Shri Manjunath K vs Shri H R Ravichandra on 3 April, 2024

Shri Manjunath K vs Shri H R Ravichandra on 3 April, 2024

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NC: 2024:KHC:13751
WP No. 14182 of 2020

IN THE HIGH COURT OF KARNATAKA AT BENGALURU

DATED THIS THE 3RD DAY OF APRIL, 2024

BEFORE
THE HON'BLE MR JUSTICE R. NATARAJ
WRIT PETITION NO. 14182 OF 2020 (GM-CPC)
BETWEEN:
SHRI MANJUNATH K.,
S/O R.K. MURTHY,
AGED ABOUT 62 YEARS,
R/A NO.KUMAR NURSERY,
NEW BANK COLONY,
KONANAKUNTE,
BENGALURU 560062.
...PETITIONER
(BY SRI. PRAKASH T. HEBBAR, ADVOCATE)

AND:
1. SHRI H.R. RAVICHANDRA
S/O LATE RAJASHEKAR REDDY,
AGED ABOUT 51 YEARS,
R/A NO.748, 18TH MAIN,
6TH BLOCK, KORAMAGNALA,
BENGALURU-560095.
Digitally signed 2. SHRI SRIDHAR L.,
by
MARKONAHALLI S/O SHRI K.B. LAKSHMAN,
RAMU PRIYA
Location: HIGH
AGED ABOUT 41 YEARS,
COURT OF R/A NO.KUMAR NURSERY,
KARNATAKA
NEW BANK COLONY,
KONANAKUNTE,
BENGALURU-560062.
...RESPONDENTS

(BY SRI. H.S.DWARKANATH, ADVOCATE FOR RESPONDENT NO.1;

SRI. H.R.RAGHU, ADVOCATE FOR RESPONDENT NO.2)

THIS WP IS FILED UNDER ARTICLE 227 OF THE

CONSTITUTION OF INDIA PRAYING TO CALL FOR THE RECORDS ON

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 Shri Manjunath K vs Shri H R Ravichandra on 3 April, 2024

THE FILE OF THE HON'BLE LXXV ADDITIONAL CITY CIVIL AND

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NC: 2024:KHC:13751
WP No. 14182 of 2020

SESSIONS JUDGE AT BENGALURU ON IA NO.6 IN O.S.NO.2568/2013

AND PERUSE THE SAME, HEAR THE PARTIES AND GRANT THE
FOLLOWING RELIEFS TO THE PETITIONER AS AGAINST THE FIRST
RESPONDENT AND SET ASIDE THE IMPUGNED ORDER DATED
30.06.2020 PASSED BY THE HON'BLE LXXV ADDITIONAL CITY CIVIL
AND SESSIONS JUDGE AT BENGALURU ON I.A NO.6 IN
O.S.NO.2568/2013 AS PER ANNEXURE-A AND ALLOW THE I.A AS
PRAYED FOR.

THIS PETITION, COMING ON FOR DICTATING ORDERS, THIS

DAY, THE COURT MADE THE FOLLOWING:

ORDER

The Defendant No.1 in O.S. No.2568/2013 on the file of the LXXV Additional City Civil and Sessions
Judge, Bengaluru City, (henceforth referred to as 'the Trial Court') has filed this writ petition
challenging an order dated 30.06.2020 passed therein by which it rejected an application (I.A.
No.VI) filed by him under Sections 33 and 34 of the Karnataka Stamp Act, 1957 (for short, 'the Act,
1957').

2. The parties shall henceforth be referred to as they were arrayed before the Trial Court. The
petitioner herein was the defendant No.1 while the respondent No.1 NC: 2024:KHC:13751 herein
was the plaintiff and respondent No.2 was the defendant No.2 in the suit.

3. The suit in O.S. No.2568/2013 was filed for specific performance of an agreement of sale dated
05.05.2008 allegedly executed by the defendants in favour of the plaintiff in respect of the suit
schedule property.

4. The defendant No.1 filed his written statement admitting the execution of the agreement dated
05.05.2008 but contended that the said agreement was not duly stamped as possession of the suit
property was agreed to be delivered before the execution of the sale deed. He further contended that
the defendants were always ready and willing to perform their part of the contract and the same was
indicated to the plaintiff in terms of their reply notice but the plaintiff did not come forward to
conclude his part of the contract. However, he claimed that after three years from the date of receipt
of the reply, the plaintiff had filed the suit for specific performance. He contended that it was the
plaintiff who NC: 2024:KHC:13751 was responsible for not concluding the transaction and hence,
the plaintiff was not entitled to any reliefs in the suit. The defendant No.1 further referred to clause
No.13 in the sale agreement dated 05.05.2008 which provided for refund of the earnest money paid
along with interest stated therein. He therefore, contends that the plaintiff was not entitled to
specific performance of the contract.

