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SUPREME COURT OF INDIA
Dipankar Datta, Pankaj Mithal, JJ.
G.M. Shahul Hameed – Appellant
Versus
Jayanthi R. Hegde – Respondent
Civil Appeal No. 1188 of 2015
Decided on : 09-07-2024
Civil Procedure Code, 1908 – Section 151 – Karnataka Stamp Act, 1957 – Sections 33, 34, 35 and 58 – Agreement to sell – Admission of an insufficiently stamped instrument (GPA) – Legislature has reposed responsibility on courts and trusted them to ensure that requisite stamp duty along with penalty is duly paid if an unstamped or insufficiently stamped instrument is placed before it for admission in support of case of a party – It is incumbent upon courts to uphold sanctity of legal framework governing stamp duty as same are crucial for authenticity and enforceability of instruments – Allowing an instrument with insufficient stamp duty to pass unchallenged, merely due to technicalities, would undermine legislative intent and fiscal interests of State – Court must vigilantly prevent any circumvention of these legal obligations, ensuring due compliance and strict adherence for upholding rule of law – Order of Trial Court restored. (Paras 21 and 22)
Facts of the case:
Substantial question arising for decision in this civil appeal is whether upon admission of an instrument in evidence and its marking as an exhibit by a court (despite the instrument being chargeable to duty but is insufficiently stamped), such a process can be recalled by court in exercise of inherent powers saved by Section 151 of Code of Civil Procedure, 1908 for ends of justice or to prevent abuse of process of court.
Findings of Court:
On the date the GPA was admitted in evidence and marked as an exhibit, Trial Court did not deliberate on its admissibility, much less applied its judicial mind, resulting in an absence of judicial determination. Trial Court not having 'decided' whether GPA was sufficiently stamped, Section 35 of 1957 Act cannot be called in aid by the respondent.
Result : Appeal allowed.
The Supreme Court of India addressed a civil appeal concerning the admissibility of an instrument that was insufficiently stamped. The core issue was whether a court can revisit and revoke its earlier decision to admit such an instrument in evidence, especially when it was admitted without a judicial determination of its admissibility or stamping status. The Court emphasized that the legal framework mandates courts to scrutinize whether an instrument is properly stamped before admitting it in evidence. If the court admits an instrument without applying its judicial mind to the issue of stamp duty, it does not constitute a proper judicial determination, and subsequent objections based on insufficient stamping can be reconsidered by the court (!) (!) .
The Court highlighted that the law requires a court to judicially decide on the admissibility of an instrument, particularly in relation to stamp duty, at the moment of its tendering in evidence. Once an instrument is properly admitted after such a judicial decision, further questioning about its stamping status is barred, and the remedy available is typically through a revision process (!) (!) (!) (!) .
However, if the court admits an instrument without a proper judicial determination—meaning it admits it mechanically or without considering its stamping status—the court retains the inherent power to revisit and revoke its earlier order. This power is essential to uphold the legislative intent of ensuring proper stamp duty payment and to prevent abuse or circumvention of legal obligations (!) (!) (!) .
The Court stressed the importance of courts actively ensuring compliance with stamp duty laws, as these laws are crucial for the authenticity and enforceability of legal instruments. Allowing an improperly stamped instrument to pass unchallenged would undermine legislative intent and harm the fiscal interests of the state. Therefore, courts must vigilantly prevent circumvention of legal obligations related to stamp duty and enforce strict adherence to the law (!) (!) .
In conclusion, the Court set aside the order of the High Court and restored the order of the Trial Court, affirming that the latter had the authority to reconsider the admissibility of the instrument due to the absence of a proper judicial determination at the time of its admission. The decision underscores the importance of judicial scrutiny in the admission process and the court’s inherent power to correct procedural oversights to uphold the rule of law and legislative intent (!) .
JUDGMENT :
Dipankar Datta, J.
