TaxTMI 
TaxTMI 
2009 (4) TMI 446
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....petitioner has asserted that at the request of the respondent-company, between September, 1999 to March, 2002, she paid a sum of Rs. 3,57,000 on various dates, through cheques issued on Canara Bank and ING Vysya Bank. The respondent-company has neither allotted the shares nor did return the money to the petitioner. It is further stated that after a good deal of persuasion, the respondent-company issued a cheque, bearing No. 368162, dated 15-4-2004, drawn in a sum of Rs. 3,57,000 on an account maintained by it with M/s. Manasa Co-operative Urban Bank Ltd., towards refund of the monies received from the petitioner. The petitioner further asserted that the company requested time for presentation of the said cheque and, at long last, when the cheque was presented, the same has been returned by the bankers with an endorsement that the directors signatures is deferring with its records. It is, therefore, asserted by the petitioner that a deliberate ploy has been used for avoiding refund of monies for which the petitioner is entitled to. That action has resulted in criminal case being launched in C.C. No. 1328 of 2004 in the court of the Metropolitan Magistrate, Secunderabad. The request ....
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....tly unleashed this litigation. It is further asserted that the petitioner never disclosed the fact that her husband was the managing director of the respondent-company till the year 2004 and that he was the promoter-director of the company and hence, she has approached this court with unclean hands by suppression of the true and relevant facts. The averment that the company has not started making commercial production has been stoutly disputed by the respondent. With these pleadings, the parties went for trial. 5. On behalf of the petitioner, her husband Sri K. Srinivasa Rao, was examined as PW1. In lieu of chief-examination, in terms of Order XVIII, rule 4 of the Code of Civil Procedure, he filed an affidavit and made himself available for cross-examination. He has reiterated the contents of the above petition. He has also asserted that the petitioner executed a special power of attorney in his favour to depose on her behalf in the above petition. It is asserted that the monies paid by the petitioner and referred to in the petition are independent from that of the investments made by himself. Exhibits P1 to P12, excepting exhibit P3, are marked and exhibited. Exhibit P3 is rece....
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....tomer Care Centre of the Hyderabad Jubilee Post Office, informing the dates on which the registered letters have been delivered at the registered office of the company and at its factory premises. Exhibits P11 and P12 are the postal receipts of exhibit P7 legal notice. 7. On behalf of the respondent-company Sri V. Prem Sagar one of the directors of the company has been examined as RW1. He has filed his affidavit in lieu of chief-examination and asserted the contents of the counter-affidavit filed in the above petition. On behalf of the respondent, exhibits R1 to R6, which are the sales tax returns of the respondent-company filed before the Commercial Tax Officer, have been got marked. He has been cross-examined. RW1 has admitted that through two sepa- rate cheques bearing Nos. 368159 and 368161 dated 1-4-2004 and 15-4-2004, respectively, a sum of Rs. 32 lakhs was paid and settled to PW1. He has admitted that exhibit P4 cheque has not been signed by PW1. He has also admitted that as per the returns filed as on 31-3-2003, current assets of the respondent-company stand at Rs. 24.62 lakhs negative. He has also admitted that exhibits R1 to R6 do not reflect the profitability of the r....
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.... further asserted that he has resigned from the directorship of the company and that he has not signed exhibit P4 cheque, but it was signed by Sri V. Ayodhya Ramulu and Ms. Sangeetha-two other directors of the com-pany. RW1 has admitted that in the ledger account a sum of Rs. 3,57,000 is shown to have been received from the petitioner. In fact, he has also got marked exhibits R12 and R13, the statements of account, issued by the Canara Bank and the ING Vysya Bank, maintained by the petitioner, from which accounts the money has been paid to the respondent-company. It is, therefore, clear that the petitioner paid to the respondent-company a sum of Rs. 3,75,000 and it was brought to the books of account of the company. The respondent has tried to establish that the PW1 was paid Rs. 32 lakhs, which included the money liable to be paid to the petitioner also. Further, it was also contended that it is PW1, who issued the cheque exhibit P4, unauthorisedly to the petitioner with a view to gain advantage. While exhibit R11 Form No. 32 has been lodged with the Registrar of Companies on August 6, 2004, the contents of column No. 5 thereof, clearly disclose that PW1 has resigned as director of....
