Karnataka High Court
Satish S/O Late Ganapathsa Meharwade vs The State Of Karnataka on 6 July, 2011
Bench: N.Kumar, Aravind Kumar
IN THE HIGH COURT OF KARNATAKA CIRCUIT BENCH AT DHARWAD DATED THIS THE 6"! DAY OF JULY, 20170 PRESENT us AND THE HON'BLE MR.JUSTICE. ARAVIND KUMAR) WRIT APPEAL NC )& 17 wae C/w. WA No.6269 (20107. WA & WA Nov 6275/2010 010° a b2¢ 2170/2010 IN W.A NO. 6178/2010 Between: 1. » Hubs, Dist: Dharwad. (By. i And: 1, Satish S/o. tate Gana path sa' Meharwade, Age: SO years, Oce: Busines Ss, Riat: .Ambikanagar, Keshwapuir, Huth -23, Dist: Dharwad. Gopal S/o. late © u rnathsa Khode, Age: 54 years, Occ: Brisiness, R/at? Pinto Road. Desai Cross, . Appellants Sri. FLV. Patil,Advocate) TheStai eof Karnataka, Rep. by the Secr etary, Denartment of Stamps & Registr ation, Bangalore. i drappa S/o. Honnappa Hot agi, ; \ge : 64 vears, Occ: bene uiture, 8 Nagar, Unkal Area, , Dist: Dharw ad. "3 oo. ~ 10; wd ve Honnappa S/ o. Rud ~ R/ate Fla No. B-S02, Silver Sprit _ Apartme ent, Lokhandaw a Andheri West, Mumbai-3: x Smt. Anasuva W/o. Rud rappa Hotagi, Age: 39 vears, Occ: Household, R/at: Sai Nagar, Unkal Area, Hubli, Dist: Dharwad. Siddappa S/o. Kudrappa Hote Age: 39 vears, Occ: Agriculture: Mes R/at: Sai Nagar, Hv bhi. Dist: Dh arwe fads Ashok S/o. Rudrappa Hetagi, Age: 36 vears, Oce: Agricu*ture, R/at: Sai Nagar, Hubli, Dist: Dharwad. appa Hoiagi, Age: 34 years, Occ:-Agriculture, R/at: Sai Nagar, Hu bli, Dist: Dhorwe Basava S/o. Rudrappa Hotasi, Age: 26 yvears,-Gcc: Agr iculture, R/at: Sai. Nagar, Hubli Dist, Dharwad. Smt. Basav Va W /O. Umes h Ye anagi, Age: 26 years, Gece: Household, Rfat: Belawadi-village™. -- Tq. & Dist: Dharwad, ~ Hasmukh'S/o. Ranachoudas Sheth Age: 64. years, Occ: Business, ing Apartment: ok handawala Complex i Andheri West, Mumbai-53. itssh Sto Hasmukh Sheth. Age. 44-vears, Occ: Business, R/at» Flat No.B-502, Silver Spring 2» Complex, la ---- x ' a be o ca S&S Fe Business wD got naer a c oy Rest & oraying ry Mv Act, ir 'WA NO.§269/2010 lL. Government of Karnataka, by its Secretary. epartment of Stam ps And Regis ration, lo wt os * Fa a ee eee re-S6G6 O01. : = ¥ Dangé all 2. Ningappa Basappa Sooei, Age: 37 vears, Occ: Agriculture, fat: Amargol-580 025; Te: Hubli, 3. Chanamma W/o. Ningappa-Segi, Age: 35 years, Occr Agric Witures. R/at: Amargol, Hubli: 4. Manjula W/o. Siddapp¢ q Mus vad, Age: 25 years, Occr Hous eholc d werk, R/at: Shivallr: 580) 001, Te q Dharwad. oF 5S. Sunanda W/o. "Veerah Mu ugad, Age: 25 years;:Oce: Agricu ulture, R/at: 'Shivaili-S' 30 GO i. Tq: Dharwad. Ce : Respondents (By Sri. C. 5 Patil, AGA for OR. '1, Sri. Malli karjunswamy B. Hiremath Adv. for R.2-R.5} _ This: "Writ Appeal is filed under Section 4 of Karnataka High Court Act, 1961, praying to set aside the order dated 19/03/2016. passed. in W.P.No.60874/2010, passed by the learne de Si ingle Judge of this Hon'ble C ourt. IN W.A NO. 6270/ 2010 = Betwe een: ; ears, "Occ: Agric ultur re, Adaragunchi, Tq: Hubli. Appellant G.R Andanimath, Advocate} frre ie 5. And: 1. Government of Karnataka by its Secretary, Department of Stamps And Registration, Bangalore- S60 001. ae boQ Ramanagouda Shankaragouda | Neelappagoudar, Age: 37. years, Oce: Agriculture, R/at: Adargurchi. Ta: Hubli an . 3. Shankaragouda Ramanagoéuda | Neelappagoudar, Age? 17 years, Occ: Student, R/at: Ade ireunchi; Tq: Hubli, minor by.his-gu: ardian : Ratnawwa W/o-Ramanagoud a. Neelappagoudar,. Age: 32 years, Occ: Agriculture; we R/at: Adargunchi, Ta: Hubli. 