Supreme Court of India
Seetharama Shetty vs Monappa Shetty on 2 September, 2024
Author: Hrishikesh Roy
Bench: Hrishikesh Roy
2024 INSC 650 REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NOS. 10039-40 OF 2024
[@S.L.P. (CIVIL) NOS. 7249-7250 OF 2022]
SEETHARAMA SHETTY … APPELLANT(S)
Versus
MONAPPA SHETTY … RESPONDENT(S)
JUDGEMENT
S.V.N. BHATTI, J.
1. Leave granted.
2. The Civil Appeals arise from an order dated 14.09.2021 in Review
Petition No. 340 of 2019 and Writ Petition No. 30734 of 2019.
3. In these Civil Appeals, the scope of Sections 33, 34, 37, and 39 of the
Karnataka Stamp Act, 1957 (for short, ‘the Act’) arises for consideration.
I. FACTUAL MATRIX Signature Not Verified 4. Digitally signed by Deepak Joshi Date: 2024.09.02
The appellant filed O.S. No. 295 of 2013 for perpetual injunction
17:34:50 IST
Reason:
restraining the respondent from interfering with the appellant’s peaceful
1
possession and enjoyment of the plaint schedule property. The plaintschedule property consists of agricultural land in Kavoor village of
Mangalore taluk. The prayer for injunction rests on the plea that the
respondent entered into the agreement of sale dated 29.06.1999 with the
appellant. The appellant claims to have been put in possession of the plaint
schedule property as part performance under the agreement of sale dated
29.06.1999 by the respondent. The other clauses covered by the
agreement are not adverted to as part of the narrative, for they are of little
relevance for disposing of the Civil Appeals.
5. It is alleged that the respondent, contrary to the possession given as
part performance under the suit agreement, tried to dispossess the
appellant. This led to exchange of notices between the parties. The sheet
anchor in the appellant’s narrative is that the agreement of sale dated
29.06.1999 exists between the parties, and in part performance 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
2
agreement of sale is sought to be protected through the prayer for perpetualinjunction.
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 duty and penalty
payable on the agreement of sale. The record discloses that the District
Registrar expressed inability to determine the deficit stamp duty and
penalty payable on the suit agreement for want of the name of the village,
hence, returned the instrument to the trial court. Thereafter, the appellant
filed a memo dated 26.04.2017 purporting to clarify the name of the village
in the schedule of the agreement of sale. The said effort was opposed by
the respondent, namely ex-post-facto incorporation of material details into
3
the suit agreement; gaps in the agreement are not filled up by the appellantto the detriment of the respondent. The trial court, agreeing with the
respondent’s objection, rejected the memo dated 26.04.2017. The
appellant filed Writ Petition No. 8506 of 2018 challenging the trial court’s
order dated 12.08.2017 before the High Court of Karnataka. On
10.08.2018, the Writ Petition was disposed of, and the operative portion
reads thus:
“Accordingly, in modification of the impugned order dated
12.08.2017, it is directed that a copy of the memo filed by the
plaintiff may be sent by the Trial Court to the office of the District
Registrar for appropriate proceedings in accordance with law.
However, it is made clear that the order and proposition with
reference to the name of the village mentioned by the
plaintiff/petitioner shall have relevance only for the purpose of
calculation of deficit stamp duty and other charges but shall have
no bearing on the merit consideration of the submissions of the
parties, including the submissions of the defendant/respondent
about the genuineness and the validity of the document in
question and the corresponding right of the plaintiff/petitioner to
contest such objections.”
7. The District Registrar, through report dated 10.11.2016, determined
the deficit stamp duty payable on the instrument at Rs. 71,200/-. The trial
court, by order dated 23.01.2019, directed the appellant to pay the deficit
stamp duty of Rs.71,200/- and ten times penalty on the agreement of sale
dated 29.06.1999. Thus, the total levy of stamp duty and penalty is Rs.
7,83,200/-. The appellant assailed the order dated 23.01.2019 in O.S. NO.
4
295 of 2013 in Writ Petition No. 30734 of 2019 before the High Court. The
Writ Petition was dismissed, and the appellant was granted four months’
time for payment of deficit stamp duty and the penalty. The 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-à-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.
