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CASE LAWS RELATED TO STAMP ACT AND RULES IN KARNATAKA - INDIA

INSTRUMENT DULY STAMPED

Instrument duly stamped' means that it bears stamps of required value with reference to nature of and content consideration in instrument — No impounding of document or levy of penalty on mere presumption of undervaluation — Enquiry as to whether there is undervaluation or not and determination of market value and demand proper duty on market value is post-registration enquiry — Deputy Commissioner to determine market value after giving notice to parties — No levy of penalty for undervaluation and evasion of stamp duty without first determining market value. To be 'duly stamped' an instrument should comply with three requirements: (i) the stamp must be of the proper amount; (ii) should bear the proper description of stamp; (iii) the stamp must have been affixed or used according to law for the time being in force. It is evident from sub-section (2) of Section 33 that for determining whether an instrument bears the proper stamp and thus complies with the requirement of being 'duly stamped', the stamp duty payable on the instrument must be determined only with reference to the terms of the instrument and not evidence dehors or beyond the instrument. Section 33 does not contemplate an enquiry, with reference to material other than the instrument itself, to reach a conclusion as to whether such instrument is duly stamped or not. In other words, only the description, nature and contents of the document and the consideration mentioned in the instrument can be looked into, to find out whether instrument is 'duly stamped'. If a property of the market value of Rs. 25,000/-, is conveyed under a sale deed, mentioning the sale consideration as Rs. 10,000/- and the stamp duty at the specified rate is paid on Rs. 10,000/- then it is duly stamped for purposes of the Act, even though there may be undervaluation regarding market value. This is so, because, to find out whether there is undervaluation, an enquiry beyond the terms and contents of an instrument, is required, to determine the market value. Undervaluation cannot be assumed merely with reference to the terms or contents of an instrument but can be determined only with reference to external evidence relating to market value. Section 33 does not contemplate or permit any such enquiry into the market value of the property which is the subject-matter of the instrument, nor determination whether there is any undervaluation. Thus, a deed of conveyance bearing the necessary stamp duty at the specified rate on the consideration or value mentioned therein, cannot be considered as 'not duly stamped' and therefore cannot be impounded under Section 33. The Sub-Registrar can send an instrument to the Deputy Commissioner under Section 37(2) for determination of a proper duty under Section 39, only if it is impounded under Section 33, as not being duly stamped. He cannot send an instrument to the Deputy Commissioner under Section 37(2), if he is merely of the opinion that it is undervalued. The Deputy Commissioner while exercising his power under Section 39 of the Act, in regard to an impounded instrument, cannot embark upon an enquiry into the market value of the property; he can only decide whether the instrument is duly stamped or not; and if he finds that it is duly stamped, he shall certify thereon that it is duly stamped; and if it is not duly stamped, he shall require payment of proper duty or the amount required to make up the. same together with a penalty as specified therein. The resultant position is that, there can be no determination of 'proper duty' not levy of penalty under Section 39, in respect of documents which are not impounded or which cannot be impounded. Hence no penalty can be levied under Section 39, in regard to an instrument which is undervalued. It should however be noted that in regard to instruments which are not duly stamped, but which are not impounded, but registered, the proper duty can be collected by initiation of proceedings under Section 46-A of the Act. Thus the determination whether a document is not duly stamped and therefore should be impounded relates to a pre-registration stage. On the other hand, the enquiry as to whether the document is undervalued or not and the determination of market value and proper duty on such market value, is a post-registration enquiry, which has nothing to do with the registration or validity of the instrument. Thus, if a document which is not duly stamped, is presented for registration, the Registering Officer will not register the document but impound it, and send it to Deputy Commissioner under Section 37(2) so that the Deputy Commissioner can require payment of proper duty and penalty under Section 39. On the other hand, if the document is undervalued, the Registering Officer shall register the document and refer the instrument to the Deputy Commissioner for determination of market value and payment of proper duty under Section 45-A and the Deputy Commissioner has to determine the market value and the proper duty payable thereon after giving the parties, a reasonable opportunity of being heard. Before 1-4-1991, in areas where Section 45-A was not brought into force, there could be no action under Section 45-A, even if the consideration/price/value mentioned in Instruments of Conveyance, Exchange or Gift was less than the market value. In such case, action could be taken only under Sections 28 and 61 of the Act. The combined effect of Section 28(1) and (2) and Section 61 and Rule 15-A was that if there was any undervaluation, the person executing the document could be prosecuted and punished under Section 61. Once Section 45-A was made applicable, of course, the deficit stamp duty could also be collected. But under no circumstances, penalty could be levied under Section 39, in regard to undervalued instruments. - Huleppa Balappa Karoshi v Sub-registrar, Chikodi, 1996(5) Kar. LJ. 605.

BOND
Definition of 'bond' and under Article 12 - Meaning of 'bond' - Schedule - Article 30{c) - 'Security deposit' whether premium or fine under Section 105 of Transfer of Property Act or money advanced in addition to the rent reserved. Security deposit is not the same thing as premium or fine as explained under Section 105 of the Transfer of Property Act, or any money advanced in addition to the rent reserved. Article 12 expressly excludes the other kinds of bonds referred to in the Note appended to the said Article, which are chargeable to duty, under the specific articles mentioned. What follows from the above is that the category of bonds mentioned in the Note, are not exigible to duty as 'bond' in the generic sense as defined in Section 2(l)(a) under Article 12. 'Bond' is a generic term. A bond is an instrument in writing by which «» person binds himself or commits legally to pay a certain sum of money to another on certain conditions. Generally accepted definition of bond is that it is a certificate of evidence of a debt, more fully described in Section 2(l)(a). The security deposit does not answer the description of premium or a fine and the same reason also hoJds good that it is not a bond in the generic sense. Thus, the document is not exigible to stamp duty either as premium or as bond in the generic sense. Chief Controlling Revenue Authority v M. V. Owndrashckar and Others, ILR 1984 Kar. 1003 (FB): AIR 1985 Kant. 61 (FB).


BOND

If a document consists of only an obligation to repay the money, then it may be considered as a bond. But when the document, in addition to the undertaking to repay the money personally, also gives a right to the creditor to recover the money by sale of a specific immoveable property, it will not come within the ambit of 'bond' as defined by the Act. Nflgablmsappa v Laxminarayana, ILR 1985 Kar. 1742.



MORTGAGE
Where petitioner executed a mortgage in 1956 and on Aug. 28, 1958 obtained further accommodation from the creditor and executed a memorandum on Sep. 1, 1958 reciting that the title deeds already with the creditor should be treated as deposit for the equitable mortgage in respect of the further advance and further recited the rate of interest and other conditions, Held: the memorandum was not an instrument of mortgage, but only an agreement relating to deposit of title deeds. Shivacharanlal v State of Mysore, (1963)1 Mys. L.J. 107.

MORTGAGE
To constitute a mortgage there must be a transfer of right over or in respect of property. See Bangalore City Municipal Corporation Act, S. 142, (1963)1 Mys. L.J.197.


MORTGAGE
Mortgage deed - Under the Stamp Act a document to be a mortgage must effect a transfer. A document which has not been registered is not chargeable to stamp duty as a mortgage. AIR 1953 Mad. 764 F.B. followed. Malkajappa v C. Ayyamma, (1964)1 Mys. L.J. 299.


MORTGAGE
Essential ingredients of a mortgage deed - There can be no transfer of interest in immoveable property if principal money secured is more than one hundred rupees, unless the mortgage is effected by a registered instrument signed by the Mortgager and attested by at least two witnesses. If documents not registered, it cannot be said the documents have transferred any interest in immoveable property. In such cases liability for levy of duty and penalty, as a mortgage deed arises. — Vasudev Pandurang v Basappa Hanumanthappa, ILR 1985 Kar. 547.


MORTGAGE & HIRE-PURCHASE
Hire purchase agreement by agriculturists for tractor and implements - Stamp. If under a document there is a transfer of specified property or creation of right over or in respect of property, it should be stamped as a mortgage deed. Where under a hire purchase agreement for tractor and other implements executed by loanees in favour of the Tahsildar, a right is created over specified immovable properties of loanees, the agreement is liable to be stamped as a mortgage under Art. 34(b) of the Act and Art. 47 is not applicable. Chief Controlling Revenue Authority v D.S. James, AIR 1973 Mys. 105


MORTGAGE
Karnataka Agricultural Credit Operations and Miscellaneous Provisions Act, 1974 — Form No. 3, Declaration — Offering security of certain immovable property for borrowing of money or financial assistance — Whether the declaration is a simple mortgage for purposes of the Act — Whether the Revenue authorities were justified in concluding that the deficit stamp duty is to be paid? A reading of the provision makes it clear that any instrument which for the purpose of securing money advanced by way of loan or to be advanced by way of loan or one person transfers or creates in favour of another person a right over a specific property is called a mortgage. In the present case a reading of the declaration would make it clear that the party concerned would offer certain property by way of security for the payment of amount of financial assistance and the description of the property is also set forth in the schedule thereto. Therefore it is clearly a case of mortgage, because there is borrowing of money and offer of security of certain immovable property in terms of Section 2(l)(n) of the Act ..... When that declaration is required to be registered and the declaration itself creates interest in respect of the property by way of charge or security in the property in question, it should certainly be held to be a mortgage. Pasalu Thimmappa and Others v Karnataka Appellate' Tribunal, Bangalore and Others, 1994(1) Kar. L.J. 379.

CONVEYANCE
Transfers other than sale when amount to conveyance? See Arts. 19 and 44, (1966)1 Mys. LJ. 21 FB.



CONVEYANCE OR RELEASE
Where a document recited that there was an agreement to sell on payment of consideration, but that a sale deed was not executed because of the loss of stamp paper purchased for the purpose and that the executant had lost his title to the property by prescription and as the second party who had acquired title by adverse possession wanted a reference deed for collateral purposes, therefore the deed was executed under which the executant relinquished his right, title and interest in favour of the other party, held, the document amounted to conveyance or sale as defined in S. 2(d) of the Act and chargeable to stamp duty under Art. 20 of the Sch. Though the word sale or purchase had not been used in the document, the word 'hereby relinquished' whatever right, title or interest the executant possessed indicated that by the document, the rights possessed by the executant were being transferred in favour of the other party. State by Sub-registrar v M.L. Manjunatha Shetty, AIR 1972 Mys. 263 (FB) : (1972)1 Mys. L.J. 508 (FB).


COPARCENARY - COURT SALE
Sale of coparcenary property between various co-sharers by court - Held, it does not amount to a sale and sale certificate issued under Or. 21, RI. 94 CPC would not be an instrument of sale and question of paying non-judicial stamp paper does not arise - Panduranga Mallya 11 v U. Vamana Mallya and Others, 1988(1) Kar. L.J. 538.


