Holding

The penalty for an insufficiently stamped instrument must be determined by the District Registrar under Section 39, and a court cannot impose the ten‑times penalty under Section 34 without following the statutory procedure.

Summary

The appellant sought a perpetual injunction claiming possession of agricultural land under an agreement of sale dated 29‑06‑1999, which the respondent contested as insufficiently stamped and therefore inadmissible. The respondent filed an application under Section 33 of the Karnataka Stamp Act, 1957 to impound the agreement and have the deficit stamp duty and penalty determined by the District Registrar. The trial court, however, imposed a ten‑times penalty under Section 34 without sending the instrument to the District Registrar, contrary to the statutory procedure. The Supreme Court examined the interplay of Sections 33, 34, 37 and 39 of the Act and held that the penalty must be fixed by the District Registrar under Section 39, not by the court under Section 34. Consequently, the direction to pay ten‑times the penalty was set aside and the trial court was directed to forward the instrument to the District Registrar for determination of duty and penalty. The appeal was partially allowed.

Issues considered

Whether the agreement of sale dated 29.06.1999, with a recital of delivery of possession, qualifies as a conveyance under Section 2(d) read with Article 20(1) of the Schedule of the Karnataka Stamp Act, 1957.
Whether the trial court could lawfully impose a ten‑times penalty under Section 34 without referring the instrument to the District Registrar for determination under Section 39.
Whether the procedural steps prescribed by Sections 33, 34, 37 and 39 of the Karnataka Stamp Act were correctly followed.

Legislation cited

Indian Stamp Act, 1899s. 35, s. 40
Karnataka Stamp Act, 1957s. 2(d), s. 33, s. 34, s. 37, s. 39

Subjects

Stamp dutyDeficit stamp dutyDeficit stamp duty and penaltyPenaltyLevy of stamp duty and penaltyAgreement of saleAd valorem stamp dutySuit instrument insufficiently stampedTen times penalty on the agreement of saleDelivery of possessionConveyanceCollection of penaltyInsufficiently stamped instrumentInadmissible in evidenceDistrict RegistrarDeputy CommissionerPerpetual injunctionPart performance under the suit agreementImpounding of the suit agreement

Judgment

[2024] 9 S.C.R. 166 : 2024 INSC 650

Seetharama Shetty
v.
Monappa Shetty
(Civil Appeal Nos. 10039-40 of 2024)
02 September 2024
[Hrishikesh Roy and S.V.N. Bhatti,* JJ.]

Issue for Consideration
Scope of Sections 33, 34, 37, 39 of the Karnataka Stamp Act,
1957; whether the agreement of sale dated 29.06.1999, with a
recital on delivery of possession to the appellant, conforms to
the definition of conveyance under Section 2(d) read with Article
20(1) of the Schedule of the Act or not; whether in the facts and
the circumstances of the case, the penalty determined by the trial
Court on the instrument instead of sending the instrument to the
District Registrar for determination and collection of penalty as
may be applicable is legal; whether, the said order of trial court
as confirmed by the impugned orders of the High Court are legal
and valid or call for interference by this Court.

Headnotes†
Karnataka Stamp Act, 1957 – ss.33, 34, 39 – Appellant sought
perpetual injunction restraining the respondent from interfering
with his possession of the plaint schedule property which he
claimed was given to him as part performance under the suit
agreement between them – Respondent denying the execution
of the aforesaid agreement of sale inter alia claimed that the
document was insufficiently stamped and thus, inadmissible
in evidence – Filed application u/s.33 for impounding of the
suit agreement – Eventually, trial court directed the appellant
to pay the deficit stamp duty and ten times penalty on the
agreement of sale – Penalty determined by the Court on the
instrument instead of sending the instrument to the District
Registrar for determination and collection of penalty, if legal:
Held: No – Before the stage of admission of the instrument in
evidence, the respondent raised an objection on the deficit stamp
duty – Therefore, it was the respondent who required the suit
agreement to be impounded and then sent to the District Registrar
to be dealt with u/s.39 – Respondent desired the impounding of the
* Author
[2024] 9 S.C.R. 167

