U. Suresh Mallya Vs. Okazaki Sekizai Company Limited - Court Judgment

Excerpt:
- karnataka stamp act, 1957 section 3: [anand byrareddy,j] instruments chargeable with duty - petitioner praying to strike down and declare as unconstitutional and void the insertion/introduction of explanation to article 6 in schedule of act - petitioner had availed credit from a co-operative bank by offering title deeds of immovable property as collateral security for repayment of loan amounts without reducing terms of such transaction into form of a document no memorandum of deposit of title deeds - in view of amendment act no.7 of 2006 to article 6 of schedule respondent demanded 5% stamp duty on transaction - held, it is clear that the phrase employed in the explanation namely for the purpose of clause (i) notwithstanding anything contained in any judgment, decree or order of any authority would clearly indicate that the intention of the legislature was a blatant act to nullify the effect of the aforesaid judgments of this court as well as the apex court in holding that a transaction of the nature involved as in the present petition would attract stamp duty notwithstanding judicial pronouncements to the contrary. this has been frowned upon by the supreme court and it is held that such legislation would fall foul of the legislative competence of the state. though in the decided cases there were veiled attempts to nullify the judgment or order, in the resent case on hand, it is a positive declaration that notwithstanding a judgment or order of a court, the transaction would be treated as one which attracted the stamp duty. this is therefore legislation, which cannot be upheld or permitted to remain on the statute book. accordingly, the explanation to article 6 of the schedule to the karnataka stamp act, 1957 as incorporated by amendment act no. 7 of 2006 is hereby declared as unconstitutional and void and the all the same is struck down as being ultra vires. - kobayashi has left the services of the plaintiff-company even though he may not be effectively assisting the prosecution of the suit, it does not create a void or a vacuum-like situation for the company to say that it is not represented by any physical person.orderk. sreedhar rao, j. 1. the defendant in o.s. no. 1920 of 1995 pending on the file of xxxi additional city civil judge, bangalore, being aggrieved by the order passed on i.a. no. ix, has filed this revision under section 115 of the code of civil procedure. 2. the brief facts relating to the controversy in question which are necessary for adjudicating the revision are referred to hereunder: okazaki sekizai company limited, a japan based company, constituted one mr. t. kobayashi as their power of attorney and filed the suit against the defendant for recovery of a sum of rs. 33,00,000/-.3. the evidence in the case is commenced and one mr. bhaktavatsalam is examined as p.w. 1 on behalf of the plaintiff-company and has also filed power of attorney while giving evidence. the evidence of the plaintiff is closed. the defendant's evidence is also closed. at that stage, the defendant made an application, i.a. no. viii, seeking production of mr. t. kobayashi for the purpose of cross-examination. in the counter-statement filed by the plaintiff to i.a. no. viii, it is averred that mr. t. kobayashi is presently no way connected with their company and that the plaintiff is unaware of the present whereabouts of mr. t. kobayashi. based upon such averments made in the counter-statement, i.a. no. ix came to be filed for non-suiting the plaintiff on the ground that the plaintiff-company being a corporate entity and a juristic person, it is necessary in law that it should be represented by an individual; since mr. t. kobayashi has disassociated himself with the plaintiff-company, the latter is no more represented by any individual and as such, there is lacuna in continuing the suit which is fatal to the very prosecution of the suit. 4. the trial court passed orders rejecting i.a. nos. viii and ix. being aggrieved, this revision is filed. 5. the admitted facts disclose that at the time of filing of the suit, the plaintiff-company was duly represented by mr. t. kobayashi, a power of attorney holder. from the averments in the written statement and the observations made by the trial court in its order, it became explicitly clear that the defendant did not object the propriety of mr. t. kobayashi representing the plaintiff-company when he filed the suit. 6. however, during the course of evidence, when mr. t. kobayashi was insisted to be summoned only for the purpose of cross-examination, it was submitted that mr. t. kobayashi has left the services and he is no more associated with the plaintiff-company. at that stage, a short question was posed by the defendant in i.a. no. ix regarding the maintainability of the suit for lack of proper representation of the plaintiff-company by a competent person as envisaged in law. 7. the learned counsel for the revision petitioner strenuously contended that in the objections filed to la. no. vii, it disclosed that mr. t. kobayashi no more associated with the company, and therefore, it is impermissible in law for a corporate body to maintain and continue the prosecution of the suit without being represented by any physical person which is mandatory under order 29, rule 1 of the cpc. it is further contended that the observations made by the trial court that p.w. 1 validly represents the company by virtue of the power of attorney produced during the course of his evidence is untenable in law and thus, the trial court grossly erred in rejecting the request made to dismiss the suit. 8. the learned counsel for the respondent per contra submitted that it is open to the party in civil proceedings to examine any witness on his behalf and close the case without examining himself. it is not necessary that always the party who has filed the suit should be examined under order 18, rule 3-a of the cpc. the respondent's learned counsel however conceded the fact that p.w. 1-bhaktavatsalam who is examined, could be considered in law only as a witness to the case and that he is not representing the company as such for prosecution of the suit. the counsel submitted that the power of attorney given to mr. t. kobayashi to represent the plaintiff-company in the suit continues to be in operation until the power is terminated. merely because mr. t. kobayashi has disassociated himself with the company, it does not mean in law that the power of attorney given is terminated. it is only in the case of death of the power of attorney holder or the principal the contract of agency gets terminated. in all other cases, even though the agent who is a party to the contract might rescind the terms of the contract, the principal can keep the contract open without terminating the same. in such cases, there would be no termination of the contract of agency. in the instant case, it was submitted that the allegations made in the objections to i.a. no. viii do not disclose that the power of attorney given to mr. t. kobayashi has been terminated. therefore, technically, mr. t. kobayashi continues to represent the plaintiff-company. 9. after carefully examining the submissions made at the bar, a very peculiar situation is evident in the facts of the case. it is not in dispute that at the time when the suit was filed, the corporate body was duly represented by an individual person and his authority was not questioned. but however, during the continuation of the suit, it appears that mr. t. kobayashi has left the services. as pointed out by the learned counsel for the respondent, the power of attorney given to mr. t. kobayashi is not terminated. nowhere in the objections it is submitted that the power of attorney given to mr. t. kobayashi is terminated. even though there are averments that disclose that mr. t. kobayashi has disassociated himself from the affairs of the company, and may be that his whereabouts are not known for the present, it does not mean that the contract of agency constituted in mr. t. kobayashi gets automatically terminated. examination of mr. bhaktavatsalam as p.w. 1, at the most, can be termed as a witness in law, competent to testify on behalf of the plaintiff. the production of power of attorney by mr. bhaktavatsalam does not indicate that he gets substituted in place of mr. t. kobayashi to represent the plaintiff-company in the suit. 10. under the circumstances, merely the averment that mr. t. kobayashi has left the services of the plaintiff-company even though he may not be effectively assisting the prosecution of the suit, it does not create a void or a vacuum-like situation for the company to say that it is not represented by any physical person. in law, the contract of agency gets automatically terminated by death of either of the parties, or the principal who has appointed the power of attorney can terminate the contract of agency either expressly or by implication. as long as the power of attorney is not terminated by the principal, the power of attorney continues to represent the company for all technical purposes. 11. after the conclusion of arguments, the learned counsel for the petitioner brought to my notice the fact that mr. bhaktavatsalam-p.w. 1, has lodged caveat for the plaintiff-company. therefore, it has to be understood that the power of attorney given to mr. t. kobayashi is deemed to have been terminated. although it is a seeming fact that mr. bhaktavatsalam has lodged the caveat, it does not mean that the power of attorney given to mr. t. kobayashi gets terminated, since caveat is an independent proceeding, by virtue of the power of attorney given to mr. bhaktavatsalam, he is entitled to lodge and prosecute independent proceedings, and the said circumstances does not appear to be an adverse circumstance to uphold the contention of the petitioner. in the result, the revision petition is dismissed with costs.

