The Indian Stamp Act, 1899 - Sections 38 and 40 - Collectorʹs power to stamp instruments impounded - the Collector’s decision in such regard being final, upon a reference under Section 38(2) of the 1899 Act.
In the present case, since the court did not itself assess the stamp duty, the reference was obviously under Section 38(2) of the 1899 Act and the Collector was bound to act under Section 40 of the Act. Since Section 40(b) gives the Collector the discretion to award any penalty between rupees five and ten times the amount of deficit court fee, the Collector acted within her/his jurisdiction to assess the amount of deficit stamp duty without imposing maximum amount of penalty, being ten times such deficit. Since the Collector thereafter remitted the matter back to the court, the court did not have a further option to modify such assessment or impose its own penalty. The chronology and scheme of Sections 38 and 40 are amply clear as to the Collector’s decision in such regard being final, upon a reference under Section 38(2) of the 1899 Act.
The Indian Stamp Act, 1899 - Section 38 (2) - Reference - Merely because the Collector obtained an assessment from the Registrar which, in any event, is the usual mode in which such assessments are done, the character of the reference would not be altered to something else than under Section 38(2).
The Indian Stamp Act, 1899 - Section 38 (2) - Reference - Mere non‐collection of the stamp duty by the Collector and leaving such ministerial modality to the court machinery does not ipso facto change the complexion of the reference, which could only be under Section 38(2) of the Act of 1899.
The Stamp Act, 1899 - Sections 35, 38 and 40 - Instruments not duly stamped inadmissible in evidence - Instruments impounded how dealt with - Collectorʹs power to stamp instruments impounded.
As such, the trial court acted palpably without jurisdiction in re‐imposing ten times penalty on the deficit stamp duty on the instrument‐in‐question, even after the Collector had exercised its discretion lawfully to dispense with the payment of ten times penalty. Hence, the impugned order dated July 16, 2018 deserves to be set aside.
IN
THE HIGH COURT AT CALCUTTA
CIVIL
REVISIONAL JURISDICTION APPELLATE SIDE
The
Hon’ble Justice Sabyasachi Bhattacharyya
24.04.2019
C.O.
No. 3910 of 2018
Debdip
De and another Vs. Partha Pratim Mahato and others
For the petitioners : Mr. Amitava
Mukherjee, Ms. Arpita Saha
For the opposite parties : Mr.
Srinjoy Das
J U D G M E N T
Sabyasachi Bhattacharyya, J.:‐
1. The
present application under Article 227 of the Constitution of India arises from
an order dated July 16, 2018 passed in a suit for specific performance of a
contract, valued at Rs.2,51,00,000/‐. The petitioners filed the said suit and
the trial court, upon impounding the agreement on which the suit was based, sent
down the same to the Collector for assessment of stamp duty. The Collector had
the same assessed and sent back a report, along with the agreement as well as
the value assessed by the District Registrar, Purulia (who was authorised by
the Collector to so assess), to the court. Vide Order No. 41 dated August 29,
2017, the trial Judge recorded the receipt of the report along with the other
documents and fixed September 16, 2017 for the payment of actual stamp duty and
registration fee.
2. Subsequently,
the defendants/opposite parties filed an application for modification of the
order of impoundment by directing the plaintiffs/petitioners to deposit the
penalty due on the deficit stamp duty as well, which had not been awarded by
the Collector. By the impugned order dated July 16, 2018, the said application
of the defendants/opposite parties was allowed on contest, directing the
plaintiffs to pay the deficit stamp duty of Rs.50,47,000/‐, as assessed by the
Collector, along with Rs.5,04,70,000/‐ (ten times the assessed stamp duty) as
penalty.
3. The
plaintiffs/petitioners have challenged the said order dated July 16, 2018.
4. Learned
counsel for the petitioners argues that the court, after impounding the document‐in‐question
and sending the same to the Collector for assessment of stamp duty, was no
longer in seisin over the matter of assessment of stamp duty and/orpenalty and
acted without jurisdiction in imposing such penalty, thereby unlawfully modifying
the report of the Collector.