Seetharama Shetty v. Monappa Shetty

suit agreement and collect the deficit stamp duty and penalty – The
trial court is yet to exercise its jurisdiction u/s.34 – On the contrary,
the trial court called for a report from the District Registrar, so for
all purposes, the suit instrument is still at one or the other steps
summed up in paragraph 21 of the present judgment – Therefore,
going by the request of the respondent, the option is left for the
decision of the District Registrar – Contrary to these admitted
circumstances, though the suit instrument is insufficiently stamped,
still the penalty of ten times u/s.34 was imposed through the
impugned orders – The imposition of penalty of ten times at this
juncture in the facts and circumstances of this case is illegal and
contrary to the steps summed up in paragraph 21 – The instrument
is sent to the District Registrar, thereafter the District Registrar in
exercise of his jurisdiction u/s.39, decides the quantum of stamp
duty and penalty payable on the instrument – The appellant is
denied this option by the impugned orders – Appellant must pay
what is due, but as is decided by the District Registrar and not
the Court u/s.34 – The direction to pay ten times the penalty of
the deficit stamp duty set aside. [Paras 22, 23]
Karnataka Stamp Act, 1957 – ss.33-35, 37, 39 – Scope –
Insufficiently stamped instrument – Admission procedure –
Steps explained and summed up. [Paras 21-21.8]
Karnataka Stamp Act, 1957 – s.2(d), Article 5, Article 20(1) of
the Schedule of the Act – ‘conveyance’:
Held: Article 5 of the Schedule of the Act deals with an agreement of
sale coupled with possession and the requirement of paying the ad
valorem stamp duty – If an instrument conforms to the requirements
of conveyance u/s.2(d) r/w Article 20(1) of the Schedule of the
Act, the applicable stamp duty is ad valorem – In the present
case, the appellant did not argue on the applicability of the clause
dealing with possession in the agreement and requirement to pay
ad valorem stamp duty and the relief of injunction was sought on
the basis of delivery of possession by the respondent under the
suit agreement. [Para 14]
Karnataka Stamp Act, 1957 – Object of the Act – Discussed.
[Para 17]
Karnataka Stamp Act, 1957 – ss.34, 39 – Distinction and
discretion under – Distinction in the discretion available to
Every Person/Court; discretionary jurisdiction conferred on
the District Registrar – Discussed.
168 [2024] 9 S.C.R.

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Case Law Cited
Gangappa and another v. Fakkirappa [2018] 13 SCR 603 – relied
on.
Trustees of H.C. Dhanda Trust v. State of Madhya Pradesh and
others [2020] 11 SCR 268; Chilakuri Gangulappa v. Revenue
Divisional Officer, Madanpalle [2001] 2 SCR 419 : (2001) 4 SCC
197; Hindustan Steel Limited v. Dilip Construction Company [1969]
3 SCR 736 : (1969) 1 SCC 597; District Registrar and Collector v.
Canara Bank [2004] Suppl. 5 SCR 833 : (2005) 1 SCC 496; State
of Maharashtra v. National Organic Chemical Industries Limited
[2024] 4 SCR 340 : (2024) SCC OnLine SC 497; Chiranji Lal v.
Haridas [2005] Supp. 1 SCR 359 : (2005) 10 SCC 746; Petiti Subba
Rao v. Anumala S. Narendra (2002) 10 SCC 427– referred to.
Digambar Warty and others v. District Registrar Bangalore
Urban District and another ILR 2013 KAR 2099; K. Amarnath v.
Smt. Puttamma ILR 1999 KAR 4634; Suman v. Vinayaka and
others (2013) SCC OnLine Kar 10138; Niyaz Ahmed Siddique
v. Sanganeria Company Private Limited (2023) SCC OnLine
Cal 1391; United Precision Engineers Private Limited v. KIOCL
Limited (2016) SCC OnLine Kar 1077; Sri. K. Govinde Gowda v.
Smt. Akkayamma and others ILR 2011 KAR 4719 – referred to.
List of Acts
Karnataka Stamp Act, 1957; Stamp Act, 1899.
List of Keywords
Stamp duty; Deficit stamp duty; Deficit stamp duty and penalty;
Penalty; Levy of stamp duty and penalty; Agreement of sale; Ad
valorem stamp duty; Suit instrument insufficiently stamped; Ten
times penalty on the agreement of sale; Delivery of possession;
Conveyance; Collection of penalty; Insufficiently stamped
instrument; Inadmissible in evidence; District Registrar/Deputy
Commissioner; Perpetual injunction; Part performance under the
suit agreement; Impounding of the suit agreement.
Case Arising From
CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 10039-40 of
2024
From the Judgment and Order dated 23.08.2019 and 14.09.2021 of
the High Court of Karnataka at Bengaluru in WP No. 30734 of 2019
and RP No. 340 of 2019 respectively
[2024] 9 S.C.R. 169

Seetharama Shetty v. Monappa Shetty

Appearances for Parties
Ms. Liz Mathew, Sr. Adv. (Amicus Curiae), Ms. Mallika Agarwal,
Ms. Bagavathy V., Advs.
Parikshit Angadi, Anirudh Sanganeria, Advs. for the Appellant.
Judgment / Order of the Supreme Court
Judgment
S.V.N. Bhatti, J.
1. Leave granted.
2. The Civil Appeals arise from an order dated 14.09.2021 in Review
Petition No. 340 of 2019 and Writ Petition No. 30734 of 2019.
3. In these Civil Appeals, the scope of Sections 33, 34, 37, and 39
of the Karnataka Stamp Act, 1957 (for short, ‘the Act’) arises for
consideration.
I. Factual Matrix
4. The appellant filed O.S. No. 295 of 2013 for perpetual injunction
restraining the respondent from interfering with the appellant’s
peaceful possession and enjoyment of the plaint schedule property.
The plaint schedule property consists of agricultural land in Kavoor
village of Mangalore taluk. The prayer for injunction rests on the
plea that the respondent entered into the agreement of sale dated
29.06.1999 with the appellant. The appellant claims to have been put
in possession of the plaint schedule property as part performance
under the agreement of sale dated 29.06.1999 by the respondent.
The other clauses covered by the agreement are not adverted to
as part of the narrative, for they are of little relevance for disposing
of the Civil Appeals.
5. It is alleged that the respondent, contrary to the possession given
as part performance under the suit agreement, tried to dispossess
the appellant. This led to exchange of notices between the parties.
The sheet anchor in the appellant’s narrative is that the agreement
of sale dated 29.06.1999 exists between the parties, and in part
performance thereunder, the appellant was put in possession of the
plaint schedule property by the respondent. Contrary to the ad idem of
the parties in putting the appellant in possession, the respondent was
trying to dispossess the appellant from the plaint schedule property.
170 [2024] 9 S.C.R.

