal shall bind the company.
Thus the refusal by Registrar is legally tenable as the specific power of attorney is not in the prescribed manner.
(ii) Deed of Specific Power of Attorney to be presented to execute registration of property is as follows:-
By This Power Of Attorney I Kiran, Chairman of Excellent Corporation Limited do hereby appoint Mr. Dinesh company secretary of the Company, my attorney for me and on my behalf to:-
- Appear for and represent me before the Registrar of Gurgaon, Haryana of all times as may be necessary.
- Present for Registration the Title Deed dated ….day of and to do any Act, deed or thing as may be necessary to complete the registration of the said deed in the manner provided by law and when it has been returned to him after being duly registered, to give proper receipt and discharge for the same.
I Kiran the Chairman of Excellent Corporation Limited, do hereby agree and declare that all acts, deeds and things done, executed or performed by the said Mr. Dinesh shall be valid and binding on me to all intents and purposes as if done by me personally which I undertake to ratify and confirm whenever required.
Signed, sealed and delivered
S/d
Witness.
S/d
Kiran,
Chairman of Excellent Corporation Limited
(iii) Chairman being a female will not make any difference as the property is to be registered in the name of the Company.
If the property would have to be registered in the personal capacity of Mrs. Kiran the benefit could have been in the terms of savings in stamp duty.
As far as issue of power of Attorney is concerned there is no distinction between man and woman.
Question 14.
Francis, aged 38 years, son of Anthony, Max house, Kunoor, Mysore, now residing at house No. 418, Bapu Bazar, New Delhi, is the Chief Administrative Officer of Standard Medical Laboratories, New Delhi. For the management of his properties at Mysore, he wants to empower Mr. Robert, aged 40 years, son of Josef, a businessman, residing at Mary house, Kunoor, Mysore. Draft a General Power of Attorney (GPA).
Answer:
Known All Men by these presents that I, Francis, aged 38(thirty-eight) year, S/o Anthony, R/o House No. 418, Bapu Bazar, New Delhi, here j by nominate, constitute and appoint Mr. Robert aged 40(forty years), S/o
Joseph, Businessman, R/o Mary House, Kunoor, Mysore District, Karnataka State as my true & lawful attorney for me, in my name, and on my behalf to do, execute and perform all or any of the following acts, deeds and things in relation to my property situated at Mysore:-
1. To manage, control, supervise, cultivate and develop ALL THAT PROP¬ERTY belong to me, and especially and fully described in the schedule A hereunder.
2. To enter into the said properties, to inspect the same, and to avail or exercise and rights or remedies vested in me.
3. To let out the shop or part thereof, described as the second item to the Schedule A hereunder on monthly tenancy basis, and to realize the rent thereof and to accept surrender of such lease.
4. To demand, sue from recover and receive and give proper receipts and discharge for all money, debts, rents, profits and securities belong to me.
5. To give notice to tenants and the occupiers of my properties to quite, or to repair any damage or to abate, any nuisance or to remedy and breach of covenants or contract.
6. To appear for and represent me in any Court of Tribunal or Registration Offices and to do all such acts as may be necessary, and to appoint and engage any advocate whenever my said attorney deem it necessary and proper.
7. To compromise, compound or withdraw cases.
8. To invest all surplus money in such manner and upon such security as my said attorney may deem fit and proper:
Provided that the said attorney shall not have power to make alienation of my properties except with my express written consent on the behalf:
Provided that the said attorney shall maintain a true, complete, correct and faithful account of all income and expenditure which shall be rendered to me every month.
And I do hereby agree and undertake to ratify and confirm all acts, deeds and things lawfully and bona fide done, executed and performed by my said attorney as if I was personally present despite the absence of my special power in that behalf.
Schedule
(Description of the Property)
I undertake to ratify and confirm whenever required.
Signed, sealed and delivered
S/d S/d
Witnesses AB
Question 15.
Draft the following Documents; Power of Attorney to present Documents for Registration of any immovable property.
