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2018 DIGILAW 516 (KER)

Ramachandran K P v. District Registrar (General)

2018-07-03

ANNIE JOHN, K.HARILAL

body2018
JUDGMENT : Harilal, J. 1. This writ petition has been filed under Article 226 of the Constitution of India with a prayer to quash Ext.P3 order passed by the Rent Control Court, Chittoor under Section 33 of the Kerala Stamp Act, 1959 (hereinafter referred to as, 'the Act'] and the order passed by the District Collector, Palakkad in case reference No.G-12023/2016 under Section 39(1) (b) of the Act and Exts.P4 and P6 orders passed by the District Registrar, Palakkad thereunder. 2. The petitioner is the landlord, who filed R.C.P.No.12/2012 before the Rent Control Court, Chittur. The aforesaid RCP was filed seeking fixation of fair rent of the petition schedule building under Section 5(1) of the Kerala Buildings (Lease and Rent Control) Act, 1965. During the said proceedings, he has produced 8 lease deeds executed in his favour by other tenants in respect of his 8 buildings to prove the prevailing rent of the similarly situated buildings. But, these lease deeds are insufficiently stamped deeds, as per the Act. Even though the aforesaid 8 lease deeds were produced to be admitted in evidence, subsequently, the petitioner withdrew the said prayer and filed an application to return the same. Then the Rent Control Court rejected the said prayer, passed Ext.P3 order impounding the lease deeds, and imposing penalty under Section 33 and 34 of the Act and directed the petitioner to deposit a sum of Rs.1,60,130/- as penalty. The Rent Control Court imposed penalty for payment of a sum, equal to ten times of such duty, in addition to the deficient portion of the stamp. But the petitioner did not deposit the said penalty. So, the Rent Control Court sent Ext.P3 order along with the aforesaid eight documents to the District Collector, for realising the stamp duty and penalty. Thereafter, the District Collector passed an order in case reference No.G12023/2016 directing the District Registrar to recover a sum of Rs.1,60,130/-, the penalty imposed by the Rent Control Court, from the petitioner. Then the District Registrar sent Ext.P6 letter to the petitioner directing him to deposit the said penalty and informing the coercive steps to be taken against him, in case of failure. This writ petition has been filed challenging the legality and correctness of Ext.P3 order passed by the rent control court, the order passed by the District Collector in case reference No.G12023/2016 and Exts. This writ petition has been filed challenging the legality and correctness of Ext.P3 order passed by the rent control court, the order passed by the District Collector in case reference No.G12023/2016 and Exts. P4 and P6 orders passed by the District Registrar thereunder. 3. Heard Sri.U.Balagangadharan, the learned counsel for the petitioner at length and the learned Government Pleader. 4. Firstly, the learned counsel appearing for the petitioner advanced arguments canvassing the point that the Rent Control Court went wrong by passing a composite order impounding the insufficiently stamped instruments and imposing penalty thereon, when the instruments were not sought to be admitted in evidence. Though an order impounding the rent deeds was passed and directed to pay penalty, the petitioner did not pay the said penalty, because the petitioner himself had already abandoned his intention to get the rent deeds admitted in evidence. Moreover, he has filed an application to return the rent deeds. Therefore, the Rent Control Court could not have passed an order impounding the rent deeds or imposing penalty, when the documents were not sought to be admitted in evidence. The learned counsel contends that, Ext.P3 composite order impounding the rent deeds and imposing penalty, passed by the Rent Control Court is illegal and unsustainable. Secondly, the District Collector went wrong by directing the District Registrar to recover the penalty imposed by the Rent Control Court, without forming his own independent opinion, as contemplated under Section 39(1)(b) of the Act. The District Collector ought to have exercised his power independently, under Section 39(1)(b) of the Act, untrammeled by the amount of penalty imposed by the Rent Control Court under Section 34(a) of the Act. Thirdly, it is contended that even if an order imposing penalty is passed by the District Collector under Section 39(b) of the Act, on a reference to him under Section 37(2) of the Act, the penalty is not leviable from the petitioner/landlord as the lessee in each rent deed was bound to bear the expenses for providing the proper stamp, in the absence of an agreement to the contrary, under Section 30(b) of the Act. Therefore, the petitioner was not liable to pay the penalty and the lessee in each rent deed produced before the court was liable to pay the penalty. Thus, questions in controversy lie under Section 33 to Section 39 of the Act. 5. Therefore, the petitioner was not liable to pay the penalty and the lessee in each rent deed produced before the court