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Therefore, the suit was filed for the relief of perpetual injunction.
Briefly narrated, the possession claimed under the agreement of sale
is sought to be protected through the prayer for perpetual injunction.
6. The respondent denies the execution of the agreement of sale
dated 29.06.1999. The appellant, since claims possession through
the agreement of sale, the suit agreement shall be treated as a
conveyance. The suit agreement is insufficiently stamped. Therefore,
the document is inadmissible in evidence unless the document is
made compliant with the requirements of the Act.
6.1. The respondent filed an application before the trial court under
Section 33 of the Act to impound the suit agreement to collect
the deficit stamp duty and penalty in accordance with the Act.
By order dated 10.11.2016, the trial court sent the agreement of
sale dated 29.06.1999 to the District Registrar for determination
of requisite stamp duty and penalty payable on the agreement of
sale. The record discloses that the District Registrar expressed
inability to determine the deficit stamp duty and penalty payable
on the suit agreement for want of the name of the village, hence,
returned the instrument to the trial court. Thereafter, the appellant
filed a memo dated 26.04.2017 purporting to clarify the name
of the village in the schedule of the agreement of sale. The
said effort was opposed by the respondent, namely ex-post-
facto incorporation of material details into the suit agreement;
gaps in the agreement are not filled up by the appellant to the
detriment of the respondent. The trial court, agreeing with the
respondent’s objection, rejected the memo dated 26.04.2017.
The appellant filed Writ Petition No. 8506 of 2018 challenging
the trial court’s order dated 12.08.2017 before the High Court
of Karnataka. On 10.08.2018, the Writ Petition was disposed
of, and the operative portion reads thus:
“Accordingly, in modification of the impugned order
dated 12.08.2017, it is directed that a copy of the
memo filed by the plaintiff may be sent by the
Trial Court to the office of the District Registrar for
appropriate proceedings in accordance with law.
However, it is made clear that the order and proposition
with reference to the name of the village mentioned
by the plaintiff/petitioner shall have relevance only
[2024] 9 S.C.R. 171

Seetharama Shetty v. Monappa Shetty

for the purpose of calculation of deficit stamp duty
and other charges but shall have no bearing on
the merit consideration of the submissions of the
parties, including the submissions of the defendant/
respondent about the genuineness and the validity of
the document in question and the corresponding right
of the plaintiff/petitioner to contest such objections.”
7. The District Registrar, through report dated 10.11.2016, determined
the deficit stamp duty payable on the instrument at Rs. 71,200/-. The
trial court, by order dated 23.01.2019, directed the appellant to pay
the deficit stamp duty of Rs. 71,200/- and ten times penalty on the
agreement of sale dated 29.06.1999. Thus, the total levy of stamp
duty and penalty is Rs. 7,83,200/-. The appellant assailed the order
dated 23.01.2019 in O.S. NO. 295 of 2013 in Writ Petition No. 30734
of 2019 before the High Court. The Writ Petition was dismissed, and
the appellant was granted four months’ time for payment of deficit
stamp duty and the penalty. The appellant filed Review Petition No.
340 of 2019, and through the impugned order dated 14.09.2021,
the Review Petition was dismissed. Hence, the Civil Appeals have
been filed questioning the orders dated 23.01.2019 and 14.09.2021.
8. The learned Single Judge has, in great detail, referred to all the
attending circumstances, appreciated their implication vis-à-vis the
statutory obligation under the Act to pay ad valorem stamp duty
on an agreement of sale satisfying the definition of a conveyance
under the Act and dismissed the Review Petition. The findings, in
brief, are as follows:
8.1. Section 33 of the Act requires the adjudicating authorities to
impound and determine the duty payable on the suit agreement.
8.2. Section 34 of the Act provides for levy of deficit stamp duty and
penalty. The Section employs the expression “ten times the
amount of the proper duty or deficit portion thereof.” Therefore,
there is no discretion granted to the adjudicating authorities to
waive or reduce the penalty.
8.3. Only on the payment of deficit stamp duty along with ten times
penalty, the suit agreement is relied in evidence.
8.4. The text used in Sections 34 and 39 of the Act cannot be
linguistically approximated, as the legislature has not vested
172 [2024] 9 S.C.R.