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 Shri Manjunath K vs Shri H R Ravichandra on 3 April, 2024

5. The defendant No.2 also filed a separate written statement admitting the execution of the sale
agreement dated 05.05.2008. He contended inter alia that under the sale agreement dated
05.05.2008, the possession of the suit property was to be delivered before the execution of the sale
deed and therefore, the document was compulsorily registrable with effect from 24.09.2001.
Therefore, he contended that the agreement of sale was unenforceable in law. He further contended
that as per the agreement dated 05.05.2008, the plaintiff was given six months time to clear the
pending litigation and since the plaintiff did not take any steps in that regard, the NC:
2024:KHC:13751 plaintiff has lost the right to seek for specific performance of the agreement of sale.
The defendant No.2 raised several other contentions and claimed that the plaintiff was not entitled
to any reliefs in the suit.

6. Based on these contentions, the Trial Court framed issues and set down the case for trial. The
plaintiff was examined as PW.1 and he marked several documents amongst which the agreement of
sale dated 05.05.2008 was marked as Ex.P1, as the counsel for defendants was absent on the said
date and no objection was raised against marking the document. Later, the defendants filed an
application (I.A. No.VI) under Sections 33 and 34 of the Act, 1957 to impound the agreement of sale
dated 05.05.2008 and to call upon the plaintiff to pay necessary duty and penalty on the said
document. This application was opposed by the plaintiff who contended that once a document was
marked in evidence, there was no question of revisiting the said document and the admissibility of
the document cannot be questioned, even if sufficient stamp NC: 2024:KHC:13751 duty was not
paid thereon. The Trial Court relied upon the judgment of the Hon'ble Apex Court in the case of
Shyamal Kumar Roy v. Sushil Kumar Agarwal [AIR 2007 SC 637] where it relied upon its earlier
decision in Javer Chand and others v. Pukhraj Surana [AIR 1961 SC 1655] where it was held "Once a
document has been marked as an exhibit in the case and the trial has proceeded all along on the
footing that the document was an exhibit in the case and has been used by the parties in
examination and cross-examination of their witnesses, Section 36 of the Stamp Act comes into
operation. Once a document has been admitted in evidence, as aforesaid, it is not open either to the
trial court itself or to a court of appeal or revision to go behind that order. Such an order is not one
of those judicial orders which are liable to be reviewed or revised by the same court or a court of
superior jurisdiction." The Trial Court relied upon a judgment of coordinate Bench of this Court in
Sri R. Mahesh and Another v. Sri B.P. Venugopal [ILR 2018 Kar 3029] where it was held that once a
document is NC: 2024:KHC:13751 marked in evidence, there was no question of the defendants
raising objections regarding sufficiency of the stamp duty paid thereon and to impound the said
document. Consequently, the Trial Court rejected the application (I.A No.VI) in terms of the
impugned order.

7. Being aggrieved by the impugned order, the defendant No.1 is before this Court in this petition.

8. Learned counsel for the petitioner contended that once a document is marked without objection,
no doubt the question regarding the admissibility of the document on the ground that sufficient
stamp duty was not paid thereon, cannot be raised. However, he contended that the Court does not
loose jurisdiction to impound the document for collection of proper duty and penalty in view of
Section 33 of the Act, 1957. He further contended that a Division Bench of this Court in Digambar
Warty and others v. District Registrar, Bangalore Urban District and another [ILR 2013 KAR 2099]

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 Shri Manjunath K vs Shri H R Ravichandra on 3 April, 2024

had held that once a document which is NC: 2024:KHC:13751 insufficiently stamped is produced
before the Court, the Court is bound to impound it and also collect penalty which is ten times the
stamp duty payable. He contended that the Division Bench held that there was no discretion left
with the Court to impose any stamp duty lesser than 10 times the stamp duty as penalty. He further
relied upon the judgment of the coordinate Bench of this Court in Shri. K. Dinesh and others vs.
Shri. Kumaraswamy and others [W.P. No.1428/2009 and connected cases decided on 30.08.2010]
where it was held that the Court does not loose jurisdiction to collect the duty and penalty on a
document which is marked in evidence.

9. Per contra, the learned counsel for the plaintiff / respondent No.1 contended that once a
document is marked in evidence, the question of going back and reconsidering the question whether
proper stamp duty was paid or not does not arise. He contends that the right to collect duty and
penalty arises once the document is produced before the Court and if the Court had failed to NC:
2024:KHC:13751 exercise jurisdiction, then it looses its right to call upon the person producing it to
pay the stamp duty. In this regard, he relied upon judgments of coordinate Bench/es of this Court in
Sri. Ninganagouda v. Smt. Kalaubai and others [ILR 2011 KAR 760] and Sri. H. Krishnappa v. Sri.
M.D. Ashwathnarayan Singh [AIR 2011 Kar 128]. He also relied upon the judgment of the Hon'ble
Apex Court in Javer Chand's case, referred supra and contended that the Court had lost its right to
impound the document to collect duty and penalty on the said agreement.