5
8.4. The text used in Sections 34 and 39 of the Act cannot be linguisticallyapproximated, as the legislature has not vested the discretion given to the
Deputy Commissioner under Section 39 of the Act in the same way to the
adjudicating authorities under Section 34 of the Act.
8.5. Relying on case law, the impugned order noted that the adjudicating
authorities do not have the discretion to disobey the legislative command to
waive or reduce the penalty in any circumstance. The discretion however
extends to the grant of a reasonable time for the payment of duty and
penalty.
8.6. Thus, through the Impugned Order, the Learned Single judge
concluded that the Review Petition fails, and the appellant was granted a
period of six months’ time to pay the deficit stamp duty along with ten
times penalty.
9. Hence, the Civil Appeals.
10. We have heard the learned counsel and also Ms. Liz Mathew, who
was appointed as Amicus Curiae to assist the Court.
II. SUBMISSIONS
11. Learned counsel for the appellant firstly contends that the suit
document conforms to the requirements of the Act and the suit was for
injunction. Considering the total circumstances, it is argued that even if the
6
suit document is not stamped correctly but having regard to the orders
dated 12.08.2017 and 10.08.2018, the trial court ought not to have decided
the deficit stamp duty and penalty under Section 34 of the Act. Instead, the
trial court ought to have sent the impounded instrument to the District
Registrar for determining the stamp duty and the penalty. Thereupon, the
District Registrar would have exercised his discretionary jurisdiction under
Section 39 of the Act and determined the quantum of penalty payable by
the appellant. In the case on hand, the dispute arose on the application filed
by the respondent requesting to send the suit document to the District
Registrar for determination of duty and penalty. The District Registrar has
sent a report on the stamp duty payable but has not collected the deficit
stamp duty or levied the penalty on the suit agreement. It is argued that the
case falls under Section 37(2) of the Act, and the impugned orders have
denied the appellant the option to have the penalty decided by the District
Registrar. Therefore, the trial court and the High Court have committed an
illegality by exercising the jurisdiction under Section 34 of the Act.
12. The learned Amicus Curie places reliance on Gangappa and
another v. Fakkirappa1, Trustees of H.C. Dhanda Trust v. State of
1
(2019) 3 SCC 788.
7
Madhya Pradesh and others2, Digambar Warty and others v. District
Registrar, Bangalore Urban District and another3, K. Amarnath v. Smt.
Puttamma4, Suman v. Vinayaka and others5, Niyaz Ahmed Siddique v.
Sanganeria Company Private Limited6, United Precision Engineers
Private Limited v. KIOCL Limited7, Chilakuri Gangulappa v. Revenue
Divisional Officer, Madanpalle8, and Sri. K. Govinde Gowda v. Smt.
Akkayamma and others9, 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 Gangulappa (supra) is
not applicable to the facts and circumstances of this case. The trial court
2
(2020) 9 SCC 510.
3
ILR 2013 KAR 2099.
4
ILR 1999 KAR 4634.
5
(2013) SCC OnLine Kar 10138.
6
(2023) SCC OnLine Cal 1391.
7
(2016) SCC OnLine Kar 1077.
8
(2001) 4 SCC 197.
9
ILR 2011 KAR 4719.
8
while considering the prayer for an injunction by relying on the suit
document, exercised its jurisdiction under Section 34 of the Act. The
procedure under Section 37(2) of the Act arises in the cases not attracting
Section 37(1) of the Act. The discretionary jurisdiction under Section 39 of
the Act is exclusive to the District Registrar/Deputy Commissioner while
exercising the powers under the Act. Thus, expecting the court to exercise
the discretion of Section 39 of the Act is untenable.
III. ANALYSIS
13. We have perused the record and noted the rival submissions. The
following points arise in the Civil Appeals:
I. 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?
II. 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?
9
POINT I
14. Agreement of sale dated 29.06.1999, among other clauses, refers to
the alleged delivery of possession in favour of the appellant by the
respondent. Article 5 of the Schedule of the Act deals with an agreement of
sale coupled with possession and the requirement of paying the ad valorem
stamp duty. If an instrument conforms to the requirements of conveyance
under Section 2(d) read with Article 20(1) of the Schedule of the Act, the
applicable stamp duty is ad valorem. In other words, ad valorem stamp duty
is paid on such instruments. The learned counsel appearing for the
appellant has not argued on the applicability of the clause dealing with
possession in the agreement and requirement to ad valorem pay stamp
duty. The relief of injunction is sought on the basis of delivery of possession
by the respondent under the suit agreement. The following Judgments are
relevant and are close in circumstance to the case on hand and are referred
to.
