Nirmala Manherlal Shah vs State Of Maharashtra And Ors.
on 3 May, 2005
Bombay High Court
Nirmala Manherlal Shah vs State Of Maharashtra And Ors. on 3 May, 2005
Equivalent citations: 2005 (5) BomCR 206, 2005 (3) MhLj 829
Author: F Rebello
Bench: F Rebello, S Kukday
JUDGMENT F.I. Rebello, J.
1. Rule. Heard forthwith.
2. The petitioner entered into an agreement with M/s Diamond Creek dated 19th July, 1980. By that
agreement M/s Diamond Creek agreed to acquire, assign and transfer all the benefits of the
Agreement dated 13th November, 1978 between M/s Unique Enterprises (India) and M/s Diamond
Creek together with right to occupy, enjoy and possess the premises. The price was set out. The
transaction was to be completed within 15 days of the Agreement. The petitioner lodged the
agreement with the Collector for an endorsement whether the document was properly stamped. On
5th March, 2003 the petitioner received a demand notice by hand delivery informing that the
agreement submitted was impounded under Section 32 of the Bombay Stamp Act, 1958. The
petitioner was called upon to pay a sum of Rs. 87,200/- as stamp duty and Rs. 1,74,000/- as penalty,
thus aggregating to a sum of Rs. 2,61,600/-. It is the case of the petitioner that she informed the
respondents that the demand was illegal as the amendment by way of explanation to Article 24 of
Schedule I to the Bombay Stamp Act, 1958 came into force on 9th December, 1985 and the
execution of the agreement was on 19th July, 1980. Though the petitioner was not bound to pay the
amount, the petitioner however paid Rs. 2,61,600/- under protest under covering letter dated 11th
March, 2003 which according to the petitioner was not acknowledged. The sum of Rs. 2,61,600/-
was accepted and receipt issued. The petitioner thereafter by letter of 4th August, 2003 after
drawing the attention of the respondents to the judgment of this Court called for refund of the
amount with interest at 12% p. a. As the respondents failed to refund the said amount the present
petition with the reliefs as prayed for.
3. On behalf of the respondents Samir Madhav Kurtkoti, Additional Superintendent of Stamps has
filed an affidavit. It is set out that Section 32A of the Bombay Stamp Act, 1958 was substituted with
effect from 4th July, 1980 by Section 10 of Maharashtra Act 27 of 1985. By virtue of Section 32A as
amended any instrument of conveyance or transfer of lease by way of assignment executed on or
after 4th July, 1980 is included. It is pointed out that this was required to be introduced as there was
a deliberate avoidance of payment of stamp duty on conveyance and the State revenue suffered
seriously. It is set out that the petitioner paid Rs. 5/- only as stamp which was the duty in the year
1980, but did not produce it for registration and presented the said document for adjudication on
13th November, 2002 after nearly 22 years with a deliberate view to avoid payment of stamp duty.
As she could not sell the property without payment of the stamp duty the petitioner presented the
document for adjudication on 13th November, 2002. Adverting to the judgment of the learned
Judge of this Court in Padma Nair v. The Deputy Collector, Valuation and Stamp Duty, and Anr., , it
is set out that the judgment is not applicable as in that case the petitioner had lodged the same for
registration on the date of execution i.e. on 16th October, 1984.
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Nirmala Manherlal Shah vs State Of Maharashtra And Ors. on 3 May, 2005
4. We have heard learned Counsel for the parties and the contentions as urged therein. Two issues
arise in this petition, (1) If a document was submitted under Section 31 of the Bombay Stamp Act,
1958 for adjudication whether it was open to the respondent to impound the said document and
demand the stamp duty and penalty in terms of the demand made on the petitioner and (2) whether
the agreement to sell entered into in the year 1980 requires payment of Court Fees in terms of the
amendment to the Bombay Stamp Act, 1958 which insofar as payment of stamp duty is concerned
came into effect from 10th December, 1985.
