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2024 SCC OnLine SC 2320

In the Supreme Court of India

(BEFORE HRISHIKESH ROY AND S.V.N. BHATTI, JJ.)

Seetharama Shetty … Appellant(s);

Versus
Monappa Shetty … Respondent(s).
Civil Appeal Nos. 10039-40 of 2024 [@S.L.P. (Civil) Nos. 7249-
7250 of 2022]
Decided on September 2, 2024
The Judgment of the Court was delivered by
S.V.N. BHATTI, J.:— 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. 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

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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 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

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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 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

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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.
12. The learned Amicus Curie places reliance on Gangappa v.
Fakkirappa1, Trustees of H.C. Dhanda Trust v. State of Madhya
2
Pradesh , Digambar Warty v. District Registrar, Bangalore Urban
3 4 5
District , K. Amarnath v. Smt. Puttamma , Suman v. Vinayaka , Niyaz
6
Ahmed Siddique v. Sanganeria Company Private Limited , United
7
Precision Engineers Private Limited v. KIOCL Limited , Chilakuri
8
Gangulappa v. Revenue Divisional Officer, Madanpalle , and Sri. K.
Govinde Gowda v. Smt. Akkayamma9, 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

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Commissioner while exercising the powers under the Act. Thus,

expecting the court to exercise the discretion of Section 39 of the Act is
untenable.
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:
“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

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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.
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

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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
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
judgment of this Court on the object of the Indian Stamp Act, 1899.
17.1. In Re: Interplay Between Arbitration Agreements under
11
Arbitration and Conciliation Act, 1996 and Stamp Act, 1899 , 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

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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.”
12
17.2. In Hindustan Steel Limited v. Dilip Construction Company ,
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.”
13
17.3. The ratio in District Registrar and Collector v. Canara Bank
and State of Maharashtra v. National Organic Chemical Industries
Limited14 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 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

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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 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)”
17
20. Further, in Petiti Subba Rao v. Anumala S. Narendra , 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

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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)”
19 20 21 22
21. As per the steps taken under Sections 33 , 34 , 35 , 37 ,
23
and 39 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 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

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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. Subsection (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.
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

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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 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.
———
1
(2019) 3 SCC 788.

2
(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) 4 SCC 197.

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9
ILR 2011 Kar 4719.

10
(2008) 3 SCC 674.

11
(2024) 6 SCC 1.

12
(1969) 1 SCC 597.

13
(2005) 1 SCC 496.

14
2024 SCC OnLine SC 497.

15
(2005) 10 SCC 746.

16
2020 SCC OnLine SC 753

17
(2002) 10 SCC 427

18

Karnataka §33 §34 §35 §36 §37 §38 §39

Stamp Act,
1957

Indian §33 §35 §36 §37 §38 §39 §40

Stamp Act,
1899

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

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(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

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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 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.]

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