Kasturi and Others vs Mailareppa and Others

K.N. Phaneendra, J—The defendants in OS No. 271/2010 on the file of the Principal Senior Civil Judge & JMFC, Hubli have filed IA No. V u/ss. 34, 35, 36, 37, 41 and 45A of the Karnataka Stamp Act read with Registration Act seeking the indulgence of the court to refer an un-registered deed of receipt dated 30.03.1995 executed between the present plaintiff No. 1 and late Yamanappa Shivarayappanavar i.e., husband of defendant No. 1 to the Deputy Commissioner, Dharwad to determine and collect the proper stamp duty, registration charges and penalty if any on the said document.

It appears, the plaintiffs have filed objections to the said application stating that without prejudice to their rights, the defendants are bound to pay the stamp duty on the alleged document and they have in fact virtually supported the defendants prayer and they have argued that the court has to pass appropriate order with regard to fixing of the stamp duty and penalty at the rate of 10 times and the same is ordered to be paid on the 50% of the prevalent market value of the property. As the documents relied pertains to a valuable property, the same has to be paid to the Government exchequer as compensation.

The trial Court has considered the grounds urged by the parties and observed that in view of the un-registered document in question, half share of the plaintiff was given in favour of the defendant for a sum of Rs. 80,000/-, therefore, it calculated the amount, on the basis of such amount, the stamp duty and penalty was fixed at Rs. 1,24,800/- in respect of the un-registered document styled as money paid receipt in question and directed the defendants to pay the said amount within three weeks.

The learned Counsel for the petitioners herein strenuously contends before the court that the trial Court has not specifically gone through the nature of the document in question and not meticulously examined and understood the same in proper perspective before ordering such amount as duty penalty. If the document is read in proper perspective, it only says that it is only a family arrangement between the parties and one of the parties has released his share in favour of another. Therefore, it only attract Section 45 of the Registration Act and not under Section 34 of the Karnataka Stamp Act. Secondly, he contended before the court that the petitioners have prayed for referring the document to the Deputy Commissioner for the purpose of ascertaining the nature of the document and then to fix duty penalty and then the defendant is ready and willing to pay duty, penalty as may be fixed by the Deputy Commissioner. He further contends before this Court that though there are some admissions in the affidavit filed in support of the application, but in fact the court has not considered the document in proper perspective. Therefore, the order impugned in the petition is bad in law and the same is liable to be set aside.

On careful hearing of both the parties, now let me consider the particular document which was drawn on Rs. 10/- stamp paper which is styled as receipt, but the contents of the document has to be read by the court in order to understand what is the nature of the transaction that has been entered into between the parties in order to ascertain whether the said document is chargeable document with duty, penalty or not.

On understanding and meaningful reading of the document it shows that the document was entered into between one Sri Yamanappa and Sri Mylarappa, wherein it is categorically stated that the said two persons are full blood brothers and after the demise of their father, their entire family properties have been divided among the family members i.e., sisters of the parties by name Yallavva, Fakkiravva, Gangavva and Savithri who have relinquished their shares in favour of their brothers i.e., Yamanappa and Mailarappa. Thereafter, the entire property has been divided into two half''s one was allotted to Yamanappa and another was allotted to Mailarappa. This is the first part of the document. The second part of the document shows that the said Mailarappa has given up his share in favour of Yamanappa on consideration of a sum of Rs. 80,000/- stating that he has received some amount even prior to the said document by way of security deposit of Rs. 10,000/- etc., and excluding the amount already paid, he has received Rs. 70,000/- on the date of the document and executed the said document releasing the entire share in favour of the said Yamanappa and that he has specifically stated that from the date of execution of the document, the defendant has become the absolute owner of the said property and the legal representatives of Mailarappa have absolutely no right, title or interest over the said property.

Looking to the above said document, the said document though styled as a receipt, but it comprising of two important segments. The first part of the document refers to the earlier partition that has taken place between the parties, allocation of half share each in the entire property in favour of the plaintiff Mailarappa and his brother Yamanappa. The second part of the document discloses that the share which was allotted in favour of Mailarappa was actually sold for a sum of Rs. 80,000/- and adjusting the amount of Rs. 10,000/- already paid, received a sum of Rs. 70,000/- as on the date of the said document. Therefore, if the document is properly read, it gives an induction that after partition between two brothers one party wants to sell his share in favour of another that has been done in the said document.

