GANGAPPA AND ANR. versus FAKKIRAPPA
[2018] 13 S.C.R. 603, Supreme Court of India, 2018
Outcome: Disposed off
Segment: Ratio
A
B
C
D
E
F
G
H
603
GANGAPPA AND ANR.
v.
FAKKIRAPPA
(Civil Appeal No. 11932 of 2018)
DECEMBER 14, 2018
[ASHOK BHUSHAN AND AJAY RASTOGI, JJ.]
Karnataka Stamp Act,1957 – ss.33, 34 and 38 – Appellants-
plaintiffs entered into agreements to sell with respondent-defendant
– Appellants filed suits for specific performance of contract –
Principal Civil Judge impounded agreements to sell filed by the
plaintiffs in the suits with direction to the plaintiff to pay deficit
duty and penalty – Agreements to sell in question were admitted in
evidence on payment of deficit duty and penalty which was double
the deficit duty in both the suits – Respondent filed writ petition –
High Court directed the court below to levy the penalty at 10 times
of the deficit duty – Propriety of – Held: Sections 33 and 34 clearly
indicate that penalty imposed has to be 10 times – High Court
correctly interpreted the provisions of s.33 in the impugned judgment
–There is no discretion vested with the authority impounding the
document in the matter of collecting duty u/s.33 – However, in the
present case the order of the trial court was passed as early as on
22.04.2013, i.e. more than five years ago – In view of impounding
the documents and imposition of penalty, the suit must not have
proceeded further, and it must be at the threshold stage – Asking
the appellant to deposit 10 times of penalty and thereafter to invoke
the jurisdiction of Deputy Collector u/s.38 to refund penalty shall
be a proceeding again
taking considerable time – In the facts of
the present case, ends of justice be served in closing the matter by
confirming the payment of deficit duty with the double penalty as
imposed by the trial court.
Karnataka Stamp Act,1957 – ss.38, 39 – Discretion to Deputy
Commissioner – Scope of – Discussed.
Karnataka Stamp Act,1957 – ss.33 and 39 – Contradistinction
between – Object of – Discussed.
[2018] 13 S.C.R. 603
603
A
B
C
D
E
F
G
H
604
SUPREME COURT REPORTS
[2018] 13 S.C.R.
Disposing of the appeal, the Court
HELD: 1.1 The statute envisages that when the 10 times
of the amount of the proper duty or deficient portion thereof
exceeds five rupees, a sum equal to 10 times of such duty or
portion is the penalty. The language of Section 34, Karnataka
Stamp Act,1957 provides a flat rate of penalty when the amount
of proper duty exceeds five rupees i.e. 10 times of such duty or
portion. There is a clear contrast in the language of Section 34
and Section 39 of the 1957 Act. Section 39(1)(b) indicates that if
the Deputy Commissioner is of opinion that such instrument is
chargeable with duty and is not duly stamped shall require the
payment of the proper duty with a penalty of five rupees. The
latter part of the provision  states “or if he thinks fit an amount
not exceeding ten times the amount of the proper duty or of the
deficient portion thereof, whether such amount exceeds or falls
short of five rupees”. Thus, discretion has been conferred on
the Deputy Commissioner which is apparent from the words “if
he thinks fit”. Deputy Commissioner has discretion of imposing
penalty of 10 times or lesser of the amount of duty or portion
thereof. There is clear contradistinction between the power under
Section 33 and 39. The object and purpose for such
contradistinction in the provision and power is not far to seek.
Section 33 applies to every person having by law or consent of
parties authority to receive
evidence, and every person in-charge
of a public office. Thus, Section 33 covers a host of authorities,
persons before whom instruments are filed. The legislative
scheme does not indicate any distinction between a court receiving
an insufficiently stamped instrument in evidence and other
authorities. All have to impose penalty of 10 times of the duty or
deficit portion, if it exceeds rupees five. This provision is for
purpose of maintaining a uniformity in imposing a fixed penalty of
10 times without adverting to any adjudicatory process regarding
quantifying the quantum of penalty.  The statute gives discretion
to Deputy Commissioner who is the authority envisaged by the
Act in-charge of the revenue administration of a District.
