Karnataka High Court
Sri Zafarulla Khan vs Smt R.K.Sujatha on 29 August, 2023
Author: M.G.S. Kamal
Bench: M.G.S. Kamal
1
R
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 29TH DAY OF AUGUST, 2023
BEFORE
THE HON'BLE Mr. JUSTICE M.G.S. KAMAL
WRIT PETITION No.47225 OF 2016 (GM-CPC)
BETWEEN:
SRI. ZAFARULLA KHAN
S/O FAIZ MOHAMMED KHAN
AGED ABOUT 50 YEARS
R/AT NO.105
HOUSE OF LORDS
ST. MARKS ROAD
BANGALORE - 560 001.
...PETITIONER
(BY SRI.GIRIDHAR S.V., ADVOCATE)
AND:
1. SMT. R.K.SUJATHA
D/O LATE S. KRISHNA @ KRISHNAPPA
AGED ABOUT 40 YEARS
2. R.K. VANI
D/O LATE S. KRISHNA @ KRISHNAPPA
AGED ABOUT 31 YEARS
3. SMT. R.K. SUGUNA
D/O LATE S. KRISHNA @ KRISHNAPPA
AGED ABOUT 33 YEARS
2
4. SMT. MUNICHELLAMMA
W/O LATE S. KRISHNAN
AGED ABOUT 65 YEARS
5. SRI R.K. MUNIRAJ
S/O LATE S. KRISHNAN
AGED ABOUT 46 YEARS
6. SRI R.K. SHASHIDHARA
S/O LATE S. KRISHNAN
AGED ABOUT 44 YEARS
ALL ARE R/AT RAMAGONDANAHALLI
VARTHUR HOBLI
BANGALORE EAST TALUK
REPRESENTED BY GPA HOLDER
M. RAJANNA S/O MUNISHAMAPPA
AGED ABOUT 48 YEARS
RAMAGONDANAHALLI
VARTHUR HOBLI
WHITEFIELD POST
BANGALORE-560 066.
(R-4 IS DEAD LR's OF R-4 i.e., R-1, R-2, R-3 R-5
AND R-6 ARE ALREADY ON RECORD
AMENDMENT VIDE COURT ORDER
DATED:06.12.2017
... RESPONDENTS
(BY SRI. M.S. VARADARAJAN, ADVOCATE FOR R-1 TO R3,
R5 & R6, R4-R1 TO R3, R5 & R6 ARE TREATED AS HEIRS
AND LRS OF DECEASED R4)
THIS WRIT PETITION IS FILED UNDER ARTICLE 227
OF THE CONSTITUTION OF INDIA PRAYING TO CALL FOR
3
RECORDS IN O.S.NO.1342/2006 ON THE FILE OF THE IST
ADDL. SENIOR CIVIL JUDGE, BANGALORE RURAL
DISTRICT, BANGALORE, CULMINATING IN THE ORDER
IMPUGNED. ISSUE A WRIT OF CERTIORARI, SIMILAR
WRIT, ORDER OR DIRECTION TO SET ASIDE ORDER
DATED:01.08.2016 AS AT ANNEXURE-F PASSED BY THE I
ADDITIONAL SENIOR CIVIL JUDGE, BANGALORE RURAL
DISTRICT, BANGALORE IN O.S.NO.1342/2006 AND
DIRECTING THE RESPONDENTS TO PAY THE DUTY AND
PENALTY OF EXHIBIT P.1. AND ETC.
THIS PETITION HAVING BEEN HEARD AND
RESERVED, COMING ON FOR PRONOUNCEMENT OF
ORDER, THIS DAY, THE COURT MADE THE FOLLOWING:
ORDER
Present petition is against the order dated 01.08.2016 passed in O.S.No.1342/2006 on the file of I Additional Senior Civil Judge, Bangalore Rural District, Bangalore (hereinafter referred to as the 'trial Court) rejecting a memo dated 24.04.2014 filed by the petitioner/defendant No.1 requesting to collect stamp duty and penalty payable on General Power of Attorney dated 11.05.2006 marked as Exhibit P-1.
42. Facts leading to filing of the present petition briefly stated are:
(a) Respondents herein as the plaintiffs have filed the above suit in O.S.No.1346/2006 against the petitioner as defendant No.1 therein for relief of judgment and decree of declaration of title and consequent relief of permanent injunction in respect of suit schedule properties being agricultural lands. Respondents as plaintiffs have appointed and constituted one M.Rajanna, son of Munishamappa as their agent and attorney in terms of a General Power of Attorney dated 11.05.2006 and have examined him on their behalf as P.W.1.
Said Sri. M.Rajanna has produced the said General Power of Attorney dated 11.05.2006 and the same has been marked as Ex.P1.
(b) Petitioner/defendant No.1 thereafter filed a memo dated 24.04.2014 requesting the Court to collect stamp duty and penalty on the said General power of attorney-Ex.P.1, 5 as according to the petitioner/defendant No.1 the said document is insufficiently stamped.
In the said memo dated 24.04.2014 petitioner/defendant No.1 has contended that in terms of the said General Power of Attorney-Ex.P.1 the attorney is authorized inter alia to negotiate for sale and to enter into an agreement to sell, to receive advance and balance sale consideration, to execute and to register any deed of conveyance and present such deed of conveyance in the office of Sub-Registrar.