5. It
is argued that the said report was accepted by the court vide Order No. 41
dated August 29, 2017 and as such could not be modified without proper reason,
as done in the impugned order.
6. It
is submitted on behalf of the petitioners that the reference was one under
Section 38(2) of the Stamp Act, 1899 and as such the Collector’s power pursuant
to such reference was circumscribed by Section 40 of the said Act of 1899.
7. It
is submitted that Section 40(b) of the said Act permitted the Collector the
discretion of awarding a penalty of five Rupees or, if he thinks fit, an amount
not exceeding ten times the amount of proper duty or of the deficient portion
thereof, whether such amount exceeds or falls short of five rupees. As such,
the Collector had jurisdiction to award penalty according to its discretion,
within the range of five Rupees to ten times the amount of deficit stamp duty.
8. The
court did not retain jurisdiction after such reference, to sit in judgment over
the decision of the Collector, within the periphery of the 1899 Act.
9. It
is further submitted that Section 40(2) of the said Act attached finality to
every certificate issued by the Collector under clause (a) of sub‐section (1)
of Section 40, which, as provided in Section 40(2), would be conclusive evidence
of the matters stated therein for the purposes of the 1899 Act.
10. In
this context, learned counsel for the petitioners cites a judgment reported at 2002(3)
CHN 151 [Biswajit Chakraborty vs. Mira Sen Ray], wherein
it was held, inter alia, that the scheme of the 1899 Act provided that if the
Collector receives an instrument under Section 38(2) of the said Act, he shall
adopt the procedure as specified in Section 40 and that every certificate
issued under Section 40(1)(a) of the Act shall be conclusive evidence for the
matters stated therein. It was further observed that the court could itself impound
and admit the document‐in‐question under Section 35 of the 1899 Act on payment
of sufficient duty, with a penalty. However, if the party who produces such document
for being admitted in evidence is aggrieved by the order of court as regards classification
of the document or amount of duty and penalty assessed, it may pray to the
court to send the document in original to the Collector under Section 38(2), when
Section 40 would apply.
11. Learned
counsel next cites a full bench judgment of the Punjab High Court reported at AIR
1966 Punjab 293 [Smt. Kamala Devi vs. The Chief Controlling Revenue Authority,
Delhi], wherein it was held that a penalty
on stamp duty was justified only in cases where a deliberate attempt was made
by the executants to evade the payment of the proper stamp duty first by
presenting them direct to the Commissioner instead of getting them registered
before the presentation. It was held that the executant of a document ought not
to be subjected to the maximum penalty even if the document was found to be under‐stamped,
unless an attempt had been made to evade the payment of the properstamp duty by
trying to disguise the true nature of the document by drafting it in misleading
terms.
12. Learned
counsel next cites a judgment reported at AIR
2001 SC 1321 [Chilakuri Gangulappa vs. Revenue Divisional Officer, Madanapalle
and another], wherein it was held by the Supreme
Court that if the trial court finds that the instrument is insufficiently stamped,
it should have asked the appellant as to whether he would remit the deficient portion
of the stamp duty together with penalty amounting to ten times the deficiency. If
the appellant agreed to remit the said amount, the court has to proceed with
the trial after admitting the document in evidence. 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 it was held that the Collector shall take into
account all factors concerned in deciding as to what should be the proper
amount of penalty to be imposed.
13. By
relying on the aforesaid judgments, it is argued on behalf of the petitioners
that the trial court acted without jurisdiction in re‐imposing full penalty,
ten times the amount of the deficit stamp duty, without considering the factors
involved, as mandated by law. Moreover, the trial court acted without
jurisdiction in imposing any penalty at all, in view of the Collector having
refused to do so.
