Thursday, 22 November 2012

It is Duty of court to impound Document insuffiently Stamped

In the instant case there is no dispute that the Bombay City Civil Court falls in the category of person specified in sub-section (1) of Section 33. It has by law authority to receive evidence. So the first condition of Section 33 is fulfilled, As the document in question has been produced before the court by the petitioners themselves for being acted upon, the second condition is also fulfilled. The document was sought to be admitted in evidence. The signatures of the respective parties as well as the contents of the instrument were duly proved. It was only at that stage when a question was raised by the court in regard to the adequacy of the stamp duty paid on the said instrument that time was sought by the parties and later the application for modification of the decree itself was withdrawn. The question is whether the court before whom an inadequately stamped document had been produced for modification of the decree passed by it earlier, can be restrained from impounding the same under Section 33 of the Act by the concerned party by withdrawing the application itself with which the said document had been produced. To put it differently, in such a situation whether the court becomes functus officio for the purpose of Section 33 of the Act. The answer, in my opinion, in clear terms is in the negative. A duty has been cast on the authority or the court to impound a document under Section-33 if any such document which is inadequately stamped is produced before it to be acted upon and that duty does not come to an end On withdrawal of the document by the party liable to pay additional duty and penalty. The powers, duties and jurisdiction of the court to pass orders on the application of the party for modification of the decree on the basis of such application and the document produced therewith and the powers, functions and jurisdiction of the court under Section 33 of the Stamp Act to impound the inadequately stamped document produced or coming before it are two distinct and different powers and jurisdictions. For the purpose of modification of the decree, the court might become functus officion withdrawal of the application but for the purpose of taking action under Section 33, it cannot become functus officio if all the requirements of Section 33 are fulfilled. If the contention of the petitioners is accepted then in every case a party may produce before the court any document which is not adequately stamped and take a chance of same being admitted and in the event of the inadequacy of the stamp being deducted (sic detected Ed.) withdrawal the same to avoid impounding under Section 33 and recovery of deficiency of the penalty and fine by the Collector.

Bombay High Court
M/S. Deepak Corporation vs Pushpa Prahlad Nanderjog on 4 March, 1994
Equivalent citations: AIR 1994 Bom 337, 1995 (1) BomCR 452, 1995 (1) MhLj 489

1. This revision application is directed against the order of 26 April 1989 of the Bombay City Civil Court in SC Suit No. 2603 of 1984 holding that the document described as "consent terms" dated 21 February 1989 tendered to the court along with application dated 21 February 1989 filed by the petitioners for modification of the undertaking given by them under clause 5 of the earlier consent terms dated 20-12-1984 was liable to be impounded and directing the registrar to forward the same to the Collector for recovery of the stamp duty and penalty and registration charges.
2. The material facts, briefly stated, are as follows: The respondent, Pushpa Prahlad, had filed a suit against the petitioners for permanent injunction restraining them from interfering with her peaceful use and enjoyment of the suit premises and from taking any steps to dispossess her therefrom except by due process of law. The said suit, which was numbered as S.C. Suit No. 2603 of 1984, was settled between the parties and consent terms dated 20 December 1984 were filed. By the. said consent terms the petitioners (original defendants) agreed and undertook to offer to the respondent (original plaintiff) a self-contained flat of 600 sq. ft. in the new building to be constructed by the petitioners on the suit property at the rate of Rs. 225/- per sq. ft. and to deliver possession of the said flat within two years from the date of commencement of the construction. The above suit was decreed by the court on 20 December 1984 in accordance with the said consent terms. Thereafter on 21 February 1989, the parties signed fresh consent terms in modification and part adjustment of the above decree. An application was filed on 21 February 1989 before the Bombay City Civil Court under O. 21, R. 2 of C.P.C. for recording the fresh consent "terms and relieving the petitioners from the undertaking given by them to the court under clause 5 of the original consent terms and the decree passed in terms thereof. Fresh consent terms dated 21 February 1989 were tendered to the court along with the above application for the purpose of recording the part adjustment of the decree to the satisfaction of the plaintiff. The court took cognizance of the said document. The plaintiff as well as the partner of the defendants who had put their signatures on the said document admitted their respective signatures and contents of the document. However, before acting upon the said document, the court made a query to counsel for the petitioners (original defendants) whether the document was sufficiently stamped and whether it attracted the provisions of the Indian Registration Act. Counsel for the petitioners instead of answering the query informed the court on 24 February 1989 that the petitioners wanted to withdraw their application dated 22 February 1989 itself and not to press for order thereon. On the above prayer of the counsel, the trial court passed the following order on 24 February 1989 :
"Advocate for the defendant states that he wants to withdraw the application i.e. 22-2-89 and therefore he does not press for orders. With the above, I am not passing any orders but it will be considered whether it is necessary to impound the document by sending it to the Collector of Stamps as the parties have used it as evidence and tendered the consent terms as their agreement before this Court. In this respect separate orders will be passed. Mr. Rambhia wants to argue on this point Adjourned to 10-3-89 for orders at 2.45 p.m."
