Mary Grace Education Centre (P) Ltd. vs Martin Maria Doss

Heard the learned counsel for the petitioner.

The petitioner was the plaintiff before the Trial Court. The suit was one for specific performance of contract. The petitioner had produced one agreement and deeds which extended the agreement of sale. The defendants who had entered appearance and contested the suit, had filed an application to bring to the attention of the court that the agreements produced by the plaintiff were not duly stamped, in that, it was claimed that possession had been delivered and the plaint averments also disclosed that possession had been delivered and that the plaintiff was in possession, in which event, the documents attracted stamp duty as if there was a conveyance.

As contemplated under the Schedule to the Karnataka Stamp Act, 1957, though the agreements disclosed that possession had been delivered, the plaint prayer was for delivery of possession and specific performance of contract. The application having been filed by the defendant, the court below had accepted the contention and held that the agreement was not duly stamped and had chosen to refer the matter to the Sub-Registrar for valuation of the duty and penalty payable and thereafter has called upon the plaintiff to pay the duty and penalty, and when the plaintiff failed to pay the duty and penalty, the suit itself was dismissed. It is that which has been challenged in the present proceeding.

Though the learned counsel for the petitioner would seek to point out that the plaintiff is in possession, it is not tenable in that, the agreement itself, in several clauses, indicates that possession is postponed till after the execution of the sale deed and a mere stray clause where there is reference to the defendant handing over the keys to the premises and possession having, been delivered, could not be construed, in the face of other clauses, as evidencing delivery of possession. Notwithstanding the same, the court below having held that the plaintiff was in possession, was erroneous. Secondly, it is contended that there was no provision of law under which the matter could be referred to the Sub-Registrar for determination of duty and penalty and therefore the order was ex facie illegal and without jurisdiction.

Though the learned counsel for the respondents would seek to point out that there is enough and more material to disclose that the plaintiff was claiming to be in possession of the suit schedule property with reference to the pleadings itself, that is a question which could not be gone into in the face of the circumstance that the court below has committed a cardinal error in referring the matter to the Sub-Registrar, which is not provided for in law.

A plain reading of Sub-section (1) of Section 33 of the Karnataka Stamp Act, 1957, would indicate that it was the duty of the court to independently examine whether the document is duly stamped or not. There is no provision for remitting the document, so impounded, to the Sub-Registrar to ascertain the stamp duty. Therefore the order is ex facie illegal and to that extent, is set aside. The suit which has been dismissed for non payment of stamp duty which is determined in the above circumstance, is also set aside. Accordingly the suit is restored to file. The court below is directed to take up the proceedings from the stage of impounding the documents and thereafter determine the stamp duty and penalty payable, if any, and to proceed in accordance with law.

Accordingly the petitions are allowed, without expressing any opinion as to whether or not, the petitioner has admitted that he is in possession of the suit property. The matter is remanded for a fresh consideration. The object of Section 33 is clear that the revenue deprived to the State is required to be collected in the first place before enabling the party to take advantage of a document and therefore sub-section (2) of Section 33 would make it clear that in the event such duty and penalty is not capable of being collected from party who seeks to produce the documents and rely on it, it is for the court to despatch the document to the Deputy Commissioner, who, thereafter, would apparently take steps to recover the duty and penalty in accordance with law. The effect in such a situation would be that the document is no longer available for being admitted and marked in evidence and the plaintiff will face the disadvantage of proceeding with the suit which is based on such a document. Therefore the suit will have to be taken to its logical conclusion notwithstanding that the document is to be impounded and the duty and penalty is to be paid. The dismissal of the suit, therefore, without determining the duty and penalty payable and nextly, in remitting it to the Sub-Registrar, after it was impounded, is erroneous on the part of the Trial Court. Consequently the matter is remanded for fresh consideration in accordance with law. The further proceedings, shall be taken from the stage of impounding the document and the court shall proceed in accordance with law.