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TMI Blog2012 (12) TMI 1245X X X X Extracts X X X X X X X X Extracts X X X X ..... tive Societies Act, 1959. The Society is a tenant Co-partnership society. The Society took on long lease for 99 years, the land belonging to Chitrapur Mutt. After taking the lease, they built 96 flats. The lease-hold rights and the ownership of the building vests in the Society. Each tenant member is allotted apartment on the basis of holding distinctive shares and loan stock subscribed by the member. The members jointly hold the property through the Society during the lease period. The land together with the buildings will revert back to the lessor on expiry of the lease period. The Society has not executed any conveyance, instrument of transfer or lease deed in favour of its members. It has issued share certificates, loan stock certificates and possession certificates. Possession Certificates were issued to facilitate the members in the matter of filing IT return and other such benefits. 3. The revenue authorities i.e., the Chief Controlling Revenue Authority and the Commissioner of Stamps initiated proceedings against the petitioners under Sections 67 67-B of the Karnataka Stamp Act, 1957 ['Stamp Act' for short]. Show cause notice was issued alleging that possession cert ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontended that the transfer of shares and possession certificates in the case of all the petitioners are prior to amendment of Section 38 of the Karnataka Co-operative Societies Act. Therefore, the amendment is not applicable to the allotment of shares and consequential possession of flats was much earlier to the amendment. Therefore, they are not liable to pay stamp duty as well as registration charges. In substance, they contended the possession certificates do not partake the character of deed of conveyance and therefore no duty is payable. Challenging the said order writ petitions were filed. 5. A learned Single Judge heard all the writ petitions together and held that the possession certificates issued to the petitioners by the Society amounts to conveyance as defined under the Stamp Act and as such attracts the stamp duty as provided under Section 20(2) of the Stamp Act. However, he set aside the order to the extent of determining the market value, stamp duty and penalty under Section 39(1)(b) and remanded the matters back to the first respondent to consider the same to that extent and to re-determine the stamp duty and penalty payable. Aggrieved by the said orders, these appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n and requires to be set aside. 9. Sri Sreevatsa, learned Senior Counsel appearing for the appellants in the connected appeals adopted the aforesaid arguments. 10. Per contra, Sri Sajjan Poovaiah, learned Additional Advocate General appearing for the State contended that the definition of immovable property, used in Section 20(2) includes within its hold, the land and building and also the benefit arising out of the land. Admittedly, in the instant case, though the title of the land and the building vests with the Society after construction of the apartments, the benefit of enjoyment of apartments are transferred to the members through the possession certificates. In fact majority of the allottees in turn have executed a Deed of Conveyance, conveying such interest, which they got from the Society and all those documents are duly stamped and registered. But the very original documents are not subjected to duty and registration and therefore the learned Single Judge was justified in holding that the transaction in these cases fall within the definition of Conveyance . Insofar as the question of limitation is concerned, he submitted, it applies only to the proceedings to which Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enefit of members subject to approval by the Competent Authority. Clause 10 of the bye-laws deals with Rights of members. It reads as under: 10. Rights of Members All members shall be eligible to avail the benefits as per the objectives under bye-laws. Each member is eligible for allotment of a flat in the building constructed by the society. The society shall function as Tenant co-partnership society' in which the ownership of building and flats constructed on land acquired by the society on lease from Shri Chitrapur math will vest with the society and the members who are allotted the flats will have right of possession, transfer and letting out of the flats allotted to them as per the terms and conditions indicated in the possession certificate tenancy Agreement and Bye-laws of the society. 14. Clause 13 deals with the Procedure for Transfer of Shares and Interest. The relevant clauses are 13(a) (g), which read as under: (a) A member may apply to the Secretary in the prescribed forms for transfer of his shares and other interests stating therein the reason for such transfer, such application shall be submitted with the consent of the transferee along with share certificates, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bye-laws of the Society, confer a right to transfer, mortgage, lease, sub-let or hire his interest and or possession and his flat and or parking space allotted to him by the Society. He could also give possession of any flat or parking space to others. The only condition is that, before exercising the said right, he shall obtain a written permission of the Society with due procedure. 