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Judgment
K.N. Keshavanarayana, J.—As these two petitions arise out of the same proceedings in C.C. No. 15587/08 on the file of the XVI Additional Chief Metropolitan Magistrate, Bangalore they were heard together and are being disposed of by this common order. The parties in these petitions are referred to their rankings before the learned Magistrate.
In the criminal proceedings initiated on the private complaint filed by the Petitioner in Crl. P. No. 4813/10 alleging offence punishable u/s 138 of the Negotiable Instruments Act, 1881 (for short "N.I. Act") against the Respondent - Smt. Ravikala, the complainant sought to mark in evidence an unregistered agreement of sale dated 4.7.2007 written on stamp paper of Rs. 200/- said to have been executed by the accused in favour of the complainant, to substantiate his contention that the cheque in question was issued for discharge of the liability due by the accused to the complainant objected for admitting the said agreement in evidence inter alia contending that as per the recital of the said agreement, possession of the immovable property has been delivered to the complainant as such the said document was chargeable for the purpose of stamp duty as a conveyance as per Article 5(e) of the Karnataka Stamp Act, 1957 (for short the Act'') and since the agreement has been written on a stamp paper of Rs. 200/-, it is an instrument insufficiently stamped, therefore, the said document cannot be received in evidence by the court for any purpose as provided by Section 34 of the Act unless the duty and penalty as per law is paid by the complainant. It was also contended that since a document written on insufficient stamp paper has been brought before the Court for admitting the same in evidence, as provided under Section. 33 of the Act the court has to impound the said document. The said objection was sought to be countered by the complainant contending that the recital in the document regarding said delivery of possession is only recording of a past event of delivery of possession much prior to the date of the agreement as such the possession of the property was not delivered under the document therefore, the agreement was not chargeable for the purpose of stamp duty as conveyance as per Article 5(e) of the Act as such the said Article is not applicable and since the agreement is written on sufficient stamp paper, the same is admissible in evidence.
Alternatively, it was also contended that Sections 33 and 34 of the Act are not applicable to the admission of any instrument in evidence in any proceedings in Criminal Court other than the proceedings under Chapters XII or XXXVI of the Code of Criminal Procedure, 1898 (for short "the Code of 1898").
The learned Magistrate though initially marked the document for the purpose of identification as Ex.S1, later after hearing the learned Counsel appearing on both sides, by order dated 25.8.2010, held that though in the agreement dated 4.7.2007 it is recited that the possession of the property has been delivered to the purchasers on 25.5.2007, it has to be construed that possession of the subject matter of the agreement of sale has been delivered on the strength of the agreement of sale. For this purpose, he relied on the decision of the Apex Court in the case of Mst. Kirpal Kaur Vs. Bachan Singh and Others, and decision of this Court in the case of C.K. Ravi Prasanna Gowda Vs. T.K. Gowramma, . In this view of the matter, the learned Magistrate held that the said document is chargeable for the purpose of stamp duty as conveyance as per Article 5(e) of the Act and since the document in question has been written on stamp paper of Rs. 200/-, the document is written on insufficient stamp. The learned Magistrate further proceeded to hold that conjoint reading of Sections 33 and 34 of the Act together makes it clear that if the Magistrate does not think fit so to do then only he is not impound such document in a criminal proceedings, Having regard to the facts and circumstances of the case, the learned Magistrate was of the opinion that this is not a case which could fall within exception provided under Sections 33 and 34 of the Act. The learned Magistrate was also of the opinion that since the two chapters contained in the Code of 1898 as mentioned in proviso (a) to Sub-section (2) of Section 33 and Clause (c) of Section 34 of the Act deals with the disputes as to the immovable properties and the maintenance of wife and children respectively and even to such proceedings pending before the criminal court the rigor of Sections 33 and 34 are applicable and since the proceedings for offence u/s 138 of the N.I. Act being a dispute between two private individuals, it has to be construed that the exceptions provided under Clause (c) of Section 34 and Section 33 proviso are not applicable to the proceedings u/s 138 of the N.I. Act. In that view of the matter, the learned Magistrate held that the document cannot be received in evidence unless duty and penalty is paid and for that purpose he ordered impounding of the document and directed the complainant to pay Rs. 46,50,800/- as duty and penalty which includes the deficit stamp duty of Rs. 4,22,800/-. It is to quash the said order passed by the learned Magistrate, the complainant has presented Criminal Petition No. 4813/10 u/s 482 of Code of Criminal Procedure.
