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2007 DIGILAW 581 (CAL)

KANAI BANERJEE v. HASMUKH D. PAREKH

2007-08-01

SANJIB BANERJEE

body2007
( 1 ) THE petitioner has invoked Art. 227 of the Constitution of India to assail an order of May 4, 2007 passed in Title Suit No. 43 of 2003. By such order, the learned Civil judge (Senior Division), 4th Court at Alipore declined the petitioner's request for not accepting the principal document on which the respondent's suit was based, in evidence, upon putting the respondent on terms. ( 2 ) THE learned Court below ascertained the stamp duty that was payable on the document and required the respondent to put in five times the value thereof by way of penalty as condition precedent for the document to be received in evidence. The revisional petitioner submits that in view of the provisions of the Stamp Act, 1899, the document could not have been received in evidence upon it being stamped and should have been sent down to the collector for adjudication of stamp duty and penalty. The petitioner assails the adjudication of stamp duty by the learned Court below and the imposition of penalty at five times the amount of stamp duty and urges that Section 35 gives no authority to the Court to assess stamp duty nor does it permit any discretion in the matter of the quantum of penalty. The petitioner urges that in view of Section 36 of the Act, unless the question raised by the petitioner is decided, the petitioner is precluded from questioning the document on the grounds of its admissibility except under Section 61 of the Act. Sections 35 and 36 of the Stamp Act, 1899 provide as follows : "35. Instruments not duly stamped inadmissible in evidence, etc. Sections 35 and 36 of the Stamp Act, 1899 provide as follows : "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 duty stamped : provided that (a) any such instrument not being an instrument chargeable with a duty not exceeding ten naye paise 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 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 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 the Government or where it bears the certificate of the Collector as provided by Section 32 or any other provision of this Act. 36. Admission of instrument where not to be questioned. 36. Admission of instrument where not to be questioned. Where an instrument has been admitted in evidence, such admission shall not, except as provided in section 61, be called in question at any stage of the same suit or proceeding on the ground that the instrument has not duly stamped. " ( 3 ) THE petitioner claims that if a document cannot be received in evidence on the ground of it being not stamped or inadequately stamped, there is a complete embargo on such document being used for any purpose, including by a plaintiff against a defendant in a suit of the nature instituted by the respondent in the learned Court below. The petitioner asserts that there is no room for discretion under Section 35, if the power therein can at all be exercised by a court without reference to the Collector. ( 4 ) IN support of the grounds urged (2001)4 SCC 197 : ( AIR 2001 SC 1321 ) (Chilakuri gangulappa v. Revenue Divisional Officer, madanpalle and Anr.) is cited. In that case the supreme Court considered the special provisions introduced by an amendment in andhra Pradesh that incorporated special provisions in the Stamp Act as to its manner of application in that State. The appellant in the Supreme Court case filed a suit seeking enforcement of an agreement for sale of an immovable property. On the agreement being produced in Court, it was found to be insufficiently stamped whereupon the learned Munsif impounded it and forwarded the same to the Revenue Divisional Officer (RDO) for the purpose of taking further action and also called for a report from a subordinate revenue officer regarding the real market value of the property. The RDO assessed the market value of the property, found the amount due as additional duty and imposed a penalty equivalent to ten times of the deficiency. Such order of the rdo was challenged under the special provisions introduced in the Act in Andhra pradesh. The appeal was found to be not maintainable. The order dismissing the appeal was carried by way of a revision before the High Court and the High Court found that the lower' appellate Order was unassailable as a party could not prefer an appeal without tendering the amount adjudged to be due from him. The appeal was found to be not maintainable. The order dismissing the appeal was carried by way of a revision before the High Court and the High Court found that the lower' appellate Order was unassailable as a party could not prefer an appeal without tendering the amount adjudged to be due from him. ( 5 ) IN such context and upon noticing section 38 of the Act, the Supreme Court proceeded to deal with the matter. Section 38 of the Act needs first to be noticed before the enunciation of the law by the Supreme court can be adverted to : "38. Instruments impounded, how deal 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 shail 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. " ( 6 ) ON the appreciation of Section 38 of the Act, the Supreme Court held as follows: "12. 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 adjudicator/ steps. But if the party refuses no pay the amount aforesaid the Court has to 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 deficiency of the stamp duty. But if the party refuses no pay the amount aforesaid the Court has to 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 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. " 13. In the present case, an argument is raised that the instrument is not actually an agreement of sale as envisaged in the Schedule to the Stamp Act (subject to amendment made by the State of Andhra Pradesh) but it is only a deed of compromise entered into by two disputing persons. We refrain from expressing any opinion on the said plea as it is open to the parties to raise their contentions regarding the nature of the document before the trial Court. 