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2022 Supreme(Kar) 480

IN THE HIGH COURT OF KARNATAKA AT DHARWAD BENCH
N.S.SANJAY GOWDA, J.
Shri Anil S/o. Ramachandra mashalkar – Appellant
Versus
Shri Babu S/o. Hasansab Kadakol – Respondent
Writ Petition No.112448 of 2017 (GM-CPC)
Decided on : 15-12-2022

Advocates:
Advocate Appeared:
For the Appellant :Shri Srinand A.Pachhapure, Advocate
For the Respondent:Shri Rajashekhar Burji, Advocate

Headnote:

STAMP DUTY - IMPOUNDING OF INSTRUMENT - POWER OF IMPOUNDING OFFICER - SCOPE AND EXTENT - ADMISSIBILITY OF INSTRUMENT IN EVIDENCE - REVISION - POWER OF APPELLATE COURT - SCOPE AND EXTENT - SUFFICIENCY OF STAMP DUTY - DETERMINATION - AUTHORITY - DEPUTY COMMISSIONER - JURISDICTION - PROCEDURE - CERTIFICATE OF DEPUTY COMMISSIONER - EFFECT - INSTRUMENT ADMITTED IN EVIDENCE - SUBSEQUENT IMPOUNDING - LEGALITY - STAMP ACT, 1957 - SECTIONS 31, 32, 33, 34, 35, 37, 38, 39, 41, 53A, 58.

Fact of the Case:

The petitioner instituted a suit seeking specific performance of an agreement of sale. During the pendency of the suit, the suit property was conveyed to the second respondent. The second respondent filed an application under Section 34 of the Karnataka Stamp Act, 1957 (the Act) requesting the Court to pass an order to the effect that the agreement of sale dated 03.04.2008 (Ex.P1) should not be acted upon. The Trial Court passed the impugned order holding that the Trial Court had ample power to impound a document for the purpose of collection of stamp duty and penalty, even if the document had already been admitted into evidence. The petitioner challenged the legality of the said order.

Finding of the Court:

1. The power to impound an instrument is available once before it is admitted in evidence by the impounding officer and once after it is admitted in evidence by the appellate court, when it is considering a decision rendered by the subordinate court regarding the sufficiency of stamp duty and penalty while admitting the instrument in evidence. 2. The ultimate authority to determine whether an instrument is duly stamped or not, rests only on the Deputy Commissioner and the two acts of impounding officer i.e., forming an opinion that the instrument is not duly stamped and impounding the instrument under Section 33 or the sending of an authenticated copy of the instrument on which duty and penalty is collected as ascertained by the impounding officer under proviso (a) to Section 34, are merely acts in aid of facilitating the exercise of power by Deputy Commissioner in the matter of determination of duty. 3. Once an instrument is admitted in evidence, even by inadvertence, the admissibility of the document on the ground it was insufficiently stamped cannot be questioned thereafter. 4. The power to invoke Section 58 of the Act is only by the Court on its own at the behest of the Deputy Commissioner, no other person, such as a defendant to a suit, can be permitted to invoke the power of revision under Section 58 of the Act.

Issues: 1. Whether the impounding officer has the power to impound an instrument after it has been admitted in evidence? 2. Whether the Appellate Court has the power to revise a decision of the Trial Court regarding the sufficiency of stamp duty and penalty while admitting an instrument in evidence? 3. Who has the authority to determine the sufficiency of stamp duty on an instrument?

Ratio Decidendi: 1. The power to impound an instrument is available once before it is admitted in evidence by the impounding officer and once after it is admitted in evidence by the appellate court, when it is considering a decision rendered by the subordinate court regarding the sufficiency of stamp duty and penalty while admitting the instrument in evidence. 2. The Appellate Court has the power to revise a decision of the Trial Court regarding the sufficiency of stamp duty and penalty while admitting an instrument in evidence, but only if the Trial Court has actually taken a decision on the issue. 3. The Deputy Commissioner has the authority to determine the sufficiency of stamp duty on an instrument.

Final Decision: The impugned order of the Trial Court and the order of the District Court are quashed. The Trial Court shall consider ExP-1 as an instrument admissible in evidence and consider the same on its merits while deciding the suit.

ORDER :

1. An order of the Trial Court directing the Office to impound a document, which was admitted in evidence as Ex.P1, for collection of stamp duty and penalty, is assailed in this writ petition.

2. On 03.04.2008, an agreement of sale was executed between the petitioner and the first respondent, whereby the first respondent agreed to sell the suit property for a sum of Rs.6,00,000/-(Rupees Six lakhs only). The entire sale consideration was stated to be paid on the date of execution of the sale deed. It was also stated that the possession of the property was required to be delivered at the time of registration of the sale deed, but, the petitioner had come into possession of the property under an irrevocable Special Power of Attorney executed by the first respondent on the same day. The agreement also contained a clause that the first respondent would execute the registered sale deed at the convenience of the parties and as demanded by the petitioner.

3. On 12.12.2012, the petitioner instituted a suit seeking for specific performance of the agreement of the sale deed dated 03.04.2008. During the pendency of this suit, the suit property was conveyed to the second respondent on 01.07.2013 and as a consequence, the second respondent was impleaded as the second defendant on 03.02.2014.

4. The second respondent herein filed his written statement on 01.04.2014. Thereafter, a trial was conducted and during the course of the trial, the agreement of sale was admitted into evidence and marked as Ex.P1. During the production of the said agreement of sale, no objections were raised by either of the defendants for the admission of the agreement of sale into evidence.

5. However, after about 10 months, on 09.02.2015, the second defendant filed an application under Section 34 of the Karnataka Stamp Act, 1957 (for short “the Act, 1957”) requesting the Court to pass an order to the effect that the agreement of sale dated 03.04.2008 (Ex.P1) should not be acted upon.

6. In the affidavit accompanying the application, it was stated that the agreement had been admitted in evidence as Ex.P1, though it had been executed on an insufficiently stamped paper, which violated Section 33(1) of the Act, 1957 and also the ruling of this Court reported in 2011 (6) KLJ 353.

7. The Trial Court, however, did not pass any order on the said application, as a result of which, the second respondent, proceeded to file a revision petition before the District Court invoking Section 58 of the Act, 1957.

8. The District Court, after hearing the parties, took the view that when the admissibility of a document on the ground that it was insufficiently stamped was raised, the Trial Court was under an obligation to record its findings on the admissibility of the document and it accordingly allowed the revision and directed the Trial Court to decide I.A.No.14, which had been filed by the second defendant challenging the admissibility of Ex.P1.

9. The Trial Court, pursuant to the order of the District Court, has passed the impugned order holding that the Trial Court had ample power to impound a document for the purpose of collection of stamp duty and penalty, even if the document had already been admitted into evidence. The petitioner is therefore, before this Court questioning the legality of the said order.

10. Shri Srinand A. Pachhapure, learned counsel appearing for the petitioner contended that the Trial Court could not have called into question the admission of the document after it had been admitted into evidence. He contended that the power to impound the document was available to the Court only before it was admitted into evidence and if the Trial Court despite the bar to admit insufficiently stamped instrument, had admitted any instrument, for whatever reason, the same could not be questioned at any stage in the suit on the ground that the document could not have been admitted into evidence.

11. He also contended that the District Court did not have the power under Section 58

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