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Writ Petition No. 907 of 1957, decided on 18th November 1959.
Ss. 33, 35, 38 & 40‑Civil Judge impounding document under S. 33 not levying penalty under S. 35 but sending same to Collector for levying penalty in an ascertained sum equivalent to eleven times the deficit‑Procedure not consistent with law‑Proper procedure.
The petitioner was defendant in a pre‑emption suit. He produced in evidence a document which purported to be a receipt. The Civil Judge, who was trying the suit, was of the opinion that the document was a conveyance and should have been stamped as such. He directed that the petitioner should pay a sum of Rs. 2,887‑8‑0 on account of deficiency in stamp and penalty. He sent a robkar to the Collector, who, acting on the robkar, proceeded to recover this amount from the petitioner. The petitioner applied to the Collector for withdrawal of the proceedings for recovery saying that the Civil Judge had no power to impose penalty, that the Collector should follow the procedure under section 40 of the Stamp Act and that under section 29 of the Stamp Act it was not he but the executant of the document who was liable for the payment of the stamp duty. The Collector simply rejected the application without giving any reasons.
Held, that while the Civil Judge had passed an order which he had no jurisdiction to pass, there was a failure on the part of the Collector to perform his duty under section 40, Stamp Act.
Under section 33, Stamp Act, 1899, the Civil Judge had authority to impound the document 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 was paid. If the document was not admitted in evidence, then section 38 (2) was applicable and the document was to be sent to the Collector. Under section 38 (2) he could only send the document to the Collector, he had no power to impose a penalty.
Under section 35, Stamp Act, 1899, the Civil Judge can allow the document to be admitted in evidence on payment 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 the maximum ten times the proper duty.
The High Court, in the exercise of its writ jurisdiction, issued a mandamus to the Collector to proceed to deal with the case in accordance with section 40, Stamp Act.
S. 56‑Does not grant any right to any person to apply for revision but refers to control of Chief Controlling Revenue Authority‑Control not to be exercised through Commissioner‑Punjab Stamp Manual, para. 43 directing peti tions to be presented through Commissioner only an administrative instruction not haring force of law‑Chief Controlling Revenue Authority not entitled to give directions as to how petitions for revision be presented.
S. 56‑Controlling power of Chief Controlling Revenue Authority‑Not a matter of arbitrary discretion‑Authority not entitled to refuse to entertain Revision petitions.
Mazharul Haq for Petitioner.
Rustam Sidhwa for Respondents Nos. 1 and 2.
Iftikharul Haq for Respondent No. 3.
Date of hearing :18th November, 1959.
Ghulam Farid, the petitioner in this writ peti tion, was defendant in a pre‑emption suit. He produced in evidence in that suit, a document which purported to be a receipt. The learned Civil Judge, who was trying the suit, was of the opinion that the document was a conveyance and should have been stamped as such. He directed that the petitioner should pay a sum of Rs.2,887‑8‑0 on account of deficiency in stamp and penalty. He sent a robkar to the Collector, Multan, and the Collector, acting on the robkar, proceeded to recover this amount from the petitioner. The petitioner applied to the Collector for withdrawal of the proceedings for recovery saying that the Civil Judge had no power to impose penalty, that the Collector should follow the procedure under section 40 of the Stamp Act and that under section 29 of the Stamp Act it was not he but the executant of the document who was liable for the payment of the stamp duty. The Collector simply rejected the application without giving any reasons. The petitioner then moved the Board of Revenue which is the Chief Controlling Revenue Authority under the Stamp Act and to which an application in revision lies under section 56 of the Stamp Act. The Member of the Board of Revenue, to whom the application in revision was presented, refused to entertain it on the ground that it should come to him through the Commissioner of the Division. 1n this writ petition the petitioner challenges the order of the Member of the Board of Revenue on the ground that he had refused to exercise jurisdiction on an improper ground and he also challenges the proceedings for recovery of stamp duty and penalty on the grounds stated in his application to the Collector.
2. We will first consider whether the proceedings for recovery were justified in law. The learned Civil Judge had obviously proceeded under sections 33 and 38 of the Stamp Act. Before proceeding further it will be proper to reproduce the relevant sections of the Stamp Act:
"Section 33‑(1) Every person having by law or consent of parties authority to receive evidence, and every person in charge of a public office, except an officer of police, before whom any instrument, chargeable, in his opinion, with duty, is produced or comes in the performance of his function, shall, if it appears to him that such instrument is not duly stamped, impound the same.