[Paras 12-14] [609-F-H; 610-B-G]
1.2 The amount of duty and penalty is required to be sent
to Deputy Commissioner under Section 37. Deputy
Commissioner under Section 38 is empowered to refund any
A
B
C
D
E
F
G
H
605
portion of the penalty in excess of five rupees which has been
paid in respect of such instrument. Section 38 sub-section (1)
again uses the expression “if he thinks fit”. Thus, in cases where
penalty of 10 times has been imposed, Deputy Commissioner
has discretion to direct the refund of the penalty in facts of a
particular case. The power to refund the penalty under Section
38 clearly indicates that legislature have never contemplated that
in all cases penalty to the extent of 10 times should be ultimately
realised. Although the procedural part which provides for
impounding and realisation of duty and penalty does not give any
discretion under Section 33 for imposing any lesser penalty than
10 times, however, when provision of Section 38 is read, the
discretion given to Deputy Commissioner to refund the penalty
is akin to exercise of the jurisdiction under Section 39 where
while determining the penalty he can impose the penalty lesser
than 10 times.  [Paras 15, 16] [611-A-F]
1.3 The High Court correctly interpreted the provisions of
Section 33 in the impugned judgment. There is no discretion
vested with the authority impounding the document in the matter
of collecting duty under Section 33. The word used in the said
proviso is ‘shall’. Sections 33 and 34 clearly indicate that penalty
imposed has to be 10 times. [Paras 18, 21] [612-F-G; 613-G]
1.4  The order of the trial court was passed as early as on
22.04.2013 that is more than five years ago. In view
of impounding
the documents and imposition of penalty, the suit must not have
been proceeded  further, and it must be at the threshold stage;
asking the appellant to deposit 10 times of penalty and thereafter
to invoke the jurisdiction of Deputy Collector under Section 38
to refund penalty shall be a proceeding again taking considerable
time. In the facts of the present case, ends of justice would be
served in closing the matter by confirming the payment of deficit
duty with the double penalty as imposed by the trial court which
shall obviate the proceeding of approaching the Deputy
Commissioner for reduction of penalty under Section 38, which
in the facts of the present case and for the reasons noted by the
trial court was a relevant consideration for refund/reduction of
the penalty. [Paras 19, 20] [612-H; 613-D-E]
Digambar Warty and Others v. District Registrar,
Bangalore Urban District and another ILR 2013 KAR
2099 – approved.
GANGAPPA AND ANR. v. FAKKIRAPPA
A
B
C
D
E
F
G
H
606
SUPREME COURT REPORTS
[2018] 13 S.C.R.
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 11932
of 2018.
From the Judgment and Order dated 17.07.2014 of the High Court
of  Karnataka, Dharwad Bench in Writ Petition No. 78721 of 2013.
Sharanagouda Patil, Ms. Supreeta Sharanagouda, M/s S-legal
Associates, Advs. for the Appellants.
Gaurav Agarwal, M. Khairati, Irshad Ahmad, Advs. for the
Respondent.
The Judgment of the Court was delivered by
ASHOK BHUSHAN, J. 1. This appeal has been filed against
the judgment of Karnataka High Court, Dharwad Bench dated
17.07.2014 disposing of the writ petition filed by the respondent herein.
2. Brief facts of the case necessary to be noticed for deciding this
appeal are:
The appellants/plaintiffs entered into agreements to sell with
respondent-defendant dated 12.04.2005 and 16.05.2006 and earnest
money of Rs.1,40,000/- was paid. The appellants filed Suit No.863 of
2008 and Suit No.864 of 2008 praying for specific performance of contract.
Another suit filed by the sister of the defendant being O.S.No.327 of
2008 was also clubbed. The Principal Civil Judge impounded agreements
to sell filed by the plaintiffs in Suit Nos.863 and 864 of 2008 with direction
to the plaintiff to pay deficit duty and penalty vide order dated 27.09.2010.
Plaintiffs challenged the order by means of Writ Petition Nos.69264-65/
2010 and 69263/2010 which  were disposed of by the High Court vide its
judgment dated 14.03.2013 directing the Principal Civil
Judge to permit
the plaintiffs to place written submissions. After the order of the High
Court, the Principal Civil Judge passed an order dated 22.04.2013 by
which agreements to sell in question were admitted in evidence and
marked for the plaintiffs in O.S.Nos.863 and 864 of 2008 on payment of
deficit duty and penalty. Deficit duty in both the suits was determined as
Rs.12013/- and Rs.20320/- respectively and the penalty imposed was
double of the deficit duty in both the suits.
