whether the trial court which had admitted the agreements to sell in evidence could have
exercised its discretion in imposing penalty at the rate of 2 times of deficient amount of stamp duty or it was obligatory for the trial court to impose the penalty at the rate of 10 times.?
Suit for specific performance of contract. - The Trial court passed an order , by which agreements to sell in question were admitted in evidence and marked for the plaintiffs on payment of deficit duty and penalty. Deficit duty in both the suits was determined as Rs.12013/ and Rs.20320/ respectively and the penalty imposed was double of the deficit duty in both the suits. -
The High Court directed the courts below to levy the penalty at 10 times of the deficit duty as per judgment of Karnataka High Court in ILR 2013 KAR 2099. -
Apex court held that The above view of the Karnataka High Court that there is no discretion vested with the authority impounding the document in the matter of collecting duty under Section 33, is correct. The word used in the
said proviso is 'shall'. Sections 33 and 34 clearly indicate that penalty imposed has to be 10 times.- but the Learned trial court while imposing penalty at the rate of two times has given following reason: "The plaintiffs are stated to be agriculture and are residing at Sherewad village. The said fact is not denied by the defendants therein. It appears that the agreements were prepared by local villagers who are not experienced in the documentation. Looking to the status of the plaintiffs, their standard of having qualification of the document writers. I am of the opinion that the ratio laid down by our Hon'ble High Court in ILR 2011 KAR 4719 can be
applied to the present facts and circumstances levying 10 times penalty in respect of said
agreement will be harsh on the plaintiffs. Therefore I am of the opinion that levying
double the amount of deficit duty as penalty will meet the ends of justice.”-Although the procedural part which provides for impounding and realisation of duty and penalty does not give any discretion under Section 33 for imposing any lesser penalty than 10 times, however, when provision of Section 38 is read, the discretion given to Deputy Commissioner to refund the penalty is
akin to exercise of the jurisdiction under Section 39 where while determining the penalty he can impose the penalty lesser than 10 times. -asking the appellant to deposit 10 times of penalty and thereafter to invoke the jurisdiction of Deputy Collector under Section 38 to refund penalty shall be a proceeding again taking considerable time. In the facts of the present case, we are of the view that ends of justice be served in closing the matter by confirming the payment of deficit duty with the double penalty as imposed by the trial court which shall obviate the
proceeding of approaching the Deputy Commissioner for reduction of penalty under Section 38, which in the facts of the present case and for the reasons noted by the trial court was a relevant consideration for refund/reduction of the penalty.
Hon'ble Mr. Justice Ashok Bhushan
1
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO.11932 Of 2018
GANGAPPA AND ANR. ...APPELLANT(S)
VERSUS
FAKKIRAPPA ...RESPONDENT(S)
J U D G M E N T
ASHOK BHUSHAN,J.
This appeal has been filed against the judgment of
Karnataka High Court, Dharwad Bench dated 17.07.2014
disposing of the writ petition filed by the respondent
herein.
2. Brief facts of the case necessary to be noticed for
deciding this appeal are:
The appellants/plaintiffs entered into agreements
to sell with respondentdefendant dated 12.04.2005 and
16.05.2006 and earnest money of Rs.1,40,000/ was paid.
The appellants filed Suit No.863 of 2008 and Suit
No.864 of 2008 praying for specific performance of
2
contract. Another suit filed by the sister of the
defendant being O.S.No.327 of 2008 was also clubbed.
The Principal Civil Judge impounded agreements to sell
filed by the plaintiffs in Suit Nos.863 and 864 of 2008
with direction to the plaintiff to pay deficit duty and
penalty vide order dated 27.09.2010. Plaintiffs
challenged the order by means of Writ Petition
Nos.6926465/2010 and 69263/2010 which were disposed
of by the High Court vide its judgment dated 14.03.2013
directing the Principal Civil Judge to permit the
plaintiffs to place written submissions. After the
order of the High Court, the Principal Civil Judge
passed an order dated 22.04.2013 by which agreements to
sell in question were admitted in evidence and marked
for the plaintiffs in O.S.Nos.863 and 864 of 2008 on
payment of deficit duty and penalty. Deficit duty in
both the suits was determined as Rs.12013/ and
Rs.20320/ respectively and the penalty imposed was
double of the deficit duty in both the suits.
