IN THE HIGH COURT OF KERALA AT ERNAKULAM
CRP No. 560 of 2003()
1. CHAMIYAPPA MANNADIAR, S/O.
... Petitioner
2. CHANDRIKA, W/O.CHAMIYAPPA MANNADIAR,
Vs
1. DANAVAN, S/O.RAJAPPAN, AGED 46,
... Respondent
2. ARUN SAGAR, S/O.DANAVAN, AGED 17(MINOR)
3. AKITHA ALIAS AMRITHA, D/O.DANAVAN,
For Petitioner :SRI.S.V.BALAKRISHNA IYER
For Respondent :SRI.V.CHITAMBARESH
The Hon'ble MR. Justice M.SASIDHARAN NAMBIAR
Dated :11/12/2006
O R D E R
M.SASIDHARAN NAMBIAR, J.
------------------------------------------
C.R.P.NO.560 OF 2003 (G)
and
O.P.NO.6574 OF 2003 (G)
-----------------------------------------
Dated this the 11 th day of December, 2006.
O R D E R
Can a copy of an insufficiently stamped instrument be
impounded under Section 33 of Kerala Stamp Act or the deficit stamp
duty and penalty be realised? Whether a provision in the instrument
creating an oblgation to pay money, but not a fixed sum, makes the
instrument a bond as defined under section 2(a) (i) of Kerala Stamp
Act? These are the interesting questions to be settled in this case.
2. Petitioners are husband and wife. They are the plaintiffs in
O.S.156/1996 on the file of Sub Court, Palakkad. Respondent in the
C.R.P are the defendants in that suit. First respondent in the C.R.P is
the plaintiff in O.S.284/95 and O.S.543/1998 on the file of the same
court. Petitioner filed O.S.156/1996 for realisation of Rs.5.2 Lakhs due
under an agreement for sale dated 3.4.1995. First respondent filed
O.S.284/1985 for realisation of the amount paid under the agreement
contending that it was not actually an agreement for sale but a loan
transaction. O.S.43/1998 was filed for return of the amount on the
C.R.P.NO.560 OF 2003 (G)
2
basis of an agreement dated 5.4.1995. In O.S.156/1996, when Ext.P1
agreement dated 3.4.1995 was sought to be marked as an exhibit, it
was contended by respondents that the instrument was not property
stamped and it is not an agreement but a bond and sufficient stamp
duty was not paid and being an insufficiently stamped instrument, it
cannot be admitted in evidence. Learned Sub Judge, as per impugned
order in C.R.P.560/03 dated 14.2.03 held that Ext.P1 is an agreement
as well as a bond and it is chargeable with duty as provided under
Section 5 of Kerala Stamp Act. The said order is challenged in
C.R.P.560/03. In O.S.284/95, when the very same document was
sought to be marked, under Ext.P2 order passed on the same day,
learned Sub Judge held that the document is both an agreement and
bond and is chargeable with duty as provided under section 5 of Kerala
Stamp Act. Ext.P2 order is challenged in O.P.6574/03, filed under
Article 227 of Constitution of India.
3. Learned counsel appearing for petitioners and respondents
were heard.
4. Learned counsel appearing for petitioners relied on the
C.R.P.NO.560 OF 2003 (G)
3
decision of Apex court in Jupudi Kesava Rao v. Pulavarthy Venketa
Subbarao (AIR 1971 SC 1070) and argued that Ext.P1 is not an
instrument as defined under Section 2(j) of Kerala Stamp Act and it is
only a copy of the agreement which was retained by the petitioners as
is clear from the document itself and the original was handed over to
respondents and they did not produce the same and therefore copy of
an instrument cannot be impounded and for that sole reason the
orders are to be quashed. Learned counsel also argued that the
instrument does not provide for payment of money and as is clear
from the contentions of the parties, originally an agreement for sale
was executed on 31.3.95 where only first plaintiff was a party and he
agreed to sell 8.4 acres of land for a consideration of 1.5 Lakhs per
acre and as a part of the property covered by the agreement belongs
to his wife, second plaintiff, Ext.P1 agreement was executed on
3.4.1995 providing for execution of a sale deed in respect of 8.4 acres
after receiving consideration for 5 acres of land due to the pendency
of ceiling case before this court. The instrument provides that if
plaintiff succeed in that ceiling case and their right is upheld by this
court, respondents have to pay the balance sale consideration. It was
argued that the considerations so payable is not a fixed sum, as it
C.R.P.NO.560 OF 2003 (G)
4
depends on the result of the ceiling case and therefore Ext.P1 is not a
bond as defined under Section 2(a)(i) of Kerala Stamp Act. Relying on
the decision of the Lahore High Court in Tej Ram and another v.