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 often 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. The penalty often 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. " ( 7 ) THE respondent urges that the matter is not one that can be taken up by a party to the agreement contained in the concerned document. It is submitted by the respondent, that it is a matter for the Revenue and not of any concern to a defendant in a suit that the order made by the Court in receiving the document in evidence can be assailed to stall the suit altogether. The respondent refers to the judgments reported at AIR 1961 sc 1299 (Sri Rathnavarmaraja v. Smt. Vimla); AIR 1961 SC 1655 (Javer Chand v. Pukhraj Surana) and (2006) 11 SCC 331 : ( AIR 2007 SC 637 ) (Shyamal Kumar Roy v. Sushil Kumar Agarwal ). In the first case, the supreme Court considered the revision by a defendant from an order passed touching upon a question as to the adequacy of Court-fees. It was held that Court fees was a matter of revenue for the benefit of the State and not to arm a contesting party with a weapon of defence to obstruct the trial on action and whether proper Court-fees had been paid on a plaint was a question between the plaintiff and the State. ( 8 ) IN the judgment reported at AIR 1961 sc 1655 (Javer Chand v. Pukhraj Sarana), sections 35 and 36 of the Stamp Act fell for consideration and it was held that where a question as to the admissibility of a document on the ground of it being insufficiently stamped had been raised, it was required to be decided then and there when the document was tendered in evidence. Upon any decision on such aspect, whether right or wrong, the matter is closed and it is not open either to the trial Court itself or to a Court of appeal or revision to go behind that order. . . . It was held that such an order was "not one of those judicial orders liable to be reviewed or revised by the same Court or a court of superior jurisdiction". ( 9 ) THE third case cited by the respondent is inapposite in the context of the present proceedings. . . . It was held that such an order was "not one of those judicial orders liable to be reviewed or revised by the same Court or a court of superior jurisdiction". ( 9 ) THE third case cited by the respondent is inapposite in the context of the present proceedings. The point decided by the Supreme Court in such case was that if without going into the sufficiency of stamp duty, an instrument is allowed to be taken in evidence with an endorsement "objected, allowed subject to objection", the right to object remains open and can be judicially determined at the appropriate stage. On facts, the principle decided has no application in the present case. ( 10 ) IN the learned Court below, the petitioner-defendant took a point in its written statement that the document on which the plaintiff-respondent's case was founded could not be relied upon. To obviate the objection that the plaintiff was likely to face at the time of tendering the document in evidence, the plaintiff applied to the Court below for an order to make the assessment of the stamp duty to be paid by the plaintiff as the plaintiff was ready and willing to pay the assessed value immediately. That the. plaintiff recognised that stamp duty was in-sufficient and that the plaintiff volunteered to pay the adequate amount thereon, would appear from the following paragraph in the revisional application : 3. That the petitioner states that in the aforesaid suit the opposite party tendered an agreement for sale for it (sic, its) admission in evidence on February 9, 2007. In the aforesaid suit the opposite party herein as plaintiff filed an application thereby praying for an order to make the assessment of the stamp duty to be paid by the plaintiff, so that there might not be any further delay in the progress of the suit, since the plaintiff is ready and willing to pay the assessment amount immediately. ( 11 ) THE petitioner is probably correct when it asserts that the procedure that was required to be followed was not followed by the learned Court below. ( 11 ) THE petitioner is probably correct when it asserts that the procedure that was required to be followed was not followed by the learned Court below. The learned Court below should probably have required the plaintiff to make a self-assessment, should have prima facie ascertained whether such self-assessment was a plausible or an absurd assessment, and should thereafter have forwarded the amount volunteered to be paid to the Collector for a decision on the matter. Instead, the learned Court below took upon the burden to assess the quantum of stamp duty and exercised a discretion to require the plaintiff to pay five times the insufficient amount as penalty. ( 12 ) THE procedure adopted by the learned court below, is probably, not the procedure that ought to have been adopted. But yet it remains a matter between the State and the plaintiff. Such matter cannot be exploited by the defendant in a suit to stall the proceedings or as a weapon, in its defence. ( 13 ) IT is on such score that the petitioner has to fail in these revisional proceedings and the petition is dismissed. This order of dismissal is not an endorsement of the procedure adopted by the learned Court below and it will be open to such authorities as may be empowered to take up the matter in accordance with law. The defendant is not entitled to take advantage of the possible irregularity in the procedure adopted by the learned Court below. As far as the petitioner defendant is concerned, the matter is closed and it cannot seek a revisit on the matter except in accordance with Section 61, if available. ( 14 ) THERE will, however, be no order as to costs. ( 15 ) URGENT photostat certified copy of this judgment, if applied for, be given to the parties on usual undertakings. Order accordingly.