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TMI Blog2024 (9) TMI 106X X X X Extracts X X X X X X X X Extracts X X X X ..... y 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thereunder, the appellant was put in possession of the plaint schedule property by the respondent. Contrary to the ad idem of the parties in putting the appellant in possession, the respondent was trying to dispossess the appellant from the plaint schedule property. Therefore, the suit was filed for the relief of perpetual injunction. Briefly narrated, the possession claimed under the agreement of sale is sought to be protected through the prayer for perpetual injunction. 6. The respondent denies the execution of the agreement of sale dated 29.06.1999. The appellant, since claims possession through the agreement of sale, the suit agreement shall be treated as a conveyance. The suit agreement is insufficiently stamped. Therefore, the document is inadmissible in evidence unless the document is made compliant with the requirements of the Act. 6.1. The respondent filed an application before the trial court under Section 33 of the Act to impound the suit agreement to collect the deficit stamp duty and penalty in accordance with the Act. By order dated 10.11.2016, the trial court sent the agreement of sale dated 29.06.1999 to the District Registrar for determination of requisite stamp d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant filed Review Petition No. 340 of 2019, and through the impugned order dated 14.09.2021, the Review Petition was dismissed. Hence, the Civil Appeals have been filed questioning the orders dated 23.01.2019 and 14.09.2021. 8. The learned Single Judge has, in great detail, referred to all the attending circumstances, appreciated their implication vis- -vis the statutory obligation under the Act to pay ad valorem stamp duty on an agreement of sale satisfying the definition of a conveyance under the Act and dismissed the Review Petition. The findings, in brief, are as follows: 8.1. Section 33 of the Act requires the adjudicating authorities to impound and determine the duty payable on the suit agreement. 8.2. Section 34 of the Act provides for levy of deficit stamp duty and penalty. The Section employs the expression ten times the amount of the proper duty or deficit portion thereof. Therefore, there is no discretion granted to the adjudicating authorities to waive or reduce the penalty. 8.3. Only on the payment of deficit stamp duty along with ten times penalty, the suit agreement is relied in evidence. 8.4. The text used in Sections 34 and 39 of the Act cannot be linguistical ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Trustees of H.C. Dhanda Trust v. State of Madhya Pradesh and others (2020) 9 SCC 510 , Digambar Warty and others v. District Registrar, Bangalore Urban District and another ILR 2013 KAR 2099 , K. Amarnath v. Smt. Puttamma ILR 1999 KAR 4634 , Suman v. Vinayaka and others (2013) SCC OnLine Kar 10138 , Niyaz Ahmed Siddique v. Sanganeria Company Private Limited (2023) SCC OnLine Cal 1391 , United Precision Engineers Private Limited v. KIOCL Limited (2016) SCC OnLine Kar 1077 , Chilakuri Gangulappa v. Revenue Divisional Officer, Madanpalle (2001) 4 SCC 197 , and Sri. K. Govinde Gowda v. Smt. Akkayamma and others ILR 2011 KAR 4719 , and contends that the scope of jurisdiction in receiving in evidence insufficiently stamped instruments by every person, having by law or consent of parties, authority to receive evidence and every person in charge of a public office on the one hand and the Deputy Commissioner/District Registrar on the other hand, is fairly well-settled by the binding precedents. The scope of discretion available in two distinct forums covered by Sections 34 and 39 of the Act is fairly well settled and defined. 12.1. It is further argued that the ratio in Chilakuri Gangulapp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt by the text and the context of these provisions. This Court upheld the ratio laid in Digambar Warty (supra) and held that even though no discretion was provided to the court to impose a reduced penalty, Section 38 of the Act empowered the Deputy Collector to refund the duty so collected. In paragraph 18 of the Judgment, it is recorded that: 18. The above view of the Karnataka High Court that there is no discretion vested with the authority impounding the document in the matter of collecting duty under Section 33, is correct. The word used in the said proviso is shall . Sections 33 and 34 clearly indicate that penalty imposed has to be 10 times. The Division Bench of the Karnataka High Court in Digambar Warty [Digambar Warty v. Bangalore Urban District, 2012 SCC OnLine Kar 8776 : ILR 2013 KAR 2099] has rightly interpreted the provisions of Sections 33 and 34 of the Act. We, thus, are of the view that the High Court in the impugned judgment [Fakkirappa v. Gangappa, 2014 SCC OnLine Kar 12775] did not commit any error in relying on the judgment of the Division Bench in Digambar Warty [Digambar Warty v. Bangalore Urban District, 2012 SCC OnLine Kar 8776 : ILR 2013 KAR 2099]. We thus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ery Person/Court ) when an instrument insufficiently stamped is produced, the person is mandated to impound the insufficiently stamped instrument. In law, the word impound means to keep in custody of the law. (2003) 3 SCC 674 Having taken legal custody of the insufficiently stamped document, the inter-play available between Sections 33, 34, 37, 38 and 39 of the Act, as the case may be, would start operating. Sub-section (2) of Section 33 of the Act fastens an obligation to examine the instrument on the duty payable, value etc. of the instrument. Unless it is duly stamped, Section 34 of the Act, prohibits Every Person/Court from admitting in evidence or act upon an insufficiently/improperly stamped instrument. The proviso to Section 34 of the Act, subject to deposit, of deficit stamp duty and penalty enables receipt of an instrument in evidence which is otherwise prohibited by Section 34 of the Act. 17. The object of the Act is not to exclude evidence or to enable parties to avoid obligations on technical grounds. Rather, the object is to obtain revenue even from such instruments which are at the first instance unstamped or insufficiently stamped. The said objective has the twin ele ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rest of the revenue once that object is secured according to law, the party staking his claim on the instrument will not be defeated on the ground of the initial defect in the instrument. Viewed in that light the scheme is clear. 