PARTNERSHIP AND PROPERTIES
Deed of declaration of partnership property - Stamp duty chargeable. Ten persons purchased certain coffee estates for Rs. 22,75,000. A registered sale deed was executed in their favour as co-owners. Subsequently the ten persons executed a partnership deed referring to the purchase of the estates by them. Later by the draft deed in question, styled as deed of declaration of mutation of nomenclature, they declared that the estates are the properties of the partnership firm which they had formed and that their relationship in respect of the said estates was not as co-owners but as partners. Held: that the document did not purport to convey the estates to the partnership firm. The document merely recorded the intention of the partners to treat the properties purchased as partnership assets. The change of legal relationship from one of co-owners to partners in respect of immovable properties was not brought about by the instrument but by operation of law, by virtue of the fact that the partners agreed to treat the said properties as partnership properties. Hence the document was neither a 'deed of conveyance' as defined in S. 2(1 )(d), nor a 'deed of partnership' falling under Art. 40 of the Sch. to the Act, but was a 'memorandum of agreement' chargeable to stamp duty of under Art. 5(d) of the Sch. to the Act.
For the purpose of bringing separate property of the partners into a common stock of the firm, it is not necessary to have recourse to any written document. As soon as the partners intend that their separate properties should become the partnership properties and they are treated as such, then by virtue of the provisions of the Partnership Act, the properties become the properties of the firm. This result follows by
operation of law. Rebelio v Chief Controlling Revenue Authority, AIR 1971 Mys. 318 (FB).





VILLAGE MAP NOT INSTRUMENT

Map issued by local authority — Production in evidence, of certified copy of — Such map, held, is not instrument attracting payment of stamp duty, as it does not create, transfer, limit, extend, extinguish or record any right or liability — Same produced in evidence for purpose identifying suit property cannot be rejected on ground that it is not duly stamped. Held: Where a document creates some right or liability between the parties transferring certain rights, then it comes within the meaning of definition of an "instrument" and is chargeable to stamp duty. It is in respect of those documents if proper stamp duties are not paid, such documents have to be impounded and the duty and penalty has to be charged, if it is to be admitted in evidence. . . In the present case, what is required to be produced is the certified copy of the map, only for the purpose of identifying the properties described in an "instrument". Therefore, the certified copy of the map does not come within the meaning of Section 2(l)(j) and (k) of the Act so as to direct to pay the duty and penalty. The Karnataka Stamp Act does not provide for paying the duty and penalty in respect of sketches, maps, etc. If the transaction takes between two or three persons under the instrument and is not charged properly, in respect of such instrument the Court can direct the party to pay the duty and penalty as the case may be. But, mere production of the certified copy of the map does not come within the meaning of definition of an "instrument". — Channamma and Others v Shantkumar, ILR 2004(2) Kar. 1052.


KAIDB LAND

Companies Act, 1956, Section 21 — Transfer of Property Act, 1882, Section 105 — Karnataka Industrial Areas Development Act, 1966, Section 14(d) — Industrial plot allotted to company — Lease~cum-sale deed executed in respect of — Company subsequently changing its name and presenting supplementary agreement for registration in order to substitute its old name by its new name in original lease-cum-sale deed, retaining terms and conditions of lease-cum sale unaltered — Company under its new name continuing to be same as it was under its old name except for change of its business of manufacturing readymade garments to software development — By reason of mere change of user of demised property from carrying on one business to another, fresh transaction does not take place — Stamp duty on consideration fixed under original agreement Cannot again be demanded in respect of such supplementary agreement which does not effect transfer or create any new right or liability in respect of demised premises. Held: The appellant was permitted by the third respondent herein to establish a software park. The execution of supplementary agreement became necessary consequent upon the change in the name of the company. By reason of such supplementary agreement although it was permitted to establish a software park but by reason thereof no fresh transaction was entered into. .... The said lease was governed by Section 105 of the Transfer of Property Act, 1882. By reason of the supplementary agreement, a restrictive covenant has been amended in terms whereof the appellant herein was permitted to carry on the business of a Technology Park instead of manufacture of readymade garments/leather garments. Only because the name of the company was changed, the same would not mean that a fresh transaction took place. Having regard to the change in the name of the company, the appellant's name was sought to be substituted in the original agreement. The period of the lease, the quantum of the premium paid and other terms and conditions remained unaltered except the restriction contained in clause 2(q) of the said deed, was removed. By reason of mere change of user from carrying on one business to another, it is true; a fresh transaction does not take place. The terms and conditions of the lease can be changed by mutual consent. Unless the essential ingredients thereof as contained in Section 105 of the Transfer of Property Act are not altered, it cannot be said that the parties to the contract entered into a fresh transaction. The third respondent merely reserved unto itself a right of re-entry on expiry of the said period of eleven years. It could in terms of the covenant of the lease also extend the period of tenancy or terminate the same. Unless the lease itself came to an end, the third respondent did not have any right to re-convey the property. By reason of mere change in the name of the company "Prasad Garments Private Limited" the erstwhile lessee also cannot be held to have transferred its leasehold interest in favour of the appellant herein..... Execution of an instrument which would attract payment of stamp duty in terms of Article -5(d) of the Act must involve transfer of the property or otherwise a right or liability may inter alia be created, transferred etc., as envisaged in Section 3 thereof. Once it is held that the supplementary agreement is neither a deed of lease nor a deed of sale within the meaning of Section 105 or Section 54 of the Transfer of Property Act, as the case may be, Article 5(d) of the Schedule to the Act will have no application. If Article 5(d) has no application, indisputably the residuary clause contained in Article 5(f)(i) would have. The appellant admittedly paid the stamp duty in terms thereof.... It is now well-settled that for the purpose of levy of stamp duty, the real and true meaning of the instrument must be ascertained. .... Having regard to the fact that the entity of the appellant cannot be said to be totally different from Prasad Garments Private Limited and as by reason of the supplementary agreement, no fresh transaction has been entered into, the impugned judgment cannot be sustained, which is set aside accordingly. — Prasad Technology Park Private Limited, Bangalore v Sub-Registrar, Krishnarajapuram, Bangalore and Others, 2006(1) Kar. L.J. 289 (SC).





SETTLEMENT DEED-ATTESTATION

Transfer of Property Act, 1882, Section 123 — Indian Evidence Act, 1872, Sections 68 and 72 — Deed of settlement — Proof of execution of — Since law does not require attestation of such document though it is attested, it may be proved by admission or otherwise, as though no attesting witnesses existed — Examination of at least one of attesting witnesses, held, is not obligatory. Held: The settlement deed is not a document required by law to be attested. Section 72 of the Indian Evidence Act prescribes that an attested document not required by law to be attested may be proved as if it was unattested. The settlement deed though not required by law to be attested, has been attested by attestors. But then under Section 72 of the Indian Evidence Act, it is not obligatory on the part of the person propounding the document to examine the attesting witness. The testimony of the attesting witness is not the only evidence by which a settlement deed can be established. It can be done by other kinds of evidence. — Mrs. Devaki and Another v Mrs. Lingamma, 2002(3) Kar. L.J. 77B.


SETTLEMENT OR GIFT

Settlement and gift —Though under both property is given without consideration, however where gift under registered deed is for providing for dependent, document is deed of settlement and not deed of gift — Since document is intended to have immediate operation, it confers title to property immediately on beneficiary. Held: The word 'settlement' as defined under Section 2(24) of the Indian Stamp Act and Section 2(l)(q) of the Karnataka Stamp Act is a non-testamentary disposition, in writing, of movable or immovable properties made in consideration of marriage, for the purpose of distributing property of the settlor among his family or those for whom he desires to provide, or for the purpose of providing for some person dependent on him or for any religious or charitable purpose and includes an agreement in writing to make such a disposition and where any such disposition has not been made in writing, any instrument recording, whether by way of declaration of trust or otherwise, the terms of any such disposition. When the document is executed for any of the purposes mentioned in the above sections of the Indian Stamp Act or the Karnataka Stamp Act, then it could be called a 'settlement deed'. There is a clear distinction between the deed of settlement and a deed of gift and both the documents are recognised as the mode of conveyance of the property. A plain reading of the document-Exhibit P. 1 in question makes it clear that what the deceased did under the settlement deed-Exhibit P. 1 was to distribute his properties referred to in that deed to his wife and daughter for the purpose of providing for them who were dependent on him and were als'o the members of his family. Thus, the document in question squarely falls within the term clause (b) of sub-section (24) of Section 2 of the Indian Stamp Act which sub-section defines the term 'settlement' under the Indian Stamp Act and the same is the definition of the word 'settlement' under the Karnataka Stamp Act also. A perusal of the document shows that the purpose of the same was to distribute or to settle the property of the deceased to his wife and daughter who were dependent on him. Mrs. Devaki and Anothc.r v Mrs. Lingamma, 2002(3) Kar. L.J, 77A.


REFUND OF STAMP DUTY PAID

Refund of stamp duty and registration fee paid — Claim for — Sale deed registered in year 1996, relating to purchase of land claimed to be for construction of cinema house — Claim for refund preferred in 1998 on basis of State Government orders dated 3-6-1994 and 10-12-1997 exempting sale deed from levy of stamp duty and registration fee if land purchased under sale deed is used for constructing cinema house thereon — Claim, held, not admissible, in absence of statutory provision enabling-refund of stamp duty and registration fee. — Raja Rajagopal and Another v State of Karnataka and Others, 2000(2) Kar. L.J. 181.


UNREGISTERED DEED - STAMP AND PENALTY.
By an unregistered document which is found to be an usufructuary mortgage deed, no legally valid transfer of any interest in the property in question can be said to have been made, and when there is no such legally valid transfer, the document is not liable to stamp duty and as such no levy of stamp duty and penalty could be ordered. Gurappa Kalappa v Pattanaik, (1974)2 Kar. L.J. Sh. N. 31.


INSTRUMENT WHEN TO BE STAMPED.
Stamp duty under the Act is chargeable on an instrument on execution and the instrument should be stamped before or at the time of the execution. Failure to register the instrument after execution is an irrelevant matter for the purpose of determining the question whether the document is chargeable to duty, under the Act. Similarly, failure to obtain the previous sanction of the Collector under S. 47 of the Hyderabad Tenancy and Agricultural Lands Act, 1950 for the transfer, which invalidates the transfer, has no bearing on the question of the liability of the document to stamp duty under the Act. (1964)1 Mys. L.J, 299 overruled. — Anna Rao v Bandeppa, AIR 1971 Mys. 63 : (1970)2 Mys. L.J, 442 (FB).


REDUCTION OF STAMP DUTY
Notification Issued for — Since concession under notification dated 28-9-1994 is only for land purchased for construction of duly approved new cinema theatre, denial of concession for purchase of land with cinema theatre already existing thereon, is valid. Held: The notification dated 28-9- 1994 provides for exemption and concession only for the lands purchased for construction of the duly approved new cinema theatre and the said Government Order is not applicable to the lands with existing cinema theatre. In the present case the sale deed dated 13-2-1997 discloses the existence of Vinayaka cinema theatre as and therefore at the time of the execution of sale deed the cinema theatre was already in existence. Therefore, the order passed by the District Registrar and Deputy Commissioner of Stamps, Tumkur District is justifiable one and it is in accordance with law and it cannot be interfered with by this Tribunal in this appeal. — K.B. Nagendra and Another v The Deputy Commissioner for Stamps and Registration, Tumkur District, Tumkur and Another, 2002(53) Kar. L.J. 82B.

