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2010 DIGILAW 706 (KAR)

Nagarathnamma v. M. Bantaiah

2010-06-11

SUBHASH B.ADI

body2010
JUDGMENT : This Writ Petition is filed under Articles 226 and 227 of the Constitution of India praying to quash Ann-C. The order dtd.14.8.08, passed by the III Addl. Civil Judge (Sr.Dn) Mysore, in O.S.No.886/05 etc.) Plaintiff’s writ petition questioning the order dated 14.8.2008 passed by 3rd Additional Civil Judge (Sr.Dn.) in O.S.No.886/2005. 2. Suit is one for recovery of Rs.90,200/- with 18% interest p.a. from the date of suit till realization. Plaintiff alleges that, defendants 1 and 2 are the husband and wife and defendants 3 to 5 are the children. On 3.3.2004 defendants had borrowed a sum of Rs.70,000/- by entering into the mortgage agreement by agreeing to mortgage (Plaint produced along with Writ Petition shows only by mortgage). Defendants on the date of said transactions have handed over important document in favour of the plaintiff. 3. In the evidence, plaintiff sought to produce document styled as mortgage agreement dated 3.3.2004. Trial Court found that, the document though styled as mortgage agreement, in reality it is a mortgage and it requires to be duly stamped and register and accordingly it ordered for impounding of the document on determination of the value of the stamp duty and penalty and call upon the plaintiff to pay Rs.61,578/-. It is against this order, this Writ Petition has been filed. 4. Sri. Hasyagar, learned counsel appearing for the petitioner submitted that, the document is mortgage agreement. It is not mortgage, in terms of Section 2(N) of the Karnataka Stamp Act (in short referred to as ‘the Act’) or under Sections 58 and 59 of the Transfer of Property Act and submitted that, the document is not required to be stamped, alternatively submitted that the said document is produced only for collateral purpose for recovery of Rs.70,000/- and it does not warrant payment of stamp duty. In support of his case he relied on the judgment of this Court reported in ILR 1985 Kar 546 in the matter of Vasudev Pandurang Malawade Vs. Basappa Hanumanthappa and submitted that, this Court in identical circumstances has held that, it does not amount to mortgage and in terms of Sections 58 & 59 of the Transfer of Property Act, since the document is not registered and is not valid transfer and does not warrant for payment of stamp duty. 5. Basappa Hanumanthappa and submitted that, this Court in identical circumstances has held that, it does not amount to mortgage and in terms of Sections 58 & 59 of the Transfer of Property Act, since the document is not registered and is not valid transfer and does not warrant for payment of stamp duty. 5. Relying on the said judgment he further submitted that, trial Court having referred to the said judgment, has erroneously ordered for payment of the stamp duty and submitted that, the order suffers from illegality and requires to be set aside. 6. On the other hand Sri. Mahantesh S. Hosmath, learned counsel appearing for the defendants submitted that, the averment in paragraphs 2 and 3 of the plaint categorically makes it clear that, the transaction in question is mortgage, though it is styled as agreement, in reality it is a mortgage. He referred to the document itself and submitted that, under the document, the mortgagor has handed over the property on the date of execution of the deed as against the mortgage amount of Rs.70,000/- and it specifically mentions that it is a mortgage. Period of mortgage is fixed at three years and further the document also conferred right on the mortgagee of succession of the mortgage rights by the successor. When the document is clear and it does not require any interpretation there is no need to refer any other allegations, merely because the title of the document is shown as mortgage agreement, it will not change the nature of transaction. Transaction has to be understood on the basis of the averments in the document and intention of the parties. Intention is clear and the text of the document makes it manifestly clear that, it is a mortgage. If the party to conceal the real transaction, mentions the document as agreement, it will not change the nature or the character of transaction. In such event, it is compulsorily registered document under Section 17 of the Registration Act and if such deed is sought to be produced in the evidence then it requires to be duly stamped as required under Section 34 of the Karnataka Stamp Act. He also submitted that, even if the document is used for collateral purpose. Section 34 of the Act attracts and it requires that, no document to be used in evidence which requires the stamp duty to be paid. He also submitted that, even if the document is used for collateral purpose. Section 34 of the Act attracts and it requires that, no document to be used in evidence which requires the stamp duty to be paid. Unless it is paid, it cannot be admitted in evidence. 7. To support his contention he relied on the judgment of the Apex Court reported in 2009 (3) KCCR SN 91 wherein, the Apex Court on interpretation of the unregistered sale deed has held that, if unregistered deed of sale is sought to be put in evidence not for the purpose of enforcement of contract, but only for the purpose of recovery of the amount of consideration. On interpretation of Sections 33 and 35 of the Stamp Act, it is held that, the words, “for any other purpose whatsoever,” for the purpose of which the document has sought to be admitted in evidence would not be relevant factor for not invoking the provisions of Sections 33 and 35 of the Act. He submitted that, even in case of collateral purpose, if the document is to be admitted, Section 34 is not exclude, and submitted that, the impugned order does not call for interpretation. “What is necessary to be seen in this case is, as to whether the document required to be duly stamped and registration and non registration of the deed will also solve the plaintiff from the payment of stamp duty, for admitting the said document is evidence”. 