Sri Sujit Mukherjee vs Smt. Bela Mukherjee and Others

Dipankar Datta, J.—The Petitioner and the opposite parties entered into an agreement dated December 11, 1996 (hereafter the said agreement), written on a non-judicial stamp paper worth Rs. 20/-, in respect of sale of a property at a price of Rs. 23,00,000/- (Rupees twenty three lakh) only. Alleging that the opposite parties had failed to honour the terms and conditions of the said agreement, the Petitioner instituted Title Suit No. 3277 of 2009 for specific performance of contract and injunction. The Petitioner prayed for a decree for specific performance of the said agreement along with its amendment made in June, 2007 and also for permanent injunction restraining the opposite parties from selling/transferring the suit property to any third party. Trial of the suit has commenced and the learned Civil Judge (Senior Division) at Alipore is in seisin thereof.

The Petitioner in course of his examination tendered the said agreement in evidence. The trial Judge having found that the agreement had not been adequately stamped consistent with the provisions contained in the Indian Stamp Act impounded the same in terms of Section 33 thereof. The trial Judge was of the view that the said agreement, having regard to the price at which the property were to be sold, ought to have been written on non-judicial stamp papers of the value equivalent to 10% of Rs. 23,00,000/- in addition to Rs. 20/- required for agreement and, therefore, the said agreement was insufficiently stamped. The trial Judge upon assessment of deficit stamp duty and penalty payable on the said agreement, directed by order dated June 15, 2010 as under:

The Plaintiff is directed to make payment of Rs. 2 lacs 30 thousand being the amount of the proper stamp duty together with penalty of Rs. 23 lacs being 10 times of the deficit stamp duty in favour of the Collector, South 24-Pargs, Alipore by 30th July, 2010 and to file copy of challan by 05.8.2010. Inform Plaintiff.

The Petitioner soon thereafter filed an application before the trial Judge asserting his willingness to pay the deficit stamp duty and penalty, as assessed. He, however, expressed therein that he was unsure of the head of account to which the assessed amount is to be paid and that ascertainment thereof would take some time. Accordingly, he prayed for extension of time for a month, i.e. till August 30, 2010.

The trial Judge directed his office to send a reminder to the Collector for ascertaining the head of account but despite the same, no reply has since been obtained.

It was at this stage that the Petitioner filed another application before the trial Judge. He prayed for transmitting the said agreement to the Collector, South 24 Parganas for assessment of stamp duty and penalty afresh, with liberty to him to make payment accordingly instead of making payment of the amount assessed by the trial Judge.

The application was taken up for consideration on September 9, 2010 by the trial Judge. Upon a contested hearing, the trial Judge rejected the application. By a subsequent order dated September 27, 2010, the Petitioner''s prayer for adjournment to move the higher forum against the order dated September 9, 2010 was rejected and the parties were directed to get ready at once for further evidence of P.W.1.

The order dated September 9, 2010 is the subject matter of challenge in this application under Article 227 of the Constitution.

I have heard Mr. Chatterjee, learned senior advocate for the Petitioner and Mr. Ali, learned advocate for the opposite parties and perused the materials on record.

I propose to deal with the point raised by Mr. Ali at the outset. According to him, the Petitioner by his conduct waived his right to have an assessment made by the Collector afresh and his grievance ought not to be entertained bearing in mind the principle of law laid down in the Bench decision of this Court reported in 2009 (3) CHN 170 (Union of India v. R. Velumurugan).

It is indeed true that the Petitioner while seeking extension of time by filing the first application conveyed his willingness to deposit the amounts of deficit stamp duty and penalty as assessed by the trial Judge. However, such application filed by the Petitioner cannot, in my considered view, amount to forfeiture of his right to apply for assessment of deficit stamp duty and penalty afresh by the Collector if at all the provisions of the Act so provide unambiguously. A statutory right may be waived by a party by his conduct is settled law. Had the Petitioner tendered payment in terms of the assessment made by the trial Judge, he may not have been heard later on in relation to any grievance that the amounts of deficit stamp duty and penalty had not been justly assessed. So long payment is not tendered, any right that the statute may provide does not stand extinguished.

The decision in R. Velumurugan (supra) has no application here. The Division Bench of this Court was seized of the question as to whether the writ petition filed by the Union of India challenging an order of the Administrative Tribunal ought to be received or not. After the Tribunal allowed the application filed by the employee before it, the Union of India filed an application praying for extension of time to comply therewith. The prayer was granted. It was thereafter that the writ petition was presented before the Court. The Court refused to exercise discretion holding that by praying for enlargement of time, there was tacit acceptance of the order impugned. Paragraph 17 of the decision is of some importance and is, accordingly, quoted below:

Whether or not the Petitioners applied for enlargement of time to comply with the order of July 2, 2008, they would be entitled to maintain this petition. It is an entirely different matter as to whether the Writ Court would receive the petition or exercise the discretion, which is forever at large in such jurisdiction, in favour of the Petitioners.