10. I have considered the submissions made by the learned counsel for the defendant No.1 /
petitioner as well as the learned counsel for the plaintiff / respondent No.1.

11. In the case on hand, the document in question is an agreement of sale dated 05.05.2008 in terms
of which the defendants had agreed to sell the suit property for a total sale consideration of
Rs.14,33,25,000/- and had received a sum of Rs.2,00,00,000/- as part of the agreed

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NC: 2024:KHC:13751 sale consideration. The agreement provided that the possession of the
property would be delivered on the date of the agreement. This therefore meant that the possession
of the property would be delivered before the parties entered into a deed of absolute sale and
therefore the stamp duty was ordinarily payable under Article 5(e)(i) of the Act, 1957. Therefore, it
was an insufficiently stamped document as it was drawn up on a stamp paper of Rs.200/-. It is not
in dispute that the said agreement was marked in evidence as Ex-P1 and no objection was raised by
the defendants against marking it. However, there is nothing to show that the Trial Court had
applied its mind to consider whether the document was duly stamped or not. The seminal question
is whether the Court has the power to direct payment of stamp duty and penalty, after a document is
marked in evidence without any objection by the opposing side.

12. In order to understand the scope, purpose and purport of the law relating to collection of deficit
stamp

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 Shri Manjunath K vs Shri H R Ravichandra on 3 April, 2024

NC: 2024:KHC:13751 duty on instruments in the State of Karnataka and how insufficiently stamped
documents are to be dealt with, the provisions of the following Sections of the Act, 1957 deserve to
be noticed.

"3: Instruments chargeable with duty.- Subject to the provisions of this Act and the
exemptions contained in the Schedule, the following instruments shall be chargeable
with duty of the amount indicated in that schedule as the proper duty therefor,
respectively, that is to say,--

(a) every instrument mentioned in that schedule which, not having been previously
executed by any person, is executed in the territories of the State of Karnataka on or
after the commencement of this Act; and

(b) every instrument mentioned in that schedule which, not having been previously
executed by any person, is executed out of the State of Karnataka on or after that day,
relates to any property situate, or to any matter or thing done or to be done, in the
territories of the State of Karnataka and is received in the territories of the State of
Karnataka:

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NC: 2024:KHC:13751 Provided that no duty shall be chargeable in respect of,--

(1) any instrument, executed by, or on behalf of, or in favour of, the State
Government in cases where, but for this exemption, the State Government would be
liable to pay the duty chargeable in respect of such instrument;

(2) any instrument for sale, transfer or other disposition, either absolutely or by way
of mortgage or otherwise, of any ship or vessel, or any part, interest, share or
property of or in any ship or vessel registered under the Merchant Shipping Act,
1958.

Explanation.- Where no proper duty has been paid on the original of an instrument which is
chargeable with an amount indicated in the Schedule as proper duty therefor, then a copy of such
instrument whether certified or not and whether a facsimile image or otherwise of the original shall
be chargeable with duty of an amount which is indicated in Schedule as proper duty for the original
of such instrument, and all the provisions of this chapter and Chapters IV, VI, VII and VIII of this
Act shall mutatis mutandis be applicable to such copy of the original. xxx

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NC: 2024:KHC:13751

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 Shri Manjunath K vs Shri H R Ravichandra on 3 April, 2024

17. Instruments executed in the State of Karnataka.- All instruments chargeable with duty and
executed by any person in the State of Karnataka shall be stamped before or at the time of execution.

Provided that nothing in this section shall apply to an instrument in respect of which stamp duty has
been paid under Section 10-A. xxx

31. Adjudication as to proper stamps.- (1) When any 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 a fee of one hundred rupees, the Deputy Commissioner shall determine the duty (if any) with
which, in his judgment, the instrument is chargeable.

(2) For this purpose the Deputy Commissioner may require to be furnished with an abstract of the
instrument, and also with such affidavit or other evidence as he may deem necessary to prove that
all the facts and circumstances affecting the chargeability of the instrument with duty, or the
amount of the duty with which it is chargeable, are fully and truly set forth therein, and may refuse
to

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NC: 2024:KHC:13751 proceed upon any such application, until such abstract and evidence have
been furnished accordingly:

Provided that-

(a) no evidence furnished in pursuance of this section shall be used against any
person in any civil proceeding except in any enquiry as to the duty with which the
instrument to which it relates is chargeable; and

(b) every person by whom any such evidence is furnished, shall, on payment of the
full duty with which the instrument to which it relates, is chargeable, be relieved from
any penalty which he may have incurred under this Act by reason of the omission to
state truly in such instrument any of the facts or circumstances aforesaid.

