Case Note & Summary
The petitioner, Lucy Ayline Jacinto, filed a writ petition under Article 226 of the Constitution challenging an order of the Debts Recovery Appellate Tribunal dated 1 April 2010 and an order of the Debts Recovery Tribunal in Original Application 3158 of 2000. The dispute arose from a bank fraud involving the first respondent, Union Bank of India, and a proprietary concern M/s R.D. Swamy. In 1999-2000, an inspection revealed that M.B. Tawadia, a Deputy General Manager of the Bank, had discounted bills with discrepant documents, resulting in an overdue of Rs. 25 crores. On 15 February 2000, Vilas Thale and Mohd Shaikh executed a substituted Power of Attorney in favour of Rajesh Baheti, one of the guarantors, purporting to appoint him as constituted attorney for the petitioner. The Power of Attorney recited that on 22 January 1992, the petitioner had executed an irrevocable Power of Attorney in favour of Thale and Shaikh. The substituted Power of Attorney was notarised on 16 February 2000, but the Notary's endorsement did not bear a notarial registration number. The legal issues considered were whether the substituted Power of Attorney was valid and whether the Debts Recovery Tribunal and Appellate Tribunal erred in relying on it without proper proof. The petitioner argued that the substituted Power of Attorney was invalid due to lack of notarial registration and failure to prove the original Power of Attorney. The Bank contended that the documents were valid. The court analyzed the provisions of the Notaries Act, 1952, and held that notarial registration is mandatory. The court found that the original Power of Attorney dated 22 January 1992 was not produced, and the substituted Power of Attorney lacked notarial registration. Therefore, the court held that the Debts Recovery Tribunal and Appellate Tribunal erred in relying on the substituted Power of Attorney. The court allowed the writ petition, set aside the impugned orders, and remanded the matter to the Debts Recovery Tribunal for fresh consideration.
Headnote
A) Power of Attorney - Validity of Substituted Power of Attorney - Notarial Registration - The substituted Power of Attorney executed by Vilas Thale and Mohd Shaikh in favour of Rajesh Baheti was held invalid as the Notary's endorsement did not bear a notarial registration number, and the original Power of Attorney dated 22 January 1992 was not proved. The court held that the Debts Recovery Tribunal and Appellate Tribunal erred in relying on the substituted Power of Attorney without proper proof. (Paras 2-10) B) Debts Recovery - Recovery of Debts Due to Banks and Financial Institutions Act, 1993 - Section 19 - Original Application - The Debts Recovery Tribunal must examine the validity of documents, including powers of attorney, before passing orders for recovery. The court held that the Tribunal's failure to do so vitiated its order. (Paras 2-10) C) Evidence - Burden of Proof - Power of Attorney - The burden of proving the validity of a power of attorney lies on the party relying on it. In this case, the Bank failed to discharge that burden as the original power of attorney was not produced and the substituted power of attorney lacked notarial registration. (Paras 2-10)
Issue of Consideration
Whether the substituted Power of Attorney dated 15 February 2000 was valid and whether the Debts Recovery Tribunal and Appellate Tribunal erred in relying on it without proper proof.
Final Decision
The court allowed the writ petition, set aside the impugned orders of the Debts Recovery Appellate Tribunal dated 1 April 2010 and the Debts Recovery Tribunal in Original Application 3158 of 2000, and remanded the matter to the Debts Recovery Tribunal for fresh consideration.
Law Points
- Substituted power of attorney requires valid original power of attorney
- Notarial registration mandatory under Section 3 of the Notaries Act
- 1952
- Burden of proof on party relying on power of attorney
- Debts Recovery Tribunal must examine validity of documents before passing orders