After passing of the order dated 25.8.2010 directing the complainant to pay the duty and penalty, since the complainant: did not comply with the said direction and instead questioned the correctness of the said order before this Court in Crl.P. No. 4813 /10, the accused filed an application on 20.11.2010 purported to be under Sections 33 and 34 of the Act seeking the court to defer the further proceedings in the case till the decision on the stamp duty payable is decided by the High Court in Crl.P. No. 4813/2010. The learned Magistrate rejected the said application on the same day by a detailed order and since the accused was not ready to go ahead with the further cross-examination of PW.1 the cross-examination of PW. 1 was closed and the case was adjourned for examination of the accused under Section. 313 Code of Criminal Procedure. It is to quash the said order dated 20.11.2010, the accused has filed Crl.P. No. 5589/10.
I have heard Sr:. C.V. Nagesh, learned Senior Counsel appearing for the complainant and Sri. Ramesh chandra, learned Counsel appearing for the accused.
Sri. C.V. Nagesh learned Senior Counsel would submit as under:
Reading of Clause (c) of Section 34 of the Act. makes it clear that the bar created u/s 34 is not applicable to any proceedings in a criminal court except the proceedings under chapters XII or XXXVI of Code of 1898; As the proceedings for prosecution for the offence punishable u/s 138 do not fall under corresponding excepted Chapter in the Code of 1973 as stated in Clause (c) of Section 34 of the Act, the bar creates u/s 34 is not applicable to the criminal prosecution initiated for the offence punishable u/s 138 of the N.I. Act, as such, even if the document in question is accepted as insufficiently stamped, there is no bar for the criminal court to admit the said document in evidence, therefore, the order passed by the learned Magistrate directing payment of duty and penalty for the purpose of admitting the said document in evidence is contrary to law and without any basis as such it is illegal; Section 34 of the Act over rides Section 33 therefore when Section 34 of the Act itself is not applicable to the present proceedings, question of impounding the document as provided by Section 33 of the Act does not arise; Even the proviso (a) to Sub-section (2) of Section 33 of the Act makes it-clear that the Magistrate or Judge of a criminal court in the course of any proceeding other than the proceedings under Chapters XII and XXXVI of Code of 1898 (Chapter IX and part - D of Chapter X of Code of 1973) is not required to examine any instrument produced or an instrument coming before him in order to ascertain whether it is stamped with stamp value and description required by law in force and to impound such instrument if it is found not duly stamped, if Magistrate or Judge does not think fit so to do. Having regard to the fact that in the case on hand the document sought to be admitted in evidence was only to show the existence of the debt / liability for the discharge of which the cheque in question had been issued, the learned Magistrate ought to have exercised his discretion as provided by Clause (a) of Sub-section (2) of Section 33 and ought to have held that in the case on hand it is not necessary for him to examine the instrument in question to find out whether it is duly stamped or not and to impound the same; Failure to exercise the discretion so vested in the court has resulted in failure of justice; Having regard to the clear recital in the document that the possession of the property agreed to be sold had already been delivered much prior to the date of the agreement, it is clear that the possession of the property was not delivered under the document as such the agreement is not required to be charged for the purpose of stamp duty as conveyance and Article 5(e) of the Act is not applicable to the instrument in question as such the order directing payment of duty and penalty is bad in law. therefore, it is liable to be quashed.
