Karnataka High Court
M/S Bangalore Ice Factory vs Sri B S Venkatram on 24 April, 2013
Author: A.N.Venugopala Gowda
Bench: A.N. Venugopala Gowda
1
IN THE HIGH COURT OF KARNATAKA AT BANGALORE
DATED THIS THE 24TH DAY OF APRIL, 2013
BEFORE
THE HON'BLE MR. JUSTICE A.N. VENUGOPALA GOWDA
WRIT PETITION NO.16063/2011 C/w
W.P.NO.10397/2012 (GM-CPC)
In W.P.No.16063/2011
BETWEEN:
M/s. Bangalore Ice Factory,
By its Proprietor,
(earlier Managing Partner),
Sri B.V. Chandrashekar,
Aged about 52 years,
No.132, 1st Main Road,
Seshadripuram,
Bangalore - 560 022.
...PETITIONER
(By Sri S. Shaker Shetty, Adv.)
AND:
Sri B.S. Venkatram,
S/o. Sri B.V. Siddaramaiah,
Aged about 75 years,
No.19/2, Serpentine Road,
Kumara Park West,
Bangalore - 560 020.
.. RESPONDENT
(By Sri M. Ramakrishna, Adv.)
2
This petition is filed under Articles 226 and 227 of
the Constitution of India, praying to call for the records
and quash the impugned order dated 15.3.2011 passed in
O.S.No.3631/2008, by the 17th Addl. City Civil Judge,
Bangalore (CCH-16) vide Annexure-D.
In W.P.No.10397/2012
BETWEEN:
M/s. Bangalore Ice Factory,
No.132, I Main Road,
Seshadripuram,
Bangalore - 560 020
Rep. by its proprietor,
Sri B.V. Chandrashekar.
...PETITIONER
(By Sri S. Shaker Shetty, Adv.)
AND:
B.S. Venkatram,
S/o. B.V. Siddaramaiah,
Aged about 79 years,
No.19/2, Serpentine Road,
Kumara Park West,
Bangalore - 560 020.
.. RESPONDENT
(By Sri M. Ramakrishna, Adv.)
This petition is filed under Articles 226 and 227 of
the Constitution of India, praying to quash the order
passed by the learned XVII Addl. City Civil Judge,
Bangalore passed on 02.03.2012 in O.S.No.3631/2008 as
per Annexure-E according to law.
These petitions coming on for preliminary hearing in
'B' group this day, the Court made the following:
3
ORDER
Petitioner is the plaintiff and respondent is the defendant in O.S.No.3631/2008 pending in the Bangalore City Civil Court. The suit was filed on 06.06.2008, to pass a decree of specific performance directing the defendant to execute a sale deed in favour of the plaintiff, in respect of plaint schedule property, as per an agreement of sale dated 22.11.2006, by receiving the balance sale consideration amount and for grant of consequential reliefs. The respondent/defendant filed written statement on 30.01.2009, denying the execution of the suit document/sale agreement dated 22.11.2006. Based on the pleadings, issues having been raised, the plaintiff filed an affidavit by way of examination-in-chief. On 26.10.2010, deponent of the affidavit was treated as PW.1. On 16.11.2010, finding that the suit document is insufficiently stamped and also unregistered, Trial Judge directed the office to calculate and put up duty and penalty to be paid by the plaintiff on the said document, for directing the plaintiff to deposit the amount in the Court. 4 By making a reference to a decision reported in ILR 2004 Kar 4752. On 27.11.2010, Trail Judge directed the office to calculate the market value of suit property, as on the date of the sale agreement. On 15.03.2011, PW.1 was partly examined and Exs.P1 to P6 were marked. Suit document was impounded in terms of the decision in the case of S. Suresh V/s L. Pothe Gowda and others, AIR 2010 (3) Kar 876. Assailing the said order, W.P.No.16063/2011 has been filed.
2. After the passing of order dated 02.02.2012, the plaintiff filed an I.A. under S.37(2) of Karnataka Stamp Act, 1957 ("the Act" for short) r/w S.151 of CPC, to recall the order dated 02.02.2012 and refer the agreement to sell dated 22.11.2006 to the Deputy Commissioner for adjudication, on the ground that the duty and penalty imposed as per the order dated 02.02.2012 is excessive and inappropriate and that the plaintiff has a statutory right to seek adjudication before the Deputy Commissioner. The Trial Judge having considered the 5 application and having noticed the ratio of law in the decision reported in ILR 2007 Kar 4752, held that the Court can determine the duty and penalty to be paid. The duty and penalty was calculated and the plaintiff was directed to pay the same. Assailing the said order, W.P.No.10397/2012 has been filed.