(c) That the said General Power of Attorney is executed in respect of agricultural lands totally measuring 3 acres 33 guntas and as per the guidelines issued for the purpose of registration the subject lands are valued at Rs.25 lakhs per acre and since the general power of attorney is executed on 11.05.2006 and in view of amendment to the Karnataka Stamp Act, 1957 (hereinafter referred to as 'Act 1957') by inserting clause (eb) to Article 41 which was further amended by Act, 2006 6 with effect from 01.04.2006 stamp duty payable on the General Power of Attorney is at the rate of 7.5% of market value of the property. Thus, according to the petitioner/defendant No.1 a sum of Rs.74,25,000/- is required to be paid towards stamp duty and penalty on the said general power of attorney at Ex.P.1.
3. Statement of objections to the said memo has been filed by the respondents/plaintiffs denying the contentions urged in the memo, contending inter alia, that;
(a) once a document insufficiently
stamped is admitted in evidence
impounding of the same is prohibited under Section 35 of the Act, 1957 as the said provision prohibits the court from reopening a matter in regard to sufficiency or otherwise of the stamp duty paid on the instrument.
7(b) Thus, once insufficiently stamped document is admitted without any objection party cannot raise the objection as to admissibility of the document. Hence, sought for dismissal of the memo.
4. The Trial Court by the impugned order referring to Sections 33 to 37 of the Act, 1957 and the decisions relied upon by both the parties referred to therein has held that the document cannot be impounded after the same having been admitted in evidence in view of provisions of Section 35 of the Act, 1957 and as such rejected the memo filed by the petitioner/defendant No.1. Being aggrieved by the same, the petitioner/defendant No.1 is before this Court.
5. Sri. Giridhar S.V, learned counsel appearing for the petitioner/defendant No.1 reiterating the contents of the memo dated 24.04.2014 relied 8 upon judgment of this court in the case of SMT. SAVITRAMMA R.C. VS. M/s.VIJAYA BANK AND ANOTHER reported in ILR 2015 Kar. 984 and submitted that the reasoning assigned by the trial Court in rejecting the memo is misconceived inasmuch as the petitioner/defendant No.1 is not raising any issue with regard to the admissibility of the document in question but is only concerned with regard to payment of stamp duty and penalty. He further submitted that it is the duty of the trial Court to examine the document to find out if the document is duly stamped and if not, the trial Court shall send the document in question for adjudication and payment of required stamp duty and that the said process has nothing to do with admissibility or otherwise of the document. Hence, he submitted that order impugned warrants interference.
96. Sri. M.S.Varadarajan, learned counsel appearing for the respondents/plaintiffs justifying the order impugned submitted that the judgment in the case of SMT. SAVITRAMMA (supra) relied upon by the counsel for the petitioner/defendant No.1 does not lay down correct position of law. He refers to a judgment of the Apex Court in the case of SHYAMAL KUMAR ROY VS. SUSHIL KUMAR AGARWAL reported in 2007 AIR SCW 234 wherein the Apex Court referring to Sections 33 and 36 of the Indian Stamp Act, 1899 has held that insufficiently stamped document if admitted in evidence, cannot be impounded on the ground of insufficiency of stamp and the Court is prohibited from reopening the matter.
He thus submitted that the law laid down by the Apex Court has not been taken note of by this Court in the case of Smt.Savitramma (supra) and as such the law laid down by the Apex Court would prevail. Hence, he 10 submitted that no grounds are made out warranting interference with the impugned order passed by the Trial Court and sought for dismissal of the writ petition.
7. Heard and perused the records.
8. The contention of the petitioner is that the subject document namely General Power of Attorney marked as Ex.P1 is chargeable to stamp duty in terms of Clause (eb) of Article 41 of the Act, 1957. The Trial Court in the impugned order relying upon Section 35 of the Act, 1957 has held that General Power of Attorney at Ex.P1 has been marked without there being any objections by defendants and the court has also not noticed that the same is insufficiently stamped. That since the document has already been marked same cannot be impounded in view of provisions of Section 35 of the Act, 1957 accordingly 11 proceeded to reject the memo filed by the petitioner/defendant No.1.