was liable to pay the penalty. Thus, questions in controversy lie under Section 33 to Section 39 of the Act. 5. In view of the rival pleas, the questions that emerge for consideration in the writ petition are given below : Question Nos. 1 to 7 : Question No.1 : Has the court/empowered person, power to impound an insufficiently stamped instrument, when the said instrument is produced before the court/empowered person; but is not sought to be admitted in evidence? Question No.2 : Has the court/empowered person, power to impose penalty, when the insufficiently stamped instrument is produced before the court/empowered person; but is not sought to be admitted in evidence? Question No.3 : Is the composite order, impounding the insufficiently stamped instrument and imposing penalty, legally sustainable, when the instrument was not sought to be admitted in evidence, though produced before the court/empowered person. Question No.4 : What is the circumstance under which the court/empowered person can impose penalty, after impounding an insufficiently stamped instrument? Question No.5 : What is the nature and extent of power vested with the District Collector, while imposing penalty under Section 39(1)(b) of the Act on a reference to him under Section 37(2) of the Act? 6. Can a party, who produced an insufficiently stamped instrument before the court/empowered person, and not sought to be admitted in evidence, be burdened with the liability to pay deficient portion of stamp duty with penalty under Section 39(b) of the Act, where he was not liable to meet the expenses for providing proper stamp under Section 30 of the Kerala Stamp Act; but impounded and sent to the District Collector under Section 37(2) of the Act for imposing penalty under Section 39(1)(b) of the Act. If not, who is liable to pay the penalty. Question Nos. 1 to 3: 7. The Statutory mandate under Section 33 is that when any instrument chargeable with duty is produced before the person having by law or consent of parties authority to receive evidence, or every person in charge of a public office, except an Officer of Police, or when any such instrument is produced or comes in performance of his functions, he shall impound the same, if it appears to him that such instrument is not duly stamped. Therefore, it is obligatory on the said officer to impound the insufficiently stamped instrument, when such an instrument is produced before him or it comes before him in the performance of his function. The wording “is produced or comes in performance of his functions, shall, if it appears to him that such instrument is not duly stamped” are very significant and explicitly makes the above view very clear. The expression 'shall' conveys a command and thereby makes the provision mandatory as well as obligatory. Therefore, we hold that when an insufficiently stamped instrument comes to the notice of the court/empowered person, it is incumbent upon the court/empowered person under Section 33 of the Act to impound such instrument, irrespective of the purpose for which it was produced before the court or the party who produced it before them. In short, mere production or casual appearance of insufficiently stamped instrument before the court/empowered person, in the performance of functions is sufficient for invoking the power of impounding, envisaged under Section 33 of the Act. We make it clear that the prayer for receiving or admitting the instrument is not required for invoking the power to impound the same under Section 33 of the Act. 8. What is meant by the expression “impound”? The expression 'impound' only means taking possession of the document for being held in custody only, in accordance with law. Therefore, it is obligatory on the court/empowered person to take possession of the insufficiently stamped instrument. Section 33 empowers the court/empowered person to take possession of the insufficiently stamped instrument only, and the court/empowered person has no power to impose penalty under Section 33 of the Act, when the document is produced before the court/empowered person and is not sought to be admitted in evidence. Accordingly, it can be safely concluded that the composite order, impounding the instrument and imposing penalty, when the insufficiently stamped instrument is produced before the court/empowered person but is not sought to be admitted in evidence, is legally unsustainable as the court/empowered person has no power to impose penalty under Section 33 of the Act, when the instrument is not sought to be admitted in evidence. It further follows that, the order impounding the insufficiently stamped instrument alone is legally sustainable and the court is bound to pass such an order impounding the instrument only, when the instrument is not sought to be admitted in evidence. 