2024 (7) TMI 537 - SC - Indian Laws

Inherent power to recall a process - admission of an instrument in evidence and its marking as an exhibit by a court (despite the instrument being chargeable to duty but is insufficiently stamped) - section 151 of the Code of Civil Procedure - whether the Trial Court did judicially determine the question of admissibility? HELD THAT - The Trial Court not having decided whether the GPA was sufficiently stamped, section 35 of the 1957 Act cannot be called in aid by the respondent. For section 35 to come into operation, the instrument must have been admitted in evidence upon a judicial determination. The words judicial determination have to be read into section 35. Once there is such a determination, whether the determination is right or wrong cannot be examined except in the manner ordained by section 35. However, in a case of no judicial determination , section 35 is not attracted. In view of the reasoning of the Trial Court of admitted failure on its part to apply judicial mind coupled with the absence of the counsel for the appellant before it when the GPA was admitted in evidence and marked exhibit, a factor which weighed with the Trial Court, we have no hesitation to hold that for all purposes and intents the Trial Court passed the order dated 19th October, 2010 in exercise of its inherent power saved by section 151, CPC, to do justice as well as to prevent abuse of the process of court, to which inadvertently it became a party by not applying judicial mind as required in terms of sections 33 and 34 of the 1857 Act. We appreciate the approach of the Trial Court in its judicious exercise of inherent power. The legislature has reposed responsibility on the courts and trusted them to ensure that requisite stamp duty, along with penalty, is duly paid if an unstamped or insufficiently stamped instrument is placed before it for admission in support of the case of a party. It is incumbent upon the courts to uphold the sanctity of the legal framework governing stamp duty, as the same are crucial for the authenticity and enforceability of instruments. Allowing an instrument with insufficient stamp duty to pass unchallenged, merely due to technicalities, would undermine the legislative intent and the fiscal interests of the state - the court must vigilantly prevent any circumvention of these legal obligations, ensuring due compliance and strict adherence for upholding the rule of law. Finding no error in the order of the Trial Court dated 19th October, 2010, the impugned order of the High Court dated 26th September, 2011 is set aside, meaning thereby that the order of the Trial Court is restored - appeal allowed.

Summary

Issues Involved:
1. Whether a court can recall an instrument admitted in evidence and marked as an exhibit, despite being insufficiently stamped, using inherent powers under section 151 of the Code of Civil Procedure (CPC).
2. The legality of the High Court's order setting aside the Trial Court's decision to impound an insufficiently stamped General Power of Attorney (GPA).

Detailed Analysis:

1. Recall of Insufficiently Stamped Instrument:
The primary issue in this civil appeal is whether a court can recall an instrument admitted in evidence and marked as an exhibit, despite being insufficiently stamped, using inherent powers under section 151 of the CPC. The court examined sections 33, 34, 35, and 58 of the Karnataka Stamp Act, 1957, which govern the admissibility and impounding of instruments that are chargeable with duty but are insufficiently stamped.

The court emphasized that sections 33 and 34 impose a duty on the presiding officer to impound an insufficiently stamped instrument and prevent its admission in evidence unless it is duly stamped. The court also highlighted that judicial determination is necessary for admitting such instruments in evidence. If a document is admitted without applying judicial mind, section 35, which bars questioning the admissibility of an instrument once admitted, does not apply.

2. Legality of the High Court's Order:
The appellant challenged the High Court's order, which set aside the Trial Court's decision to impound the insufficiently stamped GPA. The High Court had allowed the respondent's writ petition, stating that once a document is admitted in evidence, its admissibility cannot be questioned on the ground of insufficient stamping, as per section 35 of the Karnataka Stamp Act, 1957.

The Supreme Court disagreed with the High Court's view, stating that the Trial Court did not apply its judicial mind when admitting the GPA in evidence. The absence of judicial determination meant that section 35 was not applicable. The Supreme Court held that the Trial Court had the authority to revisit and recall the process of admission and marking of the instrument using its inherent powers under section 151 of the CPC to do justice and prevent abuse of the court's process.

The court referenced several precedents, including Javer Chand v. Pukhraj Surana and Ram Rattan v. Bajrang Lal, which underscored the necessity of judicial determination when admitting insufficiently stamped documents. The court concluded that the Trial Court's order to impound the GPA was justified and restored the Trial Court's decision.

Conclusion:
The Supreme Court allowed the appeal, set aside the High Court's order, and restored the Trial Court's decision to impound the insufficiently stamped GPA. The court emphasized the importance of judicial determination in admitting documents and the duty of the courts to ensure compliance with stamp duty laws to uphold the legal framework and fiscal interests of the state.