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1. : R IN THE HIGH COURT OF KARNATAKA DHARWAD BENCH DATED THIS THE11T H DAY OF FEBRUARY2015BEFORE THE HON’BLE MR.JUSTICE A.N.VENUGOPALA GOWDA WRIT PETITION NO.68108/2010 (GM-ST/RW) BETWEEN SRI. GAJANAN RAMACHANDRA VELANGI, AGE:
47. YEARS, OCC: BUSINESS, R/O No.148/B, BHUDHAWAR PETH, TILAKWADI, BELGAUM. ... PETITIONER (BY SRI F V PATIL, ADV.) AND1 SRI. VIJAYA IRAPPA @ CHUDAMANI UNDRE, AGE: MAJOR, OCC: AGRICULTURE, R/O16421, ANASURKAR GALLI, BELGAUM.
2. MISS. REKHA D/O IRAPPA CHUDAMANI UNDRE, AGE: MAJOR, OCC: HOUSEHOLD WORK, R/O16421, ANASURKAR GALLI, BELGAUM.
3. MISS. PRAMILA D/O IRAPPA CHUDAMANI UNDRE, AGE: MAJOR, OCC: HOUSEHOLD WORK, R/O16421, ANASURKAR GALLI, BELGAUM.
4. SHRI. NARAYAN S/O SIDRAI CHOUGALE, AGE: MAJOR, OCC: CONTRACTOR, R/O A/P MANNUR, BELGAUM. :
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8. 9. SHRI. JOTIBA S/O SIDRAI CHOUGALE, AGE: MAJOR, OCC: CONTRACTOR, R/O A/P MANNUR, BELGAUM. SHRI. AJIT BABURAO JADHAV, AGE: MAJOR, OCC: ENGINEER, R/O4360A, CHAVAT GALLI, BELGAUM. SHRI. ASHOK KEMPANNA NAIK, AGE: MAJOR, OCC: AGRICULTURE, R/O A/P BENIWAD, TQ. HUKKERI, DIST. BELGAUM. SHRI. NAVARATAN PREMCHAND JAIN, AGE: MAJOR, OCC: BUSINESS, R/O HOUSE No.3233/1, BHENDI BAZAAR, BELGAUM. SHRI. PRAKASH TOLARAM MALANI, AGE: MAJOR, OCC: BUSINESS, R/O MALI GALLI, BELGAUM.
10. THE DISTRICT REGISTRAR, D.C. COMPOUND, BELGAUM. ... RESPONDENTS (BY SRI.M.G. NAGANURI, ADV. FOR R.1 TO R.3, SRI.S.S.HATTIKATAGI, ADV.FOR R.4 AND R.5, SMT.K. VIDYAVATHI, AGA FOR R.10, SRI.A.B.NESARGI, ADV. FOR R.7 TO R.9, SRI.A.D.SHILLEDAR AND SRI.S.B. RAWOOT, ADVS. FOR R.6.) THIS WRIT PETITION IS FILED UNDER ARTICLES226& 227 OF CONSTITUTION OF INDIA PRAYING TO A. STRIKE DOWN STAMP ON INSTRUMENTS ARTICLE5e) IF RELATING TO SALE OF IMMOVALBE PROPERTY WHEREIN PART PERFORMANCE OF THE CONTRACT,(i) POSSESSION OF THE PROPERTY IS DELIVERED OR IS AGREED TO BE DELIVERED WITHOUT EXECUTING THE CONVEYANCE, (ii) :
3. : POSSESSION OF THE PROPERTY IS NOT DELIVERED, AND ETC. THIS WRIT PETITION COMING ON FOR PRELIMINARY HEARINGIN B-GROUP, THIS DAY, THE COURT MADE THE FOLLOWING: - ORDER
In CMP.8/2006, by order dated 2.8.2006, Sri.B.S.Ramakantha, District Judge (Retd), was appointed as the sole arbitrator, to adjudicate the dispute between the petitioner and the respondents, in respect of the matters pertaining to ‘an agreement of sale’ dated 14.4.2012. Learned Arbitrator having entered the reference, the parties filed their respective pleadings. Points for determination having been moulded, affidavit evidence of the petitioner was filed. During the course of further evidence of the petitioner, on 21.04.2008, before the learned Arbitrator, the original agreement of sale was produced. Respondents 1 to 6 having filed an application, under Sections 33 and 34 of the Karnataka Stamp Act, 1957 (‘Act’ for short), and sought impounding of the original agreement of sale, statement of objections was filed by the petitioner. The learned Arbitrator, upon :
