D. K. Mahajan ( 1 ) THIS petition for revision is directed against the decision of Shri 0. P. Saini, Additional Judge Small Cause Court, Delhi. ( 2 ) A suit for recovery of Rs. 961. 00on account of principal and Interest was filed by the plaintiff against the defendants Mahan Singh and Deep Chand S/o Kirpa Ram on the basis of the balance atruck by them in his bahi on the 20th December, 1963. The defendants contested the suit. It was pleadked that the bahi was not admissible in evidence because the acknowledgement was not properly stamped. It was also pleaded that the plaintiff was money-lender and that he could not bring the suit without getting the Money-lenders Licence. The liability to pay the amount in question was also denied. It is common ground that if the acknowledgement is not admissible in evidence the plaintiffs suit must fail. ( 3 ) THE trial Court he that the plaintiff was a money-lender and that lie had a Moneylender s Licence. The defendents admitted the execution of the balance in bahi but they pleaded that the entry rebalance amounted to an acknowledgement and not an agreement, and, therefore, it being not properly stamped, was not admissible in evidence. The trial Court also held that theentry in dispute amounted to an acknowledgement and was, therefore, not admissible in evidence, and that the amount in question had not been paid back by the defendants. The suit was accordingly dismissed. Against, this decision, the present petition for revision was preferred to this Court, which came up for Hearing before Capoor J. on the 28th February, 1961, who passed the following order:- "one of the points raised in this case by Mr. The suit was accordingly dismissed. Against, this decision, the present petition for revision was preferred to this Court, which came up for Hearing before Capoor J. on the 28th February, 1961, who passed the following order:- "one of the points raised in this case by Mr. D. K. Kapoor on behalf of the petitioner is that the extension of the Indian Stamp (East Punjab Amendment) Act, 1949 (East Punjab Act No. XXVII of 1949), to Delhi State by a notification in the official Gazette No. SRO-422 dated the 21st March, 1951, was ultra vires of the powers conferred on the Legislature of the Delhi State by section 2 of the Part C States (Laws) Act, 1950 (Act No. XXX of 1950) inasmuch as by that extension it was a Central Act, that is the- Indian Stamp Act, which was sought to be amended, Prima facie there is some force in the contention and I would, therefore, direct that notice be issued to the Advocate-General, who may make any submission he desired on this point. "the matter was then placed before me on the 3rd December, 1962, and in view of the Constitutional question involved in the case I directed that the matter be decided by a division Bench. That is how the matter 6as been placed before us. ( 4 ) IT is common ground that the acknowledgement is stamped with one anna stamp. Up to the 21st, March, 1951, acknowledgements required only one anna stamp. After this date, the requisite stamp has been raised to anna two. This has been done in the following manner : In the year 1949 (The Indian Stamp (East Punjab Amendment) Act, 1949 (No. XXVII of 1949) was passed. This Act brought about various amendments in the Indian Stamp Act. This Act was extended to Delhi by a notification No. SRO-422 dated the 21st March, 1951, published in the Gazette of India, Part II-Section 3, dated the 31st March, 1951. The power to extend laws prevailing in other States has been conferred on the Central Government under section 2 of the Part C States (Laws) Act, 1950 (No. XXX of 1950 ). The power to extend laws prevailing in other States has been conferred on the Central Government under section 2 of the Part C States (Laws) Act, 1950 (No. XXX of 1950 ). Section 2 of this Act is in these terms ;- "the Central Government, may, by notification in the Official Gazette, extend to any Part C State (other than Coorg and the amendment to Andaman and Nicobar Islands) or to any part of such State, with such restrictions and modifications as it thinks fit, any enactment which is in force in a Part A State at the date of the notification ; and, provision may be made in any enactment so extended for the repeal or amendment of any corresponding law (other than a Central Act) which is for the time being applicable to that part C. State. "it is in view of the change brought about in the Stamp Act applicable to Delhi, i. e. ; the Central Act, that enhanced stamp of two annas was required on acknowledgement instead of the original Stamp of the one anna. If the enhanced stamp of two annas is not justified, then the document is properly stamped and could not have been ruled out of evidence. The learned counsel for the petitioner has raised three contentions before us: 1. that the Indian Stamp Act was applicable to Delhi and that it could not have been amended by recourse to section 2 of the pari C States (Laws) Act, 1950 ; 2. than even