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the discretion given to the Deputy Commissioner under Section
39 of the Act in the same way to the adjudicating authorities
under Section 34 of the Act.
8.5. Relying on case law, the impugned order noted that the
adjudicating authorities do not have the discretion to disobey
the legislative command to waive or reduce the penalty in any
circumstance. The discretion however extends to the grant of
a reasonable time for the payment of duty and penalty.
8.6. Thus, through the Impugned Order, the Learned Single judge
concluded that the Review Petition fails, and the appellant was
granted a period of six months’ time to pay the deficit stamp
duty along with ten times penalty.
9. Hence, the Civil Appeals.
10. We have heard the learned counsel and also Ms. Liz Mathew, who
was appointed as Amicus Curiae to assist the Court.
II. Submissions
11. Learned counsel for the appellant firstly contends that the suit
document conforms to the requirements of the Act and the suit
was for injunction. Considering the total circumstances, it is argued
that even if the suit document is not stamped correctly but having
regard to the orders dated 12.08.2017 and 10.08.2018, the trial court
ought not to have decided the deficit stamp duty and penalty under
Section 34 of the Act. Instead, the trial court ought to have sent the
impounded instrument to the District Registrar for determining the
stamp duty and the penalty. Thereupon, the District Registrar would
have exercised his discretionary jurisdiction under Section 39 of the
Act and determined the quantum of penalty payable by the appellant.
In the case on hand, the dispute arose on the application filed by
the respondent requesting to send the suit document to the District
Registrar for determination of duty and penalty. The District Registrar
has sent a report on the stamp duty payable but has not collected
the deficit stamp duty or levied the penalty on the suit agreement. It
is argued that the case falls under Section 37(2) of the Act, and the
impugned orders have denied the appellant the option to have the
penalty decided by the District Registrar. Therefore, the trial court
and the High Court have committed an illegality by exercising the
jurisdiction under Section 34 of the Act.
[2024] 9 S.C.R. 173

Seetharama Shetty v. Monappa Shetty

12. The learned Amicus Curie places reliance on Gangappa and
another v. Fakkirappa,1 Trustees of H.C. Dhanda Trust v. State
of Madhya Pradesh and others,2 Digambar Warty and others
v. District Registrar, Bangalore Urban District and another,3 K.
Amarnath v. Smt. Puttamma,4 Suman v. Vinayaka and others,5
Niyaz Ahmed Siddique v. Sanganeria Company Private Limited,6
United Precision Engineers Private Limited v. KIOCL Limited,7
Chilakuri Gangulappa v. Revenue Divisional Officer, Madanpalle,8
and Sri. K. Govinde Gowda v. Smt. Akkayamma and others,9
and contends that the scope of jurisdiction in receiving in evidence
insufficiently stamped instruments by every person, having by
law or consent of parties, authority to receive evidence and every
person in charge of a public office on the one hand and the Deputy
Commissioner/District Registrar on the other hand, is fairly well-
settled by the binding precedents. The scope of discretion available
in two distinct forums covered by Sections 34 and 39 of the Act is
fairly well settled and defined.
12.1. It is further argued that the ratio in Chilakuri Gangulappa
(supra) is not applicable to the facts and circumstances of
this case. The trial court while considering the prayer for
an injunction by relying on the suit document, exercised its
jurisdiction under Section 34 of the Act. The procedure under
Section 37(2) of the Act arises in the cases not attracting
Section 37(1) of the Act. The discretionary jurisdiction under
Section 39 of the Act is exclusive to the District Registrar/
Deputy Commissioner while exercising the powers under the
Act. Thus, expecting the court to exercise the discretion of
Section 39 of the Act is untenable.

1 [2018] 13 SCR 603 : (2019) 3 SCC 788
2 [2020] 11 SCR 268 : (2020) 9 SCC 510
3 ILR 2013 KAR 2099
4 ILR 1999 KAR 4634
5 (2013) SCC OnLine Kar 10138
6 (2023) SCC OnLine Cal 1391
7 (2016) SCC OnLine Kar 1077
8 [2001] 2 SCR 419 : (2001) 4 SCC 197
9 ILR 2011 KAR 4719
174 [2024] 9 S.C.R.

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III. Analysis
13. We have perused the record and noted the rival submissions. The
following points arise in the Civil Appeals:
I. Whether the agreement of sale dated 29.06.1999, with a recital
on delivery of possession to the appellant, conforms to the
definition of conveyance under Section 2(d) read with Article
20(1) of the Schedule of the Act or not?
II. Whether, in the facts and circumstances of the case, the order
dated 23.01.2019 of trial court, as confirmed by the impugned
orders dated 23.08.2019 and 14.09.2021, are legal and valid
or call for interference by this Court under Article 136 of the
Constitution of India?
Point I
14. Agreement of sale dated 29.06.1999, among other clauses, refers
to the alleged delivery of possession in favour of the appellant by
the respondent. Article 5 of the Schedule of the Act deals with an
agreement of sale coupled with possession and the requirement of
paying the ad valorem stamp duty. If an instrument conforms to the
requirements of conveyance under Section 2(d) read with Article 20(1)
of the Schedule of the Act, the applicable stamp duty is ad valorem.
In other words, ad valorem stamp duty is paid on such instruments.
The learned counsel appearing for the appellant has not argued on the
applicability of the clause dealing with possession in the agreement
and requirement to ad valorem pay stamp duty. The relief of injunction
is sought on the basis of delivery of possession by the respondent
under the suit agreement. The following Judgments are relevant and
are close in circumstance to the case on hand and are referred to.
14.1. Gangappa’s case (supra), analysed a situation on an
insufficiently stamped document produced before a court,
and compared Sections 34 and 39 of the Act and held that
the discretion conferred by the provision is different by the
text and the context of these provisions. This Court upheld
the ratio laid in Digambar Warty (supra) and held that even
though no discretion was provided to the court to impose a
reduced penalty, Section 38 of the Act empowered the Deputy
Collector to refund the duty so collected. In paragraph 18 of
the Judgment, it is recorded that:
[2024] 9 S.C.R. 175

