WHY TO LEAVE SCOPE OF DOUBT AND OBJECTION ABOUT AUTHORITY OF SIGNATORY.

[C.A. DEV KUMAR KOTHARI]

SIGNATURE:

Signature should be made properly and it should not leave any reason to suspect that the signature is not proper or it is forged. Some people have tendency of signing documents in very casual manner. Author noticed different signature of one and the same person (an officer) made in different style in various notices and orders. Similarly in one case author noticed that the same person has signed with substantial differences in prescribed from at three places, and in accompanying documents - the reason was that signatory was having pain in his hand.  As the matter came to authors notice before filing of the document, author advised client to sign properly (if necessary by another signatory - director of company) and in uniform manner. Three signatures on one or two pages with substantial difference can definitely raise doubt and may lead to outright rejection of appeal.

CRUCIAS ASPECT OF SIGNATURE:

Requirement of signature of a proper person provide a preliminary check as to whether the person who is signing it is a competent person to sign and also to ensure that the signing person has taken note of its contents, understood, applied his mind and then signed to purport his authority for issuance or submission of the same to the concerned persons or authorities. Therefore, requirement as to signature as per law, organizational structure and common practices and mutual protocols need to be examined and complied with to avoid disputes.

To establish the accountability of the concerned person as well as the organization on whose behalf signature is made the signature is very important. In case of personal documents the signatory is personally liable. In case of organizational documents the organization for which the document is signed is basically responsible to the outsiders. Sometimes, the signatory may also be personally liable. However, for the obligations and liability and accountability within the organization, the person who signs documents may also be liable to the organization in case of carelessness, misfeasance, breach of trust etc.

In absence of signature a document may not generally be considered a document. Even if there is indication about likely signatory by way of mention of name or use of rubber stamp etc. the document without signature cannot be considered a document as   it cannot be considered as a mere technical defect. Without signature the document is incomplete and in eye of law may not be a document having a legal force for which it is supposed to be prepared. In any case if the concerned party to whom the unsigned document does not want to honor the same, it can easily deny

Specified persons who can sign documents as per law:

Legal documents like returns under various law, appeals, petitions, notices, share certificates, IOU, Promissory notes, etc. needs to be signed by a person who is specified for the purpose in the relevant enactment, if any applicable in a given case. A person other than the specified person can sign such documents only if the law permit signature by a duly authorized person, and the prescribed form and formalities are complied with. For example, law may require that the authority should be in specified form and should be filed along with the document. Under some enactments, the law require documents to be signed by individual himself, karta of HUF in case of HUF, Managing Director in case of company, or principal officer of company or other organization. Therefore, such requirements should be checked and documents should be signed by a person who can sign the same. In case for any reason , there is no specified person, or the specified person is not in a position then the document can be signed by other authorized person, with request to allow time, to sign or submit other copy of document duly signed by a person specified in law.

Specified person as per organizations rules:

In large organizations or statutory organizations  the  organization provides for certain rules to be adhered to by signatories, who can act within permitted limits. Therefore, the concerned person must satisfy the rule of authority and procedure for signature etc. however, an outsider may hold the organization responsible, if he proves a case of prima-facie or apparent authority of signatory and also his ignorance about lack or defect  of authority of concerned person and any mala fide is not involved. However, care should be taken in this regard while dealing for transactions involving larger value and long period.  

Organizational Rules and legal requirement:

A rule framed by organization cannot relax legal requirement. For example, a CEO of a large corporation may be very powerful person. However, he will not be eligible to sign certain documents, which are required to be signed by the managing director or a director as per legal provisions. For example a return of income or appeal under the income-tax Act, in case of company  is required to be signed by the Managing Director. In case there is no Managing Director, then any other director can sign the same. In such a situation, suppose an appeal against order passed by ITO, TDS is to be signed at local level of a factory or branch, then the appeal should be signed by MD and not the manager of factory or branch. Section 140 of the I.T. Act.

Check who can sign the relevant document:

The legal position should be checked to ascertain who are authorized to sign the document. For example under the Income Tax Act  in case of a company  Managing Director of company is required to sign the return of income, appeal etc. In absence of a managing director any other director can sign the return. Therefore care should be taken in signature of return by the MD. If for some reason the MD is not in a position to sign the return, evidence about the same must be kept ready and a suitable note can be given in the covering letter or computation in this regard.

The requirement about signature can be found in the relevant enactment, relevant rules and prescribed forms. 

Signature by a person other than specified one may not be curable defect:

Signature should be by a competent person who is specified or qualified to sign particular document. In case his authority document is required to be attached with the return, petition, appeal etc. it should be filed.