Answer:
BY THIS POWER OF ATTORNEY I, AB S/o…. R/o…., do hereby appoint CD, S/o……….. R/o……… as my attorney for me and on my behalf to:-
- Appear for and represent me before the sub-registrar of ………….. of all times as may be necessary.
- Present before him for registration the ………… deed dated the ………….. day of made between …………. to admit the execution of the said deed by me.
- To do any act, deed or thing as may be necessary to complete the registration of the said deed in the manner required by law.
- Give proper receipt and discharge when the document has been returned to him after being duly registered.
And I, the said AB, do hereby agree and declare that all acts, deeds and things done, executed or performed by the said, CD shall.be valid and binding on me to all intents and purposes as if done by me personally which I undertake to ratify and confirm whenever required.
Signed, sealed and delivered.
S/d. S/d
Witnesses AB
Question 16.
Draft a Power of Attorney authorizing Mr. X to sign for a permanent injunction to be filed before Civil Court.
Answer:
Before The Ld. District Judge, Saket Court,
New Delhi Civil Jurisdiction
Cs(Os) No ………….. /2020
In The Matter Of:
X,
S/o…….
R/o……
PLAINTIFF
VERSUS
Y,
S/o…
R/o…
DEFENDANT
By This Power Of Attorney, I, ‘Y’, defendant, in the above suit, do hereby nominate, constitute and appoint, Advocate Mr. ‘M’, as my attorney for me, in my name and on my behalf to:-
- Appear, act and plead in the said case, to make or present Permanent Injunction to the court.
- Do all other lawful acts, deeds and things in connection with the case as effectually as could do the same, if I were personally present.
- Engage and appoint any other advocate or advocates whenever my said advocate thinks proper to do so.
Provided, however, that, if any part of the advocate’s fee remains unpaid before the first hearing of the case or if any hearing of the case be fixed beyond the limits of this town, then and in such an event my said advocate shall not be bound to appear before the court.
Provided that if the case be dismissed by default, or if it be proceeded ex parte, the said advocate shall not be held responsible for the same except in case of gross negligence, willful default.
And all whatever my said advocate shall lawfully do, I do hereby agree to and shall in future ratify and confirm.
Signed, sealed and delivered
S/d
Witnesses
S/d
AB
Question 17.
Explain the following; Two types of Hire Purchase Agreements.
Answer:
The following are the types of Hire Purchase Agreement:-
| Type 1 | When the owner is unwilling to look to the purchaser of goods to recover the balance of the price, and the financier who pays the balance, undertakes the recovery. In this form, goods are purchased by the financier the dealer, and the financier obtains a hire-purchase agreement from the customer under which the latter becomes the owner of the goods on payment of all the instalments of the stipulated hire and exercising his option to purchase the goods on payment of a nominal price. |
| Type 2 | In this form of transactions, goods are purchased by the customer, who in consideration of executing a hire-purchase agreement and allied documents remains in possession of the goods, subject to liability to pay the amount paid by the financier on his behalf to the owner or dealer, and the financier obtains a hire-purchase agreement which gives him a license to seize the goods in the event of failure by the customer to abide by the conditions of the hire-purchase agreement. |
Question 18.
Comment on the following statement; Registration and payment of stamp duty on a deed of hire-purchase is compulsory.
Answer:
Stamp Duty on hire purchase deed:
There is no article governing hire purchase agreement in Schedule I to the Indian Stamp Act, 1899. Such an agreement would, therefore, fall under the general Article 5 regarding agreements in general. There¬fore, a deed of hire-purchase is liable to stamp duty as an agreement under Article 5 of the Indian Stamp Act, 1899.
Registration of hire-purchase deed:
According to Section 18(d) of Registration Act, 1908, registration is optional for an instrument other than Will, which purport or operate to create, declare, assign, limit or extinguish any right, title or interest to or in movable property. Therefore, A hire purchase agreement or a hire agreement does not require compulsory registration under the Registration Act, 1908 as it relates to movable property.
Question 19.
Draft the following Documents; Hire-Purchase Agreement.