3. Aggrieved by the judgment of the Principal Civil
Judge, respondentdefendant filed a writ petition in
3
the High Court. The High Court disposed of the writ
petition relying on a Division Bench judgment of
Karnataka High Court in Digambar Warty and others vs.
District Registrar, Bangalore Urban District and
another, ILR 2013 KAR 2099. The High Court directed the
courts below to levy the penalty at 10 times of the
deficit duty as per judgment of Karnataka High Court in
ILR 2013 KAR 2099. Aggrieved by the judgment of the
High Court this appeal has been filed by the
appellants.
4. Learned counsel for the appellant submits that the
High Court committed an error in directing payment of
penalty at 10 times. The trial court has rightly
directed for payment of deficit duty and penalty at the
rate of 2 times which was a just and proper order. It
is submitted by the learned counsel for the appellant
that when the Deputy Commissioner can reduce levy of
penalty not exceeding 10 times of the amount of duty,
the trial court while determining the deficiency and
penalty shall also have such discretion. The trial
court has rightly exercised the discretion by imposing
4
the penalty of two times.
5. Learned counsel appearing for the respondent
submits that the instruments waere not duly stamped.
While admitting the insufficiently stamped documents
the trial court has no discretion while levying the
penalty. The statute i.e. Section 34 of the Karnataka
Stamp Act, 1957 mandates penalty at the rate of 10
times. The Division Bench of the High Court in
Digambar Warty and others (supra) has correctly
interpreted Section 34 while holding that Court has no
discretion to reduce the penalty from 10 times. The
High Court has rightly followed the above Division
Bench Judgment.
6. We have considered submissions of the learned
counsel for the parties and perused the records.
7. The issue which needs to be answered in the present
case is as to whether the trial court which had
admitted the agreements to sell in evidence could have
exercised its discretion in imposing penalty at the
rate of 2 times of deficient amount of stamp duty or it
was obligatory for the trial court to impose the
5
penalty at the rate of 10 times.
8. Before we proceed to consider the respective
submissions of the parties, it is relevant to notice
statutory provisions of the Karnataka Stamp Act, 1957.
Section 33 requires every person having by law or
consent of parties authority to receive evidence, is
obliged to impound any instrument which according to
him is not duly stamped. Section 33 subsection (1) is
as follows:
“33. 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.”
9. Section 34 provides that instruments not duly
stamped are inadmissible in evidence. Section 34 subsection (1) which is relevant for the present case is
as follows:
“34. 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
6
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) 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;”
10. Section 38 empowers the Deputy Commissioner to
refund penalty paid under subsection (1) of Section
37. Section 39 relates to the Deputy Commissioner's
power to stamp instruments impounded. Section 38 and
Section 39(1) are as follows:
“38. Deputy Commissioner]1's power to
refund penalty paid under subsection (1) of
section 37. (1) 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.
(2) When such instrument has been impounded
only because it has been written in
contravention of section 13 or section 14, the
1[Deputy Commissioner]1 may refund the whole
penalty so paid.
7
39. Deputy Commissioner's power to stamp
instruments impounded. (1) When the Deputy
Commissioner]1 impounds any instrument under
section 33, or receives any instrument sent to
him under subsection (2) of section 37, not
being an instrument chargeable with a duty not
exceeding fifteen naye paise only or a
mortgage of crop Article 35 (a) of the
Schedule] chargeable under clause (a) or (b)
of section 3 with a duty of twentyfive naye
paise, 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 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 Deputy Commissioner may, if
he thinks fit, remit the whole penalty
prescribed by this section.”
11. Section 34 proviso provides for admitting in
8
evidence an instrument not duly stamped are on payment
of duty and penalty. With regard to penalty statute
provides:
"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;”
12. The statute envisages that when the 10 times of the
amount of the proper duty or deficient portion thereof
exceeds five rupees, a sum equal to 10 times of such
duty or portion is the penalty.
