1 wp7670.10.sxw ssm IN THE HIGH COURT OF JUDICATURE AT BOMBAY APPELLATE SIDE CIVIL JURISDICTION WRIT PETITION NO. 7670 OF 2010 M/s. Win­n­Quiz Company Limited .....Petitioner. Vs. The Authorized Officer, Bank of Baroda & Ors. ......Respondents. Mr. S.U. Kamdar, Sr. Advocate with Ms. Pooja Patil and Mr. C.M. Jadhav i/by M/s. Mahesh Menon & Co. for the Petitioner. Mr. Anant B. Shinde for Respondent No.1. Ms. Aparna D. Vhatkar, AGP for Respondent No.5. CORAM : DR. D.Y. CHANDRACHUD AND ANOOP V. MOHTA, JJ. DATE : JUNE 15, 2011 ORAL JUDGMENT:­ The Petitioner filed an Application under Section 17 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SA No. 36 of 2010) before the Debts Recovery Tribunal. During the course of the proceedings, in that Application, the First Respondent relied upon a Memorandum of Entry dated 30 May 1997 in respect of a mortgage created by the Second 2 wp7670.10.sxw ssm Respondent in favour of the First Respondent by the deposit of title deeds of a residential flat at Pedder Road, Mumbai. The Memorandum was executed at Kolkata. On 28 July 2010, the First Respondent submitted a request before the Collector of Stamps, Mumbai for adjudication of the proper stamp duty. The Collector by a letter dated 11 August 2010 stated that since the Memorandum had been executed at Kolkata, which was not within his jurisdiction, the case was closed and the Memorandum was returned to the First Respondent. The First Respondent filed an affidavit before the Debts Recovery Tribunal stating these facts. An Application was filed by the First Respondent before the Tribunal and after adverting to the letter of the Collector, it was prayed that the Tribunal may pass an appropriate order for the payment of stamp duty on the Memorandum of entry dated 30 May 1997. 2 The Petitioner filed a reply to the Application, the material part of which reads as follows:­ “I say that the Memorandum of Entry dated 30th May 1997 has been admittedly executed at Kolkatta. The same is not admissible in evidence since appropriate stamp duty thereon has not been paid by the Respondents. As per Section 33 of the Bombay Stamp Act, 1958 (as amended), this Honorable Tribunal has powers to impound the same. As per Section 33 of the Bombay Stamp Act, 1958 (as 3 wp7670.10.sxw ssm amended), no instrument chargeable with duty shall be admitted in evidence. Hence it is a fit case where this Honorable Tribunal may pass order relating to payment of appropriate stamp duty and penalty thereon as Section 34 of the Bombay Stamp Act, 1958 (as amended).” 3 The Tribunal by its order dated 16 August 2010, accepted the request of the Bank to impound the document under Section 33(1) of the Bombay Stamp Act, 1958 holding that since the adjudicating authority has refused to adjudicate upon the stamp duty, the Tribunal is duty bound to impound it. The stamp duty provided in respect of a Memorandum evidencing a deposit of title deeds was `50,000/­ at the material time. The Tribunal called upon the bank to pay a stamp duty of `50,000/­ together with a penalty of `1,00,000/­ under Section 34. The Tribunal passed an order that on the payment of the stamp duty and penalty, the Registrar shall send an intimation to the Collector together with a copy of the impounded document and remit the penalty and stamp duty to the Collector. The Petitioner challenged the order of the Tribunal before the Debts Recovery Appellate Tribunal. The Appeal was dismissed by the impugned order dated 16 September 2010. The Appellate Tribunal noted that the Memorandum related to property situated in West Bengal, Assam and Mumbai. However, no relief was claimed with respect to the property in West Bengal and 4 wp7670.10.sxw ssm Assam before the Tribunal. The Appellate Tribunal affirmed the order of the Tribunal. 4 Counsel appearing on behalf of the Petitioner submits that the instrument in question was chargeable to stamp duty under Clause (aa) of the proviso to Section 3 of the Indian Stamp Act, 1899. Hence, the instrument should have been sent upon impounding to the adjudicating authority for stamp duty at Kolkata. 5 Proviso aa to Section 3 is applicable to the State of West Bengal by virtue of the Bengal Stamp (Amendment) Act, 1922. The proviso, in so far as it is material, is to the following effect. “Provided that, except as otherwise expressly provided in this Act, and notwithstanding anything contained in clauses (a), (b) or (c) of this section or in Schedule I, the amount indicated in Schedule IA to this Act shall, subject to the exemptions contained in that Schedule, be the duty chargeable under this Act on the following instruments, mentioned in clauses (aa) and (bb) of this proviso, as the proper duty therefor respectively,­ (aa) every instrument, mentioned in Schedule IA as chargeable with duty under that Schedule, which, not having been previously executed by any person, is executed in [West Bengal] on or after the first day of April, 1922; and (bb) every instrument mentioned in Schedule IA as chargeable with duty under that Schedule, which, not 5 wp7670.10.sxw ssm having been previously executed by any person, is executed out of [West Bengal] on or after the first day of April, 1922, and relates to any property situated, or to any matter or thing done or to be done, in [West Bengal ] and is received in [West Bengal]:” 6 The submission that has been urged on behalf of the Petitioner is that under entry 6 of Schedule IA, stamp duty is liable to be paid on any instrument evidencing an agreement relating to the deposit of title deeds or constituting or being evidence of the title to any property whatever (other than a marketable security). Hence, it is urged that the Tribunal erred in following the procedure prescribed under Section 33 of the Bombay Stamp Act, 1958 and the only correct order for the Tribunal to pass would have been to impound the instrument and to remit it to the adjudicating authority in the State of West Bengal. 