C.V. Manoharan vs The Government of Andhra Pradesh and Others

C.V. Nagarjuna Reddy, J.—This writ petition is filed for a mandamus to set aside proceedings, dated 26.09.2012, of respondent No. 3, whereby he has determined deficit stamp duty at Rs. 1,79,980/- and levied penalty at 10 times the deficit stamp duty amount amounting to Rs. 17,99,980/-. I have heard the learned counsel for the petitioner and the learned Assistant Government Pleader for Revenue appearing for the respondents.

The petitioner filed O.S. No. 101 of 2011 on the file of the learned III Additional District Judge, Tirupathi for permanent injunction against the owner of the premises. In the suit, the petitioner sought to rely upon an unregistered and insufficiently stamped rental agreement. The learned District Judge referred the document to respondent No. 3 for impounding. Accordingly, respondent No. 3 has issued the impugned proceedings, whereunder, as noted hereinabove, he has determined the deficit stamp duty and imposed penalty at 10 times the deficit stamp duty.

The learned counsel for the petitioner submitted that respondent No. 3 has arbitrarily exercised his power and that no reasons have been assigned by him for imposing the extreme penalty of 10 times the stamp duty.

The learned Assistant Government Pleader sought to support the decision of respondent No. 3.

I have carefully considered the submissions of the learned counsel for the parties and perused the record.

Section 40 of the Indian Stamp Act, 1899 (for short ''the Act'') empowers the Collector to impound an instrument which is unstamped or insufficiently stamped. Under Clause-(b) of subsection (1) thereof, if the Collector is of the opinion that an 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 five rupees; or if he thinks fit, an amount not exceeding ten times the amount of the proper duty or the deficient portion thereof, whether such amount exceeds or falls short of five rupees. The legislature vested wide discretion in the Collector in the matter of imposition of penalty. This discretion varies from the minimum of Rs. 5/- upto the maximum of 10 times the proper duty or deficient portion thereof.

In State Bank of Indore v. Gills Goods Carriers Pvt. Ltd. SCC 69, the Supreme Court held that while exercising discretion, the Collector has to act in a fair and reasonable manner.

A perusal of the impugned order shows that no specific reasons have been assigned by respondent No. 3 for imposing maximum prescribed penalty on the petitioner. When the statute vests discretion on the public authority, it should exercise such discretion reasonably and not in an arbitrary and whimsical manner. While availability of power is one thing, its exercise is quite another thing. The responsibility to exercise the discretion in a reasonable manner lies more in cases where discretion vested by the statute is unfettered and unbridled. In my opinion, for imposing the extreme penalty as done by respondent No. 3, mere factum of evasion of duty is not sufficient, but reasons such as fraud or deliberately deceiving the State in order to deprive the revenue and to make undue enrichment need to be recorded by the Collector. No such reasons have been assigned by respondent No. 3 to impose the maximum penalty.

In the facts and circumstances of the case, I am of the opinion that interests of justice would be served if the penalty is reduced to one time the deficit stamp duty. Accordingly, while confirming the quantum of deficit stamp duty at Rs. 1,79,980/-, the amount of penalty is reduced from 17,99,980/- to Rs. 1,79,980/-.

The order of respondent No. 3 is accordingly modified and the writ petition is allowed to the extent indicated above. As sequel to disposal of the writ petition, W.P.M.P. No. 42149 of 2012 shall stand disposed of as infructuous.