Supreme Court of India
N.M. Theerthegowda vs Y.M. Ashok Kumar on 2 September, 2024
Author: Hrishikesh Roy
Bench: Hrishikesh Roy
2024 INSC 649 NON-REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 10038 OF 2024
[@S.L.P. (CIVIL) NO. 19165 OF 2021]
N.M. THEERTHEGOWDA … APPELLANT(S)
Versus
Y.M. ASHOK KUMAR AND OTHERS … RESPONDENT(S)
JUDGEMENT
S.V.N. BHATTI, J.
1. Leave granted.
2. The appellant filed O.S. No. 610 of 2015 for specific performance of
the agreement for sale dated 04.11.1996, stated to have been executed
by the respondents. The appellant also prayed to set aside the sale
deed dated 13.08.2003, which the first and second respondents
executed in favour of the third respondent. The appellant claims
possession of suit schedule property as part performance under the
Signature Not Verified
Digitally signed by
agreement of sale dated 04.11.1996. An agreement of sale coupled with
Deepak Joshi
Date: 2024.09.02
17:34:51 IST
Reason:
possession is deemed to be a conveyance warranting payment of ad
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valorem stamp duty. Admittedly, the suit agreement is written on stamp
papers worth Rs.200/-. Article 5(e)(i) of the Schedule of the Act, read
with amended Stamp Act No. 8 of 1995, prescribes the duty as payable
on a conveyance. The appellant has not produced the original
agreement in O.S. No. 610 of 2015. The explanation offered by him is
that the agreement is filed in a connected matter between the parties.
From the order dated 14.08.2015, it appears that the appellant
expressed readiness to pay duty and penalty on the certified copy of the
agreement of sale dated 04.11.1996, now filed along with the plaint. The
trial court, by order dated 14.08.2015, held as follows:
“In respect of penalty on deficit stamp duty is concerned in
reported rulings;
ILR 2013 KAR 2099 (DB) – Degambar Warty and others – V/s.
District Registrar, Bangalore Urban District and another.
Wherein in the above said rulings it is held;
“No discretion is granted to the Court to impose
a lesser penalty. A power is vested in Civil Court
to impound the document.”In view of the above said settled law, the Civil Court has no
discretion to impose lesser penalty below ten times. The proper
stamp duty payable on the agreement of sale dated 04-11-1996.
The ten times penalty on deficit stamp duty comes to
Rs.14,38,000/- Plus deficit stamp duty of Rs.1,43,800/-, in all the
plaintiff has to pay deficit stamp duty and penalty of
Rs.15,81,800/- on the unregistered agreement of sale dated 04-
11-1996.
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ORDER
The plaintiff is directed to pay duty and penalty totally
Rs.15,81,800/-.
The office is directed to collect the duty and penalty as stated
above. Thereafter, as per Sec.37 of the Karnataka Stamp Act,
send an authenticated copy of the unregistered agreement of
sale dated 04-11-1996 to the concerned District Registrar,
together with Certificate and the amount collected as a duty and
penalty.”
3. The appellant filed Writ Petition No. 36970 of 2015, assailing the trial
court’s order dated 14.08.2015. The appellant argued that the deficit
stamp duty should alone be collected at the time of the passing of the
judgment and decree, and the levy of penalty is illegal and erroneous.
The High Court, through the order impugned in the appeal, rejected.
4. The instant Civil Appeal has been heard with Civil Appeal Nos.
10039-40 of 2024 (@ S.L.P. (C) No. 7249-50 of 2022). After perusing
the record, we are of the view that the circumstances in which the
decision to pay stamp duty and penalty is rendered are different from
the tagged civil appeals. Advocate for the appellant contends that the
document should have been sent to the District Registrar to determine
deficit stamp duty and penalty under Section 39 of the Act, instead of
the court deciding under Section 34 of the Stamp Act. The argument is
untenable to the facts and circumstances of this case.
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5. In Civil Appeal Nos. 10039-40 of 2024 (@ S.L.P. (C) Nos.