2 a -- Respondents (By Sri. cs Patil, AGA for Rot, M/s. Hegde, Neeralagi He. Pats | for R.2. R.3 Served) us Writ Ap ppeal 3 Ss fled under Section 4 of Karnataka High Col itt Act, 1061, _pray:ng to set aside the common order dated ] G34 201 10, passéd in W.P.No.67011/2009, passed by the. learned Single J udge of this Hon'ble Court. IN W.A'NO.62 2175/2010 " Bet ween: ~Srat-Maheshwari W/o. Laxman Golvalkar, Age>38 years, Occ: Agriculture & Hous sen ol d Work, R/o. Aravatagi Village, : Dharwad. And: I. Basalingappa S/o. Basatteppa Humbari, Age: 62 years, Occ: Agriculture, R/o. Narendra, Tq: & Dist: Dharwad. 2. Mallappa S/o. Rangappa Ganiger, / 5 } Anes Age: Major, Occ: Agriculture. CO R/o. Kumbarkoppa, Tq. & Dist: Dharwad. 3. Shivanand S/o. 'Rangapi pa Ganiger, Age: Major, Occ Agriculture, SO R/o. Kumbarkoppa. Tq. & Dist: Dharwad. 4. Adarshappa S/o. Rangappa Ganiger, Age: Major, Occ: Agriculture R/o. Kumbarkoppa, Tq 6 Dist' Dharwad. 5. The State of, Karnataka. Department of Stamp . And Registration: Bangalore. By its Secretary. : wee _ . Respondents (By Sri. Aru nob Neélopant, Adv.for R.1 to R.3. R.4 served) | BO This Writ "Appeal. is filed under Section 4 of the Karnataka' High Courts Act. praying to set aside the order of learived Single Judge ¢ jated 19/03/2010, passed in writ peution No: 9023 }/ 2008 rejecting the writ petition, allow the writ petition and-also 'allow the writ appeal. These appeals are coming on for orders this d ay, t (NN. Kumar J. delivere d the following: JUDGMENT
-In, these batch of writ appeals the constitutional ~- validity of Article 5(e) and proviso (a} to Section 34 of rataka Stamp Act. is challenged Therefore, they are all taken up together and disposed of by -this common order.
2. For the purpose of clarity we-havé. set out in this proceedings the facts in W.PONO.64748 (2006, O.S.No0.398/2007 was filed 'for, specific performance of contract based on an agreement of sale dated 26.01.2003 wherein the terms "Of agreement of possession of the -property in question agreed to be sold was delivered to-the purchaser. In the course of trial when the» plaintiff Wanted. to mark 'the said document, the defendant objected, contending that it was insufficiently stamped: Thereafter plaintiff made an. applic: under Section 151 of CPC for sending e the - said docuinen ts to District Registrar for ~ determination of stamp duty and for levy penalty "under Section. 39 of the Stamp Act. The. said 'ejected. Against the said ord er of rejection plaintiff filed a writ petition before co OF this. Court challenging the validity of Article-5(e) of °y sf "mentiened in the schedule is liable for stamp duty.
"Act, 1995, which came into force on 315! March 1995 Stamp Act inter alia, raising two contentions. .The first contention of the appellants is that : the agreement of sale is not an instrument es defined -- under Section 2) of the Act. The proviso fa} to Section 34 of the Stamp .Act "provided that the"
imposition of penalty ten times on the inarket value of the property and same is arbitrary, unreasonable and it is violation of Article i4 of the Constitution of India. The imposing or : penaity is most disproportionate and Virtually it exceeds the value of the property itself. Such being the position, the proviso (a) to Section a4-cointers arbitrary, unguided and unconscionable 'power on the authorities. ry Theréfore, 'proviso {a} to Section 34 is liable to be struck down".
It was contended Section 3 is the charging a = aa) "sectfon. It contemplates that every instrument
9. agreement of sale with possession or without possession were not made as compulsory registrable. Further by Act No.8/1995, the State Government by. inserting the agreement of 'sale- coupled. with' possession in the schedule. mace "it compulscrily | registrable. The said amendment is ultra vires constitution.