Maqbal Shah and others (AIR 1928 Lahore 370) and Apex Court in
The Member, Board of Revenue v.Arthur Paul Benthall (AIR 1956 SC
35) it was argued that section 5 of the Kerala Stamp Act does not
apply to the instrument as it is a single transactions and the order of
the learned Sub Judge treating the instrument attracting Section 5 of
Kerala Stamp act is unsustainable.
5. Learned counsel appearing for respondents relying on the
decision of the Apex Court in State of Kerala v. McDowell and Co. Ltd
(1994 (1) KLT 802) argued that the instrument by itself creates an
obligation to pay money being the value for the remaining extent of
the property covered by the instrument, less the value paid for five
acres at the rate shown in the instrument making it clear that in case
petitioners did not succeed in the ceiling case pending before this
court, that provision would be void and therefore it is a bond as rightly
found by the trial court. Relying on the decision of this court in
Varghese V. State of Kerala (1989 (1) KLT 24), learned counsel further
C.R.P.NO.560 OF 2003 (G)
5
argued that when an instrument is sought to be marked as evidence
and court is satisfied that the instrument is insufficiently stamped,
court is bound to act as provided under section 33 and as the
instrument is a bond, trial court rightly found that the instrument is
not sufficiently stamped and the order cannot be challenged. Relying
on the decision of this court in Asokan v. Deputy Collector (1995 (2)
KLT
292) i
t was argued that courts power to impound an instrument
cannot be challenged on the ground that parties to the instrument are
not before the court or that the document was not produced by the
petitioners or that the original was not produced before the court.
6. A bond has been defined in sub clause 1 of section (a) of
(2) of Kerala Stamp Act, as follows:-
“any instrument whereby a person obliges himself to pay money
to another, on condition that the obligation shall be void if a specified
act is performed, or is not performed, as the case may be”.
7. Apex court in state of Kerala v. McDowell and Co. Ltd
(supra), construing the said provision held that definition must be
read as it stands and nothing may be read in or implied and the word
C.R.P.NO.560 OF 2003 (G)
6
“whereby” in the section must be read as by which Their Lordship held,
” in our view, the definition of
bond in sub-clause (1) of clause (a) of
Section 2 of the Kerala Stamp Act is
clear and unambiguous. It must be read
as it stand, nothing may be read in or
implied. The word ‘whereby’ must be
read as meaning what it ordinarily does,
namely, ‘by which’. An instrument,
therefore, by which a person puts
himself under an obligation to pay a sum
of money to another on condition that
the obligation shall be void if some
specific act is, or is not, performed is a
bond. The only question to pose is, has
the executant of the instrument put
himself under an obligation, or bound
himself, to pay a sum of money to
another, the obligation to be void under
specified circumstances? If the
C.R.P.NO.560 OF 2003 (G)
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executant can be sued for that sum of
money only upon the strength of the
instrument, the instrument is a bond”.
8. To resolve the dispute Ext.P1 the agreement is to be read
as a whole. It is to be seen whether the instrument creates an
obligation to pay a sum of money and also provides that the obligation
will be void if some specified act is or is not performed.
9. Ext.P1 is a copy of an agreement executed between
petitioners and the first respondent. Under Ext.P1, petitioners agreed
to sell 8.4 acres of land belonging to them for a consideration of
Rs.1,90,000/- per acre. It specially provides that out of the sale
consideration, first respondent need pay only the consideration for five
acres of land, as the remaining extent of property is involved in a
ceiling case then pending before this court. Evidently, if the ceiling
case is decided against petitioners, first respondent inspite of the
assignment deed will not get any right over that extent of the
property. Parties, therefore on their wisdom, chose to provide that
the liability of first respondent to pay the consideration for that extent
of the property, which depends on the fate of the ceiling case, arise
C.R.P.NO.560 OF 2003 (G)
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only after the final decision in the ceiling case. It was therefore
provided that part of the consideration, depending on the decision in
ceiling case, need not be paid at the time of execution of the sale
deed, though the deed is for the entire extent. Payment for that
extent of the property is to be made only after petitioners succeed in
the ceiling case. The instrument creates an obligation to pay the
consideration for the balance extent depending on the decision in the
ceiling case. It is clear that the said obligation will crystalise only on
the final decision of the ceiling case. If this court upholds the case of
the excutants of the instrument in respect of the whole claim, the
consideration payable will be the value for 3.4 acres at the rate of
rs.1,90,000/- per acre. If part of the claim alone is upheld, the
quantum of consideration will proportionately be reduced. If so, can it
be said that the instrument creates an obligation to pay, an
ascertained sum of money on which stamp duty is to be paid.
