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PETITIONER: THE BOARD OF REVENUE, U. P. AND  OTHERS

       Vs.

RESPONDENT: SARDARNI VIDYAWATI AND ANOTHER

DATE OF JUDGMENT: 06/02/1962

BENCH: WANCHOO, K.N. BENCH: WANCHOO, K.N. DAS, S.K. SARKAR, A.K. SUBBARAO, K. AYYANGAR, N. RAJAGOPALA

CITATION:  1962 AIR 1217            1962 SCR  Supl. (3)  50  CITATOR INFO :  RF         1966 SC  81  (5)

ACT: Stamp Duty-Impounding of document Reference Revenue  Board, if  must hear the party aggrieved Indian Stamp Act, 1899  (2 of 1899), ss. 33, 56 (2).

HEADNOTE: The respondents sought permission of the Court to with. draw certain moneys on furnishing security which was granted.   A security  bond  was executed by the respondents by  which  a house was given as security.  The Inspector of Stamps repor- ted  that the security bond was insufficiently  stamped  and therefore it should be impounded and a deficit stamp duty of Rs.  482111  /-and  a penalty of Rs.  4,826/14/-  should  be levied.   Thereupon  the  Deputy  Commissioner)  acting   as Collector,  called  for objections.   The  judicial  officer before  whom the security bond was filed impounded the  bond and forwarded it to the Deputy Commissioner.  After  further objections  were filed by the respondents before  the  Stamp Officer,  the  latter submitted a  report  to  the  Deputy Commissioner upholding the order of the Inspector of Stamps. Thereupon the Deputy Commissioner passed an order "realise". The respondents filed a revision petition against the  order of  the Deputy Commissioner before the Board of Revenue  and while  that  petition was pending  the  Deputy  Commissioner referred the matter to the Board of Revenue under s. 56  (2) of  the Stamp Act and the Board of Revenue passed  an  order upholding  the  order  of  the  Deputy  Commissioner.    The respondents then filed a writ petition under Art. 226 of the Constitution  before the High Court.  Their main  contention was  that they were not given a hearing either by the  Board of  Revenue  or the Deputy Commissioner.  The  petition  was heard  by a Single Judge who dismissed the petition  on  the ground  that  neither  the Stamp Act  nor  the-Rules  framed thereunder  Provided that a hearing should be given  to  the aggrieved  person.  Thereafter the appeal Court treated  the matter  as a reference before the Revenue Board under s.  56 (2)  of  the  Act and held that the Act  or  Rules  did  not

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require  that a hearing should be given by  the  authorities acting  under s. 56 but that although they were acting  only administratively.   they  were  bound  to  give  a   bearing according to the principles of natural justice.  The  appeal was allowed. 51 Held, that it is clear that s. 56 (2) deals with cases where there  is a doubt in the mind of the Collector in regard  to an  instrument as to its construction and the provisions  of the Act applicable to it.  Such doubt itself shows that  the point  raised for the Collector’s decisions is  a  difficult point  of  law and from the very nature of the  duty  to  be performed  in such circumstances it appears clear  that  the Chief Controlling Revenue Authority has to decide the matter judicially and would thus be a quasi-judicial tribunal. Where the provisions of the Act are silent, the duty to  act judicially may be inferred from the provisions of the statu- te  or  may be gathered from the cumulative  effect  of  the nature  of the rights affected, the mariner of the  disposal provided  the  objective  criterion to be  adopted  and  the phraseology used and other indicia afforded by the statute. The questions before the Board under s. 56 (2) being one  of construction of an instrument and the application of the Act to  it  being a pure questions of law which  may  result  in payment  of large amounts by the executant of  the  document the  Board  should  give,  for  the  determination  of  such question,  a  hearing  and  it  should  act  judicially   in determining a pure question of law.