Per contra, Sri. Ramesh chandra, learned Counsel appearing for the Respondent accused sought to justify the orders of the learned Magistrate and contended as under:
Though the recital found in the document in question with regard to the delivery of possession states that the possession of the property agreed to be sold had been delivered earlier to the date of the agreement, it has to be construed that the possession had been delivered under the agreement as such the agreement was required to be charged for the purpose of stamp duty as conveyance a provided under Article 5(e) of the Act, therefore the learned Magistrate is justified in holding that Article 5(e) of the Act id applicable to the document in question and on that basis in holding that the document in question is written on an insufficient stamp paper; Having regard to nature of the criminal proceedings to which Sections 33 and 34 of the Act are made applicable, it is clear that these two Sections are applicable to the criminal proceedings relating to immovable property and maintenance of wife and children, therefore, these two Sections are made applicable to the criminal proceedings between the private individuals and since the proceedings for the offence punishable u/s 138 of the N.I. Act are between two private individuals, Sections 33 and 34 are applicable to proceedings for the offence punishable u/s 138 of N.I. Act. Even if it is assumed that Section 34 is not applicable to the criminal proceedings for the offence punishable u/s 138 of the N.I. Act, the power of the court to examine an instrument and impounding the same if it is found insufficiently stamped, as provided u/s 33 of the Act, is not curtailed and discretion is vested with the criminal court as provided by proviso (a) of Sub-section (2) of Section 33 of the Act and since in the case on hand, the learned Magistrate has properly exercised his discretion, the order directing the complainant to pay duty and penalty in respect of the document in question is in accordance with law and it does not call for interference by this Court.
In support of his contentions, the learned Counsel for the accused placed reliance on the following decisions:
C.K. Ravi Prasanna Gowda Vs. T.K. Gowramma,
Sri. G.K.S. Shankar Vs. Smt. Puttarevamma and Another,
Sri. G.K.S. Shankar Vs. Smt. Puttarevamma and Another,
AIR 2008 KAR 26 [J. Prakash S/o M. Jayaram v. Smt. M.T. Kamalamma and Anr.]
AIR 2008 KAR 172 [J.S. Paramesh Siddegowda v. Smt. Indramma V. Murthy]
K. Amarnath Vs. Smt. Puttamma,
In the light of the above, the following points arise for my consideration in this petition:
(1) Whether the provisions of Sections 33 and 34 of the Act are applicable to criminal prosecution launched for the offence punishable u/s 138 of the N.I. Act?
(2) Whether in the facts and circumstances of the case, the learned Magistrate is justified in directing the complainant to pay duty and penalty of Rs. 46,50,800/- before admitting the agreement of sale in evidence?
Of course, before examining the applicability of provisions of Sections 33 and 34 of the Act, it is necessary to ascertain as to whether the document sought to be admitted in evidence is properly stamped or not. However in the case on hand, since the complainant sought to admit an agreement of sale dated 4.7.2007 said to have been executed by the accused in his favour in a criminal prosecution launched for the offence punishable u/s 138 of the N.I. Act, I am of the opinion that it is not necessary to record a definite finding as to whether or not the document is properly stamped. Therefore, in this proceeding it is not necessary for this Court to record a finding as to whether the delivery of possession of the immovable property agreed to be sold, prior to the date of the parties entering into a written agreement and recording of such past event in the written agreement, will have to be construed as delivery of possession under the agreement attracting the stamp duty payable as per Article 5(e)(i) of the Act, Therefore, let me proceed to consider the question as to whether or not Sections 33 and 34 of the Act are applicable to a criminal prosecution launched for the offence punishable u/s 138 of the N.I. Act by assuming that the document is insufficiently stamped. In view of this, there is no need to consider the applicability of the decision of this Court in the case of C.K. Ravi Prasanna Gowda Vs. T.K. Gowramma, relied upon by the learned Counsel for the accused.
Reading of Sect ion 34 of the Act makes if clear that the said Section creates an embargo on the courts and other authorities who are empowered to receive evidence, to admit any instrument chargeable with stamp duty, in evidence for any purpose if such instrument is not properly stamped. However, Clause (c) of Section 34 of the Act is an exception to this general rule.