+. The Second -contentign raised was the proviso (a) to Section: 34 of the Act has been inserted in the year.19& oe lapse of-tinse and the nature of penalty that 'is béiig imposed in the present days virtually leads. te canfiseation of the property itself. inthe iristant, casé penalty that has been determined is RS.4,7.9,000/-. In view of the changing times, the "State "would Have taken steps to make a corresponding amendment to the proviso {a} to 34 of the Act as the evasion of the stamp "effecting necessary amendment to the Stam p Act by amendment of the definition of market v alue and the determination of the same authorities, the corresponding have been carried out to proviso {a} te the Act. As it is confisicato ry in the frature liable to be violative of Articke 14 ef the Censtit UnLOD of India. Both the contentions were and has-.dismissed. the writ petition
1.e., how these appeals are prefe
5. We appearing fort wo our consideration 18 asunder:
endment carried out to the Article 5Sfe} and proviso the Stamp Act is § to be set aside?' The. impugned provision reads as and. it is' coe soot (11) lmmovable wherein part of the con possession property is agreed without cCOMmVveyanec.
DOs yee ssion is pra pe riy ig acl.
is to executing» 4%) dee :
property| performance --
delivered or.
be delivered "and «if 'been paid on rupees five Of t not delivered, "Same duty -as. a ~ A MNo. 2{ be) "| Prowic /(One r ° hundred market value of thc é » prope ety where a deed of that, led of sarlier is executed by an.
"the Same partics in of the same property. reSpecs proper stamp such agreement, on such "deed of cancellation" shall not exceed hundred.| for every one) rupee or part thereof onsideration than rupees Fi ays t rene ho I
6. Under Section 2 of the Karnataka Stamp Act, 1957 (for short hereinafter referred to aS Act) tne words "conveyance" "instrument" and "market value',"
is defined as under:
(d) "Conveyance" includes
(a) a conveyance on-sale;
(b) every instmament:>. °
(c) every decree or final-order of any Civil Court; an _ (dl) veverveorder, made by High Court under . Section 394 of. the Companies Act, "1986 'ins tespect of amalgamation of C0 mpan ie ass by "which 7 property, whether moveable or
-, imimovable or any estate is transferred to, or vested in, any other person, and which is "not otherwise specifically provided for by the 'sehedule;
_ {e) ".XXXxX LE) MAXX (gy. XXXX Hy X XXX
i) XXXX G) "Instrument" includes every document maintained in or by media) by which any right or liability #s, or purports to be, created, tran sterred, limited, extended extinguished or recorded, > Ox wees XXX "Market value" in relation to any property which is the "subject-matter . of "an instrument, means 'the price "which such property woul! d- have fetched, in thé opinion of the Deputy | 'ommmis 8 sioner or the Appellate neon « or. the Chief Controlling Revenise "Autharity, | -soldvin open market on the date "of 'esulton of such instrument or - the consideration stated in the instrument, w hicheve 'ris higher.
Section 3 1S 3 charging Section which reads J. " Instruments chargeable with duty.- » Subject to the provisions of this Act and-éxemptions contained in the Schedule, q thee following instrument shall be "chargeable with duty of the amount 3 indicated in that schedule as the proper duty therefore, respectively, that is to say.-
(a) every instrument mentioned in that 4 a schedule which not having been i previously executed by any person, is executed in the territories of the State of Karnataka on Or after. the' schedule which, "net having - Deen. previously exéectited by any. person, is"
executed out of | the State of Karnataka on or after that. days relates. to any property situate, or, toany matter or thing done or te. be. done, in the territories. of the State of Karnataka and ais received in the territories of the "State of Karnataka,:
Provided that to.duty shall be chargeable in respect of.- .
th) this exemption, the (State Government) airy instrument, executed by, or on 'behalf of, or in favour of, the (State Government) in cases where, but for would be liable to pay the dut Vv chargeable in respect of such instrument;
any instrument for sale, transfer o1 other disposition, either absolutely or by way of mortgage or otherwise, of any ship or vessel, or anv. part, interest, share or property of orF.any ia Peersrerea under, "(the
2) aa ; + ~ vA at :
8 Phe argument is what ss the Act 1S an and, £o° comstitute ar.
instrument any right or which ¥ or purports to recorded it is only the said instrumernt is chargeable or vesting to be charged as is no transfer of nition of both "Tastrument as well as convevance. ng Se, Section o4+ of the Transfer of Property Act, a 43 oars defines what
10. The definition of contract for sale found under Section 54 of the transfer of Property. Act makes it clear that "A contract for sale "OT immovable . property is a contract that a sale of such property shall take place on terms settled between the narties. It does not, by itself create any" interest in or charge on such property." Therefore the argument is that an agreement for sale"does not create any interest, there is no transfer of, interest in 'movable property and therefore it. d oes. Hot fall within, the definition of the word 'instrument™-As well as ihe word "conveyance". When the proposed "amendment of legislature is C such instrument, it is fans ni ond ood imposing, stamp duty.