Depending on the decision of the court in the ceiling case, the liability
or obligation may be nil or a maximum of consideration for 3.4 acres
of at the rate of Rs.1,90,000/- per acre. If so the instrument thereby
does not create an obligation to pay a particular sum of money.
True, the instrument satisfies part of the definition of a bond as
C.R.P.NO.560 OF 2003 (G)
9
defined in Section 2(a) (i) of Kerala Stamp act, as the said obligation is
treated void, if the ceiling case end against the petitioners. But the
question is whether for that reason, the said obligation to pay the
balance consideration, is a liability to pay the “money” as defined
under section 2(a) (i) of Kerala Stamp Act. The definition of section 2
(a)(i) provides that by the instrument the person must oblige himself
to pay money. That money has to be a fixed sum and cannot be a
sum which has to be ascertained at a later point of time depending on
other contingencies as in this case. Though Ext.P1 provides for
payment of balance sale consideration, the quantum of balance
consideration definitely depends upon the balance extend of the
property, excluding 5 acres conveyed. Under the instrument,
balance extent depends upon the decision of this court in the ceiling
case. As rightly argued by learned counsel appearing for the
petitioner, if this court upholds only part of the claim made by
petitioners, it would definitely reduce the liability to pay money,
provided in the instrument. If so, it cannot be said that the instrument
provides for payment of money on which stamp duty could be
charged. Therefore on that ground itself, it is to be held that the
document is not a bond.
C.R.P.NO.560 OF 2003 (G)
10
10. Moreover as rightly pointed out by learned counsel
appearing for petitioner, trial court is competent to impound an
instrument as defined under section 2(j) of Kerala Stamp Act,
corresponding to section 2(14) of the Indian Stamp Act.
Section 2(j) of Kerala Stampt Act defines an “instrument”
includes every document by which any right or liability is or purports to
be created,transferred, limited, extended, extinguished or recorded but
does not include a bill of exchange, promissory note, bill of lading,
letter of credit, policy of insurance, transfer of share of debenture,
proxy and receipt.
11. Section 34 mandates that no instrument chargeable with
duty shall be admitted in evidence for any purpose by any person
authorised to receive evidence or shall be acted upon, registered or
authenticated by any such person or by any public officer, unless such
an instrument is duly stamped except as provided under the proviso
enabling the party to get it admitted on payment of deficit stamp duty
payable and the penalty as provided thereunder. Section 33 provides
that every person having by law or consent of parties authority to
receive evidence and every person in charge of public office except a
C.R.P.NO.560 OF 2003 (G)
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police officer, when an instrument is produced or comes in the
performance of his functions, appears to him that the instrument is
insufficiently stamped, shall impound the same. Section 37 provides
how an instrument which was impounded under section 33 is to be
dealt with. Under sub section 1 of section 37, when an insufficiently
stamped instrument is admitted, after payment of deficit stamp duty
payable and the penalty as provided, the person so impounding the
instrument shall send to the Collector an authenticated copy of such
instrument, together with a certificate stating the amount of duty and
penalty levied and shall also send such amount to the Collector. If the
deficit duty and penalty has not been paid, sub section mandates that,
the person impounding the instrument shall send it to the collector.
Section 39 deals with the powers to stamp the instrument impounded.
The provisions therefore make it clear that the instrument to be
examined under section 33 and impounded, is the original instrument
itself and not a copy of the instrument. Though section 33 enables the
court to receive the deficit duty payable with the penalty payable, if it
is not paid, sub section 2 of section 37 mandates that the instrument is
to be send to the Collector who is bound to stamp the instrument as
provided under Section 39. That cannot be on the copy of an
C.R.P.NO.560 OF 2003 (G)
12
instrument itself but the instrument which could only be the original
instrument.
12. The judicial committee of privy council in Raja of Bobbihi
V. Inuganti Chiria Sitaramaswami Guru (1900 ILR 23 Mad. 49)
considered the question whether a copy of the instrument can be
tendered as secondary evidence, when the original instrument was
shown to have been insufficiently stamped. The judicial committee
held,
” These clauses throughout deal
with and exclusively refer to the
admission as evidence of original
documents, which at the time of their
execution, were not stamped at all or
were insufficiently stamped. It is only
upon production of the original writ,
that the Collector has given him, or the
duty imposed upon him, of assessing
and charging the penalty, a duty which
he must in that case, perform by
C.R.P.NO.560 OF 2003 (G)
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writing an indorsement, upon the writ
submitted to him, which then, and not
till then becomes probative in law”.
