GANGAPPA AND ANR.versusFAKKIRAPPA

                        [2018] 13 S.C.R. 603                             603


                     GANGAPPA AND ANR.                                   A
                                  v.
                           FAKKIRAPPA
                  (Civil Appeal No. 11932 of 2018)
                       DECEMBER 14, 2018                                 B
       [ASHOK BHUSHAN AND AJAY RASTOGI, JJ.]
       Karnataka Stamp Act,1957 – ss.33, 34 and 38 – Appellants-
plaintiffs entered into agreements to sell with respondent-defendant
– Appellants filed suits for specific performance of contract –
Principal Civil Judge impounded agreements to sell filed by the          C
plaintiffs in the suits with direction to the plaintiff to pay deficit
duty and penalty – Agreements to sell in question were admitted in
evidence on payment of deficit duty and penalty which was double
the deficit duty in both the suits – Respondent filed writ petition –
High Court directed the court below to levy the penalty at 10 times
of the deficit duty – Propriety of – Held: Sections 33 and 34 clearly    D
indicate that penalty imposed has to be 10 times – High Court
correctly interpreted the provisions of s.33 in the impugned judgment
–There is no discretion vested with the authority impounding the
document in the matter of collecting duty u/s.33 – However, in the
present case the order of the trial court was passed as early as on      E
22.04.2013, i.e. more than five years ago – In view of impounding
the documents and imposition of penalty, the suit must not have
proceeded further, and it must be at the threshold stage – Asking
the appellant to deposit 10 times of penalty and thereafter to invoke
the jurisdiction of Deputy Collector u/s.38 to refund penalty shall
be a proceeding again taking considerable time – In the facts of         F
the present case, ends of justice be served in closing the matter by
confirming the payment of deficit duty with the double penalty as
imposed by the trial court.
    Karnataka Stamp Act,1957 – ss.38, 39 – Discretion to Deputy
Commissioner – Scope of – Discussed.                                     G
     Karnataka Stamp Act,1957 – ss.33 and 39 – Contradistinction
between – Object of – Discussed.


                                                                         H
                                 603
604           SUPREME COURT REPORTS                    [2018] 13 S.C.R.


A          Disposing of the appeal, the Court
             HELD: 1.1 The statute envisages that when the 10 times
      of the amount of the proper duty or deficient portion thereof
      exceeds five rupees, a sum equal to 10 times of such duty or
      portion is the penalty. The language of Section 34, Karnataka
B     Stamp Act,1957 provides a flat rate of penalty when the amount
      of proper duty exceeds five rupees i.e. 10 times of such duty or
      portion. There is a clear contrast in the language of Section 34
      and Section 39 of the 1957 Act. Section 39(1)(b) indicates that if
      the Deputy Commissioner is of opinion that such instrument is
      chargeable with duty and is not duly stamped shall require the
C     payment of the proper duty with a penalty of five rupees. The
      latter part of the provision states “or if he thinks fit an amount
      not exceeding ten times the amount of the proper duty or of the
      deficient portion thereof, whether such amount exceeds or falls
      short of five rupees”. Thus, discretion has been conferred on
D     the Deputy Commissioner which is apparent from the words “if
      he thinks fit”. Deputy Commissioner has discretion of imposing
      penalty of 10 times or lesser of the amount of duty or portion
      thereof. There is clear contradistinction between the power under
      Section 33 and 39. The object and purpose for such
      contradistinction in the provision and power is not far to seek.
E     Section 33 applies to every person having by law or consent of
      parties authority to receive evidence, and every person in-charge
      of a public office. Thus, Section 33 covers a host of authorities,
      persons before whom instruments are filed. The legislative
      scheme does not indicate any distinction between a court receiving
F     an insufficiently stamped instrument in evidence and other
      authorities. All have to impose penalty of 10 times of the duty or
      deficit portion, if it exceeds rupees five. This provision is for
      purpose of maintaining a uniformity in imposing a fixed penalty of
      10 times without adverting to any adjudicatory process regarding
      quantifying the quantum of penalty. The statute gives discretion
G     to Deputy Commissioner who is the authority envisaged by the
      Act in-charge of the revenue administration of a District.
      [Paras 12-14] [609-F-H; 610-B-G]
          1.2 The amount of duty and penalty is required to be sent
      to Deputy Commissioner under Section 37. Deputy
H     Commissioner under Section 38 is empowered to refund any
            GANGAPPA AND ANR. v. FAKKIRAPPA                            605