17.3. The ratio in District Registrar and Collector v. Canara Bank (2005) 1 SCC 496 and State of Maharashtra v. National Organic Chemical Industries Limited (2024) SCC OnLine SC 497 and Chiranji Lal v. Haridas (2005) 10 SCC 746 reiterated that the Indian Stamp Act, 1899 is a piece of fiscal legislation, and not a remedial statute enacted on demand of the permanent public policy to receive a liberal interpretation. The principles for interpreting a fiscal provision/law are fairly settled. There is no scope for equity or judiciousness if the letter of law is clear and unambiguous in method, mode and manner of levy and collection. The decisions further held that the act authorises involuntary extraction of money, and therefore, is in the nature fiscal statute which has to be interpreted strictly. 17.4. Section 37 of the Act stipulates the procedure on how the instrument impounded is dealt with. The plain reading of Section 37(1) of the Act discloses that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uthority should exercise such discretion reasonably and not in oppressive manner. The responsibility to exercise the discretion in reasonable manner lies more in cases where discretion vested by the statute is unfettered. Imposition of the extreme penalty i.e. ten times of the duty or deficient portion thereof cannot be based on the mere factum of evasion of duty. The reason such as fraud or deceit in order to deprive the Revenue or undue enrichment are relevant factors to arrive at a decision as to what should be the extent of penalty under Section 40(1)(b). ( Emphasis supplied ) 20. Further, in Petiti Subba Rao v. Anumala S. Narendra (2002) 10 SCC 427 , this Court notes on the discretionary limits while interpreting analogous provisions Karnataka Stamp Act, 1957 33 34 35 36 37 38 39 Indian Stamp Act, 1899 33 35 36 37 38 39 40 in the Indian Stamp Act, 1899 that: 6. The Collector has the power to require the person concerned to pay the proper duty together with a penalty amount which the Collector has to fix in consideration of all aspects involved. The restriction imposed on the Collector in imposing the penalty amount is that under no circumstances the penalty amount shall go bey ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or by any public officer, unless such instrument is duly stamped: Provided that, (a) any such instrument not being an instrument chargeable 1[with a duty not exceeding fifteen naye paise]1 only, or a mortgage of crop [Article 1[35]1 (a) of the Schedule] chargeable under clauses (a) and (b) of section 3 with a duty of twenty-five naye paise shall, subject to all just exceptions, be admitted in evidence on payment of the duty with which the same is chargeable, or, in the case of an instrument insufficiently stamped, or the amount required to make up such duty, together with a penalty of five rupees, or, when ten times the amount of the proper duty or deficient portion thereof exceeds five rupees, of a sum equal to ten times such duty or portion; [1. Substituted by Act 29 of 1962 w.e.f. 1.10.1962.] (b) where a contract or agreement of any kind is effected by correspondence consisting of two or more letters and any one of the letters bears the proper stamp, the contract or agreement shall be deemed to be duly stamped; (c) nothing herein contained shall prevent the admission of any instrument in evidence in any proceeding in a Criminal Court, other than a proceeding under Chapter XII or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rsement thereon that it is duly stamped, or that it is not so chargeable, as the case may be; (b) if he is of opinion that such instrument is chargeable with duty and is not duly stamped he shall require the payment of the proper duty or the amount required to make up the same, together with a penalty of five rupees; or if he thinks fit; an amount not exceeding ten times the amount of the proper duty or of the deficient portion thereof, whether such amount exceeds or falls short of five rupees: Provided that, when such instrument has been impounded only because it has been written in contravention of section 13 or section 14, the 1[Deputy Commissioner]1 may, if he thinks fit, remit the whole penalty prescribed by this section. [1. Substituted by Act 29 of 1962 w.e.f. 1.10.1962.] (2) 1[Subject to any orders made under Chapter VI, every certificate]1 under clause (a) of sub- section (1) shall, for the purposes of this Act be conclusive evidence of the matters stated therein. [1. Substituted by Act 29 of 1962 w.e.f. 1.10.1962.] (3) Where an instrument has been sent to the 1[Deputy Commissioner]1 under sub-section (2) of section 37, the 1[Deputy Commissioner]1 shall, when he has dealt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to forward the instrument to the Deputy Commissioner/District Registrar. Subsection (2) of Section 37 of the Act deals with cases not falling under Section 34 and 36, and the person impounding an instrument shall send it in original to the Deputy Commissioner. This includes the exigencies set out in paragraph 21.1.1. 21.5. Being a regulatory and remedial statute, a party who follows the regulation, and pays the stamp duty and penalty, as per Sections 34 or 39 of the Act, the legal objection emanating from Section 33 of the Act alone is effaced and the document is admitted in evidence. In other words, the objection under the Stamp Act is no more available to a contesting party. 21.6. Section 39 of the Act is titled deputy commissioner s power to stamp instruments impounded. This Section provides the procedure to be followed by the Deputy Commissioner/District Registrar while stamping instruments that are impounded under Section 33 of the Act. As per Section 39(1)(b) of the Act, the penalty may extend to ten times the stamp duty payable; however, ten times is the farthest limit which is meant only for very extreme situations. Therefore, the Deputy Commissioner/District Registrar has ..... X X X X Extracts X X X X X X X X Extracts X X X X
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