(2) For that purpose every such person shall examine every instrument so chargeable and so produced or coming before him in order to ascertain whether it is stamped with a stamp of the value and description required by the law in force in the Provinces and the Capital of the Federation when such instru ment was executed or first executed.
Provided that‑
(a) nothing herein contained shall be deemed to require any Magistrate or Judge of a Criminal Court to examine or impound, if he does not think fit so to do, any instrument coming before him in the course of any proceeding other than a proceeding under Chapter XII or Chapter XXXVI of the Code of Criminal Procedure, 1898 ;
(b) in the case of a Judge of a High Court, the duty of examining and impounding any instrument under this section may be delegated to such officer as the Court appoints in this behalf
(3) For the purposes of this section, in cases of doubt,
(a) the collecting Government may determine what offices shall be deemed to be public offices, and
(b) the collecting Government may .determine who shall be deemed to be persons in charge of public offices.
Section 35‑No instrument chargeable with duty shall be admitted in evidence for any purpose by any person having by law or consent of parties authority to receive evidence, or shall be acted upon, registered or authenticated by any such person or by any public officer, unless such instrument is duly stamped.
Provided that‑
(a) any such instrument not being an instrument chargeable with a duty of one anna or half an anna only, or a bill of exchange or promissory note shall, subject to all just exceptions, be admitted in evidence on payment of the duty with which the same is chargeable, or in the case of an instrument insufficiently stamped, of the amount required to make up such duty, together with a penalty of five rupees, or, when ten times the amount of the proper duty or deficient portion thereof exceeds five rupees, of a sum equal to ten times such duty or portion ;
(b) where any person from whom a stamped receipt could have been demanded, has given an unstamped receipt and such receipt, if stamped, would be admissible in evidence against him, then such receipt shall be admitted in evidence against him on payment of a penalty of one rupee by the person tendering it ;
(c) where a contract or agreement of any kind is effected by correspondence consisting of two or more letters, and any one of the letters bears the proper stamp, the contract or agreement shall be deemed to be duly stamped ;
(d) nothing herein contained shall prevent the admission of any instrument in evidence in any proceeding in a Criminal Court, other than a proceeding under Chapter XII or Chapter XXXVI of the Code of Criminal Procedure, 1898 ;
(e) nothing herein contained shall prevent the admission of any instrument in any Court when such instrument has been executed by or on behalf of the Crown, or where it bears the certificate of the Collector as provided by section 32 or any other provision of this Act."
Section 38.‑(1) 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 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 instru ment shall send it in original to the Collector.
Section 40.‑(1) When the Collector impounds any instrument under section 33, or receives any instrument sent to him under section 38, subsection (2), not being an instrument chargeable with a duty of one anna or half an anna 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 it 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, an 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 impounding officer."
Under section 33 the learned Civil Judge, before whom this document 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 was 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 payment 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 documents 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 the, 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 ,q an application had been submitted to him by the petitioner objecting to the legality of the recovery proceedings, he determine6 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 application of the petitioner shows that the Collector was simply executing the order of the Civil Court.
4. There is force also in the objection of the petitioner that the learned Member of the Board of Revenue improperly refused to hear his application for revision. The refusal of the learned Member of the Board of Revenue is based on Para. 43 of F what are called "Notes and Administrative Instructions on Sections and Articles of Schedules I and I‑A of the Stamp Act". These are printed in Chapter 3 of the Stamp Manual. Para. 43 runs:
"All applications under clause (1) of this section for revision of orders of Collectors in the Punjab should be made to the Chief Controlling Revenue Authority through the Commissioner of the division. (Punjab Government letter No. 314, dated the 6th January 1933).
The intention of the orders is that although Commissioners have no statutory authority, they should be associated as far as possible in the administration of the Stamp Act. When an application for revision of the orders of a Collector is forwarded to the Financial Commissioner under section 56 (1) of the Stamp Act, the Commissioner of the division should, after hearing the parties, if necessary, express his opinion on the case. (Financial Commissioner's letter No. 180/84, dated the 9th January 1935)."