contrary. te ~ "the statutory provision and was contended that ot eo pom sane cs vy © wong pont LO gots sdk ee a ot i Pe On, me wok t
--
det
--"
"Tj eo i ="
co om = eo poe Indian Registration Act, has been amended. Section "17 ef the, Indian Registration Act, 1908 deals with compulsory registerable documents of which istration was not compulsory. However, b y Act No.48 of 2001 which came into force from 24.09.2001 sub Section 1-A has been inserted which reads as under "(1-A) The documents _ . ) ontaini ne 7 contracts to transfer fer ce consideration. any. immovable property for the "pu rpose of Section 53-A of the Transfer of -Property Act, 1882 (4 of 1882} shall be registered if they have beén exectited con or "after the commencement oft _t he Regis tration and Other Related. baws (Amendment) Act, 2001 and if such documents" are not registered on or after "cominrence me rrt, then, they shall have. m9 ) effect for, thre- purpose of the said Section n oN 2- A, il. Relying on 'this. provision it is contended that ifan" agres ment of sale which satisfy the req: Jirement "Sect on S3-A, which necessarily means delivery 'of pédeeesion of the property agreed to be "sold is not 'begistered, it will not have effect for the "purpuse of Section 53-A, as declared by sub Section (L-A) of Section 17 and an invalid document is also "required to be stamped by virtue of this amendment. Fherefore, it also runs contra rv to law laid down by ~- TR.
the Parliament and therefore, it was contended that it is unconstitutional. This argument proceeds .-on, misconception of law. In the first place definition of | instrument is, inclusive definition. The word. used is, the instrument includes every document. So, the. argument that for an instrument under Section 2), there should be a transfer. "of interest "of any immovable property, is not necessary» It is one such category of document. whigh - fatis within the definition of the 'word "instrament". In other words, any document, in writing, is. an instrument under Section 2(j) of the: Att. The definition of conveyance includes: an. instrument 'in addition to instrument which also deats with other types of transaction and the jaw.-spevifically provides, what is stamp duty » payable "or. conveyan ce under Article 20. In other werds;-an instrument is to be stamped as conveyance .if.under such an instrument there is transfer of "interest in immovable property. If there is no transfer ef an interest, stamp duty is not pavable as road ong any interest in immovable property in favour of even
13. In a given set "oP. circumstance without a registered sale deed, the purchaser can enjoy the property absolutety 'ever. against the true owner. That 18 purpose -of Section »-S53-A of the Transfer of Property:
aforesaid provision=.builaers "who take the property under an 4 sand develop the property, intending purchaser, is a loop hole in the without} be eliminated in the ett a a os ae existing -legislati amendment has been brought about. By such an amendment construed as convevance. Therefore, they "nave enacted the law saving that in respect -of. an agreement of sale to which Section 5S3-A, iSmade applicable, the stamp duty. payable ~ on... such.
"oS agreement of sale is as conveyance. Therefore, it is"
clear that agreement of sale is not a conveyance, It is fully recognised by the fegislature. But they. wanted to levy stamp duty as conveyance and that precisely they have done in 'the aménded. provision. The power of the State legislature "te jevy. taxes on such an instrument is'.not. disputed. Once the State Legislature under the. Schetre of Constitution has the power to-ievy taxes and by virtue of that power they have levied taxes, it cannot said to be ultra vires of the constitution.or un-constitutional. . 14. "In. the Indian Registration Act, the 'Legislature has made it compulsory to be registered, the document which was in possession prior to 2001.
"However, they have declared that if the document is Spy roarmrietarasyi elas legen a fie yf Soy ely es OA te My ryd "lOt registered, the benelhit of Section 53-A is not Pegi 7 3 3 oe yy ee We m '+n altracted to such an oa OPCCMeHtL, it does not STRLC alll is not registered it is admissible in evide nce. but it ony devon ered by the par liam ents such. procedures without claiming benefit of Section 53-A, by paving insuffics time of leading evidence, 1957. Therefore, merely now it is compulsory registrabies. document. and law declares that pure chasér ig not entitled to benefit of Section 53-A it would not render;
there 1S mo-"substance in the said contention. The second contention urged the proviso {a) to Section G4 of the rich reads-as.undcer:
Section 34 of the Stamp Act w
34. Instrument not duly os stamped inadmissible in evidence, etc.: No.inistrument > chargeable with duty 'shall be 'acmitted in evidence for any purpose bv. anv person having by law or consent 6f evidence, or shall be acted upon.-registered or ated. bv 'anve such.-person or by any authentic public officer "unless "stich, instrument is duly stamped.
g Provided that.