13. The language of Section 34 provides a flat rate of
penalty when the amount of proper duty exceeds five
rupees i.e. 10 times of such duty or portion. There is
a clear Contrast in the language of Section 34 and
Section 39. Section 39 subsection (1) subclause (b)
is extracted for ready reference:
“39(1)(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 five rupees; or if he thinks
fit; an amount not exceeding ten times the
9
amount of the proper duty or of the
deficient portion thereof, whether such
amount exceeds or falls short of five
rupees:”
14. The above provision indicated that if the Deputy
Commissioner is of opinion that such instrument is
chargeable with duty and is not duly stamped shall
require the payment of the proper duty with a penalty
of five rupees. The latter part of the provision
states “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”. Thus, discretion has been
conferred on the Deputy Commissioner which is apparent
from the words “if he thinks fit”. Deputy Commissioner
has discretion of imposing penalty of 10 times or
lesser of the amount of duty or portion thereof. There
is clear contradistinction between the power under
Section 33 and 39. The object and purpose for such
contradistinction in the provision and power is not far
to seek. Section 33 applies to every person having by
law or consent of parties authority to receive
10
evidence, and every person incharge of a public
office. Thus, Section 33 covers a host of authorities,
persons before whom instruments are filed. The
legislative scheme does not indicate any distinction
between a court receiving an insufficiently stamped
instrument in evidence and other authorities. All have
to impose penalty of 10 times of the duty or deficit
portion, if it exceeds rupees five. This provision is
for purpose of maintaining a uniformity in imposing a
fixed penalty of 10 times without adverting to any
adjudicatory process regarding quantifying the quantum
of penalty. The statute gives discretion to Deputy
Commissioner who is the authority envisaged by the Act
incharge of the revenue administration of a District.
The definition of Deputy Commissioner is given in
Section 2(dd) which is to the following effect:
“2(dd) ‘Deputy Commissioner’ means the Chief
Officer in charge of the revenue
administration of a district and includes in
respect of such provisions of this Act or
rules made thereunder such officer in such
area as the State Government may by
notification in the Official Gazette specify;”
15. The amount of duty and penalty is required to be
11
sent to Deputy Commissioner under Section 37. Section
37 is quoted below:
“37. Instruments impounded how dealt with.
(1) When the person impounding an
instrument under section 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 34 or of duty as provided by
section 36, he shall send to the Deputy
Commissioner 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 Deputy Commissioner 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 Deputy Commissioner.
16. Deputy Commissioner under Section 38 is empowered
to refund any portion of the penalty in excess of five
rupees which has been paid in respect of such
instrument. Section 38 subsection (1) again uses the
expression “if he thinks fit”. Thus, in cases where
penalty of 10 times has been imposed, Deputy
Commissioner has discretion to direct the refund of the
penalty in facts of a particular case. The power to
refund the penalty under Section 38 clearly indicates
12
that legislature have never contemplated that in all
cases penalty to the extent of 10 times should be
ultimately realised. Although the procedural part which
provides for impounding and realisation of duty and
penalty does not give any discretion under Section 33
for imposing any lesser penalty than 10 times, however,
when provision of Section 38 is read, the discretion
given to Deputy Commissioner to refund the penalty is
akin to exercise of the jurisdiction under Section 39
where while determining the penalty he can impose the
penalty lesser than 10 times.
17. In the Division Bench judgment of the Karnataka
High Court relied by the High Court in Digambar Warty
and others (supra), after noticing the provisions of
Section 33 and 34 the Division Bench laid down
following in paragraph 36:
“36. This provision refers to the power
of the Civil Court which admits the documents
in evidence. The main Section is couched in
the negative. Unless the instrument is duly
stamped, it is inadmissible in evidence. As an
exception, the proviso provides for payment of
duty and penalty. In the matter of collection
of duty and penalty no discretion is vested
with the authority admitting such an
instrument in evidence. The duty payable on
13
the instrument is prescribed by statute.