The substantial question arising for decision in this civil appeal is whether upon admission of an instrument in evidence and its marking as an exhibit by a court (despite the instrument being chargeable to duty but is insufficiently stamped), such a process can be recalled by the court in exercise of inherent powers saved by section 151 of the Code of Civil Procedure 1[CPC, hereafter] for the ends of justice or to prevent abuse of the process of the court.
2. Assail in this civil appeal is to the judgment and order dated 26th September, 20112[impugned order, hereafter] passed by a learned Single Judge of the High Court of Karnataka at Bengaluru3[High Court, hereafter] whereby His Lordship set aside the order dated 19th October, 2010 passed by the Court of Additional Senior Judge-III, Mangalore4[Trial Court, hereafter] and allowed the petition5[Writ Petition No. 11653 of 2011 (GM-CPC)] preferred by the respondent under Article 227 of the Constitution.
3. The facts, relevant for the disposal of the present appeal, are adverted to in brief hereunder:
b. Second Sale Agreement and Sale Deed: An agreement to sell the suit property was executed between the appellant and Praveen Shetty on 11th September, 2003. The appellant paid the consideration, and a Sale Deed was executed on 8th October, 2003 between the appellant and Praveen Shetty.
c. Civil Suit by the appellant: The appellant instituted a civil suit7[O.S. No. 301 of 2003] against the respondent, B. Ramesh Hegde, and Praveen Shetty, seeking a declaration that the Sale Deed dated 3rd October, 2003 was null and void, and not binding on the appellant.
d. Civil Suit by the respondent: Conversely, the respondent also instituted a civil suit8[O.S. No. 134 of 2005] against the appellant and Praveen Shetty, seeking a declaration that the Sale Deed dated 8th October, 2003 was null and void, and not binding on the respondent.
e. Filing of GPA before the Trial Court: In the suit instituted by the respondent, witness action commenced. B. Ramesh Hegde, in whose favour the GPA was executed by the respondent, on 6th June, 2010 tendered the GPA in course of his examination-in-chief. The appellant's counsel was engaged in another court; hence, he was unable to appear. The junior counsel did not object that the GPA was insufficiently stamped and, thus, inadmissible in evidence. The Trial Court, in the absence of objection, admitted the GPA in evidence and marked it as an exhibit whereafter the matter stood adjourned for cross-examination.
f. Interlocutory Applications: On the next hearing date, 25th June, 2010 to be precise, the appellant filed two interlocutory applications9[I.A.s, hereafter] in the suit filed by the respondent. In I.A. No. IX, the appellant sought a review of the order dated 6th June, 2010, and in I.A. No. X, it was prayed that the GPA be impounded on the ground that it has been insufficiently stamped. The appellant contended that since the GPA was executed in favour of a third party with power to sell the property, article 41 of the Schedule to the Karnataka Stamp Act, 195710[1957 Act, hereafter] was applicable, necessitating payment of requisite stamp duty based on the market value of the property. The GPA was prepared only on a stamp paper worth Rs.100, rendering it insufficiently stamped and in accordance with section 34 of the 1957 Act, an insufficiently stamped document had to be impounded and a penalty of ten times the duty value paid.
g. The respondent objected to the I.A.s asserting
Allowing an instrument with insufficient stamp duty to pass unchallenged, merely due to technicalities, would undermine legislative intent and fiscal interests of State – Court must vigilantly preven....
The court established that trial courts must diligently assess the admissibility of documents, particularly regarding stamping and registration, and have the authority to impound insufficiently stamp....
Under the Indian Stamp Act, once a document is found to be insufficiently stamped, the court is duty-bound to impound the document and send it to the Collector for proper assessment and payment of th....
A document admitted in evidence cannot be questioned for insufficiency of stamp duty, but courts have a mandatory duty to impound such documents regardless of any objections raised.
Documents marked as exhibits can be subsequently objected to for admissibility if not duly stamped, requiring judicial determination on the issue of admissibility.
The marking of a document is not the same as admitting it in evidence. Marking a document merely means that it has been produced before the Court and noted in the record, while admitting a document i....
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