(ap, (any. such. ivstrument not being an just exceptions, be admitted in Loe Cerne Ol Ey) LLISLrume Pme arlount yoo eed oo Drone eo é Nail er om) pose required to make up such -auty, together with a penalty of five rupees, or, when ten times the amount ofthe - proper duty or dificient portion thereof exceeds five rupees, of a sum equal to tem times such duty of portion, ~
16. A reading of the aforesaid provision, makes it very clear that no in sttument chargeable with duty shall be admitted im evidence tor any urpose by any person having by Taw oF corisent 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: insirwment is duly stamped. Therefore, there is no prohibition for execution of a document anid stamping it insufficiently. But if that document is to be prod uced as a piece of evidence, to be produced at the time of registration, to be "produced at "the time of authentication, the same sha 'not' be accepted by the person who is vested with the power to give validitv to such an instrument. ~ if such an instrument is produced a discretion is & on given to the person admitting the instrument in evidence to admit the document on payment of duty and penalty and in the case of an instrument where the duty is pavable as 25 paise U VELEN pave :
Rs.5/- and in all other cases.10 trmes the-amourit 'of calculation of duty by 'the Distriet Cellector. Section 39 reads as under:
39. [Desuty Commissiener] power to stamp instruments impounded.- (1) When the t [Deputy .Co¥nmis impounds any instrument Lyide: OS, Or receives any instrum der sub-section (2) of Section 37, net being an instrument chargeabel y H ~ jwith a duty not.exceeding fifteen paise}) only or . Shall-adopt the that such instrument is Stamped, | , Case May DE:
(b) if he is of the opinion that such instrument is chargeable with duty and is "fet-.duly:
Stamped he shall require the payment of. the proper duty or the-amount required: te make up the same, together witha penal of five rupees; or if he thinks fit an amount not exceeding ten limes the amount of the proper duty or of "the "deficient ~ portion thereof, whether such. arnount exceeds or falls short of five rupess: . l7. The instrumenr which is not duly stamped yay be produced before _the..Deputy Commissioner who in turn impoudds the rnstrument under Section 33 of the Act>or any mstraument sent to him. Under sub-section (2) of Section 37 he shall adjudicate the sable on the said instrument and he proper, duty pa has been vested? with the power to impose such penalty not exceeding 10 times the 4 ount of the Whereas if the said docy ment is 'proper du under Section 34, the said discretic aye gd #15 cain aithari¢te . Wath tne said GAULTOPILY.
"of penalty; in that context i
18. Relying on this provision firstly, it. was contended that imposition of duty or penaliy by. ter times is in the nature of impounding," confiscation"
and hit by Article 14° of Constitution of India. Secondly, it was contended "that ~ there 2 is. discrimination in the matter of levying. penalty Dy authorities and again hit py Article 14. The argument of arbitrariness proceeds"utider the assumption as it is being passed from . the day it was enacted. The State Legislature have passed.enactment to see that, if an instrument -@o not recite the proper market value of the consideration, the Registering authorities have been vested» with the power to collect stamp duty;.on the basis of the market value of the property ". prescribed by.the State, and therefore, the imposition arbitrary and
77) 'redundant. Further, it was contended that if 10 times the duty is collected as penalty, the total duty "~pavable would be more than the market value of the property. Therefore it amounts to conferring i f ~ aS bh 'play before a document is tendered in evidence. If unbridled power on the authority. The "word unbridled power, presupposes that the statute nas not prescribed any guidelines by Imposing penalty. ip 7 the instant case the said provision prescribes outer limit. If the impounding authority or the court cr- any other authority before whom the" evidence is produced and if they are-impounding, the instrument and admit the instrument in, evideriee,:they have been vested with the potver to impose peniatty 10 times the duty and admit ihe document in'evidence. When the legislature has prescribed 10 times as penalty payable, no discretion "ts given to such authority. Therefore, question Gf . any authority exercising unbridled 'po ver would not arise. They would be exercisitig power-in terms of statute and therefore, » this argument.of unbridled power has no substance.
"19.-.In so far as discrimination pleaded in exercise of power by the authorities under Section 34 "and Section 39 is concerned Section 39 comes into 2 ponte ow lan ype, a aa "nile Bas Goris,