“DRAFTING OF DEED, WILL
AND DOCUMENTATION
AND
ITS LEGAL IMPORTANCE”
By
DR. MAHESH THAKAR
ADVOCATE
B.Sc.,LLM, Ph.D., FCS, CAIIB
“Reputation and learning are akin to capital assets, like the good
will of an old partnership… For many, they are the only tools
with which to hew a pathway to success. The money spent in
acquiring them is well and wisely spent.”
-----------------------Lawyers:
“Persons who write a 10000 word document and call it a brief”
-----------------------“There are two kinds of lawyers: those who know the law and
those who know the judge.”
POINTS OF DISCUSSION
1. WHAT IS A DOCUMENT?
2. VARIOUS STATUTORY DEFINITIONS OF “DOCUMENT”
3. DRAFTING OF DOCUMENTS: IMPORTANT INITIAL
ASPECTS:
4. DOCUMENTS GENERALLY REQUIRED TO BE
PREPARED UNDER VARIOUS ACTS:
5. IMPORTANT PRINCIPLES AND SUGGESTIONS FOR
GOOD DRAFTING:
6. COMMON FEATURES OF A DOCUMENT:
7. DOCUMENTATION IN CYBER WORLD:
8. DOCUMENTS AND EVIDENCE ACT:
9. OFFENCES RELATING TO DOCUMENTS UNDER INDIAN
PENAL CODE:
10. STAMP ACT (FAQs)
11. WILL
12. SOME IMPORTANT DOCUMENTS & STAMP DUTY
1. WHAT IS A DOCUMENT?
A document is something that furnishes
evidence and shall also include matter
written, expressed or described upon any
substance by means of letters, figures or
marks or by more than one of those
means which is intended to be used or
which may be used for the purpose of
recording that matter.
2. VARIOUS STATUTORY
DEFINITIONS OF “DOCUMENT”
Statute
Section
Definition
General
Clauses Act
S. 3(18)
“Document” shall include any matter written,
expressed or described upon any substance
by means of letters, figures or marks, or by
more than one of those means which is
intended to be used or which may be used for
the purpose of recording that matter.
Companies
Act
S. 2(15)
“Document” includes summons, notice,
requisition, order, other legal process and
registers, whether issued, sent or kept in
pursuance of this or any other Act or
otherwise.
Indian
Evidence
Act
S. 3 The word “document” denotes any matter
expressed or described upon any substance
by means of letters, figures or marks, or by
more than one of those means, intended to be
used, or which may be used, as evidence of
that matter.
Information
Technology
Act, 2000
S. 2 “Document” includes an electronic record as
defined in clause (t) of sub-section 1 of Sec. 2
of The I. T. Act, 2000
Registration
Act
Sec “Document” means a document which is
legally enforceable.
50
3. DRAFTING OF DOCUMENTS:
IMPORTANT INITIAL ASPECTS:
• A document is intended to be an evidence and has to
stand the test of law. Hence, knowledge of law is the
basic essential requirement. Since the laws are many
and multiple, the concept of super specialization within
some branches involves specialization in the specific
branch of law or practice.
• The drafting professional should conceive the sketch or
skin of the draft so that no important aspects or omitted
or irrelevant aspects get admitted randomly.
• The paragraphs in the draft should come in strictly
logical order highlighting the purpose and scheme of the
document.
• Since a document is intended to operate within a legal
framework, use of legal language is indispensable but it
should be to utmost possible extent precise and accurate.
The draft must be readily intelligible to layman.
• The drafting professional should appreciate and use
precise words to convey what he means to say, what he
does not mean to say and what he need not say.
• Document should be self-explanatory and unambiguous.
• Prefer separate documents where subject matters are
distinct or applicable rules of law are different.
• Before releasing the draft, it be reconsidered/verified to
satisfy that before it is too late, the draft means what it
intends and terms are clear and definite.
4. DOCUMENTS GENERALLY REQUIRED
TO BE PREPARED UNDER VARIOUS
ACTS:
(i) Indian Contract Act:
Agreements, MOUs, guarantees, indemnities, power of attorneys
and all other documents not specifically covered elsewhere.