17. A combined reading of these documents makes it clear that the ownership of the land vests with Sri. Chitrapur math. The Society has constructed the apartments and the ownership of the apartment vests with the Society. But, by virtue of the aforesaid documents, the members have a right to be in possession of the apartment. They have a right to lease the apartment to a person of their choice. They can also transfer possession to another person. Therefore, the member is conferred the power to have the benefit of the land and the building uninterruptedly and exclusively to the extent mentioned in the Possession Certificate and he could alienate the said property. It is in this background, we have to find out, whether it amounts to conveyance. 18. The Karnataka Stamp Act, 1957 (for short hereinafter ref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e General Clauses Act and in addition, it includes buildings, rights to ways, air rights, development rights, whether transferable or not. The Legislature has the power to define a word given artistically. So the definition of a word in the definition Section may either be restricting of its ordinary meaning or it may be extensive of the same. When a word is defined to mean such and such, a definition is prima facie restricted and exhausted, where as when a word defined includes such and such, the definition is prima facie extensive. The word includes is often used in interpretation clause notwithstanding the meaning of the words or phrases occurring in the body of the statute. When it is so used, these words and phrases must be construed as comprehending not only such things as they signify according to their nature and purpose, but also those things, which the interpretation clause declares, they shall include. When a word is defined to bar a number of inclusive meanings, the sense in which the word is used in a particular provision must be ascertained from the context of the scheme of the Act, the language of the provision and the meaning intended to be served thereby. 23. Chapt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ected thereby; (c) An easement cannot be transferred apart from the dominant heritage; (d) All interest in property restricted in its enjoyment to the owner personally cannot be transferred by him; [(dd) A right to future maintenance, in whatsoever manner arising, secured or determined, cannot be transferred;] (e) A mere right to sue cannot be transferred; (f) A public office cannot be transferred, nor can the salary of a public officer, whether before or after it has become payable; Stipends allowed to military naval, air-force and civil pensioners of the Government and political pensions cannot be transferred; (h) No transfer can be made (1) in sofar as it is opposed to the nature of the interest affected thereby, or (2) for an unlawful object or consideration within the meaning of section 23 of the Indian Contract Act, 1872 (9 of 1872), or (3) to a person legally disqualified to be transferee; (i) Nothing in this section shall be deemed to authorize a tenant having an untransferable right of occupancy, the farmer of an estate in respect of which default has been made in paying revenue, or the lessee of an estate, under the management of a Court of Wards, to assign his interest a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , not that of absolute or limited use. He is the owner of a thing, who is entitled to all those uses of it, which are not specially excepted and cut-off by the law. No such right as that of absolute and unlimited use is known to the law. The limits that are imposed upon an owner's right of use are of two kinds. The first are the various limits imposed upon ownership by the general law. The second class of restrictions upon a owner's right of use consists of those which flow from the existence of encumbrances vested in other persons. Therefore, in the context of Stamp Act and chargeability of an instrument under the Act, what is to be seen is, whether it is an instrument under which a person claims a right and whether that right can be construed as an immovable property. Having regard to the definition of the immovable property in the general Clauses Act and after amendment under the Stamp Act and in particular the said definition being an inclusive one, it not only includes the land and buildings, but includes the benefits that arise out of land and things attached to the earth. Therefore, though a person may not be the owner of a land or a building and the said land or bui ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no room for doubt that it constitutes a conveyance as defined under Section 2(d) of the Stamp Act. This is an ingenious method adopted by the members to avoid payment of stamp duty and registration fees. 28. In the light of the aforesaid discussion, we are satisfied, that the learned Single Judge, on proper appreciation of the entire material