9. Learned counsel for the petitioner relied upon Judgment of this court in the case of Smt.Savitramma (supra) in support of his contention wherein this court has held as under:
"6. From the aforesaid statutory provisions and the decisions, it is clear that a duty is cast upon every Judge to examine every document, which is produced or comes before him in the performance of his functions. On such examination, if it appears to the Judge that such instrument is not duly stamped, an obligation is cast upon him to impound the same. This duty is to be performed by the Judge irrespective of the fact whether any objection to its marking is raised or not. Hence, there is a need for diligence on the part of the Court having regard to the statutory obligation under Section 33 of the Karnataka Stamp Act. Section 34 of the Karnataka Stamp Act mandates that an instrument, which is not duly stamped shall not be admitted in evidence. If any objection is taken to the admissibility of the evidence, it shall be decided then and there. If this document is found to be insufficiently stamped, then in terms of the proviso (a) to Section 34, the Court shall call upon the person, who is tendering the said document to pay duty and ten times penalty and thereafter admit the 12 document in evidence. If duty and penalty is not paid, the document shall not be admitted in evidence. If such an objection is not taken at the time of admitting the said instrument in evidence, and the insufficiently stamped document is admitted in evidence then section 35 of the Act provides that such admission shall not be called in question at any stage of the same suit or proceeding on the ground that the instrument has not been duly stamped. It has nothing to do with impounding the document. A duty is cast upon every Judge to examine every document that is sought to be marked in evidence. The nomenclature of the document is not decisive. The question of admissibility will have to be decided by reading the document and deciding its nature and classification. The tendency to mark documents without inspection and verification should be eschewed. Even while recording ex parte evidence or while recording evidence in the absence of the Counsel for the other side, the Court should be vigilant and examine and ascertain the nature of the document proposed to be marked and ensure that it is a document which is admissible. The Court should not depend on objections of the other Counsel before considering whether the document is admissible in evidence or not. Section 33 of the Stamp Act casts a duty on the Court to examine the document to find out whether it is duly stamped or not, irrespective of the fact whether an objection to its marking is raised or not. Section 37 of the Act provides what the Judge has to do when he has collected duty and penalty under Section 34 of the Act and what he has to do, if the case does not fall under Section 34 of the Act.13
10. As against the above, learned counsel for respondent relied upon the Judgment of the Apex Court in the case of Shyamal Kumar Roy (supra) contending that the law laid down by this court in Savitramma's case is per incuriam, wherein the Apex Court dealing with an identical issue under Section 33 and 36 of the Indian Stamp Act, 1899 has held that Section 36 is a stand alone clause which prohibits a court of law from reopening the matter on insufficiency of payment of stamp duty. Relevant paragraphs of the said judgment are extracted hereunder;
"14. Section 36, however, provides for a 'stand alone' clause. It categorically prohibits a court of law from reopening a matter in regard to the sufficiency or otherwise of the stamp duty paid on an instrument in the event the same has been admitted in evidence. Only one exception has been made in this behalf, viz., the provisions contained in Section 61 providing for reference and revision. In a case where Section 33 of the Act, as amended by West Bengal Act would be applicable, the proviso appended to Sub-Section (5) carves out an exception that if no action would be 14 taken after a period of four years from the date of execution of the instrument.
17. Objection as regards admissibility of a document, thus, specifically required to be taken that it was not duly stamped. On such objection only the question is required to be determined judicially.
19. When there had been no determination as regards sufficiency of the stamp duty paid on an instrument and in the event the document is taken in evidence with an endorsement, that "objected, allowed subject to objection", this Court in Ram Rattan (supra) held that the objection was not judicially determined and the document was merely tentatively marked and in such a situation Section 36 would not be attracted. Ram Rattan (supra) also, therefore, is an authority for the proposition that the party objecting to the admissibility of the document must raise an objection so as to enable the trial judge to determine the issue upon application of his judicial mind at the appropriate stage.
20. If no objection had been made by Appellant herein in regard to the admissibility of the said document, he, at a later stage, cannot be permitted to turn round and contend that the said document is inadmissible in evidence.
23. It may be true that the object of Indian Stamp Act is to collect revenue and the amendments carried out by the State of West Bengal provides for more stringent steps in that behalf. It may also be true that by reason of Sub-Section (4) of Section 33 of the West 15 Bengal Act, a duty has been cast upon the court to apply its mind when an instrument having insufficient stamp duty is brought to its notice, but, only thereby Section 36 of the Indian Stamp Act cannot be made inapplicable. Section 36, as indicated hereinbefore, applies on its own force."
11. In the light of the aforesaid decisions of this Court and of the Apex Court, it is to be seen that the petitioner in his memo dated 24.04.2014 is not seeking to reopen the question of admissibility of the document. On the other hand the petitioner referring to clause (eb) to Article 41 of the Act, 1957 as amended has sought for impounding of the said document for the sole purpose of payment of stamp duty and penalty in a sum of Rs.74,25,000/- as calculated thereunder. In the objections statement to the said memo it is contended that once the document is marked without any objection same cannot be held inadmissible and it is no longer open to the court to reopen the same.
1612. The Constitution Bench of the Apex Court in the case of M/s.N.N.Global Mercantile Private Limited Vs M/s.Indo Unique Flame Limited and others reported in (2023) 7 SCC 1, while dealing with the question as to;
"Whether the statutory bar contained in Section 35 of the Indian Stamp Act, 1899 applicable to instruments chargeable to stamp duty under Section 3 read with schedule to the Act, would also render the arbitration agreement contained in such an instrument, as being non-existent, pending payment of stamp duty on the substantive contract/instrument?"
Analysing its earlier Judgment in the case of Hindustan Steel Limited Vs Dilip Construction Company, (1969) 1 SCC 597 the Apex Court at paragraphs 65 to 67 has held as under:
65. This Court in Hindustan Steel Limited v.
Dilip Construction Company, was dealing with the following set of facts: an award was made by an Umpire under the Indian Arbitration Act, 1940, which was filed in the Court. The appellant applied to set aside the Award, inter alia, contending that it was unstamped. It contended that it was on that account, invalid, illegal and liable to be set aside. The 17 respondent thereupon applied to the District Court to have the Award impounded and validated by the levy of stamp duty and penalty. The Award was impounded and visited with duty and penalty, which was duly paid and certified. The contention of the appellant was that, not only could an unstamped Award, be not admitted in evidence, but it could not be acted upon, as the instrument had no existence in the eye of law.