(ii) Companies Act:
Memorandum and Articles of Association, resolutions, minutes,
proceedings relating to takeovers, mergers, scheme of
amalgamation, demergers and connected documentation,
Prospectus.
(iii) Indian Partnership Act:
Partnership deeds, reconstitution, resolution, retirement of
partners
(iv) Transfer of Property Act:
Sale deeds, lease deeds, gift deeds, exchange of property, mortgage,
documents, agreement for sale, construction and development
agreements, release deeds.
(v) Intellectual Property rights:
Copyright, relinquishment of copyright, trademarks and its assignments,
patents’ registration and assignment, registration of designs, franchise
agreements, etc.
(vi) Banking transactions, related documentation:
Sanction letters, board resolutions, hypothecation and mortgage
documents, consortium documents.
(vii) Industrial and labor laws:
Appointment, apprenticeship, disciplinary proceedings, charge sheets,
departmental inquiries, retrenchment, schemes for gratuity, provident
fund trust, contract labor, etc.
(viii) Insurance laws:
Insurance policies, assignments and other connected documents
(ix) Arbitration laws:
Arbitration agreement, international arbitration agreements, notices for
arbitration, submissions before arbitrators, proceedings for challenge to
arbitration award, etc.
(x) International agreements:
Agreements between the parties/corporates having different nationality
and governed by different laws, treaties and protocols, conventions
applicable to and governing the situation.
(xi) Testamentary and family laws:
Will, codicil, cancellation of will, family settlement, creation of trust, family
partition, marriage and divorce, intervous and testamentary succession,
adoption deed.
(xii) Other financial transactions:
Commercial papers, related documentation, standby facility,
consequences of default
(xiii) Other miscellaneous documents:
Formation of societies, NGOs, S. 25 companies, financial collaborations,
joint ventures, bonds, agency, consultancy, supply.
(xiv) Pleadings:
The petitions, applications and written submissions made
before any authority who has power to adjudicate
normally comes within pleading. It contains the material
fact on which the party pleading relies for his claim or
defense. Generally, it follows the following chronology:
• Original application/plaint/suit/petition usually filed by
plaintiff/applicant initiating action.
• Upon notice, the other side has to file Written
Statement/affidavit-in-reply.
• Thereupon the petitioner can file rejoinder in reply to the
contentions in the W.S.
• Affidavit-in-sur-rejoinder by the other side followed by
additional affidavits depending on the issues involved.
• Affidavits required to be filed
The list is merely illustrative and not exhaustive
5. IMPORTANT PRINCIPLES AND
SUGGESTIONS FOR GOOD DRAFTING:
•
Be clear.. through the document to any person who
has a knowledge of the subject matter. Prepare
scheme of facts and contents you propose to deal with
through a instructions section.
•
Be satisfied.. as to what the document means to say,
does not mean to say and need not say.
Since client may not be as well-versed in law as you
are, be sure as to within what legal framework such as
Sections, Rules, notifications, if applicable, the
document is recognized and operates.
•
Be unambiguous.. Avoid a situation where
you are thinking that you are saying one thing
but really saying more than one.
•
Be self-explanatory.. through the document
•
Have separate documents... Documents
which are completely distinct or applicable
rules of law differ
•
Use schedules... In respect of matters which
are factual such as description of property, list
of assets, etc. which may make the document
otherwise complex, but cannot be dispensed
with.
•
Be logical... So that the risk of omission and repetition
is minimized.
•
Use words in the same sense... If in a specific
context, meaning changes, use the word phrase
“unless expressed otherwise or repugnant to the
context or meaning thereof”.
•
Avoid passive voice... Unless in particular context, it
makes the meaning more clear, active voice be
preferred.
•
Comply with incidental mandatory requirements...
such as stamping of documents, registration, vetting,
etc.
•
Avoid self-complacency/unilateralism... be prepared for vetting,
review without necessarily accepting casual and uncontextual
suggestions.
Clarity as to the bare minimum contents you require for protecting
and safeguarding your interest has to be adhered to.
•
Respect precedent and forms... without converting yourself into a
mechanical follower, so that allegations like “non-application of mind”
or “cut and paste” technologist can be avoided.
•
Historical context... When documents are supplemental, be sure
about what the principal document says and what is intended to be
dealt with in supplemental documents.