on record, rightly held that the transaction in question falls within the definition of 'conveyance' and therefore the instrument evidencing such conveyance is chargeable to duty in terms of Section 3 of the Act read with the appropriate schedule under the Act. POINT NO. 2-LIMITATION 29. In the alternative, it was contended that assuming the transaction in question falls within the definition of 'conveyance' as defined under Section 2(d) of the Act and the authorities have the power to impound the said document, their right to recover stamp duty and penalty is clearly barred by the law of limitation as prescribed under Section 46A of the Act. 30. Per contra, it was contended on behalf of the Revenue that only, if the case falls under Section 46A of the Act, the limitation prescribed therein is attracted. It has no application t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as executed or first executed: Provided that- (a) nothing herein contained shall be deemed to require any Magistrate or Judge of a Criminal Court to examine or impound, if he does not think fit so to do, any instrument coming before him in the course of any proceedings other than a proceedings under Chapter XII or Chapter XXXVI of the Code of Criminal Procedure, 1898; (b) in the case of a Judge of the High Court, the duty of examining and impounding any instrument under this section may be delegated to such officer as the Court appoints in this behalf. (3) For the purposes of this section, in cases of doubt, the Government may determine- (a) what offices shall be deemed to be public offices; and (b) who shall be deemed to be persons-in-charge of public offices. 33. Section 34 of the Act declares that Instruments not duly stamped are inadmissible in evidence, etc.' It reads as under:- 34. Instruments not duly stamped inadmissible in evidence, etc.-No instrument chargeable with duty shall be admitted in evidence for any purpose by any person having by law or consent of parties authority to receive evidence, or shall be acted upon, registered or authenticated by any such person or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duty or portion. 35. This provision refers to the power of the Civil Court which admits the documents in evidence. The main Section is couched in the negative. Unless the instrument is duly stamped, it is inadmissible in evidence. As an exception, the proviso provides for payment of duty and penalty. In the matter of collection of duty and penalty no discretion is vested with the authority admitting such an instrument in evidence. The duty payable on the instrument is prescribed by statute. Therefore, there is no question of any discretion being vested with the authority impounding the document in the matter of collecting the duty. Once the duty payable is ascertained from the statute, no discretion is vested with the authority admitting the document in evidence, in the matter of imposition of duty and penalty. The word used in the said proviso is 'shall'. It is mandatory. However, Section 35 makes it clear, that where an instrument has been admitted in evidence without there being objection at the time of admitting the said instrument in evidence, then such admission shall not, except as provided in Section 58, be called in question at any stage of the same suit or procee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the duty and penalty cannot be sent to the Deputy Commissioner, the law provides for a authenticated copy of such an instrument being sent to the Deputy Commissioner. However, in all other cases, it is the original of the document impounded which is to be sent to the Deputy Commissioner. The object being, the said provision should not come in the way of speedy disposal of cases before the Court. 38. Section 38 of the Act deals with the power of the Deputy Commissioner to refund the penalty paid under Sub-section (1) of Section 37. When a copy of an instrument is sent to the Deputy Commissioner under Sub-section (1) of Section 37, he may, if he thinks fit, refund any portion of the penalty in excess of five rupees which has been paid in respect of such instrument. The reason being, when a person receiving the evidence impounds the document and collects the duty under Section 34 of the Act, which in most of the cases, is the Civil Court, the time of the Court should not be wasted in deciding, whether it is a fit case where penalty of ten times the duty is to be levied or a case is made out for imposition of lesser penalty. Therefore, the Legislature consciously has used the word, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mount of 10 times does not necessarily mean that the Courts have to impose the maximum penalty payable. Yet another learned Single Judge who could not agree with the aforesaid view, rightly referred the matter to the Division Bench. On such reference, the Division Bench of this Court in the case of J.S. Paramesh VS. Smt. Imdramma reported in 2008(5) Kar. L.J. 502, interpreting clause (a) of Section 34 of the Act, held as under: 3. The impugned order was passed by the Trial Court in exercise of the power under the proviso to Section 34 of the Karnataka Stamp Act, 1957. According to clause (a) of