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2017 SCC OnLine Kar 3709 : ILR 2017 Kar 3421 : (2017) 1 KCCR 810 : (2017) 3
Kant LJ 340 : (2017) 2 ICC 266 : (2017) 2 AIR Kant R 357

In the High Court of Karnataka

(Kalaburagi Bench)
(BEFORE A.N. VENUGOPALA GOWDA , J.)

Dandamudi Ramesh @ Raniarao and Another

Versus
Sharnappa and Another*
W.P. No. 83041/2010 (GM-CPC)
Decided on January 27, 2017
Karnataka Stamp Act, 1957 — Sections 33 and 34 — Agreement of sale not duly stamped —
Order passed by the Trial Court directing payment of stamp duty and penalty — Challenge to —
Grievance of the petitioner is that the requisite value of stamp papers are produced along with
the plaint —
Held :
(a) Merely because the deficit stamp duty payable in respect of the agreement of sale was produced
along with the plaint, it cannot be construed that such an act amounts to adjudication and
certification by the Deputy Commissioner as per the provisions of Sections 31 and 32 of the Act.
(Para 9)
(b) Sections 31 and 32 of the Act provide for adjudication of stamp duty. Under Section 31, it is open
to the executant of any instrument to produce the document before the Deputy

Page: 3422

Commissioner, and require him to adjudicate on the question whether the document should bear any
stamp duty. The Deputy Commissioner, thereupon should adjudicate stamp duty with which payment can
be made to avoid impounding the document by a Court of authority empowered to receive the document
in evidence. The said procedure could have been followed by the petitioners instead of buying the stamp
papers and producing along with the plaint which does not meet the requirement of law.

(Para 8)
Further Held :
(a) Section 33 of the Act casts a duty upon the authorities concerned, including the Courts, to
impound a document, where the instrument produced is insufficiently stamped. Section 34 makes
the instruments not only stamped inadmissible in evidence. An instrument not duly stamped shall
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
penalty.
(Para 5)
(b) Agreement of sale being insufficiently stamped, same is inadmissible in evidence on account of
prohibition in Section 34. Court being the authority to receive the instrument in evidence, to give
effect thereto, agreement to sell with possession being an instrument which requires payment of
the stamp duty applicable to the deed of conveyance, stamp duty required to be paid having not
been

Page: 3423

paid, Trial Judge has held the instrument is inadmissible in evidence. By impounding the instrument, Trial
Judge has determined the deficit stamp duty and penalty as per the provisions of the Act.

(Para 6)
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Writ Petition is Dismissed.

Cases Referred At Paras

1. (2010) 5 SCC 401 : AIR 2010 SC 1654 S. Kaladevi v. V.R. (Ref) 2

Somasundaram

2. ILR 2013 KAR 2099 Digambar Warty v. District Registrar.; (Foll) 11

Bangalore Urban District

Sri Shivakumar Kalloor, Advocate for Petitioners;

Sri P.S. Malipatil, Advocate for Respondents.
The Judgment of the Court was delivered by
A.N. VENUGOPALA GOWDA, J.:— The petitioners are plaintiffs and the respondents are
defendants in O.S. No. 4/1999 pending on the file of the Senior Civil Judge, Lingasugur.
Suit has been founded on the agreements to sell dated 04.06.2008 and 10.06.2008. It is
the case of the plaintiffs that the possession of property in question was delivered to them
under the

Page: 3424

agreement dated 10.06.2008 and they are in possession and enjoyment in part
performance of the contract. By filing written statement suit has been contested. Issues
having been raised, suit is at the stage of trial. When the suit document - sale agreement
dated 10.06.2008 was sought to be marked as an exhibit in the evidence by plaintiffs,
objection was raised by defendants on the ground that the instrument having not been
engrossed on the requisite stamp paper, cannot be admitted. Arguments of Learned
Advocates having been heard, Learned Trial Judge having found that the stipulated
amount of stamp duty has not been paid in respect of the said instrument, has passed an
order dated 26.03.2010, directing payment of deficit stamp duty and penalty. Assailing
the said order this petition was filed.

2. Sri Shivakumar Kalloor, Learned Advocate contended that deficit stamp duty payable
in respect of the agreement dated 10.06.2008 having been made good by way of purchase
of the requisite stamp i.e., before the institution of the suit and the stamp papers having
been produced along with the plaint, there is no scope for impounding of the instrument.
He submitted that the order passed to pay deficit stamp duty and penalty is contrary to
Section 34 of the Karnataka Stamp Act, 1957 (for short, ‘the Act’). Reliance was placed on
the decision in S. Kaladevi v. V.R. Somasundaram1 . Learned Counsel contended that the
impugned order is arbitrary and liable to be set-aside.