Judgment:
ORDER

K. Sreedhar Rao, J.

1. The defendant in O.S. No. 1920 of 1995 pending on the file of XXXI Additional City Civil Judge, Bangalore, being aggrieved by the order passed on I.A. No. IX, has filed this revision under Section 115 of the Code of Civil Procedure.

2. The brief facts relating to the controversy in question which are necessary for adjudicating the revision are referred to hereunder:

Okazaki Sekizai Company Limited, a Japan based company, constituted one Mr. T. Kobayashi as their power of attorney and filed the suit against the defendant for recovery of a sum of Rs. 33,00,000/-.

3. The evidence in the case is commenced and one Mr. Bhaktavatsalam is examined as P.W. 1 on behalf of the plaintiff-company and has also filed power of attorney while giving evidence. The evidence of the plaintiff is closed. The defendant's evidence is also closed. At that stage, the defendant made an application, I.A. No. VIII, seeking production of Mr. T. Kobayashi for the purpose of cross-examination. In the counter-statement filed by the plaintiff to I.A. No. VIII, it is averred that Mr. T. Kobayashi is presently no way connected with their company and that the plaintiff is unaware of the present whereabouts of Mr. T. Kobayashi. Based upon such averments made in the counter-statement, I.A. No. IX came to be filed for non-suiting the plaintiff on the ground that the plaintiff-company being a corporate entity and a juristic person, it is necessary in law that it should be represented by an individual; since Mr. T. Kobayashi has disassociated himself with the plaintiff-company, the latter is no more represented by any individual and as such, there is lacuna in continuing the suit which is fatal to the very prosecution of the suit.