Answer:
This Agreement Of Hire Purchase made on 3rd day of June 2019 between AB, S/o…. R/o…. (hereinafter called the “Owner” which expression shall include the successors and assigns where the context so admits) of the ONE PART.
AND
CD, S/o…. R/o…. (hereinafter called the “Hirer” which expression shall include the successors and assigns where the context so admits) of the OTHER PART.
Whereas, the owner is engaged in the business of manufacturing and has agreed to let to the hirer
And Whereas the hirer has agreed to take on hire the said goods more particularly described in the Schedule A hereto for the term of five years from the date of execution of this agreement.
Now This Deed Witnesseth As Under:
1. Hire: The hirer shall pay to the owner on the execution of this agreement the sum of ₹ ……………….. the hire for the first month and on the first day of every calendar month or year during the hiring the sum of ₹ ………………. by way of hire for the said goods, as specified in Schedule-B hereto.
2. Option to purchase: The hirer shall at any time during the hiring have the option of purchasing the said goods for ₹ ……………. and in that event the hirer shall receive credit for all sums previously paid by him under the preceding clause.
3. Hirer’s covenants: During the hiring tenure the hirer will:
- Not sell, pledge, hypothecate, charge or in any manner encumber the goods or part with possession of the said goods or any of 2 them.
- Not without the consent in writing of the owner, remove the p said goods or any part thereof from the premises of the hirer at ……………. and shall keep the owner informed forthwith of any charge in address or shift of place.
- Will not lend or transfer the goods to any other person without the previous sanction in writing of the owner.
- Will keep the goods in good order and condition and will, on the expiry of years or earlier termination of this agreement, return the same to owner in the same condition.
- Pay all taxes, fees, duties, fines, registration charges, other expenses, payable in respect of the assets – when the same shall become due.
- Permit the owner or his authorised agent or nominee at all reasonable times to inspect and examine the condition of the said goods.
- Shall keep the goods insured against all losses or damage by fire, tempest or theft upto the value of ₹ with an Insurance Company to be approved by the owner and shall punctually pay all premiums.
- The hirer shall indemnify the owner against claims by third parties arising by accident caused by user of the asset until the determination of this agreement.
4. Change in address: The hirer shall forthwith intimate the owners any change of address of the hirer and of the address of the premises where the asset is kept.
5. Default clause: If the hirer shall make default in the punctual payment in full, of the said monthly hire or in the observance or performance of any of the provisions of this agreement, on his part to be observed and performed the hiring shall immediately be determined.
6. Owner to make possession: On the determination of the hiring, the owner may without notice or demand retake possession of the said goods.
7. Option to terminate hiring: The hirer may terminate this agreement at any time by returning the said goods at the owner’s place of business.
8. Rights of damages not affected: If the hiring is terminated by the hirer under clause 7 such termination shall not prejudice the owner’s right to recover the hire upon the date of such termination nor his right to H recover damages for any prior breach of this-agreement by the hirer.
9. Compensation for depreciation: At the termination of this agreement either at the instance of the hirer or the owner, the hirer shall pay to the owner by way of compensation for depreciation of the said article such sum as with the amount previously paid for hire shall make up a sum equal to not less than one half of total amount payable under the agreement.
10. Any time or other indulgence granted by the owner shall not prejudice or affect his strict rights under this agreement.
Schedule A
Description of Assets
1. Name.
2. Accession No.
3. Mark/Trade Name.
4. Year of Manufacture.
5. Type of Machine.
6. No. of Machine
7. Other descriptions: ……………………………
8. Accessories affixed to the asset: ……………………………
Schedule B
The amounts payable under this Agreement are as under:
Due Date Amount(₹)
…………………
In Witness Whereof the parties hereunto have set and subscribed their hands the day, month and year hereinbefore mentioned and bind themselves their heirs, successors and administrators and assigns.
Witness: 1. Signature of Hirer
Witness: 2. Signature of Owner
Question 20.
In the light of judicial pronouncement discuss the following; The family settlement must be a bona fide one.