portion of the penalty in excess of five rupees which has been         A
paid in respect of such instrument. Section 38 sub-section (1)
again uses the expression “if he thinks fit”. Thus, in cases where
penalty of 10 times has been imposed, Deputy Commissioner
has discretion to direct the refund of the penalty in facts of a
particular case. The power to refund the penalty under Section
38 clearly indicates that legislature have never contemplated that     B
in all cases penalty to the extent of 10 times should be ultimately
realised. Although the procedural part which provides for
impounding and realisation of duty and penalty does not give any
discretion under Section 33 for imposing any lesser penalty than
10 times, however, when provision of Section 38 is read, the           C
discretion given to Deputy Commissioner to refund the penalty
is akin to exercise of the jurisdiction under Section 39 where
while determining the penalty he can impose the penalty lesser
than 10 times. [Paras 15, 16] [611-A-F]
      1.3 The High Court correctly interpreted the provisions of
Section 33 in the impugned judgment. There is no discretion            D
vested with the authority impounding the document in the matter
of collecting duty under Section 33. The word used in the said
proviso is ‘shall’. Sections 33 and 34 clearly indicate that penalty
imposed has to be 10 times. [Paras 18, 21] [612-F-G; 613-G]
       1.4 The order of the trial court was passed as early as on      E
22.04.2013 that is more than five years ago. In view of impounding
the documents and imposition of penalty, the suit must not have
been proceeded further, and it must be at the threshold stage;
asking the appellant to deposit 10 times of penalty and thereafter
to invoke the jurisdiction of Deputy Collector under Section 38
to refund penalty shall be a proceeding again taking considerable      F
time. In the facts of the present case, ends of justice would be
served in closing the matter by confirming the payment of deficit
duty with the double penalty as imposed by the trial court which
shall obviate the proceeding of approaching the Deputy
Commissioner for reduction of penalty under Section 38, which          G
in the facts of the present case and for the reasons noted by the
trial court was a relevant consideration for refund/reduction of
the penalty. [Paras 19, 20] [612-H; 613-D-E]
      Digambar Warty and Others v. District Registrar,
      Bangalore Urban District and another ILR 2013 KAR
                                                                       H
      2099 – approved.
606             SUPREME COURT REPORTS                           [2018] 13 S.C.R.


A           CIVIL APPELLATE JURISDICTION : Civil Appeal No. 11932
      of 2018.
           From the Judgment and Order dated 17.07.2014 of the High Court
      of Karnataka, Dharwad Bench in Writ Petition No. 78721 of 2013.
           Sharanagouda Patil, Ms. Supreeta Sharanagouda, M/s S-legal
B     Associates, Advs. for the Appellants.
           Gaurav Agarwal, M. Khairati, Irshad Ahmad, Advs. for the
      Respondent.
             The Judgment of the Court was delivered by
            ASHOK BHUSHAN, J. 1. This appeal has been filed against
C
      the judgment of Karnataka High Court, Dharwad Bench dated
      17.07.2014 disposing of the writ petition filed by the respondent herein.
            2. Brief facts of the case necessary to be noticed for deciding this
      appeal are:

