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High Court Of Madhya Pradesh
Bishambhar Dayal, C. J. , Shiv Dayal and A. P. Sen, JJ.
BALKRISHNA BIHARI LAL - Appellant
Versus
BOARD OF REVENUE, M.P. - Respondents
Misc. Civil Case 132 Of 1955
Decided On : 08/11/1969
Where in the instrument there is not the slightest indication of any partition having taken place earlier, and in so many words it is recorded in it that by the document itself a partition is being effected, it is an instrument of partition within the meaning of section 2(15) of the Stamp Act. [Para 5
(2) Stamp Act, 1899 - S. 1 - applicability of the Act to instruments - principles governing.
The following principles govern the application of the Stamp Act to instruments:-
(i) The duty is payable on the instrument and not on the transaction. It is not open to the revenue to say that the instrument should be deemed to be that which it is not on record and the object of the trall8action was to achieve a purpose not disclosed in the instrument.
(1889) 23 Q.B.D. 579 relied on.
(ii) The Court is not, bound by the apparent tenor of the instrument; it is the real nature of the transaction which will determine the stamp duty. The recitals in the instrument should not be lost sight of merely because the parties gave a particular description of its nature. But the rule does not go beyond this. (1888) 21 QBD 352, 1909 AC 427, (1911) 2 KB 1001, (1869) 4 HL 100, AIR 1940 PC 183. (1936) AC 1, & AIR 1961 Mad. 504 (FB) referred to.
(iii) The Court must look at the instrument itself as it stands and it is not permissible to show, by evidence, any collateral circumstances. The nature of the document can be determined only from the language it employs and the purpose which it is intended to serve. Although it is permissible to look behind the form and at the substance of the transaction, this can be done only by construing the instrument itself and not by taking into consideration any collateral or other evidence de hors the instrument. The question must be decided essentially with reference to the contents of the instrument and to the intention of the parties which is gathered from the contents. 5 BLR 103 relied on.
(iv) In determining stamp duty, the substance of the transaction as disclosed by whole of the instrument has to be looked to, and not merely the operative part of the instrument.
(v) Stamp duty is payable on an instrument according to its tenor arid it does not matter that it cannot be given effect to for some independent cause.
(vi) There can be no objection to a device effectuating a transaction in a manner that lower rate of duty is attracted. (1961) 1 Ch. 210 relied on. [Para 7
(3) Stamp Act, 1899 - Ss. 35 & 36 - document tendered in evidence - question of proper stamp - has to be determined before the document admitted in evidence - document once admitted in evidence - section 36 comes into operation.
When a document is tendered in evidence and before it is marked as exhibit in a case, the trial Court has to judicially determine whether it is properly stamped or not. Once it has been marked as exhibit in a case and has been used by the parties in examination-in-chief or cross-examination of a witness, section 36 steps in. AIR 1961 SC 1655 relied on. [Para 10
(4) Stamp Act, 1899 - Ss. 38(2) & 35 - document admitted in evidence - section 38 (2) has no application.
An instrument can be sent to the Collector under section 38(2) of the Stamp Act only when it is impounded under section 33, but it is not admitted in evidence on payment of penalty and/or duty with the aid of section 35. Section 38(2) has no application to a case where the document has been admitted in evidence. [Para 12
(5) Stamp Act, 1899 - Ss, 61, 36, 38(2), 39 & 40 - trial Court admitting an instrument in evidence - question of proper stamp duty how may be raised - Collector has no jurisdiction unless the instrument is sent by appellate or reference Court.
In a case where an instrument is tendered and the civil Court just admits it in evidence, without its being questioned on the ground that it is not duly stamped, such validity cannot, by virtue of section 36 of the Act, be subsequently questioned at any stage of the same suit or proceeding on the ground that it is not duly stamped. The only course then open is the one provided in section 61 of the Act. Under that section, it is the Court, to which appeals lie from, or references arc made by, the Court which admitted the instrument in evidence, which may, on its own motion or on the application of the Collector, rake into consideration the order of the subordinate Court admitting the instrument in evidence. And, if such (appeal or reference) Court is of the opinion that such instrument should not have been admitted in evidence without payment of duty and penalty under section 35, or that higher duty and penalty should have been paid, such Court may order the instrument to be produced and may impound it when produced. Such Court shall then send the instrument, along with its declaration, to the Collector. [Para 11
If the Collector has not received the instrument under section 61, he cannot exercise powers under section 39 or 40 of the Act. [Para 14
(6) Stamp Act, 1899 - Ss. 29 & 44 & Art. 45 - stamp duty on instrument of partition - whole of it may be realized from one party - rights of parties inter se.