Therefore, there is no question of any
discretion being vested with the authority
impounding the document in the matter of
collecting the duty. Once the duty payable is
ascertained from the statute, no discretion is
vested with the authority admitting the
document in evidence, in the matter of
imposition of duty and penalty. The word used
in the said proviso is 'shall'. It is
mandatory. However, Section 35 makes it clear,
that where an instrument has been admitted in
evidence without there being objection at the
time of admitting the said instrument in
evidence, then such admission shall not,
except as provided in Section 58, be called in
question at any stage of the same suit or
proceeding on the ground that the instrument
has not been duly stamped. Section 58 deals
with the power of the Appellate Court to
review the finding recorded by the original
Court under Section 34 of the Act, either suo
motu or on the application of the Deputy
Commissioner. Section 36 of the Act deals with
admission of improperly stamped instrument.
The State Government may make rules providing
that, where an instrument bears a stamp of
sufficient amount but of improper description,
it may, on payment of the duty with which the
same is chargeable, be certified to be duly
stamped, and any instrument so certified shall
then be deemed to have been duly stamped as
from the date of its execution.”
18. The above view of the Karnataka High Court that
there is no discretion vested with the authority
impounding the document in the matter of collecting
14
duty under Section 33, is correct. The word used in the
said proviso is 'shall'. Sections 33 and 34 clearly
indicate that penalty imposed has to be 10 times. The
Division Bench of the Karnataka High Court in Digambar
Warty and others (supra) has rightly interpreted the
provisions of Sections 33 and 34 of the Act. We, thus,
are of the view that the High Court in the impugned
judgment did not commit any error in relying on the
judgment of the Division Bench in Digambar Warty and
others (supra). We thus has to uphold the above view
expressed in the impugned judgment.
19. There is one more aspect which needs to be noted in
the present case. We have seen that even though 10
times penalty has to be collected and imposed by the
person impounding the document under Section 37,
Section 38 empowers the Deputy Collector to refund the
duty. Learned trial court while imposing penalty at the
rate of two times has given following reason:
"The plaintiffs of O.S. No.863/08 and 864/08
are stated to be agriculture and are residing
at Sherewad village. The said fact is not
denied by the defendants therein. It appears
that the agreements were prepared by local
villagers who are not experienced in the
15
documentation. Looking to the status of the
plaintiffs, their standard of having
qualification of the document writers. I am of
the opinion that the ratio laid down by our
Hon'ble High Court in ILR 2011 KAR 4719 can be
applied to the present facts and circumstances
levying 10 times penalty in respect of said
agreement will be harsh on the plaintiffs.
Therefore I am of the opinion that levying
double the amount of deficit duty as penalty
will meet the ends of justice.”
20. The order of the trial court was passed as early as
on 22.04.2013 that is more than five years ago. In view
of impounding the documents and imposition of penalty,
we are sure that the suit must not have been proceeded
further, and it must be at the threshold stage; asking
the appellant to deposit 10 times of penalty and
thereafter to invoke the jurisdiction of Deputy
Collector under Section 38 to refund penalty shall be a
proceeding again taking considerable time. In the facts
of the present case, we are of the view that ends of
justice be served in closing the matter by confirming
the payment of deficit duty with the double penalty as
imposed by the trial court which shall obviate the
proceeding of approaching the Deputy Commissioner for
reduction of penalty under Section 38, which in the
16
facts of the present case and for the reasons noted by
the trial court was a relevant consideration for
refund/reduction of the penalty.
21. In view of the foregoing discussion, we are,
therefore, of the view that the High Court has
correctly interpreted the provisions of Section 33 in
the impugned judgment but instead of prolonging the
matter permitting the appellant to deposit 10 times of
penalty and thereafter to take recourse under Section
38, we in the facts of the present case close the
proceedings regarding penalty on the agreements to sell
by approving the direction of the trial court for
payment of entire deficit duty and double the penalty.
22. The appeal is disposed of accordingly.
..........................J.
( ASHOK BHUSHAN )
..........................J.