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....d by the petitioner and that circumstance lends credence to the claim of the petitioner, effectively. Exhibit P4 has been returned uncleared by the banker of the respondent-company. Exhibit P4 has not been signed by PW1, but it was signed by two different directors. Therefore, the respondent-company has failed to discharge the onus on it to explain as to why exhibit P4 has come to be issued in favour of the petitioner herein. The theory set up by the respondent that the amount of Rs. 3,57,000 has already been returned to the petitioner, being part of the amount paid to PW1, is not simply believable, for, PW1 has been paid through two separate cheques a sum of Rs. 32 lakhs. If the amount payable to the petitioner were also inclusive of the said amount paid to PW1, then, there would not have been any further necessity to issue exhibit P4 cheque separately and independently in favour of the petitioner. The debt due to the petitioner, therefore, has simply not been discharged. 12. Learned counsel for the respondent Sri D. Srinivas, placed reliance, upon the judgment rendered by a learned single judge of this court in K. Bharathy v. Authority under section 50 of A.P.S.E. Act-cum-Labo....
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....tinctions; the object and purposes of the parties must always be kept in view, and, where the language will permit, that construction should be carried out that will support instead of defeat the purposes of the instrument-Holladay v. Daily (19 Wall. (U.S.) 606). [Emphasis supplied] 15. It will be relevant to notice that the donee of a power of attorney, acts on behalf of his/her principal, hence, the power of attorney is a special power of agency, normally, deriving power for the purpose of managing, buying or selling real and personal property or for purposes of carrying on business or for the purpose of securing loans, leases, mortgages and for making investments and for securing insurance cover and also for the purpose of suing and to be sued. Thus, a host of functions, which are otherwise normally liable to be performed in an individual capacity by a particular person, called as principal, are granted to be performed by another person in the capacity as the agent of such a principal. This grant of power in writing is what has come to be constituted and recognised as the power of attorney. To render the principal to be bound by all such actions of his agent and with a view t....
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....lidity as that of a vakalat and that, unless it was revoked by formal proceedings through court, no orders could be passed on the petition. Therefore, by reason of the authority given to him in the power of attorney, he claimed the same right as a legal practitioner who has been given a vakalat; and since the power of attorney authorises him to plead in court, it follows that he claims that right; and indeed we are informed that either in these proceedings or in some other, Lakshmana Rao, J. allowed him to address the court. In view of the claim put forward by the respondent in the affidavit referred to the Master posted the matter before Gentle, J. for orders and he has referred the matter to us and it has been fully argued here by learned counsel for the petitioner, Krishnammal, the Bar Council, the Advocates' Association and the Attorneys' Association; and we have also heard the respondent in person. We may say at once that there is an unreported Bench decision of this High Court directly in point on the first question in C.M.P. No. 498 of 1911, where it was held by Benson and Sundara Ayyar, JJ. that a right to appear in court for his principal given to a recognised agent by ....
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....n England and other countries in Europe where there has been never a prohibition against non-lawyers performing such legal functions as giving legal advice or preparing some kind of legal documents.... 13. Now, the Advocates Act, 1961, which is an Act to amend and consolidate the law, repeals the above provisions of the Letters Patent and parts of the Legal Practitioners Act. Section 32 of the Advocates Act uses the word 'appear' while sections 29 and 33 use the expression 'practice'. The word 'practice' includes both acting and pleading, and takes in all the normal activities of a legal practitioner. Though section 33 of the Advocates Act uses the word 'practice', we are here concerned with the word 'appear' used in section 32. A non-advocate, when he seeks permission to 'appear' cannot, in my view, be permitted to 'address' the court on the strength of the power-of-attorney. In Sornam's case, while observing that he can 'appear' or 'act' Natesan, J. observed (page 211) : 'As a recognised agent, he can have appearance and he can act; now he wants also to plead the cause before the court, that is factually to practice the profession of law.' 14. Natesan, J., also stated th....
