Hon’ble Arun Tandon, J.—These two connected writ petitions have been filed by the officers of the Life Insurance Corporation of India challenging the demand of stamp duty to the sum of Rs. 1,77,71,488/- raised by the Deputy Inspector General/Deputy Commissioner, Stamps, Kanpur Division, Kanpur vide order dated 29.11.2003 and the consequential demand notices dated 5.2.2007 and 22.2.2007.

2. Facts relevant for deciding these two petitions are as follows :

Life Insurance Company is a statutory Corporation created under the Life Insurance Corporation Act, 1936. The Corporation has its Zonal office at Kanpur Nagar.

For the purposes of execution of Life Insurance Policies for every sum of Rs. 1000/- insured a insurance stamp of the value of 40 paisa is required to be affixed on each policy bond. The Divisional Office at Kanpur made purchases of self adhesive insurance stamps from the registered stamp vendors of Maharashtra, between 19.4.1993 to 29th March, 2001 and is stated to have used the same on policy bonds issued by various Branch of Life Insurance Corporation under the Divisional Office at Kanpur. A dispute arose with regards to the genuineness of such insurance stamps purchased. A First Information Report alleging a total loss of Rs. 1,77,71,488/- to the State of Uttar Pradesh was lodged by the Deputy Inspector General (Stamps), Kanpur Nagar with the Police Station Peelkhana, District Kanpur Nagar.

The issue with regards to the aforesaid criminal investigation is not the subject matter of these proceedings and therefore, no further facts are being stated in that regard.

On 29.11.2003 an order was passed by the Deputy Inspector General Stamps, Kanpur with reference to the letter of the Senior Divisional Manager, Life Insurance Corporation, Kanpur stating therein that between 19.4.1993 to 29.3.2001 self adhesive insurance stamps to the tune of Rs. 1,77,71,488/- have been purchased by the Divisional Office at Kanpur from the following vendors :

(a) Amol Enterprises, Pune

(b) M/s. V.S.Uppalkar, Mumbai

(c) M/s. Gusain, Borewali

(d) M/s. Nirmal P. Gore, Pune

(e) M/s. Somal Enterprises, Meerut.

Either the aforesaid stamp seller were non-existent or else the stamps purchased from them have illegally been used by the Divisional Office at Kanpur which has resulted in a loss of Rs. 1,77,71,488/- to the State Government. The petitioners were, therefore, directed to deposit the said money failing which proceedings under the Indian Stamp Act, 1899 for recovery of the same shall be initiated. It is against this notice that the first writ petition being Writ Petition No. 197 of 2004 has been filed. During the pendency of the said petition Demand Notice dated 5.2.2007 and 22.2.2007, for a like amount have been issued which have been challenged by means of connected writ petition No. 11143 of 2007.

3. The petitioners have stated that Gyanendra Som/Somal Enterprises, Meerut, one of the seller named in the order was duly authorized on behalf of M/s. Gadiya, a stamp vendor of Pune (Maharashtra) to sell the stamps on their behalf.

4. This Court may at the very outset record that it is admitted to the writ petitioners that self adhesive insurance stamp worth Rs. 1,77,71,488/- have been purchased from the stamp vendors authorized by the State of Maharashtra and used for establishing the payment of stamp duty by affixation of the said stamps on Policy Bonds executed in State of Uttar Pradesh. It is also not disputed by the writ petitioner that the said insurance stamps purchased from the vendors of State of Maharashtra were not issued by the U.P. Government as per Rule 3 of the U.P. Stamp Rules as amended up to date. The demand of the aforesaid amount of Rs. 1,77,71,488/- which represents the value of the stamp purchased from the stamp vendors authorized by the State of Maharashtra i.e. from a place outside the State of Uttar Pradesh and used on Policy Bonds executed in Uttar Pradesh is being questioned before this Court on behalf of the Life Insuran