3. Sri S. Shaker Shetty, learned advocate appearing for the petitioner, at the outset submitted that the petitioner is giving up the challenge to the action/order of the Trial Court, in so far as the impounding of sale agreement dated 22.11.2006 is concerned. Learned counsel contended that the suit document having been impounded, the Trial Judge ought to have sent the document to the Deputy Commissioner for adjudication of the duty and penalty and for issuance of a certificate. He submitted that the Trial Court has no authority to determine the duty and penalty on the impounded document and compel the plaintiff to pay the duty and penalty. He further submitted that the impugned order 6 directing the payment of duty and penalty suffers from material irregularity and being vitiated is liable to be quashed. Reliance was placed on the decisions in the cases of Leelamma Samuel V/s Francis, ILR 1994 Karnataka 3143 and Chilakuri Gangulappa Vs. Revenue Divisional Officer, Madanapalle and another, AIR 2001 SC 1321.
4. Sri R. Ramakrishna, learned advocate appearing for the respondent on the other hand supported the view taken by the Trial Court in the matter of impounding of the suit document and also the decision taken for calculation of duty and penalty and in directing the plaintiff to remit the sum. He sought dismissal of both the writ petitions.
5. Perused the writ record. The point for consideration is, whether the impugned orders suffer from material irregularity and warrant any interference?
6. Chapter IV of the Act deals with 'instruments not duly stamped.' S.33 of the Act provides for examination 7 and impounding of instruments. S.34 of the Act declares that the instruments not duly stamped is inadmissible in evidence, etc. Said provisions mandate that no instrument chargeable with duty shall be admitted in evidence for any purpose, by any person, having by law or consent of the parties, authority to receive evidence. Further, the provision mandates that such an instrument shall not be acted upon, registered or authenticated, by any such person or by any public officer, unless, such instrument is duly stamped. The proviso thereunder provides for admission of such instrument, provided that it can be admitted in evidence on payment of duty, with which the same is chargeable or in the case of an instrument insufficiently stamped, of the amount required to make up such duty, together with a penalty. The provision refers to the powers of the Civil Court, which admits the document in evidence. Unless the instrument is duly stamped, it is inadmissible in evidence. The proviso is an exception and it provides for payment of duty and penalty. In the matter of collection of duty and penalty no discretion is vested with 8 the authority admitting such an instrument in evidence. The duty payable on the instrument is prescribed in the statute.
7. S.37 of the Act deals with the procedure to be followed by the authority after impounding the document under S.33 and after passing of the order under S.34 or S.36 of the Act. When a person impounding an instrument under S.33 has by law or consent of parties, authority to receive evidence and admit such an instrument in evidence, upon payment of a penalty as provided under S.34 or duty as provided under S.36, in Sub-Section(1) of S.37, he shall send to the Deputy Commissioner or to such person, as he may appoint in this behalf, an authenticated copy of such instrument, together with a certificate in writing, stating that the payment of duty and penalty levied in respect thereof. Sub-Section (2) S.37 of the Act provides 'in every other case', the person so impounding an instrument shall send it in original to the Deputy Commissioner.
9
8. The decisions on which Sri S.Shaker Shetty placed reliance, noticed in para 3 supra, have no application to the case on hand, more particularly, on account of settled position of law in catena of decisions wherein the scope of the provisions of Ss.33, 34, 37, 38 and 39 of the Act have been examined and it has been held by this Court that, on payment of duty and penalty, the Court has to send an authenticated copy of instrument together with a certificate in writing stating the amount of duty and penalty levied in respect of such document and send such amount to the Deputy Commissioner or to such person as he may appoint, and, if the Commissioner thinks fit, refund any portion of the penalty paid in respect of such instrument. Such a course of action has been held as permissible to prevent delay in deciding of the suit.