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....e context of section 2 of the Powers-of-Attorney Act, 1882, it is of importance to notice the following statement of law (made by the Full Bench), in Powers of Newly Enrolled Statutory Advocates under the Indian Bar Councils Act, In re AIR 1928 Mad. 1182. (page 1186) : "....I am of opinion that where an Act confers rights to a party in general terms and entitles him to perform more than one function, the cutting down of those rights by a rule would make that rule repugnant to the provisions of the Act. The following observations of Wills, J., in Queen v. Bird [1898] 2 QBD 340/67 LJ QB 618/14 TLR 384/62 J.P. 422/46 WR 528/79 LT 156, are in point : 'I desire in my judgment to adopt a broad principle which is too clear to need cases to be cited for its justification-the principle that where a power to make regulations is given to a public body by statute, no regulations made under it can abridge a right conferred by the statute itself'." 22. In fact, the Supreme Court had authoritatively pronounced its disapproval of allowing the powers of attorney holders to plead on behalf of their principals. The Supreme Court in Harishankar Rastogi v. Girdhari Sharma AIR 1978 SC 1019, has....
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.... J. had occasion to deal with a similar matter while considering a plea like this in a chamber proceeding in the Supreme Court. In that case, a party sought permission to be represented by another person in a criminal case. Learned judge then struck a note of caution in the following terms in Harishankar Rastogi v. Girdhari Sharma AIR 1978 SC 1019 (paragraph 3) : 'If the man who seeks to represent has poor antecedents or irresponsible behaviour or dubious character, the court may receive counter-productive service from him. Justice may fail if a knave were to represent a party. Judges may suffer if quarrelsome, ill-informed or blackguardly or blockheadedly private representatives filing arguments at the court. Likewise, the party himself may suffer if his private representative deceives him or destroys his case by mendacious or meaningless submissions and with no responsibility or respect for the court. Other situations, settings and disqualifications may be conceived of where grant of permission for a private person to represent another may be obstructive, even destructive of justice.' 12. The appellant submitted that he is the duly appointed attorney of the respondent-coupl....
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.... is dispensed with. But in no case can the appearance of the accused be made through a power of attorney holder. So the contention of the appellant based on the instrument of power of attorney is of no avail in this case. 16. In this context reference can be made to a decision rendered by a Full Bench of the Madras High Court in M. Krishnammal v. T. Balasubramania Pillai AIR 1937 Mad. 937, when a person, who was the power of attorney holder of another, claimed right of audience in the High Court on behalf of his principal. A single judge referred three questions to be considered by the Full Bench, of which the one which is relevant here was whether an agent with the power of attorney to appear and conduct judicial proceedings has the right of audience in court. Beasley, C.J., who delivered the judgment on behalf of the Full Bench stated the legal position thus (AIR headnote) : 'An agent with a power of attorney to appear and conduct judicial proceedings, but who has not been so authorised by the High Court, has no right of audience on behalf of the principal, either in the appellate or original side of the High Court.... There is no warrant whatever for putting a power of att....
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....uct a lawyer or an attorney and to settle the pleadings in writing or to affix the verifications for the general truth of the averments is not a prohibitory exercise, but is a legitimate exercise liable to be carried on by an agent. Therefore, the power of attorney holders have always been accorded the necessary permission to set forth the pleadings on behalf of their principals. An agent is always allowed and permitted to make and set forth the pleadings on behalf of his principal in India. Therefore, deposing on behalf of the principal in a court being part of the exercise of tendering evidence is not a forbidden exercise to be indulged in by an agent. Such persons are entitled to be cross-examined as the act and art of cross-examination being essentially to ascertain the veracity of the statements/submissions made by a witness and in that process, extract the whole of the truth. Section 18 of the Evidence Act, clearly permits and allows evidence to be collected even from an agent. Therefore, the contention canvassed by learned counsel for the respondent placing reliance upon a judgment in K. Bharathy's case (supra), is not tenable, it is altogether a different thing that a power....