•
In respect of documents having transborder effect... be sure as to law of
which country will be applicable and
ensure its compliance.
•
Prefer a Chapter of definitions... When
few words are often repeated throughout
the document, it is advisable to have in
initial part a chapter giving definitions of
those words.
•
In respect of corporate bodies...
When they are a party to the documents, take
additional care of the special provisions applicable to
such party. Thus, for e.g.,
(i) a public limited company has restrictions u/s. 293 of
Companies Act for borrowing.
(ii) a public trust cannot mortgage or lease without prior
permission of Charity Commissioner.
(iii) a society has to follow its by-laws,
(iv) Government has to execute the document through a
person authorized by the governor/President or under
departmental rules.
6. COMMON FEATURES OF A
DOCUMENT:
(a) Commencement/title of the deed
Such as conveyance deed, gift deed, joint venture
agreement, etc.
(b) Description of parties to the deed and their legal
character in the transactions.
(c) Recitals:
Usually it begins with the word “whereas” and it controls
and narrates the background of the operative part of the
document. It may narrate the circumstances and context
in which the document is prepared. Followed by such
narrative recital there may be the reference of
agreement which is intended to be given effect.
(d) Parcels:
A phrase from English drafting which is popularly used refers to
property sought to be conveyed and correct description thereof.
(e) Operative part:
In background of the recitals, usually the operative part comes as “in
consideration of... The parties hereby agree/convey”, etc.
(f) Arrangement:
It narrates and elaborates para-wise how the recitals and operative
part have been given effect.
(g) Testimonial:
It is the conclusive part and the usual phrase is “in witness whereof
the said parties hereunto have executed this deed”.
(h) Attestation:
Certain documents require attestation which means person other that
parties will witness the fact of the document being signed in his/her
presence. Such documents are will, sale deed, lease deed, etc.
7. DOCUMENTATION IN CYBER WORLD:
Legislative changes have been brought in to keep
pace with the new millennium when speed is the
hallmark of every individual’s initiative and India has to
keep pace with the global developments. Accordingly,
Information Technology Act, 2000 has been enacted and
amended. It has brought corresponding changes in
Indian Penal Code, Indian Evidence Act, Bankers’ Book
Evidence Act and Reserve Bank of India Act.
The United Nations adopted modal law on electronic
credit named United Nations Commission on
International Trade Law (UNCITRAL). Some of the
important features of this law relevant for our today’s
topic have been summarized below:
•
I.T. Act applies to whole of India except when specifically
provided otherwise. In Sec. 2 of the Act, important and
significant terms such as electronic signature, electronic
record, data, computer system, etc. have been defined.
•
Sec. 3 deals with authentication of electronic record by use
of asymmetric crypto system and hash function which
envelop and transform the initial electronic record into
another electronic record. Hash function is an algorithm
mapping or translation of one sequence into another.
Manner of authenticating digital signature and creation of
digital signature also has been elaborated. Sec. 11 deals
with attribution of electronic records to the originator who
sends or authorizes sending of or sends through an
information system program by originator. If originator
does not stipulate receipt of electronic record in a particular
form, any communication or conduct to that effect by the
addressee is sufficient.
• Sec. 13 stipulates that unless agreed otherwise, dispatch of
electronic record occurs when it enters a computer resource
outside the control of the originator. (It is like offer and
acceptance under the traditional Contract Act).
• Sec. 65, 66, 67 deals with the offences such as tampering
with computer source documents, computer related offences
and punishment. The punishment is imprisonment up to 3
years and/or five lac rupees and for subsequent offence, 5
years and ten lac rupees.
• A statutory authority namely “Controller” has been
constituted u/s. 68 and he has the power to give directions.
The Central Govt. also has powers to issue directions for
interception or decryption of any information through any
computer source.
• Following punishments/penalties have
been prescribed
Sec,
Offence
Punishment
and/or
penalty
71
Misrepresentation or suppression of fact to the
controller/Certifying authority
2 years and one
lac rupees
72
Breach of confidentiality and privacy
2 years and one
lac rupees
73
Publishing false electronic signature certificate
2 years and one
lac rupees
74
Publication for fraudulent purpose
2 years and one
lac rupees
Caution notes:
• Even offences or contravention committed
outside of India irrespective of nationality
are also covered.