4. : perusal of the record and consideration of rival contentions, having found that ‘the possession of the property in dispute is agreed to be delivered without executing conveyance’ and that the instrument falls within the purview and ambit of Article 5(e)(i) of the Act and thus, attracts duty and penalty, under Section 34 of the Act and having regard to Section 33 of the Act, which speaks of examination and impounding of instruments and since the document produced came in performance of the functions of the Arbitral Tribunal, which has by consent of parties, authority to receive evidence and finding that the document in question has not been admitted in evidence and the same was only produced, by being of the opinion that Sub-Section (1) of Section 37 does not apply and it is only Sub-Section (2) of Section 37, which applies to the situation, allowed the application on the ground that the instrument is insufficiently stamped and impounded the same. Consequently, the original instrument was ordered to be sent to the jurisdictional authority, under Sub- Section (2) of Section 37 of the Act i.e. to the District Registrar, Belgaum, for needful in the matter, as :
5. : contemplated under the Act and return the same, as provided under Sub-section (3) of Section 39 of the Act. The District Registrar having notified and the petitioner having consented to pay deficit stamp duty of Rs.8,54,800/- and pleaded to show leniency in the matter of levy of penalty, an order dated 16.7.2010 was passed and the petitioner was directed to pay the deficit stamp duty of Rs.8,55,000/- and penalty of Rs.5000/-, i.e., in all Rs.8,60,000/-. Assailing the said order, WP.67812/10 was filed. On 30.07.2012, Memo for withdrawal of the writ petition having been filed by stating that the writ petition was filed seeking a limited prayer and in view of filing of this writ petition challenging the constitutional validity of certain provisions of the Act, permission be granted to withdraw the writ petition and pursue this writ petition, permission was granted on 30.07.2012 and the said petition was dismissed as withdrawn. This writ petition was filed challenging the order dated 19.5.2010 passed by the Arbitrator and the order dated 16.7.2010 passed by respondent-10 –District Registrar, Belgaum, and also the :
6. : Constitutional validity of Section 34 and Article 5(e)(i) and (ii) of the Act.
2. Sri.F.V. Patil, learned advocate submitted that in view of upholding of constitutional validity of Article 5(e) and proviso (a) to Section 34 of the Act, in the case of Satish vs. State of Karnataka, ILR2011KAR.2484, prayers relating to striking down of the said provisions, does not survive for consideration. However, he contended that the Arbitrator having no power to impound the instrument and the orders passed by the learned Arbitrator and the District Registrar, vide annexures-E and F, being contrary to the record of the case and the law are liable to be quashed.
3. Sri.M.G.Naganuri, learned advocate and Smt.K. Vidyavthi, learned AGA, on the other hand, made submissions in support of the orders, as at annexures-E and F, and sought dismissal of the petition with exemplary costs. :
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4. Perused the record and considered the rival contentions. The point for consideration is: “Whether an Arbitrator, before whom an instrument is produced, has the authority to examine the instrument, in order to ascertain, it is duly stamped and if he comes to the conclusion that the instrument is not duly stamped, to impound the document and deal with the same?."