These instructions have not the force of law and in fact it is not contended by learned counsel who appears for the respondent that Para. 43 has the force of law. Under section 75 of the Stamp Act, the Central Government or Provincial Government can frame rules to carry out the purpose of the Act. Such rules are under section 76 to be published in the official Gazette. It is not contended that Para 43 represents any rule. Para 43 refers to a letter of the Government which is only an administrative instruc tion. Question arises whether, following this administrative instruction, the Board of Revenue could have refused hearing of this application. Section 56 of the Stamp Act which grants to the Chief Controlling Revenue Authority powers of control runs thus:
56. "Reference and Revision.‑(1) The powers exercisable by a Collector under Chapter IV and Chapter V and under clause (a) of the first proviso to section 26 shall in all cases be subject to the control of the Chief Controlling Revenue Authority.
(2) If any Collector, acting under section 31, section 40 or section 41, feels doubt as to the amount of duty with which any instrument is chargeable, he may draw up a statement of the case, and refer it, with his own opinion thereon, for the decision of the Chief Controlling Revenue Authority.
(3) Such authority shall consider the case and send a copy of its decision to the Collector who shall proceed to assess and charge the duty (if any) in conformity with such decision."
It will be observed that this does not grant a right to any person to apply but only grants power to the Chief Controlling Revenue Authority to exercise control. It may be asked as to whether it is not open to the Chief Controlling Revenue Authority to give some directions as to the manner in which petitions for revision are to be presented to it because it is a matter which relates to the exercise of discretion by it. After some consideration, we have reached the clear conclusion that the answer is in the negative. The Chief Controlling Revenue Authority cannot assume any legislative power. It would be an exercise of legislative power if the Chief Controlling Revenue Authority is entitled .to make a rule observance of which is essential before it is prepared to exercise its jurisdiction under section 56. At the same time, Para 43 envisages an expression of opinion by the Commissioner and consideration of the views of the Commissioner by the Chief Controlling Revenue Authority. This could not be done without some provision in the rules or in the Act. The law has given no authority to the Commissioner to influence the views of the Chief Controlling Revenue Authority and this cannot be done by an administrative instruction. It is also to be kept in view that if a party is forced to go to the Commissioner, it is deprived of the assistance which it may otherwise secure by means of a stay order. If the party applies for a stay order (as had been done in this case) it is an improper exercise of jurisdiction to refuse to hear him without his first going to the Commissioner who has got no power of issuing a stay order. This point is by itself sufficient for showing that what is contained in Para 43 cannot be a legally enforceable rule.
5. Another point which needs consideration in this connection is that although section 56 only grants power to the Chief Controlling Revenue Authority to exercise control over the Collector, it cannot be regarded as a matter of arbitrary discretion with the Chief Controlling Revenue Authority to entertain a petition or not. When powers are granted for a particular purpose, there is a duty cast on the person empowered to act in furtherance of that purpose. It is to be observed that against the order of the Collector the only remedy available (apart from a civil suit which may lie in a case of tack of jurisdiction) is under section 56. If the Collector imposes a penalty of ten times the stamp duty, the only, authority that can reduce that penalty is the Chief Controlling Revenue Authority. The Chief Controlling Revenue Authority cannot refuse to exercise its jurisdiction, i.e., it cannot refuse to consider a case, though after considering a case it may pass such orders as it thinks fit.
6. We find that the learned Collector did not proceed in accordance with section 40 and that the learned Member of the Board of Revenue also refused to exercise jurisdiction without a proper ground. The question is as to what is the order we should under the circumstances pass. We could have given a direction to the learned Member of the Board of Revenue to hear the case on merits. We do not, however, think any useful purpose will be served by such a direction because he too will have to send the case to the Collector in order that he may proceed in accordance with section 40. We think it will be better that we give a direction to the Collector. We accordingly issue a mandamus to the Collector to proceed in accordance with section 40 of the Stamp Act i.e he should determine whether the instrument is sufficiently stamped E If he finds it is not sufficiently stamped, he will determine the amount of penalty which is to be levied. No proceedings foil recovery of Rs. 2,887‑8‑0 in accordance with the order of the learned Civil Judge shall be taken because the order was void in law. Any proceedings that are now to be taken shall follow the order passed by the learned Collector under section 40. This writ petition is accepted but there is no order as to costs.
A. H. Petition accepted.
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