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Constitutional Petition No. 1648 of 1980, decided on 17th August.

1981.

‑‑ S. 38 (2) read with S. (40 (1)(b)‑Impounding of documents ---Civil Judge not admitting gift deed in-evidence when produced be fore him during recording of evidence but ordering petitioner to pay deficit stamp fee and ten times penalty‑Held : Civil Judge's adjudication on questions of deficit stamp duty and quantum of penalty‑Not warranted by law‑Civil Judge should have im pounded document and referred case to Collector.

Ghulam Farid v. Board of Revenue, Lahore, P L D 1960 Lah. 211 ref.

S. Nasiruddin for Petitioner.

Anwar Jarnali for Respondents.

Date of hearing : 17th August, 1981.

‑This is a writ petition directed against the order dated 4th November, 1980, passed by the learned III Extra Civil Judge, Hyderabad, in Suit No. 151 of 1972 and also against the order dated 11^th November, 1980, passed by the learned District Judge, Hyderabad, in Civil Revision No. 56 of 1980. ,

2. The brief facts leading to the filing of the above petition are that the petitioner had filed the above suit for declaration and injunction against the respondent. The above suit was proceeded with before the learned Civil Judge and during the course of recording of the evidence, it seems that the petitioner produced a gift deed. Upon the objection of the learned counsel for respondent No. 3, the learned Civil Judge declined to admit the said gift deed on the ground that it was not property stamped. The learned Civil Judge passed the aforesaid impugned order dated 4th September, 1980 holding that the gift deed was required to bed stamped at the value of Rs. 3,000 and directed the petitioner to pay Rs. 156 as a deficit stamp fee and also to pay ten times penalty, amount ing to Rs. 1,716. The petitioner being aggrieved by the aforesaid order' filed Civil Revision No. 56 of 1980 which was also dismissed through the aforesaid order dated 11th November 1980. The petitioner being aggriev ed by the above two impugned orders has filed this petition.

3. (a) The learned counsel for the petitioner has contended that since the document in question was not admitted in evidence, the learned Civil Judge was obliged to impound the same and to refer it to the Collector under section 38(2) of the Stamp Act, 1899 and that the Collec tor under section 41 (1)(b) of the Act would have been entitled to adjudi cate upon the questions of quantum of deficit stamp fee and the quantum of penalty to be imposed. On the other hand, it has been contended by Mr. Anwar Jamali, learned counsel for respondent No. 3 that under subsection (1) of section 38 of the Act the learned Civil Judge was com petent to direct the petitioner to pay, deficit stamp fee and also to pay ten times penalty.

(b) In support of the above contention Mr. S. Nasiruddin learned counsel for the petitioner has referred to the case of Ghulam Farid v. Board of Revenue, Lahore (P L D 1960 Lah. 211), in which case the facts were that a Civil Judge during the course of the trial of a suit imposed a penalty under section 38 on an understamped document. A writ petition was filed which was decided by a Division Bench of the erstwhile High Court of the West Pakistan comprising of B. Z. Kaikaus and S.A. Farooqui, JJ.

It may be pertinent to quote hereinbelow the relevant passage from the above judgment which reads as follows;-----