66. It is thereupon that the Court had held, inter alia:
"5. An instrument which is not duly stamped cannot be received in evidence by any person who has authority to receive evidence, and it cannot be acted upon by that person or by any public officer. Section 35 provides that the admissibility of an instrument once admitted in evidence shall not, except as provided in Section 61, be called in question at any stage of the same suit or proceeding on the ground that the instrument has not been duly stamped.
6. Relying upon the difference in the phraseology between Sections 35 and 36 it was urged that an instrument which is not duly stamped may be admitted in evidence on payment of duty and penalty, but it cannot be acted upon because Section 35 operates as a bar to the admission in evidence of the instrument not duly stamped as well as to its being acted upon, and the Legislature has by Section 36 in the conditions set out therein removed the bar only against admission in evidence of the instrument. The argument ignores the true import of Section 36. By that section an instrument once admitted in 18 evidence shall not be called in question at any stage of the same suit or proceeding on the ground that it has not been duly stamped. Section 36 does not prohibit a challenge against an instrument that it shall not be acted upon because it is not duly stamped, but on that account there is no bar against an instrument not duly stamped being acted upon after payment of the stamp duty and penalty according to the procedure prescribed by the Act. The doubt, if any, is removed by the terms of Section 42(2) which enact, in terms unmistakable, that every instrument endorsed by the Collector under Section 42(1) shall be admissible in evidence and may be acted upon as if it has been duly stamped."
67. We may also profitably refer to paragraph- 8 as well:
"8. Our attention was invited to the statement of law by M.C. Desai, J., in Mst Bittan Bibi v. Kuntu Lal [ILR (1952) 2 All 984] :
"A court is prohibited from admitting an instrument in evidence and a court and a public officer both are prohibited from acting upon it. Thus a court is prohibited from both admitting it in evidence and acting upon it. It follows that the acting upon is not included in the admission and that a document can be admitted in evidence but not be acted upon. Of course it cannot be acted upon without its being admitted, but it can be admitted and yet be not acted upon. If every document, upon admission, became automatically liable to be acted upon, the provision in Section 35 that an instrument chargeable with duty but not duly stamped, shall not be acted upon by the Court, 19 would be rendered redundant by the provision that it shall not be admitted in evidence for any purpose. To act upon an instrument is to give effect to it or to enforce it."
"In our judgment, the learned Judge attributed to Section 36 a meaning which the legislature did not intend. Attention of the learned Judge was apparently not invited to Section 42(2) of the Act which expressly renders an instrument, when certified by endorsement that proper duty and penalty have been levied in respect thereof, capable of being acted upon as if it had been duly stamped."
Having noted as above, at paragraph 68 the Apex Court has drawn its conclusion as under:
"68. We draw the following conclusions, as to what has been laid down by a Bench of three learned Judges in Hindustan Steel (supra):
68.1 The Stamp Act is a fiscal measure intended to raise revenue;
68.2 The stringent provisions of the Act are meant to protect the interest of the Revenue;
68.3 It is not intended to be used as a weapon by a litigant to defeat the cause of the opponent;
68.4 Upon the endorsement being made under Section 42(2) of the Stamp Act, the document would be admissible in evidence and can be acted upon.20
At paragraph 70 the Apex Court has held as under:
"70. It is true that an unstamped instrument is compulsorily impoundable under Section 33 of the Stamp Act. The procedure to be followed thereafter is also provided in the Act. After the procedure is followed and the duty and the penalty is paid, the instrument would come to be visited with the endorsement under Section 42(2). Thereafter, it becomes enforceable and it can be acted upon, as held in Hindustan Steel."
At paragraph 92 the Apex Court has held as under:
"While the Stamp Act is a fiscal enactment intended to raise revenue, it is a law, which is meant to have teeth. The point of time, at which the stamp duty is to be paid is expressly provided for in Section 17 of the Stamp Act. There cannot be any gainsaying, that call it a fiscal enactment, it is intended that it is to be implemented with full vigour. The duty of a Court must be to adopt an interpretation which results in the enforcement of the law, rather than allowing the law to be flouted with impunity. Once this principle is borne in mind, the task of the Court becomes less difficult.
93. The law, as contained in Section 33 read with Section 35 of the Stamp Act, would result in the following conclusions:
93.1 Every person having, by law or consent of parties, the authority to receive evidence, before whom, an instrument is produced, is duty-bound 21 to immediately impound the same. This is upon his forming the opinion that the instrument is not duly stamped. In a case, where the instrument does not bear any stamp at all, when it is exigible to stamp duty, there can be little difficulty in the person forming the opinion that it is not duly stamped. No doubt, under Section 33(2), in cases of ambiguity, the person shall examine the instrument to arrive at the liability.
93.2 Apart from a person having authority to receive evidence, which, no doubt, would include a court and an Arbitrator, every person In-charge of a Public Office, before whom, such instrument is produced or comes in the performance of his functions, has the duty to impound the unstamped or insufficiently stamped document, arises. This is no doubt after 'examining' the instrument and ascertaining as to whether the instrument was stamped as required when the document was executed or first executed [See Section 33(2)].
One exception in Section 33 is an Officer of the Police. In other words, the Officer of the Police has no authority to impound an unstamped or insufficiently stamped document produced before him. No doubt, a Criminal Court is not under compulsion vide the proviso. Section 33, no doubt, authorises delegation of power.