32. Certificate by Deputy Commissioner.- (1) When an instrument brought to the Deputy
Commissioner under section 31, is in his opinion, one of a description chargeable with duty, and

(a) the Deputy Commissioner determines that it is already fully stamped, or

(b) the duty determined by the Deputy Commissioner under section 31, or such a

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 Shri Manjunath K vs Shri H R Ravichandra on 3 April, 2024

NC: 2024:KHC:13751 sum as, with the duty already paid in respect of the instrument, is equal to the
duty so determined, has been paid, the Deputy Commissioner shall certify by endorsement on such
instrument that the full duty stating the amount with which it is chargeable has been paid.

(2) When such instrument is, in his opinion, not chargeable with duty, the Deputy Commissioner
shall certify in manner aforesaid that such instrument is not so chargeable, (3) Subject to any orders
made under Chapter VI, any instrument upon which an endorsement has been made under this
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 had been originally duly stamped:

Provided that nothing in this section shall authorise the Deputy Commissioner to
endorse,-

(a) any instrument executed or first executed in India and brought to him after the
expiration of one month from the date of its execution, or first execution, as the case
may be;

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NC: 2024:KHC:13751

(b) any instrument executed or first executed out of India and brought to him after the expiration of
three months after it has been first received in the State of Karnataka; or

(c) any instrument chargeable with a duty not exceeding fifteen naye paise or a mortgage of crop
Article [35](a) of the Schedule chargeable under clause (a) or (b) of section 3 with a duty of
twenty-five naye paise, when brought to him, after the execution thereof, on paper not duly
stamped.

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 State

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NC: 2024:KHC:13751 of Karnataka when such instrument was executed or first executed:

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 Shri Manjunath K vs Shri H R Ravichandra on 3 April, 2024

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.

34. Instruments not duly stamped inadmissible in evidence, etc.- No instrument chargeable with

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NC: 2024:KHC:13751 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 with a duty not
exceeding fifteen naye paise only, or a mortgage of crop Article [35](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, of the amount
required to make up such duty, together with a penalty of five rupees, or, when ten
times the amount of the proper duty or deficient portion thereof exceeds five rupees,
of a sum equal to ten times such duty or portion;

(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,

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 Shri Manjunath K vs Shri H R Ravichandra on 3 April, 2024

the contract

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NC: 2024:KHC:13751 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 Deputy Commissioner as provided by section 32 or any other provision of this Act and such
certificate has not been revised in exercise of the powers conferred by the provisions of Chapter VI.

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.

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NC: 2024:KHC:13751

36. Admission of improperly stamped instruments.- The State Government may make rules
providing that, where an instrument bears a stamp of sufficient amount but of improper description,
it may, on payment of the duty with which the same is chargeable, be certified to be duly stamped,
and any instrument so certified shall then be deemed to have been duly stamped as from the date of
its execution.

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 Deputy Commissioner an authenticated copy of such instrument, together
with a certificate in writing, stating the amount of duty and penalty levied in respect thereof, and
shall send such amount to the Deputy Commissioner or to such person as he may appoint in this
behalf.

(2) In every other case, the person so impounding an instrument shall send it in original to the
Deputy Commissioner

38. Deputy Commissioner's power to refund penalty paid under sub-section (1) of section

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NC: 2024:KHC:13751

37.- (1) When a copy of an instrument is sent to the Deputy Commissioner under sub-section (1) of
Section 37, he may, if he thinks fit, refund any portion of the penalty in excess of five rupees which
has been paid in respect of such instrument.

(2) When such instrument has been impounded only because it has been written in contravention of
section 13 or section 14, the Deputy Commissioner may refund the whole penalty so paid.

39. Deputy Commissioner's power to stamp instruments impounded.- (1) When the Deputy
Commissioner 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 with a duty not exceeding
fifteen naye paise only or a mortgage of crop [Article [35](a) of the Schedule] chargeable under
clause (a) or (b) of Section 3 with a duty of twenty-five naye paise, he shall adopt the following
procedure:--

(a) if he is of opinion that such instrument is duly stamped, or is 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

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NC: 2024:KHC:13751 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 Deputy Commissioner may,
if he thinks fit, remit the whole penalty prescribed by this section.

(2) Subject to any orders made under Chapter VI, every certificate under clause (a) of
sub-section (1) shall, for the purposes of this Act be conclusive evidence of the
matters stated therein.