NEW DELHI, ( AJAY RASTOGI )
December 14, 2018.
exercised its discretion in imposing penalty at the rate of 2 times of deficient amount of stamp duty or it was obligatory for the trial court to impose the penalty at the rate of 10 times.?
Suit for specific performance of contract. - The Trial court passed an order , by which agreements to sell in question were admitted in evidence and marked for the plaintiffs on payment of deficit duty and penalty. Deficit duty in both the suits was determined as Rs.12013/ and Rs.20320/ respectively and the penalty imposed was double of the deficit duty in both the suits. -
The High Court directed the courts below to levy the penalty at 10 times of the deficit duty as per judgment of Karnataka High Court in ILR 2013 KAR 2099. -
Apex court held that The above view of the Karnataka High Court that there is no discretion vested with the authority impounding the document in the matter of collecting duty under Section 33, is correct. The word used in the
said proviso is 'shall'. Sections 33 and 34 clearly indicate that penalty imposed has to be 10 times.- but the Learned trial court while imposing penalty at the rate of two times has given following reason: "The plaintiffs are stated to be agriculture and are residing at Sherewad village. The said fact is not denied by the defendants therein. It appears that the agreements were prepared by local villagers who are not experienced in the documentation. Looking to the status of the plaintiffs, their standard of having qualification of the document writers. I am of the opinion that the ratio laid down by our Hon'ble High Court in ILR 2011 KAR 4719 can be
applied to the present facts and circumstances levying 10 times penalty in respect of said
agreement will be harsh on the plaintiffs. Therefore I am of the opinion that levying
double the amount of deficit duty as penalty will meet the ends of justice.”-Although the procedural part which provides for impounding and realisation of duty and penalty does not give any discretion under Section 33 for imposing any lesser penalty than 10 times, however, when provision of Section 38 is read, the discretion given to Deputy Commissioner to refund the penalty is
akin to exercise of the jurisdiction under Section 39 where while determining the penalty he can impose the penalty lesser than 10 times. -asking the appellant to deposit 10 times of penalty and thereafter to invoke the jurisdiction of Deputy Collector under Section 38 to refund penalty shall be a proceeding again taking considerable time. In the facts of the present case, we are of the view that ends of justice be served in closing the matter by confirming the payment of deficit duty with the double penalty as imposed by the trial court which shall obviate the
proceeding of approaching the Deputy Commissioner for reduction of penalty under Section 38, which in the facts of the present case and for the reasons noted by the trial court was a relevant consideration for refund/reduction of the penalty.
Hon'ble Mr. Justice Ashok Bhushan
1
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO.11932 Of 2018
GANGAPPA AND ANR. ...APPELLANT(S)
VERSUS
FAKKIRAPPA ...RESPONDENT(S)
J U D G M E N T
ASHOK BHUSHAN,J.
This appeal has been filed against the judgment of
Karnataka High Court, Dharwad Bench dated 17.07.2014
disposing of the writ petition filed by the respondent
herein.
2. Brief facts of the case necessary to be noticed for
deciding this appeal are:
The appellants/plaintiffs entered into agreements
to sell with respondentdefendant dated 12.04.2005 and
16.05.2006 and earnest money of Rs.1,40,000/ was paid.
The appellants filed Suit No.863 of 2008 and Suit
No.864 of 2008 praying for specific performance of
2
contract. Another suit filed by the sister of the
defendant being O.S.No.327 of 2008 was also clubbed.
The Principal Civil Judge impounded agreements to sell
filed by the plaintiffs in Suit Nos.863 and 864 of 2008
with direction to the plaintiff to pay deficit duty and
penalty vide order dated 27.09.2010. Plaintiffs
challenged the order by means of Writ Petition
Nos.6926465/2010 and 69263/2010 which were disposed
of by the High Court vide its judgment dated 14.03.2013
directing the Principal Civil Judge to permit the
plaintiffs to place written submissions. After the
order of the High Court, the Principal Civil Judge
passed an order dated 22.04.2013 by which agreements to
sell in question were admitted in evidence and marked
for the plaintiffs in O.S.Nos.863 and 864 of 2008 on
payment of deficit duty and penalty. Deficit duty in
both the suits was determined as Rs.12013/ and
Rs.20320/ respectively and the penalty imposed was
double of the deficit duty in both the suits.