SOCIETY PROPERTY TRANSFERRED TO TRUST

Document described as Deed or Trust by President of National Education Society - Whether the document is a deed of trust or settlement deed - Terms of deed - Society becomes a trust - Property gets transferred and there is complete change in the status - No provision in Societies Registration Act to change character of society to trust - Transaction in effect amounts to transfer of property and is chargeable to stamp duty as settlement. Held: Undisputedly the property belonged to the society registered under the Society Registration Act and these properties are sought to be transferred and vested in the newly created Trust. The society existed as separate legal entity, and the Instrument in question seeks to convert the society into a trust and transfer and vest all the properties in the trust. There is no provision in the Societies Registration Act to convert the properties of a society into a Trust Property. Under these circumstances, looking to the very terms of the Instrument in question, the document falls within the meaning of settlement as defined under Section 2(l)(q)(iii) of the Act and as such it is liable to duty under Article 48 of the Schedule to the Act. - The Chief Controlling Revenue Authority, Govt. of Karnataka v Dr. H. Narasimhaiah, ILR 1991 Kar. 1041


GIFT DEED AND EXEMPTION IN STAMP DUTY

Gift deed — Stamp duty chargeable to — Gift to mother — Since family in relation to donor for purpose of stamp duty does not include mother, concessional rate applicable where donee is member of family of donor, is not attracted — Stamp duty is chargeable on basis of market value of property transferred as gift — Non-inclusion of mother in definition of "family", held, is not discriminatory. Held: The ground of challenge is that the explanation of 'family' in Article 28(b) is violative of Article 14 on account of non-inclusion of father and mother. It is possible that in certain circumstances, logically mother, father and dependant brothers/sisters may be included in the definition of 'family'. But, it is also possible in a different set of circumstances, mother and father or siblings may not be considered as members of the family. When a person is married and has children, normally the spouse and children are alone considered as family, for several purposes. There is nothing unreasonable about it. Further, the question is not whether it is reasonable to include the parents, but whether their non-inclusion is unreasonable and arbitrary so as to render the explanation open to challenge on the ground of violation of Article 14. It is not possible to hold that when mother is not included in the definition, the definition of 'family' in the explanation becomes incomplete and violates Article 14 or that the explanation defining 'family' should be so interpreted as to include the mother. Equally baseless is the contention that because a gift from mother to son falls under Article 28(b), a gift from son to mother should also necessarily fall under Article 28(b). .... Article 28(b) will have to be read with the explanation, in a plain and normal manner. Only if the deed falls squarely under Article 28(b), the concessional rate of stamp duty can be availed. If not, the deed will be governed by Article 28(a). — M.S. Narendm and Another n State of Karnataka and Another, 2001(5) Kar. L.J. 191A.



BENEFIT OF REDUCED STAMP DUTY CANNOT BE RESTRICTED TO STAMP DUTY PAYABLE UNDER SECTION 3 OF ACT, AND HAS TO BE EXTENDED TO ADDITIONAL STAMP DUTY PAYABLE UNDER SECTION 3-B OF ACT
Notification dated 16-6-1999 reducing "total stamp duty payable under Act" on instruments of conveyance of immovable property purchased from Messrs Information Technology Park Limited, Bangalore, upto fifty per cent — Where reduction of stamp duty granted under notification is reduction in total stamp duty payable under Act in respect of such instruments, benefit of reduced stamp duty cannot be restricted to stamp duty payable under Section 3 of Act, and has to be extended to additional stamp duty payable under Section 3-B of Act — Notice demanding full payment of additional stamp duty, held, is not sustainable and is liable to be quashed. Held: The notification expressly speaks of the total stamp duty payable under the Act and with reference to the category of transactions referred to in the notification itself. When there is no dispute that the sale deeds in respect of which the demands have now been raised, are the types of transactions which are covered under the notification, the only other question is as to whether a distinction can be made with regard to the concession vis-a-vis levy of stamp duty and levy of additional stamp duty. The notification does not expressly mention either of stamp duty leviable under Section 3 or additional stamp duty leviable under Section 3-B of the Act. On the other hand, what all it says is that the total stamp duty payable in respect of the transactions the concession of 50% is extended. As the words used is "total stamp duty payable", obviously it should include the additional stamp duty levied and collected under Section 3-B of the Act. If that were not to be the case, then there was no occasion to use the words "total stamp duty payable". ... It cannot be said that extending of the notification dated 16-6-1999 to be applicable to levy of duty as well as additional stamp duty is in the nature of a liberal interpretation of the notification or amounts to enlarging the application of the notification. No such exercise is either necessary or indulged in, when the wordings of the notification itself is looked into. The notification itself achieves the core object of granting exemption upto 50% on even additional stamp duty payable and to the class of transactions referred therein. . . . The three transactions being clearly covered by the notification dated 16-6-1999 being of the nature of transactions referred to therein and also granting exemption upto 50% of the total stamp duty payable in respect of the transaction, the stand of the petitioner claiming exemption from levy of stamp duty even in respect of payment of additional stamp duty under Section 3-B of the Act is perfectly justified and in consonance with the notification. The demand raised calling upon the petitioners to pay the difference of duty over and above what it had paid, is not sustainable in law and accordingly these demand notices are liable to be quashed- — Tata Consultancy Services, Mumbai v State of Kamataka and Another, 2003(6) Kar. L.J. 540.


MODE OF CANCELLATION OF COURT FEE STAMP PAPERS
No particular mode is prescribed either under any statute or any rules framed under statute — Provision requiring cancellation would be duly complied with if evidence of cancellation is such that same sheet cannot be applied to any other instrument — Rejection of plaint on technical ground that party or his Counsel has not affixed his signature on each and every sheet, is legally untenable, when each and every sheet is cancelled by typing thereon cause title of suit. Held: The suit of the plaintiff is to recover a huge amount of Rs. 13,39,34,033.80 and he has also paid the requisite Court fee of Rs. 8,77,0007-. The preliminary objection of the Trial Court is that all the stamp papers have not been defaced by the plaintiff or by his Counsel by putting his signature. . . . When such Court fee stamp papers are produced, the purpose of defacing is to ensure that it is not used in any other case. In the present case neither the plaintiff nor the plaintiff's Counsels have signed the stamp papers, but it is clear that the cause title of the parties have been duly typed. Therefore, it satisfies the requirement of Section 13 of the Karnataka Stamp Act, 1957. . . . Even otherwise, on filing of the papers with the Court along with the stamp papers, the Court office puts the seal of the Court on all the stamp papers and will punch the stamps. Thereby, it also results in defacing of the stamp papers... . There is no other provision in the Civil Rules of Practice or under the High Court Rules describing the manner as to in what way the stamp papers have to be defaced. Therefore, if the requirement of Section 13 of the Karnataka Stamp Act is complied, it suffices the matter. Accordingly, the Trial Court is directed to register the case and proceed in accordance with law. — Shetty's Construction Company Private Limited, Hubli v Krishna Bhagya Jala Nigam Limited, Bangalore and Others, ILR 2004 Kar. 1467 :

POWER TO LEVY STAMP DUTY ON DOCUMENTS REGISTERED OUTSIDE THE STATE.
The main contention urged in this case is that the treatment meted out to the Central Government employees in not putting them on par with the State Government employees in regard to payment of Stamp duty on the mortgage deeds to be executed in favour of the respective Governments on housing loans is opposed to principles of natural justice apart from offending the provisions of Article 14 of the Constitution of India ........The economic legislations should be viewed by the Courts with greater latitude and they cannot be struck down as invalid on the ground of crudities and inequities. In the instant case, the impugned notification came to be made keeping in view the financial position of the persons who are unequal in many respects. Therefore, the impugned notification having been based on reasonable classification, cannot be interfered with .... Section 19 of the Act entitles the State of Kaniataka to demand proper stamp duty from persons who have registered .their documents outside the State but the same are subsequently enforced within the State of Kaniataka and therefore the procedure initiated under Section 46-A of the Act, by the respondents is in consonance with the said provisions of the Act. - Erappa and Others v State of Karnataka and Others, 1991(2) Kar. L.J. 432B : ILR 1991 Kar. 3102.


PRODUCTION OF DOCUMENTS — DUTY OF COURT TO EXAMINE DOCUMENT

Duty of Court to examine document independently whether it is duly stamped or not, irrespective of whether objection against marking is raised or not — Once Court admits document in evidence even wrongly, such admission becomes final and cannot be called in question thereafter on ground that document was not duly stamped. Held: A duty is cast upon every Judge to examine every document that is sought to be marked in evidence. The nomenclature of the document is not decisive. The question of admissibility (with reference to Section 34 of Karnataka Stamp Act, or Section 35 of Indian Stamp Act and Section 49 of Registration Act) will have to be decided by reading the document and deciding its nature and classification. The tendency to mark documents without inspection and verification should be eschewed. Even while recording ex parte evidence or while recording evidence in the absence of the Counsel for the other side, the Court should be vigilant and examine and ascertain the nature of the document proposed to be marked and ensure that it is a document which is admissible. The Court should not depend on objections of the other Counsel before considering whether the document is admissible in evidence or not. Section 33 of the Stamp Act casts a duty on the Court to examine the document to find out whether it is duly stamped or not/ irrespective of the fact whether an objection to its marking is raised or not. It should be borne in mind that once a document is admitted in evidence, it cannot be called in question thereafter on the ground that it was not duly stamped. Once the Court admits a document even wrongly, such admission becomes final and cannot be reopened. Hence, the need for diligence not only on the part of the opposite Counsel, but also on the part of the Court having regard to the statutory obligation under Section 33 of Karnataka Stamp Act. Procedure to be followed while considering admissibility of — If Court comes to conclusion that document is insufficiently stamped, Court should determine deficit Stamp duty and penalty payable and direct party to pay same and admit document after payment is made — If payment is not made, Court has to impound document and send same to District Registrar for having dealt with in accordance with law as per Section 37(2) of Karnataka Stamp Act.

