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(iii) When the proper duty or deficient portion of the proper duty exceeds five rupees, then on payment of ten times the amount of such proper duty or deficient portion in excess of five rupees .

12. Sections 38 and 40 of the Indian Stamp Act deals with the power of the Collector to stamp instruments that are impounded. The same is extracted for easy reference:

18. I have already discussed the relevant Sections, namely Sections 35, 38 and 40 of the Indian Stamp Act. The trial Court failed to see that the very purpose of sending the instrument to the Stamping Authority under Section 38 of the Act was to invite a finding from the authorities, exercising power under Section 40 of the Indian Stamp Act. A discretion is clearly vested with the Stamping Authority exercising power under Section 40 to levy a penalty up to ten times on the actual duty payable or deficient duty, as the case may be. The communication that has been received by the Court from the Special Deputy Collector (Stamps) is nothing but the proceedings under Section 40 of the Stamp Act. Though Section 40 (1)(b) clearly enables the Collector to require payment of actual https://www.mhc.tn.gov.in/judis duty or the amount required to make up the actual duty, together with a penalty of rupees five or if the Collector thinks to fit an amount not exceeding ten times the proper duty or of the deficient portion there of, whether such amount of duty or deficient duty exceeds or falls short of rupees five, the word used in Section 40 (1)(b) is “or” and by employing the further words “if he thinks fit” clearly points to the fact that it is not necessary for the Collector to levy penalty in all cases and wherever he chooses to levy penalty, it cannot exceed ten times, the amount of actual duty payable or the actual deficient portion of the duty payable. The requirement mandated is only collection of the actual duty or actual deficient duty together with a penalty of rupees five. This Court, in Avinash Kumar Chauhan V. Vijay Krishna Mishra reported in 2009-3- MLJ-409(SC), has also held that it is not mandatory to levy the maximum penalty of ten times in all cases.

19. Thus, when the communication sent by the Special Deputy Collector (Stamps), the competent authority to the District Munsif Court not indicating any penalty amount, the trial Court ought not to have passed the impugned order, once again sending the matter back to the authority for https://www.mhc.tn.gov.in/judis the purposes of levying a penalty. Further, it is also contended by the learned Senior Counsel for the revision petitioner that the properties allotted to the defendants under the very same family arrangement were being enjoyed by them and some of the properties have also been dealt with already. However, with an ulterior motive, the defendants have taken such technical objections only with a view to cause serious prejudice and loss to the plaintiffs. Though this argument may not directly impact the issue on hand, at the same time, it cannot be totally ignored for the simple reason that despite the suit for a bare injunction being filed in the year 1989, the said litigation has not seen the light of the day. On two occasions, this matter has reached the corridors of this Court for merely deciding the admissibility of the Memorandum of Family Arrangement. The conduct of the respondents by taking an objection regarding the Family Arrangement after enjoying its fruits and also not choosing to appear before this Court only seems to probablise the argument of the learned Senior Counsel. The trial Court was not justified in sending the matter back to the stamp authority to fix the penalty amount payable under Section 35 of the Stamp Act. The stamping authority has already reported to the Court and on that basis the deficit amount payable is only Rs. https://www.mhc.tn.gov.in/judis 13,502/-. This amount includes the penalty of rupees five payable under Section 40 of the Indian Stamp Act. Thus, the trial Court is directed to mark the said Memorandum of Family Arrangement, dated 31.03.1993, subject to the plaintiff paying the deficit court fee of Rs.13,502/-, if not already paid, and on admission of the said document as an exhibit, the trial Court shall look into the same only for collateral purposes, as the said document is an unregistered instrument and the Court in C.R.P(MD)No. 2062 of 2009 has also rendered a finding that for want of registration and stamp duty, the said document is inadmissible, with a rider that the plaintiff can work out his remedy under proviso to Section 35 of the Indian Stamps Act, to enable him to extent use the document for collateral purpose.