Signature by a person other than specified person may lead to a fatal mistake which may not be curable. For example in section 139(9) of the Income Tax act, 1961 we do not find defects as to absence of signature or proper signature as a curable defect.  Thus an improper signature may lead to invalid document.

Judgment of the Supreme Court in case of a co-operative society:

In the matter of Dhuriapar Kisan Sahakari Chini Mills Ltd. v. CCE, Allahabad  [2007] 8 STJ 99 (SC) Tribunal had dismissed appeal, filed under Central Excise law   on the ground that it was not  filed by a competent person. The Tribunal however, did not provide any opportunity to the appellant to satisfy that the appeal was filed by an authorized person. Therefore, on appeal the Supreme Court remitted the matter to the Tribunal for a fresh decision after allowing the appellant an opportunity to establish that the appeal was filed by a competent person. Portions relevant for the purpose of this write up  from the judgment of the Supreme Court is abstracted below:

"  …  the appeal has been dismissed observing that it has not been filed by a competent person.  It does not appear that any opportunity was granted to the appellant to satisfy the Tribunal that the same had been filed by an authorized person.  Under these circumstances, we set aside the impugned judgment, remit the appeal to customs, Excise & Service Tax Appellate Tribunal, New Delhi, for fresh consideration after hearing Counsel for the parties.  It would be for the appellant to satisfy the Tribunal that the appeal has been filed by a duly authorized person.  We express no view one way or other.  The decision on this issue would be rendered by the Tribunal without influenced by the order dated 12th July, 2005.  It would be open to the Tribunal to grant opportunity to the appellant to file appropriate resolution / department**, if it comes to the conclusion that the appeal as filed has not been presented by the duly authorised person.

The appeal is allowed accordingly.

(** seems a printing mistake it may be declaration or departmental instruction)

Controversy and contingency continue in above case:

The Supreme Court remitted the appeal to the Tribunal mainly because the Tribunal had not provided opportunity to the appellant to establish its case that a competent person filed appeal. The court had not expressed any opinion and left the matter to the Tribunal. The appellant has to establish that the appeal was filed by a competent person and that may be established by proper resolution / declaration.

Reading between lines it also appears that Tribunal can grant opportunity to file appropriate resolution/ declaration if it comes to conclusion that a competent person has not filed appeal. This means that a ratification of appeal is intended.

The facts are not clear as to who signed the appeal and how he was considered as not a competent person by the Tribunal. It appears that the Supreme Court has taken a liberal view by remitting the matter to the Tribunal. It also appears that had the Tribunal provided an opportunity to the appellant and then came to conclusion that appeal is not filed by a competent person, perhaps the Supreme Court might have confirmed the order of the Tribunal.  This shows importance of proper signature of documents.

Recent case before CESTAT:

SAYAJI HOTELS LTD. Versus CCE, INDORE [2009 -TMI - 34779 - CESTAT, NEW DELHI] decided on  23 June 2009

In this case also question as to verification and Signature on Appeal documents arose.The Revenue/ respondent contended that the appeal memorandum and the stay application have not been signed by a person eligible or authorized to sign such documents.  Shri Santosh Khandelwal, who signed the documents is the  Dy. General Manager (Commercial).

According to Rule 8 of the CESTAT (Procedure) Rules, 1982, "every memorandum of appeal/application/cross objection shall be signed and verified by the appellant/ applicant/ respondent or the Principal officer duly authorized to sign memorandum of appeal/application/ cross objection.

On consideration of preliminary objection the Tribunal held that  there is no provision in the Act or Rules  regarding productions of authorization before the concerned officer of the Tribunal's Registry. The process of verification in the Registry does not require involvement of the other side.

Analysis of CESTAT order and learning from the same:

For learning a lesson it is desirable to analyze the judgment of the CESTAT. For that purpose salient aspects are discussed in a columnar manner:

