A few days ago, I had written an article on the legal validity of the oral agreement in the movie ‘Lagaan’. It was an interesting experience to analyse the events of that movie from a legal perspective. On the suggestion of a good friend, I decided to analyse the events of another popular movie from a legal perspective. Unfortunately, it has so happened that due to the events shown in movies pertaining to the functioning of the courts in India, a wrong impression has been created in the minds of the common man. Such depiction has also misled many people into making incorrect assumptions about Indian law.
I do not plan to or hope to rectify this situation, but I only wish to bring forth some facts that would perhaps make the understanding of Indian law a bit easier. The movie that I have chosen for my next analysis is the movie ‘Baazigar’ (Gambler), which was released in the year 1993. This movie is a story of revenge, where the son of a wronged father tries to take revenge on the person who betrayed his father. In doing so, the protagonist of the movie, whose real name is Ajay Sharma also goes by the name Vicky Malhotra deceives the 2 daughters of the villain of the movie Madan Chopra. Here, the protagonist of the movie is what is now referred to as an anti-hero. Ajay Sharma a.k.a. Vicky Malhotra initially seduces and kills the elder sister and then tricks the younger sister into falling in love with him. This entire charade is so that Madan Chopra will confer such power and authority to Vicky Malhotra so that Vicky can finally take over Chopra’s business empire, which we find out much later in the movie. The manner in which, Vicky plans to take over Chopra’s business empire is unclear but it is shown that he ultimately takes over the entire business with the use of a Power of Attorney. After Vicky takes over the entire business, it is shown that Chopra in the past, had used a Power of Attorney to take over the same business from Vicky’s father by betraying his trust. This betrayal had brought Vicky’s entire family literally on the streets, left with no money or any place to stay. Now, the basic premise of this entire modus operandi is that all the actions taken by either Vicky or Chopra can be taken by using a Power of Attorney. This premise needs to be examined. For the purposes of this analysis, the laws applicable to the state of Maharashtra shall be considered.
A Power of Attorney is a document that confers upon a person, the authority to do certain things on behalf of someone, as if they had been done by that person himself or herself. The statutory provision regarding a Power of Attorney is given in the Powers of Attorney Act, 1882. The definition of a Power of Attorney is an inclusive definition. This means that the definition does not cover all forms and variations of a Power of Attorney. The definition states that “Powers-of-Attorney’ is any instrument empowering a specified person to act for and in the name of the person executing it.
There are basically 2 kinds of powers that can be given. The difference is in the scope of the powers that can be given. The scope can be general, or it can be specific/limited. A General Power of Attorney contains all the powers that can be possibly exercised by any individual, including selling or purchasing any movable or immovable property. The scope of a Limited Power of Attorney can be extremely varied. The scope can range from giving the authority to someone to carry out bank transactions or to represent the principal in any legal proceedings or to even sell and purchase any movable or immovable property on behalf of someone. What will change is the amount of Stamp Duty that will need to be paid for the different kinds of powers that are included in any Power of Attorney. For example, the Stamp Duty required to be paid for a Power of Attorney that allows or grants someone the authority to represent the principal in any legal proceedings will be ₹500. However, if the Power of Attorney allows the Constituted Attorney to sell or purchase immovable property on behalf of the principal, then the Stamp Duty that is to be paid will be equivalent to the Stamp Duty that is paid when an actual conveyance takes place. The exception to this is if the Constituted Attorney is either the father, mother, brother, sister, wife, husband, daughter, son, grandson, granddaughter or father, mother, brother or sister of the spouse. In this situation, the Stamp Duty shall be ₹500. And, for any Power of Attorney through which, the power to transfer immovable property is given, is required to be registered. Otherwise, registration of a Power of Attorney is not mandatory. These details regarding the amount of Stamp Duty payable are given in the Maharashtra Stamp Act.
In this movie, the first instance of betrayal is that of Madan Chopra betraying Vicky’s father Vishwanath Sharma. Essentially, Vishwanath Sharma gives Madan Chopra a Power of Attorney using which, Chopra transfers the ownership of the entire business to him. Further, it is shown that Chopra also takes a loan in Sharma’s name using the same Power of Attorney without his knowledge and therefore, Sharma’s house gets auctioned when Sharma misses paying the loan instalment and also does not respond to the court notice. In a particular scene, the lawyer is shown to inform Sharma that even the tea estate bought by Sharma in Assam is going to be sold to recover the loan. A lot of questions are raised about how this could have been even possible.