Seetharama Shetty v. Monappa Shetty

“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 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 [Digambar
Warty v. Bangalore Urban District, 2012 SCC OnLine Kar
8776 : ILR 2013 KAR 2099] 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
[Fakkirappa v. Gangappa, 2014 SCC OnLine Kar 12775]
did not commit any error in relying on the judgment of the
Division Bench in Digambar Warty [Digambar Warty v.
Bangalore Urban District, 2012 SCC OnLine Kar 8776 :
ILR 2013 KAR 2099]. We thus have to uphold the above
view expressed in the impugned judgment [Fakkirappa v.
Gangappa, 2014 SCC OnLine Kar 12775].
However, as a one-time measure, this Court allowed closing
the matter by confirming the payment of deficit duty with the
double penalty as imposed by the trial court. The precedent
interpreted the discretionary limits under Section 34 of the Act.
14.2. In United Precision Engineers Private Limited (supra), the
question arose as to the extent of power exercised by Deputy
Commissioner under Section 37(2) of the Act. The Court
observed that the phrase “in every other case” contained in
Section 37(2) of the Act will have to be understood to include
not only an instrument which is merely impounded and referred
but also an instrument impounded, relating to which duty
and penalty determined but not paid by the party. The court
observed that as per the combined reading of the sections,
if the impounding authority determined the penalty under
Section 37(1) of the Act, and thereafter, sends the document
to Deputy Commissioner under Section 37(2) of the Act, then
the Deputy Commissioner will have the power to reduce the
penalty under Section 38 of the Act. The ratio deals with the
interplay between Sections 37 and 38 of the Act.
176 [2024] 9 S.C.R.

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15. The impugned order, in fact, refers to these judgments. The High
Court has correctly distinguished the jurisdiction vested in every
person or a person in the public office on the one hand and on the
other hand the District Registrar in determining the penalty payable
on insufficiently stamped instrument. The ratio in all fours is applicable
to the circumstances of the case. Therefore, by relying on the above
judgments, it is held that the appellant, with a view to produce in
evidence the agreement of sale in the suit, must pay the deficit stamp
duty and penalty. We are confirming the findings of the High Court
in this behalf. The next question for consideration is whether in the
facts and the circumstances of the case, the penalty determined by
the Court on the instrument instead of sending the instrument to the
District Registrar for determination and collection of penalty as may
be applicable is legal.
Point II
16. Chapter IV of the Act is both mandatory and regulatory. Section 33
mandates every person having by law or consent of parties authority
to receive evidence and every person in charge of public office
(for short, ‘Every Person/Court’) when an instrument insufficiently
stamped is produced, the person is mandated to impound the
insufficiently stamped instrument. In law, the word impound means
to keep in custody of the law.10 Having taken legal custody of the
insufficiently stamped document, the inter-play available between
Sections 33, 34, 37, 38 and 39 of the Act, as the case may be, would
start operating. Sub-section (2) of Section 33 of the Act fastens an
obligation to examine the instrument on the duty payable, value
etc. of the instrument. Unless it is duly stamped, Section 34 of the
Act, prohibits Every Person/Court from admitting in evidence or act
upon an insufficiently/improperly stamped instrument. The proviso
to Section 34 of the Act, subject to deposit, of deficit stamp duty
and penalty enables receipt of an instrument in evidence which is
otherwise prohibited by Section 34 of the Act.
17. The object of the Act is not to exclude evidence or to enable parties
to avoid obligations on technical grounds. Rather, the object is to
obtain revenue even from such instruments which are at the first

10 (2003) 3 SCC 674
[2024] 9 S.C.R. 177

Seetharama Shetty v. Monappa Shetty

instance unstamped or insufficiently stamped. The said objective has
the twin elements of recovering the due stamp duty and penalty, and
also the public policy of binding parties to the agreed obligations. It is
apposite to refer to the declaration of law by a seven-judge bench’s
judgement of this Court on the object of the Indian Stamp Act, 1899.
17.1. In Re: Interplay Between Arbitration Agreements under
Arbitration and Conciliation Act, 1996 and Stamp Act,
1899,11 a Seven-Judge Bench of this Court noted that Section
35 of the Indian Stamp Act, 1899 (analogous to Section 34 of
the Act) unambiguously requires an instrument chargeable with
stamp duty to only be “admitted in evidence” if it is properly
stamped. This Court further noted that improperly stamping
the instrument does not render that instrument void or invalid.
On the contrary, it is a defect which is curable upon payment
of requisite stamp duty and penalty. The relevant paragraph
reads thus:
“54. Section 35 of the Stamp Act is unambiguous. It
stipulates, “No instrument chargeable with duty shall
be admitted in evidence…” The term “admitted in
evidence” refers to the admissibility of the instrument.
Sub-section (2) of Section 42, too, states that an
instrument in respect of which stamp-duty is paid
and which is endorsed as such will be “admissible
in evidence.” The effect of not paying duty or paying
an inadequate amount renders an instrument
inadmissible and not void. Non-stamping or improper
stamping does not result in the instrument becoming
invalid. The Stamp Act does not render such an
instrument void. The non-payment of stamp duty is
accurately characterised as a curable defect. The
Stamp Act itself provides for the manner in which
the defect may be cured and sets out a detailed
procedure for it. It bears mentioning that there is no
procedure by which a void agreement can be “cured.”