JUDGMENT: CIVIL APPELLATE JURISDICTION :Civil Appeal No. 29 of 1958. Appeal from the judgment and order dated May 3, 1956, of the Allahabad High Court in Special Appeal No. 48 of 1954. Veda Vyasa and C. P. Lal. for the appellant. A. N. Goyal, for the respondents. 1962.   February 6. The Judgment of the Court was  delivered by WANCHOO,  J.-This is an appeal on a certificate  granted  by the  Allahabad  High Court.  The brief facts  necessary  for present  purposes are these.  Certain decretal  moneys  were deposited  in the then Chief Court of Oudh at Lucknow.   The respondents  applied  to the Chief Court for  permission  to withdraw   the  moneys  on  furnishing  security  and   were permitted  to do so.  Thereupon a registered  security  bond was executed and registered in Simla in 1949 by which 52 a  house there was given in security for withdrawal  of  the money.   Befere, however, the money could be withdrawn,  the Inspector of Stamps reported on March 15, 1950, that the  so called security bond was in reality a mortgage deed  without possession  and  was insufficiently stamped.   He  therefore reported  that it should be impounded and the deficit  stamp duty  of  Rs.  482/11/-  and  a  penalty  amounting  to  Rs. 4,826/14/-  should be levied with respect to that  document. Thereupon on April 5, 1950, the Deputy Commissioner,  Kheri, acting as Collector passed the following order :-               "In case the parties have any objection,  they               put  it in writing which will be  referred  to               the Board of Revenue." It seems that on July 5, 1950, the respondents objected that the  document  was not a mortgagedeed and that, no  duty  or penalty  was payable, and further that as the  document  had not  been  till then accepted by the court,. it was  only  a

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tentative document.  On August 3, 1950, the judicial officer before  whom the security bond was filed impounded it  under s. 33 of the Indian Stamp Act, No. If of 1898,  (hereinafter referred to as the Act), and apparently forwarded it to  the Deputy  Commissioner,  Kheri, under s. 38 of  the  Act.   It seems thereafter that in November 1950 the respondents filed further objections before Stamp Officer (TreaBury  Officer), Kheri,  from  whom  the Deputy Commissioner who  acts  as  a Collector  for  the  purposes of the Act had  called  for  a report.   In  December  1950, the Treasury  Officer  made  a report  to  the  effect that the view of  the  Inspector  of Stamps was correct and duty and penalty. as reported by  the latter  were  due.   The  respondents’  case  was  that  the Treasury Officer did not give them any hearing before making the  said report.  It seems that on this report  the  Deputy Commissioner  made the order "Realise".  He also is said  to have given no hearing to the respondents.  In January  1951, the respondents filed a 53 revision against the order of the Deputy Commissioner before the Board of Revenue.  It appears however that in March 1951 the Deputy Commissioner referred the matter to the Board  of Revenue  under s. 56(2) of the Act.  In July 1951 the  Board of  Revenue disposed of the matter and upheld the  order  of the Collector.  But the respondents’ complaint was that  the Board  of  Revenue  also  did  not  give  them  a   hearing. Consequently they filed a writ petition in the High Court in November  1951.  That petition was dismissed by the  learned Single  Judge  on the ground that neither the  Act  nor  the Rules  made thereunder provided that any bearing  should  be given to the person who was liable to pay the deficit  stamp duty and the penalty.  He further held that in any case  the Collector  had  given an opportunity to the  respondents  to urge  their  objections in writing, and that  the  Board  of Revenue  had  also  considered  the  grounds  taken  by  the respondents  in  their revision-petition and  there  was  no provision in the law requiring the Board of Revenue to  give a personal hearing or a hearing through counsel in a case of this kind. The respondents then went in appeal.  The appeal court seems to have treated the matter before the Board as if it were  a reference under s. 56(2) of the Act.  As the learned  Single Judge has pointed out, though the order of the Collector  of December  1950 would usually be final, it appeared  that  he had chosen to make a reference to the Board of Revenue under s. 56(2).  We must therefore proceed on the assumption  that this  case has been disposed of by the Board under s.  56(2) and  not  by the Collector under s. 40(1) or. by  the  Board under s. 56(1).  The appeal court under ss. 40 and 56  leave the  entire matter to the opinion of the person before  whom the  insufficiently stamped document is produced and do  not lay down any procedure for calling upon the party  concerned to show cause why the document be not held to be 54 insufficiently stamped and there was no provision under  the Act or the Rules which required the authorities concerned to give any hearing to the person executing the document.   The appeal  court therefore held that the authorities  concerned when  acting  either under s. 40 or s. 56  were  not  acting judicially  or quasi judicially.  The appeal  court  further held  that  even though the authorities were  acting  merely administratively under a. 40 and s. 56(2) they were bound to give  a  hearing  according to  the  principles  of  natural justice,  in accordance with the decision of that  court  in Special  Appeal No. 291 of 1955, Ghanshyamdas Gupta v.  The,