To begin our analysis, it is first of all, necessary to understand what kind of organisation or rather, what was the Constitution of Sharma’s company. Now, because I wanted to write this article, I watched the movie with as much attention as possible and I tried to see if there was any reference to the Constitution of Sharma’s company. In one scene, it is shown that Vishwanath Sharma tells Madan Chopra that he has made him a 5% Partner in the Company. In a scene immediately thereafter, someone tells Vishwanath Sharma that the Directors of the Company are waiting for him. Here, there is a contradiction. Chopra has been made a 5% Partner in a Company, but there cannot be a Partner in a Company. In common parlance, we seldom pay attention to and differentiate between a Partnership and a Company. However, businessmen and especially owners of such big companies are used to using the correct terminologies. If Chopra is made a 5% Partner, then Sharma’s organization was probably a Partnership firm and the Partnership Act, 1932 would have been applicable. However, if it was a Company, then Sharma would have been given shares of the company equivalent to 5% ownership of equity of that Company.
Now, we cannot assume whether the company was a Private Limited Company or a publicly listed Company. Since this movie is of the year 1993, the Companies Act, 1956 would have been applicable. Regardless of whether the company was a Private Limited Company or a Public Company, the statutory requirements would have had to be met with before giving someone 5% ownership. As stated above, someone tells Vishwanath Sharma that the Directors of the Company were waiting for him, so it would be safe to assume that it was actually a Company and not a Partnership Firm. Also, it is not known whether any Board Resolution was passed or not, granting Chopra 5% equity but let us assume that this was done and also that all statutory compliances were made.
What is however confusing, is that Sharma is shown to have gone to Assam to take care of a recently purchased tea plantation. Even if we consider that communication back in the year 1993 or even a few years before that was not as fast or as easy as it is today, but telephones did exist and it can be safely assumed that a person, as rich as Sharma definitely had access to telephones. It is therefore incomprehensible, how nothing got communicated to Sharma in Assam when this entire procedure of transferring the ownership of the company was happening. It has to be concluded that there were no employees loyal to Sharma, that nobody informed him of what was going on in his own company. This is surprising since Sharma is shown to be a benevolent individual. Having said that, in order to start a Company, there needs to be a minimum of 2 directors. So, even when Chopra was given 5% equity in the company, there should have been another director holding some equity. From all this, it can only be assumed that Sharma had at least 51% equity, whose control was handed over to Chopra.
The most confusing aspect of all this is that, it cannot be ascertained whether there was any need to give anybody a Power of Attorney. A Company is a juridical entity and for different purposes, the Company Board authorises different individuals to act as Authorised Signatories for the Company. It is obvious that Sharma did not want to lose any control of his company; so giving somebody that power does not any sense. Either Chopra could have been made an Authorised Signatory or he could have been given a Specific/Limited Power of Attorney.
As for the loan that Chopra takes in the name of Sharma, that too is surprising, because it would not make sense for anybody to give a Power of Attorney to someone that would allow the Constituted Attorney to act for the principal in his personal as well as professional capacity. Sharma specifically gives Chopra the Power of Attorney while Sharma goes to Assam and so that Chopra should not face any difficulty in Sharma’s absence in running the Company’s operations. But that was only for any professional activity and not any personal activity. After returning from Assam, Sharma drives up to the company premises in a taxi. Here, therefore, we have to assume that Sharma has already been deprived of all his assets. But it is shown only in the next scene that he becomes aware of the attachment of all his properties, including his bank accounts. And because Sharma and his family are shown to be deprived of all money, we have to assume that the loan of ₹5 crores was more than Sharma’s entire net worth.
Realistically, Sharma could have very well challenged the order of attachment of his properties. But that was not done.
The sequence of events up to here demonstrate a ton of improbabilities but that is how the law works in Bollywood.
Later, Sharma’s son Ajay takes revenge on Chopra and uses the same trick that Chopra used on his father; that of using a Power of Attorney. However, this time, Ajay does not incur any loan on behalf of Chopra. It is difficult to understand why he does not incur any loan when his sole motive was to destroy Chopra’s life. This merciful act could have very well led to Ajay’s death, as Chopra hires goons to beat up and probably kill Ajay. If Ajay had incurred a loan on behalf of Chopra, Chopra would not have had the means to hire any goons and would have been brought literally onto the street, penniless. This is what should have happened because the same thing had happened to Vishwanath Sharma. It is possible, however, that a man of Chopra’s disposition had probably stashed away some money in foreign bank accounts to evade taxes. That money may have been used to hire those goons.
I have immense respect for the one who thought of using a Power of Attorney as the central premise to the story of this movie. However, the scope and the use of a Power of Attorney has been miscommunicated and other legal provisions have been ignored. Of course, unfortunately, we have encountered in our lives several instances of corruption and the lackadaisical attitude of the bureaucracy. However, having said that, I do not think that while transferring ownership of the company back from Chopra to Sharma, the concerned officers and bureaucrats who have ignored one supremely important fact – the Power of Attorney made by Madan Chopra was made in the name of Vicky Malhotra, but the character’s real name was Ajay Sharma. That was a big gamble!