the said proviso, when the amount of the proper duty or deficient portion thereof exceeds five rupees, the penalty to he imposed is a sum equal to ten times such duty or portion. There is no discretion granted to the Court to impose a lesser penalty. Hence the observation contained in the order dated 8-12-2005 in Writ Petition No. 43172 of 2004 that the Courts have the power to impose as penalty a lesser amount than ten times the amount of proper duty or deficient portion is not correct. The observation is contrary to the clear provisions contained in the proviso to Section 34 of the Karnata ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is to be held that the Courts under Section 34 of the Act shall also have similar power like Deputy Commissioner under Section 39(1)(b) of the Act to levy penalty not more than 10 times if the Court thinks fit and proper. 19. At the cost of repetition, it is to be said that provisions of Sections 34 and 39 gives a direction to the Court and the Authority to levy penalty of Rs. 5/- apart from collecting deficit stamp duty or in the alternative can levy penalty not more than 10 times in appropriate cases. The Court or the Deputy Commissioner shall have to take into consideration the literacy of the parties, the nature of transaction and their financial capacity while levying the penalty. However, while levying alternative penalty not more than 10 times, normally the Court or the Deputy Commissioner shall levy penalty double the duty and only in the exceptional circumstances for special reasons, the harsher and extreme step to levy penalty not more than 10 times to be invoked. 42. Now the question is, which of the two decisions, noticed supra is to be followed, in particular, by the Sub-ordinate Courts in the State. Dealing with this aspect, the Supreme Court in the case of Mahadeolal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nic development of the law, besides providing assurance to the individual as to the consequence of transactions forming part of his daily affairs. And, therefore, the need for a clear and consistent enunciation of legal principle in the decisions of a court. 45. In the case of Sundrajas Kanyalal Bhatija VS. Collector, Thane reported in (1989) 3 SCC 396, a two-Judge Bench of the Apex Court observed as under: 22.... In our system of judicial review which is a part of our constitutional scheme, we hold it to be the duty of judges of superior courts and tribunals to make the law more predictable. The question of law directly arising in the case should not be dealt with apologetic approaches. The law must be made more effective as a guide to behaviour. It must be determined with reasons which carry convictions within the courts, profession and public. Otherwise, the lawyers would be in a predicament and would not know how to advise their clients. Sub-ordinate courts would find themselves in an embarrassing position to choose between the conflicting opinion. The general public would be in dilemma to obey or not to obey such law and it ultimately falls into disrepute. 46. In the case of V ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Benches and a judgment of three learned Judges was binding on Benches of two learned Judges-a proposition that learned counsel for the appellants did not dispute. The learned Attorney-General drew our attention to the judgment of a Constitution Bench in Sub-Committee of Judicial Accountability vs. Union of India where it has been said that 'no coordinate Bench of this Court can even comment upon, let alone sit in judgment over, the discretion exercised or judgment rendered in a cause or matter before another coordinate Bench' The learned Attorney-General submitted that the appropriate course for the Bench of two learned Judges to have adopted, if it felt so strongly that the judgment in Nityananda Kar was incorrect, was to make a reference to a Bench of three learned Judges. That Bench of three learned Judges, if it also took the same view of Nityananda Kar, could have referred the case to a Bench of five learned Judges. 6. In the present case the Bench of two learned Judges has, in terms, doubted the correctness of a decision of a Bench of three learned Judges. They have, therefore, referred the matter directly to a Bench of five Judges. In our view, judicial discipline a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Hon'ble Judges (Katju, J.) constituting the Bench criticized the orders passed by various Benches in the same case, the other Hon'ble Judge (Sinha, J.) expressed himself in the following words: 100. For the views been taken herein, I regret to express my inability to agree with Brother Katju, J. in regard to the criticisms of various orders passed in this case itself by other Benches. I am of the opinion that it is wholly inappropriate to do so. One Bench of this Court, it is trite, does not sit in appeal over the other Bench particularly when it is a coordinate Bench. It is equally inappropriate for us to express total disagreement in the same matter as also in similar matters with the directions and observations made by the larger Bench. Doctrine of judicial restraint, in my opinion, applies even in this realm. We should not forget other doctrines which are equally developed viz. Judicial Discipline and respect for the Brother Judges. 