PETITIONER:
CHIEF CONTROLLING REVENUE AUTHORITYANDSUPERINTENDENT OF STAM
Vs.
RESPONDENT:
MAHARASHTRA SUGAR MILLS LTD.
DATE OF JUDGMENT:
27/05/1950
BENCH:
KANIA, HIRALAL J. (CJ)
BENCH:
KANIA, HIRALAL J. (CJ)
FAZAL ALI, SAIYID
SASTRI, M. PATANJALI
MAHAJAN, MEHR CHAND
MUKHERJEA, B.K.
CITATION:
1950 AIR 218 1950 SCR 536
CITATOR INFO :
MV 1952 SC 252 (89)
R 1968 SC 497 (7,8,9)
ACT:
Indian Stamp Act (II of 1899), ss. 57, 59 (2)--Reference
to High Court--Nature of power to refer--Duty to refer on
request of party affected--Order directing Chief Control-
ling Authority to refer--Whether "matter concerning
revenue" --Jurisdiction of Original Side of High
Court--Government of India Act, 1935, s. 266 (1).
HEADNOTE:
The power conferred on the Chief Revenue Authority by
Sec. 57 of the Indian Stamp Act, to make a reference to the
High Court is not intended for the benefit of the Revenue
Authority a1one, but enures also for the benefit of the
party affected by the assessment. It is therefore coupled
with a duty to make a reference when he is called upon to
do so by the party effected, and if he declines to do so, it
is within the power of the Court to direct him to discharge
that duty and make a reference to the Court.
Alcock Ashdown & Co. Ltd. v. Chief Revenue Authority (50
I.A. 227) and Julius v. Bishop of Oxford (5 A.C. 214) ap-
plied.
537
The order of a High Court to a revenue officer to do his
duty would not be the exercise of original jurisdiction in a
matter concerning the revenue within the meaning of Sec. 226
of the Government of India Act, 1935, and the jurisdiction
of the High Court to direct the Chief Controlling Revenue
Authority to make a reference under Sec. 57 of the Stamp
Act was not barred by Sec. -226 of the Government of India
Act.
The fact that the proceedings had passed beyond the
stage of enforcing payment does not prevent the High Court
from directing the Revenue Authority to make a reference,
for, if the opinion of the Court on the reference is against
the Revenue Authority he will have to refund whatever has
been recovered in excess, under Sec. 59 (2) of the Act.
JUDGMENT:
APPEAL from the High Court of Judicature at Bombay:
Civil Appeal No. XII of 1950.
This was an appeal from a judgment and order of the High
Court of Bombay (Chagla, Acting’ C.J. and Bhagwati J.) dated
2nd September, 1947, in Appeal No. 60 of 1946. The facts
are fully set out in the judgment.
C.K. Daphtary, Advocate-General of Bombay (M. M. Desai.
with him) for the appellant.
M.C. Setalvad, Attorney-General for India (S.S. Ragne-
kar, with him) for the respondent.
1950. May 27. The judgment of the Court was delivered
by
KANIA C.J.–This is an appeal from a judgment of the
High Court at Bombay and it relates to the jurisdiction of
the Court to direct the Chief Controlling Revenue Authority
and the Superintendent of Stamps at Bombay to state a case
for the opinion of the Court under section 57 of the Stamp
Act.
The respondent company, for its business, borrowed
money from the Central Bank of India Ltd. at Bombay. In
order to secure the loan a document was executed on the 22nd
of March, 1945, with a stamp of Rs. 16-8-0, on the footing
that it was a, deed of hypothecation without possession of
the goods. When the deed was sent to the Sub-Registrar for
registration he impounded the same and sent it to the Stamp
Office. The Assistant Superintendent of Stamps
538
wrote to the respondent that the document was a mortgage
with possession, chargeable with duty under article 40 (a)
of the Schedule and inquired why it was not duly stamped
before execution. The respondent’s solicitors in their
reply contended that the document was not, and was never
intended by the parties to be, a mortgage with possession.