3. Later, on hearing the parties on the question whether it was necessary for the court to forward the document to the Collector for recovery of stamp duty, penalty and registration charges, it decided the issue against the petitioners by its order dated 26 April 1989 which is the subject matter of challenge in this revision application. The trial court recorded a finding that the document in question had been tendered before it as evidence. It was observed that the advocate for the defendants (the petitioners herein) by written application dated 22 February 1989 had tendered the consent terms as evidence of fresh agreement between the parties for modification of the decree and for recording part adjustment of the decree. Not only that, the parties also admitted their respective signatures as also the contents of the said document before the court. It was only when a question was raised by the court whether the document was adequately stamped or it was liable to additional stamp duty, penalty and registration charges that the learned advocate was instructed not to press the application. Such an attempt; by the parties, according to the trial court, was not only deceptive but gross dishonest attempt to avoid stamp duty and penalty. The court distinguished the various decisions relied upon by the counsel for the petitioners and observed that they were not applicable as, unlike in those cases, in the present case the consent terms dated 21 February 1989 were tendered before the court as evidence of Agreement between the parties for adjustment of part of the decree. Not only that, the parties had confirmed their respective signatures as well as the contents of the document in question. The consent terms were duly produced before the court as evidence. It was only when before making it as an exhibit the court wanted to impound the same and recover the stamp duty and penalty, an attempt was made to disarm the court by seeking to withdraw the application itself. The trial court observed that such action of the party cannot affect the power of the court to impound an inadequately stamped document duly produced before it. The trial court, therefore, held that the document was liable to be impounded and accordingly directed the registrar to send the same to the Collector for recovery of stamp duty, penalty and registration charges. It is this order which is the subject matter of challenge in this revision petition.
4. Learned counsel for the petitioners submit that the action of the trial court is illegal and without jurisdiction inasmuch as the petitioners having withdrawn the application for modification of the decree, the court became functus officio and no more remained in possession of the said document and hence it had no power to impound the same. Counsel also referred to the order of the court dated 24 February 1989 which has been set out above and pointed out that as the petitioner wanted to withdraw its application dated 22 February 1989 and did not press for orders, the trial court did not pass any order thereon. In such a situation, the court was not justified in observing that it would consider whether it was necessary to impound the document by sending it to the Collector of Stamps as the same had been used as evidence and tendered before the court and that separate order would be passed in that respect. Counsel submits that the latter part of the above order and the impugned order passed in pursuance thereof later are both illegal and without jurisdiction.
5. For appreciation of the point in issue, it may be expedient to set out the relevant provisions of the Bombay Stamp Act, 1958 (the Act). Chapter IV deals with "Instruments not duly stamped". Section 33 provides for examination and impounding of such instruments. This section as it stood at the material time reads:
"S. 33(1) Subject to the provisions of Section 32A, every person having by-law or consent of parties authority to receive evidence and every person in charge of a public office, except an officer of police or any other officer, empowered by law to investigate offences under any law for the time being in force, before whom any instrument chargeable, in his opinion, with duty, is produced or comes in the performance of his functions shall if it appears to him that such instrument is not duly stamped, impound the same irrespective whether the instrument is or is not valid in law.
(2) For that purpose every such person shall examine every instrument so chargeable and so produced or coming before him in order to ascertain whether it is stamped with a stamp of the value and description required by the law for the time being in force in the State when such instrument was executed or first executed :
Provided that,--
(a) nothing herein contained shall be deemed to require any Magistrate or Judge of a Criminal Court to examine or impound, if he does not think fit so to do any instrument coming before them in the course of any proceeding other than a proceeding under Chapter IX or Part D of Chapter X of the Code of Criminal Procedure, 1973;
(b) in the case of a Judge of a High Court, the duty of examining and impounding any instrument under this section may be delegated to such officer as the Court may appoint in this behalf.
(3) For the purposes of this section, in cases of doubt,--
(a) the State Government may determine what offices shall be deemed to be public offices; and
(b) the State Government may determine who shall be deemed to be persons in charge of public offices."