3. Aggrieved by the judgment of the Principal Civil Judge,
respondent-defendant filed a writ petition in the High Court. The High
Court disposed of the writ petition relying on a Division Bench judgment
of Karnataka High Court in Digambar Warty and others vs. District
A
B
C
D
E
F
G
H
607
Registrar, Bangalore Urban District and another, ILR 2013 KAR
2099. The High Court directed the courts below to levy the penalty at
10 times of the deficit duty as per judgment of Karnataka High Court in
ILR 2013 KAR 2099. Aggrieved by the judgment of the High Court
this appeal has been filed by the appellants.
4. Learned counsel for the appellant submits that the High Court
committed an error in directing payment of penalty at 10 times. The trial
court has rightly directed for payment of deficit duty and penalty at the
rate of 2 times which was a just and proper order. It is submitted by the
learned counsel for the appellant  that when the Deputy Commissioner
can reduce  levy of penalty not exceeding 10 times of the amount of
duty, the trial court while determining the deficiency and penalty shall
also have such discretion. The trial court has rightly exercised the
discretion by imposing the penalty of two times.
5. Learned counsel appearing for the respondent submits that the
instruments waere not duly stamped. While admitting the insufficiently
stamped documents the trial court has no discretion while levying the
penalty. The statute i.e. Section 34 of the Karnataka Stamp Act, 1957
mandates penalty at the rate of 10 times. The Division Bench of the
High Court in  Digambar Warty and others (supra) has correctly
interpreted Section 34 while holding that Court has no discretion to reduce
the penalty from 10 times. The High Court has rightly followed the
above
Division Bench Judgment.
6. We have considered submissions of the learned counsel for the
parties and perused the records.
7. The issue which needs to be answered in the present case is as
to whether the trial court which had admitted the agreements to sell in
evidence could have exercised its discretion in imposing penalty at the
rate of 2 times of deficient amount of stamp duty or it was obligatory for
the trial court to impose the penalty at the rate of 10 times.
8. Before we proceed to consider the respective submissions of
the parties, it is relevant to notice statutory provisions of the Karnataka
Stamp Act, 1957. Section 33 requires every person having by law or
consent of parties authority to receive evidence, is obliged to impound
any instrument which according to him is not duly stamped. Section 33
sub-section (1) is as follows:
“33. Examination and impounding of instruments.- (1) Every
person having by law or consent of parties authority to receive
GANGAPPA AND ANR. v. FAKKIRAPPA
[ASHOK BHUSHAN, J.]
A
B
C
D
E
F
G
H
608
SUPREME COURT REPORTS
[2018] 13 S.C.R.
evidence, and every person in charge of a public office, except an
officer of police, 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.”
9. Section 34 provides that instruments not duly stamped are
inadmissible in evidence. Section 34 sub-section (1) which is relevant
for the present case is as follows:
“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:
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
him in the course of any proceeding other than a proceeding
under Chapter XII or Chapter XXXVI of the Code of Criminal
Procedure, 1898;”
10. Section 38 empowers the Deputy Commissioner to refund
penalty paid under sub-section (1) of Section 37. Section 39 relates to
the Deputy Commissioner’s power to stamp instruments impounded.
Section 38 and Section 39(1) are as follows:
“38. Deputy Commissioner]1’s
power to refund penalty
paid under sub-section (1) of section 37.- (1) When a copy of
an instrument is sent to the Deputy Commissioner under sub-
section (1) of section 37, he may, if he thinks fit, refund any portion
of the penalty in excess of five rupees which has been paid in
respect of such instrument.
(2) When such instrument has been impounded only because it
has been written in contravention of section 13 or section 14, the
1[Deputy Commissioner]1 may refund the whole penalty so paid.
39. Deputy Commissioner’s power to stamp instruments
impounded.- (1) When the Deputy Commissioner]1 impounds
any instrument under section 33, or receives any instrument sent
A
B
C
D
E
F
G
H
609
to him under sub-section (2) of section 37, not being an instrument
chargeable with a duty not exceeding fifteen naye paise only or a
mortgage of crop Article 35 (a) of the Schedule] chargeable under
clause (a) or (b) of section 3 with a duty of twenty-five naye
paise, he shall adopt the following procedure:
(a) if he is of opinion that such instrument is duly stamped, or is
not chargeable with duty, he shall certify by endorsement
thereon that it is duly stamped, or that it is not so chargeable,
as the case may be;
(b) if he is of 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 five rupees; or if he thinks fit; an
amount not exceeding ten times the amount of the proper duty
or of the deficient portion thereof, whether such amount
exceeds or falls short of five rupees:
Provided that, when such instrument has been impounded
only because it has been written in contravention of section 13
or section 14, the Deputy Commissioner may, if he thinks fit,
remit the whole penalty prescribed by this section.”