They pointed out that no possession of the property had been
given or was intended to be given, except in certain contin-
gencies and therefore the document was properly stamped. In
reply the Assistant Superintendent intimated that the docu-
ment was chargeable with duty of Rs. 56,250 and a penalty of
Rs. 5,000 had been imposed. The respondents were asked to
pay the amount forthwith. On the 27th July, 1945, the
respondent filed a suit against the Central Bank contending
that the document was not a mortgage with possession. It
was alleged that since a doubt had arisen as to whether the
document gave effect to the common intention of the parties
the Court’s directions were sought for and if the Court
found that the document as framed did not give effect to the
said common intention of the parties the instrument may be
rectified. On 9th August, 1945, the respondent’s solicitors
informed the Assistant Superintendent that such a suit
had been filed and requested that the demand for payment
of stamp duty and penalty may not be pressed under the
circumstances. In the further correspondence, on behalf
of the appellant, the demand was reiterated and resort to
the coercive procedure of section 48 of the Stamp Act was
threatened. The Collector thereafter sent a letter to the
respondents on the 17th January, 1946, demanding payment.
On the 25th of January, 1946, the suit filed by the respond-
ent was disposed of by the Court and the rectification as
prayed was ordered. The respondent’s solicitors immediately
intimated the result of the suit to the Assistant Superin-
tendent and sent a copy of the deed showing the rectifica-
tions made in the original document. A similar letter was
also sent to the Collector of Bombay. On the 1st February,
1946, the respondent’s solictors enquired of
539
the Assistant Superintendent of Stamps whether he was agree-
able to make a reference under section 56 (2) to the appel-
lant, as the question of liability to pay the stamp duty
and. penalty involved important questions of law. A
petition on behalf of the respondent to the appellant
was also filed on the 5th of February in which it was
prayed that either the order of the Assistant Superintendent
of Stamps be rescinded or in the alternative a case may be
referred under section 57 of the Stamp Act for the opinion
of the High Court. This petition was rejected on the 4th
July, 1946. The respondent there- upon filed a petition in
the High Court on the 19th of July, 1946, praying that a
writ of certiorari may be issued against the appellant, or
an order may be made against him under section 45 of the
Specific Relief Act, to cancel the levy of the stamp duty
and penalty as claimed on behalf of the appellant or in the
alter- native the appellant may be ordered under section 57
of the Stamp Act to refer the matter to the High Court for
its opinion. The matter came for hearing before Mr. Justice
Blagden who did not grant the first relief but directed the
appellant to state a case under section 57 of the Stamp Act
to the Court for its opinion. The appellant filed an appeal
but failed. He has now come in appeal to this Court.
Two points have been urged on behalf of the appelant.
The first is whether under section 57 of the Stamp Act
there is an obligation on the appellant to state a case, and
if not whether the High Court had jurisdiction to give a
direction to that effect. The second point is whether having
regard to the terms of section 226 (1)of the Government of
India Act, 1935, the High Court had jurisdiction to order
the appellant to state the case, it being a matter relating
to the revenue. Under this head it is also argued that the
matter had proceeded beyond the stage of assessment and,had
reached the stage of recovery. Therefore, the High
Court of Bombay had no jurisdiction to pass the order it
did. The material part of section 57 of the Stamp Act runs
as follows:
“57. (1) The Chief Controlling Revenue-authority
70
540
may state any case referred to it under section 56,
sub-section (2), or otherwise coming to its notice, and
refer such case, with its own opinion thereon-
* * * *
(b) if it arises in the province of Bombay, to the High
Court at Bombay; …….. ”
Section 226 (1) of the Government of India Act-
1935, runs as follows :–
“226. (1) Until otherwise provided by Act of the
appropriate legislature, no High Court shall have any
original jurisdiction in any matter concerning the
revenue, or concerning any act ordered or done in the
collection thereof according to the usage and practice
of the country or the law for the time being in force.”
On behalf of the appellant it is contended that
the very words of section 57 of the Stamp Act show
that it is a power given to the appellant to state a
case and it is not an obligation. The section is framed
and worded only to give the benefit thereof to the
appellant and it is not for the’ benefit of any other party.