Section 34 provides that instruments not duly stamped shall be inadmissible in evidence. This section, as it stood at the material time, so far as relevant, reads: S. 34 "Instruments not duly stamped inadmissible in evidence, etc.-
No instrument chargeable with duty not being any instrument referred to in subsection (1) of Section 32A shall be admitted in evidence for any purpose by any person haying 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, subject to all just exceptions, be admitted in evidence on payment of,--
(i) the duty with which the same is chargeable, or in the case of an instrument insufficiently stamped, the amount required to make-up such duty, and
(ii) a penalty of five rupees or, ten times the amount of deficient portion thereof, whichever is higher."
Section 37 lays down the manner of dealing with instruments which have been impounded. If the person impounding the document has the authority to receive evidence and admits the instrument in evidence on payment of penalty or duty, he has to follow the procedure laid down in sub-section (1). In other cases, procedure laid down in subsection (2) is to be followed, This section reads:
Section 37. "Instruments impounded how to be dealt with.-
(1) When the person impounding an instrument under Section 33 has by law or consent of parties authority to receive evidence admits such instrument in evidence upon payment of a penalty as provided by Section 34 or of duty as provided by Section 36, 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, a person so impounding the original instrument shall prepare an authentic copy of such instrument and where it is a true copy or all abstract referred to in Section 31 or true copy referred to in Section 33A, he shall send such authentic copy or, true copy, or as the case may be, an abstract to the Collector, for the purpose of taking action on the authentic copy or a true copy or, as the case may be, an abstract as if it were the original instrument and endorsing thereon a certificate with reference to the instrument under clause (a) of sub-section (1) of Section 39 or under sub-section (1) pf Section 41, as the case may be. On receipt of the authentic copy, the true copy or, as the case may be, an abstract with the certificate as aforesaid endorsed thereon, the person who had impounded the original instrument shall copy on the original instrument the certificate endorsed on the authentic copy and shall authenticate such certificate; and where it is a true copy or an abstract on which the certificate as aforesaid is endorsed, the registering officer who had forwarded the true copy or an abstract shall make appropriate entries in respect of the instrument of which it was a true copy or an abstract, in the relevant register maintained by him and on an application made in this behalf issue under his signature a certificate to the effect that the proper duty or, as the case may be, the proper duty and penalty stating the amount of each have been levied in respect of that instrument, and the name and residence of the person paying such duty and penalty."
6. A conjoint reading of the above sections makes it clear that Section 34 of the Act only prohibits the admissibility of instruments not duly stamped in evidence except on payment of the amount required to make up the proper stamp duty and the penalty specified therein. Section 33 is intended to achieve a different object altogether. It has been incorporated to safeguard the revenue of the State. It mandates every person specified therein before whom any instrument chargeable with duty is produced or comes in performance of his functions to impound the same if he is satisfied that such an instrument is not duly stamped. For that purpose, he has been given the power to examine the instrument so produced or coming up before him in order to ascertain whether it is stamped with a stamp of the value and description described by the law. The fact that the instrument is or is not valid in law is not relevant for the purpose of impounding the same. Under Section 37 such impounded document has to be sent to the Collector for the purpose of taking action as contemplated in sub-section (2) thereof. If the document has been admitted in evidence on payment of duty and penalty provided in Section 34 the authority concerned may follow the procedure laid down in sub-section (1). In other cases the procedure laid down in sub-section (2) has to be followed and authenticated copy of the instrument from the court has to be forwarded to the Collector for appropriate action.