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Board of High School and Intermediate Education, U. P.  They therefore set aside the order of the Board of Revenue on the ground  that no hearing had been given to  the  respondents. Thereupon  on application for leave to appeal to this  Court was made to the High Court, which was allowed ; and that  is how the matter has come before us. The  main contention of the appellant before us is that  the High  Court  having held that the Board  was  acting  merely administratively  when proceeding under s.56 (2) of the  Act went wrong in holding that it was bound under the principles of natural justice to give a hearing to the respondents.  In effect  the appellant in this case impugned the  correctness of the view taken in Special Appeal No. 291 of 1955 (supra). That  case  has come up before us in appeal (C.  A.  132  of 1959  Board of High School and Intermediate Education v.  G. D.  Gupta), judgment in which is being delivered today.   We have  in that case held that the examinations’ committee  is under a duty to act judicially when proceeding under  r.1(1) of  Chap.   VI  of the Regulations framed under  the  U.  P. Intermediate Education Act, (No.  11 of 1921), and have  not upheld  the  view  taken  by the High  Court  that  it  acts administratively.  A similar question arises in the present 55 appeal, viz., whether the Board of Revenue when dealing with a proceeding under s. 56(2) of the Act acts administratively or  quasi-judicially.   We must make it clear  that  we  are proceeding  in  this  appeal on the basis  that  the  matter before  the  Board was under s.56(2) on a reference  by  the Collector and not under s.56(1) on the application filed  by the respondents inviting it to exercise its power of control thereunder.  The contention on behalf of the respondents  is that  when the Board is acting under s. 56(2) of the Act  it is acting quasi-judicially. Let us therefore first look to the scheme which leads up  to the  reference under s. 56(2) of the Act.  That  sub-section provides that if any Collector, acting under s. 31, s.40  or s.41,  feels doubt as to the amount of duty with  which  any instrument is chargeable, he may draw up a statement of  the case,  and refer it, ’with his own opinion thereon, for  the decision   of  the  Chief  Controlling  Revenue   authority. Section  31  deals  with the case  when  any  instrument  is brought to the Collector, and the person bringing it applies to have the opinion of that officer as to the duty (if  any) with  which  it is chargeable.  It is then the duty  of  the Collector either to determine the duty (if any) with  which, in his judgment the instrument is chargeable or to refer the case  to  the  Chief  Controlling  Revenue-authority   under s.56(2) if he has any doubt in the matter.  Section 40 deals with the case where an instrument is impounded under s.33 or the  Collector  receives any instrument sent  to  him  under s.38(2), (subject to certain exceptions) and gives power  to the Collector either to certify that’ the instrument is duly stamped or that it is not chargeable at all, or if he is  of opinion  that the instrument is chargeable with duty and  is not duly stamped to require the payment of proper duty or to make  up  the  same together with a  penalty.   But  if  the Collector is doubtful in the matter he has been given  power under s.56(2) to 56 refer   the  question  to  the  Chief  Controlling   Revenue authority.    Lastly   under   s.41,   if   any   instrument P.chargeable  with  duty and not duty  stamped  (subject  to certain  exceptions)  is produced by any person of  his  own motion before the Collector within one year from the date of its execution of first execution, and such person brings  to