A combined reading of Sections 33, 34, 35, 36, 37 and 41 of the Karnataka Stamp Act requires the following procedure to be adopted by a Court while considering the question of admissibility of a document with reference to the Stamp Act; (a) When a document comes up before the Court, it has to examine and determine whether it is properly stamped. When the other side objects to it, the Court should consider such objection and hear both sides; (b) After hearing, if the Court comes to the conclusion that the document has been duly stamped, it shall proceed to admit the document into evidence; (c) on the other hand, if the Court comes to the conclusion that the document is not stamped or insufficiently stamped, it shall pass an order holding that the document is not duly stamped and determine the Stamp duty/deficit stamp duty and penalty to be paid and fix a date to enable the party who produces the document to pay the Stamp duty/deficit Stamp duty plus penalty; (d) If the party pays the duty and penalty the Court shall certify that proper amount of duty and penalty has been levied and record the name and address of the person paying the said duty and penalty and then admit the documr a in evidence as provided under Section 41(2); and the Court shall send an authenticated copy of the instrument to the District Registrar together with a Certificate and the amount collected as duty and penalty, as provided under Section 37(l)(e). If the party does not pay the duty and penalty, the Court will have to pass an order impounding the document and send the instrument in original, to the District Registrar for being dealt with in accordance with law as per Section 37(2) of the Karnataka Stamp Act.
Document insufficiently stamped and document requiring registration but not registered — Provisions of both Acts bar such documents being received in evidence — Regarding insufficiently stamped document, bar is absolute, subject to provision enabling Court to collect deficit Stamp duty and penalty — Regarding unregistered document bar is not so absolute, as unregistered instrument may be received as evidence of contract in suit for specific performance or as evidence of part performance of contract of sale of immovable property or as evidence of collateral transaction not required to be effected by registered instrument. Held: The difference between Section 34 of the Karnataka Stamp Act and Section 49 of the Registration Act should also be borne in mind. Section 34 says "no instrument chargeable with duty shall be admitted in evidence for any purpose, or shall be acted upon, registered or authenticated by. . . unless such instrument is duly stamped". Subject to the provision enabling the Court to collect the deficit Stamp duty, the bar under Section 34 is absolute and an instrument which is not duly stamped cannot be admitted at all in evidence for any purpose. On the other hand, Section 49 of the Registration Act which deals with the effect of non-registration of documents provides that if a document which is required to be registered under law is not registered, then such document shall not affect any immovable property comprised therein, nor can it confer any power to adopt, nor can it be received as evidence of any transaction affecting such property or conferring such power. But the proviso to Section 49 provides that an unregistered instrument may be received as evidence of a contract in a suit for specific performance or as evidence of part performance of a contract for the purpose of Section 53-A of Transfer of Property Act or as evidence of any collateral transaction not required to be effected' by registered instrument. For example, if a sale deed is executed on a white paper and is not stamped, it can neither be admitted in evidence nor be used for any purpose. But if a sale deed is executed on requisite stamp paper but is not registered and the executant refuses to admit registration, then the purchaser has a right to file a suit for specific performance, and rely on the sale deed, even though it was not registered, as evidence of the contract for sale. Thus, though both Section 34 of the Stamp Act (corresponding to Section 35 of the Indian Stamp Act) and Section 49 of the Registration Act, both bar the document being received as evidence, the bar is absolute under Stamp Act (unless deficit duty and penalty is paid) and the bar is not absolute under Registration Act.— K. Amarnath v Smt. Puttamma, 2000(4) Kar. L.J. 55.





INSUFFICIENTLY STAMPED DOCUMENTS PRODUCED -PROCEDURE.
The petitioners filed claim petitions contending that they had acquired title to the property attached by means of sale deeds executed by defendant in their favour. The sale deeds were insufficiently stamped and petitioners applied praying that the documents be sent to the Deputy Commissioner under S. 37(2) of Stamp Act. The Munsiff dismissed the applications on the ground that when they are tendered in evidence, he will decide the question of insufficiency of stamp. In revision. Held, the Munsiff rightly dismissed the applications to send the documents to the Deputy Commissioner under S. 37(2). When a document comes before the Court for the purpose of being used in evidence, the first jurisdiction of determining the duty and penalty is that of the Court. It is only when that stage is crossed and the document is not tendered in evidence, then and then only does S. 37(2) come into play. Lakshminarayanachar v Narayan, (1969)2 Mys. L.J. 299.


SUB-REGISTRAR TO WHOM DEED IS PRESENTED FOR REGISTRATION, HAS NO POWER TO IMPOUND DEED FOR INSUFFICIENCY OF STAMP AND REFER MATTER TO DEPUTY COMMISSIONER FOR DETERMINING OF STAMP DUTY PAYABLE
If Sub-Registrar finds that stamp duty paid is insufficient, he can refuse to register deed till deficiency in stamp duty is made good, and it is also open to party to appeal against Sub-Registrar's order demanding payment of additional stamp duty — Impounding of document and reference made before registration of deed are without jurisdiction and, so also order passed by Deputy Commissioner on reference, Held: Unless the document is registered under the provisions of the Indian Registration Act, 1908, the Registering Authority, the Sub-Registrar has no authority to make reference of the document to Deputy Commissioner, who is notified by the Government in exercise of its power under Section 45-A of the Act, for the purpose of exercise of his power under this provision of the Act. Since the document was not registered, he had no jurisdiction to determine the sufficiency or otherwise of the stamp duty payable on the document to be registered before the Sub-Registrar under the provisions of the Act 1957 and the relevant rules. For the reasons stated supra, the Sub-Registrar should not have refused to register the document when it was presented for registration. As contemplated under the provisions of Section 35 of the Registration Act of 1908 when the Sub-Registrar has refused to register the document presented before him, he has to follow the procedure as provided under Section 71 of the Act, 1908 the order of reference of the unregistered document made by the Sub-Registrar to the Deputy Commissioner amounts to refusal to register the document for which the Sub-Registrar was statutorily obligated to assign his reasons for his refusal to register the document. Upon such order the petitioner has got a statutory remedy under Section 72 of the Act, 1908. Therefore, the action of Sub-Registrar in not registering the document and referring the document to the Deputy Commissioner for examining as to whether the stamp duty paid on the document is sufficient or not is bad in law. Therefore, the order passed by the Deputy Commissioner on the reference is not in conformity with either the provisions of the Karnataka Stamp Act or Indian Registration Act. Therefore, the impugned order passed by him is wholly unsustainable in law. . . . The plain reading of sub-sections (2) and (3) of Section 45-A of the Act, 1957, it makes very clear that the Sub-Registrar has got power to make reference of the conveyance deed after registration of the document under Section 45-A of the Act, 1957. Therefore, the Deputy Commissioner of the area who has been notified for the purpose of the provisions of the Karnataka Stamp Act, 1957 has to examine the document with regard to the value of the property which is the subject-matter of 'Conveyance' Deed, after registration of the document by the Registering Authority under the provisions of the Indian Registration Act, then only the second respondent can exercise his power under Section 45-A(2) and (3) of the Act of 1957. — Dr. Uslm Motwn Das v The Divisional Commissioner, Bangalore Division, Bangalore- and Others, 2001(3) Kar. LJ.463.


LEASE DEED – STAMP DUTY INSUFFICIENCY
Document styled, as lease not properly stamped produced during the course of eviction petition by the petitioner - Whether Trial Court was right in holding it as inadmissible evidence. Held: Proviso (a) to Section 34 of the Karnataka Stamp Act, however, provides for a procedure to pay the stamp duty and the prescribed penalty, if a party requires the document to be admitted in evidence. That procedure is still available to the petitioner - Hanumanumul Baid v Ananthapadmanabha, ILR 1992 Kar. 1133.


INSTRUMENT NOT DULY STAMPED — NOT ADMISSIBLE IN EVIDENCE, NOT EVEN FOR COLLATERAL PURPOSES.
Section 34 of the Act mandates, no document shall be admitted in evidence for any purpose, unless it is duly stamped. Section puts a complete embargo and bar against admissibility of such a document which is not stamped, or which is not duly stamped, and it cannot be made use of for any purpose. — Doddabasappa v Gurubasappa (Deceased) by LRs. and Others, 2001(4) Kar. L.J, 104A.



COURT SHOULD APPLY ITS MIND TO THE QUESTION OF ADMISSIBILITY EVEN IF THERE IS NO OBJECTION
Nothing on record to show that Court applied its mind to the question of admissibility nor the act of making endorsement has been made — Hence question of admissibility of document of evidence kept open to be decided by Trial Court at the time of final decision. Held: There is nothing on record to show that the Court has applied its mind to the prior act of examining whether the document Ex. P-l is admissible in evidence. The second act namely marking the endorsement under Order 13, Rule 4(1), C.P.C. also has not been made admittedly. It is no doubt true that the defendants did not raise any objections at the time of marking the document in question as Ex. P-l. But I do not think it absolves the responsibility placed on the Court in examining the document for admissibility. The facts of the case disclose that according to the plaintiff himself Ex. P-l represented an agreement of sale, a completed contract whereas the defendants have contended that the document indicates only a proposal and is not a completed contract. It is neither necessary nor proper for this Court to express any opinion on this aspect as it may prejudice the case of either party before the Trial Court. But what is important to note is that the admissibility of the document Ex. P-l which is not stamped was a serious question to be considered by the Trial Court at the time of marking the document. There is nothing on record to show that the Trial Court had applied its mind consciously to the question whether the document was admissible or not. By no stretch of imagination could it be said in this case that the document has been admitted in evidence. The proper order that could be passed is to keep open the question of the admissibility of the document Ex. P-l leaving it to be decided by the Trial Court at the time of the final decision of the suit. - Narasamma and Another v Arjun M. Menda and Others, 1995(5) Kar. L.J. 574.



PALU-PATTI KARAR

Production of earlier Palu-patti Karar, not duly stamped and registered, only to prove as to when joint status stood severed - Held, Palu-patti Karar admissible in evidence; Order of Trial Court directing payment of duty and penalty on the document set aside. In this Court what has been contended is that once the Court came to the conclusion, it was admissible in evidence for collateral purpose of only proving the severance of status and not evidence of the partition, the Court was not correct in asking the plaintiff to pay duty and penalty as if the document was not required to be stamped. Undoubtedly, under the Karnataka Stamp Act an instrument of partition is required to be duly stamped according to the provisions contained there, i.e., on the market value of the largest of the shares. But, that has already been done in the deed of partition executed in the year 1968 and duly registered in respect of the same properties pursuant to what was agreed in the instrument in question. Therefore, the learned Munsiff committed an error in coming to the conclusion that there can be two partition deeds in respect of the same properties by holding the instrument in question to be also a deed of partition. If parties have paid duty on the instrument of partition of 1968, that will be the document which will be effective being a registered document and the earlier palu-patti has no other value except as evidence of severance of Joint status, that is, the point of time to be reckoned for purpose of severance of status - Narayan Rao, M.S. v M.S. Shivarama, 1988(2) Kar. L.J. 330.


PALU-PATTI KARAR
Documents not required to be registered — Document merely reciting properties which were assigned to respective brothers in previously concluded partition of joint Hindu family does not declare any right and hence there is no necessity of registering such document — Such document produced, not as suit document, but only for collateral purpose of evidencing possession of property, is admissible as evidence in suit for perpetual injunction.Document refers to the items of the properties which were given to the brothers. It is only a list of articles given to the respective brothers on 31-3-1976 under the heading 'division regarding family amenities and properties'. ... In this case, the document in question is not a suit document. It is only produced for collateral purposes to show that the respondent is in possession of the property. According to the parties, the partition had taken place in the year 1957. Document came^nto being only to show the items of the property allotted to the shares of each brother. Therefore, the learned Court below has come to the conclusion that it is nothing but a palupatti or memorandum of partition. .... The same was produced only to show severance of the coparcenary joint family n the same is indicating the list of properties allotted to each brother by virtue of earlier partition effected amongst them. Partition list which are mere records of previously completed partition between the parties can be admitted in evidence even though they are unregistered to prove the facts of partition..... Even if the document is not admissible in evidence because of the bar imposed by the provisions of Sections 17 and 49 of the Registration Act, still the party is not precluded from adducing oral evidence to show that a particular property has fallen to their share. — K.C. Thimma Reddy v K. Govinda Reddy, 2000(1) Kar. L.J. Sh. N. 36.