9. On a meticulous reading of Sections 33, 34 and 37 of the Act, it is well discernible that the power to impound and impose penalty are different and distinct and conferred to the court/empowered person on different circumstances and context. Question No.4 10. Then the question to be considered is what is the circumstances under which the court/empowered person can impose penalty on the insufficiently stamped instrument. It is well discernible from Section 34 of the Act that no instrument chargeable with duty shall be admitted in evidence or shall be acted upon unless the instrument is duly stamped and such insufficiently stamped instrument be admitted in evidence on payment of deficient portion and penalty at 10 times of such portion. Thus, penalty can be imposed only if the instrument is sought to be admitted in evidence and no penalty can be imposed if the document is not tendered to be admitted in evidence. 11. There arises another question, what is the procedure to be adopted, when the insufficiently stamped instrument is impounded under Section 33 of the Act; but the same is not sought to be admitted in evidence? Section 37(1) and (2) prescribes as to how the impounded instrument shall be dealt with. The procedure to be adopted is prescribed under Section 37(1) and (2) of the Act. According to Section 37(1), if the instrument is admitted in evidence and penalty is imposed, the Registering Officer shall, under Section 34, send an authenticated copy of such instrument to the District Collector, together with the certificate in writing, stating the amount of duty levied and shall send such amount to the District Collector or to such person appointed on that behalf. 12. According to Section 37(2) in every other case, the person so impounding an instrument shall send it in original to the District Collector. It follows that the instrument, which was impounded, but not admitted in evidence, would fall under Section 37(2) of the Act. 12. According to Section 37(2) in every other case, the person so impounding an instrument shall send it in original to the District Collector. It follows that the instrument, which was impounded, but not admitted in evidence, would fall under Section 37(2) of the Act. In other words, the instrument, which was impounded under Section 33, but not admitted in evidence, shall be sent to the District Collector, as prescribed under Section 37(2), for imposing penalty under Section 39(b) of the Act. Question No.5 13. What is the nature and extent of power vested with the District Collector, while imposing penalty under Section 39(1)(b) of the Act. Section 39 (1)(a) and (b) deals with the District Collector's power of stamping and imposing of penalty. Section 39(1)(b) specifically prescribes the procedure of imposing penalty on insufficiently stamped instrument, which has been received by him under Section 37(2) for imposition of penalty. The power of imposing penalty is very wide and discretionary. As per Section 39(1)(a) and (b), it depends upon the opinion of the District Collector on the instrument. Since the imposition of penalty depends upon the independent opinion of the District Collector, the District Collector can form his own opinion, notwithstanding the fact that the court/empowered person has already formed an opinion as to the insufficiency of stamp, while impounding the instrument. The District Collector is not bound to impose penalty invariably on all documents/instruments referred to him under Section 37(2) of the Act, without examining the insufficiency in his own view. At this juncture, it is to be remembered that we have already found that if the document is not sought to be admitted in evidence, the court/empowered person has no jurisdiction or power to impose penalty. The prima facie satisfaction alone is sufficient to impound a document/instrument. Therefore, the opinion to be formed by the District Collector must be untrammelled by the observations made by the court/empowered person, which impounded the instrument and sent it to the District Collector under Section 37(2) of the Act, for imposing penalty. Question No: 6 14. The statutory mandate under Section 17 of the Act is that all instruments chargeable with duty and executed by any person in the State of Kerala shall be stamped before or at the time of execution. Question No: 6 14. The statutory mandate under Section 17 of the Act is that all instruments chargeable with duty and executed by any person in the State of Kerala shall be stamped before or at the time of execution. According to Section 3 of the Act, subject to the provisions of the Act and the exemptions contained in the schedule, the instrument described under Sub Section (a) & (b) shall be chargeable on the duty of the amount indicated in the schedule as the proper duty thereof respectively. 15. Some party to the instrument/document have a tendency to circumvent the rule of law and they may execute documents/instruments, without paying the required stamp duty. Such insufficiently stamped instruments may come to the notice of the court or empowered person, on production by the parties to the lis or proceedings. We have already held that even though, he was not liable to pay the stamp duty to the instrument/document or he is not a party to the insufficiently stamped instrument/document, he is liable to pay deficient portion of stamp duty with penalty, if he wants to admit the instrument in evidence in the suit or proceedings. 