11 (2024) 6 SCC 1
178 [2024] 9 S.C.R.

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17.2. In Hindustan Steel Limited v. Dilip Construction Company,12
this Court held that the Indian Stamp Act, 1899 is a fiscal
measure intended to raise revenue, and the stringent provisions
of the Stamp Act cannot be used as a weapon to defeat the
cause of the opponent. The relevant paragraph reads thus:
“7. The Stamp Act is a fiscal measure enacted to
secure revenue for the State on certain classes of
instruments: It is not enacted to arm a litigant with
a weapon of technicality to meet the case of his
opponent. The stringent provisions of the Act are
conceived in the interest of the revenue once that
object is secured according to law, the party staking
his claim on the instrument will not be defeated on the
ground of the initial defect in the instrument. Viewed
in that light the scheme is clear.”
17.3. The ratio in District Registrar and Collector v. Canara Bank13
and State of Maharashtra v. National Organic Chemical
Industries Limited 14 and Chiranji Lal v. Haridas15 reiterated
that the Indian Stamp Act, 1899 is a piece of fiscal legislation,
and not a remedial statute enacted on demand of the permanent
public policy to receive a liberal interpretation. The principles
for interpreting a fiscal provision/law are fairly settled. There is
no scope for equity or judiciousness if the letter of law is clear
and unambiguous in method, mode and manner of levy and
collection. The decisions further held that the act authorises
involuntary extraction of money, and therefore, is in the nature
fiscal statute which has to be interpreted strictly.
17.4. Section 37 of the Act stipulates the procedure on how the
instrument impounded is dealt with. The plain reading of
Section 37(1) of the Act discloses that the person impounding
the instrument under Section 33 of the Act and after receiving
the penalty under Section 34 of the Act or duty under Section
36 of the Act, shall send to the Deputy Commissioner an

12 [1969] 3 SCR 736 : (1969) 1 SCC 597
13 [2004] Suppl. 5 SCR 833 : (2005) 1 SCC 496
14 [2024] 4 SCR 340 : (2024) SCC OnLine SC 497
15 [2005] Supp. 1 SCR 359 : (2005) 10 SCC 746
[2024] 9 S.C.R. 179

Seetharama Shetty v. Monappa Shetty

authenticated copy of such instrument together with the amount
of duty and penalty so levied and collected. Section 37(2) of
the Act deals with an instrument not subjected to the procedure
of Sections 34 or 36 of the Act. According to Section 37(2) of
the Act, the instrument is sent to the Deputy Commissioner for
enquiry and decision at his end. The Deputy Commissioner gets
jurisdiction under Section 39 of the Act and then decides the
duty and also the penalty leviable on the insufficiently stamped
instrument. In this background, we take note of the principle
laid down on the distinction in the discretion available to Every
Person/Court and the discretionary jurisdiction conferred on the
District Registrar. See, United Precision Engineers (supra)
and Gangappa (supra).
The settled distinction and discretion available under Sections
34 and 39 of the Act is no more res integra.
18. The above consideration does not actually address the appellant’s
argument under Section 37(2) read with Section 39 of the Act.
Appellant contends that the respondents by filing an application for
impounding the instrument, preferred to have deficit stamp duty and
the penalty collected exclusively by the District Registrar because the
admissibility or otherwise of the suit document is not yet considered
by the trial court for any purpose. From the record, it appears that
the instrument is likely to be considered at the interlocutory stage
for granting or refusing temporary injunction. Therefore, the option
available under Section 33 read with Section 37 of the Act is set in
motion, resulting in the instrument being sent to the District Registrar,
and calling for a report.
19. A Three-Judge Bench of this Court in Trustees of HC Dhandha
Trust v State of Madhya Pradesh16 held that in case of deficiency of
Stamp Duty the Collector of Stamps cannot impose ten times penalty
under Section 40(1)(b) of the Indian Stamp Act, 1899 (analogous
to Section 39(1)(b) of the Act) automatically or mechanically. The
relevant paragraph reads thus:
“22. The purpose of penalty generally is a deterrence
and not retribution. When a discretion is given to a public

16 [2020] 11 SCR 268 : (2020) SCC OnLine SC 753
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authority, such public authority should exercise such
discretion reasonably and not in oppressive manner. The
responsibility to exercise the discretion in reasonable
manner lies more in cases where discretion vested by the
statute is unfettered. Imposition of the extreme penalty
i.e. ten times of the duty or deficient portion thereof
cannot be based on the mere factum of evasion of
duty. The reason such as fraud or deceit in order to
deprive the Revenue or undue enrichment are relevant
factors to arrive at a decision as to what should be the
extent of penalty under Section 40(1)(b).
(Emphasis supplied)”
20. Further, in Petiti Subba Rao v. Anumala S. Narendra,17 this
Court notes on the discretionary limits while interpreting analogous
provisions18 in the Indian Stamp Act,1899 that:
“6. The Collector has the power to require the person
concerned to pay the proper duty together with a penalty
amount which the Collector has to fix in consideration
of all aspects involved. The restriction imposed on the
Collector in imposing the penalty amount is that under
no circumstances the penalty amount shall go beyond
ten times the duty or the deficient portion thereof. That
is the farthest limit which meant only in very extreme
situations the penalty need be imposed up to that limit.
It is unnecessary for us to say that the Collector is not
required by law to impose the maximum rate of penalty as
a matter of course whenever an impounded document is
sent to him. He has to take into account various aspects
including the financial position of the person concerned.
(Emphasis supplied)”