SALE AGREEMENT – POSSESSION DELIVERED- STAMP DEFICIT AND PENALTY
Agreement to sell immovable property — Stamp duty payable on — Where possession of property is delivered pursuant to such agreement, stamp duty payable is same as duty payable in respect of conveyance on market value of property agreed to be sold — If such agreement is insufficiently stamped, same is inadmissible in evidence unless deficit stamp duty is paid along with penalty which is ten times such deficit duty. Held: Article 5(e) of the Karnataka Stamp Act prescribes, that agreement if relating to sale of immovable property, wherein part performance of the contract, possession of the property is delivered or is agreed to be delivered without executing the conveyance, then, the stamp duty payable is the same as conveyance under Article 20 on the market value of the property. The explanation to Article 5(e) to (i) prescribes that where subsequently, conveyance is executed in pursuance of such agreement the stamp duty already paid shall be adjusted towards the total duty leviable on the conveyance. Thus, it is clear that where an agreement of sale under which the possession is delivered, it amounts to conveyance and hence, attracts stamp duty as conveyance on the market value of the property. In the instant case, the agreement entered into between the parties, which is a basic document for claiming the relief of specific performance and for injunction, clearly provides for sale of immovable property and it also recites that the possession has been delivered. Therefore, the document in question clearly falls within the scope of Article 5(e) of the Karnataka Stamp Act and its Explanation (II). If the Legislature thought that it would be appropriate to collect duty at the stage of the agreement itself, if it fulfills certain conditions instead of postponing collection of such duty till the completion of the transaction by execution of a conveyance deed in as much as all substantial conditions of a conveyance have already been fulfilled, such as an agreement if relating to sale of immovable property, where, in part performance possession of the property is delivered and what remains to be done is a mere formality of paying the balance and of execution of sale deed, it would be necessary to collect duty at a later stage itself though right, title and interest may not have passed as such. Still by reason of the fact that under the terms of the agreement there is an intention of sale and possession of the property has also been delivered, it is certainly open to the State to charge such instruments at a particular rate, which is same as a conveyance on the market value of the property, and that is exactly what has been done in the present case. Therefore, it cannot be said that the impugned order made by the Trial Court suffers from any such illegality or material irregularity so as to call for interference in revision. The document, which is insufficiently stamped, cannot be permitted to be used for collateral purpose in view of Section 34 of the Karnataka Stamp Act which clearly prescribes that no instrument chargeable with duty shall be admitted in evidence for any purpose. In the instant case, the proper stamp duty payable under the Karnataka Stamp Act being not paid and when the document was sought to be used in evidence, the Court below was justified in passing the impugned order which cannot be found fault with. — Jayalakshmi Reddy v Thippanna and Others, 2003(5) Kar. LJ. 263.

DETERMINATION OF STAMP DUTY AND PENALTY PAYABLE
Unstamped instrument — Production of in evidence — Determination of stamp duty and penalty payable — Trial Court can determine same, and there is no need to make reference to Registrar of Stamps for determination of same. Held: There is no provision in Karnataka Stamp Act, 1957, which envisages a reference to the Registrar of Stamps for determining the duty payable on any instrument. The scheme of Section 34 of the Karnataka Stamp Act, 1957, also does not envisage any such reference being made before the document could be marked. The amount of duty payable on the sale deed (in the absence of any material to show that the property had been undervalued), is relatable to the consideration that was paid and received by the parties to the transaction. The penalty amount leviable on the instrument also didn't require or call for any enquiry which could possibly call for a reference to the Registrar. The Court below was therefore justified in holding that the duty payable on the instrument as also the penalty had to be calculated by the Court and not by the Registrar. — Mahadeva v The Commissioner, Mysore City Corporation and Others, 2003(1) Kar. L.J. 518B.


DETERMINATION OF STAMP DUTY AND PENALTY PAYABLE
Jurisdiction of Court — When a document chargeable to duty and produced before Court for purpose of being used in evidence is either not stamped at all or insufficiently stamped — Court to determine duty and penalty and impose it after impounding — Security deposit in lease — Duty payable comes under Section 30(c) of the Act covered by fine, premium or money advanced. Held: When a document comes before the Court for the purpose of being used in evidence, the first jurisdiction of determining the duty and penalty is that of the Court. Section 34 of Karnataka Stamp Act prohibits the reception in evidence of documents which are insufficiently stamped. But a proviso is added thereto according to which the same is chargeable and the person having authority to receive evidence may impose such duty together with the penalty as specified therein. The exercise of jurisdiction under the proviso to Section 34 arises when a document is actually tendered in evidence but it might have been produced much earlier by one or other of the parties to the litigation. When a document chargeable to duty and produced into Court in connection with a proceeding before it is found by that Court to be either not stamped at all or insufficiently stamped it is bound to impound it. Idea of impounding it is to enforce collection of duty or deficient duty together with penalty. When a document comes before the Court for the purpose of being used in evidence, the first jurisdiction of determining the duty and penalty is that of the Court. It is only when that stage has crossed and the document is not tendered in evidence that it ceases to be a document impounded by the Court. In cases where party has produced certain document and expressly makes his intention clear that he would not rely upon that document in support of his causes pleaded, then that would amount to his not producing for purposes of placing reliance on that document by way of legal evidence then the question of Court exercising its powers under Section 34 of the Karnataka Stamp Act would not arise and the Court has nothing more to do with it as a Court but as impounding authority has to send the same to the Deputy Commissioner under sub-section (2) of Section 37, since Stamp Act is a fiscal legislation and its object is to collect revenue. The only question that requires consideration is whether the security deposit of Rs. 7,500/-comes under ambit of Section 30(c) of the Karnataka Stamp Act for purposes of payment of additional stamp duty than the one that is already paid on the document. Whether payment of a sum of Rs. 7,500/- mentioned in Clause (4) of Part 11 as security deposit represents nature of premium or money advanced in addition to rent reserved for purposes of payment of stamp duty as a conveyance under Section 30(c) of the Karnataka Stamp Act. Premium is defined in Section 105 of Transfer of Property Act, 1882 as the price paid or promised for a lease. It is to be noted that both Clauses (b) and (c) of Article 30 use the words fine, premium or money advanced. The duty that is payable on the document in question comes squarely under the ambit of Article 30(c) of the Karnataka Stamp Act, 1957. - Leelamma Samuel v T.M. Francis, 1994(4) Kar. LJ. 573.


STAMP OBJECTION
Document insufficiently stamped admitted in evidence — Such document cannot be rejected in evidence when law provides for recovery of deficit stamp duty with penalty and same has in fact been recovered — Stamp Act is a fiscal measure enacted to secure revenue for State and not enacted to arm litigant with weapon of technicality to meet case of his opponent — Court is not required to consider admissibility of document in evidence from stand point of stamp law — Once Court, rightly or wrongly, admits document in evidence, admission cannot be called in question at any stage of suit or proceeding on ground that document is insufficiently stamped. Held.—Instruments cannot be rejected on the ground that they are inadmissible on the ground of being not properly stamped when the requisite duty and penalty is recoverable and recovered. .... .In the instant case, the Karnataka Stamp Act, or any enactment providing for recovery of stamp duty on specified instruments, is a fiscal enactment intended to secure to the State specified stamp duty. Sections 34 and 35 of the Karnataka Stamp Act is intended to effectuate the intention of the legislature by barring the admission of document unless the requisite stamp duty is paid along with the stipulated penalty. When once a document is admitted in evidence rightly or wrongly, Section 35 of the Karnataka Stamp Act bars any objection to the admissibility of the document at a later stage in the same proceedings or otherwise. The only exception is Section 58 of the Karnataka Stamp Act. In the instant case Section 58 of the Karnataka Stamp Act is inapplicable. When once a document has been admitted, rightly or wrongly, in evidence, it is not open to a party in any other proceedings to contest the admissibility of the document on the ground that the document is not properly stamped in accordance with law. Sections 34 and 35 come into operation when for the first time a document is tendered in evidence and not on subsequent occasions when it is already tendered as evidence. In the instant case, the document was admittedly marked in the litigation between the same parties and the same is now sought to be tendered as evidence in this case. The question of admissibility of the document on account of being improperly stamped cannot now be raised by the defence in the suit. .... .The Trial Judge committed a jurisdictional error in rejecting the document in question. — Sakamma v Pavadi Gowda and Others, 1999(2) Kar. LJ. 650.



STAMP OBJECTION
Document admitted in evidence — Determination of question as to sufficiency of stamp duty paid thereon — Court postponing determination of question at later stage while admitting document in evidence, it amounts to admission of document subject to objection — It is obligatory to decide question before disposing of suit finally — Immunity from objection contemplated in Section 35, is not attracted to documents admitted subject to objection. Held: In the present case, the Court below has postponed the determination of question of stamp duty. At the time when the document was produced and filed at the stage of evidence objection was raised, but the Court below postponed it for decision later on. So, it had not decided the question of admissibility of the document for want of stamp duty. At that stage, it had only been taken on record for the purpose of avoiding delay, subject to determination of the question, later on. May it be an irregularity, may it be for purpose of avoiding any delay in course of recording of evidence and interruption. There may be some irregularity, but it did not bar the jurisdiction of the Court to determine that question. A document which has been taken on record subject to objections, clearly indicates that the question of admissibility is to be later on decided, and the same has not been decided at the stage when it was filed, section makes it obligatory to decide that question. .... The taking of document subject to objections clearly indicated in the present case Court has not applied its mind, and has not determined the question of admissibility of document to attract Section 35 of the Karnataka Stamp Act. — Doddabasappa v Gurubasappa (Deceased) by LRs. and Others, 2001(4) Kar. LJ. 104A.


STAMP OBJECTION

Document tendered in evidence — Admissibility questioned by party opposite on ground that document was not duly stamped — Court, in order to ensure uninterrupted recording of evidence, marking it as exhibit pending adjudication of objection — Such marking of document tentatively, held, is not conclusive of its admissibility and does not give it immunity from being questioned — Order subsequently passed by Trial Court holding that document was not duly stamped and directing party tendering same to pay deficit stamp duty with penalty — Order, held, does not call for interference in revision.Held: In the present case mere marking of a document as exhibit is not conclusive for the purpose of giving it any immunity from questioning under Section 35 of the Act, because, admittedly the document was not admitted after judicial application of mind and the marking was only for the sake of convenience and the issue of admissibility was postponed to facilitate uninterrupted recording of evidence. . . In this view of the matter, direction of the Trial Court to the plaintiffs to pay deficit duty with penalty as provided under clause (a) of the proviso to Section 34 of the Act cannot be said to be suffering from any error requiring interference by this Court. — Riyaz Khan and Others v Modi Mohammed Ismail and Others, 2002(3) Kar. LJ. 551A.