14.1. Gangappa’s case (supra), analysed a situation on an insufficiently
stamped document produced before a court, and compared Sections 34
and 39 of the Act and held that the discretion conferred by the provision is
different 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
10
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 have
to uphold the above view expressed in the impugned judgment
[Fakkirappa v. Gangappa, 2014 SCC OnLine Kar 12775].However, as a one-time measure, this Court allowed closing the
matter by confirming the payment of deficit duty with the double penalty as
imposed by the trial court. The precedent interpreted the discretionary limits
under Section 34 of the Act.
14.2. In United Precision Engineers Private Limited (supra), the
question arose as to the extent of power exercised by Deputy
Commissioner under Section 37(2) of the Act. The Court observed that the
phrase “in every other case” contained in Section 37(2) of the Act will have
to be understood to include not only an instrument which is merely
11
impounded and referred but also an instrument impounded, relating towhich duty and penalty determined but not paid by the party. The court
observed that as per the combined reading of the sections, if the
impounding authority determined the penalty under Section 37(1) of the
Act, and thereafter, sends the document to Deputy Commissioner under
Section 37(2) of the Act, then the Deputy Commissioner will have the power
to reduce the penalty under Section 38 of the Act. The ratio deals with the
interplay between Sections 37 and 38 of the Act.
15. The impugned order, in fact, refers to these judgments. 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. Therefore, by relying on the above judgments, it is held that the
appellant, with a view to produce in evidence the agreement of sale in the
suit, must pay the deficit stamp duty and penalty. We are confirming the
findings of the High Court in this behalf. The next question for consideration
is whether in the facts and the circumstances of the case, the penalty
determined by the Court on the instrument instead of sending the
12
instrument to the District Registrar for determination and collection ofpenalty as may be applicable is legal.
POINT II
16. Chapter IV of the Act is both mandatory and regulatory. Section 33
mandates every person having by law or consent of parties authority to
receive evidence and every person in charge of public office (for short,
‘Every 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.10
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
10
(2003) 3 SCC 674.
13
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
elements of recovering the due stamp duty and penalty, and also the public
policy of binding parties to the agreed obligations. It is apposite to refer to
the declaration of law by a seven-judge bench’s judgement of this Court on
the object of the Indian Stamp Act, 1899.
17.1. In Re: Interplay Between Arbitration Agreements under
Arbitration and Conciliation Act, 1996 and Stamp Act, 189911, a Seven-
Judge Bench of this Court noted that Section 35 of the Indian Stamp Act,
1899 (analogous to Section 34 of the Act) unambiguously requires an
instrument chargeable with stamp duty to only be “admitted in evidence” if
it is properly stamped. This Court further noted that improperly stamping
the instrument does not render that instrument void or invalid. On the
contrary, it is a defect which is curable upon payment of requisite stamp
duty and penalty. The relevant paragraph reads thus:
11
(2024) 6 SCC 1.
14
“54. Section 35 of the Stamp Act is unambiguous. It stipulates,
“No instrument chargeable with duty shall be admitted in
evidence…” The term “admitted in evidence” refers to the
admissibility of the instrument. Sub-section (2) of Section 42, too,
states that an instrument in respect of which stamp-duty is paid
and which is endorsed as such will be “admissible in evidence.”
The effect of not paying duty or paying an inadequate amount
renders an instrument inadmissible and not void. Non-stamping
or improper stamping does not result in the instrument becoming
invalid. The Stamp Act does not render such an instrument void.
The non-payment of stamp duty is accurately characterised as a
curable defect. The Stamp Act itself provides for the manner in
which the defect may be cured and sets out a detailed procedure
for it. It bears mentioning that there is no procedure by which a
void agreement can be “cured.”
