2004 Supreme(SC) 1378

2004(8) Supreme 547
SUPREME COURT OF INDIA
(From Andhra Pradesh High Court)
R.C. Lahoti, CJI and Ashok Bhan, J.
Distt. Registrar and Collector, Hyderabad and Anr. -Appellants
versus
Canara Bank etc. -Respondents
Civil Appeal Nos. 6350-6374 of 1997
With
C.A. 7079 of 2004
(Arising out of SLP (C) No. 11607/2001)
Decided on 1-11-2004
Counsel for the Parties :
For the Appearing Parties : Mrs. K. Amareswari, Sr. Advocate, T.V. Ratnam, K. Subba Rao, O.S.G. Prasuna, K. Ram Kumar, Pradeep Dewan, Dr. Manmohan Sharma, Pramod B. Agrawala, Ms. Pravina Gautam, Ms. Anupam Dhingra, S. Srinivasan, A. Ranganadhan, Buddy Ranganadhan, A.V. Rangam, P.P. Singh, S.N. Bhat, Y. Prabhakara Rao, Y. Raja Gopala Rao, V. Sudeer, M.B. Rama Subba Raju, Balaji Srinivasan, Ms. S. Sunita, Devendra Singh, Ghan Shyam, Advocates.

IMPORTANT POINT
Section 73 of the Indian Stamp Act as amended in its application to the State of Andhra Pradesh by Andhra Pradesh Act No. 17 of 1986 is ultra vires the Constitution.

Headnote:Indian Stamp Act, 1899-Section 73 as incorporated by Andhra Pradesh Act No. 17 of 1986-A.P. State Rules 1986-Amendment of the Central Act in its application to the State of Andhra Pradesh by A.P. Act No. 17 of 1986-Validity challenged-Attack is on ground of unreasonableness, inconsistency and excessive delegation of powers and also on account of drastic powers having been conferred on executive authorities without laying down guidelines-Documents executed between private parties and received and retained in the custody of the bank in ordinary course of their loan advancing transactions were inspected-Banks were then served with a request to remit the amount of deficit duty on documents inspected and to recover the same from parties concerned-Grievance of private persons that the documents in their possession are sought to be inspected, impounded and levied with duty though they were not tendered in evidence nor produced before any public office-Section 73 was struck down by the High Court as ultra vires the provisions of the Indian Stamp Act as also of Article 14 of the Constitution-Whether judgment of the High Court is sustainable-(Yes)-The provision does not lay down any guidelines for determining the person who can be authorized by the Collector to exercise the powers conferred by Section 73 of the Act.

       Held : A bare reading of Section 73 as substituted by A.P. Act No. 17 of 1986 indicates the infirmities with which the provision suffers. The provision empowers any person authorized in writing by the Collector to have access to documents in private custody or custody of a public officer without regard to the fact whether the documents are sought to be used before any authority competent to receive evidence and without regard to the fact whether such document would ever be voluntarily produced or brought before a public officer during the performance of any of his specified functions in his capacity as such. The power is capable of being exercised by such persons at all reasonable times and it is not preceded by any requirement of the reasons being recorded by the Collector or the person authorized for his belief necessitating search. The person authorized has been vested with authority to impound the document. It is only in case of documents in custody of any bank that an exception has been carved out for giving a 30 days previous notice to the bank to make good the deficit stamp duty before seizing and impounding the document. Not only there is no valid reason - none pointed out either in the pleadings nor at the hearing - for drawing the distinction between a bank and other public office or any person having custody of document. Even in the case of a bank, the power to adjudicate upon the need for impounding the document has been vested in the person authorized. The provision does not lay down any guidelines for determining the person who can be authorized by the Collector to exercise the powers conferred by Section 73. (Para 16)

       It cannot be denied that there is an element of confidentiality between a Bank and its customers in relation to the latter s banking transactions. Can the State have unrestricted access to inspect and seize or make roving inquiries into all Bank records, without any reliable information before it prior to such inspection? Further, can the Collector authorize any person whatsoever to make the inspection, and permit him to take notes or extracts? These questions arise even in relation to the sec. 73 and have to be decided in the context of privacy rights of customers. (Para 46)

       Once we have accepted in Govind and in latter cases that the right to privacy deals with persons and not places , the documents or copies of documents of the customer which are in Bank, must continue to remain confidential vis-a-vis the person, even if they are no longer at the customer s house and have been voluntarily sent to a Bank. If that be the correct view of the law, we cannot accept the line of Miller in which the Court proceeded on the basis that the right to privacy is referable to the right of property theory. Once that is so, then unless there is some probable or reasonable cause or reasonable basis or material before the Collector for reaching an opinion that the documents in the possession of the Bank tend, to secure any duty or to prove or to lead to the discovery of any fraud or omission in relation to any duty, the search or taking notes or extracts therefore, cannot be valid. The above safeguards must necessarily be read into the provision relating to search and inspection and seizure so as to save it from any unconstitutionality. Secondly, the impugned provision in sec. 73 enabling the Collector to authorize any person whatsoever to inspect, to take notes or extracts from the papers in the public office suffers from the vice of excessive delegation as there are no guidelines in the Act and more importantly, the section allows the facts relating to the customer s privacy to reach non-governmental persons and would, on that basis, be an unreasonable encroachment into the customer s rights. This part of the Section 73 permitting delegation to any person suffers from the above serious defects and for that reason is, in our view, unenforceable. The State must clearly define the officers by designation or state that the power can be delegated to officers not below a particular rank in the official hierarchy, as may be designated by the State. The A.P. amendment permits inspection being carried out by the Collector by having access to the documents which are in private custody i.e. custody other than that of a public officer. It is clear that this provision empowers invasion of the home of the person in whose possession the documents tending to or leading to the various facts stated in sec. 73 are in existence and sec. 73 being one without any safeguards as to probable or reasonable cause or reasonable basis or materials violates the right to privacy both of the house and of the person. (Paras 54 to 56)

       An instrument which is not duly stamped cannot be received in evidence by any person who has authority to receive evidence and it cannot be acted upon by that person or by any public officer. This is the penalty which is imposed by law on the person who may seek to claim any benefit under an instrument if it is not duly stamped. Once detected the authority competent to impound the document can recover not only duty but also penalty, which provision, protects the interest of revenue. In the event of there being criminal intention or fraud, the persons responsible may be liable to be prosecuted. The availability of these provisions, in our opinion adequately protects the interest of revenue. Unbridled power available to be exercised by any person whom the Collector may think proper to authorize without laying down any guidelines as to the persons who may be authorized and without recording the availability of grounds which would give rise to the belief, on the existence where of only, the power may be exercised deprives the provision of the quality of reasonableness. Possessing a document not duly stamped is not by itself any offence. Under the garb of the power conferred by Section 73 the person authorized may go on rampage searching house after house i.e. residences of the persons or the places used for the custody of documents. The possibility of any wild exercise of such power may be remote but then on the framing of Section 73, the provision impugned herein, the possibility cannot be ruled out. Any number of documents may be inspected, may be seized and may be removed and at the end the whole exercise may turn out to be an exercise in futility. The exercise may prove to be absolutely disproportionate with the purpose sought to be achieved and, therefore, a reasonable nexus between stringency of the provision and the purpose sought to be achieved ceases to exist. (Para 59)

       For the foregoing reasons we agree with the view taken by the High Court that Section 73 of the Indian Stamp Act as amended in its application to the State of Andhra Pradesh by Andhra Pradesh Act No. 17 of 1986 is ultra vires the Constitution. (Para 61)