STAMP OBJECTION

Unregistered and unstamped sale deed — Production of, in evidence — Objection to — Direction issued by Court, while judicially determining objection, to party relying upon such instrument to pay stamp duty and penalty before admitting it in evidence to prove nature of his possession of property — Provisions of Stamp Act make no exception in favour of document sought to be admitted in evidence even for proving collateral transaction, and prescribe condition subject to which such document can be admitted in evidence — Order of Trial Court, held, needs no interference. Held: Even when a document is inadmissible for want of registration, the same is admissible to show the character of the possession of the person in whose favour it is executed. There is therefore no gainsaid that ihe unregistered sale deed relied upon by the petitioner could for the limited purpose of proving the nature of his possession be let into evidence notwithstanding the fact that the deed was compulsorily registrable under Section 17, but had not been so registered. . . . That a document is being admitted for a collateral purpose does not however necessarily mean that it can be let in for that purpose even when it is not duly stamped. Section 34 of the Karnataka Stamp Act, 1957, inter alia provides that no instrument which is chargeable to duty shall be admissible in evidence for any purpose or shall be acted upon, registered or authenticated by any person or by any public officer unless such instrument is duly stamped. The expression 'for any purpose' used in Section 34 of the Karnataka Stamp Act/1957, is wide enough to include use of any document for a collateral purpose or transaction. ... It cannot be accepted that just because an unregistered document can be admitted in evidence for proving a collateral transaction, any such use would entitle the document to be marked as an exhibit de hors the provisions of Section 34 of the Karnataka Stamp Act, 1957. The provisions of Section 49 of the Act remain limited to the consequences of no n-registration of compulsorily registrable documents. The said provision does not deal with or stipulate the consequence that follow if an instrument sought to be proved is not duly stamped. That part is provided for separately by provisions of Section 34 of the Karnataka Stamp Act, 1957, which does not make any exception in favour of documents sought to be admitted in evidence for proving a collateral transaction. So long as an instrument is chargeable with duty, the provisions of Section 34 would render it inadmissible in evidence for any purpose unless the same is duly stamped. . . . The proviso to Section 34 prescribes the conditions subject to which a document which is not duly stamped can be admitted in evidence. It inter alia provides for payment of the duty with which the same is chargeable or in the case of an instrument insufficiently stamped, the amount which is required to make up such duty together with the prescribed penalty. There is no conflict between what is permitted by the proviso to Section 49 of the Registration Act on the one hand and Section 34 of the Karnataka Stamp Act, 1957, on the other. The demand of duty and penalty in terms of the proviso to Section 34 before the document could be marked in token of its having been admitted in evidence did not therefore suffer from any error of law to warrant interference. Whenever an objection regarding the admissibility of an instrument on the ground of its being unstamped or insufficiently stamped is raised, the Court is required to determine the objection before proceeding any further, unlike other cases where an objection to the admissibility of a document on any other ground may be examined at a later stage and the document tentatively marked to avoid delay in recording of the evidence. — Mahadeva v The Commissioner, Mysore City Corporation and Others, 2003(1) Kar. LJ. 518A.



STAMP OBJECTION

Sections 34 to 37 - Held, have no relevance to enquiry under Section 45A of Act - Scope explained.
Section 34 of the Act has no relevance to the action taken in the present case under Section 45A. That section comes into operation when a person produces a registered document which even, according to the nature of transaction and the valuation of the property as discernible from the document itself is insufficiently stamped. According to the provision, if a document which is insufficiently stamped is produced before a Court, Tribunal or Authority, it would be in-admissible evidence but could be admitted in evidence, if the party concerned pays the penalty at the rate provided in the proviso. Similarly Section 37 provides as to how instruments impounded should be dealt with. That also has no relevance for this case. Pushpa, M. v State of Karnalaka, 1987(1) Kar. L.J. 77.


UNSTAMPED AGREEMENT TO SELL
Suit for specific performance filed on basis of — Such instrument required to be stamped under law but not stamped is not admissible in evidence for any purpose, unless stamp duty and penalty are paid — Expression "any purpose" includes issue of interlocutory order of injunction to restrain other party from alienating suit property during pendency of suit.Held: Section 34 of the Karnataka Stamp Act, 1957, inter alia provides that no instrument chargeable with duty shall be admitted in evidence for any purpose by any person having by law or consent of parties authority lo 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. Proviso to Section 34 makes such documents admissible in evidence upon payment of penalty. The expression "for any purpose" appearing in the section is wide enough to include within its amplitude use of the document for the purposes of issue or refusal of injunctions prayed for in a suit for specific performance or similar other reliefs. The document in question has admittedly been produced by the plaintiffs-appellants before the Court below. It has come to the notice of the said Court that the document in question is not duly stamped. The Court would therefore be entitled to impound the same in exercise of its power under Section 33 of the Act. Neither Section 33 nor Section 34 of the Act makes an exception to the general rule or make unstamped or under-stamped documents admissible for the purposes of issuing interlocutory orders. . . In that view, therefore, the Court below was justified in insisting upon the payment of the stamp duty and the penalty on the agreement to sell before it could issue an injunction in raVour of the appellants on that basis. Instead of doing so, the Court below appears to have taken an indulgent view by which it has issued an injunction but made its continuance subject to the payment of the stamp duty and penalty on the same by the appellants. The error committed by the Court below is thus for the benefit of the appellants. The Court may well have been justified in ignoring the document so long as it was not properly stamped and the penalty on the same not paid. — KB. Jayaram and Another v Navineethamma and Others, 2003(5) Kar. LJ. 225.

UNSTAMPED AGREEMENT TO LEASE
Lease deed — Requirements of — Once terms of lease are reduced to writing, instrument requires to be stamped and also requires registration.Held: For the purpose of Stamp duty, it makes no difference whether the deed is a deed of lease or agreement to lease. Both require the same Stamp duty. Once the terms of a lease are reduced to writing, the instrument requires to be stamped as per Article 30 and requires registration under Section 107 of the Transfer of Property Act. Even Agreements/Deeds of lease which do not provide for payment of any rent, but merely provide for payment of a premium which is non-refundable or a deposit which is refundable at the end of the lease, are liable to Stamp duty, the duty being at a rate equivalent to a conveyance on the value of such premium or deposit. Thus the deed dated 9-12-1984 which is a lease agreement was liable to a Stamp duty of Rs. 1,000/- under Article 30(b). The Stamp duty paid is only Rs. 5/-. The deficit Stamp duty is Rs. 995/-. Having regard to Section 34, if the respondent wanted to overcome the bar against admissibility under the Stamp Act, he has to pay Rs. 995/-as deficit Stamp duty and Rs. 9,950/- being ten times the deficit duty as penalty, in all Rs. 10,945/-. K Amarnath v Smt. Puttamma, 2000(4) Kar. LJ. 55F.


COURT SHOULD APPLY ITS MIND ABOUT ADMISSIBILITY OF DOCUMENT
Proper procedure to be followed by Courts enumerated.Held: Marking of a document is a ministerial act whereas, admitting a document in evidence is a judicial act. Before a document is let in evidence, there should be a judicial determination of question whether it can be admitted in evidence or not. In other words, the Court admitting a document must have applied its mind consciously to the question whether the document was admissible or not. ..... Even if in the affidavit filed by way of examination-in-chief, the defendant is referring to the document on which he relies on and has given an exhibit number to the said document, the same has to be ignored by the Court and the witness should be called upon to enter the witness-box and if he wants to rely on the said documents, to tender the said documents in evidence, before the Court. .... The proper procedure to be followed by the Courts after the amendment of the Code of Civil Procedure would be as under, (a) When the case is posted for evidence, the examination-in-chief of a witness shall be on affidavit unless ordered otherwise; (b) When the affidavit is sought to be filed on the date the case is posted for evidence, the Court should insist that the witness whose affidavit is sought to be filed enters the witness-box, takes oath and thereafter he/she shall hand over the affidavit containing his/her examination-in-chief to the Court. In other words, the Court should not receive the affidavit containing the examination-in-chief of a witness by his/her Counsel, thus preventing the possibility of the witness disowing such affidavit; (c) After the affidavit is received through the witness, the Court shall call upon the witness whether he/she has any documentary evidence to tender and if the witness tenders any documentary evidence, the same shall be received by the Court subject to objection raised by the opposite party; (d) If objections are raised, the Court should judicially determine the question whether it can be admitted in evidence or not, then and there if the objection relates to insufficiency of stamp duty; (e) If the Court decides to admit the document, then it shall follow the procedure prescribed under Order 13, Rule 4(1) of the CPC and mark the document. — Krishna v Sanjeev, 2003(7) Kar. LJ. 38 : ILR 2003 Kar. 3716.


SUB-REGISTRAR HAS IMPOUNDED THE DOCUMENT
Stamp duty — Reference of document for determination of — Deputy Commissioner to whom impounded document was sent, has to return same to impounding officer after he has dealt with same — Reference was not valid and legal for non-compliance with procedure prescribed. Held: The Sub-Registrar has impounded the document presented for registration under Section 33 of the Act and referred to the 2nd respondent under Section 37(2) of the Act. The 2nd respondent did not follow the procedure prescribed under sub-section (1)of Section 39 of the Act but referred the document for determination under Section 53 of the Act to first respondent. Since the document falls under Article 40- B (b) of the Act for the purpose of payment of stamp duty, it was not at all a matter for the Sub-Registrar to make the reference under Section 37(2) of the Act. Therefore, the reference made was not legal and valid. In fact, reference of the document was wholly unwarranted. — Y.C. Susheela Devi and Others v State of Karnataka and Others, 2002(3) Kar. L.J. 413B.



DEPUTY COMMISSIONER HAS NO JURISDICTION TO REVIEW HIS CERTIFICATION.
Instrument presented for registration, impounded and sent to Deputy Commissioner on opinion that instrument is not duly stamped — Deputy Commissioner, on coming to opinion that instrument is not required to be stamped, returning instrument with his certification to that effect duly endorsed on instrument — Once such certification is made by Deputy Commissioner, same is final subject only to any order that may be made in reference or revision, and Deputy Commissioner has no jurisdiction to review his certification. Held: The certification made under Section 39(l)(a) shall be conclusive or final for the purpose of the Act subject to any orders that may be made under Chapter VI of the Act. In other words, the certification made under Section 39(1 )(a) cannot be reviewed under any of the provisions of the Act except under Chapter VI of the Act. In this case, the certification made by the Deputy Commissioner under Section 39(l)(a) was reviewed by himself which is not permissible in law as it does not fall within the ambit of Chapter VI of the Act. The power of the Deputy Commissioner to review or redetermine the issue already decided by him under Section 39(1 )(a) of the Act cannot be traced to any of the provisions of Chapter VI of the Act to sustain his order dated 20-6-2001. None of the provisions of Chapter VI of the Act confer power on the Deputy Commissioner to review the certification made by him under Section 39(l)(a) of the Act. Therefore, the impugned order of the Deputy Commissioner dated 20-6-2001 is clearly without authority of law as it cannot be sustained by relying on any of the provisions of Chapter VI of the Act. ..... In view of the above, the order dated 20-6-2001 passed by the Deputy Commissioner and the order of the Karnataka Appellate Tribunal dated 4-7-2002 are liable to be set aside and are accordingly set aside. — K.B. Nagendra and Another v State of Karnataka and Others, ILR 2005 Kar. 2105.