3. Aggrieved by the judgment of the Principal Civil
Judge, respondentdefendant filed a writ petition in
3
the High Court. The High Court disposed of the writ
petition relying on a Division Bench judgment of
Karnataka High Court in Digambar Warty and others vs.
District Registrar, Bangalore Urban District and
another, ILR 2013 KAR 2099. The High Court directed the
courts below to levy the penalty at 10 times of the
deficit duty as per judgment of Karnataka High Court in
ILR 2013 KAR 2099. Aggrieved by the judgment of the
High Court this appeal has been filed by the
appellants.
4. Learned counsel for the appellant submits that the
High Court committed an error in directing payment of
penalty at 10 times. The trial court has rightly
directed for payment of deficit duty and penalty at the
rate of 2 times which was a just and proper order. It
is submitted by the learned counsel for the appellant
that when the Deputy Commissioner can reduce levy of
penalty not exceeding 10 times of the amount of duty,
the trial court while determining the deficiency and
penalty shall also have such discretion. The trial
court has rightly exercised the discretion by imposing
4
the penalty of two times.
5. Learned counsel appearing for the respondent
submits that the instruments waere not duly stamped.
While admitting the insufficiently stamped documents
the trial court has no discretion while levying the
penalty. The statute i.e. Section 34 of the Karnataka
Stamp Act, 1957 mandates penalty at the rate of 10
times. The Division Bench of the High Court in
Digambar Warty and others (supra) has correctly
interpreted Section 34 while holding that Court has no
discretion to reduce the penalty from 10 times. The
High Court has rightly followed the above Division
Bench Judgment.
6. We have considered submissions of the learned
counsel for the parties and perused the records.
7. The issue which needs to be answered in the present
case is as to whether the trial court which had
admitted the agreements to sell in evidence could have
exercised its discretion in imposing penalty at the
rate of 2 times of deficient amount of stamp duty or it
was obligatory for the trial court to impose the
5
penalty at the rate of 10 times.
8. Before we proceed to consider the respective
submissions of the parties, it is relevant to notice
statutory provisions of the Karnataka Stamp Act, 1957.
Section 33 requires every person having by law or
consent of parties authority to receive evidence, is
obliged to impound any instrument which according to
him is not duly stamped. Section 33 subsection (1) is
as follows:
“33. 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.”
9. Section 34 provides that instruments not duly
stamped are inadmissible in evidence. Section 34 subsection (1) which is relevant for the present case is
as follows:
“34. 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
6
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) 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;”
10. Section 38 empowers the Deputy Commissioner to
refund penalty paid under subsection (1) of Section
37. Section 39 relates to the Deputy Commissioner's
power to stamp instruments impounded. Section 38 and
Section 39(1) are as follows:
“38. Deputy Commissioner]1's power to
refund penalty paid under subsection (1) of
section 37. (1) 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.
(2) When such instrument has been impounded
only because it has been written in
contravention of section 13 or section 14, the
1[Deputy Commissioner]1 may refund the whole
penalty so paid.
7
39. Deputy Commissioner's power to stamp
instruments impounded. (1) When the Deputy
Commissioner]1 impounds any instrument under
section 33, or receives any instrument sent to
him under subsection (2) of section 37, not
being an instrument chargeable with a duty not
exceeding fifteen naye paise only or a
mortgage of crop Article 35 (a) of the
Schedule] chargeable under clause (a) or (b)
of section 3 with a duty of twentyfive naye
paise, 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 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 Deputy Commissioner may, if
he thinks fit, remit the whole penalty
prescribed by this section.”
11. Section 34 proviso provides for admitting in
8
evidence an instrument not duly stamped are on payment
of duty and penalty. With regard to penalty statute
provides:
"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;”
12. The statute envisages that when the 10 times of the
amount of the proper duty or deficient portion thereof
exceeds five rupees, a sum equal to 10 times of such
duty or portion is the penalty.
