27 May 1950
Supreme Court


Case number: Appeal (civil) 12 of 1950






DATE OF JUDGMENT: 27/05/1950


CITATION:  1950 AIR  218            1950 SCR  536  CITATOR INFO :  MV         1952 SC 252  (89)  R          1968 SC 497  (7,8,9)

ACT:     Indian Stamp Act (II of 1899), ss. 57, 59 (2)--Reference to  High Court--Nature of power to refer--Duty to  refer  on request of party affected--Order  directing  Chief  Control- ling   Authority  to  refer--Whether   "matter    concerning revenue"   --Jurisdiction   of   Original   Side   of   High Court--Government of India Act, 1935, s. 266 (1).

HEADNOTE:     The  power conferred on the Chief Revenue  Authority  by Sec. 57 of the Indian Stamp Act, to make a reference to  the High  Court is not intended for the benefit of  the  Revenue Authority  a1one,  but enures also for the  benefit  of  the party affected by the assessment.  It  is therefore  coupled with  a duty  to make a reference when he is called upon  to do so by the party effected, and if he declines to do so, it is within the power of the Court to direct him to  discharge that duty and make a reference to the Court.     Alcock Ashdown & Co. Ltd. v. Chief Revenue Authority (50 I.A.  227) and Julius v. Bishop of Oxford (5 A.C.  214)  ap- plied. 537     The order of a High Court to a revenue officer to do his duty would not be the exercise of original jurisdiction in a matter concerning the revenue within the meaning of Sec. 226 of  the Government of India Act, 1935, and the  jurisdiction of  the High Court to direct the Chief  Controlling  Revenue Authority to make    a reference under Sec. 57 of the  Stamp Act  was not barred by Sec. -226 of the Government of  India Act.  The  fact  that the proceedings had  passed  beyond  the stage  of enforcing payment does not prevent the High  Court from  directing the Revenue Authority to make  a  reference, for, if the opinion of the Court on the reference is against the  Revenue Authority he will have to refund  whatever  has been recovered in excess, under Sec. 59 (2) of the Act.



JUDGMENT:     APPEAL  from  the High Court of  Judicature  at  Bombay: Civil Appeal No. XII of 1950.     This was an appeal from a judgment and order of the High Court of Bombay (Chagla, Acting’ C.J. and Bhagwati J.) dated 2nd  September, 1947, in Appeal No. 60 of 1946.   The  facts are fully set out in the judgment.     C.K. Daphtary,  Advocate-General of Bombay (M. M. Desai. with him) for the appellant.     M.C.  Setalvad, Attorney-General for India (S.S.  Ragne- kar, with him) for the respondent.     1950.  May 27.  The judgment of the Court was  delivered by     KANIA  C.J.--This  is an appeal from a judgment  of  the High  Court at Bombay and it relates to the jurisdiction  of the Court to direct the Chief Controlling Revenue  Authority and  the Superintendent of Stamps at Bombay to state a  case for  the opinion of the Court under section 57 of the  Stamp Act.     The   respondent company,  for  its  business,  borrowed money  from  the Central Bank of India Ltd. at  Bombay.   In order to secure the loan a document was executed on the 22nd of March,  1945,  with a stamp of Rs. 16-8-0, on the footing that  it was a, deed of hypothecation without possession  of the  goods. When the deed was sent to the Sub-Registrar  for registration he impounded the same and sent it to the  Stamp Office. The Assistant Superintendent of Stamps 538 wrote  to  the respondent that the document was  a  mortgage with  possession, chargeable with duty under article 40  (a) of  the  Schedule and inquired why it was not  duly  stamped before  execution.   The respondent’s  solicitors  in  their reply  contended  that the document was not, and  was  never intended by the parties to be,  a mortgage  with possession. They pointed out that no possession of the property had been given or was intended to be given, except in certain contin- gencies and therefore the document was properly stamped.  In reply the Assistant Superintendent intimated that the  docu- ment was chargeable with duty of Rs. 56,250 and a penalty of Rs.  5,000 had been imposed.  The respondents were asked  to pay  the  amount  forthwith.  On the 27th  July,  1945,  the respondent filed a suit against the Central Bank  contending that  the document was not a mortgage with  possession.   It was alleged that since a doubt had arisen as to whether  the document gave effect to the common intention of the  parties the  Court’s  directions were sought for and  if  the  Court found that the document as framed did not give effect to the said  common intention of the parties the instrument may  be rectified.  On 9th August, 1945, the respondent’s solicitors informed  the  Assistant  Superintendent that such  a   suit had  been  filed  and  requested that the demand for payment of  stamp  duty and penalty  may not be  pressed  under  the circumstances.    In the further correspondence,  on  behalf of the appellant,  the  demand was reiterated and resort  to the  coercive procedure of section 48 of the Stamp  Act  was threatened.   The Collector thereafter sent a letter to  the respondents  on the 17th January, 1946,  demanding  payment. On the 25th of January, 1946, the suit filed by the respond- ent  was disposed of by the Court and the  rectification  as prayed was ordered. The respondent’s solicitors  immediately intimated  the result of the suit to the Assistant  Superin- tendent  and sent a copy of the deed showing the  rectifica-