Now let me come back to the application filed before the court by the defendant for fixation of the duty penalty. It is worth to note here the affidavit filed along with the application as to how the defendant has understood this particular document. It is specifically stated at paragraph 3 that in the oral partition took place long back in the year 1992-93 and specifically oral and unequivocal share of plaintiff No. 1 was made in favour of Yamanappa in the year 1995 and accordingly, the deed of receipt has been executed by plaintiff No. 1 in favour of the husband of the first plaintiff i.e., Yamanappa on Rs. 10/- non judicial stamp paper. It is further stated in the affidavit that the total sale amount for the sale of share of plaintiff No. 1 is Rs. 80,000/- was paid, which was the maximum market price of the said property at the time of the sale of the half share of the suit property. Therefore, it is requested that the said IA may be allowed referring the said deed dated 30.3.1995 executed by the plaintiff No. 1 in favour of late Yamanappa to determine and to collect proper stamp duty, Registration charges, penalty etc,

On plain reading of the affidavit filed by the wife of Yamanappa, Smt. Kasturi, the parties have understood the said document as a deed which refers to the earlier partition, acquisition of the title by Mailarappa and selling of the said property fallen to his share for a sum of Rs. 80,000/- in favour of Yamanappa. When parties have no ambiguity with regard to the nature of the document there is no need for the court to refer the document to the Deputy Commissioner for the purpose of ascertaining the nature of the document and to fix the duty penalty. When the law itself provide as to how the duty penalty has to be calculated by the court itself, when the court has ample opportunity on the basis of unambiguous document, the court in my opinion is right in holding that it is not a mere receipt but it is the document under which an amount of consideration of Rs. 80,000/- was paid for giving up half share of plaintiff No. 1 in the suit property in favour of the defendant. Therefore, in my opinion, the duty penalty fixed by the court at the rate of 10 times is proper and correct.

So far as Article 45(b) of the Karnataka Stamp Act, 1957 is concerned, as relied upon by the learned Counsel is not applicable to the present facts and circumstances of the case. This provision clearly shows that all duties whether proper or deficit or any stamp duty under any provision of this Act, shall be certified on the instrument in the manner prescribed. The said Article 45(b) of the Act reads as follows:

"45(b) Where the release is between the family members - proper stamp duty would be Rs. 1,000/-.

Explanation - Family in relation to a person for a purpose of clause (b) means husband, wife, son, daughter, father, mother, brother, [wife/children of the pre-deceased brother], sister, [husband/children of the predeceased sister], wife of a pre-deceased son and children of a pre-deceased son or pre-deceased daughter."

This Article says that if any release in favour of another family member then only the provision is attracted. But, it all depends upon how the parties have understood the said document. If the parties have styled the said document as a release deed, then only Article 45(b) of the Act may be applicable. If the parties themselves have understood the document as out and out sale of the share already allotted in favour of one of the parties, then the question of considering the document as a release deed does not arise because the party claims absolute ownership over the property by virtue of the said document as if it is executed in the nature of sale deed. Therefore, in my opinion, Article 45(b) of the Karnataka Stamp Act, 1957 is not applicable. But, on the other hand, Section 34 of the Karnataka Stamp Act, 1957 is applicable and it says that if the instrument is not duly stamped which is placed for admission before the court, the said document becomes inadmissible in evidence unless the duty penalty is paid. The said provision reads thus-

"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 [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, 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.

(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 [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]"

On reading of the above said provision, it is clear that if any such instrument not being an instrument chargeable with duty not exceeding fifteen paise and so on, be admitted in evidence on payment of duty with which the same is charged 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. Therefore, when it is clearly stated in the application that it is a out and out sale, the stamp duty has to be calculated and thereafter 10 times of the stamp duty has to be fixed as penalty.

In this regard, it is also worth to note here the decision of this court reported in 2010 (6) KLJ 166, between S. Suresh Vs. L. Pothegowda and others, wherein this court has held that-

"Impounding of document not duly stamped or insufficiently stamped - (i) Whether document produced along with plaint or application but not tendered in evidence for marking could be impounded? (ii) What are the considerations to be followed in case of document sought to be admitted in evidence? (iii) What is the consequence of admitting a document which is not sufficiently stamped but admitted in the evidence without any objection?"

It is clarified that when a document is produced and is sought to be marked in the evidence in proof of the issue raised in the suit, court is required to see as to whether, the document is admissible in evidence, or whether the document is irrelevant, or the document requires the compliance of any provisions of law. Payment of stamp duty is revenue to the Government, as such, it is the duty of the court to verify the document sought to be admitted in evidence and if it is not duly stamped or insufficiently stamped, it shall call upon the party producing the same to pay the duty and penalty. If the same is paid, the Court may proceed to mark the said document in evidence. If the duty is not paid the court may impound the original document and send the same to registrar for further action. Party objecting to the marking must raise his objection at the time of marking, if the document admitted without objection, the party cannot raise its objection as to the admissibility of the document in the evidence."

In view of the above said decision, the petitioner himself has placed an application before the trial Court that he is ready and willing to pay the penalty if it is referred to the Deputy Commissioner, but this ruling makes it clear that if the court fixes the duty penalty on the unambiguous document fixing the amount and if the amount is not paid, then only the said document can be impounded and referred to competent authority. In this particular case, the court unambiguously came to the conclusion that it is the consideration amount of Rs. 80,000/- paid for the half share of the plaintiff No. 1. Therefore, the duty penalty has to be paid on the said document and fixed the penalty at Rs. 1,24,800/- on the basis of the market value of the property. Therefore, I am of the opinion that the trial Court has not at all committed any mistake in passing such order. Hence, it does not call for interference.

Accordingly, the petition is dismissed.