IMPORTANT POINT
In case of an instrument not duly stamped, authority u/s 33 can admit it on payment of duty and 10 times penalty. There is no discretion in imposing penalty. However the penalty can refunded u/s 38.

JUDGMENT :

Ashok Bhushan, J.

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 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 obl