Andhra Pradesh High Court - Amravati
Ayyaluri Sivamma, vs The State Of Andhra Pradesh, on 14 December, 2020
Author: M. Ganga Rao
Bench: M. Ganga Rao
THE HON'BLE SRI JUSTICE M. GANGA RAO
Writ Petition No.4577 of 2019
ORDER
This writ petition, under Article 226 of the Constitution of India, is filed to issue a Writ of Mandamus declaring the order of the 2nd respondent vide proceedings No.G1/411/2018 dated 16.02.2019, as illegal, arbitrary and violative of principles of natural justice and consequently to set aside the same.
Heard learned counsel for the petitioner, learned Government Pleader for Assignment appearing for the respondents 1 & 2 and learned counsel appearing for the respondents 3 to 5. Perused the material on record.
The facts, in brief, are that a civil suit - OS.No.66 of 2013 was filed by the petitioner against the respondents 3 to 5 herein, for declaration and other reliefs, basing on an unregistered agreement of sale, dated 01.06.1997, executed by the 3rd respondent and his brother in favour of the husband of the petitioner. At the trial of the suit, the said document was filed as evidence. Since the document was not duly stamped, the learned II Additional Senior Civil Judge, Nandayal, referred the document to the 2nd respondent, by order passed in IA.No.710/2018 in OS.No.66 of 2013, for the purpose of impounding and collection of proper stamp duty and penalty payable on the unregistered agreement of sale. The 2nd respondent vide the proceedings dated 16.02.2019, directed the petitioner to pay the deficit stamp duty of Rs.42,980/- and penalty of Rs.4,29,800/-. Aggrieved thereby, the present writ petition came to be filed.
Learned counsel for the petitioner submits that as per Section 40(1)(b) of the Indian Stamp Act, 1899, if the 2nd respondent is of the opinion that the document is chargeable with duty and is not duly stamped, he has to exercise 2 MGR,J WP_4577_2019 his statutory discretionary power and 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. The 2nd respondent, without taking into account the factors concerned for deciding as to what should be the proper amount of penalty to be imposed, mechanically, following the circular memo, dated 01.06.2018, of the Commissioner & Inspector General of Registration and Stamps, imposed the maximum penalty. In the Circular memo, dated 01.06.2018, issued by the Commissioner and Inspector General of Registration and Stamps, it is stated that 'in case of impounding of compulsorily registered documents, the maximum penalty should be levied to safeguard the legitimate Stamp Revenue'. The 2nd respondent has to exercise statutory discretion endowed on him in a fair and reasonable manner. The 2nd respondent is under obligation to record reasons which persuaded him to impose maximum penalty. But, in the impugned order except noting the value of the property on which duty is to be paid, it is not stated as to how the 2nd respondent arrived at the maximum penalty to be imposed in respect of the document. When a discretion is given to a public authority, such public authority should exercise such discretion reasonably and not in oppressive manner. Imposition of the extreme penalty i.e. ten times of the duty or deficient portion thereof must be supported by justifiable reasons. The impugned order is bereft of reasons and is violative of principles of natural justice. In support of his contentions, he relied on a recent decision of the Hon'ble Supreme Court in Trustees of H.C. Dhanda Trust v. State of Madhya Pradesh & Ors,.
Learned Government Pleader and learned counsel for the unofficial respondents, having reiterated the averments in the counters filed by the respondents, submits that the recitals of the unregistered agreement of sale 3 MGR,J WP_4577_2019 fall under Article 47A of Schedule IA of Indian Stamp Act. The value of the instrument was ascertained as Rs.3,90,720/- (as mentioned in the instrument). Therefore, the deficit stamp duty was arrived at Rs.42,980/-. The 2nd respondent impounded the document by imposing ten times penalty as per Section 40(1)(b) of the Indian Stamp Act. The provision empowers the 2nd respondent to levy the penalty of an amount not exceeding ten times the amount of the proper duty or the deficient portion thereof. In exercise of the said powers, the 2nd respondent impounded the document by imposing penalty of ten times the proper duty. The contention of the writ petitioner that the 2nd respondent, being carried away by the circular dated 01.06.2018, imposed ten times penalty, without applying his mind cannot be countenanced. Nowhere in the impugned proceedings, the circular memo was referred. The writ petition is liable to be dismissed.
I have given earnest consideration to the facts and submissions. Section 40(1)(b) of the Indian Stamp Act, reads as under:
(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 the 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 Collector may, if he thinks fit, remit the whole penalty prescribed by this section.
A reading of the provision makes it clear that if the 2nd respondent thinks fit, he can impose penalty of an amount not exceeding ten times the amount of 4 MGR,J WP_4577_2019 the proper duty or of the deficient portion thereof. Thus, the amount of penalty not exceeding ten times, under Section 40(1)(b), is neither automatic nor can be mechanically imposed. Hence, the 2nd respondent is under obligation to give reasons which weighed with him in imposing the maximum penalty. In the impugned proceedings, the 2nd respondent has only stated that 'as the instrument is unregistered sale agreement, it is chargeable under Article 47 of Schedule 1A of Indian Stamp Act and the value of the instrument is ascertained as Rs.3,90,720/-, therefore, it is adjudicated as per the provisions of Indian Stamp Act with stamp duty of Rs.42,980/-; therefore, the party is requested to pay the deficit stamp duty of Rs.42,980/- and penalty of Rs.4,29,800/- total Rs.4,72,780/-'. No reasons much less justifiable reasons have been given by the 2nd respondent justifying the imposition of maximum penalty of ten times. The impugned proceedings are issued by the 2nd respondent mechanically without application of his mind.
In the decision relied on by learned counsel for the petitioner, the Hon'ble Supreme Court, referred to relevant Sections in the Indian Stamp Act and its earlier decision in Peteti Subba Rao vs. Anumala S. Narendra, 2002 (10) SCC 427 wherein it was held as follows:
"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."5
MGR,J WP_4577_2019 The Hon'ble Supreme Court in the above case categorically held that it is only in the very extreme situation that penalty needs to be imposed to the extent of ten times.
For the aforesaid reasons, the order passed by the 2nd respondent, vide proceedings No.G1/411/2018, dated 16.02.2019, without giving any reasons and without application of mind, is held to be illegal, arbitrary and bad in law. Hence, the same is liable to be set aside.
Accordingly, the order passed by the 2nd respondent, vide proceedings No.G1/411/2018, dated 16.02.2019, is set aside and the matter is remanded back to the 2nd respondent to adjudicate the issue afresh and pass reasoned orders, within a period of eight (08) weeks from the date of receipt of a copy of this order and communicate the same to the parties concerned.
Till the above exercise is completed, there shall be stay of all further proceedings in OS.No.66 of 2013 on the file of the II Additional Senior Civil Judge's Court, Nandyal.
The Writ Petition is accordingly allowed. There shall be no order as to costs.
Pending interlocutory applications, if any, shall stand closed.
______________ M.GANGA RAO, J 14.12.2020 Vjl