7 On the other hand, it has been urged on behalf of the First Respondent that the instrument in question, was admittedly executed in the State of West Bengal. The instrument related inter alia to the property in Mumbai. Hence, the instrument was chargeable to stamp duty under Section 3 (1) (b) of the Bombay Stamp Act, 1958. Under Section 19 such an instrument which relates to any property situated 6 wp7670.10.sxw ssm within the State is liable to be subjected to payment of stamp duty under the Bombay Stamp Act upon being received in the State. The Tribunal had hence acted in accordance with law. 8 The rival submissions now fall for determination. Section 3 of the Indian Stamp Act, 1899 stipulates that subject to the provisions of the Act and the exemptions contained in Schedule I, the instruments described therein shall be chargeable with duty in the amount indicated in the Schedule. Clause (a) deals with every instrument mentioned in the Schedule which, not having been previously executed by any person, is executed in India on or after 1 July, 1899. By and as a result of the West Bengal (Amendment) Act of 1922, a proviso has been inserted. The proviso contains a non­obstante provision under which inter alia instruments mentioned in Schedule IA will be chargeable with duty indicated in the Schedule ­ such instruments being those which are executed in West Bengal on or after 1 April 1922. Clause (bb) deals with instruments mentioned in Schedule IA which are executed out of West Bengal but relate to any property situated within that State. Counsel appearing on behalf of the Petitioner submitted that the instrument in question, ought to have been stamped under the Indian Stamp Act, 1899 by virtue of 7 wp7670.10.sxw ssm clause (aa) of the proviso to Section 3 (as amended) in relation to the State of West Bengal. 9 Now, what is material is that the instrument in question, was produced within the State of Maharashtra before an authority competent to and empowered by the Law to receive evidence. Section 3 of the Bombay Stamp Act deals with instruments which are chargeable with duty as stipulated in Schedule I. Section 3 provides as follows, in so far as it is material. “3. Instrument chargeable with duty Subject to the provisions of this Act and the exemptions contained in Schedule I, the following instruments shall be chargeable with duty of the amount indicated in Schedule I as the proper duty therefor respectively, that is to say­ (a) every instrument mentioned in Schedule I, which not having been previously executed by any person, is executed in the State on or after the date of commencement of this Act; (b) every instrument mentioned in Schedule I, which not having been previously executed by any person, is executed out of the State on or after the said date, relates to any property situate, or to any matter or thing done or to be done in this State and is received in this State:” (Emphasis supplied) 10 Under Clause (b) an instrument which is executed out of the 8 wp7670.10.sxw ssm State, but which relates to any property situated in the State or to any matter or thing done or to be done in the State, is liable to stamp duty upon being received in the State. In the present case, the instrument admittedly was executed in the State of West Bengal. The instrument relates to property which is situated in Mumbai. In such an event the procedure which is to be followed is provided in Sections 18 and 19 of the Bombay Stamp Act, 1958. Under Sub Section (1) of Section 18 every instrument chargeable with duty executed out of the State may be stamped within three months after it has been first received in the State. Clause (a) of Section 19 provides as follows. “19. Payment of duty on certain instruments [or copies thereof] liable to increased duty in [Maharashtra State] Where any instrument of the nature described in any article in Schedule I and relating to any property situate or to any matter or thing done or to be done in this State is executed out of the State and subsequently [such instrument or a copy of the instrument is) received in the State.­ (a) the amount of duty chargeable on such instrument [or a copy of the instrument] shall be the amount of duty chargeable under Schedule I on a document of the like description executed in this State less the amount of duty, if any, already paid under any law in force in India excluding the State of Jammu and Kashmir on such instrument when it was executed:” 11 Section 19 applies to an instrument of the nature described in 9 wp7670.10.sxw ssm Schedule I where; (i) it relates to any property situated within the State; or (ii) it relates to any matter or thing done or to be done in the State of Maharashtra. In such a situation where the instrument is executed outside the State and is subsequently received in the State, thereupon, upon the instrument being received in the State the amount of duty chargeable on the instrument is to be the duty chargeable under Schedule I on a document of like description executed in the State less the amount of duty, if any, already paid under any other law in force in India. In such an event, if an instrument has already been stamped with duty under any other law in force in India, that duty would be duly given credit for, in making the computation under Section 19(a). 12 In the present case, the instrument was executed in Kolkata. The instrument had not been adjudicated to the payment of stamp duty in the State of West Bengal. The instrument related to property situated in Mumbai. The instrument was therefore, liable to the payment of stamp duty under Section 3(1)(b) of the Bombay Stamp Act, 1958. The Tribunal has acted within the scope of the provisions of Sections 33 and 34 by impounding the instrument and directing the collection of stamp duty and penalty. As a matter of fact, the court has 10 wp7670.10.sxw ssm been informed that the First Respondent has already deposited both the stamp duty and the penalty thereon. 13 In this view of the matter, the order passed by the Tribunal as confirmed by the Appellate Tribunal does not suffer from any infirmity. The petition is accordingly dismissed. There shall be no order as to costs. (ANOOP V. MOHTA, J.) (DR. D.Y. CHANDRACHUD, J.)