Observation of Tribunal	Remarks and learning
Heard both sides extensively on the preliminary objection.	This shows gravity and importance of the matter.
DR submits that no evidence has been produced or placed on record to show that the said Khandelwal is the Principal Officer authorized to sign the appeal memorandum and the stay applications.	It must be kept in mind that there are always chances of objections by opposite party so as to win the case on technical issue. This objection took place because the signatory had no prima facie or apparent position of a principal officer or authorized person.
DR relied on  Philips India Ltd. v. Collector of Central Excise, Mumbai, 2003 -TMI - 51831 - (CEGAT, WEST ZONAL BENCH, MUMBAI) in which, taking into account discrepancies like Vakalatanam not bearing a date, verification of the stay application not bearing a date, and the other defects like back-dated authorization appeal and stay petition were held not maintainable.	This shows that in case of defect, it becomes very contingent on view which an appellate authority may take. Some judges give very serious thought on such issues and consider carelessness of party as his indulgence in un-necessary litigation.
DR also relied on  Chandra Tobacco Ltd. v. CCE, New Delhi  2004 -TMI - 53543 - (CESTAT, SOUTH ZONAL BENCH, CHENNAI) in which taking note of the Board's resolution authorizing one Shri T.R. Thyagarajan Mudaliar as Additional Director only till the date of next Annual General Meeting held that he had no locus standi to file an application for restoration of appeal decided.	This shows that some times opposite party even DR may be very careful to find a possible defect even in a remote manner and from a remote source.
DR fairly submitted that such omissions are rectifiable mistakes as has held by the Larger Bench of the Tribunal in the case of Wood Crafts Products Ltd. v. Collector of Central Excise reported in 1989 (41) E.L.T. 682 (Tribunal).	Who knows, what will be the ultimate judgment of the supreme court? We cannot even be sure of two judges judgment of the Supreme Court.
A/R of taxpayer  submits that the appeal has been filed before the concerned officer of the Registry and after due processing, the appeal has been accepted and listed before the Bench for hearing the stay petition.  Shri Khandelwal is an authorized signatory of the company. He, in that capacity has signed application for registration with the Service Tax Authorities ST-3 Returns, reply to show cause notice. He also drew our attention that the said Shri Khandelwal appeared before the Commissioner during the course of adjudication proceedings. He submits that there is no basis for the doubts entertained by the Department that Shri Khandelwal cannot be considered as Principal Officer in terms of Rule 8 of CESTAT (Procedure) Rule, 1982.	What are pointed out by the A/R are only indicative of existence of some sort of authorization in favor of the signatory. However, whether it meet the specific requirement can be doubted. Furthermore whether authorization is still continuing or not is also required to be established. One should not mind if the authority or court want to confirm that the signatory was authorized on the day of signing.
A/R relied on the following decisions of the Tribunal :- Collector of Central Excise v. Berger Paints reported in 1990 -TMI - 42659 - (SUPREME COURT OF INDIA). Everett (India) Pvt. Ltd. v. CCE, Calcutta - 1988 (33) E.L.T. 577 (Tribunal).  ICI (India) Ltd. v. CCE, Mumbai-VI - 1999 (114) E.L.T. 749 (Tribunal).	All these shows that contingencies should be avoided by making appeal documents perfect and filing well before limitation period. There should not be apparent mistake or lacunae which can prompt objections by opposite party or by the appellate authority  or court. It is very well known that many officers / judges are very particular of such aspects and many have a lenient tendency to promote justice. Who knows what nature or mood the officer or judge will have in ultimate proceeding?
Tribunal carefully considered submissions of both sides and various Rules including Rule 6, 8,9 and 16.	The matter became contingent, only because of lack of document as to authority of signatory.
Tribunal considered that reading of these rules clearly indicate that the appeal before the Tribunal has to be filed in the office of the Tribunal (i.e. before the concerned officer in the Registry i.e. Registrar or Asstt. Registrar or other authorized officers). The responsibility for verification as to whether the competent person has signed the appeal memorandum or the application etc. is that of the Registry. The list of documents which are required to be enclosed with the appeal/application does not include the authorization as principal officer.	It is true that the Rules does not require filing of document as to authority. However, when the law require document to be signed by a specified person or an authorized person. Then naturally when the person is not an apparently authorized person, the registry office , opposite party or the court can raise an objection and want an evidence about proper authority on the day when the document was signed/ presented.
Tribunal noted that the appeal has been filed in the Registry and no defects have been noticed and the application for stay has been listed for hearing before the Bench. At this stage, the preliminary objection has been raised by the Department. Tribunal observed that Department has not categorically challenged  that Shri Khandelwal is not the Principal Officer allegation is that  no authorization mentioning Shri Khandelwal as Principal officer has been filed alongwith the appeal memorandum. As per Rule 8(3),  appeal, memorandum are . requires to be signed by the Principal Officer authorized by the Company. However, there is no requirement that the authorization from the Board of Directors should be submitted along with the appeal memorandum. If there is any evidence that somebody has impersonated as Principal officer, or an unauthorized person has filed the appeal wrongly, certainly the consequences follow. If Registry has done their job and listed the stay petitions, preliminary objection merely based on doubts entertained by the Department without indicating the basis for such doubt is not acceptable. We find in this particular case from the available record that the said Shri Khandelwal was one, who has filed application on behalf of the Company for registration as a service tax assessee before the Excise Authorities; he has been regularly filing Service Tax Returns; he has appeared before the Commissioner during the personal hearing in the adjudication proceedings; he has signed the appeal memorandum and he has also signed the applications for stay.	The Tribunal has considered circumstantial evidences and held that there is no reason to doubt authority. Furthermore there is no categorical challenge of the authority of the signatory. Such preliminary objection can be raised by opposite party or the Tribunal/ court itself. It appears that the Tribunal did not consider the Rule 18. Sub-rule (1) concerns with issue of notice of hearing. And sub Rule  (2) states that the issue of notice referred to in sub-rule (1) shall not by itself be deemed to mean that the appeal or application has been admitted. Similar is Rule 19(2) of the ITAT Rule, 1963 and we find that many benches of Tribunal are dismissing appeals on the basis of this Rule when appellant is not present.
Tribunal held that it is  are not able to find any basis whatsoever for the doubt entertained by the Department and, therefore, we find no basis for the preliminary objection.	Per author: It would have been in interest of taxpayer to file documentary evidence of authority to avoid any controversy. When a document is available, why not to file the same.
The Hon'ble Supreme in the case of Berger Paints cited Supra has held that the Tribunal was in error in dismissing the appeal observing that there was no warrant for such a strained construction.  (per author in that case authorization of the commissioner t file appeal was not filed)
The Registry is not prevented from causing necessary verification or that the Department cannot bring it to the notice of the Registry that there was any mis-representation on the part of any person signing as a Principal officer in the matter relating to the application/appeal etc.	Why to give a chance of objection? It is avoidable by simply filing relevant document.
Tribunal also considered that  (a) Tribunals were created for speedy disposal of the matter with its own machinery of Procedure.  (b) the Procedure, must be construed liberally and as far as possible, technical objections raised without any basis should not be allowed to defeat substantial justice.	It is well said that the purpose of Tribunal is to render speedy justice, but that does not mean that one should be careless in such a manner that opposite party has reason to raise objections.
Tribunal considered Hindustan Laminators Pvt. Ltd. v. Union of India reported in 2004 -TMI - 47501 - (HIGH COURT AT CALCUTTA) in which it was  observed by Division Bench  that "the statutory provisions of the Central Excise Act deal with the questions of revenue and, as such, detailed provisions have been created for appeal and then the remedy can be pursued up to High Court and also Supreme Court in order to shorten the period of litigation and for a quick decision. Thus, the dilatory and time consuming proceeding of a suit before a Civil Court has been impliedly barred."	This is true and must be applied in the interest of justice for all purposes. In fact, author feels that there is no shortage of courts or judges, but the procedures have to be streamlined to avoid dilatory practices. A title suit can be settled within about six to nine  months if properly presented, pursued, and co-operated by counsels without  adopting dilatory tactics . However, unfortunately even a small title suit may take more than ten years as experienced by author.
Tribunal held that we do not find any merit, whatsoever, in the preliminary objection raised by the Department. Accordingly, the same is rejected and on request of the SDR hearing on the stay petition was adjourned to 7th July, 2009.	Who knows departments counsel may suggest filing an appeal on admittance point itself. The best course would have been  that the appellant should have filed documentary evidence about authority of Mr. Khandelwal. However, it appears that  this was not done by the appellant.

