“This provision is for purpose of maintaining a uniformity in imposing a fixed penalty of 10 times without adverting to any adjudicatory process regarding quantifying the quantum of penalty.”
The Supreme Court, interpreting a provision in the Karnataka Stamp Act, 1957, observed that, while admitting insufficiently stamped documents, trial courts have no discretion in levying the penalty.
The issue raised in the appeal (Gangappa vs. Fakeerappa) was whether the trial court could have imposed a penalty at the rate of two times of the deficient amount of stamp duty or it was obligatory for the trial court to impose the penalty at the rate of 10 times.
The bench comprising Justice Ashok Bhushan and Justice Ajay Rastogi observed that there is no discretion vested with the authority impounding the document in the matter of collecting duty under Section 33 of the Act. It said that there is clear contradistinction between the power under Section 33 and that under Section 39.
The bench said: “The object and purpose for such contradistinction in the provision and power is not far to seek. Section 33 applies to every person having by law or consent of parties authority to receive evidence, and every person in charge of a public office. Thus, Section 33 covers a host of authorities, persons before whom instruments are filed. The legislative scheme does not indicate any distinction between a court receiving an insufficiently stamped instrument in evidence and other authorities. All have to impose penalty of 10 times of the duty or deficit portion, if it exceeds rupees five. This provision is for purpose of maintaining a uniformity in imposing a fixed penalty of 10 times without adverting to any adjudicatory process regarding quantifying the quantum of penalty.”
However, in this particular case, the court closed the proceedings regarding penalty on the agreements to sell by approving the direction of the trial court for payment of entire deficit duty and double the penalty.