if it be held that the necessary amendment could have been made by recourse to section 2 of the Part C States (Laws) Act, 1950, the amendment having not been made in accordance with Article 254 of the Constitution of India, is of no effect; and 3. that in view of the decision of the Supreme Court in re:art. 143. Constitution of India and Delhi Laws Act (1911) etc. half of section 2 of the Parts C States (Laws) Act, 1950, being ultra vires, no recourse to this section can be made to amend the Central Act. ( 5 ) AS some of the considerations are common to the first and the third contention, I have deemed it proper to deal with both these contentions together in the first instance. ( 5 ) AS some of the considerations are common to the first and the third contention, I have deemed it proper to deal with both these contentions together in the first instance. The earlier provisions before section 2 of the Part C States (Laws) Act, 1950, was enacted was section 7 of the Delhi Laws Act, 1912, which is in these terms :- "7. The Provincial Government may, be notification in the Official Gazette, extend with such restrictions and modifications as it thinks fit to the Province of Delhi or any part thereof, any enactment which is in force in any part of the provinces at the dateof such notification. "this provision was repealed by the Part C States (Laws) Act, 1950, and its place was -taken by section 2 of that Act Section 2 was considered by the Supreme Court in Delhi Law Act case. Special Reference No. 1 of 1951. This was a decision by a Bench of seven Judges presided over by Kania, C. J. Fuzl Ali, Patanjali Sastri and S. R. Dass, JJ. held section 7 of the Delhi Laws Act and section 2 of the Part C States (Laws) Act to be valid in entirety. Kania C. J. and M. C. Mahajan J. held both these provisions to be invalid Mukherjia and Bose, JJ. held the following part of section 2 of the Part C States (Law) Act as invalid :- ". . . . . . provision may be made in any enactment so extended for the repeal or appendment of any correspondence law (other than a Central Act) which is for the time being applicable to that Part C State. "it will, therefore, be apparent that the majority held part of section 2 of the aforesaid Act as invalid. It will, therefore, be appropriate at this stage to set out the ratio of the Supreme Court decision with regard to this part of section 2 of the Act. I may, with great respect, quote the observations of Mukherjea J. They occur at Page 408 of the report and are set out below in extenso :- "it will benoticed that the powers conferred by this section upon the Central Government are far in excess of those conferred by the other two legislative provisions, at least in accordance with the interpretation which I have attempted to put upon them. As has been stated, already, it is quite an intelligible policy that so long as a proper legislative machinery is not set up in a particular area, the parliament might empower an executive authorjty to introduce laws validly passed by a competent legislature and actutally in force in other parts of the country to such area, with such modifications and restrictions as the authority thinks proper, the. modifications being limited adjustments or changes of a minor character. But this pre-supposes that there is no existing law on that particular subject actually in force in that territory. If any such law exists and power is given to repeal or abrogate such laws either in whole or in part and substituted in place of the some others laws which are in force in other areas, it would certainly amount to an unwarrantable delegation of legislative powers. To repeal or abrogate an existing law is the exercise of an essential. legislative power and the policy behind such acts must be the policy of the legislature itself. If the legislature invests the executive with the power to determine as to which of the laws to determine as be in force in a particular territory are useful or proper and if it is given to that authority to replace any of them by laws brought from other provinces with such modifications as it thinks proper, that would be to investigate the executive with the determination of the entire legislative policy and not merely of carrying out a policy which the legislature has already laid down. Thus the power of extension, which is contemplated by section 2 of the Part C States (Laws) Ant includes the power of introducing laws which may be in actual conflict with the laws validly established and already in. operation in that tenitory This sir ws, how the practice, which was. adopted, during the early British periad das an expedient and possibly harmless measure with the object of providing laws for a newly acquired territory or backward area till it grew up into full-fledged administrative and political unit, is being resorted to m later times for no other purposes than that of vesting almost unrestricted legislative powers with regard to certain areas in the executive government. The