8. Karnataka Stamp Act is special enactment, it defines the instrument, mortgage, and conveyance, hence it is better to look into the definition as provided under the Act itself. Section 2(j) of the Act defines the instrument, which reads as under: “Instrument includes every document and record created or maintained in or by an electronic storage and retrieval device or medial by which any right or liability is, or purports to be, created, transferred, limited, extended, extinguished or recorded.” 9. Reading of definition makes it clear that, every document and record created or maintained by which any right or liability is, or purports to be created, transferred, limited, extended, extinguished or recorded every such transaction is an instrument. What is required to be seen, as to whether the transaction between the parties creates or purported to create any right or liability. What is required to be seen, as to whether the transaction between the parties creates or purported to create any right or liability. Hence it is the document sought to be relied is required to seen to know the transaction. 10. Article 20 of the Act requires for every conveyance as defined under Section 2(d) of the Act, not being a transfer charged or exempted under No.52 to pay the stamp duty on the market value of the property which is the subject matter of conveyance. Definition of conveyance under Section 2(d) includes, the instrument also. In the light of this definition it is necessary to refer to the document itself, to know whether it creates or purport to create any right. Kannadam 11. From the reading of the documents, makes it clear that, there is a transfer of property, there is consideration of mortgage amount and there is also period of mortgage. It also further recites as regard to the enjoyment of the property not only by mortgagee, but also by the successor in case of his demise. These averments makes the complete transaction of mortgage as defined under Section 2(N) of the Act. Even reading of Sections 58 and 59 of the Transfer of Property Act also makes it clear that, the transaction referred to above is a clear mortgage. 12. Now the question is, if this document is not registered, will it lose the character of mortgage and does not warrant for payment of stamp duty? 13. Mortgage of a value more than Rs.100/- in respect of immovable property is required to be compulsory registered under Section 17 of the Registration Act. Section 49 prohibits admissibility of such documents, which are required to be compulsory register except using them for collateral purpose or using for the purpose of endorsement of the agreement. However, it is requires to be mentioned that, Article 20 includes an agreement of sale coupled with delivery of possession in part performance of the agreement and is also chargeable with stamp duty. In this case, the transaction being mortgage and the suit is based on the said document. However, it is requires to be mentioned that, Article 20 includes an agreement of sale coupled with delivery of possession in part performance of the agreement and is also chargeable with stamp duty. In this case, the transaction being mortgage and the suit is based on the said document. If the said document is to be admitted in the evidence, for the purpose of enforcing the rights, section 34 of the Stamp Act requires the stamp duty to be paid before it is admitted in the evidence, otherwise the document would be impounded under Section 33 of the Act. Section 34 of the Act reads as under: Section 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 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.” 14. Under Section 34 of the Act, no instrument chargeable under the Act would be admitted in the evidence unless it is duly stamped. This provision creates any doubt as regard to the payment of stamp duty. As the nature of transaction being mortgage, nonregistration of the said document makes the document inadmissible. Even if the document is used for collateral purpose, it does not escape the stamp duty u/s 34 of the Act, if the party wants to use the said document for admitting in the evidence. Section 34 of the Act, does not exclude the document to be admitted for collateral purpose without the stamp duty. If that is so, on reading of these provisions, I have no doubt in my mind that the transaction being a mortgage transaction and the document is sought to be admitted for recovery of the mortgage amount. It compulsory requires stamp duty to be paid in terms of Section 34 of the Act. The judgment relied on by the learned counsel for the petitioner refers to the provision of Section 2(N) of the Act for the purpose of non-registration of the document it is held that, the document is invalid and for that reason, the stamp duty is not payable. But invalid document cannot be admitted in evidence to enforce rights thereunder. The judgment relied on by the learned counsel for the petitioner refers to the provision of Section 2(N) of the Act for the purpose of non-registration of the document it is held that, the document is invalid and for that reason, the stamp duty is not payable. But invalid document cannot be admitted in evidence to enforce rights thereunder. It is not a case that the document for want of registration does not admissible, but it is case of the stamp duty on an instrument which is compulsorily chargeable and required to be paid. Very fact that the provisions under Section 34 of the Act requires the payment of stamp duty and penalty, it is obvious that, in case the document which is chargeable and the stamp duty is not paid, though otherwise invalid, but to use it in evidence it requires duty and penalty to be paid. Section 34 of the Act is not dependent on the registration of the document, even if it is not registered, but if it is to be admitted in evidence, provisions of Section 34 of the Act would attract, whether it is used for collateral purpose or otherwise. In view of the above observation, the judgment relied on by the learned counsel for petitioner is distinguishable. In the circumstances, the writ petition is devoid of merits and same is dismissed.