Case Note & Summary
The appellant filed a suit for specific performance of an agreement for sale dated 04.11.1996, which was coupled with possession, thereby deemed a conveyance under the Karnataka Stamp Act, 1957. The agreement was written on stamp papers worth Rs.200/- only, whereas ad valorem stamp duty was payable. The appellant did not produce the original agreement, but filed a certified copy and expressed readiness to pay duty and penalty. The trial court, by order dated 14.08.2015, directed payment of deficit stamp duty of Rs.1,43,800/- and ten times penalty of Rs.14,38,000/-, totaling Rs.15,81,800/-, relying on Section 34 of the Act and a Division Bench decision in Degambar Warty v. District Registrar. The appellant challenged this order by way of a writ petition before the High Court, which was dismissed. The Supreme Court, in the present appeal, considered whether the trial court should have sent the document to the District Registrar under Section 39 instead of deciding under Section 34. The Court noted that the appellant had voluntarily submitted to Section 34 by expressing readiness to pay duty and penalty, and therefore the court had no discretion but to impose ten times penalty. The Court distinguished the facts from the companion appeals where the option under Section 39 was exercised. The Supreme Court dismissed the appeal, upholding the trial court's order.
Headnote
A) Stamp Act - Deemed Conveyance - Agreement of Sale with Possession - Article 5(e)(i) of Schedule to Karnataka Stamp Act, 1957 - An agreement of sale coupled with possession is deemed to be a conveyance warranting payment of ad valorem stamp duty. The court held that the suit agreement written on stamp papers worth Rs.200/- was insufficiently stamped and required payment of deficit duty and penalty. (Paras 2-4) B) Stamp Act - Impounding and Penalty - Section 34 of Karnataka Stamp Act, 1957 - No Discretion to Impose Lesser Penalty - When a party submits to Section 34, the court has no discretion to impose a penalty less than ten times the deficit stamp duty. The trial court correctly directed payment of Rs.15,81,800/- as deficit duty and penalty. (Paras 2-5) C) Stamp Act - Option to Approach District Registrar - Sections 33, 34, 37, 39 of Karnataka Stamp Act, 1957 - A party has the option to either pay duty and penalty under Section 34 or apply to the District Registrar under Section 39. The option must be exercised before the court proceeds under Section 34. In this case, the appellant expressed readiness to pay duty and penalty under Section 34, and thus the court's order was upheld. (Paras 4-5)
Issue of Consideration
Whether the trial court was correct in directing payment of deficit stamp duty and ten times penalty under Section 34 of the Karnataka Stamp Act, 1957, or whether the document should have been sent to the District Registrar under Section 39 for determination of penalty.
Final Decision
The Supreme Court dismissed the appeal, upholding the trial court's order dated 14.08.2015 directing payment of deficit stamp duty of Rs.1,43,800/- and ten times penalty of Rs.14,38,000/-, totaling Rs.15,81,800/-.
Law Points
- Agreement of sale coupled with possession is deemed a conveyance
- Stamp duty payable as per Article 5(e)(i) of Schedule to Karnataka Stamp Act
- 1957
- Court has no discretion to impose lesser penalty under Section 34
- Option to approach District Registrar under Section 39 must be exercised before court proceeds under Section 34