11. Section 34 proviso provides for admitting in evidence an
instrument not duly stamped are on payment of duty and penalty. With
regard to penalty statute provides:
“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;”
12. The statute envisages that when the 10 times of the amount
of the proper duty or deficient portion thereof exceeds five rupees, a
sum equal to 10 times of such duty or portion is the penalty.
13. The language of Section 34 provides a flat rate of penalty
when the amount of proper duty exceeds five rupees i.e. 10 times of
such duty or portion. There is a clear Contrast in the language of Section
34 and Section 39. Section 39 sub-section (1) sub-clause (b) is extracted
for ready reference:
GANGAPPA AND ANR. v. FAKKIRAPPA
[ASHOK BHUSHAN, J.]
A
B
C
D
E
F
G
H
610
SUPREME COURT REPORTS
[2018] 13 S.C.R.
“39(1)(b) if he is of 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 five rupees; or if he thinks fit; an amount
not exceeding ten times the amount of the proper duty or of the
deficient portion thereof, whether such amount exceeds or falls
short of five rupees:”
14. The above provision indicated that if the Deputy Commissioner
is of opinion that such instrument is chargeable with duty and is not duly
stamped shall require the payment of the proper duty with a penalty of
five rupees. The latter part of the provision  states “or if he thinks fit an
amount not exceeding ten times the amount of the proper duty or of the
deficient portion thereof, whether such amount exceeds or falls short of
five rupees”. Thus, discretion has been conferred on the Deputy
Commissioner which is apparent from the words “if he thinks fit”.
Deputy Commissioner has discretion of imposing penalty of 10 times or
lesser of the amount of duty or portion thereof. There is clear
contradistinction between the power under Section 33 and 39. The object
and purpose for such  contradistinction in the provision and power is not
far to seek. Section 33 applies to every person having by law or consent
of parties authority to receive evidence, and every person in-charge of a
public office. Thus, Section 33
covers a host of authorities, persons before
whom instruments are filed. The legislative scheme does not indicate
any distinction between a court receiving an insufficiently stamped
instrument in evidence and other authorities. All have to impose penalty
of 10 times of the duty or deficit portion, if it exceeds rupees five. This
provision is for purpose of maintaining a uniformity in imposing a fixed
penalty of 10 times without adverting to any adjudicatory process
regarding quantifying the quantum of penalty.  The statute gives discretion
to Deputy Commissioner who is the authority envisaged by the Act in-
charge of the revenue administration of a District. The definition  of
Deputy Commissioner is given in Section 2(dd) which is to the following
effect:
“2(dd) ‘Deputy Commissioner’ means the Chief Officer in charge
of the revenue administration of a district and includes in respect
of such provisions of this Act or rules made thereunder such officer
in such area as the State Government may by notification in the
Official Gazette specify;”
A
B
C
D
E
F
G
H
611
15. The amount of duty and penalty is required to be sent to
Deputy Commissioner under Section 37. Section 37 is quoted below:
“37. Instruments impounded how dealt with.-(1) When 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 34 or of duty as provided by section 36, he shall send to
the Deputy Commissioner 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 Deputy Commissioner 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 Deputy Commissioner.
16. Deputy Commissioner under Section 38 is empowered to refund
any portion of the penalty in excess of five rupees which has been paid
in respect of such instrument. Section 38 sub-section (1) again uses the
expression “if he thinks fit”. Thus, in cases where penalty of 10 times
has been imposed, Deputy Commissioner has discretion to direct the
refund of the penalty in facts of a particular case. The power to refund
the penalty under Section 38 clearly indicates that legislature have never
contemplated that in all cases penalty to the extent of 10 times should be
ultimately realised. Although the procedural part which provides for
impounding and realisation of duty and penalty does not give any discretion
under Section 33 for imposing any lesser penalty than 10 times, however,
when provision of Section 38 is read, the discretion given to Deputy
Commissioner to refund the penalty is akin to exercise of the jurisdiction
under Section 39 where while determining the penalty he can impose
the penalty lesser than 10 times.
17. In the  Division Bench judgment of the Karnataka High Court
relied by the High Court in Digambar Warty and others (supra), after
noticing the provisions of Section 33 and 34 the Division Bench laid
down following in paragraph 36:
“36. This provision refers to the power of the Civil Court which
admits the documents in evidence. The main Section is couched
in the negative. Unless the instrument is duly stamped, it is
inadmissible in evidence. As an exception, the proviso provides
for payment of duty and penalty. In the matter of collection of
GANGAPPA AND ANR. v. FAKKIRAPPA
[ASHOK BHUSHAN, J.]
