The duty of the court to impound insufficiently stamped documents and the procedure for admitting such documents in evidence under the Indian Stamp Act.

1. With the consent of parties, the matter is heard finally.

2. In this writ petition under Article 227 of the Constitution of India the petitioners have challenged the validity of the order dated 8-8-2011 passed by the Trial Court. In order to appreciate the petitioner's challenge to the impugned order, few facts need mention which are state infra.

3. The respondents-plaintiffs filed the suit for specific performance of the contract on the basis of an agreement dated 25-7-2006. Under the agreement, out of total consideration of Rs 11,01,000/-, sum of Rs. 6,01,000/- was paid to the defendants by way of cheques. The plaintiff submitted his examination-in-chief under Order 18 Rule 4 of the Code of Civil Procedure. On behalf of the defendants another agreement dated 5-8-2006 was produced in which the amount of sale consideration was mentioned as Rs. 25 lacs and an amount of Rs. 6,01,000/- was paid under the agreement to the defendants and the amount of Rs. 18,99,000/- was shown payable to the defendants. An objection was raised by the Counsel for the plaintiffs with regard to the admissibility of the aforesaid agreement dated 5-8-2006 on the ground that the same was insufficiently stamped in view of the amendment made in the Indian Stamp Act, 1899 (for short 'the Act') as applicable to the State of Madhya Pradesh which came into force on 13-8-2002.

4. The Trial Court thereupon directed the petitioners that in case they want to tender the aforesaid agreement in evidence, they will have to pay a sum of Rs. 24,950/- by way of duty and a sum on Rs. 2.5 lacs by way of penalty. Accordingly, the petitioners were granted time to deposit the amount of duty and penalty, in case they wanted to exhibit the document.

5. Learned Senior Counsel for the petitioners has assailed the aforesaid order passed by the Trial Court on the ground that the Trial Court ought to have impounded the document in question and should have sent the same to Collector of Stamps for determination of the stamp duty and penalty. It is further submitted that the Collector of Stamps is the only authority to determine the amount of duty and penalty as per his discretion. Learned Senior Counsel in support of his submission has placed reliance on the decision of the Supreme Court in Petiti Subba Rao Vs. Anumala S. Narendra, (2002) 10 SCC 427.

6. On the other hand, learned Counsel for the respondents submitted that the order passed by the Trial Court is perfectly just and legal. It is further submitted that only when the petitioners inform the Trial Court that they are not willing to pay the amount of duty and penalty then the Court is required to adopt the procedure under Section 38(2) of the Act.

7. I have considered the submissions made on both sides. Section 33 of the Act provides that when an insufficient stamped document is filed in the Court, the Court is duty bound to impound the same. Section 35 of the Act provides that no instrument chargeable with duty shall be admitted in evidence for any purpose unless such instrument is duly stamped. Clause (a) of the proviso to Section 35 provides that such an instrument shall, be admitted in evidence on payment of the duty with which the same is chargeable, or, in the case of an instrument insufficiently stamped, of the amount required to make up such duty, together with a penalty of five rupees, or when ten times the amount of the property duty or deficient portion thereof exceeds five rupees, of a sum equal to ten times such duty or portion. Section 38 prescribes the procedure after impounding a document. Section 38(1) provides that when the person impounding an instrument under Section 33 has by law or consent of parties authority to receive evidence and admit such instrument in evidence upon payment of a penalty as provided by Section 35, or of duty as provided by Section 37, he shall send to the Collector an authenticated copy of such instrument, together with a certificate in writing, stating the amount of duty and pena