The court clarified the distinction between undervalued and not duly stamped instruments and the procedural implications under the Karnataka Stamp Act.

R. V. RAVEENDRAN, J.

( 1 ) PETITIONER agreed to purchase land bearing r. s. No. 103, measuring 3 acres 1 gunta of yadur village, chikodi taluk for a sale price of Rs. 13,000/ -. As the vendor failed to execute the sale deed, petitioner filed a suit for specific performance in the year 1982. During the pendency of the suit, the vendor executed a sale deed dated 26-8-1985 in favour of the petitioner conveying the said land for the agreed consideration of Rs. 13,000/- in pursuance of a consent decree passed by the civil court.

( 2 ) THE said sale deed was presented to the sub-registrar, chikodi (first respondent) for registration on 29-8-1985. The sub-registrar impounded the document on the ground that the document was undervalued and therefore not duly stamped under Section 33 of the Karnataka Stamp Act, 1957 ('act' for short) read with Rule 15-a of karnataka stamp rules, 1958 ('rules' for short ). After verification of sale statistics and other information, the sub-registrar came to the conclusion that the value set forth in the deed was less than the market value and assessed the market value as Rs. 90,000/ -. He held that the document has been deliberately undervalued to evade payment of higher stamp duty and thus the document is not duly stamped. Hence, the sub-registrar, purporting to exercise power of the deputy commissioner under Section 39 of the Act, directed recovery of deficit stamp duty of Rs. 6,930/-, penalty of Rs. 69,300/- (at 10 times the stamp duty) and deficit registration fee of Rs. 770/-, in all Rs. 77,000/- from the person in enjoyment of the property, vide order dated 5-9-1985 (Annexure-A ). The said order was passed without notice to the petitioner and the order was not communicated to him. Petitioner came to know about the order only in march, 1989, when he received a notice demanding payment of Rs. 77,000/ -. Immediately he filed this petition for quashing of annexure-a. Rule and stay of the impugned order was granted on 1-8-1989.

( 3 ) THE following questions arise for consideration in this petition: (A) whether a sale deed presented for registration, bearing the necessary stamp duty calculated at the specified rate, on the consideration mentioned in the deed, can be impounded under Section 33 of the Act, on the ground that it is undervalued and therefore not duly stamped? (B) if it is found that there is undervaluation in regard to the market value of the property which is the subject matter of conveyance, whether it is permissible to require payment of penalty under Section 39 of the Act, in addition to the proper stamp duty and registration charges?

( 4 ) SECTION 33 is the only provision in the Act, authorising impounding of documents. Sub-section (1) of Section 33 of the act provides that every person having by law or consent of parties, authority to receive 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 instruments is not duly stamped, impound the same. Sub-section (2) provides that for that purpose, such person shall examine every instrument so chargeable and so produced or coming before him, in order to ascertain whether it is stamped, with a stamp of the value and description required by law in force in the State of karnataka. Thus under Section 33 of the Act, a sub-registrar to whom a document is presented for registration, can impound it, if it appears to him that such document is not duly stamped.

( 5 ) WHEN is an instrument not 'duly stamped'? According to section 2 (e) of the Act, unless the context otherwise requires, 'duly stamped' as applied to an instrument, means that the instrument bears an adhesive or impressed stamps of not less than the proper amount and that such stamp has been affixed or used in accordance with the law for the time being in force in the territories of the state of karn

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