16. On the other hand, where the document is not sought to be admitted in evidence and the court or authority impounded it and sent it to the District Collector for imposing penalty, can the person who was not liable to meet the expenses for providing proper stamp under the Act, be burdened with penalty merely on the reason that he brought the insufficiently stamped instrument to the notice of the court or empowered person ? This is the context under which we have considered question No.6. 17. Section 30 deals with the question “duty by whom payable?” Going by Section 30 of the Act, we find that there is a specific provision casting liability on one of the parties to the instrument/document to meet the expenses of providing the proper stamp, for the execution of the document/instrument. 18. Section 30(a) and (b) imposes the liability to meet the expenses of providing proper stamp on one of the parties to the document/instrument in the absence of an agreement to the contrary. For example, according to Section 30(b) in the case of a conveyance (including a re-conveyance of mortgaged property) the liability to meet the expenses of providing proper stamp is imposed on the grantee. For example, according to Section 30(b) in the case of a conveyance (including a re-conveyance of mortgaged property) the liability to meet the expenses of providing proper stamp is imposed on the grantee. But in the case of a lease or agreement to lease, the liability to meet the expenses of providing proper stamp is imposed on the lessee. Thus Section 30 imposes liability to meet the expenses of providing proper stamp on different persons on the basis of the nature of documents/instruments. 19. We are of the opinion that where the statute itself imposes the liability to meet the expenses of providing proper stamp on a particular person to the document/instrument, and he failed to provide proper stamp, it is not just and proper to impose penalty on any person, other than the said person, who failed to provide proper stamp, under Section 30 of the Act. Since penalty is a penal provision, it can never be imposed on any person other than the defaulter/wrong doer. So, any person, who was not liable to meet the expenses for providing sufficient stamp under Section 30 of the Act, cannot be made liable to pay penalty under Section 39(1)(b) of the Act, merely on the reason that he produced the insufficiently stamped instrument/document before the court, though it was not sought to be admitted in evidence. 20. But we notice that instead of imposing and realising penalty from the person, who was liable to provide proper stamp and failed to do so, in violation of statutory provision, the penalty is being imposed and realised invariably from the party who produced the document/instrument before the court, even though he was not liable to meet the expenses for proper stamp under Section 30 of the Act. 21. When a document/instrument is received under Section 37(2) of the Act, for imposition of penalty under Section 39(1)(b), the District Collector, shall issue notice to the parties to the document/instrument, and examine the question who was liable to meet the expenses of providing proper stamp under Section 30 of the Act, and impose penalty on that person only. 21. When a document/instrument is received under Section 37(2) of the Act, for imposition of penalty under Section 39(1)(b), the District Collector, shall issue notice to the parties to the document/instrument, and examine the question who was liable to meet the expenses of providing proper stamp under Section 30 of the Act, and impose penalty on that person only. Merely on the reason that, a person has produced an insufficiently stamped document/instrument before the court and the court impounded it and sent for penalty proceedings, the District Collector cannot impose liability to pay penalty on that person, who was not liable to meet the expenses for providing proper stamp under Section 30 of the Act or a person who was not a party to the document/instrument. We are of the opinion that a person who failed to meet the expenses for providing proper stamp under Section 30 of the Act alone can be made liable to pay penalty and a person, who was not liable to meet the expenses of providing proper stamp or a person who is not a party to the document/instrument, cannot be held liable to pay penalty under Section 39(1)(b) of the Act. 22. Further, we noticed that the realisation of penalty from the person, who produced the insufficiently stamped document/instrument and sought it to be admitted in evidence under Section 34 of the Act is an exception to the aforesaid general rule. It is justifiable in view of the fact that in the said circumstance he wants to get insufficiently stamped document/instrument admitted in evidence in that suit or proceedings itself for his own benefit, notwithstanding the loss caused to the public exchequer. So, an option is given to him to save public money and to get benefited and there is no statutory compulsion on him to pay penalty, if he does not want the