Answer:
As defined by Halsbury’s Laws of England/A family arrangement is an agreement between members of the same family, intended to be generally and reasonably for the benefit of the family either by compromising doubtful or disputed rights or by preserving the family property or the peace and security of the family by avoiding litigation or by saving its honour.”
In the case of Kale v. Dy. Director of Consolidation AIR 1976 SC 807 the Supreme Court has laid down the following essentials of a family settlement in a concrete form:
1. The family settlement must be a bona fide one so as to resolve family disputes and rival claims by a fair and equitable division or allotment of properties between the various members of the family.
2. The said settlement must be voluntary and should not be induced by fraud, coercion or undue influence.
3. The family arrangement maybe even oral in which case no registration is necessary.
4. Registration of a family settlement is necessary only if the terms of the family arrangement are reduced into writing. A memorandum of family settlement recording the terms of an already existing oral settlement does not require registration.
5. The members who may be parties to the family arrangement must have some antecedent title, claim or interest or even a possible claim in the property which is acknowledged by the parties to the settlement.
6. Even in bona fide disputes, present or possible, which may not involve legal claims are settled by a bona fide family arrangement which is fair and equitable, the family arrangement is final and binding on the parties to the settlement.
In the case of CITV. R. Pottnammal (1987) 164 ITR 706 (Mad), the Court has held that:
“Even if a party to the settlement had no title but, under the arrangement, the other party relinquishes all its claims or titles in favour of such a person and acknowledges him to be the sole owner, then the antecedent title must be assumed and the family arrangement will be upheld and the Courts will find no difficulty in giving assent to the same. ”
Question 21.
In the light of judicial pronouncements discuss the following; A family arrangement can be enforced in a court of I&w:
Answer:
Following are key points on family arrangements:-
Objective of family settlement:
The object of a family arrangement is to protect the family from long drawn litigation and solidarity/unity of the family and to avoid hatred and bad blood between the various members of the family.
Enforce ability of family settlement:
According to the Supreme Court, a family arrangement by which the property is equitably divided between the various contenders so as to achieve an equal distribution of wealth instead of concentrating the same in the hands of few is undoubtedly a milestone in the administration of social justice.
The Supreme Court has generally taken a broad view of the matter and leaned heavily in favour of upholding any such arrangement. In the case of Lakshmi Perumallu v. Krishnavenamma AIR 1965 SC 825:1965(1) SCR 261 SC has held:-
“A family arrangement, which is for the benefit of the family, can be enforced in a court of law. But before the court would do so, it must be shown that there was an occasion for effecting a family arrangement and that it was acted upon. ”
Question 22.
Draft the following Document (Assume facts if necessary); Family Settlement Deed.
Answer:
This Deed Of Family Arrangement is executed on 3rd day of June 2019 between Mr. A, S/o MN aged years, R/o (hereinafter called as the “first party”).
AND
Mr. B, S/o XM aged years, R/o (hereinafter called as the “second party”).
Whereas the first party has started and carried out the business and undertaking described in Schedule ‘A’ by his own initiative and efforts with his own capital and funds.
And Whereas the second party, who is son of the pre-deceased son of the first party and residing with him under the care and parentage of the first party and assisting him in conduct of the aforesaid business for which he was being paid share in profit.
And Whereas the second party thus having contributed his labour and skill for the development of the business rendered valuable services for the same and rendered himself entitled for an equal share in the said business.
Now, This Deed Witnesseth As Follows:
- That the parties have agreed to distribute the business and the prop¬erties of the business amongst each other in an equal proportion.
- It is hereby decided and declared that the first party hereinafter shall hold, own and possess as full and absolute owner of the properties described in Schedule ‘B’.
- It is hereby decided and declared that the second party hereinafter shall hold, own and possess as full and absolute owner of the properties described in Schedule ‘C.
- That no party shall have any demand or claim on any account whatsoever on the share of other parties.
- The business and properties have been distributed amongst the parties to this deed absolutely.
In Witness Whereof the parties to this deed have put and subscribed their respective hands in presence of witnesses on the date above mentioned.
Witness 1 First Party
Witness 2 Second Party