7. In the instant case there is no dispute that the Bombay City Civil Court falls in the category of person specified in sub-section (1) of Section 33. It has by law authority to receive evidence. So the first condition of Section 33 is fulfilled, As the document in question has been produced before the court by the petitioners themselves for being acted upon, the second condition is also fulfilled. The document was sought to be admitted in evidence. The signatures of the respective parties as well as the contents of the instrument were duly proved. It was only at that stage when a question was raised by the court in regard to the adequacy of the stamp duty paid on the said instrument that time was sought by the parties and later the application for modification of the decree itself was withdrawn. The question is whether the court before whom an inadequately stamped document had been produced for modification of the decree passed by it earlier, can be restrained from impounding the same under Section 33 of the Act by the concerned party by withdrawing the application itself with which the said document had been produced. To put it differently, in such a situation whether the court becomes functus officio for the purpose of Section 33 of the Act. The answer, in my opinion, in clear terms is in the negative. A duty has been cast on the authority or the court to impound a document under Section-33 if any such document which is inadequately stamped is produced before it to be acted upon and that duty does not come to an end On withdrawal of the document by the party liable to pay additional duty and penalty. The powers, duties and jurisdiction of the court to pass orders on the application of the party for modification of the decree on the basis of such application and the document produced therewith and the powers, functions and jurisdiction of the court under Section 33 of the Stamp Act to impound the inadequately stamped document produced or coming before it are two distinct and different powers and jurisdictions. For the purpose of modification of the decree, the court might become functus officion withdrawal of the application but for the purpose of taking action under Section 33, it cannot become functus officio if all the requirements of Section 33 are fulfilled. If the contention of the petitioners is accepted then in every case a party may produce before the court any document which is not adequately stamped and take a chance of same being admitted and in the event of the inadequacy of the stamp being deducted (sic detected Ed.) withdrawal the same to avoid impounding under Section 33 and recovery of deficiency of the penalty and fine by the Collector. In this connection, it may be expedient to refer to Section 35 of the Act, which provides that "once a document is admitted in evidence it cannot be called in question at any stage of the same even if it is found that it is not duly stamped. In such cases also, the document may be impounded in the manner laid down in Section
58. Section 58 provides:
Section 58 "Revision of certain decisions of Courts regarding the sufficiency of stamps.
(1) When any Court in the exercise of its civil or revenue jurisdiction or any Criminal Court in any proceeding under Chapter IX of Part D of Chapter X of the Code of Criminal Procedure 1973, makes any order admitting any instrumental evidence as duly stamped or as not requiring a stamp, or upon payment of duty and a penalty under Section 34, the Court to which appeals lie from, or references are made by, such first-mentioned Court may, of its own motion or on the application of the Collector, take such order into consideration.
(2) If such Court, after such consideration is of opinion that such instrument should not have been admitted in evidence without the payment of duty and penalty under Section 34, or without the payment of a higher duty and penalty then those paid, it may record a declaration to that effect, and determine the amount of duty with which such instrument is chargeable, and may require,--
(i) the party or person concerned to make the payment of the proper duty or the amount required to make up the same, together with a penalty under Setion_34, or payment of a Higher duty and penalty than those paid, to itself or to the Collector; and
(ii) any person in whose possession or power such instrument then is, to produce the same, and may impound the same when produced.
(3) When any declaration has been recorded under sub-section (2), the Court recording the same shall send a copy thereof to the Collector, and, where the instrument to which it relates has been impounded or is otherwise in the possession of such Court, shall also send him such instrument,
(4) The Collector may thereupon, notwithstanding anything contained in the order admitting such instrument in evidence, or in any certificate granted under Section 41, or in Section 42, prosecute any person for any offence against the stamp law which the Collector considers him to have committed in respect of such instrument:
Provided that-
(a) no such prosecution shall be instituted where the amount including duty and penalty, which, according to the determination of such court, was payable in respect of the instrument under Section 34, is paid to the Court or the Collector, unless the Collector thinks that the offence was committed with an intention of evading payment of the proper duty;
(b) except for the purpose of such prosecution no declaration made under this section shall affect the validity of any order admitting any instrument in evidence or of any certificate granted under Section 41."
Thus it is evident that Section 35 only gives finality to the decision in regard to the admissibility of the document in evidence. It docs not operate as a bar to impounding of the same.
8. Counsel for the petitioner, referred to decisions of various High Courts in support of his contention that once proceedings arc concluded, the authority becomes functus officio and it cannot thereafter call for the document and examine the adequacy or inadequacy of the stamp duty paid thereon for the purpose of taking action under Section 33 of the Act. All these decisions, in my opinion, are applicable only to cases where the court rightly or wrongly comes to a conclusion during the pendency of the proceedings before it that the document in question was properly stamped. Once that is done and the proceedings are concluded, it cannot later proceed to take action under Section 33 of the Act for impounding of the very same document. That is not the position in the instant case. Here, when the petitioner on being questioned about the inadequacy of the stamp duty paid on the document in question wanted to withdraw the application itself for modification of the decree on the basis of the said document, the court observed that it would examine the document for the purpose of Section 33 of the Act and it was only at the request of the counsel for the petitioner that the above determination was deferred to a later date. That, in my opinion, does not in anyway affect the power of the court to take action under Section 33 of the Act.
9. In view of the above discussion, I do not find any infirmity in the impunged order of the trial court impounding the document and directing the Registrar to forward the same to the Collector for determination of the correct stamp duty and penalty and recovering the same. In that view of the matter this revision application is dismissed.
There shall be no order as to costs.
Certified copy expedited.
10. Order accordingly.
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