17 (2002) 10 SCC 427

18
Karnataka Stamp Act, 1957 §33 §34 §35 §36 §37 §38 §39
Indian Stamp Act, 1899 §33 §35 §36 §37 §38 §39 §40
[2024] 9 S.C.R. 181

Seetharama Shetty v. Monappa Shetty

21. As per the steps taken under Sections 33,19 34,20 35,21 37,22 and 3923

19 Section 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 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. (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 of the
value and description required by the law in force in the 1[State of Karnataka]1 when such instrument
was executed or first executed: [1. Adapted by the Karnataka Adaptations of Laws Order, 1973 w.e.f.
1.11.1973.] Provided that,— (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; (b) in the case of a Judge of the High Court, the duty
of examining and impounding any instrument under this section may be delegated to such officer as the
Court appoints in this behalf. (3) For the purposes of this section, in cases of doubt, the Government may
determine,— (a) what offices shall be deemed to be public offices; and (b) who shall be deemed to be
persons in charge of public offices.
20 Section 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 1[with a duty not exceeding fifteen naye paise]1 only, or a mortgage
of crop [Article 1[35]1 (a) of the Schedule] chargeable under clauses (a) and (b) of section 3 with a duty
of twenty-five naye 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, or
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; [1. Substituted by Act 29 of 1962 w.e.f. 1.10.1962.] (b) where a contract or
agreement of any kind is effected by correspondence consisting of two or more letters and any one of
the letters bears the proper stamp, the contract or agreement shall be deemed to be duly stamped; (c)
nothing herein contained shall prevent the admission of any instrument in evidence in any proceeding in
a Criminal Court, other than a proceeding under Chapter XII or Chapter XXXVI of the Code of Criminal
Procedure, 1898; (d) nothing herein contained shall prevent the admission of any instrument in any
Court when such instrument has been executed by or on behalf of the Government, or where it bears
the certificate of the 1[Deputy Commissioner]1 as provided by section 32 or any other provision of this
Act 2[and such certificate has not been revised in exercise of the powers conferred by the provisions of
Chapter VI]2. [1. Substituted by Act 29 of 1962 w.e.f. 1.10.1962.] [2. Inserted by Act 29 of 1962 w.e.f.
1.10.1962.]
21 Section 35: Admission of instrument where not to be questioned.- Where an instrument has been
admitted in evidence 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.
22 Section 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 section 34 or of duty as provided by
section 36, he shall send to the 1[Deputy Commissioner]1 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 1[Deputy Commissioner]1 or to such person as he may appoint in
this behalf. [1. Substituted by Act 29 of 1962 w.e.f. 1.10.1962.] (2) In every other case, the person so
impounding an instrument shall send it in original to the 1[Deputy Commissioner]1. [1. Substituted by Act
29 of 1962 w.e.f. 1.10.1962.]
23 Section 39: 1[Deputy Commissioner]1’s power to stamp instruments impounded.- (1) When the
1[Deputy Commissioner]1 impounds any instrument under section 33, or receives any instrument
sent to him under sub-section (2) of section 37, not being an instrument chargeable 1[with a duty not
exceeding fifteen naye paise]1 only or a mortgage of crop [Article 1[35]1 (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:— [1. Substituted by Act 29 of 1962 w.e.f. 1.10.1962.] (a) if he is of opinion that such
instrument is duly stamped, or is not chargeable with duty, he shall certify by endorsement thereon that
182 [2024] 9 S.C.R.

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under Chapter IV of the Act, the position in law is well-established, and
axiomatic by the letter of law and precedents of this Court. However,
there are a few misgivings in the sequence of its application. For the
benefit of practice and procedure, we sum up the steps as follows.
21.1. Section 33 of the Act is titled examination and impounding of
instruments. The object of the provision is to disable persons
from withdrawing the instruments produced by them on being
told that proper stamp duty and penalty should be paid.
21.1.1. The person who intends to rely on an insufficiently/
improperly stamped instrument has option to submit
to the scope of Section 34 of the Act, pay duty and
penalty. The party also has the option to directly move
an application under Section 39 of the Act before the
District Registrar and have the deficit stamp duty and
the penalty as may be imposed collected. In either of
the cases, after the deficit stamp duty and the penalty
are paid, the impounding effected under Section 35
of the Act is released and the instrument available
to the party for relying as evidence. In the event, a
party prefers to have the document sent to the deputy
commissioner for collecting the deficit stamp duty and
penalty, the Court/Every Person has no option except
to send the document to the District Registrar. The
caveat to the above is that, before the Court/Every
Person exercises the jurisdiction under Section 34
of the Act, the option must be exercised by a party.
21.2. Section 34 of the Act is titled instruments not duly stamped
inadmissible in evidence. This provision bars the admission of