(3) Where an instrument has been sent to the Deputy Commissioner under
sub-section (2) of Section 37, the Deputy Commissioner shall, when he has dealt with
it as provided by this section, return it to the impounding officer.

xxx

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 Shri Manjunath K vs Shri H R Ravichandra on 3 April, 2024

58. Revision of certain decisions of Courts regarding the sufficiency of stamps.- (1) When any Court
in the exercise of its Civil or Revenue

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NC: 2024:KHC:13751 jurisdiction or any Criminal Court in any proceeding under Chapter XII or
Chapter XXXVI of the Code of Criminal Procedure, 1898, makes any order admitting any
instrument in evidence as duly stamped or as not requiring a stamp, or upon payment of duty and a
penalty under Section 34, the Court to which appeals lie from, or references are made by, such first
mentioned Court may, of its own motion or on the application of the Deputy Commissioner, take
such order into consideration.

(2) If such Court, after such consideration, is of opinion that such instrument should not have been
admitted in evidence without the payment of duty and penalty under section 34, or without the
payment of a higher duty and penalty than those paid, it may record a declaration to that effect, and
determine the amount of duty with which such instrument is chargeable, and may require any
person in whose possession or power such instrument then is, to produce the same, and may
impound the same when produced.

(3) When any declaration has been recorded under sub-section (2), the Court recording the same
shall send a copy thereof to the Deputy Commissioner and, where the instrument to which it relates
has been impounded or is otherwise in the

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NC: 2024:KHC:13751 possession of such Court, shall also send him such instrument.

(4) The Deputy Commissioner may thereupon, notwithstanding anything contained in the order
admitting such instrument in evidence, or in any certificate granted under Section 41, or in Section
42, prosecute any person for any offence against the stamp law which the Deputy Commissioner
considers him to have committed in respect of such instrument:

Provided that,--

(a) no such prosecution shall be instituted where the amount (including duty and
penalty) which, according to the determination of such Court, was payable in respect
of the instrument under Section 34, is paid to the Deputy Commissioner, unless he
thinks that the offence was committed with an intention of evading payment of the
proper duty;

(b) except for the purpose of such prosecution, no declaration made under this
section shall affect the validity of any order admitting any instrument in evidence, or
of any certificate granted under Section

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 Shri Manjunath K vs Shri H R Ravichandra on 3 April, 2024

41."

(emphasis supplied)

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NC: 2024:KHC:13751

13. A reading of Section 3 of the Act, 1957 makes it mandatory that stamp duty shall be paid on all
instruments that are chargeable to duty as prescribed in the schedule. Section 31 of the Act, 1957
provides that if a person desires to get an opinion as to the correct duty payable on an instrument,
he may apply to the Deputy Commissioner along with the prescribed fee and set out all reasons
affecting the duty chargeable. On such application, the Deputy Commissioner shall give his opinion
about the duty payable and also whether the duty paid thereon is sufficient and or that the
instrument is not chargeable to any stamp duty. On payment of the full duty on the instrument as
may be determined, the person applying would be relieved from payment of any penalty which he
may incur under the Act, 1957. Under Section 32 of the Act, 1957, once the Deputy Commissioner
gives his opinion and after the duty as determined by the Deputy Commissioner is paid, he would
issue a certificate of payment of the actual duty paid or issue an endorsement that no stamp duty is
payable thereon. Once

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NC: 2024:KHC:13751 such certificate is issued, then the instrument shall be received in evidence or
otherwise, and may be acted upon and registered as if it had been originally duly stamped. This is
however subject to the condition that if the instrument is executed in India, such endorsement shall
be made within one month from the date of execution or if it is executed outside India within three
months from the date of its receipt in the State of Karnataka. However, such endorsements shall not
be made when the instrument is chargeable with duty not exceeding 0-15 paise or on a mortgage of a
crop, chargeable with duty of 0-25 paise.

14. Section 33 of the Act, 1957 imposes a duty on every person, who has the authority to receive
evidence to examine every instrument so chargeable and so produced or coming before him, to
ascertain whether it is stamped with a stamp of the value and description required by the law in
force in the State of Karnataka when such instrument was executed or first executed. It therefore

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NC: 2024:KHC:13751 casts a compulsory obligation on such public officer to impound such
insufficiently stamped document and proceed in accordance with law to collect the duty and penalty
and forward the same to the Deputy Commissioner who could exercise power under Section 37 of
the Act, 1957. The words 'to impound' ordinarily means 'to retain possession of a document that is
seized.' Therefore, the power of a Court to impound a document could be exercised only before the
document is marked in evidence and once it is marked as an exhibit, the right to impound it is lost

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as, for all practical purposes the document belonged to the party marking it.