Page: 3425

3. Sri Veeranagouda Patil, Learned Advocate on the other hand contended that the
agreement dated 10.06.2008 being insufficiently stamped and attempted to be admitted
in evidence, Learned Trial Judge having examined the instrument upon objection being
raised, is justified in passing the order directing payment of the deficit stamp duty and
penalty. He submitted that Sections 33 and 34 of the Act impose a duty upon the Court to
impound the document which has not been sufficiently stamped so as to safeguard the
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interest of the revenue. He further submitted that the plaintiffs having not followed the
procedure as per Section 31 of the Act, mere production of stamp papers along with the
plaint to cover the deficit stamp duty does not satisfy the requirement of law. Learned
Advocate submitted that having regard to the facts and circumstances of the case, no case
exists for interference.
4. Considered the rival contentions and perused the record. There is no dispute that
stipulated stamp duty was not paid while entering into the agreement dated 10.06.2008
i.e., when the possession of the suit property was allegedly delivered to the plaintiffs. The
case of the plaintiffs is, “that to make up the deficit stamp duty in respect of the said
instrument, they purchased and produced the stamp papers of the requisite value along
with plaint”. In the said background, the point for consideration is, whether Trial Judge
isjustified in directing payment of the deficit stamp duty and penalty on the instrument
which is the foundation for the suit?

Page: 3426

5. Section 33 of the Act casts a duty upon the authorities concerned, including the
Courts, to impound a document, where the instrument produced is insufficiently stamped.
Section 34 makes the instruments not duly stamped inadmissible in evidence. An
instrument not duly stamped shall 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 penalty.
6. In the present case, instrument dated 10.06.2008 being insufficiently stamped,
same is inadmissible in evidence on account of prohibition in Section 34. Court being the
authority to receive the instrument in evidence, to give effect thereto, agreement to sell
with possession being an instrument which requires payment of the stamp duty applicable
to the deed of conveyance, stamp duty required to be paid having not been paid, Trial
Judge has held the instrument is inadmissible in evidence. By impounding the instrument,
Trial Judge has determined the deficit stamp duty and penalty as per the provisions of the
Act.
7. Section 31 provides for adjudication as to proper stamps i.e., when an instrument
whether executed or not and whether previously stamped or not is brought to the Deputy
Commissioner and the person bringing it applies to have the opinion of that officer as to
the duty (if any) with which it is chargeable, and pays the fee, Deputy Commissioner shall
determine the duty (if any) with which, in his

Page: 3427

judgment, the instrument is chargeable. Sub-Section (1) of Section 32 provides that when
an instrument is brought to the Deputy Commissioner under Section 31 and the duty
payable is determined and is paid, shall certify by endorsement on the instrument that the
full duty (stating the amount) with which it is chargeable has been paid. Sub-Section (2)
makes clear that when such instrument is in the opinion of the Deputy Commissioner not
chargeable with duty, he shall certify in the manner stated in sub-Section (1), that such
instrument is not so chargeable. Sub-Section (3) makes clear that (subject to any orders
made under Chapter IV of the Act, any instrument upon which) an endorsement has been
made under the Section shall be deemed to be duly stamped or not chargeable with duty,
as the case may be; and, if chargeable with duty shall be receivable in evidence or
otherwise, and may be acted upon and registered as if it is originally duly stamped.

8. Sections 31 and 32 of the Act provide for adjudication of stamp duty. Under Section
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31 it is open to the executant of any instrument to produce the document before the
Deputy Commissioner, and require him to adjudicate on the question whether the
document should bear any stamp duty. The Deputy Commissioner, thereupon should
adjudicate stamp duty with which payment can be made to avoid impounding the
document by a Court of authority empowered to receive the document in evidence. The
said procedure could have been followed by the petitioners instead of buying the stamp
papers and producing along with the plaint which does not meet the requirement of law.

Page: 3428

9. In the present case, the plaintiffs did not approach the Deputy Commissioner for
adjudication as to the proper stamp duty i.e., in exercise of the power under Section 31 of
the Act. The plaintiffs have not produced the certificate of Deputy Commissioner as per the
provisions of Section 32 of the Act. Merely because the deficit stamp duty payable in
respect of the agreement dated 10.06.2008 was produced along with the plaint, it cannot
be construed that such an act amounts to adjudication and certification by the Deputy
Commissioner as per the provisions made under Sections 31 and 32 respectively of the
Act.
10. In Kaladevi's case (supra), suit was laid for specific performance and stress was
laid on the proviso to Section 49 of the Registration Act which specifically excludes the
mandatory requirement of registration in the substantive part of Section 49 read with
Section 17 of the Transfer of Property Act. Reliance having been placed upon the
unregistered sale deed at least for the purpose of proof of an oral agreement of sale as
collateral transaction, Apex Court has held that in such a situation, the document in
question can be received in evidence by making an endorsement that it is received only as
evidence of oral agreement of sale under the proviso to Section 49 of the Registration Act.
Having regard to the fact situation as is appearing in the present case, the said decision
has no application and is clearly distinguishable in as much as the instrument in question
is sought to be admitted in evidence to prove the transaction and not for collateral
purpose.

Page: 3429

11. In the above view of the matter, the Learned Trial Judge is justified in passing the
order dated 26.03.2010 directing payment of stamp duty and penalty. Impugned order
does not suffer from any legal infirmity warranting interference in exercise of power under
Article 227 of the Constitution.
In the result, petition is dismissed. However, the petitioners are granted time till
31.03.2017 to pay duty and penalty on the instrument in question. Learned Trial Judge
shall follow the procedure as has been indicated in the case of Digambar Warty v. District
Registrar, Bangalore Urban District2 .
———
* W.P. No. 83041/2010 (GM-CPC), Dated: 27th day of January, 2017.

1. (2010) 5 SCC 401 : AIR 2010 SC 1654.

2.
ILR 2013 KAR 2099.

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