17.2. In Hindustan Steel Limited v. Dilip Construction Company12, this
Court held that the Indian Stamp Act, 1899 is a fiscal measure intended to
raise revenue, and the stringent provisions of the Stamp Act cannot be used
as a weapon to defeat the cause of the opponent. The relevant paragraph
reads thus:
“7. The Stamp Act is a fiscal measure enacted to secure revenue
for the State on certain classes of instruments: It is not enacted
to arm a litigant with a weapon of technicality to meet the case of
his opponent. The stringent provisions of the Act are conceived
in the interest 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.”12
(1969) 1 SCC 597.
15
17.3. The ratio in District Registrar and Collector v. Canara Bank13 and
State of Maharashtra v. National Organic Chemical Industries
Limited14 and Chiranji Lal v. Haridas15 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 person impounding the instrument under Section 33 of
the Act and after receiving the penalty under Section 34 of the Act or duty
under Section 36 of the Act, shall send to the Deputy Commissioner an
authenticated copy of such instrument together with the amount of duty and
penalty so levied and collected. Section 37(2) of the Act deals with an
13
(2005) 1 SCC 496.
14
(2024) SCC OnLine SC 497.
15
(2005) 10 SCC 746.
16
instrument not subjected to the procedure of Sections 34 or 36 of the Act.
According to Section 37(2) of the Act, the instrument is sent to the Deputy
Commissioner for enquiry and decision at his end. The Deputy
Commissioner gets jurisdiction under Section 39 of the Act and then
decides the duty and also the penalty leviable on the insufficiently stamped
instrument. In this background, we take note of the principle laid down on
the distinction in the discretion available to Every Person/Court and the
discretionary jurisdiction conferred on the District Registrar. See, United
Precision Engineers (supra) and Gangappa (supra).
The settled distinction and discretion available under Sections 34 and
39 of the Act is no more res integra.
18. The above consideration does not actually address the appellant’s
argument under Section 37(2) read with Section 39 of the Act. Appellant
contends that the respondents by filing an application for impounding the
instrument, preferred to have deficit stamp duty and the penalty collected
exclusively by the District Registrar because the admissibility or otherwise
of the suit document is not yet considered by the trial court for any purpose.
From the record, it appears that the instrument is likely to be considered at
the interlocutory stage for granting or refusing temporary injunction.
Therefore, the option available under Section 33 read with Section 37 of
17
the Act is set in motion, resulting in the instrument being sent to the District
Registrar, and calling for a report.
19. A Three-Judge Bench of this Court in Trustees of HC Dhandha
Trust v State of Madhya Pradesh16 held that in case of deficiency of
Stamp Duty the Collector of Stamps cannot impose ten times penalty under
Section 40(1)(b) of the Indian Stamp Act, 1899 (analogous to Section
39(1)(b) of the Act) automatically or mechanically. The relevant paragraph
reads thus:
“22. The purpose of penalty generally is a deterrence and not
retribution. When a discretion is given to a public authority, such
public authority 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)”
16
(2020) SCC OnLine SC 75318
20. Further, in Petiti Subba Rao v. Anumala S. Narendra17, this Court
notes on the discretionary limits while interpreting analogous provisions18
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 beyond ten times the duty or the deficient portion thereof. That
is the farthest limit which meant only in very extreme
situations the penalty need be imposed up to that limit. It is
unnecessary for us to say that the Collector is not required by law
to impose the maximum rate of penalty as a matter of course
whenever an impounded document is sent to him. He has to take
into account various aspects including the financial position of
the person concerned.
(Emphasis supplied)”
17
(2002) 10 SCC 427
18
Karnataka Stamp Act, 1957 §33 §34 §35 §36 §37 §38 §39
Indian Stamp Act, 1899 §33 §35 §36 §37 §38 §39 §40
19
21. As per the steps taken under Sections 3319, 3420, 3521, 3722, and 3923
under Chapter IV of the Act, the position in law is well-established, and
19
Section 33: Examination and impounding of instruments.- (1) Every person having by law or
consent of parties authority to receive evidence, and every person in charge of a public office,
except an officer of police, before whom any instrument, chargeable in his opinion, with duty, is
produced or comes in the performance of his functions, shall, if it appears to him that such
instrument is not duly stamped, impound the same. (2) For that purpose every such person shall
examine every instrument so chargeable and so produced or coming before him, in order to
ascertain whether it is stamped with a stamp of the value and description required by the law in
force in the 1[State of Karnataka]1 when such instrument was executed or first executed: [1.
