Godwin Paul and Others vs L.N. Swamy and Others

Ram Mohan Reddy, J.—Plaintiffs in O.S. No. 664/2005 on the file of the Judge, Court of Small Causes, Mysuru, aggrieved by the orders dated 24.04.2009 and 26.02.2014 allowing in part I.A. No. 11 filed by the defendants and directing payment of duty and penalty on the agreement of sale dated 04.10.2000, have presented these petitions under Article 227 of the Constitution of India.

Defendants filed W.P. No. 26413/2012, whence the learned single Judge by order dated 27th August 2012 disposed of the petition with a direction to the Trial Court to reconsider I.A. No. 11 and passed orders thereon.

Facts not in dispute are:

"(a) Parties entered into an agreement of sale dated 04.10.2000 recording the sale consideration as Rs. 4 lakhs from out of which Rs. 3 lakhs was paid as advance and balance Rs. 1 lakh to be paid at the time of registration of the sale and in addition, possession of first floor of the agreement schedule premises was handed over to the purchaser/plaintiffs for their use.

(b) Parties entered into yet another agreement of sale dated 19.02.2004 in pursuance of the earlier agreement, recording factum of increase in the sale consideration to Rs. 9.50 lakhs and recording that the possession was permissible possession for repairing the first floor of the premises.

(c) That in the course of evidence of P.W. 1, the agreement of sale dated 04.10.2000 when introduced in evidence was not permitted to be marked as admissible evidence on the premise that it did not bear the requisite stamp duty under the Karnataka Stamp Act, 1957, while permitting marking of the agreement of sale dated 19.02.2004, by order dated 24.04.2009.

(d) There afterwards, plaintiffs having failed to pay deficit stamp duty and penalty, it is said O.S. No. 664/2005 was dismissed.

(e) Review Petition No. 1/2011 preferred by the plaintiffs was allowed by order dated 16.06.2012 whence the suit was restored to file.

(f) Defendants filed W.P. No. 26413/2012 whence the learned single Judge by order dated 27th August 2012 disposed of the petition with a direction to the Trial Court to reconsider I.A. No. 11 and pass orders thereon."

Sri P.N. Manmohan, learned counsel for petitioners does not and cannot deny the pleadings at paragraph 2(f) of the plaint which reads thus:

"(f) For the limited purposes of keeping certain things, the defendants allowed the plaintiffs to use first floor portion of the premises in question" 5. In the agreement dated 04.10.2000, placed before Court by the learned counsel for petitioners the covenant relating to possession reads thus:

A perusal of the aforesaid pleadings and covenant in the agreement of sale dated 04.10.2000 makes it abundantly clear that possession of portion of the agreement schedule property was handed over to the plaintiffs who took possession of the same and therefore, agreement dated 04.10.2000 engrossed on stamp paper of value Rs. 200/- (Rs. 50/- each in four sheets) was insufficiently stamped with duty, in the light of item No. 5(e)(r) of the schedule to the Karnataka Stamp Act, 1957 requiring same duty as a conveyance (No. 20) on the market value of the property where possession of the property is delivered.

The submission of learned counsel for petitioners that possession of the property was delivered only by way of permissive possession for repairing a portion of the agreement schedule property as recorded in the agreement dated 19.02.2004 and therefore, it should be deemed that possession as such was not delivered, cannot be countenanced.

There is no dispute that agreement dated 04.10.2000 between the parties preceded the agreement dated 19.02.2004. Further, in the absence of a prayer in the suit for specific performance for delivery of possession while the specific pleading is of having been put in possession of first floor of the agreement schedule property, for use of the purchaser, it is needless to state that there was part performance of the agreement of sale dated 04.10.2000 necessitating, in law, that the agreement should confirm with the payment of requisite stamp duty.

In the facts and circumstances of the case, the agreement dated 04.10.2000 was justifiably impounded by the Trial Court in exercise of jurisdiction under the Karnataka Stamp Act, 1957, (''the Act'' for short) by order dated 24.04.2009.

There is force in the submission of learned counsel for petitioners that I.A. No. 11 under Section 151 of Code of Civil Procedure filed by the defendants to dismiss the suit for non payment of deficit stamp duty and penalty, ex-facie, at the threshold, ought to have been dismissed. Neither Section 34 of the Act nor the provisions of CPC require the Court which has impounded a document as inadmissible in evidence, to dismiss the suit for non payment of deficit duty and penalty on the said impounded document. That application instead of being rejected at the threshold, unfortunately was proceeded with by the Trial Court for the purpose of determination of deficit stamp duty and penalty.

As regards the duty of the Court in exercise of jurisdiction under Section 34 of the Act, suffice it to notice the observations of the Division Bench in Digambar Warty and Others Vs. District Registrar and Chief Controller of Revenue and Commissioner of Stamps, which runs thus:

"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 duty payable on such instrument, to collect 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." 12. In the result, these petitions are allowed in part. The order dated 24.04.2009 is affirmed while the order dated 26.02.2014 is quashed and I.A. No. 11 filed by the defendants dismissed.

The Trial Court is directed to comply with the provisions of Section 34 of the Act as noticed in Digambar Warty''s case supra. Since the petitions are meritless and all that has been done is to ward off the matter of payment of duty and penalty on the agreement dated 04.10.2000, despite the statement in paragraph 2(f) of the plaint and covenant in the said agreement, calls for imposition of extraordinary cost for having consumed time of the Court and for appearance of respondent. Cost quantified at Rs. 5,000/- playable by the plaintiffs to the defendants before the Trial Court on the next date of hearing.