93.3 Under Section 35, the law-giver has disabled the admission in evidence of an instrument not stamped or insufficiently stamped, for any purpose. This would include even a collateral purpose. This is in stark contrast with a document, which is compulsorily registerable but which is not registered. Under Section 49 of the Registration Act, 1908, an unregistered document may be used for proving 22 a collateral transaction. Even this is impermissible, if the document is not stamped or insufficiently stamped. Section 35 further proceeds to declare that such an unstamped or insufficiently stamped document shall not be acted upon.
93.4 It is important to juxtapose the embargo cast on an unstamped document as aforesaid with Section 2(h) of the Contract Act. Section 2(h) of the Contract Act provides that an agreement, which is enforceable in law is a contract whereas Section 2(g), an agreement not enforceable is void. The words 'enforceable in law' or 'not enforceable in law', understood in the context of Sections 33 and 35 of the Stamp Act, would mean that upon there being an occasion, which necessitates one of the parties to the agreement having to enforce the same through recourse to sanctions available in law, the same should be vouchsafed to him.
93.5 Ordinarily, agreements are enforced through actions in Civil Courts. Remedies may be sought before Public Authorities. Both the Civil Courts and the Public Authorities are tabooed from giving effect to an unstamped instrument. Section 33 does not give a choice to the person, who has authority by law, or with consent, to take evidence, or to any Public Officer, but to impound the agreement.
93.6 The unstamped or insufficiently stamped document cannot be used as evidence for any purpose. It would be inconceivable, as to how, it could be in the same breath, be found that an unstamped document is yet enforceable in law or that it is not enforceable in law. It is another matter that the parties may act upon it. Goods 23 or services may change hands, for instance, under a document, which may be otherwise exigible to stamp duty. What is, however, relevant is that the State will not extend its protection, by appropriate sanctions. The rights, which would otherwise have been available, had the agreement been stamped, would remain frozen or rather they would not exist. We are further reinforced in our view, therefore, that the views expressed by this Court in Garware in paragraph-22, following SMS Tea Estates, represent the correct position in law.
Further the Apex Court on analyzing the nature of Stamp Act being a substantive law, at paragraph 108 and 109 has held as under:
108. The aforesaid statement appears apposite in the context of an instrument which is unstamped or insufficiently stamped. This is for the reason that on the one hand as long as it is not stamped or is insufficiently stamped, it is both liable to be impounded under Section 33 of the Stamp Act and it cannot be used as evidence or registered. This is apart from the unambiguous bar against 'acting upon' such an instrument. On the other hand, if after such an instrument is impounded and duty and penalty is paid and a certificate is endorsed upon it within the meaning of Section 42(2) signals that the instrument regains life, the bar in Section 35 of the Stamp Act is removed permanently.
Equally, under Section 36 in the case of an instrument (not secondary evidence of the instrument) which is allowed to be let in evidence without objection, then it would qualify as evidence founding a right. But this is an exception to the rule which is found in Section 24 35 of the Stamp Act. Thus, an unstamped or insufficiently stamped instrument represents a case of an agreement which not being enforceable, in the sense that the sanctions in law through a civil action is impermissible, is in the said sense, invalid. It is not invalid or void in the sense of it being still born or null and void in the sense that life cannot be poured into it.
109. We may sum up. An agreement which is unstamped or insufficiently stamped is not enforceable, as long as it remains in the said condition. Such an instrument would be void as being not enforceable [See Section 2(g) of the Contract Act]. It would not in the said sense exist in law. It can be "validated" by only the process contemplated in Section 33 and other provisions of the Stamp Act. We find the expression 'validation' used in the decision of this Court in Hariom Agrawal v. Prakash Chand Malviya which we shall refer to in greater detail later. This necessarily means that the court would not view it as enforceable, and therefore, existing in law. In the sense explained, it would not be found as 'not void' and therefore 'not invalid'. Thus, in the context of the Act, the Stamp Act and the Contract Act, we are of the view that the opinion of this Court in SMS Tea Estates, in this regard as reiterated in Garware and approved in Vidya Drolia is correct.
13. From the aforesaid law enunciated by the Apex court reiterating the principles laid down in its earlier Judgment in the case of Hindustan Steel Ltd., (supra) it is clear that merely because an insufficiently 25 stamped instrument is admitted in evidence unopposed would not be a bar in the court or the authority to exercise and discharge its duties namely to impound and seek payment of stamp duty. Lest there would be bar in acting upon such insufficiently stamped instrument.
14. Since the Judgment in M/s.N.N.Global Mercantile is rendered in the light of provisions of contained in the Indian Stamp Act, 1899 it is relevant at this juncture to refer to the relevant provisions of Indian Stamp Act, 1899 which are pari materia with that of the provisions of the Karnataka Stamp Act, 1957.
The Indian Stamp Act, 1899 The Karnataka Stamp Act, 1957
17. Instruments executed in 17. Instruments executed in the India.- State of Karnataka.-
All instruments chargeable with a All instruments chargeable with a duty and executed by any person in duty and executed by any person in [India] shall be stamped before or at the State of Karnataka shall be the time of execution. stamped before or at the time of execution.
Provided that nothing in this section shall apply to an instrument in respect of which stamp duty has 26 been paid under Section 10-A
33. Examination and impounding 33. Examination and impounding of instruments.- (1) Every person of instruments.- (1) Every person having by law or consent of parties having by law or consent of parties authority to receive evidence, and authority to receive evidence, and every person in charge of a public every person in charge of a public office, except an officer of police, office, except an officer of police, before whom any instrument, before whom any instrument, chargeable in his opinion, with duty, chargeable in his opinion, with duty, is produced or comes in the is produced or comes in the performance of his functions, shall, if performance of his functions, shall, if it appears to him that such it appears to him that such instrument is not duly stamped, instrument is not duly stamped, impound the same. impound the same.