A
B
C
D
E
F
G
H
612
SUPREME COURT REPORTS
[2018] 13 S.C.R.
duty and penalty no discretion is vested with the authority admitting
such an instrument in evidence. The duty payable on the instrument
is prescribed by statute. Therefore, there is no question of any
discretion being vested with the authority impounding the document
in the matter of collecting the duty. Once the duty payable is
ascertained from the statute, no discretion is vested with the
authority admitting the document in evidence, in the matter of
imposition of duty and penalty. The word used in the said proviso
is ‘shall’. It is mandatory. However, Section 35 makes it clear,
that where an instrument has been admitted in evidence without
there being objection at the time of admitting the said instrument
in evidence, then such admission shall not, except as provided in
Section 58, be called in question at any stage of the same suit or
proceeding on the ground that the instrument has not been duly
stamped. Section 58 deals with the power of the Appellate Court
to review the finding recorded by the original Court under Section
34 of the Act, either suo motu or on the application of the Deputy
Commissioner. Section 36 of the Act deals with admission of
improperly stamped instrument. The State Government may make
rules providing that, where an instrument bears a stamp of
sufficient amount but of improper description, it may, on payment
of the duty with which the same is chargeable, be certified to be
duly stamped,
and any instrument so certified shall then be deemed
to have been duly stamped as from the date of its execution.”
18. The above view of the Karnataka High Court that there is no
discretion vested with the authority impounding the document in the
matter of collecting duty under Section 33, is correct. The word used in
the said proviso is ‘shall’. Sections 33 and 34 clearly indicate that penalty
imposed has to be 10 times. The Division Bench of the Karnataka High
Court in Digambar Warty and others (supra) has rightly interpreted
the provisions of Sections 33 and 34 of the Act. We, thus, are of the
view that the High Court in the impugned judgment did not commit any
error in relying on the judgment of the Division Bench in Digambar
Warty and others (supra). We thus has to uphold  the above view
expressed in the impugned  judgment.
19. There is one more aspect which needs to be noted in the
present case. We have seen that even though 10 times penalty has to be
collected and imposed by the person impounding the document under
Section 37, Section 38 empowers the Deputy Collector to refund the
A
B
C
D
E
F
G
H
613
duty. Learned trial court while imposing penalty at the rate of two times
has given following reason:
“The plaintiffs of O.S. No.863/08 and 864/08 are stated to be
agriculture and are residing at Sherewad village. The said fact is
not denied by the defendants therein. It appears that the agreements
were prepared by local villagers who are not experienced in the
documentation. Looking to the status of the plaintiffs, their standard
of having qualification of the document writers. I am of the opinion
that the ratio laid down by our Hon’ble High Court in ILR 2011
KAR 4719 can be applied to the present facts and circumstances
levying 10 times penalty in respect of said agreement will be harsh
on the plaintiffs. Therefore I am of the opinion that levying double
the amount of deficit duty as penalty will meet the ends of justice.”
20. The order of the trial court was passed as early as on
22.04.2013 that is more than five years ago. In view of impounding the
documents and imposition of penalty, we are sure that the suit must not
have been proceeded  further, and it must be at the threshold stage;
asking the appellant to deposit 10 times of penalty and thereafter to
invoke the jurisdiction of Deputy Collector under Section 38 to refund
penalty shall be a proceeding again taking considerable time. In the facts
of the present case, we are of the view that ends of justice be served in
closing the matter by confirming the payment of deficit duty with the
double
penalty as imposed by the trial court which shall obviate the
proceeding of approaching the Deputy Commissioner for reduction of
penalty under Section 38, which in the facts of the present case and for
the reasons noted by the trial court was a relevant consideration for
refund/reduction of the penalty.
21. In view of the foregoing discussion, we are, therefore, of the
view that the High Court has correctly interpreted the provisions of Section
33 in the impugned judgment but instead of prolonging the matter
permitting the appellant to deposit 10 times of penalty and thereafter to
take recourse under Section 38, we in the facts of the present case
close the proceedings regarding penalty on the agreements to sell by
approving the direction of the trial court for payment of entire deficit
duty and double the penalty.
22. The appeal is disposed of accordingly.
Divya Pandey
Appeal disposed of.
GANGAPPA AND ANR. v. FAKKIRAPPA
[ASHOK BHUSHAN, J.]