The word “may” used in the section was deliberately used for
that purpose. It was pointed out that under section 56 (2)
of the Stamp Act if the Collector felt doubt as to the
amount of duty with which the instrument was chargeable “he
may draw up a statement of the case and refer it with his
opinion for the decision of the Chief Controlling Revenue
Authority.” Similarly under section 60 if any Court felt
doubt as to the amount of duty to be paid it was given
power to draw up a statement of case for the opinion of the
High Court. It was argued that both these sections gave
only power to the Collector and the Court to make a refer-
ence for their own benefit. Section 57, it was argued, was
on the same lines for the benefit of the appellant. In
none of these, any other party had any right to insist on
a reference. It was pointed out that under the Stamp Act
a Collector could certify that the document was properly
stamped, although it was not sufficiently stamped on a
true construction, and when such a certificate was given
the Controlling Authority could do nothing. He had not
even the
541
power to refer that case to the Court to levy a higher stamp
duty. For these reasons, it was contended that the scheme
of the Stamp Act was materially different from the scheme of
the Income Tax Act.
In our opinion the appellant’s contentions are unsound.
The first contention that section 57 of the Stamp Act gives
only a discretion and does not cast a duty on the appellant
to make a reference overlooks the fact that the appellant
has not to make a reference only when he is in doubt about
his decision or conclusion. In his conclusion the party
liable to pay the assessed stamp duty is materially inter-
ested. The appellant’s decision is not necessarily based
only on the reading of the entries in the Schedule to the
Stamp Act. As in the present case, the question under what
item stamp duty is leviable may depend on the true construc-
tion of a document. It may also involve the decision of the
question, as in the present case, as to what is the effect
of the Court’s order directing a rectification of the in-
strument. It does not appear, on principle, sound to hold
that these difficult questions should be left under the
Stamp Act to the final decision of the appellant, and if the
party affected by the assessment has a grievance there is no
relief at all in law for him. The construction of a docu-
ment is not always an easy matter and on the ground that it
is a substantial question of law, parties have been permit-
ted to take the matter up to the highest Court. If so, it
appears difficult to start with the assumption that because
this is a Revenue Act the decision of the appellant should
be considered final and conclusive. The provisions of sec-
tion 56 (2) and section 60 giving power to the Collector and
the Court to send a statement of case to the appellant and
the High Court respectively, in our opinion, instead of
helping the appellant, go against his contention. In those
two sections this power is given when the referring authori-
ty has a doubt to solve for himself. The absence of the
words “feels doubt as to the amount of duty to be paid in
respect of an instrument” in section 57 supports the view
that the reference contemplated under that section if not
for the benefit of the appellant only but enures
542
also for the benefit of the party affected by the assess-
ment. In our opinion, the power contained in section 57 is
in the nature of an obligation or is coupled with an obliga-
tion and under the circumstances can be demanded to be used
also by the parties affected by the assessment of the stamp
duty.
Our attention has been drawn in this connection to the
decision of the Judicial Committee of the Privy Council in
Alcock, Ashdown & Co. Ltd. v. Chief Revenue Authority,
Bombay (1). In that case a question arose about an asses-
see’s right to ask the Commissioner of Income Tax to state a
case for the opinion of the Court under section 51 of the
Indian Income Tax Act, 1918. The material part of that
section was in these terms :–
“51. (1) If, in the course of any assessment under this
Act or any proceeding in connection therewith other than a
proceeding under Chapter VII, a question has arisen with
reference to the interpretation of any of the provisions
of this Act or of any rule thereunder, the Chief Revenue
Authority may, either on its own motion or on reference from
any Revenue officer subordinate to it, draw up a statement
of the case, and refer it, with its own opinion thereon, to
the High Court, and shall so refer any such question on the
application of the assessee, unless it is satisfied that the
application is frivolous or that a reference is unnecessary.
(3)The High Court upon the hearing of any such case shall
decide the questions raised thereby, and shall deliver its
judgment thereon containing the grounds on which such deci-
sion is rounded, and shall send to the Revenue authority by
which the case was stated a copy of such judgment under the
seal of the Court and the signature of the Registrar, and
the Revenue-authority shall dispose of the case accordingly,
or, if the case arose on reference from any Revenue-officer
subordinate to it, shall forward a copy of such judgment to
such officer who shall dispose of the case conformably to
such judgment”.
In that case, after the assessment was made and
(1) 50 I.A., 227.