executive government is given the authority toaleter repeal. or amend any laws in existence at that area under the guise of bringing. The executive government is given the authority toaleter repeal. or amend any laws in existence at that area under the guise of bringing. in laws there which are valid in other parts of India. This. in my. opinion, is an unwarranteble delegation of legislative duties and cannot, be permitted. The last portion of section 2 of Part C States. (Laws)Act is, therefore, ultra Vires the powers of. Parliament as being a delegation of essential legislative, powers, in favour of a body not competent to exercise it and to that extent the legislation must be held,to ,be void. This portion is however severable and so the entire pection need not be declared invalid. The result is that in my soinion, the answer to the three questions referred to us would ,be as floows : (1) Section 7 of the Delhi Laws Act, 1912, is in its entirety intra vires, the legislature which passedit and no portion of it 13 invalid. (2) The Ajmer-Marwara (Extension of Laws) Act, 1947, or any of its provisions are not ultra vires thelegislature which passed the Act. (3) Section 2 of Part C States (Laws) Act. 1950, is ultra vires to the extent that it empowers the Central. Government to extend to Part C States laws which are in force in Part A States, even though such laws might conflict with or affect Jaws already in existence in the area to which they are extended. The power given by the. last portion of the section make provisions m any extended enactment for the repeal or amendment of any corresponding provincial. law, which is for the time being applicable to that Part C States, is there- fore, ihgeal and ultra vires. "mr. Kapur, learned counsel for the petitioner argues that it is apparent from section 2 of Part C States (Laws) Act that a Central Act cannot be either amended or repealed. If the Central Government is denied this power, the learned counsel goes on to argue, it cannot achieve that result indirectly by extending laws prevailing in Part A States which have also modified or amended the Central Acts applicable to those States. The extension of such laws indirectly replaces the existing laws or Central enactments which are for the time being applicable to Part C States. ( 6 ) THIS argument seems to have force. The extension of such laws indirectly replaces the existing laws or Central enactments which are for the time being applicable to Part C States. ( 6 ) THIS argument seems to have force. The scheme of section 2 of the Part C States (Laws) Act is that Central Acts applicable to Part C States have to be left alone. The Central Government is not given the power by the Parliament, in any way, to amend or modify the Central Acts applicable to Pa. rt C States. Parliament is the legislature for Part C States and iscompetent to make laws for such States. It appears that, for this reason, no power was conferred on the Centra] Government, either to amend or alter a Central Act. That power was with the Parliament and it remained with it. If the Central Government cannot amend or modify a Central Act, which is applicable to a Part C State, it cannot, in my view, achieve that result by an indirect method, that is by extending a law prevailing in Part A State which has modified or amended the Central Act. ( 7 ) IT is settled principal of law that what cannot be done directly cannot be done indirectly. Thus on the terms of Section 2, this argument must prevail and any modification of the Indian Stamp Act by the Indian Stamp (East Punjab Amendment) Act, 1949. would be inoperative. ( 8 ) IT cannot be disputed, and indeed it was not, that a Part A State has the right to enact a law on any of the items in List III (Concurrent List ). It has also the power to modify or amend any Central Act if it. relates to an item falling in that List. The State Legislature has no power to enact a law with regard to items in List I (Union List ). If a State Legislature wants to enact a law with regard to an item in List III, which covers the same field which is covered by an existing law or by an Act of Parliament, it can only do so m accordance with the procedure prescribed in Article 254 of the Constitution. This course could not be adopted for Delhi, but Parliament could make such a law. But recourse cannot be had to section 2 of the Part C States (Laws) Act to achieve this object. This course could not be adopted for Delhi, but Parliament could make such a law. But recourse cannot be had to section 2 of the Part C States (Laws) Act to achieve this object. The extended Act (The Indian Stamp) (East Punjab Amendment) Act, 1949 not only raised the rates of stamp duty but made a substantial modification in section 35 of the Indian Stamp Act. No trouble would have arisen if the extended Act had merely dealt with the revision of rates. In that contingency, the matter would have possibly stood concluded by the majority decision in Delhi Laws Act case- The trouble has arisen because the Indian Stamp (East Punjab Amendment) Act amended section 35 of the Indian Stamp Act, Section 35 of the Indian Stamp Act, as applicable to Delhi before its amendment by the Indian Stamp (East Punjab Amendment) Act, was in these terms :- "35. 