Under section 33 the learned Civil Judge, before whom this docu ment was produced, had authority to impound it if he was of the opinion (as he was) that it was not sufficiently stamped. He could admit the document in evidence if eleven times the stamp duty paid. If the document was not admitted in evidence, then section 38 (2) will apply and the document will have to be sent to the Collector. In the present case obviously the learned Civil Judge had acted under section 38, but it will be observed that he can simply send the impounding document and send it to the Collector He has no power whatsoever of imposing any penalty. Under section 35 he can allow the document to be admitted in evidence on pay ment of the stamp duty and (ten times the stamp duty) penalty but it is optional for the party producing the document to pay or not to pay in order to get the document admitted in evidence. If eleven times the stamp duty is not paid. the only function left to be performed by the person before whom the document is produced is to send it to the Collector. The Collector is then bound under section 40 to determine whether the instrument is properly stamped. If he finds it is not properly stamped. he has to pass an order requiring the payment of the duty as well as a penalty the minimum of which is Rs. 5 and then maximum ten times the proper duty. (3) In the present case while the learned Civil Judge passed an order which he had no jurisdiction to pass, the learned Collector failed to perform his duty under section 40. Although an application had been submitted to him by the petitioner objecting to the legality of the recovery proceedings, he determined neither the question whether the document was chargeable to duty nor the amount of penalty which was to be levied. He simply wrote the word "rejected" on the application of the petitioner and it cannot possibly be urged that by simply rejecting it he was agreeing with the Civil Court either in its decision that this was a conveyance and not a receipt or in the amount of penalty which had been imposed on the petitioner. In fact the noting by the office on the applica tion of the petitioner shows that the Collector was simply executing the order of the Civil Court."

From the above‑quoted passage of the above judgment, it is clear that in case when an under stamped document is not admitted in evidence, the procedure to be followed by the person/Court, before whom such docu ment is produced, is to impound the same and to refer the same to the g Collector, who under section 40 (1) (b) has the Power to adjudicate upon the question of deficit stamping as well as on the question of quantum of penalty. It may be advantageous to reproduce herein below sections 38 and 41 of the Act, which read as follows :‑

Section. 38.‑Instruments impounded how dealt with (I) When 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 instru ment, 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."

Section 40. Collector's power to stamp instrument impounded.‑

(1) When the Collector impounds any instruments under section 33, or receives any instrument sent to him under section 38, sub section (2), not being an instrument chargeable with a duty of non‑exceeding twenty‑five paisa only or a bill of 'exchange or promissory note, he shall adopt the following procedure‑

(a) if he is of opinion that such instrument is duly stamped, or is not chargeable with duty, he shall certify by endorsement thereon that is duly stamped, or that it is not so chargeable, as the case may be ;

(b) if he is of 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 five rupees ; or if he thinks fit, and amount not exceeding ten times the amount of the proper duty or of the deficient portion thereof, whether such amount exceeds or falls short of five rupees Provided that, when such instrument has been impounded only because it has been written in contravention of section 13 or section 14, the Collector may, if he thinks fit; remit the whole penalty prescribed by this section (2) Every certificate under clause (a) of subsection (1) shall for the purposes of this Act, be conclusive evidence of the matters stated therein.

(3) Where an instrument has been sent to the Collector under section 38, subsection

(2) The Collector shall, when he has dealt with it as provided by this section, return it to the im pounding officer."

(d) A plain reading of the above sections clearly indicates that in the instant case the learned Civil Judge instead of impounding the documents under subsection (2) of section 38 of the Act and instead of making a reference to the Collector, has himself adjudicated upon the question of deficit stamp duty and also as to the quantum of penalty to be imposed, which was not warranted by law.

It may be pertinent to observe that Mr. Jamali has made an attempt to distinguish between the imposition of a fine and the recovery of the fine. According to him, the learned Civil Judge was competent to impose ten times penalty but he had no power to enforce the recovery and that the recovery was to be effected through the Collector. When he was asked to say as to whether the Collector would have the power to go into the ques tion as to whether the quantum of penalty imposed by the Civil Judge was proper or not, his reply was that the Collector could determine the quantum of penalty. In our view the above contention is devoid of any force. If section 38 (1) would have been applicable to the instant case, the court‑could admit the document upon payment of penalty and deficit stamp duty but since it is an admitted position that subsection (2) of section 38 is attracted to the instant case, as has been conceded by the learned counsel for respondent No. 3, it must follow that section 41 (i) (b) was to be complied with and the document was to be referred to the Collector after impounding it.

4. For the above‑reasons we set aside the two impugned orders and direct the learned Civil Judge to refer the matter to the Collector after impounding the document. There will be no order as to costs.

K. M. A. Order accordingly.

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