Avoidable un-necessary litigation:

The litigant who is instituting a case must take care that his plaint/ petition or appeal , as the case may be will be contested by the opposite parties. Therefore, care should be taken to minimize chances of objections by opposite parties. There is no harm if the document is signed by a person who is apparently authorized to do so. If the signatory is not apparently authorized, then it is advisable to sign the authorization document like power or attorney, board resolution or authority letter etc. as may be a fit document in given case. If that is done the opposite parties will not have a point to raise objection. For example, in case of a company, if there is no Managing director, and  an appeal under I.T. Act  is signed by a director, then it can be mentioned by way of footnote that there is no Managing Director, so the appeal is filed by a director.  If it is so mentioned, then the opposite party or appellate authority may not enquire in this regard. In case it is not so mentioned then the opposite party or the appellate authority may raise a question as to why the appeal memo is not signed by the Managing Director. Suppose the A.O. knows that the assessee company has a Managing Director, he can also raise an objection in this regard and plead that the appeal is not maintainable at all. 

Practical notes:

Signature is essential on any document. While filing any application, return, appeal etc. one should be very careful that the concerned person who is competent to sign it has properly signed it and that he was at the place where he signed it. Also check that signature is in usual style- it is always better to have one style of signature. Besides signature, care should also be taken as to proper dating, and putting rubber stamp or seal wherever required. In case document of authorization is specifically required, it should be filed along with the document. In case the signatory is not a person who has apparent authority, (like assessee himself in case of individual or Managing Director of a company), then explanation with or without documentary evidence should be attached to avoid any reason of doubt, confusion, and resultant objection and litigation.