It is noteworthy that the Court was dealing with a petition it its Constitutional Writ Jurisdiction, whereunder power is exercised in extra-ordinary cases. The relief under Article 226 is discretionary and that is precisely the reason the Court declined to receive the petition, even after ruling that it was maintainable.

The facts are not exactly the same here. The Petitioner, if he can ex debito justitiae claim that the said agreement ought to be transmitted to the Collector for fresh assessment since he is not ultimately willing to make payment in terms of the assessment of the trial Judge, there is no reason as to why his claim should not be entertained. The contention of Mr. Ali is misconceived and hence stands overruled.

I shall now proceed to ascertain how far the contention raised by Mr. Chatterjee that the trial Judge grossly erred in the exercise of jurisdiction is acceptable. For this purpose one has to look into the provisions of the Act. The same, to the extent relevant for a decision here, read as follows:

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 India when such instrument was executed or first executed: Provided that-****

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 shall 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, a sum of equal to ten times such duty or portion;

(b) ****

(c) ****

(d) ****

(e) ****

Instruments impounded how dealt with.- (1) Where the person impounding an instrument u/s 33 has by law or consent of parties authority to receive evidence and admits such instrument in evidence upon payment of a penalty as provided by Section 35 or of duty as provided by Section 37, he shall send to the Collector an authenticated copy of such instrument, together with a certificate in writing, stating the amount of duty and penalty levied in respect thereof, and shall send such amount to the Collector, or to such person as he may appoint in this behalf.

(2) In every other case, the person so impounding an instrument shall send it in original to the Collector.

Collector''s power to stamp instruments impounded.- (1) When the Collector impounds any instrument u/s 33, or receives any instrument sent to him u/s 38, Sub-section (2), not being an instrument chargeable with a duty not exceeding ten naye paise only or a bill of exchange or promissory note, he shall adopt the following procedure:-

(a) if he is of opinion that such instrument is duly stamped, or is not chargeable with duty, he shall certify by endorsement thereon that it is duly stamped, or that it is not so chargeable, as the case may be;

(b) if he is of opinion that such 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 the five rupees; or, if he thinks fit, an amount not exceeding ten times the amount of the proper duty or of the deficient portion thereof, whether such amount exceeds or falls short of five rupees:

Provided that, when such instrument has been impounded only because it has been written in contravention of Section 13 or Section 14, the Collector may, if he thinks fit, remit the whole penalty prescribed by this section.

(2) Every certificate under Clause (a) of Sub-section (1), shall, for the purposes of this Act, be conclusive evidence of the matters stated therein.

(3) Where an instrument has been sent to the Collector u/s 38, Sub-section (2), the Collector shall, when he has dealt with it as provided by this section, return it to the impounding officer.

Upon a careful reading of the aforesaid provisions, there can be no doubt whatsoever that the trial Judge acted partly legally and partly illegally in the exercise of his jurisdiction. The trial Judge rightly impounded the said agreement, as required by Section 33 of the Act. Not admitting the said agreement in evidence and assessment of deficit stamp duty and penalty by him to be paid by the Petitioner, since he intended the same to be relied on, was also lawful and proper considering Section 35 and proviso (a) thereto. The trial Judge, however, made a departure at this stage, by failing to notice Section 38 of the Act. The Petitioner not having tendered payment in terms of assessment made by the trial Judge, it was a case to which Sub-section (2) of Section 38 applied. In the absence of payment, there was no question of admitting the said agreement in evidence. The only course that was open to the trial Judge, in accordance with the aforesaid provision, was to transmit the said agreement to the Collector for taking action in terms of Section 40.

Conjoint reading of Sections 38 and 40 of the Act makes the position clear that if a party wishes not to make payment of deficit stamp duty and penalty assessed by the Court, he cannot be compelled to make payment of the assessed amount. If he does not tender payment of the assessed amount, question of admitting the instrument, not duly stamped, in evidence does not and cannot arise. In such case without allowing the party to rely on the instrument, it is the duty of the Court to transmit the instrument in original to the Collector for fresh assessment upon granting opportunity of hearing to the person to be proceeded against. It is only after the amount assessed by the Collector is paid that the party would be entitled to urge the Court to receive the instrument in evidence and to proceed on the basis thereof.