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the notice of the Collector the fact that such instrument is not  duly  stamped and offers to pay to  the  Collector  the amount  of  the proper duty, or the amount to  make  up  the same,  and the Collector is satisfied that the  omission  to duly stamp such instrument has been occasioned by  accident, mistake  or urgent necessity, he may, instead of  proceeding under  ss.33  and  40, receive such amount  and  under  s.42 certify by endorsement thereon that the proper duty has been paid.  But even in such a case if the Collector is  doubtful in  the  matter,  he  has been given the  power  to  make  a reference to the Chief Controlling Revenue-authority.  It is clear therefore that s.56(2) deals with cases where there is a  doubt  in  the  mind of the Collector  in  regard  to  an instrument  which  comes  up  before  him  under  the  above provisions  of  the  Act  as  to  the  construction  of  the instrument  and the provisions of the Act applicable to  it. Such  doubt  itself  shows that the  point  raised  for  the Collector’s  decision is a difficult point of law  and  from the  very  nature  of  the duty  to  be  performed  in  such circumstances  it appears clear that the  Chief  Controlling Revenue-authority  has to decide the matter  judicially  and would thus be a quasijudicial tribunal. As  pointed  out  by us in C.A. 132 of  1959,  the  question whether  an  authority,  like the  Board  of  Revenue,  acts judicially is to be gathered from the express provisions of the   Act,  in  the  first  instance.   Where  however   the provisions of the Act are silent, the duty to act judicially may be inferred from the provisions of the statute or may be gathered from the cummulative effect of the nature of the 67 rights  affected, the manner of the disposal  provided,  the objective criterion to be adopted, the phraseology used  and other  indicia afforded by the statute.  It is true that  in the present case the Act and the Rules framed thereunder  do not  provide for a hearing by the Board of Revenue, when  it is dealing with a matter under s.56(2) of the Act.  But  the question  that is before the Board of Revenue under  s.56(2) is of the construction of an instrument and the  application of the Act to it.  In many cases the decision of the  Board, if it goes against the person executing the instrument., may result in payment of large amounts as deficit stamp duty and even  larger amounts as penalty.  The question is  purely  a question  of  law’ in the circumstances.  It  seems  to  us, considering  the  nature of the duty cast on  the  Board  of Revenue  under s.56(2) requiring it to construe  instruments submitted to it thereunder and the application of the Act to them which may result in payment of heavy amounts of deficit duty   and  even  heavier  amounts  as  penalty,  that   the legislature  intended that the Board of Revenue should  hear the  person executing the document before saddling him  with large  pecuniary liability.  The question before’ the  Board under s.56(2) being one of construction of an instrument and the  application of the Act to it being, a pure question  of law  which  may-result in payment of large  amounts  by  the executants  of the document, it would not in our opinion  be improper  to  hold  that for the  determination  of  such  a question the legislature intended that the party affected by the  decision  of  the Board of Revenue should  be  given  a hearing,  and  that  the  Board  should  act  judicially  in deciding a pure question of law.  The fact that the decision will depend upon the opinion of the Board cannot in any  way make  any difference for the determination of  questions  of law   must  always  depend  upon  the  opinion  arrived   at judicially  of the person or authority who has to  determine it, and that will not

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58 necessarily  mean  that  the person  determining  it  cannot possibly be required to act judicially because be has to act upon   his  opinion.   Further,  s.57  enforces  the   above conclusion.    That   section  provides   that   the   Chief Controlling Revenue-authority may state any case referred to it  under  s.56(2), or otherwise coming to its  notice.  and refer  such case, with its own opinion thereon to  the  High Court, and every such case shall be decided by not less than three  Judges  of the High Court to which  it  is  referred. This  provision shows that questions referred to  the  Board under s.56(2) may be ’such complicated questions of law that the Board may not be able to make up its mind and may be  in doubt  and in such a case the Board has the power  to  refer the  matter to the High Court along with its  opinion..  and the  question has to be decided by a Bench of three  Judges, where undoubtedly the hearing could not but be judicial.  If therefore the hearing under s.57 is judicial it would in our opinion  be proper to infer that the hearing  under  s.56(2) which deals with similar questions must also be judicial. We  are therefore of opinion that, considering the  totality of  circumstances  and  the  nature  of  the  matter  to  be determined by the Board of Revenue under s.56(2), the  Board has to act judicially when proceeding under s.56(2) and must therefore on principles of natural justice give a hearing to the  other party, namely, the executant of  the  instrument. The  Board  of Revenue therefore, acts as  a  quasi-judicial body  under s. 56(2) and the respondents were entitled to  a hearing.   We therefore uphold the order of the high  Court, though on a different ground. The appeal is hereby dismissed with costs. Appeal dismissed. 59