15. Section 34 of the Act, 1957 imposes an embargo against any authority to receive any instrument
as evidence, or allow such instrument to be acted upon unless such instrument is duly stamped.
However, exceptions are carved out in respect of the mortgage of crop on which duty payable is 0-25
paise. Similarly the applicability of the general proposition, with which we are

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NC: 2024:KHC:13751 really not concerned in this petition and are therefore not adverted to. Under
Section 35 of the Act, 1957, once an insufficiently stamped document is marked in evidence, such
admissibility cannot be questioned except as provided in Section 58 of the Act, 1957.

16. A coordinate Bench of this Court in the case of K.Amarnath v. Puttamma [ILR 1999 Kar 4634]
recorded the degree of care and caution to be exercised by the Court and held:

"11. A combined reading of Sections 33, 34, 35, 37 and 41 of the Karnataka Stamp Act
requires the following procedure to be adopted by a Court while considering the
question of admissibility of a document with reference to the Stamp Act: (a) when a
document comes up before the Court, it has to examine and determine whether it is
properly stamped. When the other side objects to it, the Court should consider such
objection and hear both sides;

(b) After hearing, if the Court comes to the conclusion that the document has been
duly stamped, it shall proceed to admit the document into evidence; (c) on the other
hand, if the Court comes to the conclusion that the document is not stamped

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NC: 2024:KHC:13751 or insufficiently stamped, it shall pass an order holding that the document is
not duly stamped and determine the Stamp duty/deficit stamp duty and penalty to be paid and fix a
date to enable the party who produces the document to pay the Stamp duty/deficit Stamp duty plus
penalty; (d) if the party pays the duty and penalty the Court shall certify that proper amount of duty
and penalty has been levied and record the name and address of the person paying the said duty and
penalty and then admit the document in evidence as provided under Section 41(2); and the Court
shall send an authenticated copy of the instrument to the District Registrar together with a
Certificate and the amount collected as duty and penalty, as provided under Section 37(1); (e) if the
party does not pay the duty and penalty, the Court will have to pass an order impounding the
document and send the instrument in original, to the District Registrar for being dealt in accordance
with law as per Section 37(2) of the Karnataka Stamp Act."

17. In Javer Chand's case referred supra relied upon by the learned counsel for the respondent No.1,
the Hon'ble Apex Court noticed that the document was marked in evidence and held, "..it is not,
therefore, one of those

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NC: 2024:KHC:13751 cases where a document has been inadvertently admitted, without the court
applying its mind to the question of its admissibility. Once a document has been marked as an
exhibit in the case and the trial has proceeded all along on the footing that the document was an
exhibit in the case and has been used by the parties in examination and cross-examination of their
witnesses, Section 36 of the Stamp Act comes into operation. Once a document has been admitted in
evidence, as aforesaid, it is not open either to the trial court itself or to a court of appeal or revision
to go behind that order. Such an order is not one of those judicial orders which are liable to be
reviewed or revised by the same court or a court of superior jurisdiction."

18. If we peruse Section 34 of the Act, 1957, a document not duly stamped shall not be "received in
evidence" and "shall not be acted upon", "registered" or "authenticated".

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NC: 2024:KHC:13751

19. A coordinate Bench of this Court in the case of K.Dinesh referred supra dealt with the difference
between admitting an "insufficiently stamped document as evidence" and allowing it "to be acted
upon" and framed questions for its consideration, one of which was "When a document which is
chargeable with duty, under the Karnataka Stamp Act, 1957, but not duly stamped, has been
admitted in evidence by a court, without any objection being raised, is the court obliged to act upon
it for all purposes thereafter, without the requirement of payment of duty and penalty? As for
instance, can the court direct the execution of a sale deed in specific performance of an agreement of
sale, when the agreement is not duly stamped?"

20. It answered the above question as follows:

"A court is prohibited from admitting an instrument in evidence and a court and a
public officer are prohibited from acting upon it. Thus, a court is prohibited from
both admitting it in evidence and acting upon it. It follows that the acting upon is not
included in the admission and that a document can be admitted in evidence but not
be acted upon. If every document, upon admission, became

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NC: 2024:KHC:13751 automatically liable to be acted upon, the provision in Section

34 that an instrument chargeable with duty but not duly stamped, shall not be acted
upon by the court, would be rendered redundant. To act upon an instrument is to
give effect to it or enforce it. (See: Hindustan Steel Ltd. Case, supra and Bittan Bibi's
case -ILR 1952(2) All 984 quoted with approval therein)."

Order XIII Rule 8 of the Code of Civil Procedure, 1908 fortifies this position.

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"O XIII R 8: Court may order any document to be impounded. -

Notwithstanding anything contained in Rule 5 or Rule 7 of this Order or in Order VII,

the court may, if it sees sufficient cause, direct any document or book produced
before it in any suit to be impounded and kept in the custody of an officer of the
Court, for such period and subject to such conditions as the Court thinks fit."