• U/s. 76, computer or computer system,
floppies, discs and accessories can be
confiscated.
8. DOCUMENTS AND EVIDENCE ACT:
•
Evidence Act applies to all judicial
proceedings where the facts and relevant facts
have to be ascertained and on the basis of that,
conclusions have to be arrived in all trials/cases
both civil and criminal.
•
Usually all provisions of Evidence Act do not
apply to Tribunals and such Sections are inserted
in constituting Act of the Tribunal.
•
As stated in the initial part, a document, in
case of dispute requires to be tested on the
touchstone of evidence through a court trial.
•
Chapter 5 of Evidence Act deals with
documentary evidence and it may be
appropriate to look at some of the important
provisions:
•
Sec. 61: Contents of documents may be
proved either by primary evidence or
secondary evidence.
•
Primary evidence means the document itself
produced in the Court.
•
Secondary evidence means certified copies.
• Sec. 64 stipulates that documents must be
proved by primary evidence except when u/s. 65
the original is shown or appears to be in power
or possession of a person against whom it is
sought to be proved or its existence, condition
and contents have been admitted by such
person or when original is destroyed or lost or it
is a public document, etc.
• Contents of electronic record may be proved by
producing the computer output contending the
information with all its material parts and
requirements of Sec. 65(b) are satisfied.
• Sec. 67 requires that a document is alleged to be signed or
written by any person’s signature or handwriting must be
proved and onus lies on the party who asserts it.
• A document required by law to be attested cannot be used
as evidence unless atleast 1 attesting witness has been
examined.
• Sec. 71 says that if attesting witness denies or does not
recollect execution of document, it may be proved by other
evidence. The documents forming the acts or records of
official bodies, tribunals, sovereign authorities, etc. are
called public documents and a certified copy thereof can
be produced as proof of the contents of “public
documents”.
• Chapter 6 of Evidence Act deals with “Exclusion of oral by
documentary evidence”. U/s. 91, if terms of contract have been
reduced to form of a document or required under law to be so
reduced, oral evidence is not admissible. However, any fact
which may invalidate such document such as fraud,
intimidation, illegality, etc. can be proved.
• U/s. 99, persons who are not parties to a document or their
representative-in-interest may give evidence of any facts
tending to show a contemperous agreement varying the terms
of the document.
• The responsibility of proving a document is called “burden of
proof’ and it lies on the person who asserts or who’s case will
fail if it is not proved.
9. OFFENCES RELATING TO DOCUMENTS
UNDER INDIAN PENAL CODE:
• Since ignorance of law is not an excuse and
professionals including chartered accountants have the
occasions to prepare or deal with or certify the
documents, hence a brief reference of the provisions.
• Sec. 463 of IPC deals with the definition of “forgery” and
in short, it means making any false document or false
electronic record with intent to cause damage or injury to
the public or to any person. Sec. 464 elaborates false
document and making it dishonestly, fraudulently, etc.
An example from the statute book can enlighten as to
how strict is the law on this point.
• A, without Z’s authority, affixes Z’s seal to a
document purporting to be a conveyance of an
estate from Z to A, with the intention of selling
the estate to B and thereby of obtaining from B
the purchase-money. A has committed forgery.
• A picks up a cheque on a banker signed by B,
payable to bearer, but without any sum having
been inserted in the cheque. A fraudulently fills
up the cheque by inserting the sum of ten
thousand rupees. A commits forgery.
• U/s. 465, forgery is an offence punishable with 2 years
imprisonment.
• More serious offence is u/s. 466 and 467 where 7 years
imprisonment for forgery of a court record or public
register is prescribed.
• Sec. 467 deals with forgery of valuable security, will,
transfer of valuable property, receive money, etc. and
such punishment may extend to 10 years.
• U/s. 468, committing forgery for the purpose of
cheating is punishable with 7 years. Forgery to harm
reputation is punishable with 3 years.
• U/s. 471, fraudulently or dishonestly using as genuine
any document which one has reason to believe that it is
false attracts the same punishment.
• S. 472 deals with counterfeiting any seal or instrument
for committing forgery and punishment is 7 years.