9. In the case of Mahadeva Vs. The Commissioner, Mysore City Corporation and others, ILR 2003 Kar 1653, the question considered was, whether the 10 Trial Court was justified in demanding the payment of duty and penalty in terms of S.34 of the Karnataka Stamp Act, 1957, on an unregistered and unstamped sale deed relied upon by the petitioner as a condition for letting the same into evidence in proof of a collateral transaction? While answering the said question, it has been held as follows :-
10. The only other question that was argued by Mr. Shetty was whether the amount of duty and penalty on the sale deed relied upon by him could determined by the Court itself or a reference to the Registrar of Stamps was necessary. There is no provision in Karnataka Stamp Act, 1957, nor has Mr. Shetty brought any to my notice which would envisage a reference to the Registrar of Stamps for determining the duty payable on any instrument. The scheme of Section 34 of the Karnataka Stamp Act, 1957, also does not envisage any such reference being made before the document could be marked. The amount of duty payable on the sale deed (in the absence of any material to show that the property had been undervalued), is relatable to the consideration that was paid and received by the parties to the transaction. The penalty amount leviable on the instrument also didn't require or call for any enquiry which could possibly call for a reference to the Registrar. The Court below was therefore justified in holding that the duty payable on the instrument as also the penalty had to be calculated by the Court and not by the Registrar as argued by the plaintiff."
11
10. In the case of Sri J.Prakash Vs. Smt. M.T.Kamalamma and Another, ILR 2007 Kar 4752, the petitioner was the plaintiff and the respondents were the defendants in O.S.No.2305/2006 on the file of the 11th Additional City Civil and Sessions Judge, Bangalore. The suit had been filed to pass a decree of specific performance of an agreement to sell dated 8.10.2005 in respect of the suit property. The defendant filed written statement and contested the suit. Defendant filed I.A.3 under S.34 of the Act r/w S.151 of CPC, to direct the plaintiff to pay the duty and penalty on the suit document, to which the plaintiff filed objections. The Trial Court on consideration of rival contentions of the parties, allowed I.A.3 by an order dated 18.1.2007 and directed the plaintiff to pay stamp duty and penalty in all amounting to `11,30,780/- as per Article 5(3)(i) of Schedule to the Act r/w S.34 of the Act. The said order was questioned in the writ petition. Upon consideration of the scope of the provisions in Ss.33, 34, 37 and 39 of the Act, it was held as follows:
12
"20. From the aforesaid provisions, it is clear that the procedure prescribed for levy of duty and penalty in respect of an impounded instrument under Section 33 of the Act is different from levy of duty and penalty on a document admitted in evidence. In the present case, the suit is based on the agreement for sale dated 8.10.2005. The said document is yet to be tendered for admitting in evidence. Therefore, the document could have been impounded under Section 33 of the Act and sent the same to the Deputy Commissioner under Section 37(2) of the Act. Thereafter, the Deputy Commissioner has to levy the duty and penalty under Section 39 of the Act and return the document to the impounding Officer. This will delay the suit. Instead of that, the Court itself can deal with the instrument under Section 34 of the Act. In Laxminarayanachar v. Narayana 1969(2) My.L.J 299 this Court has held that when the document is produced before the Court for being used in evidence, the first jurisdiction of determining the duty and penalty is that of the Court. It is only when that stage is crossed and the document is not tendered in evidence, the provisions of Sub- section (2) of Section 37 of the Act are attracted. Therefore, the court below is justified in determining duty and penalty on the document in question."
11. In the case of Ningappa Bharamappa Sogi Vs. Government of Karnataka, by its Secretary, Department of Stamps and Registration and others, ILR 2011 Kar 2484, the Trial Court considering the nature of transaction and the suit document, found that the document is not sufficiently stamped and called upon the petitioner to pay the stamp duty and penalty in terms of the provisions of S.34 of the Act and since the amount was not paid, the 13 document was impounded and, at that stage, application was filed by the petitioners seeking the Court to send the original agreement of sale to the District Registrar for impounding and collection of stamp duty and penalty. Said applications having been rejected, the writ petitions were filed questioning the Constitutional validity of S.34 and Article 5(e) of the Act and also the order passed by the Trial Court. It was contended that the document should have been sent under S.37 of the Act for the purpose of determination of duty as well as penalty by the District Registrar and there was no reason for the Civil Court to determine the duty as well as penalty, as the document was not admitted in evidence and that, only in case the document is admitted, the Court can call upon the party to pay duty as well as penalty. In the light of the rival contentions, one of the points raised for consideration was, whether the Court is required to refer the impounding document to District Registrar under Section 39 for re- determination of the stamp duty and penalty? While declaring that the impugned provision does not suffer from 14 any vires of unconstitutionality, it has been held as follows:
"27. Under Section 34, the power is conferred on the Court to levy stamp duty as well as penalty. This provision is self complete providing for charging as well as machinery. It is not dependent on the provisions of Section 39 of the Act nor it is required to be re-determined by the District Registrar. What is contemplated under Section 34 is the power of the Court to determine and levy the stamp duty as well as penalty. Once it is determined by the Court, there cannot be any other authority to sit in judgment over the determination arrived at by the Court and re-determine the duty as well as the penalty. As such, Section 39 cannot be understood to mean that the District Registrar has still power to re-determine the duty as well as the penalty even after the Court having determined the same under Section
34.
