Supreme Court (14.04.2001) in Chilakuri Gangulappa vs Revenue Divisional Officer [Appeal (civil) 1800 of 2001] held as under:
It is clear from the first sub-section extracted above that the court has a power to admit the document in evidence if the party producing the same would pay the stamp duty together with a penalty amounting to ten times the deficiency of the stamp duty. When the court chooses to admit the document on compliance of such condition the court need forward only a copy of the document to the Collector, together with the amount collected from the party for taking adjudicatory steps.
In the present case the trial court should have asked the appellant, if it finds that the instrument is insufficiently stamped, as to whether he would remit the deficient portion of the stamp duly together with a penalty amounting to ten time the deficiency. If the appellant agrees to remit the said amount the court has to proceed with the trial after admitting the document in evidence.
Excerpts of the order;
# 1. When a document was found to be insufficiently stamped the further proceedings were, unwittingly, diverted through a wrong track. After it covered a long distance everybody concerned realised that the lis was proceeding through a wrong course. It has now to be reversed and put in the proper track.
# 11. We extracted the relevant sub-sections of Section 47A for the purpose of showing that the whole route followed hitherto was wrong as Section 47A would not come into picture at all since nobody has a case that the instrument concerned was ever presented for registration. In the context of this instrument being presented before the Civil Court the relevant provision to be noticed is Section 40 of the Stamp Act. Sub-section (1) of that Section says that when the Collector impounds an instrument under Section 33, or receives any instrument sent to him under Section 38(2) he shall adopt the procedure laid down in the sub-section. In this context Section 38 is to be looked into. It is extracted below:
38. Instruments impounded how dealt with.-
(1) Where the person impounding an instrument under section 33 has by law or consent of parties authority to receive evidence and admits, such instrument in evidence upon payment of a penalty as provided by section 35 or of duty as provided by section 37, he shall send to the Collector an authenticated copy of such instrument, together with a certificate in writing, stating the amount of duty and penalty levied in respect thereof, and shall send such amount to the Collector, or to such person as he may appoint in this behalf.
(2) In every other case, the person so impounding an instrument shall send it in original to the Collector.
# 12. It is clear from the first sub-section extracted above that the court has a power to admit the document in evidence if the party producing the same would pay the stamp duty together with a penalty amounting to ten times the deficiency of the stamp duty. When the court chooses to admit the document on compliance of such condition the court need forward only a copy of the document to the Collector, together with the amount collected from the party for taking adjudicatory steps. But if the party refuses to pay the amount aforesaid the Collector has no other option except to impound the document and forward the same to the Collector. On receipt of the document through either of the said avenues the Collector has to adjudicate on the question of the deficiency of the stamp duty. If the Collector is of the opinion that such instrument is chargeable with duty and is not duly stamped he shall require the payment of the proper duty or the amount required to make up the same together with a penalty of an amount not exceeding ten times the amount of the proper duty or of the deficient portion thereof.
# 13. In the present case, an argument is raised that the instrument is not actually an agreement of sale as envisaged in the Schedule to the Stamp Act (subject to amendment made by the State of Andhra Pradesh) but it is only a deed of compromise entered into by two disputing persons. We refrain from expressing any opinion on the said plea as it is open to the parties to raise their contentions regarding the nature of the document before the trial court. In the present case the trial court should have asked the appellant, if it finds that the instrument is insufficiently stamped, as to whether he would remit the deficient portion of the stamp duly together with a penalty amounting to ten time the deficiency. If the appellant agrees to remit the said amount the court has to proceed with the trial after admitting the document in evidence. In the meanwhile, the court has to forward a copy of the document to the Collector for the purpose of adjudicating on the question of deficiency of the stamp duty as provided in Section 40(1)(b) of the Act. Only if the appellant is unwilling to remit the amount the court is to forward the original of the document itself to the Collector for the purpose of adjudicating on the question of deficiency of the stamp duty. The penalty of ten times indicated therein is the upper limit and the Collector shall taken into account all factors concerned in deciding as to what should be proper amount of penalty to be imposed.
# 14. Inasmuch as none of the above proceedings had been adopted by any of the authorities including the High Court, we set aside the impugned orders. We direct the Munsif to consider first whether the document is insufficiently stamped and if he finds that question in the affirmative he has to adopt the next step indicated above.
# 15. This appeal is accordingly allowed."
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