543
the proceedings went to the Commissioner of Income Tax, the
assessee requested that a case may be stated for the opinion
of the Court under the aforesaid section, but the Commis-
sioner refused to do so. Thereupon, a Rule was obtained
from the High Court calling upon the Chief Revenue Authori-
ty, Bombay, to show cause why a case should not be so stat-
ed. It was argued before the High Court that the Court had
no jurisdiction to order the Commissioner to state a case
for its opinion. When the matter reached the Privy Council
the objection to the jurisdiction was put more broadly.
Before the High Court the only question raised was whether
the Authority had a duty, in the circumstances, to state a
case. The point raised before the Judicial Committee of the
Privy Council took the form of saying that even if the
Authority had a duty, the Court could not require him to
exercise it; and for this purpose reliance was placed upon
the well-known general purview of the Indian Legislation
which excludes matter of revenue from the consideration of
the ordinary civil Courts, the principle being exemplified
in the case of Spooner v. Juddow (1 ) and upon section 106
(2)of the Government of India Act, 1915. The judgment of
the Board consisting of Viscount Haldane, Lord Phillimore
and Lord Carson was delivered by Lord Phillimore. In the
judgment it is stated as follows :–” It is said that,
though under this section, the Chief Revenue Authority may,
if he thinks fit, draw up a statement of the case and refer
it to the High Court he is not bound to do so even on the
application of the person to be assessed, if he is satisfied
that the application is frivolous or that the reference is
unnecessary and that the Authority has in the present case
shown that he is satisfied that the application was frivo-
lous and the reference was unnecessary.” This argument was
rejected by the High Court. Their Lordships of the Privy
Council agreed with the view of the High Court that this was
too narrow a construction of the section. They observed:
“Take first the case which is last in the clause. If the
assessee applies for a case the Authority must state it
unless he can
(1) (1850) 4 Moo. I.A. 353.
544
say that it is frivolous or unnecessary. He is not to wait
for the court to order him to do it will be a misfeasance
and a breach of the statutory duty if he does not do it ”
The judgment did not end by relying only on that portion of
section 51 (1)of the Indian Income Tax Act, 1918. It pro-
ceeds to state as follows :–“Put that case aside. The rule
here is supported upon the earlier part of the section. No
doubt that part does not say that he shall state a case, it
only says that he may. And as the learned counsel for the
respondent rightly urged, ‘may’ does not mean ‘shall’.
Neither are the words ‘it shall be lawful’ those of compul-
sion. Only the capacity or power is given to the Authority.
But when a capacity or power is given to a public authority
there may be circumstances which couple with the power a
duty to exercise it. To use the language of Lord Cairns in
the case of Julius v. Bishop of Oxford (1): ‘ There may be
something in the nature of the thing empowered to be done,
something in the object for which it is to be done, some-
thing in the conditions under which it is to be done, some-
thing in the title of the person or persons for whose bene-
fit the power is to be exercised, which may couple the power
with a duty, and make it the duty of the person in whom the
power is reposed to exercise that power when called upon to
do so.’ In their Lordships’ view, always supposing that
there is a serious point of law to be considered, there does
lie a duty upon the Chief Revenue Authority to state a case
for the opinion of the Court, and if he does not appreciate
that there is such a serious point, it is in the power of
the Court to control him and to order him to state a case.”
This reasoning and conclusions, although they have not
now the compelling force they had before the 26th of Janu-
ary, 1950, are entitled to great respect. Apart from that,
we entirely agree with that line of reasoning and the con-
clusion. In our opinion, in ‘the present case the power to
make a reference under section 57 is not only for the bene-
fit of the appellant.
(1.) 5 A.C. 214, 222.
545
It is coupled with a duty cast on him, as a public officer
to do the right thing and when an important and intricate
question of law in respect of the construction of a document
arises, as a public servant it is his duty to make the
reference. If he omits to do so it is within the power of
the Court to direct him to discharge that duty and make a
reference to the Court.
Mr. Daphtary on behalf of the appellant tried to distin-
guish this case on the ground that the scheme of the Income
Tax Act was different from the scheme of the Stamp Act. In
our opinion, the observations quoted above and the princi-
ples underlying the same are applicable to the duty cast on
the appellant under section 57 of the Stamp Act and minor
points of distinction between the schemes of the two Acts
are immaterial for the present discussion. In the words of
Lord Cairns the very nature of the thing empowered to be
done by the appellant and the conditions under which he has
to fix the amount of the duty, couple the power with the
duty to state a case for the opinion of the Court. The
provisions of section 51 (1) and (a) run on the same lines
as section 59 of the Stamp Act. Mr. Daphtary next pointed
out that there was a difference in the scheme of the Act,
because when the Collector issued a certificate under sec-
tion 32, even though his assessment might be faulty and
against the interest of the State, the State or the appel-
lant had no remedy. This overlooks the provisions of the
section empowering the Collector to issue the certificate.