MARKET-VALUE

Guidelines issued regarding the general market-value in the area - Validity.There is nothing like a general market value of immovable properties in a city or a locality and the same cannot be pre-determined on any notional or hypothetical considerations and the market value of the particular property has necessarily to be fixed on a particular date with due regard to the factors enumerated in the statute. The general market value fixed by the Deputy Commissioner which is not authorised by Section 45-A of the Act or the Rules and in derogation of them, unnecessarily restricting the power of the Registering Officers as also his own determination to be made as and when a case arises before him, is without jurisdiction and illegal. When there is under-valuation which necessarily results in under payment of stamp duty, Section 45A empowers the Registrar to make a reference to the Deputy Commissioner, who is empowered to initiate proceedings, determine the proper valuation and recover the difference of stamp duty payable thereon under the Act. Kulkarni, M.G. and Others v State of Karnataka and Others, ILR1985 Kar. 2152.





UNDER VALUATION

Instrument of conveyance - Under valuation - Reference, when and how made - Procedure stated - Order of Reference to contain reasons - Order of Reference without setting out reasons invalidates the reference - Explained - The language of Section 45A is very clear. The condition precedent for making a reference is, there must be reasons for the Sub-Registrar to believe that the market value of the property has not been truly set out in the document presented for registration. From this it follows that the reasons must be recorded. However brief it may be, it is the duty of the Sub-Registrar to record reasons for his belief that the true market value has not been set out in the document and thereafter refer the matter to the Deputy Commissioner for adjudicating the real market value of the property under sub-section (2) of Section 45A of the Act. The Sub-Registrar cannot simply record the market value of the property according to him in a sheet and send the documents to the Deputy Commissioner. The documents must be sent as enclosure to the order of reference. It is also open to the Sub-Registrar to make an inquiry as contemplated in Rule 3 ol the Karnataka Stamp (Prevention of Under Valuation of Instruments) Rules, 1977. This Rule also supports the view that an order of reference must contain reasons and the documents should be sent along with the reasons recorded by the Sub-Registrar. As this procedure has not been followed, it should be held that there is no valid reference at all. — Sanjay Kumar v The Sub-registrar and Another, 1989(2) Kar. LJ. 7.






MARKET VALUE - PROVISIONAL ORDER – FINAL ORDER

It is open to party to file objections against provisional order, and it is only after considering objections can final order be passed by Authority — Remedy of appeal is also available to party, if aggrieved by final order — Writ petition against provisional order, held, not maintainable. Held: The order under challenge is only a provisional order and not a final order. The petitioner can therefore file its objections to the provisional order and only after considering the objections, final order.will be passed by the respondent. Petitioner, if aggrieved by the final order, can file an appeal. —Stamp duty payable on deed of sale of — Sale deed executed by Karnataka Industrial Areas Development Board in respect of industrial site allotted on lease-cum-sale basis in 1985, more than decade ago — Stamp duty is payable on market value of industrial site on date of execution of sale deed and not on sale consideration mentioned in sale deed — Concession of paying stamp duty on consideration mentioned in sale deed and not on market value on date of sale, which is available in respect of sale deeds executed by statutory bodies like BDA, KHB, etc., has not been extended to sale deed executed by KIADB — Proceedings initiated to ascertain market value of industrial site on date of sale effected by KIADB, held, is not without jurisdiction. Held: The concession extended to deeds of conveyance executed by BDA, KHB and House Building Co-operative Societies and other Bodies under the proviso to Article 20 of the Schedule to the Act (that is payment of stamp duty only on the consideration mentioned in the deed of sale and not on the market value on the date of sale) has not been extended to sale deeds executed by KIADB; therefore proceedings regarding undervaluation can be initiated in regard to sale deeds executed by KIADB; and the fact that the price mentioned in such deeds of conveyance is the true and correct price paid by the purchaser, has no relevance to the determination of market value on the date of sale, which is the criterion for payment of stamp duty on deed of conveyance. 'Sale price' or 'consideration for the sale' ceased to be the basis for payment of stamp duty in the case of conveyance. In its place, the 'market value' of the property on the date of sale became the basis for calculating the stamp duty payable on conveyance in view of the Amendment to Article 20 by the Karnataka Stamp (Amendment) Act, 1975. Therefore proceedings initiated under Section 45-A of the Act in regard to a sale deed executed by KIADB are not without jurisdiction. M/s. Pals Industries Limited, Bangalore v The District Registrar (Detection of Undervaluation of Stamps), Bangalore, 2000(3) Kar. L.J. 48C


APPELLATE POWER

Section 45-A is amended and appellate power of District Judge withdrawn and invested in Divisional Commissioner — After abolition of post of Divisional Commissioner power invested in Deputy Inspector General of Stamps — Orders passed by Deputy Commissioner is appealable only with Deputy Inspector General Stamps — Orders passed by District Judge quashed. Held: Although the provision for appeal against the provisional order is repealed, still the Appellate Authority under the Act will have necessary incidental jurisdiction to entertain the appeal against the interim orders and grant necessary relief. .... The original Section 45-A provides appeal to the District Judge from the order of the Deputy Commissioner. Section 45-A is amended and the appellate power of the District Judge is withdrawn and came to be invested in the Divisional Commissioner S. Kumara Bangarappa v The Special Deputy Commissioner of Detection of Undervaluation of 'Stamps-, Bangalore and Another, 2004(7) Kar. LJ. 87 : ILR 2004 Kar. Sh. N. 6 at p. 7.


SUB-REGISTRAR HAS NO POWER TO IMPOUND DOCUMENT AND POSTPONE REGISTRATION ON GROUND THAT PROPERTY COVERED BY DOCUMENT IS UNDERVALUED.

Registration of document — Power of Sub-Registrar to postpone or keep pending — If stamp duty has been paid on consideration shown in document, Sub-Registrar has no power to impound document and postpone registration on ground that property covered by document is undervalued. Held: Sub- Registrar had no power to impound (or postpone registration of) the document on the ground that property covered by the document was undervalued. If stamp duty had been paid on the consideration shown in the document, the Sub-Registrar had no authority to go beyond the recitals and contents of the document to hold that the document was undervalued or that document was not duly stamped. In other words, Sub-Registrar can neither keep the document pending nor impound it on the ground that valuation shown was incorrect, but could only take action under Sections 28 and 61 of the Karnataka Stamp Act. Even after Section 45-A of the Act came into effect, the registration of the document could not be kept pending on the ground of undervaluation. It therefore follows that the Sub-Registrar could not have kept the sale deeds dated 20-10-1982 and 4-3-1982 pending on the ground that the properties sold thereunder were undervalued. Therefore, the notices dated 30-11-1983 holding that documents were undervalued and demanding deficit stamp duty as a condition precedent for registration, were illegal and without jurisdiction. Therefore, when the said notices dated 30-11-1983 were quashed on the ground that the Sub- Registrar had no authority to keep the registration of the sale deeds pending, the Sub-Registrar had no alternative but to register the documents. — Veerabhadrappa and Another v Jagadishgouda and Others, 2002(5) Kar. L.J. 55A



RETENTION OF DOCUMENT BY ADJUDICATING AUTHORITY FOR INDEFINITE PERIOD
An indefinite retention of the document without the adjudicating authority taking a decision can be justified in the absence of a specific provision in the Act or the rules empowering the adjudicating authority to retain the document. However it cannot be disputed that for the purpose of adjudication the competent authority will have to look into the original document itself. Nonetheless it does not mean that such document can be retained by the adjudicating authority for an indefinite period. In the circumstances if a reasonable request is made, the document may be returned to the holder of the document upon the party undertaking to produce the same if he is called upon to do so during the adjudicating proceeding. In that view of the matter, when an application is made in this behalf it appears to be just and proper to return the document to the party within a reasonable time, which may ordinarily not exceed six to eight weeks, on such reasonable terms and conditions as the adjudicating authority may consider proper. Similarly when the Sub-Registrar after registering the document has reason to believe that the property is undervalued, he is bound to make a reference to the Deputy Commissioner within such reasonable time. In that view of the matter/ it is open for the Court in the exercise of its discretionary jurisdiction under Article 226 of the Constitution to direct return of the document on terms pending adjudication under Section 45-A of the Act. -M.K. Kuruvilla v District Registrar, Bangalore and Another, 1994(4) Kar. LJ. 657 (DB).



DISTRICT REGISTRAR IS QUASI-JUDICIAL AUTHORITY CANNOT DESCRIBE HIMSELF AS COURT.
It is rather surprising, that a quasi-judicial functionary like the District Registrar for Undervaluation of properties should describe himself as a Court, as is indicated in the notice. The authority is one which is required to investigate the instances of undervaluation, determine the proper value of the properties, so that loss of revenue to the State is prevented and proper stamp duty is realized from the persons presenting documents for registration. . . Unless there is an enabling provision or statutory recognition, describing such a functionary as a Court, the authorities cannot describe themselves as Courts. The authority is, at best, a quasi-judicial functionary functioning as an administrative authority and incidentally required to pass orders inclusive of determining or affecting the civil rights of parties. The authorities are required to comply with the principles of natural justice while so functioning, giving a fair opportunity of hearing to the affected and apprise the concerned persons the date of such hearing, look into the representations or submissions made on behalf of the concerned persons and then pass a reasoned order. In the instant case, the impugned orders which are in furtherance of notices dated 16-8-2002 and 28-8-2002 do not indicate as to on which date such hearing had been fixed. The notices had also not fixed any date for the appearance of the parties before the so-called Court. While the orders indicate that a notice dated 28-8-2002 had also been issued which is also not responded by the petitioner, there is no reason as to why the concerned authorities should have issued yet another notice dated 28-8-2002 even before the period of 21 days from the date of issue of the notice dated 16-8-2002 had not expired... It is a matter of utmost regret that a public authority who deals with civil rights of parties, do not function in a transparent and fair manner. This Court cannot help but take note of the fact that the office of Sub-Registrar and Office of the District Registrar for determination of undervaluation are notorious for their nefarious activities and have been subject-matter of adverse scrutiny and comment by vigilant institutions like the Lokayuktha for corruption and bribary charges. . . Procedure which is not transparent, which does not call upon the parties to appear on a particular date, for giving representation or producing documents, a procedure where parties are kept in dark as to what may happen in the future, this Court cannot help, but observe is an arbitrary procedure vitiating the proceeding. Perhaps a fair and transparent procedure is not evolved by the authorities concerned only for extraneous reasons and for pressurizing the helpless citizens who are involved in such litigation... It is but necessary that any notice issued by the 1st respondent should indicate the date of hearing of the case that is fixed for the appearance of parties and the parties should be apprised of that date. . . Under the circumstances, the impugned orders are clearly unsustainable, being not only arbitrary, but also for violating the principles of natural justice. — Smt. B. Razia Rnzak v The District Registrar, Prevention of Undervaluation of the Instruments, Bangalore and Another, ILR 2003 Kar. 3233 : AIR 2003 Kant. 486.