13. The language of Section 34 provides a flat rate of
penalty when the amount of proper duty exceeds five
rupees i.e. 10 times of such duty or portion. There is
a clear Contrast in the language of Section 34 and
Section 39. Section 39 subsection (1) subclause (b)
is extracted for ready reference:
“39(1)(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 five rupees; or if he thinks
fit; an amount not exceeding ten times the
9
amount of the proper duty or of the
deficient portion thereof, whether such
amount exceeds or falls short of five
rupees:”
14. The above provision indicated that if the Deputy
Commissioner is of opinion that such instrument is
chargeable with duty and is not duly stamped shall
require the payment of the proper duty with a penalty
of five rupees. The latter part of the provision
states “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”. Thus, discretion has been
conferred on the Deputy Commissioner which is apparent
from the words “if he thinks fit”. Deputy Commissioner
has discretion of imposing penalty of 10 times or
lesser of the amount of duty or portion thereof. There
is clear contradistinction between the power under
Section 33 and 39. The object and purpose for such
contradistinction in the provision and power is not far
to seek. Section 33 applies to every person having by
law or consent of parties authority to receive
10
evidence, and every person incharge of a public
office. Thus, Section 33 covers a host of authorities,
persons before whom instruments are filed. The
legislative scheme does not indicate any distinction
between a court receiving an insufficiently stamped
instrument in evidence and other authorities. All have
to impose penalty of 10 times of the duty or deficit
portion, if it exceeds rupees five. This provision is
for purpose of maintaining a uniformity in imposing a
fixed penalty of 10 times without adverting to any
adjudicatory process regarding quantifying the quantum
of penalty. The statute gives discretion to Deputy
Commissioner who is the authority envisaged by the Act
incharge of the revenue administration of a District.
The definition of Deputy Commissioner is given in
Section 2(dd) which is to the following effect:
“2(dd) ‘Deputy Commissioner’ means the Chief
Officer in charge of the revenue
administration of a district and includes in
respect of such provisions of this Act or
rules made thereunder such officer in such
area as the State Government may by
notification in the Official Gazette specify;”
15. The amount of duty and penalty is required to be
11
sent to Deputy Commissioner under Section 37. Section
37 is quoted below:
“37. Instruments impounded how dealt with.
(1) When the person impounding an
instrument under section 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 34 or of duty as provided by
section 36, he shall send to the Deputy
Commissioner 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 Deputy Commissioner 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 Deputy Commissioner.
16. Deputy Commissioner under Section 38 is empowered
to refund any portion of the penalty in excess of five
rupees which has been paid in respect of such
instrument. Section 38 subsection (1) again uses the
expression “if he thinks fit”. Thus, in cases where
penalty of 10 times has been imposed, Deputy
Commissioner has discretion to direct the refund of the
penalty in facts of a particular case. The power to
refund the penalty under Section 38 clearly indicates
12
that legislature have never contemplated that in all
cases penalty to the extent of 10 times should be
ultimately realised. Although the procedural part which
provides for impounding and realisation of duty and
penalty does not give any discretion under Section 33
for imposing any lesser penalty than 10 times, however,
when provision of Section 38 is read, the discretion
given to Deputy Commissioner to refund the penalty is
akin to exercise of the jurisdiction under Section 39
where while determining the penalty he can impose the
penalty lesser than 10 times.
17. In the Division Bench judgment of the Karnataka
High Court relied by the High Court in Digambar Warty
and others (supra), after noticing the provisions of
Section 33 and 34 the Division Bench laid down
following in paragraph 36:
“36. This provision refers to the power
of the Civil Court which admits the documents
in evidence. The main Section is couched in
the negative. Unless the instrument is duly
stamped, it is inadmissible in evidence. As an
exception, the proviso provides for payment of
duty and penalty. In the matter of collection
of duty and penalty no discretion is vested
with the authority admitting such an
instrument in evidence. The duty payable on
13
the instrument is prescribed by statute.