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 instrurment chargeable with duty of one anna or half an anna only, or a bill of exchange or promissory note 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 penality 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 ). . . . . . . . . . . . . . . . . . (e ). . . . . . . . . . . . . . . . . . (d ). . . . . . . . . . . . . . . . . . (e ). . . . . . . . . . . . . . . . . . "affer amendment by the East Punjab Amendment Act, it reads thus:- "35. . . . . . . . . . . (d ). . . . . . . . . . . . . . . . . . (e ). . . . . . . . . . . . . . . . . . "affer amendment by the East Punjab Amendment Act, it reads thus:- "35. No instrument chargeable with duty shall be addmitted 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 of one anna or half anna only, or a bill of exchange or promissory note or acknowledgement or delivery order 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 penality of five rupees, or, when ten times the amount of the proper duty or deficient portion there of exceeds five rupees, of a sum equal to ten times such duty or portion ; The substantial change brought about was that acknowledgments were placed on the same footing as the bills of exchange and promissory notes, etc. " ( 9 ) THIS would take out the acknowledgment outside of the enabling provision in section 33 Indian Stamp Act as it stood before its amendment by the extended Act. The power to legislate about the rates stamp duty is vested in the State Legislature. See List II, Schedule VII:- "item 63. Rates of Stamp duty in respect of documents other than those specified in the provisions of List I With regard to rates of stamp duty. "the only restriction on this power is in List I, item 91, which is in these terms :- "91. Rates of stamp duty in in respect of bills of exchange, cheques, promissory notes, billa of lading, letters of credit, policiesof insurance, transfer of shares, debentures, proxies and receipts. "it will be obvious from item No. 91 (List 1) that acknowledgment is not one of the document which has been taken out of item 63 (List II ). Rates of stamp duty in in respect of bills of exchange, cheques, promissory notes, billa of lading, letters of credit, policiesof insurance, transfer of shares, debentures, proxies and receipts. "it will be obvious from item No. 91 (List 1) that acknowledgment is not one of the document which has been taken out of item 63 (List II ). Therefore, regarding acknowledgment, the State Legislature was competent to increase the rate of stamp duty within the limits of its own jurisdiction whether this increase could have been given effect to in a Part C State under the provisions of section 2 of the Part C States (Laws) Act possibly would have preseated no difficulty because such an extension would not offend the majority view in the Delhi Laws Act case. The learned counsel for both the parties are agreed that so far as the increase in rates is concerned no fault can be found with the extension of the Indian Stamp (East Punjab Amendment) Act. The entire argument has centered round the extension of Indian Stamp (East Punjab Amendment) Act so for as it amends section 35 of the Indian Stamp Act. ( 10 ) I may here state the reason for this argument. The reason is that if acknowledgment is taken away from section 35 of the Indian Stamp Act, no trouble would raise so far as the present case is concerned. The petitioner can make good the deficiency of stamp, that is pay an additional one anna, and in addition thereto pay the requisite penalty and thereafter section 35 will not stand in the way of the advissibility of the acknowledgment into evidence, otherwise the acknowledgment being at par with the documents mentioned in section 35, proviso (a) it will not be admissible in evidence. The enabling provision in proviso (a) to section 35 of the Indian Stamp Act which allows the deficiency in stamp duty to be made good and the imposition of a penalty so as to make an instrument admissible in evidence, is not applicable to documents specified in proviso (a), such as, instruments argeable with stamp duty not exceeding one anna or a bill of exchange etc. The moment, acknowledgment is taken out of the category of instruments mentioned in proviso (a) and it being not a document requiring a duty below one anna, the enabling provisions of the proviso will be attracted. The moment, acknowledgment is taken out of the category of instruments mentioned in proviso (a) and it being not a document requiring a duty below one anna, the enabling provisions of the proviso will be attracted. In that situation, the petitioner would be able to pay the deficiency in stamp along with the penalty and