28. Issue as regards the conflict between Sections 34 and 39 is not germane for the purpose of this case. Section 39 operates in a different field and Section 34 operates only when the document is presented before the Court and in both the cases, the penalty is leviable, legislation cannot be invalidated on the ground that there is disparity between these two provisions. Provisions have to be understood in the context and the purpose.
29. Insofar as the interpretation of provisions of Section 33, 34, 37 and 39 is concerned, this Court in a decision in K. AMARNATH vs. SMT. PUTTAMMA, 2000 (4) Kar.L.J. 55, observed that, on combined reading of Section 33, 34, 35, 36, 37 and 41 of the Karnataka Stamp Act, what emerges is that when a document comes up before the Court, it has to examine and determine whether it is properly stamped; and when the other side objects to it, the Court should consider such objection and hear both sides; after hearing, if the Court comes to the conclusion that the document has been duly stamped, it shall proceed to admit the document into evidence; on the other hand, if the Court 15 comes to the conclusion that the document is not duly stamped or insufficiently stamped, it shall pass an order holding that the document is not duly stamped and determine the Stamp duty/deficit stamp duty and penalty to be paid and fix a date to enable the party who produces the document to pay the Stamp duty/deficit Stamp duty plus penalty; if the party pays the duty and penalty the Court shall certify that proper amount of duty and penalty has been levied and record the name and address of the person paying the said duty and penalty and then admit the document in evidence as provided under Section 41(2) of the Act, and thereafter, the Court shall send an authenticated copy of the instrument to the District Registrar together with a certificate and the amount collected as duty and penalty, as provided under Section 37(1). It is only if the party does not pay the duty and penalty, the Court will have to pass an order of impounding the document and sent the instrument in the original to the District Registrar for being dealt with in accordance with law as per Section 37(2) of the Act. It is not contemplated that the District Registrar can sit in appeal as against the determination of the duty as well as the penalty. It is, in this context, only for the purpose of further action, their document is referred under Section 37(2) of the Act, and, as such, the contention of the petitioners that even after determination of the duty and penalty by the Court, the District registrar has power to re-determine the same under Section 39 is not acceptable."
12. In W.A.No.885/2008 decided on 07.12.2012 (Digambar Warty and others Vs. District Registrar, Bangalore Urban District), with regard to scope of the provisions in the Act, noticed supra, it has been held as follows:
16
"38. The reason is obvious. Generally, it is the Civil Court which receives the instrument in evidence. Admission of instrument in evidence is not proof of the said instrument. If the execution of the instrument is denied by the executant or the opposite party, burden is cast on the person producing the said instrument to prove that the instrument was executed in accordance with law. He may have to examine the attesting witnesses if there is any, or he may request the Court to compare the signature found on the said instrument with the admitted signatures in the case or he may request for sending the said instrument containing the signature for the opinion of the handwriting expert. Therefore the original document, after it being impounded and the party paying the duty and penalty cannot be sent to the Deputy Commissioner, the law provides for a authenticated copy of such an instrument being sent to the Deputy Commissioner. However, in all other cases, it is the original of the document impounded which is to be sent to the Deputy Commissioner. The object being, the said provision should not come in the way of speedy disposal of cases before the Court.