4. The Trial Court passed orders rejecting I.A. Nos. VIII and IX. Being aggrieved, this revision is filed.

5. The admitted facts disclose that at the time of filing of the suit, the plaintiff-company was duly represented by Mr. T. Kobayashi, a power of attorney holder. From the averments in the written statement and the observations made by the Trial Court in its order, it became explicitly clear that the defendant did not object the propriety of Mr. T. Kobayashi representing the plaintiff-company when he filed the suit.

6. However, during the course of evidence, when Mr. T. Kobayashi was insisted to be summoned only for the purpose of cross-examination, it was submitted that Mr. T. Kobayashi has left the services and he is no more associated with the plaintiff-company. At that stage, a short question was posed by the defendant in I.A. No. IX regarding the maintainability of the suit for lack of proper representation of the plaintiff-company by a competent person as envisaged in law.

7. The learned Counsel for the revision petitioner strenuously contended that in the objections filed to LA. No. VII, it disclosed that Mr. T. Kobayashi no more associated with the Company, and therefore, it is impermissible in law for a corporate body to maintain and continue the prosecution of the suit without being represented by any physical person which is mandatory under Order 29, Rule 1 of the CPC. It is further contended that the observations made by the Trial Court that P.W. 1 validly represents the company by virtue of the power of attorney produced during the course of his evidence is untenable in law and thus, the Trial Court grossly erred in rejecting the request made to dismiss the suit.

8. The learned Counsel for the respondent per contra submitted that it is open to the party in civil proceedings to examine any witness on his behalf and close the case without examining himself. It is not necessary that always the party who has filed the suit should be examined under Order 18, Rule 3-A of the CPC. The respondent's learned Counsel however conceded the fact that P.W. 1-Bhaktavatsalam who is examined, could be considered in law only as a witness to the case and that he is not representing the company as such for prosecution of the suit. The Counsel submitted that the power of attorney given to Mr. T. Kobayashi to represent the plaintiff-company in the suit continues to be in operation until the power is terminated. Merely because Mr. T. Kobayashi has disassociated himself with the company, it does not mean in law that the power of attorney given is terminated. It is only in the case of death of the power of attorney holder or the principal the contract of agency gets terminated. In all other cases, even though the agent who is a party to the contract might rescind the terms of the contract, the principal can keep the contract open without terminating the same. In such cases, there would be no termination of the contract of agency. In the instant case, it was submitted that the allegations made in the objections to I.A. No. VIII do not disclose that the power of attorney given to Mr. T. Kobayashi has been terminated. Therefore, technically, Mr. T. Kobayashi continues to represent the plaintiff-company.

9. After carefully examining the submissions made at the Bar, a very peculiar situation is evident in the facts of the case. It is not in dispute that at the time when the suit was filed, the corporate body was duly represented by an individual person and his authority was not questioned. But however, during the continuation of the suit, it appears that Mr. T. Kobayashi has left the services. As pointed out by the learned Counsel for the respondent, the power of attorney given to Mr. T. Kobayashi is not terminated. Nowhere in the objections it is submitted that the power of attorney given to Mr. T. Kobayashi is terminated. Even though there are averments that disclose that Mr. T. Kobayashi has disassociated himself from the affairs of the company, and may be that his whereabouts are not known for the present, it does not mean that the contract of agency constituted in Mr. T. Kobayashi gets automatically terminated. Examination of Mr. Bhaktavatsalam as P.W. 1, at the most, can be termed as a witness in law, competent to testify on behalf of the plaintiff. The production of power of attorney by Mr. Bhaktavatsalam does not indicate that he gets substituted in place of Mr. T. Kobayashi to represent the plaintiff-company in the suit.

10. Under the circumstances, merely the averment that Mr. T. Kobayashi has left the services of the plaintiff-company even though he may not be effectively assisting the prosecution of the suit, it does not create a void or a vacuum-like situation for the company to say that it is not represented by any physical person. In law, the contract of agency gets automatically terminated by death of either of the parties, or the principal who has appointed the power of attorney can terminate the contract of agency either expressly or by implication. As long as the power of attorney is not terminated by the principal, the power of attorney continues to represent the company for all technical purposes.

11. After the conclusion of arguments, the learned Counsel for the petitioner brought to my notice the fact that Mr. Bhaktavatsalam-P.W. 1, has lodged caveat for the plaintiff-company. Therefore, it has to be understood that the power of attorney given to Mr. T. Kobayashi is deemed to have been terminated. Although it is a seeming fact that Mr. Bhaktavatsalam has lodged the Caveat, it does not mean that the power of attorney given to Mr. T. Kobayashi gets terminated, since Caveat is an independent proceeding, by virtue of the power of attorney given to Mr. Bhaktavatsalam, he is entitled to lodge and prosecute independent proceedings, and the said circumstances does not appear to be an adverse circumstance to uphold the contention of the petitioner.

In the result, the revision petition is dismissed with costs.