D             The appellants/plaintiffs entered into agreements to sell with
      respondent-defendant dated 12.04.2005 and 16.05.2006 and earnest
      money of Rs.1,40,000/- was paid. The appellants filed Suit No.863 of
      2008 and Suit No.864 of 2008 praying for specific performance of contract.
      Another suit filed by the sister of the defendant being O.S.No.327 of
      2008 was also clubbed. The Principal Civil Judge impounded agreements
E     to sell filed by the plaintiffs in Suit Nos.863 and 864 of 2008 with direction
      to the plaintiff to pay deficit duty and penalty vide order dated 27.09.2010.
      Plaintiffs challenged the order by means of Writ Petition Nos.69264-65/
      2010 and 69263/2010 which were disposed of by the High Court vide its
      judgment dated 14.03.2013 directing the Principal Civil Judge to permit
      the plaintiffs to place written submissions. After the order of the High
F
      Court, the Principal Civil Judge passed an order dated 22.04.2013 by
      which agreements to sell in question were admitted in evidence and
      marked for the plaintiffs in O.S.Nos.863 and 864 of 2008 on payment of
      deficit duty and penalty. Deficit duty in both the suits was determined as
      Rs.12013/- and Rs.20320/- respectively and the penalty imposed was
G     double of the deficit duty in both the suits.
            3. Aggrieved by the judgment of the Principal Civil Judge,
      respondent-defendant filed a writ petition in the High Court. The High
      Court disposed of the writ petition relying on a Division Bench judgment
      of Karnataka High Court in Digambar Warty and others vs. District
H
             GANGAPPA AND ANR. v. FAKKIRAPPA                                  607
                  [ASHOK BHUSHAN, J.]

Registrar, Bangalore Urban District and another, ILR 2013 KAR                 A
2099. The High Court directed the courts below to levy the penalty at
10 times of the deficit duty as per judgment of Karnataka High Court in
ILR 2013 KAR 2099. Aggrieved by the judgment of the High Court
this appeal has been filed by the appellants.
       4. Learned counsel for the appellant submits that the High Court       B
committed an error in directing payment of penalty at 10 times. The trial
court has rightly directed for payment of deficit duty and penalty at the
rate of 2 times which was a just and proper order. It is submitted by the
learned counsel for the appellant that when the Deputy Commissioner
can reduce levy of penalty not exceeding 10 times of the amount of
duty, the trial court while determining the deficiency and penalty shall      C
also have such discretion. The trial court has rightly exercised the
discretion by imposing the penalty of two times.
       5. Learned counsel appearing for the respondent submits that the
instruments waere not duly stamped. While admitting the insufficiently
stamped documents the trial court has no discretion while levying the         D
penalty. The statute i.e. Section 34 of the Karnataka Stamp Act, 1957
mandates penalty at the rate of 10 times. The Division Bench of the
High Court in Digambar Warty and others (supra) has correctly
interpreted Section 34 while holding that Court has no discretion to reduce
the penalty from 10 times. The High Court has rightly followed the above
                                                                              E
Division Bench Judgment.
       6. We have considered submissions of the learned counsel for the
parties and perused the records.
       7. The issue which needs to be answered in the present case is as
to whether the trial court which had admitted the agreements to sell in       F
evidence could have exercised its discretion in imposing penalty at the
rate of 2 times of deficient amount of stamp duty or it was obligatory for
the trial court to impose the penalty at the rate of 10 times.
      8. Before we proceed to consider the respective submissions of
the parties, it is relevant to notice statutory provisions of the Karnataka
                                                                              G
Stamp Act, 1957. Section 33 requires every person having by law or
consent of parties authority to receive evidence, is obliged to impound
any instrument which according to him is not duly stamped. Section 33
sub-section (1) is as follows:
      “33. Examination and impounding of instruments.- (1) Every
      person having by law or consent of parties authority to receive         H
608            SUPREME COURT REPORTS                           [2018] 13 S.C.R.