KIADB LANDS

Conveyance of an industrial site by the Karnataka Industrial Area Development Board — Cost of allotment fixed twelve years ago mentioned as consideration — Sale deed registered not returned — Reference made to the Deputy Commissioner for Detection of Undervaluation of Stamps for determination of the market value of the site and the proper duty payable — Whether the Deputy Commissioner for Detection of Undervaluation of Stamps has jurisdiction to initiate proceedings for determination of market value in regard to a deeds of conveyance executed by a statutory authority. Stamp duty is payable on the market value of the property on the date of execution of sale deed and' not on the consideration mentioned in the instrument of conveyance. The concession of payment of stamp duty only on the consideration mentioned in the deed of conveyance instead of on market value is available only in regard to the deeds of conveyance executed by some statutory authorities like BDA, KHB,etc.r specifically mentioned in Article 20 of the Schedule. As the KIADB, though a statutory authority, is not so mentioned in the Article, the concession is not available in regard to deeds of conveyance executed by this authority. Even though the price mentioned in the deed of conveyance executed by the KIADB is true and correct consideration for the conveyance, it will not be the market price as on the date of sale. The Court can take judicial notice of the fact that there was a steady and considerable rise in the prices of real estate and the price fixed in the year 1980, when the site was allotted to the petitioner, could not obviously be the market value in the year 1992 when the sale deed was executed. Second respondent did not act without jurisdiction in making a reference under Section 45-A of the Act, and the notice issued by the Third respondent initiating a proceeding for determination of the market value is valid. - Safeguard Packaging Systems Private Limited v State of Karnataka and Others, 1995(2) Kar. L.J. 442.


MARKET VALUE – REDITERMINATION

Market value of property for purpose of registration of deed of conveyance — Redetermination of — In case of dispute, authority is statutorily required to hold enquiry and determine market value by reasoned order reflecting authority's application of mind to relevant materials — Market value of vacant sites in any locality as fixed and notified by State Government is for guidance of authority and same cannot be adopted by authority without holding independent enquiry where correctness of market value so fixed is disputed in individual case — Order determining market value, passed without holding enquiry, held, is violative, not only of statutory provisions but also of principles of natural justice, and is unsustainable in law. The District Registrar and the Divisional Commissioner have determined the market value only on the basis of a Government guideline "fixing the value of all vacant sites situate at Rajmahal Vilas Extension, II Stage, Bangalore, where the property in question is situate at Rs. 893/- per sq. ft." without holding any enquiry for correctly arriving at the market value. . . A detailed procedure is prescribed under the Karnataka Stamp Act, 1957 and the rules framed under the Act for determining the proper market value for purposes of payment of proper stamp duty. . . After completing the enquiry as required under Rules 4 and 5, the District Registrar/Deputy Commissioner is obliged in law to pass a reasoned order, reflecting his application of mind to the relevant material as per Rule 7. . . Thus, the Enquiring Authority under Section 45-A(2) of the Act, is statutorily obliged to hold a detail enquiry taking into consideration several factors like the exact location of the site in question prevailing market value, its special advantages etc., and pass a considered order giving reasons and if it fails to do so, the Appellate Authority is obliged to correct the same in exercise of its appellate powers otherwise providing of statutory appeals would become meaningless. The Registrar has not conducted the enquiry as required under Rules 4 and 5 nor his order reflects any application of mind. . . The Appellate Authority also has abdicated its appellate power of examining the correctness of the order under appeal with reference to statutory requirements and the general principles of law. Both the orders of the Appellate Authority and the Registrar are clearly unsustainable and accordingly quashed. — R. Umaprasad v Deputy Commissioner for Detection of Undervaluation of Stamps, Bangalore and Others, 2004(2) Kar. L.J. 216.



DC HAS NO POWER TO REVIEW, RECALL HIS ORDER

Commissioner seeking to review and recall his own order of determination of — Deputy Commissioner, held, has no such power conferred on him by statute — Once Deputy Commissioner holds enquiry and passes order determining market value, in response to reference made by registering officer, he cannot review his order either suo motu or on application made by party affected by order, except for purpose of rectifying mistake apparent from record — Show-cause notice issued by Deputy Commissioner proposing to hold enquiry de novo in order to redetermine market value already determined, under guise of exercising his power of review is without jurisdiction and liable to be quashed. Once Deputy Commissioner determines the proper market value of the property after holding an enquiry, the Act has not made any provision for reviewing or recalling the said order except filing an appeal under Section 45-A(5) of the Act or an application under Section 67-A(2) of the Act. .... There is no inherent power to review. A power to review must be conferred specifically by the statute and when conferred should be limited to the circumstances stated in the "power conferring section" and not beyond. So understood, the power to review his own order should be limited to the two situations referred to in Section 67-A(2) of the Act. But, what the Deputy Commissioner now proposes to do vide his show-cause notice is to conduct a de novo enquiry under the guise of exercising his power of review which is impermissible in law. — Shantesh Gureddi v State of Karnataka and Another, 2003(6) Kar. L.J. 149A.



PARTNERSHIP DISSOLUTION AND PARTITION

The purchasers under the sale deed are the eighteen partners and two minors admitted to the benefits of the firm. The property has been purchased for and on behalf of the firm. The purchase is by the partnership firm of Gowri Enterprises and not by the said twenty persons in their individual capacity. .... In fact the Dissolution Deed clearly recites that the said property was the property of the firm. Therefore, on dissolution different portions of the property could be allotted to the 18 partners and 2 minors admitted to the partnership. As the property was purchased after the commencement of partnership by twenty persons and treated as the asset of the firm, and as the allotment of different portions of the property is to the very persons who earlier held it as co-owners, the Deed of Dissolution would fall under Article 40-B(b) and not under Article 40-B(a). Article 40-B(a) will not apply as this is not a case where 'X' contributes the property to the firm and at the time of dissolution, the property is allotted to 'Y'. This would be a case of XYZ as co-owners contributing the property to the firm and on dissolution the property being allotted by metes and bounds to X, Y, and Z. Therefore, the case would fall under the residuary part of Article 40-B, that is Article 40-B(b). . . . There is thus no basis to hold that the Dissolution Deed has to be stamped as a partition, even assuming that the property was purchased on 28-3-1992 as co-owners. Partition pre-supposes co-ownership as on the date of the partition. If a property had ceased to be the co-ownership property of the 20 purchasers, but had been treated as the asset of the partnership as on the date of execution of the Deed of Dissolution, the Dissolution Deed cannot be treated as a partition. — M/s. Gowri Enterprises, Gowribidanur, Kolar District v State of Karnatakn and Others, 2000(1) Kar. LJ. 39B.

STATE POWER O LEVY AND FIX STAMP DUTY

The power to levy stamp duty is available to the State and is a tax. At what rate the tax will have to be levied and in respect of what transaction, is left to the discretion of the legislature. It is unknown in law that merely on the harshness of a particular levy, the provisions of law thereto have been struck down unless it can be shown that such levy discriminates by making classification, which is unreasonable and arbitrary. No such argument is put forth in this case. All that is stated is that a memorandum of agreement of lease-cum-sale could not be equated to a conveyance. When the legislature has the power to levy duty on different types of documents, it is the discretion of the legislature to levy duty at different rates on different types of documents. If in the opinion of the legislature such duty has to be paid on different transactions, that wisdom cannot be questioned by the Courts. Duty on such conveyance shall not exceed rupees ten or the difference of the duty payable on such conveyance and the duty already collected on the security deposit under item (d) of Article 5, whichever is greater. The second proviso to Article 20 makes it clear that if conveyance is executed pursuant to a lease-cum-sale agreement referred to in Article 5{d), the duty on such conveyance shall not exceed Rs. 10/- or the difference of duty payable on such conveyance and the duty already collected on the security deposit under Article 5(d) whichever is greater. Therefore, it is clear that the petitioner will not have to pay stamp duty once over again when the sale deed has to be executed under the terms of the lease-cum-sale agreement. If the petitioner has to pay stamp duty by way of conveyance at one stage or the other, at what stage the duty will have to be collected is also in the discretion of the legislature and if the legislature prescribes, such duty shall be collected at the earliest point of time of the transaction, no exception can be taken thereof. — G.S. Rajashekar v Bangalore Development Authority, Bangalore and Another, 1995(5) Kar. L.J. 1A (DB).






PARTNERSHIP PROPERTY RELEASE OR SALE

Where the effect of the various clauses in an instrument was that in consideration of a certain sum of money, the first party gave up in favour of the second party his share, and the second party became the full owner of the assets and liabilities of the dissolved firm, (except a piece of land) and the liability to pay income-tax and sales tax and the right to obtain refund of such tax: Held, Assuming that the instrument in question could be considered as a release, if it could also be considered as a conveyance, it would be chargeable as a conveyance attracting a higher duty. Under the instrument in question, there was a transfer of property, namely, first party's undivided share to the second party for consideration of a sum of money and thus all the requirements of a sale were satisfied.
Every sale may not involve a release and similarly every release may not result in conveyance or sale. But where the release is by a co-owner of his share in the common property which is legally capable of being transferred in favour of another co-owner, for a consideration of a sum of money coming outside the common property, the transaction amounts to a sale of the undivided share.
The adjectival clause 'which is not otherwise specifically provided for by Schedule' in the definition of 'conveyance' in S. 2(d) of the Mysore Stamp Act does not govern the words 'conveyance on sale' but governs only the words 'every instrument by which property is transferred inter vivas'. It is only when an instrument effects a transfer other than a sale, it requires further examination whether such an instrument is not otherwise specifically provided for by the Schedule before the instrument can be regarded as coming within the definition of the term 'conveyance'. 8 Mys. CCR. 294 not followed.
On the dissolution of the firm, the erstwhile partners will be co-owners of the properties of the firm. Until such property is distributed among the partners according to their rights, each of the partners will have an undivided share or interest in such property.
There is no material distinction between the share of a co-owner in a particular immovable property and a co-owner's rights and interests in the assets of the partnership, for the purpose of determining whether the instrument is a conveyance or a release. The extinguishment of the interest of the releasing co-owner and the enlargement of the interest of the other co-owner can amount to a conveyance of the undivided interest of the former to the latter. The use of any particular words like release, relinquish, assign or transfer in an instrument does not conclusively determine the nature of the instrument. The substance of the transaction has to be looked into. — M.A. Venkatachalapathi v State of Mysore, (1966)1 Mys. L.J. 21.



NEED OF MORE PRACTICAL STAMP DUTY STRUCTURES FOR LEASES

Stamp duty for leases — Need for practical, logical and reasonable structure of — Inconsistencies in existing structure — It is for Government to remove such inconsistencies. R.V. Raveendran, J., Held: To avoid the prevalent confusion and uncertainty in regard to Stamp duty in these matters and to encourage parties to execute proper deeds relating to leases and register them, the Legislature/Government may consider a more practical, logical and reasonable structure of Stamp duty regarding leases and lease agreements. While logic need not be a hallmark of taxing statutes, apparent inconsistencies may be pointed out for rectification in the interests of revenue, to encourage public to enter into lease deeds and pay Stamp duty instead of resorting to oral agreements coupled with delivery of possession. One area where the anomaly is glaring is the prescription of same Stamp duty on the amount paid as premium and advance/deposit. .... In fact the Stamp duty on a sale of a property for Rs. 1,00,0007- and lease of the same property for one year with a refundable advance of Rs. 1,00,0007- is the same. The anomaly of same Stamp duty on premium (non-refundable consideration for the lease) and advance (refundable deposit) requires to be rectified. Be that as it may. K. Amarnath v Smt. Puttamma, 2000(4) Kar. L.J. 55G.





(TO BE UPDATED)

KARNATAKA LAND LAWS