Section 29 of the Stamp Act enacts that, in the absence of an agreement to the contrary, the expense of providing the proper stamp in the case of an instrument of partition, shall be borne by the parties thereto in proportion to their respective shares in the whole property partitioned. Accordingly, all the parties to Ex. P-5, in proportion to their respective shares, had to bear the stamp duty. But this section and section 44, in effect, only regulate the liabilities as between the parties inter se. The Collector can proceed to recover the entire duty and penalty from anyone or from all those parties in his discretion. This is because the liability to pay stamp duty as between the parties to an instrument on the one hand and the State on the other is joint and several. The parties to an instrument between themselves may have the right to contribution. The Collector is not bound to collect pro rata shares from all the parties. AIR 1956 Mad. 454 relied on. [Para 15
(7) Stamp Act, 1899 - S. 40 - power of Collector in respect of penalty - discretion how to be exercised.
The powers of the Collector under section 40 of the Stamp Act are discretionary in respect of imposition of penalty. There are no provisions in the Stamp Act to guide his discretion. That being so, the general principle of law, that discretion must be exercised according to reason and justification, must be followed. [Para 16
( 1 ) THIS is a reference under Section 57 (l) (a) of the Stamp Act. The questions equivalent Citation: referred have arisen on the following facts. Balkrishna instituted a suit against nimasingh in the Court of the Civil Judge, Class I, Khargone, for the recovery of rs. 1057. 50 on foot of four promissory notes executed by him on May 26, 1957, in favour of Balkrishna Biharilal, a joint family firm. By amendment of the plaint, the plaintiff averred that in 1959 there was a partition between him and his sons under which the amount to be recovered on those promissory notes was allotted to him in his share. An issue was framed on July 16, 1962, whether the plaintiff alone had the right to sue. Balkrishna (plaintiff) was examined on July 2, 1963. He produced his Rokad Bahi (cash book) for Samvat 2016 in which there is an entry dated November 5, 1959, purporting to effect a partition and showing the shares allotted to the coparceners. Balkrishna proved this document and it was marked ex. P-5.
( 2 ) WHEN Hiralal (P. W. 2) was in the witness-box on the same day, and the document (Ex. P-5) was put to him, an objection was raised by the counsel for the defendant that it was a deed of partition and, as it did not bear the prescribed stamp, it was not admissible in evidence. There is a "note" saying that the document (Ex. P-5) has not been admitted in evidence and the objection was raised at the appropriate stage. It is not known whether this "note" was the defendant's contention or the Court's observation. After hearing both the parties, the learned trial Judge held that this document is a deed of partition and it requires stamp duty. The plaintiff's counsel then sought 15 days' time to get the document validated by the Collector on payment of such duty or penalty as would be demanded from him. The trial Court accepted the plaintiff's request and gave him time.
( 3 ) THEN the learned Civil Judge himself wrote a letter to the Collector of Khargone (No. 3743 dated July 5, 1963) with which he sent the document (Ex. P-5) with his remark that it effected a partition of the property worth about rupees one and a half lacs; that the plaintiff's share was Rs. 27,000/-; that it required stamp duty; and that a penalty was also liable to be imposed. He said in his letter that this was his opinion. In conclusion he said that the document (Ex. P-5) was being sent to him (Collector) for taking proceedings for its validation with the request that it be returned after the needful was done.
( 4 ) THE Collector, purporting to exercise his powers under Section 40 (l) (b) of the stamp Act, passed an order directing the petitioner to pay Rs. 1,350/-as stamp duty and Rs. 13,500/- as penalty for validating the document. Aggrieved by this order, Balkrishna filed a revision before the Board of Revenue, which was dismissed. The plaintiff then moved this Court by a petition in Balkrishna v. The board of Revenue, M. P. Misc. petn. No. 318 of 1964, D7- 16-9-1964 (M. P.), under Article 226 of the Constitution. A Division Bench of this Court (Dixit, C. J. and Pandey, J.) held that in its view important questions of law arose and the board had unreasonably declined to make a reference under Section 57 (1) of the stamp Act. The order of the Board of Revenue was quashed and it was directed to state the case and to refer to this Court the following questions with its opinion equivalent Citation: thereon:--
" (i) Whether, after admitting Exhibit P-5 in evidence, the Civil Judge was competent to send it to the Collector under Section 38 (2) of the Stamp Act? (ii) Whether the Collector, who had not received Ex. P-5 under the provisions of Section 61 of the Stamp Act, had jurisdiction to pass the order dated 25th March, 1964? (iii) Whether the plea that Ex. P-5 is merely a record or acknowledgment of a past fact can be shown by evidence aliunde? (iv) Whether, on the facts and In the circumstances of the case, Ex. P-5 is an instrument of partition within the mean
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