5. We may first deal with the issue of Section 31 of the Bombay Stamp Act. Section 31 provides that if
a document as set out therein is brought to the Collector by one of the parties to the instrument and
such person applies to have the opinion of that officer as to the duty with which or the Article of
Schedule I under which it is chargeable and pays a fee of one hundred rupees, the Collector shall
determine the duty with which or the Article of Schedule I under which in his judgment, the
instrument is chargeable. The petitioner has paid the fees of Rs. 100/-. The other sub-section
provides for the procedure and the requirement as to what is to be done when a document is to be
submitted. The power, therefore, referable under Section 31 is a power of adjudication for deciding
what is the stamp duty payable. A similar issue came up for consideration before the Apex Court in
the case of Government of Uttar Pradesh and Ors. v. Raja Mohammad Amir Ahmad Khan, under the
provisions of the Stamp Act, 1899. One of the issues for consideration was Section 31(1) of the
Stamp Act which for all purposes is in pari materia with Section 31(1) of the Bombay Stamp Act,
1958 except to the extent of the fees. On considering the true scope of Section 31 and other
provisions the Apex Court observed as under :--
"It would be an extraordinary position if a person seeking the advice of the Collector and not
wanting to rely upon an instrument as evidence of any fact to be proved nor wanting to do any
further act in regard to the instrument so as to the effectuate its operation should also be liable to
the penalties which unstamped instruments used as above might involve. The scheme of the Act
shows that where a person is simply seeking the opinion of the Collector as to the proper duty in
regard to an instrument, he approaches him under Section 31. If it is not properly stamped and the
person executing the document wants to proceed with effectuating the document or using it for the
purposes of evidence, he is to make up the duty and under Section 32 the Collector will then make
an endorsement and the instrument will be treated as if it was duly stamped from the very
beginning. But if he does not want to proceed any further than seeking the determination of the duty
payable then no consequence will follow and an executed document is in the same position as an
instrument which is unexecuted and unstamped and after the determination of the duty the
Collector becomes functus officio and the provisions of Section 33 have no application. The
provisions of that section are a subsequent stage when something more than mere asking of the
opinion of the Collector is to be done."
From the ratio of the said judgment it will be clear that when an application is moved under Section
31 the jurisdiction of the Collector is limited to decide or determine the duty payable. Once he does
so he becomes functus officio and in those cases he cannot apply the provisions of Section 33 of the
Stamp Act which is similar to Section 32 of the Bombay Stamp Act which is the power to impound
the instrument. The action, therefore, of the respondents in impounding the document was clearly
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Nirmala Manherlal Shah vs State Of Maharashtra And Ors. on 3 May, 2005
without jurisdiction and on this count alone the order to impound dated 5th March, 2003 is liable to
be set aside and the relief of refund as sought for by the petitioner will have to be allowed.
6. Having said so we may now deal with another issue as to whether the amendment Act 27 of 1985
is applicable. At the outset it may be pointed out that two learned single Judges of this Court in
Padma Nair v. The Deputy Collector, Valuation and Stamp Duty and Anr., and in ITC Ltd. and Anr.
v. The State of Maharashtra and Ors., 1997 (4) BCR 536, have held that they would not apply to
transactions before 9-12-1987. We may examine the said contention. On behalf of the respondents it
is submitted that they require reconsideration. Maharashtra Act 27 of 1985 came into force from
9-12-1987. Schedule I to the Act was substituted by new schedule. Conveyance was included under
Article 25 of Schedule I and the fees payable thereunder were set out. There were Explanations of
which Explanation I, provided that where in the case of agreement to sell an immovable property,
the possession of any immovable property is transferred or agreed to be transferred to the purchaser
before the execution, or at the time of execution, or after the execution of such agreement, then such
agreement to sell, shall be deemed to be a conveyance and stamp duty thereon shall be leviable
accordingly. In other words though normally the Agreement to sell does not result in any interest or
property being transferred, nevertheless by the explanation if the ingredients as set out therein were
established, such an agreement is deemed to be a conveyance and stamp paper has to be paid
accordingly. We may gainfully reproduce the relevant portion of the Article :--
"Explanation 1 -- For the purposes of this Article, where in the case of agreement to sell an
immovable property, the possession of any immovable property is transferred or agreed to be
transferred to the purchaser before the execution, or at the time of execution, or after the execution
of, such agreement then such agreement to sell shall be deemed to be a conveyance and stamp duty
thereon shall be leviable accordingly;
Provided that, the provisions of Section 32A shall apply mutatis mutandis to such agreement which
is deemed to be a conveyance as aforesaid as they apply to a conveyance under that section.
Provided further that, where subsequently a conveyance is executed in pursuance of such agreement
of sale, the stamp duty, if any, already paid or recovered on the agreement of sale which is deemed
to be a conveyance, shall be adjusted towards the total duty leviable on the conveyance."