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 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 only because it has been written in contravention of section 13 or section 14, the
1[Deputy Commissioner]1 may, if he thinks fit, remit the whole penalty prescribed by this section. [1.
Substituted by Act 29 of 1962 w.e.f. 1.10.1962.] (2) 1[Subject to any orders made under Chapter VI,
every certificate]1 under clause (a) of sub- section (1) shall, for the purposes of this Act be conclusive
evidence of the matters stated therein. [1. Substituted by Act 29 of 1962 w.e.f. 1.10.1962.] (3) Where
an instrument has been sent to the 1[Deputy Commissioner]1 under sub-section (2) of section 37, the
1[Deputy Commissioner]1 shall, when he has dealt with it as provided by this section, return it to the
impounding officer. [1. Substituted by Act 29 of 1962 w.e.f. 1.10.1962.]
[2024] 9 S.C.R. 183

Seetharama Shetty v. Monappa Shetty

an instrument in evidence unless adequate stamp duty and the
penalty are paid. Every person so authorised to collect deficit
stamp duty and penalty has no discretion except to levy and
collect ten times the penalty of deficit stamp duty.
21.3. Section 35 of the Act is titled admission of instrument where
not to be questioned. Section 35 prohibits questioning the
admission of an insufficiently stamped instrument in evidence.
21.4. Section 37 of the Act is titled instruments impounded, how
dealt with. This Section arises when the party pays the deficit
duty and penalty, the Court is to impound the instrument under
Section 33 of the Act and has to forward the instrument to the
Deputy Commissioner/District Registrar. Sub-section (2) of
Section 37 of the Act deals with cases not falling under Section
34 and 36, and the person impounding an instrument shall
send it in original to the Deputy Commissioner. This includes
the exigencies set out in paragraph 21.1.1.
21.5. Being a regulatory and remedial statute, a party who follows
the regulation, and pays the stamp duty and penalty, as per
Sections 34 or 39 of the Act, the legal objection emanating
from Section 33 of the Act alone is effaced and the document
is admitted in evidence. In other words, the objection under
the Stamp Act is no more available to a contesting party.
21.6. Section 39 of the Act is titled deputy commissioner’s power
to stamp instruments impounded. This Section provides the
procedure to be followed by the Deputy Commissioner/District
Registrar while stamping instruments that are impounded
under Section 33 of the Act. As per Section 39(1)(b) of the
Act, the penalty may extend to ten times the stamp duty
payable; however, ten times is the farthest limit which is
meant only for very extreme situations. Therefore, the Deputy
Commissioner/District Registrar has discretion to levy and
collect commensurate penalty.
21.7. The above steps followed and completed by paying/depositing
the deficit duty and penalty would result in the instrument
becoming compliant with the checklist of the Act. The finality is
subject to the just exceptions envisaged by the Act addressing
different contingencies.
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21.8. The scheme does not prohibit a party to a document to
first invoke directly the jurisdiction of the District Registrar
and present the instrument before Court/Every Person after
complying with the requirement of duty and penalty. In such an
event, the available objection under Sections 33 or 34 of the
Act is erased beforehand. The quantum of penalty is primarily
between the authority/court and the opposing party has little
role to discharge.
22. Reverting to the circumstances of the case by keeping in perspective
the steps summarised in the preceding paragraph, we notice that,
before the stage of admission of the instrument in evidence, the
respondent raised an objection on the deficit stamp duty. Therefore, it
was the respondent who required the suit agreement to be impounded
and then sent to the District Registrar to be dealt with under Section
39 of the Act. In this case, the respondent desired the impounding
of the suit agreement and collect the deficit stamp duty and penalty.
The trial court is yet to exercise its jurisdiction under Section 34 of
the Act. On the contrary, the trial court has called for a report from
the District Registrar, so for all purposes, the suit instrument is still at
one or the other steps summed up in paragraph 21. Therefore, going
by the request of the respondent, the option is left for the decision
of the District Registrar. Contrary to these admitted circumstances,
though the suit instrument is insufficiently stamped, still the penalty
of ten times under Section 34 of the Act is imposed through the
impugned orders. The imposition of penalty of ten times at this
juncture in the facts and circumstances of this case is illegal and
contrary to the steps summed up in paragraph 21. The instrument
is sent to the District Registrar, thereafter the District Registrar in
exercise of his jurisdiction under Section 39 of the Act, decides the
quantum of stamp duty and penalty payable on the instrument. The
appellant is denied this option by the impugned orders. It is trite
law that the appellant must pay what is due, but as is decided by
the District Registrar and not the Court under Section 34 of the Act.
23. Hence, for the above reasons, the direction to pay ten times the
penalty of the deficit stamp duty merits interference and accordingly
is set aside. The trial court is directed to send the agreement of sale
dated 29.06.1999 to the District Registrar to determine the deficit
stamp duty and penalty payable. Upon receipt of the compliance
certificate from the District Registrar, without reference to an
[2024] 9 S.C.R. 185

Seetharama Shetty v. Monappa Shetty

objection under the Act, the suit document be received in evidence.
All objections available to the respondents except the above are left
open for consideration.
24. Appeals are allowed in part, as indicated above.

Result of the case: Appeals partly allowed.

†
Headnotes prepared by: Divya Pandey