Therefore, there is no question of any
discretion being vested with the authority
impounding the document in the matter of
collecting the duty. Once the duty payable is
ascertained from the statute, no discretion is
vested with the authority admitting the
document in evidence, in the matter of
imposition of duty and penalty. The word used
in the said proviso is 'shall'. It is
mandatory. However, Section 35 makes it clear,
that where an instrument has been admitted in
evidence without there being objection at the
time of admitting the said instrument in
evidence, then such admission shall not,
except as provided in Section 58, be called in
question at any stage of the same suit or
proceeding on the ground that the instrument
has not been duly stamped. Section 58 deals
with the power of the Appellate Court to
review the finding recorded by the original
Court under Section 34 of the Act, either suo
motu or on the application of the Deputy
Commissioner. Section 36 of the Act deals with
admission of improperly stamped instrument.
The State Government may make rules providing
that, where an instrument bears a stamp of
sufficient amount but of improper description,
it may, on payment of the duty with which the
same is chargeable, be certified to be duly
stamped, and any instrument so certified shall
then be deemed to have been duly stamped as
from the date of its execution.”
18. The above view of the Karnataka High Court that
there is no discretion vested with the authority
impounding the document in the matter of collecting
14
duty under Section 33, is correct. The word used in the
said proviso is 'shall'. Sections 33 and 34 clearly
indicate that penalty imposed has to be 10 times. The
Division Bench of the Karnataka High Court in Digambar
Warty and others (supra) has rightly interpreted the
provisions of Sections 33 and 34 of the Act. We, thus,
are of the view that the High Court in the impugned
judgment did not commit any error in relying on the
judgment of the Division Bench in Digambar Warty and
others (supra). We thus has to uphold the above view
expressed in the impugned judgment.
19. There is one more aspect which needs to be noted in
the present case. We have seen that even though 10
times penalty has to be collected and imposed by the
person impounding the document under Section 37,
Section 38 empowers the Deputy Collector to refund the
duty. Learned trial court while imposing penalty at the
rate of two times has given following reason:
"The plaintiffs of O.S. No.863/08 and 864/08
are stated to be agriculture and are residing
at Sherewad village. The said fact is not
denied by the defendants therein. It appears
that the agreements were prepared by local
villagers who are not experienced in the
15
documentation. Looking to the status of the
plaintiffs, their standard of having
qualification of the document writers. I am of
the opinion that the ratio laid down by our
Hon'ble High Court in ILR 2011 KAR 4719 can be
applied to the present facts and circumstances
levying 10 times penalty in respect of said
agreement will be harsh on the plaintiffs.
Therefore I am of the opinion that levying
double the amount of deficit duty as penalty
will meet the ends of justice.”
20. The order of the trial court was passed as early as
on 22.04.2013 that is more than five years ago. In view
of impounding the documents and imposition of penalty,
we are sure that the suit must not have been proceeded
further, and it must be at the threshold stage; asking
the appellant to deposit 10 times of penalty and
thereafter to invoke the jurisdiction of Deputy
Collector under Section 38 to refund penalty shall be a
proceeding again taking considerable time. In the facts
of the present case, we are of the view that ends of
justice be served in closing the matter by confirming
the payment of deficit duty with the double penalty as
imposed by the trial court which shall obviate the
proceeding of approaching the Deputy Commissioner for
reduction of penalty under Section 38, which in the
16
facts of the present case and for the reasons noted by
the trial court was a relevant consideration for
refund/reduction of the penalty.
21. In view of the foregoing discussion, we are,
therefore, of the view that the High Court has
correctly interpreted the provisions of Section 33 in
the impugned judgment but instead of prolonging the
matter permitting the appellant to deposit 10 times of
penalty and thereafter to take recourse under Section
38, we in the facts of the present case close the
proceedings regarding penalty on the agreements to sell
by approving the direction of the trial court for
payment of entire deficit duty and double the penalty.
22. The appeal is disposed of accordingly.
..........................J.
( ASHOK BHUSHAN )
..........................J.
NEW DELHI, ( AJAY RASTOGI )
December 14, 2018.