(2) For that purpose every such (2) For that purpose every such person shall examine every person shall examine every instrument so chargeable and so instrument so chargeable and so produced or coming before him, in produced or coming before him, in order to ascertain whether it is order to ascertain whether it is stamped with a stamp of the value stamped with a stamp of the value and description required by the law and description required by the law in in force in the [India] when such force in the [State of Karnataka] instrument was executed or first when such instrument was executed executed: or first executed:
Provided that,-- Provided that,-- (a) nothing herein contained shall be (a) nothing herein contained shall be deemed to require any Magistrate or deemed to require any Magistrate or Judge of a Criminal Court to Judge of a Criminal Court to examine examine or impound, if he does not or impound, if he does not think fit so think fit so to do, any instrument to do, any instrument coming before coming before him in the course of him in the course of any proceeding any proceeding other than a other than a proceeding under proceeding under Chapter XII or Chapter XII or Chapter XXXVI of the Chapter XXXVI of the Code of Code of Criminal Procedure, 1898 (5 Criminal Procedure, 1898 (5 of of 1898); 1898); (b) in the case of a Judge of the (b) in the case of a Judge of the High High Court, the duty of examining Court, the duty of examining and and impounding any instrument impounding any instrument under under this section may be delegated this section may be delegated to such to such officer as the Court appoints officer as the Court appoints in this 27 in this behalf. behalf. (3) For the purposes of this section, (3) For the purposes of this section, in cases of doubt, the Government in cases of doubt - may determine (a) what offices shall be deemed to (a) (the State Government) may be public offices; and determine what offices shall be (b) who shall be deemed to be deemed to be public offices; and persons in charge of public offices. (b) (the State Government) may determine who shall be deemed to be persons in charge of public offices. 35. Instruments not duly 34. Instruments not duly stamped inadmissible in stamped inadmissible in evidence, etc.,- evidence, etc.- No instrument No instrument chargeable with duty chargeable with duty shall be shall be admitted in evidence for any admitted in evidence for any purpose purpose by any person having by by any person having by law or law or consent of parties authority to consent of parties authority to receive evidence, or shall be acted receive evidence, or shall be acted upon, registered or authenticated by upon, registered or authenticated by any such person or by any public any such person or by any public officer, unless such instrument is officer, unless such instrument is duly duly stamped: stamped: Provided that-- Provided that-- (a) any such instrument [shall], be (a) any such instrument not being an admitted in evidence on payment of instrument chargeable [with a duty the duty with which the same is not exceeding fifteen paise] only, or a chargeable, or, in the case of an mortgage of crop [Article [35] (a) of instrument insufficiently stamped, of the Schedule] chargeable under the amount required to make up clauses (a) and (b) of section 3 with such duty, together with a penalty of a duty of twenty-five paise shall, five rupees, or, when ten times the subject to all just exceptions, be amount of the proper duty or admitted in evidence on payment of deficient portion thereof exceeds five the duty with which the same is rupees, of a sum equal to ten times chargeable, or, in the case of an such duty or portion; instrument insufficiently stamped, of the amount required to make up such (b) where any person from whom a duty, together with a penalty of five stamped receipt could have been rupees, or, when ten times the demanded, has given an unstamped amount of the proper duty or receipt and such receipt, if stamped, deficient portion thereof exceeds five would be admissible in evidence rupees, of a sum equal to ten times against him, then such receipt shall such duty or portion; be admitted in evidence against him 28 on payment of a penalty of one (b) where a contract or agreement of rupee by the person tendering it; any kind is effected by correspondence consisting of two or (c) Where a contract or agreement more letters and any one of the of any kind is effected by letters bears the proper stamp, the correspondence consisting of two or contract or agreement shall be more letters and any one of the deemed to be duly stamped; letters bears the proper stamp, the contract or agreement shall be (c) nothing herein contained shall deemed to be duly stamped; prevent the admission of any instrument in evidence in any (d) nothing herein contained shall proceeding in a Criminal Court, other prevent the admission of any than a proceeding under Chapter XII instrument in evidence in any or Chapter XXXVI of the Code of proceeding in a Criminal Court, other Criminal Procedure, 1898; than a proceeding under Chapter XII or Chapter XXXVI of the Code of (d) nothing herein contained shall Criminal Procedure 1898 (V of prevent the admission of any 1898); instrument in any Court when such instrument has been executed by or (e) nothing herein contained shall on behalf of the Government, or prevent the admission of any where it bears the certificate of the instrument in any Court when such [Deputy Commissioner] as provided instrument has been executed by or by section 32 or any other provision on behalf of the (Government), or of this Act [and such certificate has where it bears the certificate of the not been revised in exercise of the Collector as provided by section 32 powers conferred by the provisions of or any other provision of this Act. Chapter VI]. 36. Admission of instrument 35. Admission of instrument where not to be questioned.-- where not to be question- Where Where an instrument has been an instrument has been admitted in admitted in evidence, such evidence such admission shall not, admission shall not, except as except as provided in Section 58, be provided in section 61, be called in called in question at any stage of the question at any stage of the same same suit or proceeding on the suit or proceeding on the ground ground that the instrument has not that the instrument has not duly been duly stamped. stamped. 42. Endorsement of instruments 41. Endorsement of instruments in which duty has been paid on which duty has been paid under section 35, 40 or 41.-- under section 34, 39 or 40.