claim that the acknowledgment be admitted into evidence. The entire basis of the petitioner s suit is the acknowledgment. If the acknowledgment is ruled out, as it has been ruled out, the suit was bound to fail, as it failed. ( 11 ) GOING back to the argument, the question that arises is : whether the amendment by the Indian Stamp (East Punjab Amendment) Act, of section 35 solely relates to rates and, therefore, it could be made applicable to Delhi under section 2 of the Part C States ( Laws) Act ? I am unable to hold that this is so. The extended Act affects a Central Act and therefore by recourse to section 2 of the Part C States (Laws) Act, it could not have been extended to Delhi. Entry No. 44 in List III, which reads thus :- "44. Stamp duties other than duties or fees collected by means of judicial stamps, but not including rates of stamp duty. "gives the power of legislation regarding stamp duties to both the Parliament and the State Legislature. With regard to the rates of such stamp duties the power with regard to all documents excepting those set out in List I, item 91, is with the State Legislature, vide item No. 63, List II. Moreover, section 3.) of the Indian Stamp Act embodies a rule of evidence. What it does is it prohibits insufficiently stamped documents from being tendered into evidence. Viewed in this manner, section 35 could have very well been enacted under entry No. 12, List III This entry reads thus :- "12. Evidence and oaths; recognition of laws, public acts and records, and Judicial proceedings. "in either event, whether section 35 can be enacted under entry No. 44 (List III) or entry No. 12 (List III), the legislation with regard to it can beundertaken both by the Union Legislature as well as by the State Legislature. Evidence and oaths; recognition of laws, public acts and records, and Judicial proceedings. "in either event, whether section 35 can be enacted under entry No. 44 (List III) or entry No. 12 (List III), the legislation with regard to it can beundertaken both by the Union Legislature as well as by the State Legislature. ( 12 ) THUS it will be apparent from what has been stated above, that the Central Government could not extend the provisions of the Indian Statmp (East Punjab Amendment) Act to Delhi by recourse to section 2 of the Part C States (Laws) Act, because section 35 of the Indian Stamp Act was. applicable to Delhi and no amendment or modification of this provision could be made by recourse to the powers conferred on the Central Government by section 2 of the Part C States (Laws) Act, This follows logically from the provisions of section 2 and from the decision of the Supreme Court in Delhi Laws Act case. I am, therefore, of the view that the contention of the learned counsel for the petitioner is correct and must prevail. The amendment of section 35 of the Indian Stamp Act by the Indian Stamp (East Punjab Amendment) Act, 1949, has to be ruled out as being beyond the powers conferred on the Central Government by section 2 of the Part C States (Laws) Act and even if such a power could be spelt out of section 2, that power is ultra vires for the reasons given in Delhi Laws Act case. ( 13 ) MR. Bishambar Dayal, learned counsel for the Delhi Administration, sought to argue that the amendment of section 35 was an incidental matter-incidental to the enhancement of the rate of stamp duty m certain documents. He however, argued that as the State Legislature had the power to legislate about the rates of stamp duty, it had also the power incidentally to prescribe penalties for the non-payment of those duties. This argument is not sound in view of the fact that the other matters relating to stamp have been specifically taken out of List II as would be apparent from the corresponding entry in Lists III that is, entry No. 44. This argument is not sound in view of the fact that the other matters relating to stamp have been specifically taken out of List II as would be apparent from the corresponding entry in Lists III that is, entry No. 44. If the various entries, which I have already dealt with in List I, II and III, are kept in view, a clear indication is provided that only with regard to the matter of rates of stamp duty with certain exceptions was left to the exclusive jurisdication of the State Legislature. All other matters regarding imposition of stamp duties etc. , were put in List III. I have, therefore, no hesitation in repelling the argument of the learned counsel for the State. ( 14 ) IN this view of the matter, it is not necessary to advert to the second contention. ( 15 ) FOR the reasons given above, this petition is allowed, the judgment and decree of the learned Additional Judge Small Cause Court is set aside and the case is remitted to him for decision after admitting into evidence the acknowledgment in dispute after recovery of the deficient stamp and penalty. There will be no order as to costs. The parties are directed to appear before the trial Court on the 12th June, 1964.