tions  made in the original document.  A similar letter  was also sent to the Collector of  Bombay.  On the 1st February, 1946, the respondent’s solictors enquired of 539 the Assistant Superintendent of Stamps whether he was agree- able to make a reference under section 56 (2) to the  appel- lant,  as  the question of liability to pay the  stamp  duty and.  penalty  involved important questions   of   law.    A petition  on behalf   of  the respondent to  the   appellant was  also filed on  the 5th of February  in  which  it   was prayed that either the order of the Assistant Superintendent of  Stamps be rescinded or in the alternative a case may  be referred  under section 57 of the Stamp Act for the  opinion of  the High Court.  This petition was rejected on  the  4th July, 1946.  The respondent there- upon filed a petition  in the  High  Court on the 19th of July, 1946, praying  that  a writ  of certiorari may be issued against the appellant,  or an  order  may be made against him under section 45  of  the Specific  Relief Act, to cancel the levy of the  stamp  duty and penalty as claimed on behalf of the appellant or in  the alter- native the appellant may be ordered under section  57 of  the Stamp Act to refer the matter to the High Court  for its opinion.  The matter came for hearing before Mr. Justice Blagden who did not grant the first relief but directed  the appellant to state a case under section 57 of the Stamp  Act to the Court for its opinion.  The appellant filed an appeal but failed. He has now come in appeal to this Court.      Two  points have been urged on behalf of the  appelant. The  first  is whether under section 57 of  the   Stamp  Act there is an obligation on the appellant to state a case, and if  not  whether the High Court had jurisdiction to  give  a direction to that effect. The second point is whether having regard  to the terms of section 226 (1)of the Government  of India  Act, 1935, the High Court had jurisdiction  to  order the appellant to state the case, it being a matter  relating to  the revenue. Under this head it is also argued that  the matter had proceeded beyond the stage of assessment  and,had reached the stage of recovery.  Therefore, the High Court  of  Bombay had no jurisdiction to pass the  order  it did.  The material part of section 57 of the Stamp Act  runs as follows:   "57. (1) The Chief Controlling Revenue-authority    70 540 may state any case referred to it under section 56, sub-section (2), or otherwise coming to its notice, and refer such case, with its own opinion thereon- *          *            *            *     (b) if it arises in the province of Bombay, to the  High Court at Bombay;  ........  "             Section 226 (1) of the Government of India Act-             1935, runs as follows :--             "226. (1) Until otherwise provided by Act of the appropriate  legislature,  no  High  Court  shall  have  any original   jurisdiction   in  any  matter   concerning   the revenue,  or  concerning  any act ordered  or  done  in  the collection  thereof  according  to the  usage  and  practice of  the  country or the law for the time  being  in  force." On   behalf   of  the  appellant  it   is   contended   that the  very  words  of  section  57  of  the  Stamp  Act  show that  it  is  a  power given to the  appellant  to  state  a case  and  it is not an obligation. The  section  is  framed and  worded  only  to  give  the  benefit  thereof  to   the appellant and it is not for the’ benefit of any other party. The word "may" used in the section was deliberately used for



that purpose.  It was pointed out that under section 56  (2) of  the  Stamp  Act if the Collector felt doubt  as  to  the amount of duty with which the instrument was chargeable  "he may  draw up a statement of the case and refer it  with  his opinion  for the decision of the Chief  Controlling  Revenue Authority."   Similarly under section 60 if any  Court  felt doubt  as  to the amount of duty to be paid  it  was   given power to draw up a statement of case for the opinion of  the High  Court.   It was argued that both these  sections  gave only power to the Collector and the   Court to make a refer- ence for their own benefit. Section   57, it was argued, was on  the same lines for the benefit   of the  appellant.   In none of these, any other party   had any right to insist  on a reference.  It was pointed   out that under the Stamp  Act a  Collector could certify   that the document was  properly stamped,  although    it was not sufficiently stamped  on  a true  construction,   and when such a certificate was  given the  Controlling   Authority could do nothing.  He  had  not even the 541 power to refer that case to the Court to levy a higher stamp duty.   For these reasons, it was contended that the  scheme of the Stamp Act was materially different from the scheme of the Income Tax Act.     In our opinion the appellant’s contentions are  unsound. The first contention that section 57 of the Stamp Act  gives only a discretion and does not cast a duty on the  appellant to  make a reference overlooks the fact that  the  appellant has  not to make a reference only when he is in doubt  about his  decision  or conclusion.  In his conclusion  the  party liable  to pay the assessed stamp duty is materially  inter- ested.   The appellant’s decision is not  necessarily  based only  on the reading of the entries in the Schedule  to  the Stamp Act.  As in the present case, the question under  what item stamp duty is leviable may depend on the true construc- tion of a document.  It may also involve the decision of the question,  as in the present case, as to what is the  effect of  the Court’s order directing a rectification of  the  in- strument.   It does not appear, on principle, sound to  hold that  these  difficult questions should be  left  under  the Stamp Act to the final decision of the appellant, and if the party affected by the assessment has a grievance there is no relief  at all in law for him.  The construction of a  docu- ment is not always an easy matter and on the ground that  it is a substantial question of law, parties have been  permit- ted  to take the matter up to the highest Court.  If so,  it appears difficult to start with the assumption that  because this  is a Revenue Act the decision of the appellant  should be  considered final and conclusive. The provisions of  sec- tion 56 (2) and section 60 giving power to the Collector and the  Court to send a statement of case to the appellant  and the  High  Court respectively, in our  opinion,  instead  of helping the appellant, go against his contention.  In  those two sections this power is given when the referring authori- ty  has  a doubt to solve for himself.  The absence  of  the words  "feels doubt as to the amount of duty to be  paid  in respect  of an instrument" in section 57 supports  the  view that  the reference contemplated under that section  if  not for the benefit of the appellant only but enures 542 also  for the benefit of the party affected by  the  assess- ment.  In our opinion, the power contained in section 57  is in the nature of an obligation or is coupled with an obliga- tion and under the circumstances can be demanded to be  used also by the parties affected by the assessment of the  stamp