A           evidence, and every person in charge of a 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.”
B            9. Section 34 provides that instruments not duly stamped are
      inadmissible in evidence. Section 34 sub-section (1) which is relevant
      for the present case is as follows:
            “34. Instruments not duly stamped inadmissible in evidence,
            etc.- No instrument chargeable with duty shall be admitted in
C           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,-
D              (a) nothing herein contained shall be deemed to require any
               magistrate or Judge of a Criminal Court to examine or impound,
               if he does not think fit so to do, any instrument coming before
               him in the course of any proceeding other than a proceeding
               under Chapter XII or Chapter XXXVI of the Code of Criminal
               Procedure, 1898;”
E
            10. Section 38 empowers the Deputy Commissioner to refund
      penalty paid under sub-section (1) of Section 37. Section 39 relates to
      the Deputy Commissioner’s power to stamp instruments impounded.
      Section 38 and Section 39(1) are as follows:
              “38. Deputy Commissioner]1’s power to refund penalty
F           paid under sub-section (1) of section 37.- (1) When a copy of
            an instrument is sent to the Deputy Commissioner under sub-
            section (1) of section 37, he may, if he thinks fit, refund any portion
            of the penalty in excess of five rupees which has been paid in
            respect of such instrument.
G           (2) When such instrument has been impounded only because it
            has been written in contravention of section 13 or section 14, the
            1[Deputy Commissioner]1 may refund the whole penalty so paid.
            39. Deputy Commissioner’s power to stamp instruments
            impounded.- (1) When the Deputy Commissioner]1 impounds
H           any instrument under section 33, or receives any instrument sent
             GANGAPPA AND ANR. v. FAKKIRAPPA                                    609
                  [ASHOK BHUSHAN, J.]

      to him under sub-section (2) of section 37, not being an instrument       A
      chargeable with a duty not exceeding fifteen naye paise only or a
      mortgage of crop Article 35 (a) of the Schedule] chargeable under
      clause (a) or (b) of section 3 with a duty of twenty-five naye
      paise, he shall adopt the following procedure:
          (a) if he is of opinion that such instrument is duly stamped, or is   B
          not chargeable with duty, he shall certify by endorsement
          thereon that it is duly stamped, or that it is not so chargeable,
          as the case may be;
          (b) if he is of opinion that such instrument is chargeable with
          duty and is not duly stamped he shall require the payment of          C
          the proper duty or the amount required to make up the same,
          together with a penalty of five rupees; or if he thinks fit; an
          amount not exceeding ten times the amount of the proper duty
          or of the deficient portion thereof, whether such amount
          exceeds or falls short of five rupees:
                 Provided that, when such instrument has been impounded         D
          only because it has been written in contravention of section 13
          or section 14, the Deputy Commissioner may, if he thinks fit,
          remit the whole penalty prescribed by this section.”
      11. Section 34 proviso provides for admitting in evidence an
instrument not duly stamped are on payment of duty and penalty. With            E
regard to penalty statute provides:
      “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          F
      ten times such duty or portion;”
       12. The statute envisages that when the 10 times of the amount
of the proper duty or deficient portion thereof exceeds five rupees, a
sum equal to 10 times of such duty or portion is the penalty.
       13. The language of Section 34 provides a flat rate of penalty           G
when the amount of proper duty exceeds five rupees i.e. 10 times of
such duty or portion. There is a clear Contrast in the language of Section
34 and Section 39. Section 39 sub-section (1) sub-clause (b) is extracted
for ready reference:
                                                                                H
610             SUPREME COURT REPORTS                         [2018] 13 S.C.R.