14. In
reply, learned counsel for the defendants/opposite parties argues that in the
present case, the act of the trial court in sending the document to the
Collector was not areference under Section 38(2) of the Stamp Act, 1899 but was
merely to take an opinion of the Collector as regards the stamp duty to be
imposed. Hence, the provisions of Section 40 were not applicable to the present
case at all and the Collector had no discretion to waive the penalty on the
deficit stamp duty.
15. It
is argued that, even as per the judgments cited by the petitioners, the court
had to give an opportunity to the petitioners first, upon assessment of stamp
duty and penalty, as to whether the petitioners were agreeable to pay such
amount. Only upon refusal by the petitioners to do so would the question of
reference under Section 38(2) arise. Since, in the present case, no such prior
option was given to the petitioners by the court on assessment of stamp duty
and penalty, it could not be said that the reference was under Section 38(2) of
the 1899 Act.
16. Learned
counsel submits that the assessment was not even made by the Collector himself
but by the District Registrar, Purulia. If the exercise was one under Section
40 of the 1899 Act, the Registrar had no authority to so assess and as such
there was no assessment under Section 38(2) at all. Hence, it is argued that
the court retained its jurisdiction and authority to assess the stamp duty. As
per Section 38(1), if the court itself assessed the deficit stamp duty, the
court was governed by Section 35, proviso (a) and would have to levy ten times
of the deficit stamp duty as penalty, having no discretion to waive the payment
of such penalty.
17. In
this context, learned counsel cites a judgment reported at 1969
Supreme (Guj) 71 [Kantaben Jayantilal Soni vs. Ranjitlal Natverlal Soni], wherein
it was held, in respect of therelevant provisions of the Bombay Stamp Act, that
the Collector, in case of having assessed the stamp duty and penalty, was the
authority which would collect the deficit stamp duty and penalty.
18. Learned
counsel further cites a judgment reported at (2002)
10 SCC 427 [Peteti Subba Rao vs. Anumala S. Narendra] as
well as a judgment reported at AIR 2010 Madhya Pradesh 158 [Umesh
Kumar Prakashchandra Sharma vs. Rajaram Ramchandra Jat and anr.],
in support of the proposition that Section 40 of the 1899 Act authorized the
Collector to recover the duty as well as the penalty. It is the Collector who
shall require the payment of proper duty together with penalty.
19. Since
in the present case, the Collector did not recover the amount but the matter
was relegated back to the court, it is a sure indication of the court having
retained its jurisdiction to assess the stamp duty and the reference was not
under Section 38(2) of the Code of Civil Procedure but a mere effort on the
part of the court to have a yardstick by way of a report from the Collector to
assess the proper stamp duty and penalty.
20. Upon
considering the submissions of both sides, the question which falls for consideration
is, whether the court below acted without jurisdiction in assessing the stamp
duty and penalty itself, even after the Collector assessed the deficit stamp
duty payable.
21. For
this purpose, Sections 35, 38 and 40 of the Stamp Act, 1899 are relevant and
are set out below:
“Stamp Act, 1899:‐
35. 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, of a sum equal to ten times such duty or portion;
(b) where any person from whom a
stamped receipt could have been demanded, has given an unstamped receipt and
such receipt, if stamped, would be admissible in evidence against him, then
such receipt shall be admitted in evidence against him on payment of a penalty
of one rupee by the person tendering it;
(c) 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;
(d) 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 (5 of 1898);
(e) nothing herein contained
shall prevent the admission of any instrument in any Court when such instrument
has been executed by or on behalf of theGovernment or where it bears the
certificate of the Collector as provided by section 32 or any other provision
of this Act.
… … …
38. Instruments impounded how dealt
with.— (1) Where 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 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.
... … …
40. Collectorʹs power to stamp
instruments impounded.—(1) When the Collector impounds
any instrument under Section 33, or receives any instrument sent to him under Section
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 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 under section 38, sub‐section (2), the Collector shall,
when he has dealt with it as provided by this section, return it to the impounding
officer.”
22.
