Court Can Receive The Deficient/Requisite Stamp Duty Itself, Requirement To Send The Impounded Agreement To Collector Of Stamps Not Mandatory: Delhi High Court

The Delhi High Court while reiterating that it is mandatory for the Court exercising power under Section 11 of the A&C Act to impound the non-stamped or insufficiently stamped agreement held that the Court can itself collect the deficient/requisite stamp duty under Section 35 of the Stamps Act, 1899 and enable deposit of the requisite stamp duty along with penalty as contemplated under proviso (a) to Section 35 of the Stamp Act. The bench of Justice Sachin Datta has given the much-needed clarity on the procedure to be followed by the Court after the impounding of the unstamped/insufficiently stamped agreement. It held that the Court after impounding the agreement would have two options (i) send the impounded instrument to the Collector of Stamps which will follow the drill of Section 40-42 of the Stamps Act or (ii) take recourse to Section 35 of the Stamp Act and enable deposit of the requisite stamp duty alongwith penalty as contemplated under proviso (a) to Section 35 of the Stamp Act. The Court held that in appropriate cases, particularly where the quantum of stamp duty payable is not in dispute, it would be preferable for the Court to take recourse to Section 35, to enable deposit of the requisite stamp duty in Court and thereafter to act on the basis of the instrument containing the arbitration agreement without sending it to the Collector of Stamps. The Court further held that “18. After payment of stamp duty together with penalty as contemplated under proviso (a) to Section 35 of the Stamp Act, an authenticated copy of such duly endorsed instrument (endorsed under Section 42 of the Stamp Act), together with the certificate in writing, stating the amount of duty levied in respect thereof, and such amount shall be sent to the Collector or to any person authorized by the Collector in this behalf as per Section 38(1) of the Stamp Act. It shall be open to the Collector in exercise of jurisdiction under Section 39 of the Stamp Act to refund any portion of the penalty which has been paid/levied in respect of such agreement/ instrument.” The Court observed that such a procedure will not only be in consonance with N.N. Global but will also effectuate the mandate under Section 11(13) of the Act, and to ensure that disposal of petition/s under Section 11 of the Act is not inordinately delayed on account of the adjudicatory exercise to be carried out by the Collector of Stamps. Further, the Court observed that the Court while taking recourse to Section 35 can delegate certain functions to an appointed officer or to the Registrar of the Court, however, the duty of determining the nature of the instrument and the stamp duty payable thereon cannot be delegated and the same has to be performed by the Court itself. The Court laid down a list of tasks/functions that can be delegated by the Court while taking recourse to Section 35 of the Stamps Act: The duty of examining and impounding of any instrument which is unstamped or insufficiently stamped; Preparation of a “report” on the nature and character of the document and the amount of duty and penalty payable thereon; Endorsement on the original instrument in terms of Section 42(1) that the instrument is now duly stamped and the proper duty and penalty (stating the amount of each) have been levied in respect thereof, and the name and residence of the person paying them; Preparation of a copy of the original instrument (after endorsement) thereby ensuring the genuineness and exactness of the contents thereof, at the expense of the party paying the stamp duty (alongwith penalty)/clearing the stamp defect, and expressly marking the copy thus prepared as an “authenticated copy” of the original instrument; Preparation of a “certificate” as provided in Section 38(1) stating the amount of stamp duty and penalty levied in respect of the original instrument; and Transmission of the a) Authenticated Copy; b) Certificate; and c) the total amount of the stamp duty and penalty collected to the concerned Collector at the place where the instrument was executed. Case Title: Splendor Landbase Ltd v. Aparna Ashram SocietyCitation: 2023 LiveLaw (Del) 735 Date: 22.08.2023 Click Here To Read/Download Order

Court Can Receive The Deficient/Requisite Stamp Duty Itself, Requirement To Send The Impounded Agreement To Collector Of Stamps Not Mandatory: Delhi High Court

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