A           “39(1)(b) if he is of opinion that such instrument is chargeable
            with duty and is not duly stamped he shall require the payment of
            the proper duty or the amount required to make up the same,
            together with a penalty of five rupees; or if he thinks fit; an amount
            not exceeding ten times the amount of the proper duty or of the
            deficient portion thereof, whether such amount exceeds or falls
B
            short of five rupees:”
              14. The above provision indicated that if the Deputy Commissioner
      is of opinion that such instrument is chargeable with duty and is not duly
      stamped shall require the payment of the proper duty with a penalty of
      five rupees. The latter part of the provision states “or if he thinks fit an
C     amount not exceeding ten times the amount of the proper duty or of the
      deficient portion thereof, whether such amount exceeds or falls short of
      five rupees”. Thus, discretion has been conferred on the Deputy
      Commissioner which is apparent from the words “if he thinks fit”.
      Deputy Commissioner has discretion of imposing penalty of 10 times or
D     lesser of the amount of duty or portion thereof. There is clear
      contradistinction between the power under Section 33 and 39. The object
      and purpose for such contradistinction in the provision and power is not
      far to seek. Section 33 applies to every person having by law or consent
      of parties authority to receive evidence, and every person in-charge of a
      public office. Thus, Section 33 covers a host of authorities, persons before
E     whom instruments are filed. The legislative scheme does not indicate
      any distinction between a court receiving an insufficiently stamped
      instrument in evidence and other authorities. All have to impose penalty
      of 10 times of the duty or deficit portion, if it exceeds rupees five. This
      provision is for purpose of maintaining a uniformity in imposing a fixed
F     penalty of 10 times without adverting to any adjudicatory process
      regarding quantifying the quantum of penalty. The statute gives discretion
      to Deputy Commissioner who is the authority envisaged by the Act in-
      charge of the revenue administration of a District. The definition of
      Deputy Commissioner is given in Section 2(dd) which is to the following
      effect:
G
            “2(dd) ‘Deputy Commissioner’ means the Chief Officer in charge
            of the revenue administration of a district and includes in respect
            of such provisions of this Act or rules made thereunder such officer
            in such area as the State Government may by notification in the
            Official Gazette specify;”
H
             GANGAPPA AND ANR. v. FAKKIRAPPA                                  611
                  [ASHOK BHUSHAN, J.]

     15. The amount of duty and penalty is required to be sent to             A
Deputy Commissioner under Section 37. Section 37 is quoted below:
      “37. Instruments impounded how dealt with.- (1) When the
      person impounding an instrument under section 33 has by law or
      consent of parties authority to receive evidence and admits such
      instrument in evidence upon payment of a penalty as provided by         B
      section 34 or of duty as provided by section 36, he shall send to
      the Deputy Commissioner an authenticated copy of such instrument,
      together with a certificate in writing, stating the amount of duty
      and penalty levied in respect thereof, and shall send such amount
      to the Deputy Commissioner or to such person as he may appoint
      in this behalf.                                                         C
        (2) In every other case, the person so impounding an instrument
      shall send it in original to the Deputy Commissioner.
       16. Deputy Commissioner under Section 38 is empowered to refund
any portion of the penalty in excess of five rupees which has been paid
in respect of such instrument. Section 38 sub-section (1) again uses the      D
expression “if he thinks fit”. Thus, in cases where penalty of 10 times
has been imposed, Deputy Commissioner has discretion to direct the
refund of the penalty in facts of a particular case. The power to refund
the penalty under Section 38 clearly indicates that legislature have never
contemplated that in all cases penalty to the extent of 10 times should be    E
ultimately realised. Although the procedural part which provides for
impounding and realisation of duty and penalty does not give any discretion
under Section 33 for imposing any lesser penalty than 10 times, however,
when provision of Section 38 is read, the discretion given to Deputy
Commissioner to refund the penalty is akin to exercise of the jurisdiction
under Section 39 where while determining the penalty he can impose            F
the penalty lesser than 10 times.
       17. In the Division Bench judgment of the Karnataka High Court
relied by the High Court in Digambar Warty and others (supra), after
noticing the provisions of Section 33 and 34 the Division Bench laid
down following in paragraph 36:                                               G
        “36. This provision refers to the power of the Civil Court which
      admits the documents in evidence. The main Section is couched
      in the negative. Unless the instrument is duly stamped, it is
      inadmissible in evidence. As an exception, the proviso provides
      for payment of duty and penalty. In the matter of collection of         H
612             SUPREME COURT REPORTS                          [2018] 13 S.C.R.