7249-50 of 2022), the steps under Chapter IV of the Act have been
summarised in paragraph 21 of the Judgement, and reads thus –
“21.1. Section 33 of the Act is titled examination and impounding of
instruments. The object of the provision is to disable persons from
withdrawing the instruments produced by them on being told that proper
stamp duty and penalty should be paid.
21.1.1. The person who intend to rely on an insufficiently/improperly
stamped instrument has option to submit to the scope of Section 34 of the
Act, pay duty and penalty. The party also has the option to directly move
an application under Section 39 of the Act before the District Registrar,
and have the deficit stamp duty and the penalty as may be imposed
collected. In either of the cases, after the deficit stamp duty and the
penalty are paid, the impounding effected under Section 35 of the Act is
released and the instrument available to the party for relying as evidence.
In the event, a party prefers to have the document sent to the deputy
commissioner for collecting the deficit stamp duty and penalty, the
Court/Every Person has no option except to send the document to the
District Registrar. The caveat to the above is that, before the Court/Every
Person exercises the jurisdiction under Section 34 of the Act, the option
must be exercised by a party.
21.2. Section 34 of the Act is titled instruments not duly stamped
inadmissible in evidence. This provision bars the admission of an
instrument in evidence unless adequate stamp duty and the penalty are
paid. Every person so authorised to collect deficit stamp duty and penalty
has no discretion except to levy and collect ten-times the penalty of deficit
stamp duty.
21.3. Section 35 of the Act is titled admission of instrument where not
to be questioned. Section 35 prohibits questioning the admission of an
insufficiently stamped instrument in evidence.
21.4. Section 37 of the Act is titled instruments impounded, how dealt
with. This Section arises when the party pays the deficit duty and penalty,
the Court is to impound the instrument under Section 33 of the Act and
has to forward the instrument to the Deputy Commissioner/District
Registrar. Sub-section (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
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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 discretion to levy and collect commensurate penalty.
21.7. The above steps followed and completed by paying/depositing
the deficit duty and penalty would result in the instrument becoming
compliant with the checklist of the Act. The finality is subject to the just
exceptions envisaged by the Act addressing different contingencies.
21.8. 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.
6. Having regard to the detailed consideration, the twin points on the
collection of deficit stamp duty and the penalty are substantially covered.
Before applying the said summary to the case on hand, the
circumstances of the case are adverted to.
7. In the accompanying Civil Appeals, by referring to Section 37(2), we
have held as follows:
“23. Hence, for the above reasons, the direction to
pay ten times the penalty of the deficit stamp duty
warrants to be interfered with 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.
Upon receipt of the compliance certificate from the
District Registrar, without reference to an objection5
under the Act, the suit document is received in
evidence. All objections available to the respondents
except the above are left open for consideration.”
8. In the present case, the appellant wanted the suit agreement to be
admitted in evidence at the interlocutory stage. The suit was filed on
12.08.2015. On 14.08.2015, the case was posted before the court, and
the counsel for the appellant in the trial court agreed to pay
proper/sufficient stamp duty and penalty on the certified copy of the
agreement to sale. In other words, the appellant invited the court to
decide under Section 34(1) of the Act.
9. Being so, when the trial court imposed ten times penalty on the
deficit stamp duty, the appellant argued in the High Court that he would
pay the stamp duty when the decree of specific performance was
granted. In our considered view, the case of appellant is covered by
Section 34 of the Act, and rightly ten-times penalty is imposed. Further,
the appellant having invited the court, as noted above, cannot now
express the willingness to exercise the option under Section 37(2) of the
Act. On the contrary, Section 37(1) of the Act would apply in the present
case.
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10. The High Court, through the impugned order, while relying on the
ratio in Gangappa and another v. Fakkirappa1 and Digambar Warty
and others v. District Registrar, Bangalore Urban District and
another2, has rightly rejected the prayer of the appellant.
11. For the above reasons, we do not see any ground warranting
interference in the order impugned.
12. The Appeal fails and is accordingly dismissed. There is no order as
to cost.
..……………………J.
(HRISHIKESH ROY)
…………………….J.
(S.V.N BHATTI)
NEW DELHI;
SEPTEMBER 02, 2024.
1
(2019) 3 SCC 788.
2 ILR 2013 KAR 2099.
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