Section 35 makes it mandatory for
the authority which receives the evidence including the court, to admit the
document in evidence only on payment of the deficit stamp duty along with ten
times the amount of the proper or deficient stamp duty. There is no discretion
available to the court with regard to the dispensing with of the payment of penalty.
Section 38(1) envisages the court or any other authority to receive and admit
the instrument‐in‐question in evidence only upon payment of a penalty as
provided by Section 35 and to send to the Collector an authenticated copy of
the instrument together with a certificate in writing, stating the amount of
duty and penalty levied in respect thereof and to send such amount to the
Collector or to such person as he may appoint in this behalf. An assessment of
the stamp duty under Section 38(1) automatically attracts Section 35, making it
mandatory for the court not only to compel the party relying on the instrument
to pay the further deficit court fees but ten times the amount of the deficient
court fee.
23. The
general tenor of the judgments cited make it apparent that the court has to
give a first option to the party relying on the instrument to pay the stamp
duty and penalty upon assessing the same. Generally, only upon refusal on the
part of the said party to put in the amount, the matter is referred to the
Collector under Section 38(2).
24. However,
the said judgments do not make it mandatory in every case for the court to give
the first option to the party relying on the instrument. The same is a general proposition,
admitting of exceptions as well, since Section 38 itself does not contemplate any
such prior opportunity to be given to the party‐in‐question.
25. In
the present case, although no prior option was given to the petitioners to
agree to the deficit stamp duty, such absence of option dose not ipso
facto vitiate the reference under Section
38(2) to the Collector or alter the character of such reference. In any event,
the petitioners, by the mere act of preferring the present challenge against
the levy of penalty by the trial court, have expressed their intention not to
agree to such assessment, which would necessitate a reference to the Collector
under Section 38 (2) of the 1899 Act all the same. Since such an exercise has
already been done in the present case, a repetition would be unnecessary and
futile.
26. The
scheme of the 1899 Act does not leave any scope of there being any other
provision of reference, in the present context, than Section 38(2) of the said
Act.
27. In
the present case, since the court did not itself assess the stamp duty, the
reference was obviously under Section 38(2) of the 1899 Act and the Collector
was bound to act underSection 40 of the Act. Since Section 40(b) gives the
Collector the discretion to award any penalty between rupees five and ten times
the amount of deficit court fee, the Collector acted within her/his
jurisdiction to assess the amount of deficit stamp duty without imposing
maximum amount of penalty, being ten times such deficit.
28. Since
the Collector thereafter remitted the matter back to the court, the court did
not have a further option to modify such assessment or impose its own penalty.
29. The
chronology and scheme of Sections 38 and 40 are amply clear as to the Collector’s
decision in such regard being final, upon a reference under Section 38(2) of
the 1899 Act.
30. Merely
because the Collector obtained an assessment from the Registrar which, in any event,
is the usual mode in which such assessments are done, the character of the reference
would not be altered to something else than under Section 38(2).
31. From
another perspective, mere non‐collection of the stamp duty by the Collector and
leaving such ministerial modality to the court machinery does not ipso
facto change the complexion of the
reference, which could only be under Section 38(2) of the Act of 1899.
32. As
such, the trial court acted palpably without jurisdiction in re‐imposing ten
times penalty on the deficit stamp duty on the instrument‐in‐question, even
after the Collector had exercised its discretion lawfully to dispense with the
payment of ten times penalty. Hence, the impugned order dated July 16, 2018
deserves to be set aside.
33. Accordingly,
C.O. No.3910 of 2018 is allowed on contest, thereby setting aside the impugned
order and directing the petitioners to deposit/pay the actual stamp duty of Rs.50,47,000/‐
along with registration fees of Rs.7,93,089/‐, as directed by the trial court vide
Order No. 41 dated August 29, 2017, within three weeks from date in the court below.
34. There
will be no order as to costs.
35. Urgent
certified website copies of this order, if applied for, be made available to
the parties upon compliance with the requisite formalities.