I may observe here that the issue is no longer res integra. Upon consideration of the above provisions, the Supreme Court in its decision reported in Chilakuri Gangulappa Vs. Revenue Divisional Officer, Madanpalle and Another, had the occasion to observe as follows:

**** In the context of this instrument being presented before the civil court the relevant provision to be noticed is Section 40 of the Stamp Act. Sub-section (1) of that section says that when the Collector impounds an instrument u/s 33, or receives any instrument sent to him u/s 38(2) he shall adopt the procedure laid down in the Sub-section. In this context Section 38 is to be looked into. It is extracted below:

****

It is clear from the first Sub-section extracted above that the court has the power to admit the document in evidence if the party producing the same would pay the stamp duty together with a penalty amounting to ten times the deficiency of the stamp duty. When the court chooses to admit the document on compliance with such condition the court need forward only a copy of the document to the Collector, together with the amount collected from the party for taking adjudicatory steps. But if the party refuses to pay the amount aforesaid the Court has no other option except to impound the document and forward the same to the Collector. On receipt of the document through either of the said avenues the Collector has to adjudicate on the question of the deficiency of the stamp duty. If the Collector is of the opinion that such 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 an amount not exceeding ten times the amount of the proper duty or of the deficient portion thereof''.

**** In the present case the trial court should have asked the Appellant, if it finds that the instrument is insufficiently stamped, as to whether he would remit the deficient portion of the stamp duty together with a penalty amounting to ten times the deficiency. If the Appellant agrees to remit the said amount the court has to proceed with the trial after admitting the document in evidence. In the meanwhile, the court has to forward a copy of the document to the Collector for the purpose of adjudicating on the question of deficiency of the stamp duty as provided in Section 40(1)(b) of the Act. Only if the Appellant is unwilling to remit the amount the court is to forward the original of the document itself to the Collector for the purpose of adjudicating on the question of deficiency of the stamp duty. The penalty of ten times indicated therein is the upper limit and the Collector shall take into account all factors concerned in deciding as to what should be the proper amount of penalty to be imposed.

(underlining for emphasis by me)

Yet again, in the decision reported in Peteti Subbarao v. Anumala Narendra, (2002) 10 SCC 427 the law was reiterated in the following words:

Chapter IV of the Indian Stamp Act contains provisions regarding ''instruments not duly stamped''. It is Section 35 which falls under the said chapter which empowered the trial court to direct the party (who wants the document to be acted upon) to pay the stamp duty (or the deficient portion) together with a penalty of rupees fifteen, or, when ten times the amount of the proper duty or deficient portion thereof exceeds fifteen rupees, of a sum equal to ten times such duty or portion. This is for the purpose of enabling the document to be admitted in evidence. In such a situation the document would be admitted only on payment of the aforesaid sum. In a case where the party is not willing or he cannot afford to pay the said sum the court has to adopt the procedure envisaged in Section 38(2) of the Act. That Sub-section is with reference to the action which the trial court is, perforce to adopt u/s 33(1) of the Act.

Mr M.N. Rao, learned Senior Counsel submitted that the Appellant cannot afford to pay the penalty now suggested as the amount is far beyond his capacity. But at the same time, he made a fervent plea that his suit cannot be allowed to be dismissed on the ground of inability to pay the huge penalty amount alone. We find some force in the said plea. In a case where the party fails to pay the penalty suggested by the court the document impounded has to be sent to the Collector for the purpose of taking further steps in respect of that document as provided in Section 40 of the Act. The Collector has the power to require the person concerned to pay the proper duty together with a penalty amount which the Collector has to fix in consideration of all aspects involved. The restriction imposed on the Collector in imposing the penalty amount is that under no circumstances the penalty amount shall go beyond ten times the duty or the deficient portion thereof. That is the farthest limit which meant only in very extreme situations the penalty need be imposed up to that limit. It is unnecessary for us to say that the Collector is not required by law to impose the maximum rate of penalty as a matter of course whenever an impounded document is sent to him. He has to take into account various aspects including the financial position of the person concerned.

(underlining for emphasis by me)

I am sure, the aforesaid authorities were not cited before the trial Judge as a result Be that as it may, by not adopting the course of action mandated by Section 38(2) of whereof the impugned order was passed in ignorance thereof.

the Act, the trial Judge has clearly acted illegally in the exercise of his jurisdiction in dismissing the second application filed by the Petitioner, thereby refusing to transmit the said agreement to the Collector. I have no hesitation to hold that the order impugned is indefensible and deserves to be set aside. It is ordered accordingly.

The trial Judge is directed to transmit the said agreement to the Collector at once. Further progress of the suit shall depend on receipt of a certificate issued by the Collector that the amount assessed by him u/s 40 of the Act has been duly paid by the Petitioner. I hope and trust that once the said agreement in original is transmitted to the Collector, appropriate action according to law shall be taken without undue delay.

The application stands allowed to the extent mentioned above, without order as to costs.

Urgent photostat certified copy of this judgment and order, if applied, may be furnished to the applicant at an early date.