5. Section 33 of the Act relates to examination and impounding of the instruments. It reads thus: “33. Examination and impounding of instruments: (1) Every person having by law or consent of parties authority to receive evidence, and every person in-charge of public office, except an officer of police, before whom any instrument, chargeable in his opinion, with duty, is produced or comes in the performance of his functions, shall, if it appears to him that such instrument is not duly stamped, impound the same. (2) For that purpose every such person shall examine every instrument so chargeable and so produced or coming before him, in order to ascertain whether it is stamped with a stamp :
8. : of the value and description required by law in force in India when such instrument was executed or first executed.” 6. Section 33 casts a duty on every person having by law or by consent of the parties, authority to receive evidence, to examine the instrument in order to ascertain whether it is duly stamped. If such person comes to the conclusion that the instrument is not duly stamped, has to impound the document and deal with the same in accordance with Section 37 of the Act. The mandate of the section has been interpreted in Government of Andhra Pradesh. Vs. P.Laxmi Devi (Smt), (2008) 4 Scc 720, as follws: “16. A perusal of the said provision shows that when a document is produced (or comes in the performance of his functions) before a person who is authorised to receive evidence and a person who is in charge of a public office (except a police officer) before whom any instrument chargeable with duty is produced or comes in the performance of his functions, it is the duty of such person before whom the said instrument is produced to impound the document if it is not duly stamped. The use of :
9. : the word shall in section 33(1) shows that there is no discretion in the authority mentioned in section 33(1) to impound a document or not to do so. In our opinion, the word shall in section 33(1) does not mean may but means shall. In other words, it is mandatory to impound a document produced before him or which comes before him in the performance of his functions.” 7. Section 34 of the Act provides that instruments not duly stamped are inadmissible in evidence and cannot be acted upon. It reads thus:
34. Instruments not duly stamped inadmissible in evidence, etc.- No instrument chargeable with duty shall be admitted in evidence for any purpose by any person having by law or consent of parties authority to receive evidence, or shall be acted upon registered or authenticated by any such person or by any public officer, unless such instrument is duly stamped: Provided that.- (a) any such instrument not being an instrument chargeable (with a duty not exceeding fifteen paise only), or a mortgage of :
10. : crop Article 35(a) of the Schedule chargeable under clauses (a) and (b) of Section 3 within a duty of twenty five paise shall, subject to all just exceptions, 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 proper duty or deficient portion thereof exceeds five rupees, of a sum equal to ten times such duty or portion.” Having regard to the mandate of Section 34, unless stamp duty and penalty due in respect of the instrument is paid, the person or the public officer cannot act upon the instrument.
8. In the case of M. Muniswamy vs. B.P.Krishnappa Mudaliar and Others, ILR2007KAR.3721, the challenge was to an order passed by an Arbitrator, holding that if the instrument is not properly stamped, deserves to be impounded and necessary stamp duty to be calculated and recovered with permissible :
11. : penalty, passed under Section 33(1) of the Act. In the said context, Division Bench has held as follows: “3. It is not disputed that Ex.P.2 agreement of sale was produced by the appellant before the Arbitrator as documentary evidence in support of his case. The appellant does not dispute that the Arbitrator is a person having by law and consent of parties the authority to receive evidence. It is also not disputed that Ex.P.2 instrument is chargeable with duty. In Annexure-‘D’ order the Arbitrator has taken the view that the instrument is not duly stamped. Accordingly he has impounded the same. In our view, all the requirements of Section 33(1) of the Karnataka Stamp Act, 1957, have been satisfied in this case and therefore the Arbitrator was right and justified in passing Annexure-‘D’ order. In this view of the matter the learned Single Judge was right in dismissing the writ petition. Hence, there is no merit in the writ appeal. The writ appeal is dismissed.” 9. In view of the above statutory provisions, and the decision in the case of M.Muniswamy (supra), the Arbitrartor, who is the person having by consent of parties, :
12. : authority to receive evidence, passed the order dated 19.5.2010 vide annexure-E.
10. Before the District Registrar i.e. respondent 10, the petitioner having appeared and stated in writing, on 28.06.2010, his willingness to pay deficit stamp duty of Rs.8,54,800/- and sought sympathetic consideration, in the matter of levy of penalty, the order at annexure-F was passed. Sri.F.V. Patil, during the course of hearing, did not press into service the allegation made in para-6 of the writ petition, ‘that the petitioner gave consent for payment of stamp duty on account of the District Registrar’s assurance to waive of the penalty or the threat caused with regard to the penalty being leviable at ten times.’ Even otherwise, the petitioner having stated in writing, on 28.6.2010, before the District Registrar with regard to his willingness to pay the deficit stamp duty of Rs.8,54,800/- and the penalty being merely Rs.5000/-, there is no merit in the contention sought to be raised, as against annexure- F. :
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11. Exception having not been taken by the petitioner before the respondent-10, to the impounding of the instrument by the learned Arbitrator, and in view of the statement of the petitioner dated 28.6.2010, made before respondent-10, noticed supra, there is no merit in the contentions urged by Sri F.V.Patil, as against the orders, as at annexures-E and F. Both the Arbitrator and the District Registrar, vested with the power, have passed the orders vide Annexure-E & F. The same being neither arbitrary nor illegal, no inerference is called for. In the result, writ petition being devoid of merit is dismissed, with no order as to costs. Sub/ SD/- JUDGE