The scheme of the Stamp Act may be briefly noticed. Chapter
II contains provisions about the liability of instruments to
duty, of the time of stamping instruments, of valuations for
duty and provisions as to the person by whom duty is ‘pay-
able. Chapter III which contains only two sections deals
with the adjudication as to stamps. The first (section 31)
is where an instrument, whether executed or not and whether
previously stamped or not, is brought to the Collector with
an application to have his opinion as to the duty with which
it is chargeable. For obtaining that opinion the applicant
has to pay a fee. The Collector may call for information
and take evidence. After he has done so he determines the
546
amount of the stamp duty and certifies under section 32 that
the full duty with which it is chargeable has been paid. It
is obvious that the party applying is interested in obtain-
ing the opinion and therefore he cannot object to the cer-
tificate of the Collector. If the Collector himself is in
doubt he has the power under section 56 (2) to ask for the
opinion of the appellant. It is therefore clear that in
respect of these two provisions under Chapter III no griev-
ance could exist on either side. From section 33 and Chap-
ter IV onwards there are provisions in which the opinion of
the Stamp Officer and of the party interested in paying the
stamp duty may come in conflict. The sections in Chapters
IV, V and VI ending with section 61, deal with situations
arising from such difference of opinion. Section 57 (1)
falls under this heading. In our opinion, therefore, this
contention of the appellant fails.
The next point urged was whether the High Court has
jurisdiction to order the Revenue Authority to state a case
in face of the provisions of section 226 of the Government
of India Act, 1935. The argument was urged in two parts:
Firstly, that this being a. revenue matter, the jurisdiction
of the Court was excluded. Secondly, that the matter had
ceased to be in the stage of assessment but had reached the
stage of collection of stamp duty. On that ground the
present case was sought to be distinguished from Alcock’s
case(1). In our opinion this argument of the appellant must
also fail. A similar argument based on the wording of the
corresponding section 106 (2) of the Government of India
Act, 1915, as mentioned above, was urged in Alcock’s
case(1). On that point their Lordships observed as follows
:–” Upon the point thus broadly stated their Lordships have
no difficulty in pronouncing a decision. To argue that if
the legislature says that a public officer, even a revenue
officer, shall do a thing and he, without cause or justifi-
cation, refused to ,do that thing, yet the Specific Relief
Act would not be applicable and there would be no power in
the Court to compel him to give relief to the subject is to
state a
(1) 50 I.A. 227.
547
proposition to which their Lordships must refuse assent.”
In dealing with the argument that because of section 106 (2)
of the Government of India Act, 1915, the High Court had no
jurisdiction to make the order, the Board observed as fol-
lows :–” In their Lordships’ view the order of a High Court
to a revenue officer to do his statutory duty would not be
the exercise of original jurisdiction in any matter concern-
ing the revenue.” In our opinion, in the present case also,
the respondent seeks the Court’s intervention to make the
appellant perform his statutory duty to state a case. That
is not exercising the original jurisdiction of the Court in
any matter concerning the revenue. It is only asking the
appellant to perform his statutory duty. The further argu-
ment that the proceedings in this case had passed beyond the
stage of assessment and had reached the stage of enforcing
payment is again irrelevant because by the relief granted by
the High Court no attempt is made to obstruct the Revenue
Authority in the discharge of his duties. At one stage an
injunction was granted against the appellant but that has
been cancelled. In fact, this aspect of the discussion is
only academic because if payment is enforced and the opinion
of the Court, on the statement of the case is against the
appellant, he will have to act in conformity with that
opinion under section 59 (2) of the Stamp Act and refund
whatever may be held to be recovered in excess.
In our opinion therefore the contentions of the appel-
lant fail and the appeal is dismissed with costs.
Appeal dismissed.
Agent for the appellant: R.S. Narula..
Agent for the respondent: Tanubhai C. Desai.
71
548