52. In the case of U.P. Gram Panchayat Adhikari Sangh VS. Data Ram Saroj reported in (2007) 2 SCC 138, the Apex Court noted that by ignoring the earlier decision of a coordinate Bench, a Division Bench of the High Court directed that part- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s has been done in this case. If a learned Single Judge holds the view that the Division Bench of the Court which has laid down the law, has not looked into the case from another angle and interprets the provision which is diametrically opposite to the view taken by the Division Bench, it results in utter confusion. It is well settled that, if a Bench of co-ordinate jurisdiction, disagrees with another Bench of co-ordinate jurisdiction, whether on the basis of different arguments or otherwise, on a question of law, it is appropriate that the matter be referred to a larger Bench for resolution of the issue, rather than to leave two conflicting judgments to operate, creating confusion. It is not proper to sacrifice certainty of law. Judicial decorum, no less than legal propriety forms the basis of judicial procedure and it must be respected at all cost. The law must be made more effective as a guide to behaviour. It must be determined with reasons which carry convictions within the Courts, profession and public. Otherwise, the Advocates would be in a predicament and would not know how to advise their clients. Subordinate Courts would find themselves in an embarrassing position to cho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he last six decades and increase in the frequency of conflicting judgments of the superior judiciary will do incalculable harm to the system inasmuch as the courts at the grass roots will not be able to decide as to which of the judgments lay down the correct law and which one should be followed. 91. We may add that in our constitutional set up every citizen is under a duty to abide by the Constitution and respect its ideals and institutions. Those who have been entrusted with the task of administering the system and operating various constituents of the State and who take oath to act in accordance with the Constitution and uphold the same, have to set an example by exhibiting total commitment to the Constitutional ideals. This principle is required to be observed with greater rigour by the members of judicial fraternity who have been bestowed with the power to adjudicate upon important constitutional and legal issues and protect and preserve rights of the individuals and society as a whole. Discipline is sine qua non for effective and efficient functioning of the judicial system. If the Courts command others to act in accordance with the provisions of the Constitution and rule of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dant circumstances and then in his discretion can reduce the penalty payable. The said order reducing the penalty should not be arbitrary and whimsical, as otherwise it may give scope for abuse of such power and the very intention of the legislature enacting the provision for penalty would be defeated. Therefore, merely because the Deputy Commissioner has been conferred under the statute the power to levy duty less than 10 times, such a power cannot be exercised mechanically without application of mind and without assigning reasons for such reduction. That would serve the object with which this penalty provision is introduced in the Act, which in fact is in the nature of terrorem, so that the duty payable on the instruments are properly paid and the attempt to avoid payment of requisite duty is discouraged. Section 67-A of the Act provides that when the Deputy Commissioner adjudicates the duty payable on such instrument, there is an obligation cast on him to give a reasonable opportunity to be heard, to such person who is liable to pay duty. RECOVERY 59. After determination of duty and penalty as aforesaid, the next stage is, the stage of recovery. If a person does not voluntarily ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... came to be inserted by Act 15 of 1980 with effect from 01.04.1972. By amendment Act 24 of 1999, for more effective implementation of the provisions of the Act, Section 67 67B were substituted by way of amendment, which conferred power on the authorities to impound documents under Section 33 of the Act, which comes into their possession in a manner other than what is provided under Section 33 of the Act. The amended Section 67 reads as under: 67. Books, etc., to be open to inspection.