Adapted by the Karnataka Adaptations of Laws Order, 1973 w.e.f. 1.11.1973.] 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 proceeding other than a proceeding 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.
20
Section 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 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 Chapter XXXVI of the Code of Criminal Procedure, 1898; (d) nothing herein
contained shall prevent the admission of any instrument in any Court when such instrument has
been executed by or on behalf of the Government, or where it bears the certificate of the
1[Deputy Commissioner]1 as provided by section 32 or any other provision of this Act 2[and
such certificate has not been revised in exercise of the powers conferred by the provisions of
Chapter VI]2. [1. Substituted by Act 29 of 1962 w.e.f. 1.10.1962.] [2. Inserted by Act 29 of 1962
w.e.f. 1.10.1962.]
21
Section 35: Admission of instrument where not to be questioned.- Where an instrument has
been admitted in evidence such admission shall not, except as provided in section 58, be called
in question at any stage of the same suit or proceeding on the ground that the instrument has
not been duly stamped.
20
axiomatic by the letter of law and precedents of this Court. However, there
are a few misgivings in the sequence of its application. For the benefit of
practice and procedure, we sum up the steps as follows.
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.
22
Section 37: Instruments impounded how dealt with.- (1) When the person impounding an
instrument under section 33 has by law or consent of parties authority to receive evidence and
admits such instrument in evidence upon payment of a penalty as provided by section 34 or of
duty as provided by section 36, he shall send to the 1[Deputy Commissioner]1 an authenticated
copy of such instrument, together with a certificate in writing, stating the amount of duty and
penalty levied in respect thereof, and shall send such amount to the 1[Deputy Commissioner]1
or to such person as he may appoint in this behalf. [1. Substituted by Act 29 of 1962 w.e.f.
1.10.1962.] (2) In every other case, the person so impounding an instrument shall send it in
original to the 1[Deputy Commissioner]1. [1. Substituted by Act 29 of 1962 w.e.f. 1.10.1962.]
23
Section 39: 1[Deputy Commissioner]1’s power to stamp instruments impounded.- (1) When
the 1[Deputy Commissioner]1 impounds any instrument under section 33, or receives any
instrument sent to him under sub-section (2) of section 37, 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 clause (a) or (b) of section 3 with a duty of twenty-five naye
paise, he shall adopt the following procedure:— [1. Substituted by Act 29 of 1962 w.e.f.
1.10.1962.] (a) if he is of opinion that such instrument is duly stamped, or is not chargeable with
duty, he shall certify by endorsement 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 with
it as provided by this section, return it to the impounding officer. [1. Substituted by Act 29 of
1962 w.e.f. 1.10.1962.]
21
21.1.1. The person who intends 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.
22
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 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
23
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.
22. Reverting to the circumstances of the case by keeping in perspective
the steps summarised in the preceding paragraph, we notice that, 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
24
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. On the contrary, the trial court has
called for a report from the District Registrar, so for all purposes, the suit
instrument is still at one or the other steps summed up in paragraph 21.
Therefore, going by the request of the respondent, the option is left for the
decision of the District Registrar. Contrary to these admitted circumstances,
though the suit instrument is insufficiently stamped, still the penalty of ten
times under Section 34 of the Act is imposed through the impugned orders.
The imposition of penalty of ten times at this juncture in the facts and
circumstances of this case is illegal and contrary to the steps summed up
in paragraph 21. 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.
23. Hence, for the above reasons, the direction to pay ten times the
penalty of the deficit stamp duty merits interference and accordingly is set
25
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 objection under the Act, the suit
document be received in evidence. All objections available to the
respondents except the above are left open for consideration.
24. Appeals are allowed in part, as indicated above.
..……………………J.
(HRISHIKESH ROY)
……………………J.
(S.V.N BHATTI)
NEW DELHI;
SEPTEMBER 02, 2024.
26