In a landmark judgment, a Supreme Court bench comprising Justice Hrishikesh Roy and Justice S.V.N. Bhatti has clarified the legal framework under the Karnataka Stamp Act, 1957, for making insufficiently stamped instruments admissible in court. The court ruled that parties have the option to either pay the deficit duty and penalty under Section 34 or directly approach the District Registrar under Section 39 to have the instrument properly stamped.
Background of the Case
The case, Seetharama Shetty vs. Monappa Shetty, revolved around a dispute over an agreement of sale dated June 29, 1999, for agricultural land in Kavoor village, Mangalore taluk. The appellant, Seetharama Shetty, had filed a suit (O.S. No. 295 of 2013) seeking a perpetual injunction to prevent the respondent, Monappa Shetty, from interfering with his peaceful possession of the property. Seetharama Shetty claimed he was in possession of the property based on part performance under the agreement of sale, while Monappa Shetty denied the execution of the agreement and argued that it was insufficiently stamped, rendering it inadmissible in evidence.
The trial court impounded the agreement and sent it to the District Registrar for determination of the stamp duty and penalty. However, the Registrar returned the document, citing a lack of necessary details. The matter was further complicated by disagreements over the incorporation of missing details in the document.
Legal Issues Involved
The legal issues in this case centered around the interpretation of Sections 33, 34, 37, and 39 of the Karnataka Stamp Act, 1957. The key questions before the court were:
1. Whether the agreement of sale, which included a recital of possession, met the definition of a conveyance under the Act, thus necessitating ad valorem stamp duty.
2. Whether the trial court and the High Court erred in determining the penalty under Section 34 instead of referring the document to the District Registrar for determination under Section 39.
Court’s Decision and Observations
The Supreme Court, in its judgment delivered by Justice Hrishikesh Roy and Justice S.V.N. Bhatti, ruled that the appellant could either choose to pay the deficit duty and penalty under Section 34 or directly approach the District Registrar under Section 39 for determining the proper stamp duty and penalty.
Key Observations:
1. On the Definition of Conveyance: The court observed that the agreement of sale, which included a recital of possession, did conform to the definition of conveyance under Section 2(d) read with Article 20(1) of the Schedule of the Act, thus requiring the payment of ad valorem stamp duty.
2. On the Discretion of Authorities: The court clarified that under Section 34, adjudicating authorities do not have the discretion to waive or reduce the penalty for insufficiently stamped documents. However, under Section 39, the District Registrar has the authority to determine the penalty, which can be up to ten times the deficit duty, but not automatically or mechanically.
“The discretion conferred by the provision is different by the text and the context of these provisions,” the court observed, citing the precedent set in Gangappa v. Fakkirappa and Digambar Warty v. District Registrar, Bangalore Urban District.
3. On Procedure and Jurisdiction: The court noted that Section 34 bars the admission of an instrument in evidence unless adequate stamp duty and penalty are paid. However, it also allowed for the possibility of directly approaching the District Registrar under Section 39, thus providing flexibility in the procedure.
“The impugned orders have denied the appellant the option to have the penalty decided by the District Registrar,” the court stated. “The trial court and the High Court have committed an illegality by exercising jurisdiction under Section 34 instead of allowing the procedure under Section 39.”
Conclusion and Directions of the Court
The Supreme Court set aside the orders directing the payment of ten times the penalty under Section 34. It instructed the trial court to send the agreement of sale dated June 29, 1999, to the District Registrar to determine the deficit stamp duty and penalty payable. The court made it clear that upon receipt of compliance from the District Registrar, the suit document could be admitted in evidence without further objections under the Stamp Act.
Case Details
– Case Number: Civil Appeal Nos. 10039-40 of 2024 [@S.L.P. (Civil) Nos. 7249-7250 of 2022]
– Bench: Justice Hrishikesh Roy and Justice S.V.N. Bhatti
– Appellant: Seetharama Shetty
– Respondent: Monappa Shetty
– Amicus Curiae: Ms. Liz Mathew