It is thus clear that any document, produced in Court, may for sufficient reason, be impounded and
dealt with as above. It may be before or even after a document is admitted in evidence. Therefore, on
the above reasoning, though the admissibility of the document in question in WP 1428/2009,
cannot be

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NC: 2024:KHC:13751 raised as rightly held by the court below however, the Court is precluded from
acting upon it for any other purpose, unless duty and penalty are paid."

21. The Hon'ble Apex Court in the case of N.N.Global Mercantile Private Limited v. Indo Unique
Flame Limited and Others [(2023) 7 SCC 1] has held as follows:

"93. The law, as contained in Section 33 read with Section 35 of the Stamp Act, would
result in the following conclusions:

93.1. Every person having, by law or consent of parties, the authority to receive
evidence, before whom, an instrument is produced, is duty-bound to immediately
impound the same. This is upon his forming the opinion that the instrument is not
duly stamped. In a case, where the instrument does not bear any stamp at all, when it
is exigible to stamp duty, there can be little difficulty in the person forming the
opinion that it is not duly stamped. No doubt, under Section 33(2), in cases of
ambiguity, the person shall examine the instrument to arrive at the liability.

93.2. Apart from a person having authority to receive evidence, which, no doubt,
would include a

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NC: 2024:KHC:13751 court and an arbitrator, every person in-charge of a public office, before
whom, such instrument is produced or comes in the performance of his functions, has the duty to
impound the unstamped or insufficiently stamped document, arises. This is no doubt after
"examining" the instrument and ascertaining as to whether the instrument was stamped as required
when the document was executed or first executed [see Section 33(2)]. One exception in Section 33
is an officer of the Police. In other words, the officer of the Police has no authority to impound an
unstamped or insufficiently stamped document produced before him. No doubt, a criminal court is
not under compulsion vide the proviso. Section 33, no doubt, authorises delegation of power.

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93.3. Under Section 35, the law-giver has disabled the admission in evidence of an instrument not
stamped or insufficiently stamped, for any purpose. This would include even a collateral purpose.
This is in stark contrast with a document, which is compulsorily registerable but which is not
registered. Under Section 49 of the Registration Act, 1908, an unregistered document may be used
for proving a collateral transaction. Even this is impermissible, if the document is not stamped or
insufficiently stamped. Section 35 further proceeds

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NC: 2024:KHC:13751 to declare that such an unstamped or insufficiently stamped document shall
not be acted upon. 93.4. It is important to juxtapose the embargo cast on an unstamped document
as aforesaid with Section 2(h) of the Contract Act. Section 2(h) of the Contract Act provides that an
agreement, which is enforceable in law is a contract whereas Section 2(g), an agreement not
enforceable is void. The words "enforceable in law" or "not enforceable in law", understood in the
context of Sections 33 and 35 of the Stamp Act, would mean that upon there being an occasion,
which necessitates one of the parties to the agreement having to enforce the same through recourse
to sanctions available in law, the same should be vouchsafed to him.

93.5. Ordinarily, agreements are enforced through actions in civil courts. Remedies may be sought
before public authorities. Both the civil courts and the public authorities are tabooed from giving
effect to an unstamped instrument. Section 33 does not give a choice to the person, who has
authority by law, or with consent, to take evidence, or to any public officer, but to impound the
agreement. 93.6. The unstamped or insufficiently stamped document cannot be used as evidence for
any purpose. It would be inconceivable, as to how, it could be in the same breath, be found that an

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NC: 2024:KHC:13751 unstamped document is yet enforceable in law or that it is not enforceable in
law. It is another matter that the parties may act upon it. Goods or services may change hands, for
instance, under a document, which may be otherwise exigible to stamp duty. What is, however,
relevant is that the State will not extend its protection, by appropriate sanctions. The rights, which
would otherwise have been available, had the agreement been stamped, would remain frozen or
rather they would not exist. We are further reinforced in our view, therefore, that the views
expressed by this Court in Garware [Garware Wall Ropes Ltd. v. Coastal Marine Constructions &
Engg. Ltd., (2019) 9 SCC 209 : (2019) 4 SCC (Civ) 324] in para 22, following SMS Tea Estates [SMS
Tea Estates (P) Ltd. v. Chandmari Tea Co. (P) Ltd., (2011) 14 SCC 66 : (2012) 4 SCC (Civ) 777] ,
represent the correct position in law."

Therefore, though under Section 35 of the Act, 1957, the admissibility of the document cannot be
questioned on the ground that sufficient duty was not paid, if a party is desirous to act upon it, he is
bound to pay the stamp duty and penalty.

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NC: 2024:KHC:13751

22. A few other coordinate benches of this Court were also of the same opinion and the same are
referred below:

i) C.L.Harish Bhagavan v. Smt.Noor Ahmadi Khanum (WP No.1808/2012 decided on

05.03.2014);

ii) Syed Mohiddin v. Sonnappa and others (W.P.No.10947/2016 decided on 02.09.2022); and

iii) Zafarulla Khan v. Smt.R.K.Sujatha and others (W.P.No.47225/2016 decided on 29.08.2023).