Learned Counsel on behalf of the respondents had drawn the attention of the Court however to
Section 32A which was substituted with effect from 4th July, 1980 by Maharashtra Act 27 of 1985.
That section requires that every instrument of conveyance, exchange, gift, certificate of sale, deed of
partition or power of attorney to sell immovable property when given for consideration, deed or
settlement or transfer of lease by way of assignment, presented for registration under the provisions
of Registration Act, 1908, shall be accompanied by a true copy thereof. The proviso provides that in
respect of instrument accepted on or after 4th July, 1980, to the date of commencement of the
Bombay Stamp (Amendment) Act, 1985, an extract of the instrument to be taken from the
registration record shall be deemed to be the true copy accompanying the instrument, presented for
registration for the purposes of Sub-section (1). Under Sub-section (2) if any officer registering such
instrument has reason to believe, on the basis of the information available with him in this behalf,
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Nirmala Manherlal Shah vs State Of Maharashtra And Ors. on 3 May, 2005
that the market value of the immovable property which is the subject matter at such instrument has
not been truly set forth therein, he may, immediately after presentation of such instrument, give a
notice to the person who is likely to pay the stamp duty under Section 30, calling upon such person
to pay the deficit amount of stamp duty and a penalty at the rate of 2 per cent of the deficient
portion of the stamp duty, for every month or part thereof from the date of execution of such
instrument. The other provision provides for effect of payment or non-payment. In other words the
section would come into play if the document is presented for registration or if such document is
presented before any of the person or authority as specified under Section 33, in which event the
Collector may proceed to pass orders for payment of deficient stamp duty. The learned Judge in the
case of Padma Nair (supra) after considering the matter was pleased to hold that Article 25 in
Schedule I considering the explanation would be applicable to agreements made with effect from
9th December, 1985 and not earlier. The matter again came up for consideration before another
learned single Judge in the case of ITC Limited and Anr. v. The State of Maharashtra and Ors., . In
that case also the agreement was executed in the year 1973, and stamp duty of Rs. 5/- was paid. The
Collector-stamps insisted that considering the amendment full stamp duty with penalty had to be
paid. The learned Judge relied upon the judgment in the case of Padma Nair (supra) and also
independently came to the conclusion that the amendment under Item 25 would not be applicable
to agreements which were entered into before 9th December, 1985.
These judgments hold the field, Padma Nair (supra) was a judgment delivered on 28th July, 1993.
The decision of Padma Nair has been followed subsequently. The State Government, it appears; has
not challenged the correctness of the view taken in Padma Nair and for the last 12 years this is the
view and Item 25 is understood in terms of the law as set out in Padma Nair (supra).
The learned Counsel for the respondents, as pointed out earlier, sought to rely upon Section 32A on
the ground that it was made applicable retrospectively from the year 1980. As noted earlier Section
32A would be applicable if the document was presented for registration or had come up before the
authorities under Section 33 of the Act. Section 32A was referred to in the case of Padma Nair
(supra). Even otherwise all that Section 32A would mean is that every instrument of conveyance if
presented for registration under the provisions of Registration Act, power has been given to the
Officer to examine whether it has been properly stamped. Though Section 32A was introduced by
Act 27 of 1985 and the Schedule to the Act was also substituted Act 27 of 1985 nevertheless in so far
as Item 25 is concerned it was made applicable and/or came into force only with effect from 9th
December, 1985. Therefore, the explanation under Item 25 if the agreement is held to be a
conveyance the fees as amended would be payable after 9th December, 1985. If the document is not
presented for registration it would have the same effect as an unexecuted document. We are,
therefore, of the view that the view taken in Padma Nair (supra) and ITC Ltd. (supra) would be the
correct interpretation of Item 25 of Schedule I to the Bombay Stamp Act. We, therefore, have no
reason to differ from the view taken by the two learned Single Judges of this Court.
7. In the instant case as we have already noted the document was impounded when the petitioner
had applied under Section 31. The action of the respondent was clearly without jurisdiction. Even
otherwise considering the answer to Issue No. 2 on the date the agreement was entered into the
document was properly stamped. In the light of that the petition will have to be allowed.
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Nirmala Manherlal Shah vs State Of Maharashtra And Ors. on 3 May, 2005
8. Rule accordingly made absolute in terms of prayer Clause (a) as also prayer Clause (b), except the
interest on the sum of Rs. 2,61,600/- will be at the rate of 6% per annum from 12th March, 2003 till
payment/realisation. In the circumstances there shall be no order as to costs.
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