Pauline and Others vs P. Jagadesh Kumar

S. Sujatha, J.—These petitions are filed by the plaintiffs challenging the order passed by the City Civil Judge on IA. in O.S. No. 26581/2009.

For the sake of convenience, the parties are herein are referred to as per their rank in the trial Court.

The brief facts of the case are that the plaintiffs have filed the suit for partition and separate possession claiming their share in the suit schedule property. Exs. D16 and D.17 - lease deeds are the documents marked by the defendants subject to objection. Applications were filed by the plaintiffs to impound the documents Ex. D.16 and D.17 and collect the duty and penalty on the same. Ex. D.16 being a lease deed for a period of 11 months, the annual rent payable being Rs. 22,000/-, the document ought to have been executed on a stamp paper of Rs. 210/-. However, the lease deed was executed on a stamp paper of Rs. 100/-. There was a deficit duty of Rs. 110/- which was liable to be paid by the plaintiff with the penalty of Rs. 5/-. So far as Ex. D.17 is concerned, the lease was for a period of 60 months commencing from 15.3.2005 and the rent fixed was Rs. 1,00,000/- per month. The said lease deed is liable to be executed on a stamp paper of Rs. 1,10,000/- as per the calculation made by the plaintiffs but, the lease deed was executed on a stamp duty of Rs. 200/- with a deficit duty of Rs. 10,99,800/-. Accordingly, the trial Court allowed the applications in part directing the defendants to pay duty and penalty of Rs. 110/- on Ex. D.16 and Rs. 1,09,805/- in respect of Ex. D.17 within 15 days failing which the documents Exs. D.16 and 17 are inadmissible in evidence, cannot be looked into for any other purpose.

Being aggrieved by the said order passed by the trial Court the plaintiffs are before this Court seeking for modification of the order passed by the trial Court and to direct the respondents to pay the deficit stamp duty and penalty on Ex. D.16 and Ex. D.17 as per Sections 33 and 34 of the Karnataka Stamp Act.

Heard the learned counsel for the parties.

The learned counsel appearing for the plaintiffs contended that Ex. D.17 is a lease deed for 60 months commencing from 15.3.2005 with a monthly rent of Rs. 1,00,000/- on which stamp duty payable is Rs. 1,10,000/-. Since, the same not being paid, the said document has to be impounded and duty and penalty has to be collected as per Sections 33 and 34 of Karnataka Stamp Act which works out to be Rs. 10,99,800/- (Rupees Ten Lakh Ninety Nine Thousand Eight Hundred only). Reliance was placed on the judgment of this Hon''ble Court in Miss. Sandra Lesley Anna Bartels Vs. Miss. P. Gunavathy, .

Per contra, the learned counsel appearing for the respondent supported the order of the trial Court and sought for dismissal of the writ petition.

Sections 33 and 34 of the Karnataka Stamp Act reads thus:

Examination and impounding of instruments.--(1) Every person having by law or consent of parties authority to receive evidence, and every person in-charge of a public office, except an officer of police, before whom any instrument, chargeable in his opinion, with duty, is produced or comes in the performance of his functions, shall, if it appears to him that such instrument is not duly stamped, impound the same.

(2) For that purpose every such person shall examine every instrument so chargeable and so produced or coming before him, in order to ascertain whether it is stamped with a stamp of the value and description required by the law in force in the State of Karnataka when such instrument was executed or first executed:

Provided that,--

(a) nothing herein contained shall be deemed to require any Magistrate or Judge of a Criminal Court to examine or impound, if he does not think fit so to do, any instrument coming before him in the course of any proceeding other than a proceeding under Chapter XII or Chapter XXXVI of the Code of Criminal Procedure, 1898;

(b) in the case of a Judge of the High Court, the duty of examining and impounding any instrument under this section may be delegated to such officer as the Court appoints in this behalf.

(3) For the purposes of this section, in cases of doubt, the Government may determine.--

(a) what offices shall be deemed to be public offices; and

(b) who shall be deemed to be persons in-charge of public offices.

Instruments not duly stamped inadmissible in evidence, etc.-No instrument chargeable with duty shall be admitted in evidence for any purpose by any person having by law or consent 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 instrument is duly stamped:

Provided that,-

(a) any such instrument not being an instrument chargeable [with a duty not exceeding fifteen nay a paise] only, or a mortgage of crop [Article 2[35] (a) of the Schedule] chargeable under clauses (a) and (b) of Section 3 with a duty of twenty-five nay a paise shall, subject to all just exceptions, be admitted in evidence on payment of the duty with which the same is chargeable, or, in the case of an instrument insufficiently stamped, of the amount required to make up such duty, together with a penalty of five rupees, or, when ten times the amount of the proper duty or deficient portion thereof exceeds five rupees, of a sum equal to ten times such duty or portion;

(b) where a contract or agreement of any kind is effected by correspondence consisting of two or more letters and any one of the letters bears the proper stamp, the contract or agreement shall be deemed to be duly stamped;

(c) nothing herein contained shall prevent the admission of any instrument in evidence in any proceeding in a Criminal Court, other than a proceeding under [Chapter XII or Chapter XXXVI of the Code of Criminal Procedure, 1898;

(d) nothing herein contained shall prevent the admission of any instrument in any Court when such instrument has been executed by or on behalf of the Government, or where it bears the certificate of the [Deputy Commissioner] as provided by section 32 or any other provision of this Act [and such certificate has not been revised in exercise of the powers conferred by the provisions of Chapter VI].

