2024 (9) TMI 106 - SC - Indian Laws

Scope of Sections 33, 34, 37, and 39 of the Karnataka Stamp Act, 1957 - interpretation of statute - definition of conveyance - agreement of sale - perpetual injunction restraining the respondent from interfering with the appellant s peaceful possession and enjoyment of the plaint schedule property. Whether the agreement of sale dated 29.06.1999, with a recital on delivery of possession to the appellant, conforms to the definition of conveyance under Section 2(d) read with Article 20(1) of the Schedule of the Act or not? - HELD THAT - The High Court has correctly distinguished the jurisdiction vested in every person or a person in the public office on the one hand and on the other hand the District Registrar in determining the penalty payable on insufficiently stamped instrument. The ratio in all fours is applicable to the circumstances of the case - the appellant, with a view to produce in evidence the agreement of sale in the suit, must pay the deficit stamp duty and penalty. Whether, in the facts and circumstances of the case, the order dated 23.01.2019 of trial court, as confirmed by the impugned orders dated 23.08.2019 and 14.09.2021, are legal and valid or call for interference by this Court under Article 136 of the Constitution of India? - HELD THAT - The scheme does not prohibit a party to a document to first invoke directly the jurisdiction of the District Registrar and present the instrument before Court/Every Person after complying with the requirement of duty and penalty. In such an event, the available objection under Sections 33 or 34 of the Act is erased beforehand. The quantum of penalty is primarily between the authority/court and the opposing party has little role to discharge. Before the stage of admission of the instrument in evidence, the respondent raised an objection on the deficit stamp duty. Therefore, it was the respondent who required the suit agreement to be impounded and then sent to the District Registrar to be dealt with under Section 39 of the Act. In this case, the respondent desired the impounding of the suit agreement and collect the deficit stamp duty and penalty. The trial court is yet to exercise its jurisdiction under Section 34 of the Act - The imposition of penalty of ten times at this juncture in the facts and circumstances of this case is illegal. The instrument is sent to the District Registrar, thereafter the District Registrar in exercise of his jurisdiction under Section 39 of the Act, decides the quantum of stamp duty and penalty payable on the instrument. The appellant is denied this option by the impugned orders. It is trite law that the appellant must pay what is due, but as is decided by the District Registrar and not the Court under Section 34 of the Act. The direction to pay ten times the penalty of the deficit stamp duty merits interference and accordingly is set aside. The trial court is directed to send the agreement of sale dated 29.06.1999 to the District Registrar to determine the deficit stamp duty and penalty payable - Appeal allowed in part.

Summary

Issues Involved:
1. Whether the agreement of sale dated 29.06.1999 conforms to the definition of conveyance under Section 2(d) read with Article 20(1) of the Schedule of the Karnataka Stamp Act, 1957.
2. Whether the trial court's order dated 23.01.2019, as confirmed by the High Court's orders dated 23.08.2019 and 14.09.2021, is legal and valid or calls for interference under Article 136 of the Constitution of India.

Issue-Wise Detailed Analysis:

I. Whether the agreement of sale dated 29.06.1999 conforms to the definition of conveyance under Section 2(d) read with Article 20(1) of the Schedule of the Act:

The agreement of sale dated 29.06.1999 included a recital on the delivery of possession to the appellant, which aligns with the definition of conveyance under Section 2(d) read with Article 20(1) of the Schedule of the Act. The appellant sought an injunction based on this delivery of possession. The court referred to relevant judgments, including Gangappa's case, which clarified that an insufficiently stamped document produced before a court must comply with the ad valorem stamp duty requirements. The High Court distinguished the jurisdiction vested in different authorities under Sections 34 and 39 of the Act, confirming that the appellant must pay the deficit stamp duty and penalty to use the agreement as evidence. The court upheld the High Court's findings, confirming that the agreement of sale must be treated as a conveyance requiring ad valorem stamp duty.

II. Whether the trial court's order dated 23.01.2019, as confirmed by the High Court's orders dated 23.08.2019 and 14.09.2021, is legal and valid or calls for interference under Article 136 of the Constitution of India:

The trial court had directed the appellant to pay the deficit stamp duty of Rs. 71,200/- and ten times penalty, totaling Rs. 7,83,200/-. The High Court dismissed the appellant's writ petition and review petition, granting six months for payment. The appellant argued that the trial court should have sent the impounded instrument to the District Registrar for determining the stamp duty and penalty under Section 39 of the Act, rather than deciding it under Section 34. The court noted that the object of the Act is to obtain revenue and bind parties to their obligations, not to exclude evidence on technical grounds.

The court referred to several precedents, including the seven-judge bench judgment in Re: Interplay Between Arbitration Agreements under Arbitration and Conciliation Act, 1996 and Stamp Act, 1899, which emphasized that improperly stamping an instrument is a curable defect. The court also cited Hindustan Steel Limited v. Dilip Construction Company, which stated that the Stamp Act is a fiscal measure intended to raise revenue, not to arm litigants with technicalities. The court highlighted the distinction between the discretionary jurisdiction of the District Registrar under Section 39 and the mandatory provisions under Section 34.

The court concluded that the trial court had not yet exercised its jurisdiction under Section 34, and the instrument should have been sent to the District Registrar for determining the penalty. The imposition of ten times the penalty by the trial court was deemed illegal, and the court directed the trial court to send the agreement to the District Registrar for determination of the deficit stamp duty and penalty. The appeals were allowed in part, setting aside the direction to pay ten times the penalty and instructing the trial court to comply with the proper procedure.

Conclusion:

The court confirmed the necessity of treating the agreement of sale as a conveyance requiring ad valorem stamp duty and clarified the procedural steps for determining and collecting the deficit stamp duty and penalty. The trial court's imposition of ten times the penalty was set aside, and the matter was remanded to the District Registrar for proper determination. The appeals were allowed in part, ensuring compliance with the Karnataka Stamp Act, 1957.