Case Note & Summary
The petitioner, original plaintiff, filed Special Civil Suit No.904 of 2005 for specific performance of an agreement to sale dated 31-1-2005 in respect of certain lands at Village Fursungi, Pune. The agreement was for a total consideration of Rs.23,27,500/-, with Rs.1,00,000/- paid as earnest money and Rs.4,00,000/- to be paid at execution. The plaintiff alleged that the defendants refused to execute the sale deed despite notice. The defendants denied the claim, asserting the agreement was only a security for a loan and that it was insufficiently stamped. During trial, the plaintiff filed an application (Exhibit 55) to exhibit the agreement. The trial court rejected the application on the ground that the agreement was not properly stamped and therefore inadmissible under Section 34 of the Bombay Stamp Act, 1958. The plaintiff challenged this order by way of writ petition under Article 226 of the Constitution. The High Court examined the provisions of the Bombay Stamp Act, particularly Sections 33, 34, and 35. It held that Section 34 bars admission of an insufficiently stamped instrument as evidence of any transaction but does not bar its use for a collateral purpose. The court further held that when such a document is produced, the court must impound it under Section 33 and send it to the Collector for realization of deficit stamp duty and penalty. The court set aside the trial court's order and directed that the agreement be impounded and produced before the Collector for payment of deficit duty and penalty, and thereafter it could be exhibited for collateral purpose. The writ petition was allowed with no order as to costs.
Headnote
A) Stamp Act - Admissibility of Insufficiently Stamped Document - Section 34 Bombay Stamp Act, 1958 - Section 35 Bombay Stamp Act, 1958 - The court considered whether an agreement to sale which was insufficiently stamped could be exhibited in evidence for a collateral purpose. The court held that Section 34 bars admission of such document as evidence of any transaction but does not bar its use for a collateral purpose. The court directed that the document be impounded under Section 33 and produced before the Collector for payment of deficit stamp duty and penalty, and thereafter it could be exhibited for collateral purpose. (Paras 5-8) B) Stamp Act - Impounding of Insufficiently Stamped Instrument - Section 33 Bombay Stamp Act, 1958 - The court held that when an insufficiently stamped instrument is produced in evidence, the court must impound it under Section 33 and send it to the Collector for realization of deficit duty and penalty. The court cannot reject the application for exhibition outright. (Paras 5-8) C) Specific Relief Act - Suit for Specific Performance - Agreement to Sale - The petitioner filed a suit for specific performance of an agreement to sale. The trial court rejected the application to exhibit the agreement on ground of insufficient stamping. The High Court set aside the order and allowed the application subject to impounding and payment of duty and penalty. (Paras 1-8)
Issue of Consideration
Whether an insufficiently stamped agreement to sale can be exhibited in evidence for a collateral purpose despite the bar under Section 34 of the Bombay Stamp Act, 1958?
Final Decision
The High Court allowed the writ petition, set aside the order of the trial court, and directed that the agreement to sale be impounded under Section 33 of the Bombay Stamp Act and produced before the Collector for payment of deficit stamp duty and penalty. Thereafter, the document could be exhibited for a collateral purpose. No order as to costs.
Law Points
- Section 34 of Bombay Stamp Act
- 1958 bars admission of insufficiently stamped instrument as evidence of any transaction but does not bar its use for collateral purpose
- Section 35 of Bombay Stamp Act
- 1958 allows impounding and collection of deficit duty and penalty
- Section 33 of Bombay Stamp Act
- 1958 empowers court to impound insufficiently stamped instrument