- (1) When the duty and penalty (if (1) When the duty and penalty (if any) leviable in respect of any any) leviable in respect of any instrument have been paid under instrument have been paid under section 35, section 40 or section 41, section 34, section 39 or section 40, 29 the person admitting such the person admitting such instrument instrument in evidence or the in evidence or the [Deputy Collector, as the case may be, shall Commissioner], as the case may be, certify by endorsement thereon that shall certify by endorsement thereon the proper duty or, as the case may that the proper duty or, as the case be, the proper duty and penalty may be, the proper duty and penalty (stating the amount of each) have (stating the amount of each) have been levied in respect thereof, and been levied in respect thereof and the name and residence of the the name and residence of the person person paying them. paying them. (2) Every instrument so endorsed (2) Every instrument so endorsed shall thereupon be admissible in shall thereupon be admissible in evidence, and may be registered and evidence, and may be registered and acted upon and authenticated as if it acted upon and authenticated as if it had been duly stamped, and shall be had been duly stamped, and shall be delivered on his application in this delivered on his application in this behalf to the person from whose behalf to the person from whose possession it came into the hands of possession it came into the hands of the officer impounding it, or as such the officer impounding it, or as such person may direct: person may direct: Provided that-- Provided that,-- (a) no instrument which has been (a) no instrument which has been admitted in evidence upon payment admitted in evidence upon payment of duty and a penalty under section of duty and a penalty under section 35, shall be so delivered before the 34, shall be so delivered before the expiration of one month from the expiration of one month from the date of such impounding, or if the date of such impounding, or if the Collector has certified that its further [Deputy Commissioner] has certified detention is necessary and has not that its further detention is necessary cancelled such certificate; and has not cancelled such certificate. (b) nothing in this section shall affect the Code of Civil Procedure, (b) nothing in this section shall affect 1882 (14 of 1882), section 144 order XIII, Rule 9 of the First clause 3. Schedule to the Code of Civil Procedure, 1908. 61. Revision of certain decisions 58. Revision of certain decisions of Courts regarding the of Courts regarding the sufficiency of stamps.-- sufficiency of stamps.- (1) When any Court in the exercise (1) When any Court in the exercise of of its civil or revenue jurisdiction of its Civil or Revenue jurisdiction or any Criminal Court in any proceeding any Criminal Court in any proceeding 30 under Chapter XII or Chapter XXXVI under Chapter XII or Chapter XXXVI of the Code of Criminal Procedure, of the Code of Criminal Procedure, 1898 (5 of 1898), makes any order 1898, makes any order admitting any admitting any instrument in instrument in evidence as duly evidence as duly stamped or as not stamped or as not requiring a stamp, requiring a stamp, or upon payment or upon payment of duty and a of duty and a penalty under section penalty under section 34, the Court 35, the Court to which appeals lie to which appeals lie from, or from, or references are made by, references are made by, such first such first-mentioned Court may, of mentioned Court may, of its own its own motion or on the application motion or on the application of the of the Collector, take such order into [Deputy Commissioner], take such consideration. order into consideration. (2) If such Court, after such (2) If such Court, after such consideration, is of opinion that such consideration, is of opinion that such instrument should not have been instrument should not have been admitted in evidence without the admitted in evidence without the payment of duty and penalty under payment of duty and penalty under section 35, or without the payment section 34, or without the payment of of a higher duty and penalty than a higher duty and penalty than those those paid, it may record a paid, it may record a declaration to declaration to that effect, and that effect, and determine the determine the amount of duty with amount of duty with which such which such instrument is chargeable, instrument is chargeable, and may and may require any person in require any person in whose whose possession or power such possession or power such instrument instrument then is, to produce the then is, to produce the same, and same, and may impound the same may impound the same when when produced. produced. (3) When any declaration has been (3) When any declaration has been recorded under sub-section (2), the recorded under sub-section (2), the Court recording the same shall send Court recording the same shall send a copy thereof to the Collector, and, a copy thereof to the 1[Deputy where the instrument to which it Commissioner]1 and, where the relates has been impounded or is instrument to which it relates has otherwise in the possession of such been impounded or is otherwise in Court, shall also send him such the possession of such Court, shall instrument. also send him such instrument. (4) The Collector may thereupon, (4) The [Deputy Commissioner] may notwithstanding anything contained thereupon, notwithstanding anything in the order admitting such contained in the order admitting such instrument in evidence, or in any instrument in evidence, or in any certificate granted under section 42, certificate granted under section 41, or in section 43, prosecute any or in section 42, prosecute any 31 person for any offence against the person for any offence against the Stamp-law which the Collector stamp-law which the [Deputy considers him to have committed in Commissioner] considers him to have respect of such instrument: committed in respect of such instrument: Provided that-- (a) no such prosecution shall be Provided that,-- instituted where the amount (a) no such prosecution shall be (including duty and penalty) which, instituted where the amount according to the determination of (including duty and penalty) which, such Court, was payable in respect according to the determination of of the instrument under section 35, such Court, was payable in respect of is paid to the Collector, unless he the instrument under section 34, is thinks that the offence was paid to the [Deputy Commissioner] committed with an intention of unless he thinks that the offence was evading payment of the proper duty; committed with an intention of evading payment of the proper duty; (b) except for the purposes of such prosecution, no declaration made (b) except for the purpose of such under this section shall effect the prosecution, no declaration made validity of any order admitting any under this section shall affect the instrument in evidence, or of any validity of any order admitting any
certificate granted under section 42. instrument in evidence, or of any certificate granted under section 41.