These provisions were subjected to judicial scrutiny before this Court in the case of MISS SANDRA LESLEY ANNA BARTELS''s referred to supra, this Court has categorically held as under:

"11. There are two different circumstances under the Stamp Act for impounding a document; (1) the Court has power to impound the document, moment it appears to the Court that such instrument is not duly stamped and (2) or to wait till such document is tendered in the evidence. A combined reading of Sections 33 and 34 clearly reveal that a discretion is granted to the Court either to impound the document under Section 33 before the same is tendered in evidence and even if a document is not impounded under Section 33, the Court is bound to impound the document when the same is tendered in the evidence under Section 34. In other words, the Court cannot say that it will wait till the document is tendered in the evidence. It is only an option given to Court to exercise the power under Section 33 and 34 but the difference between Sections 33 and 34 is that, Section 34 can be enforced by a Court when a document has to be received in the evidence but Section 33 can be invoked not only by the Court, but, by every person in-charge of a public office. A person in-charge of a public office has no power to exercise the power vested under Section 34 of the Act.

Court cannot say that it would impound the document only when the document is tendered in evidence for marking. There may be instances where duty and penalty payable may be very high and the party may not choose to rely upon such insufficiently stamped document in order to avoid stamp duty and penalty. In such circumstances, it would result in loss of revenue to the exchequer. The power of impounding a document is to collect stamp duty and penalty whenever there is an escape of duty. Therefore, when it is brought to the notice of the Court that a document is insufficiently stamped, the Court exercising its power under Section 33 of the Act has to pass an order at the first instance for impounding the document. Though there is a discretion vested in the Court to exercise powers under Sections 33 and 34 of the Act, no Court can hold that it would wait till the document is tendered in evidence. In such circumstances, there may be chances of loss of revenue to the exchequer."

A Division Bench of this Court in the case of Digambar Warty and Others Vs. District Registrar and Chief Controller of Revenue and Commissioner of Stamps, had an occasion to consider the power of the Court to reduce the penalty payable under Section 34 of the Act. After referring to the judgment of the Division Bench directly on the point and also various other judgments, this court while overruling the judgment rendered by the single Bench in Govinde Gowda''s case with reference to Sections 33, 34, 35, 36 and 37 of the Stamp Act, it was held as under:

"39. Section 38 of the Act deals with the power of the Deputy Commissioner to refund the penalty paid under Sub-section (1) of Section 37. When a copy of an instrument is sent to the Deputy Commissioner under Subsection (1) of Section 37, he may, if he thinks fit, refund any portion of the penalty in excess of five rupees which has been paid in respect of such instrument. The reason being, when a person receiving the evidence impounds the document and collects the duty under Section 34 of the Act, which in most of the cases, is the Civil Court, the time of the Court should not be wasted in deciding, whether it is a fit case where penalty of ten times the duty is to be levied or a case is made out for imposition of lesser penalty. Therefore, the Legislature consciously has used the word, ''shall'' taking away any discretion in the Civil Court in the matter of imposition of penalty equal to ten times the duty payable. However, the Civil Court after impounding the document, collecting the duty and penalty, is under a statutory obligation to send it to the Deputy Commissioner under Sub-section (1) of Section 37. Therefore, when such an instrument is so sent to the Deputy Commissioner, he has been conferred the power to reduce the penalty already paid before the Civil Court. One of the reasons why such discretion is not vested with the Civil Court is, it is the revenue authorities who are more concerned with the collection of revenue, and that is not the job of the Civil Courts. However, if a document which is not stamped or insufficiently stamped is tendered in evidence in Civil Court and admitted in evidence, then the very purpose of the Stamp Act itself would be defeated. Therefore, 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 the duty payable on such instrument, to collect the 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. However, there appears to be some conflicting opinion in this regard." 11. This Court in Huchamma Vs. Chandrashekar, has held as under:

"19. Therefore, the impugned order imposing a penalty of Rs. 5/- cannot be sustained being wholly illegal and without jurisdiction. The Civil Court has no jurisdiction to impose a penalty less than 10 times and the penalty payable on the agreement of sale dated 07.01.2006 is therefore 10 times the duty found to be deficit by the trial court. Thus, the impugned order requires to be set aside only to the extent of imposing penalty of Rs. 5/"-. 12. Applying the said principles of law enunciated by this Court, the defendants are liable to pay the duty and penalty of Rs. 10,99,800/- under Sections 33 and 34 of the Karnataka Stamp Act on Ex. D.17. Though Ex. D.16 was the subject matter of the petition, no arguments are advanced on Ex. D.16. The learned counsel appearing for the plaintiffs has confined his arguments only to Ex. D.17.

Accordingly, writ petitions are disposed of modifying the order dated 02.01.2013 on I.A. in O.S. No. 26185/2009 on the file of the XXVIII Addl. City Civil and Sessions Judge, Bangalore directing the defendant to pay duty and penalty of Rs. 10,99,800/-in respect of Ex. D.17 within one month from today failing which trial Court is directed to impound Ex. D.17 as per Sections 33 and 34 of the Karnataka Stamp Act.