Proviso to Clause (c) of Section 34 of the Act reads as under:
Instruments not duly stamped inadmissible in evidence, etc. - No instrument chargeable with duty shall he 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) x x x x x
(b) x x x x x
(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 Cod e of Criminal Procedure, 1898;
(d) x x x x
Thus from Clause (c) of Section 34 of the Act, it is clear that the embargo created regarding admission of an instrument in evidence unless such instrument is duly stamped is not made applicable to the proceedings in a criminal court. However, in Clause (c) a further exception is carved out and by virtue of the same, the embargo created in this regard are made applicable even to a proceeding in criminal court if they relate to any proceedings under Chapter XII or Chapter XXXVI of the Code of 1898 [corresponding Chapters IX and part D of Chapter X of Code of 1973]. Chapter IX of Code of 1973 comprising of Sections 125 - 128, deal with proceedings regarding maintenance of wife, children and parents. Part-D of Chapter X of code of 1973 comprising of Sections 145 - 148, deal with disputes as to the immovable property. Of course as contended by learned Counsel for the accused, the criminal prosecutions falling under these two Chapters relate to the disputes between two private individuals. No doubt the prosecution for the offence punishable u/s 138 of the N.I, Act is also a dispute between two private individuals. However on that analogy, it is not open to the court to hold that the exception created as per Clause (c) of Section 34 of the Act is not attracted to the proceedings initiated for the offence punishable u/s 138 of the N.I. Act. It is for the Legislatures to make law. The dishonour of the cheque and failure to pay the amount covered under the cheque within the statutory period after receipt of demand from the drawee of the cheque, has been made an offence u/s 138 of the N.I. Act with effect from 1.4.1989. However, the legislatures have not chosen to amend Clause (c) of Section 34 of the Act to include the criminal prosecution for the offence punishable u/s 138 of the N.I. Act as an excepted category in Clause (c) of Section 34 of the Act. Therefore, it is not open for this Court to legislate. Under these circumstances, I find no substance in the contention of the learned Counsel for the accused that the prosecution for the offence punishable u/s 138 of the N.I. Act being a dispute between two individuals is akin to the criminal proceedings under corresponding Chapters of Code of 1973 mentioned In Clause (c) of Section 34 of the Act, therefore, the embargo created u/s 34 of the Act is applicable to such proceedings. As the proceeding u/s 138 of the N.I. Act does not fall under any of the Chapters of Code of 1973 mentioned in Clause (c) of Section 34 of the Act, the embargo created u/s 34 of the Act regarding admission of an instrument not duly stamped in evidence, does not apply to a criminal prosecution launched for the offence punishable u/s 138 of the N.I. Act.
Section 33 of the Act deals with examination and impounding of an instrument. Section 33 of the Act mandates that whenever an instrument chargeable with duty as per the Act is produced before the Court or other authorities who are competent to receive evidence or brought before such court or authority while performing their functions, such court or authority should examine every instrument so chargeable to ascertain whether the same is stamped with stamp of the value and description required by law in force and upon such ascertainment if it is found that the instrument is not properly stamped, to impound the same. However, proviso (a) to Sub-section (2) of Section 33 of the Act has created an exception to this mandatory provision. The provision of Section 33 to the extent relevant for our purpose reads as under:
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 of Karnataka when such instrument was executed of first executed:
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) x x x x
(3) x x x
(a) x x x
(b) x x x
According to proviso (a) to Sub-section (2) of Section 33 of the Act, a Magistrate or Judge of a criminal court is not required to examine any instrument produced before him or coming before him for the purpose of ascertaining whether or not the instrument is properly stamped and not required to impound the same if it is found not properly stamped if such Magistrate or Judge of the criminal court does not think fit so to do. However this exception is not applicable once again to the proceedings under Chapter XII or Chapter XXXVI of the Code of 1898 (corresponding Chapter IX and part D of Chapter X of Code of 1973). Thus, the exception created under proviso (a) vests discretion with the Magistrate or Judge of the criminal court. It is well settled law wherever discretion is vested with the court it has to be exercised judiciously having regard to the facts and circumstances of each case. The question is whether, regard being had to the facts and circumstances of the case on hand, exception created under proviso (a) to Section 33 of the Act is required to be applied or not. In the case on hand, the prosecution is launched for the offence