23. However, as held by the Hon'ble Apex Court in N.N.Global Mercantile Private Limited, referred
supra, admissibility of an instrument in evidence is different from acting upon it. The Court may
refrain from acting upon an insufficiently stamped document and since the plaintiff in the instant
case is suing for the specific performance of the agreement of sale dated 05.05.2008, he is bound to
pay the duty and penalty as applicable. The judgment of a

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NC: 2024:KHC:13751 coordinate bench of this Court in Anil v. Babu [2023 (1) Kar.L.R 239] did not
consider the purport of the words "to act upon it" but held that "the power to examine and impound
the instrument is only when it is produced before the impounding officer and before the instrument
is admitted in evidence. The power to impound the instrument is thereafter unavailable and this is
clear from the wording of Section 35, which states the admission of the document cannot be
questioned, except as provided under Section 58 of the Act". Therefore, in the light of the judgment
of the Constitution Bench of the Hon'ble Apex Court in N.N. Global Merchantile, referred supra, it is
respectfully held that the judgment of coordinate Bench of this Court in the case of Anil referred
supra, did not consider whether an insufficiently stamped instrument could still be acted upon.

24. In view of the aforesaid, it is held that once an insufficiently stamped document is admitted in
evidence,

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NC: 2024:KHC:13751 the Court does not loose seisin over the document and it is still entitled to
collect the duty and penalty.

25. Now coming to the next question as to the amount of penalty that has to be collected, the
Division bench of this Court in Digamber Warty referred supra held that the Court has no discretion
but is bound to collect ten times the duty as penalty. However, the Hon'ble Apex Court in Gangappa
and another v. Fakkirappa [(2019) 3 SCC 788], considered a case of an insufficiently stamped
agreement of sale with reference to the provisions of the Act, 1957 and upheld the view expressed by
Division Bench of this Court in Digamber Warty referred supra. The Hon'ble Apex Court upheld the

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exercise of discretion of the Trial Court in relying upon the judgment of a coordinate Bench of this
Court in K.Govinde Gowda v. Akkayamma [ILR 2011 Kar 4719] and held that levying double the
amount of deficit stamp duty as penalty as done by the Trial Court would meet the ends of justice.
Likewise, the Hon'ble Apex Court

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NC: 2024:KHC:13751 in Trustees of HC Dhanda Trust v. State of Madhyapradesh and others [AIR
2020 SC 4349] held:

"21. 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).

xxx

25. No other reasons have been given either by the Collector or by the High Court
justifying the imposition of maximum penalty of ten times. It is not the case of
Collector that the conduct of the appellant was dishonest or contumacious. The High
Court in its judgment has noticed that although the resolution was passed on
06.04.2005 to execute the

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NC: 2024:KHC:13751 Deed of Transfer by Trustees in favour of Jogesh Dhanda and

Ishan Dhanda, but later on they deliberately executed the deed in the name of Deed
of Assent on a stamp paper of Rs.200/-. For the reason given by the Collector as well
as by the High Court that there was intention to evade the stamp duty in describing
the document as Deed of Assent the imposition of the penalty was called for but in
the facts and circumstances and the reasons which have been given by the Collector
of Stamps as noticed above we are satisfied that this was not a case of imposition of
extreme penalty of ten times of deficiency of stamp duty. Taking into consideration
all facts and circumstances of the case, we are of view that ends of justice will be
served in reducing the penalty imposed to the extent of the half i.e. five times of
deficiency in the stamp duty."

Though Hon'ble Apex Court was exercising its plenary power in imposing a lesser penalty, having
regard to the fact that the transaction value under the impugned instrument was Rs.14,33,25,000/-

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and also having regard to the fact that discretion is vested with the Deputy Commissioner under
Section 38 of the Act, 1957 to refund penalty in excess of Rs.5/-, this Court considers it

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NC: 2024:KHC:13751 appropriate to impose an equivalent amount of stamp duty as penalty as that
would meet the ends of justice.

26. In view of the above, this petition is allowed in part and the impugned order dated 30.06.2020
passed by the LXXV Additional City Civil and Sessions Judge, Bengaluru, on I.A. No.VI in O.S.
No.2568/2013 is set aside and the application (I.A. No.VI) filed by the defendant No.1 is allowed in
part and the plaintiff is directed to pay the stamp duty as applicable and an equivalent amount of
duty as penalty. Upon payment of stamp duty and penalty, the Trial Court shall proceed in
accordance with Section 37 of the Act, 1957.

Sd/-

JUDGE sma

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