15. As noted above, even Section 34 of the Act, 1957 apart from placing a complete embargo on the `admissibility' of an instrument not duly stamped also puts an embargo on `acting upon' the same. A close reading of Section 35 of the Act, 1957 reveal that only "admission" of an instrument insufficiently stamped cannot be called in question. There is however no reference in Section 35 with regard to "acting upon"
32on such instrument. As observed by the Apex Court in the case of Hindustan Steel Ltd., which is referred to in paragraph 51 of its Judgment is M/s.N.N.Global Mercantile (P) Limited (supra) court is prohibited from both "admitting" an insufficiently stamped instrument in evidence and `acting upon it'. It further clarifies that a document can be admitted yet not acted upon.
Thus, mere act of admitting a document, though sufficient enough to prevent questioning/or reopening the same in terms of Section 35 of the Act, the same however cannot prevent from `being not acted upon' unless the defect is cured in the manner known to law.
16. Thus, in view of the law laid down by the Apex Court in M/s.N.N.Global Mercantile (P) Limited (supra) the Stamp Act being a fiscal measure intended to raise revenue and the stringent provisions of the Act are meant to protect the interest of the revenue 33 and that upon endorsement being made under Section 41 of the Act, 1957 the document admitted in evidence can be acted upon. As already noted though the document in question has been admitted in evidence the same does not purport to authorize the court to act upon the same without compliance of payment of required stamp duty.
17. It may not be out of place to refer to some of the decisions of this court on the aforesaid issue;
(i) In the case of Savik Vijai Engineering Private Limited and others Vs BCL Financial Services Private Limited, in W.P.65132/2016 decided on 21.03.2019 this court while relying upon the Judgment in the case of Savithramma (supra) held that the document insufficiently stamped and admitted in evidence though objection was not raised, subsequently it does not take away the obligation to impound the document under Section 33 of the Act.
(ii) Similarly in the case of Sri.R.Mahesh and anr Vs B.P.Venugopal reported in AIR 2019 Kant 198, ILR 2018 Kar 3029 dealing with identical situation, Co- ordinate Bench of this court has held at paragraph 14 that .........."A mere marking of the document would not suffice to escape from the rigour of the Act. It is obvious that there has been no judicial application of mind before admitting the document. The marking of document is a ministerial act and on the contrary, the admission of a document is a judicial act. Admittedly no 34 objections has been raised at the time of marking of document. That by itself will not absolve the court of its responsibility to examine the admissibility aspect of the same or the power to secure the interest of the State Exchequer by calling for and impounding the document for the limited purpose of calculating and collecting stamp duty. This view of the court is further fortified by scheme of the Act as set out in Section 36, 41 and 42 of the Act.
Further relying upon the observation of the Apex Court in the case of Hindustan Steels Ltd., (Supra) and in the light of provisions of Section 58 of Act 1957 has held that ".......in respect of a document which is already marked the court is entitled to subsequently hold it to be a document which is not stamped or insufficiently stamped and it shall also determine the amount of duty with which such instrument is chargeable."
(iii) In the case of S.Byregowda and anr Vs Saramma Joseph Tannickal in W.P.Nos.49650- 49651/2017 decided on 12.09.2019 following the principles in the case of R.Mahesh (supra) has directed document to be impounded with liberty to pay the deficit duty and penalty.
18. In the light of the provisions of Act, 1957, principles of law enunciated by the Apex Court and the consistent decisions of Co-ordinate Benches of this court referred to hereinabove, it can safely be said that even if an insufficiently stamped instrument is admitted in evidence unopposed, the embargo placed 35 under Section 35 of the Act, 1957 regarding questioning the admissibility cannot be read to mean that the same would enable the court to "act upon"
such insufficiently stamped instrument without curing the defect of payment of stamp duty. The requirement of payment of stamp even as contemplated under Section 17 of the Act, 1957, is before or at the time of execution and a duty is casted upon the Court under Section 34 to ensure payment of stamp duty. The only remedy is to cure the defect by payment of stamp duty and penalty if any in accordance with law and such an act would not amount to recall or review or reopening of the order admitting the document.
19. In the light of the law enunciated by the Apex Court in the case of M/s.N.N.Global Mercantile (P) Limited (supra) and for the aforesaid reasons and analysis writ petition is allowed. Impugned order 36 dated 01.08.2016 in O.S.No.1342/2006 on the file of I Additional Senior Civil Judge, Bangalore Rural District, Bangalore is set aside. Matter is remitted to the trial court for adjudication on the memo dated 24.04.2014 filed by the petitioner and to pass appropriate orders in the light of the observations made hereinabove. Such order shall be passed within a period of eight weeks from the date of receipt of the certified copy of this order.
The assistance rendered by Mr.Siddiq Hussain Khan Shah, Law Clerk cum Research Assistant is placed on record.
Sd/-
JUDGE RU/SBN