-A Deputy Commissioner or an Assistant Commissioner or any officer not below the rank of a Sub-Registrar authorized by the Deputy Commissioner or Chief Controlling Revenue Authority in this behalf may for the purpose of this Act require every public officer or any person to produce or permit at all reasonable time, inspection of such registers, books, records, papers, documents, information in electronic storage and retrieval device or medium, applications, instrument or proceedings, the inspection whereof may tend to secure any duty or to prove or lead to the discovery of any fraud or omission in relation to any duty and take such notes and extracts as he may deem necessary without fee or charge and m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e instruments under Section 33, whereas Section 67B empowers the authorities to enter upon the premises, inspect certain documents and seize and impound them under Section 33. If the document is impounded under Section 67-B, Sub-section (2) of Section 67-B provides that the authority shall require the person liable to pay the proper duty or the amount required to make up the same and also penalty not exceeding five times the amount of the deficient duty thereof if any leviable and in case of default the amount of duty and penalty shall be recovered in accordance with Section 46. The proviso makes it clear that before taking any action under this sub-section, a reasonable opportunity of being heard shall be given to the person likely to be affected thereby. Therefore, the law makes a distinction in so far as payment of penalty is concerned, between the documents which are sought to be tendered by way of evidence and documents which are seized by the authorities under Section 67-B of the Act. If a person wants the document to be admitted in evidence or tendered in evidence, the penalty payable is ten times, however, subject to reduction of the said penalty at the discretion of the De ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to the parties, shall hold an enquiry and adjudicate the market value of the property, which is the subject matter of the instrument and specifically the duty payable thereon. The Deputy Commissioner also has been vested with the suo moto power, to be exercised within two years from the date of registration of any instrument specifically under sub-Section (1) not already referred to him. Under sub-Section (1) he may call for and examine instruments for the purpose of satisfying himself on the correct market value of the property which is the subject matter of the instrument and thereafter determine the market value payable and recover the same. 64. In a case falling under Section 45-A, if the amount determined as duty payable is not paid, the instrument is not registered. Section 45-A does not apply to a case to which Section 46-A applies, which applies to a document which may be compulsorily registrable or not registrable. In view of Sections 67 and 67-B read with Section 33 of the Act, all documents which comes into possession of a competent authority is now required to be impounded and there should be a determination of the stamp duty payable. After such determination, steps h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a period of five years is prescribed for initiation of proceedings for collection of duty. In cases where the non payment by reason of fraud, collusion or any willful mistake or suppression of facts or contravention for any other provisions of the Act or the Rules made there under, the period prescribed is 10 years. The proviso to Section makes it clear that this provision shall not apply to instrument executed prior to first day of April 1972. Therefore, Section 46-A comes into effect from the day the stamp duty was payable on an instrument. Whether the document is impounded under Section 33 or it comes into possession of the authority in any other manner, he is under an obligation to adjudicate the stamp duty payable. Before adjudicating, there is an obligation to hear the person, who is liable to pay the stamp duty. The bar of limitation is for initiation of proceedings for recovery of stamp duty payable on the instrument. It is five years from the date of execution of the document. In the case of fraud, collusion, misrepresentation, it is 10 years. Therefore, the contention of the revenue that no limitation is prescribed for documents which are impounded under Section 33 has n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd this legislation. 70. Insofar as the determination of market value, payment of duty is concerned, the learned Single Judge has set aside the impugned notice and orders and remanded the matter back to the concerned authority for fresh adjudication. Under the circumstances, we pass the following order:- (a) Writ Appeals are partly allowed; (b) The finding of the learned Single Judge and the authorities that the documents in question constitute 'conveyance' as defined under Section 2(d) of the Act, is affirmed. (c) In view of the fact that the proceedings are initiated beyond the period of limitation though the said documents are not stamped, authorities cannot recover the stamp duty payable on the said instruments; (d) However it would not come in the way of the petitioners volunteering to pay the requisite stamp duty and get the documents registered; and (e) In view of the fact that the learned Single Judge has remanded the matter back to the authorities, the authorities shall determine the stamp duty payable with the penalty, but they shall not initiate steps to recover the same. (f) After the determination of market value, it is open to the appellants to pay the requisi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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