A           duty and penalty no discretion is vested with the authority admitting
            such an instrument in evidence. The duty payable on the instrument
            is prescribed by statute. Therefore, there is no question of any
            discretion being vested with the authority impounding the document
            in the matter of collecting the duty. Once the duty payable is
            ascertained from the statute, no discretion is vested with the
B
            authority admitting the document in evidence, in the matter of
            imposition of duty and penalty. The word used in the said proviso
            is ‘shall’. It is mandatory. However, Section 35 makes it clear,
            that where an instrument has been admitted in evidence without
            there being objection at the time of admitting the said instrument
C           in evidence, then such admission shall not, except as provided in
            Section 58, be called in question at any stage of the same suit or
            proceeding on the ground that the instrument has not been duly
            stamped. Section 58 deals with the power of the Appellate Court
            to review the finding recorded by the original Court under Section
            34 of the Act, either suo motu or on the application of the Deputy
D
            Commissioner. Section 36 of the Act deals with admission of
            improperly stamped instrument. The State Government may make
            rules providing that, where an instrument bears a stamp of
            sufficient amount but of improper description, it may, on payment
            of the duty with which the same is chargeable, be certified to be
E           duly stamped, and any instrument so certified shall then be deemed
            to have been duly stamped as from the date of its execution.”
             18. The above view of the Karnataka High Court that there is no
      discretion vested with the authority impounding the document in the
      matter of collecting duty under Section 33, is correct. The word used in
F     the said proviso is ‘shall’. Sections 33 and 34 clearly indicate that penalty
      imposed has to be 10 times. The Division Bench of the Karnataka High
      Court in Digambar Warty and others (supra) has rightly interpreted
      the provisions of Sections 33 and 34 of the Act. We, thus, are of the
      view that the High Court in the impugned judgment did not commit any
      error in relying on the judgment of the Division Bench in Digambar
G     Warty and others (supra). We thus has to uphold the above view
      expressed in the impugned judgment.
            19. There is one more aspect which needs to be noted in the
      present case. We have seen that even though 10 times penalty has to be
      collected and imposed by the person impounding the document under
H     Section 37, Section 38 empowers the Deputy Collector to refund the
               GANGAPPA AND ANR. v. FAKKIRAPPA                                   613
                    [ASHOK BHUSHAN, J.]

duty. Learned trial court while imposing penalty at the rate of two times        A
has given following reason:
      “The plaintiffs of O.S. No.863/08 and 864/08 are stated to be
      agriculture and are residing at Sherewad village. The said fact is
      not denied by the defendants therein. It appears that the agreements
      were prepared by local villagers who are not experienced in the            B
      documentation. Looking to the status of the plaintiffs, their standard
      of having qualification of the document writers. I am of the opinion
      that the ratio laid down by our Hon’ble High Court in ILR 2011
      KAR 4719 can be applied to the present facts and circumstances
      levying 10 times penalty in respect of said agreement will be harsh
      on the plaintiffs. Therefore I am of the opinion that levying double       C
      the amount of deficit duty as penalty will meet the ends of justice.”
       20. The order of the trial court was passed as early as on
22.04.2013 that is more than five years ago. In view of impounding the
documents and imposition of penalty, we are sure that the suit must not
have been proceeded further, and it must be at the threshold stage;              D
asking the appellant to deposit 10 times of penalty and thereafter to
invoke the jurisdiction of Deputy Collector under Section 38 to refund
penalty shall be a proceeding again taking considerable time. In the facts
of the present case, we are of the view that ends of justice be served in
closing the matter by confirming the payment of deficit duty with the
                                                                                 E
double penalty as imposed by the trial court which shall obviate the
proceeding of approaching the Deputy Commissioner for reduction of
penalty under Section 38, which in the facts of the present case and for
the reasons noted by the trial court was a relevant consideration for
refund/reduction of the penalty.
       21. In view of the foregoing discussion, we are, therefore, of the        F
view that the High Court has correctly interpreted the provisions of Section
33 in the impugned judgment but instead of prolonging the matter
permitting the appellant to deposit 10 times of penalty and thereafter to
take recourse under Section 38, we in the facts of the present case
close the proceedings regarding penalty on the agreements to sell by             G
approving the direction of the trial court for payment of entire deficit
duty and double the penalty.
      22. The appeal is disposed of accordingly.

Divya Pandey                                               Appeal disposed of.   H