document/instrument admitted in evidence. It is for him to choose any of the options, i.e. to pay or not to pay. If he wants to admit the insufficiently stamped document/instrument in evidence so as to avail any benefit, certainly he must pay the penalty amount, which could be realised from the actual defaulter under the due process of law. It is for him to choose any of the options, i.e. to pay or not to pay. If he wants to admit the insufficiently stamped document/instrument in evidence so as to avail any benefit, certainly he must pay the penalty amount, which could be realised from the actual defaulter under the due process of law. But realisation of penalty from a person, who does not want to admit an insufficiently stamped instrument/document in evidence cannot be equated with him, when that lost amount can be realised from the actual defaulter, under due process of law envisaged under Section 39(1)(b) of the Act. 23. Bearing the aforesaid legal proposition in mind, we have examined the arguments advanced by the learned counsel for the petitioner. In the instant case, the petitioner is the landlord, who filed rent control petition seeking an order fixing the fair rent of the petition schedule building under Section 5(1) of the Kerala Buildings (Lease and Rent Control) Act, 1965. Though he produced eight lease deeds, he filed I.A.No.1599/2014 seeking to return the original of those deeds after comparing with the Xerox copies. Admittedly, those original lease deeds are insufficiently stamped instruments. However, the court below has not returned the documents and passed an order impounding the lease deeds and imposing penalty under Section 33 of the Act. He was directed to pay Rs.1,60,130/-. But he failed to pay the said amount and the documents were not admitted in evidence. Consequently, the rent control court sent the documents to the District Collector for realising the said stamp duty and penalty. 24. Admittedly, the petitioner has filed an application to return the documents and it shows that the documents were not sought to be admitted in evidence. We are of the opinion that the rent control court ought not to have proceeded with the imposition of penalty on 8 lease deeds, when the petitioner has filed an application to return the same, and he expressed his stand that he does not want to admit the documents in evidence. But, instead of impounding and sending the lease deeds to the District Collector for imposing penalty, the rent control court proceeded further, and imposed penalty at Rs.1,60,130/-. 25. But, instead of impounding and sending the lease deeds to the District Collector for imposing penalty, the rent control court proceeded further, and imposed penalty at Rs.1,60,130/-. 25. In view of Section 33 of the Act, the rent control court was bound to impound the documents and the same is justified under law; but imposition of penalty cannot be justified, when the petitioner did not want to admit them in evidence. The court below is justified in rejecting the prayer for return of the lease deeds when the court was bound to impound the lease deeds under Section 33 of the Act. In the above view, we find that, that part of Ext.P3 order, whereby the court below imposed penalty @ Rs.1,60,130/-, is illegal and unsustainable . The order, impounding the documents, would stand justified. 26. Coming to the proceedings initiated by the District Collector, on receipt of the instruments under Section 37(2) of the Act, we find that the District Collector has not ventured to examine the question, who was liable to meet the expenses for providing proper stamp under Section 30 of the Act. On the other hand, the District Collector initiated proceedings in a perfunctory manner to realise Rs.1,60,130/- from the party by issuing direction to the District Registrar. The District Registrar, in turn, issued Exts.P4 and P6 to the petitioner directing him to pay the penalty amount and informing the coercive steps to be taken against him for realising the said amount of penalty. We have already found that Ext.P3 order passed by the rent control court is legally unsustainable in respect of the imposing penalty . 27. Therefore, imposition of penalty alone in Ext.P3 order is quashed and the reference to the District Collector under Section 37(2) of the Act would stand affirmed. Consequently, the order passed by the District Collector in reference case No.G-12023/2016 to realise penalty and all further proceedings under Exts.P4 and P6 also would stand quashed. 28. Since the impounding and further reference to the District Collector under Section 37(2) of the Act stands affirmed by this Court, the District Collector is hereby directed to consider the aforesaid 8 documents under Section 39(b) of the Act, as if no penalty was imposed by the rent control court, and pass orders accordingly, in view of the observations and propositions laid down by this Court in this judgment. The order shall be passed at the earliest, at any rate, within a period of three months from the date of receipt of a copy of this judgment. This writ petition is disposed of accordingly.