39. Section 38 of the Act deals with the power of the Deputy Commissioner to refund the penalty paid under Sub- section (1) of Section 37. When a copy of an instrument is sent to the Deputy Commissioner under Sub-section (1) of Section 37, he may, if he thinks fit, refund any portion of the penalty in excess of five rupees which has been paid in respect of such instrument. The reason being, when a person receiving the evidence impounds the document and collects the duty under Section 34 of the Act, which in most of the cases, is the Civil Court, the time of the Court should not be wasted in deciding, whether it is a fit case where penalty of ten times the duty is to be levied or a case is made out for imposition of lesser penalty. Therefore, the Legislature consciously has used the word, 'shall' taking away any discretion in the Civil Court in the matter of imposition of penalty equal to ten time the duty payable. However, the Civil Court after impounding the document, collecting the duty and penalty, is under a statutory obligation to send it to the Deputy Commissioner under Sub-17
section (1) of Section 37. Therefore, when such an instrument is so sent to the Deputy Commissioner, he has been conferred the power to reduce the penalty already paid before the Civil Court. One of the reasons why such a discretion is not vested with the Civil Court is, it is the revenue authorities who are more concerned with the collection of revenue, and that is not the job of the Civil Courts. However, if a document which is not stamped or insufficiently stamped is tendered in evidence in Civil Court and admitted in evidence, then the very purpose of the Stamp Act itself would be defeated. Therefore, a power is vested in Civil Court to impound the document. In fact, it is an obligation cast on the Civil Court by the statute. But, the legislature does not want to burden the Civil Court to go into the question, whether a case for payment of lesser penalty is made out or not. The Civil Courts cannot be expected to be wasting their precious judicial time in deciding matters which exclusively fall within the sphere of revenue authorities and under the scheme of the Act, which has to be decided by them. Therefore, it prescribes that after determining the duty payable on such instrument, to collect the duty with ten times penalty and then transmit the document to the Deputy Commissioner with duty and penalty so collected. Thereafter, a power is conferred on the Deputy Commissioner under Section 38 of the Act to hold an enquiry after giving an opportunity to the person who has paid duty and penalty to extend the benefit of reduction of penalty. Such a reduction in penalty is available to both the documents i.e., tendered before the Civil Court or produced directly before the Deputy Commissioner under Section 33. No discrimination in law is made between these two types of documents. However, there appears to be some conflicting opinion in this regard. "
(Italicized by me for emphasis)
13. In the case of Miss Sandra Lesley Anna Bartels vs. Miss P. Gunavathy, AIR 2013 Kar 52, after considering the provisions of Ss.33 and 34 of the Act and the decisions 18 in the cases of Lakshminarayanachar vs. Narayan and another, 1969 (2) MLJ 299), K. Dinesh Vs. Kumaraswamy- W.P.No.10441/2008 decided on 30th August 2010 and S. Suresh (supra), in the matter of impounding insufficiently stamped document, where it comes to the notice of the court and the course of action which should be taken by a Court, it has been held as follows :-
"11. There are two different circumstances under the Stamp Act for impounding a document; (1) the Court has power to impound the document, moment it appears to the Court that such instrument is not duly stamped and (2) or to wait till such document is tendered in the evidence. A combined reading of Sections 33 and 34 clearly reveal that a discretion is granted to the Court either to impound the document under Section 33 before the same is tendered in evidence and even if a document is not impounded under Section 33, the Court is bound to impound the document when the same is tendered in the evidence under Section 34. In other words, the Court cannot say that it will wait till the document is tendered in the evidence. It is only an option given to Court to exercise the power under Sections 33 & 34 but the difference between Sections 33 and 34 is that, Section 34 can be enforced by a Court when a document has to be received in the evidence but Section 33 can be invoked not only by the Court, but, by every person in-charge of a public office. A person in-charge of a public office has no power to exercise the power vested under Section 34 of the Act.
12. Court cannot say that it would impound the document only when the document is tendered in evidence for marking. There may be instances where duty and penalty payable may be very high and the party may not 19 choose to rely upon such insufficiently stamped document in order to avoid stamp duty and penalty. In such circumstances, it would result in loss of revenue to the exchequer. The power of impounding a document is to collect stamp duty and penalty whenever there is an escape of duty. Therefore, when it is brought to the notice of the Court that a document is insufficiently stamped, the Court exercising its power under Section 33 of the Act has to pass an order at the first instance for impounding the document. Though there is a discretion vested in the Court to exercise powers under Sections 33 and 34 of the Act, no Court can hold that it would wait till the document is tendered in evidence. In such circumstances, there may be chances of loss of revenue to the exchequer.
13. In the circumstances, we answer the reference "holding that under Section 33 of the Stamp Act, the moment an insufficiently stamped instrument comes to the notice of the Court, the same has to be impounded in accordance with Section 33, whether the same would be relied upon by the party under Section 34 or not."
14. In view of the ratio of decisions noticed in paras 8 to 13 supra and the challenge to the order/action of the Trial Court in impounding the suit document having been given up, the course of action taken by the Trial Court to calculate the duty and penalty payable on the impounded document of the plaintiff and in directing him to deposit the sum, does not suffer from any material irregularity, warranting any interference. The course of action which the Trial Court adopted for the impounding of 20 the insufficiently stamped document and in directing the petitioner to pay the duty and penalty being inconformity with the well settled position of law as per the decisions noticed supra, the impugned orders are neither irrational nor illegal.
In the result, the writ petitions being devoid of merit, shall stand dismissed with no orders to costs.
Sd/-
JUDGE Ksj/-