punishable u/s 138 of the N.I. Act on the premise that the accused agreed to sell and the complainant agreed to purchase an immovable property for total consideration of Rs. 60 lakhs and as on the date of the agreement dated 4.7.2007, the accused received Rs. 20 lakhs by way of advance but for more than one reason the accused was not able to complete the sale transaction, as such, the accused agreed and undertook to the complainant to refund the amount of Rs. 20 lakhs together with another sum of Rs. 3 lakhs by way of interest and for discharge of said liability, the accused issued cheque in question and when the said cheque was presented for encashment, the same was returned unpaid. It is now well settled law by catena of decisions that though the cause of action for the offence u/s 138 of the N.I. Act comprise of several components, the offence would be complete only when the drawer of the cheque fails to pay the amount covered under the cheque within a period of fifteen days from the date of the receipt of the notice issued as per Clause (h) of 138 of the N.I. Act by the drawee or the holder in due course of the cheque. Thus the whole basis for the prosecution for the offence punishable u/s 138 of the N.I. Act are issuance of the cheque, its dishonour and failure on the part of the drawer of the cheque to pay the amount covered under the cheque within the specific period from the date of the receipt of notice. In the case on hand the agreement of sale was sought to be admitted in evidence to substantiate the contention of the complainant that the cheque in question was issued for discharge of liability due by the drawer to the drawee of the cheque. The basis for the prosecution was not the agreement of sale, but on the other hand, it was issuance of the cheque and its dishonour and failure on the part of the drawer of the cheque to pay the amount. The fact that the cheque in question was issued by the accused for the discharge of her liability due under agreement of sale has been specifically pleaded in the complaint. Therefore, in the considered opinion of this Court, the learned Magistrate ought to have exercised his discretion to hold that the mandate of Sub-sections (1) and (2) of Section 33 of the Act are not required to be applied in respect of the instrument in question. Therefore, in my opinion, non-exercise of the discretion so vested in the learned Magistrate has resulted in great hardship and prejudice to the complainant. Having regard to the facts and circumstances of the case, I am of the opinion that the learned Magistrate ought to have exercised the discretion so vested in him under proviso (a) to Sub-section (2) of Section 33 of the Act and it was not necessary for him in the present case to have examined the instrument in question to ascertain whether or not the instrument was properly stamped and to proceed to impound the same as it was found insufficiently stamped. Undertaking such exercise in the case on hand, in my opinion, was not warranted regard being had to the facts and circumstances of the case. In this view of the matter, the order passed by the learned Magistrate directing payment of duty and penalty as a condition for admitting the agreement of sale in evidence cannot he sustained and it is liable to be quashed. In all the reported decisions relied by the learned Counsel for the accused, this Court has considered the rigor of Sections 33 and 34 of the Act as applicable to the proceedings in civil court. In none of these decisions, the applicability of Sections 33 and 34 in relation to the proceedings in a criminal court in the light of proviso (a) to Sub-section (2) of Section 33 and Clause (c) of Section 34 of the Act has been considered. Therefore, none of these decisions are applicable to the case on hand and no sustenance can be drawn from these decisions by the learned Counsel for the accused to support his contention. Therefore, the criminal petition filed by the complainant deserves to be allowed and the order passed by the learned Magistrate is liable to be quashed.
In the midst of legal jugglery, it appears the Respondent - accused did not choose to further cross-examine PW. I, As this Court has now found that the order passed by the learned Magistrate directing the complainant to pay duty and penalty is liable to he quashed, it is just and proper to afford further opportunity to the accused to further cross-examine PW. 1 and also to lead the defence evidence, if any.
In this view of the matter, both the petitions are allowed. The order dated 25.8.2010 directing the complainant to pay Rs. 46,50,800/- as duty and penalty on the agreement of sale for the purpose of admitting it in evidence and the order dated 20.11.2010 directing closure of cross-examination of PW. 1, are hereby quashed. The learned Magistrate is directed to admit the said document in evidence without insisting upon payment of duty and penalty and to proceed to dispose of the proceedings in accordance with law by affording reasonable opportunity to both the parties to lead further evidence. It is made further clear that the learned Magistrate shall afford reasonable opportunity to the accused to further cross-examine PW. 1 and also to lead defence evidence, if any.