• U/s. 489A, counterfeiting currency note is punishable
with 10 years if done knowingly. Same punishment for
selling, buying or receiving such currency notes or
having reason to believe that it is forged.
• S. 489C stipulates punishment of 7 years for being in
possession of any counterfeit currency note knowing
or with reason to believe that it is counterfeit.
• S. 477A is in the same group of offences and deals with
falsification of accounts with intent to defraud and
punishment is 7 years.
• Sec. 192 deals with fabricating false
evidence for making entry in any book or
record or electronic record or making such
document which may be used as
evidence before Court or arbitrator and
if court may be misled by such evidence
and form an opinion then it is offence of
fabricating false evidence for which
punishment is 7 years.
10.STAMP ACT (FAQs)
Q. Why so important?
• Even if the document is very accurately drafted, if it is not duly
stamped, it is inadmissible in evidence.
Q. Why Central & State Act operate together?
• It is a concurrent subject. Indian Stamp Act lays down law or stamp
duty on promissory notes, bill of exchange, Letter of Credit, foreign
bills, etc. In respect of most other document, the local Stamp Act
will apply.
Q. Various methods of stamping?
• Stamp papers/franking/electronic stamping, adhesive stamps for
special purposes such as notary, insurance, share transfer, etc.
If Act lays down that duty has to be paid in a specific manner,
then it has to be so paid
Q. What is adjudication?
• Power is vested in the stamp authorities to adjudicate the
proper value for stamp duty ignoring what the parties have
shown. For immovable properties, the “jantri” is applicable.
Q. What is impounding?
• If any public officer (other than a police officer) in discharge
of his duties and who has authority to receive evidence forms
an opinion that document is not duly stamped, he can
impound it and send it to stamp authority for adjudication.
Q. Can an understamped document still be valid?
• By payment of penalty up to 10 times the deficit stamp duty
and the proper stamp duty, it can be except for promissory
note, etc.
11.WILL
• It is governed by Indian Succession Act and the capacity
to dispose of is governed of by respective personal laws.
• In case of extreme exigency like person from airforce,
etc. at war, privileged will, i.e. oral will also permissible.
• Will does not require stamp paper nor registration is
required.
• Will can be modified by a codicil or even cancelled.
• Two attesting witnesses are required.
• Will has to be proved before a Court and this is called
probate. If there is no will then Letter of Succession has
to be obtained.
• Will can be interpreted by applying Armchair Rule.
• Through will, tax planning can be made for future.
• Nomination merely entitles a person to receive the
property but does not extinguish the right of other heirs.
• In respect of self-acquired property, will can be made
even in favor of persons other than heirs.
12. SOME IMPORTANT
DOCUMENTS & STAMP DUTY:
Affidavit
Rs. 20/-
Development/Promoters Agreement for land
1% of market value of the
property
Equitable mortgage/hypothecation (Article 6)
- for loan up to Rs. 10 crores
0.25% subject to maximum of
1,00,000
- for above Rs. 10 crores
(separately for subsequent extension)
Subject to maximum of
3,00,000
Articles of Association (Article 12)
subject to maximum of Rs. 5,00,000/(A S. 25 company is exempted)
0.5%
Memorandum of Association of a company (Article
35)
- If accompanies by Articles
Rs. 100/- Otherwise
Same as Articles
Arbitrators Award
Rs. 100/-
Cancellation of any document
Rs. 100/-
Conveyance/Sale deed (Article 20)
Depends on value of
property
Gift (Article 28)
Same duty as sale deed for
immovable property
Lease
Depends on lease period
Leave & licence
0.5% on the premium
Letter of Allotment (Article 31)
1 rupee for every one
thousand rupees or part
thereof
Letter of Guarantee
Rs. 100/-
Mortgage deed
- With possession
- When possession not given
Same duty as conveyance
Same as per Article 6
Partnership deed
For alteration/dissolution of partnership
Power of attorney
1% of the capital
subject to
maximum of Rs.
10000/Rs. 100/Rs. 100/- except
when power to
sell the property
is given to
attorney. In such
case, stamp duty
as per sale deed
THANKING YOU
You can contribute your suggestions/views on
dr_thakar@indiatimes.com