13. Apex court in State of Bihar V. Karam Chand (AIR 1962 SC
110) followed that decision and laid down that the position is well
settled that a copy of the instrument cannot be validated by payment
of stamp duty or deficit stamp duty and penalty.
14. Section 55 of Indian Stamp Act correspond to Section 34 of
Kerala Stamp Act. Apex court in Jupudi V. Pulavarthi (AIR 1971 SC
1070) construing section 35 of Indian Stamp Act held that the bar
imposed under Section 35 is on the reception of any but the original
instrument and forbade the reception of secondary evidence and
Section 36 (corresponding to Section 35 of Kerala Stamp Act) only
lifted that bar in the case of an original unstamped or insufficiently
stamped document to which no exception as to admissibility was taken
at the first stage and did not create any exception to a copy of the
document. Their lordship held,
” The first limp of Section 35
clearly shut out from evidence any
C.R.P.NO.560 OF 2003 (G)
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instrument chargeable with duty
unless it is duly stamped. The
second limb of it which relates to
acting upon the instrument will
obviously shut out any secondary
evidence of such instrument, for
allowing such evidence to be let in
when the original admittedly
chargeable with duty was not
stamped or insufficiently stamped,
would be tantamount to the
document being acted upon by the
person having by law or authority to
receive evidence. Proviso (a) is only
applicable when the original
instrument is actually before the
Court of law and the deficiency in
stamp with penalty is paid by the
party seeking to rely upon the
document. Clearly secondary
C.R.P.NO.560 OF 2003 (G)
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evidence either by way of oral
evidence of the contents of the
unstamped document or the copy of
it covered by section 63 of the Indian
Evidence Act would not fulfill the
requirements of the proviso which
enjoins upon the authority to receive
nothing in evidence except the
instrument itself. Section 35 is not
concerned with any copy of an
instrument and a party can only be
allowed to rely on a instrument
which is an instrument for the
purpose of Section 35. ‘Instrument’
is defined in Section 2 (14) as
including every document by which
any right or liability is, or purports to
be created, transferred, limited,
extended, extinguished or recorded.
There is no scope for inclusion of a
C.R.P.NO.560 OF 2003 (G)
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copy of a document as an instrument
for the purpose of the Stamp Act.
If Section 35 only deals with original instruments and not
copies Section 36 cannot be so interpreted as to allow secondary
evidence of an instrument to have its benefit. The words “an
instrument” in Section 36 must have the same meaning as that in
Section 35. The legislature only relented from the strict provisions of
Section 35 in cases where the original instrument was admitted in
evidence without objection at the initial stage of a suit or proceedings.
In other words, although the objection is based on the insufficiency of
the stamp affixed to the document, a party who has a right to object
to the reception of it must do so when the document is first tendered.
Once the time for raising objection to the admission of the
documentary evidence is passed, no objection based on the same
ground can be raised at a later stage. But this in no way extends the
applicability of Section 36 to secondary evidence adduced or sought to
be adduced in proof of the contents of a document which is unstamped
or insufficiently stamped.”
C.R.P.NO.560 OF 2003 (G)
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15. In view of the settled legal position, when a copy of the
instrument as in this case was produced, court has no power to
impound the copy of the instrument as provided under section 33. For
that reason alone, the order of the learned Munsiff is bad. The learned
counsel appearing for respondent submitted that if such a view is
taken it would allow parties to shield the original insufficiently or
unstamped instrument from production in the case and only copy will
be produced. I find no reason for such an apprehension. If it is shown
that the original instrument (document) was either not stamped or
insufficiently stamped, as declared by the Apex court in Jupudi’s case
(supra) the copy of that instrument cannot be admitted as secondary
evidence. Hence no party can escape from the bar provided under
Section 33, by producing copy of the instrument which is not stamped
or not sufficiently stamped.
16. From the provisions of the Act and the decisions of the
Apex Court it is clear that copy of a instrument cannot be impounded
under Section 33 of Kerala Stamp Act and only the original instrument
can be impounded. By paying the deficit duty payable, with the
penalty payable ,only the original instrument could be admitted in
C.R.P.NO.560 OF 2003 (G)
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evidence. A copy of an unstamped or insufficiently stamped
instrument cannot either be impounded or admitted as additional
evidence.
In view of the earlier findings, the orders of Munsiff that Ext.P1
document is a bond is set aside.
M.SASIDHARAN NAMBIAR,
JUDGE.
bkn