IMPORTANT POINT
The correct procedure under Section 88 of Stamp Act on impounding an instrument insufficiently stamped by the Court is to ask the litigant to make up deficiency and pay penalty failing which original is to be sent to Collector for adjudication. In this case Court followed wrong procedure in sending the instrument without dealing as above direct to revenue authorities for adjudication.

Headnote:Indian Stamp Act, 1889-Section 47A(4) (as included in A.P . State)-Suit on an agreement to sell-Court finding it insufficiently stamped-Impounded and sent to Revenue Officer-Whether correct? (No)-Appeal allowed-Section 38 of Stamp Act-Instruments impounded how dealt with explained.
       Held : It is clear from the first sub-section extracted above that the court has a power to admit the document in evidence if the party producing the same would pay the stamp duty together with a penalty amounting to ten times the deficiency of the stamp duty. When the court chooses to admit the document on compliance of such condition the court need forward only a copy of the document to the Collector, together with the amount collected from the party for taking adjudicatory steps. But if the party refuses to pay the amount aforesaid the Collector ? (sic) (Court) has no other option except to impound the document and forward the same to the Collector. On receipt of the document through either of the said avenues the Collector has to adjudicate on the question of the deficiency of the stamp duty. If the Collector is of the 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 an amount not exceeding ten times the amount of the proper duty or of the deficient portion thereof." (Para 12)
       In the present case, an argument is raised that the instrument is not actually an agreement of sale as envisaged in the Schedule to the Stamp Act (subject to amendment made by the State of Andhra Pradesh) but it is only a deed of compromise entered into by two disputing persons. We refrain from expressing any opinion on the said plea as it is open to the parties to raise their contentions regarding the nature of the document before the trial Court. In the present case the trial Court should have asked the appellant, if it finds that the instrument is insufficiently stamped, as to whether he would remit the deficient portion of the stamp duty together with a penalty amounting to ten times the deficiency. If the appellant agrees to remit the said amount the court has to proceed with the trial after admitting the document in evidence. In the meanwhile, the court has to forward a copy of the document to the Collector for the purpose of adjudicating on the question of deficiency of the stamp duty as provided in Section 40(1)(b) of the Act. Only if the appellant is unwilling to remit the amount the court is to forward the original of the document itself to the Collector for the purpose of adjudicating on the question of deficiency of the stamp duty. The penalty of ten times indicated therein is the upper limit and the Collector shall take into account all factors concerned in deciding as to what should be the proper amount of penalty to be imposed. (Para 13)
       Inasmuch as none of the above proceedings had been adopted by any of the authorities including High Court we set aside the impugned orders. We direct the Munsif to consider first whether the document is insufficiently stamped and if he finds that question in the affirmative he has to adopt the next step indicated above. This appeal is accordingly allowed. (Paras 14 and 15)

JUDGMENT

Thomas, J.-Leave granted.

2. When a document was found to be insufficiently stamped the further proceedings were, unwittingly, diverted through a wrong track. After it covered a long distance everybody concerned realised that the lis was proceeding through a wrong course. It has now to be reversed and put in the proper track.

3. Appellant filed a civil suit before the Munsif Court, Madanapalle (Andhra Pradesh) as early as 1988. The main relief claimed in the suit is enforcement of an agreement executed on 26.6.1986 for sale of an immovable property. When the agreement was produced in court it was found to be insufficiently stamped and the learned Munsif impounded it and forwarded the instrument to the Revenue Divisional Officer (RDO) for the purpose of taking further action on it (the Collector must have delegated his powers to the R.D.O. in that behalf). He called for a report from a subordinate revenue officer regarding the real market value of the property which is mentioned in the document.

4. On the strength of the said report the R.D.O. found that the market value of the property was Rs. 64,880/- and hence the agreement of sale should have been stamped with an additional duty of Rs. 3,895/-. As the instrument was stamped only with a stamp of Rs. 5/- the R.D.O. imposed a penalty equivalent to ten times of the deficiency which amounted to Rs. 38,950/-. The order of the R.D.O. was passed on 4.7.1998.

5. Appellant challenged the said order by filing an appeal before the Senior Civil Judge purportedly under Section 47A(4) of the Indian Stamp Act, 1899. (The said section is included in the Stamp Act as per a State amendment carried out by the State of Andhra Pradesh). Learned Senior Civil Judge found that the appeal was not maintainable for two reasons. First is that the order challenged before him was not passed by the registering authority nor the procedure laid down in Section 47A of the Stamp Act was followed. He also found that appellant did not pay the amount of Stamp duty before preferring an appeal which is a condition precedent for filing such appeal. On both premises the appeal was dismissed as not maintainable. The Senior Civil Judge pronounced the judgment on 12.3.1999.

6. Appellant filed a revision petition before the High Court challenging the judgment of the Civil Judge. A Single Judge of the High Court of Andhra Pradesh pointed out that as per the proviso to Section 47A of the Act "no appeal shall be preferred unless and until the difference, if any, in the amount of duty is paid by the person liable to pay the same, after deducting the amount already deposited by him." Even though the appellant made a plea before the High Court for giving him some time to pay the amount learned Single Judge found that no such time can be granted at that stage since he has already preferred the appeal. Learned Single Judge did not consider whether an appeal would otherwise have been maintainable before the Civil Judge. Hence the revision petition was dismissed with the following observations :

"Deposit of amount is a condition precedent for filing the appeal. The Court has no power to grant any relaxation to any party in the matter of deposit of amount as required under the proviso. In fact, a duty is cast on the petitioner to deposit the amount in accordance with the proviso at the time of filing of the appeal. If any appeal is filed without deposit of the amount in accordance with the proviso, that appeal is clearly not maintainable. For these reasons, I do not find any merit in the petition. In the facts and circumstances of the case, I do not want to go into the question whether the learned Senior Civil Judge had the jurisdiction to hear the appeal or not."

7. It is the aforesaid order which the appellant has challenged in this Court by special leave. When petition for special leave was moved learned counsel for the appellant submitted on 22.11.1999 that the appellant was ready and willing to deposit the differential amou

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