duty.     Our  attention has been drawn in this connection to  the decision  of the Judicial Committee of the Privy Council  in Alcock,  Ashdown  &  Co. Ltd. v.  Chief  Revenue  Authority, Bombay  (1).  In that case a question arose about an  asses- see’s right to ask the Commissioner of Income Tax to state a case  for the opinion of the Court under section 51  of  the Indian  Income  Tax  Act, 1918. The material  part  of  that section was in these terms :--     "51. (1) If, in the course of any assessment under  this Act  or any proceeding in connection therewith other than  a proceeding  under  Chapter VII, a question has  arisen  with reference to the interpretation of any     of the provisions of  this  Act or of any rule thereunder, the  Chief  Revenue Authority may, either on its own motion or on reference from any  Revenue officer subordinate to it, draw up a  statement of the case, and refer it, with its own opinion thereon,  to the High Court, and shall so refer any such question on  the application of the assessee, unless it is satisfied that the application is frivolous or that a reference is unnecessary.    (3)The High Court upon the hearing of any such case shall decide  the questions raised thereby, and shall deliver  its judgment thereon containing the grounds on which such  deci- sion is rounded, and shall send to the Revenue authority  by which the case was stated a copy of such judgment under  the seal  of the Court and the signature of the  Registrar,  and the Revenue-authority shall dispose of the case accordingly, or, if the case arose on reference from any  Revenue-officer subordinate to it, shall forward a copy of such judgment  to such  officer who shall dispose of the case  conformably  to such judgment". In that case, after the assessment was made and (1) 50 I.A., 227. 543 the proceedings went to the Commissioner of Income Tax,  the assessee requested that a case may be stated for the opinion of  the Court under the aforesaid section,  but the  Commis- sioner  refused  to do so.  Thereupon, a Rule  was  obtained from the High Court calling upon the Chief Revenue  Authori- ty, Bombay, to show cause why a case should not be so  stat- ed.  It was argued before the High Court that the Court  had no  jurisdiction to order the Commissioner to state  a  case for its opinion.  When the matter reached the Privy  Council the  objection  to the jurisdiction was  put  more  broadly. Before  the High Court the only question raised was  whether the  Authority had a duty, in the circumstances, to state  a case.  The point raised before the Judicial Committee of the Privy  Council  took  the form of saying that  even  if  the Authority  had  a duty, the Court could not require  him  to exercise  it; and for this purpose reliance was placed  upon the  well-known  general purview of the  Indian  Legislation which  excludes matter of revenue from the consideration  of the  ordinary civil Courts, the principle being  exemplified in  the case of Spooner v. Juddow (1 ) and upon section  106 (2)of  the Government of India Act, 1915.  The  judgment  of the  Board consisting of Viscount Haldane,  Lord  Phillimore and  Lord Carson was delivered by Lord Phillimore.   In  the judgment  it  is  stated as follows :--" It  is  said  that, though under this section, the Chief Revenue Authority  may, if he thinks fit, draw up a statement of the case and  refer it  to the High Court he is not bound to do so even  on  the application of the person to be assessed, if he is satisfied that  the application is frivolous or that the reference  is unnecessary  and that the Authority has in the present  case shown  that he is satisfied that the application was  frivo-



lous and the reference was unnecessary."  This argument  was rejected  by the High Court.  Their Lordships of  the  Privy Council agreed with the view of the High Court that this was too  narrow a construction of the section.   They  observed: "Take  first  the case which is last in the clause.  If  the assessee  applies  for a case the Authority  must  state  it unless he can (1) (1850) 4 Moo. I.A. 353. 544 say that it is frivolous or unnecessary.  He is not to  wait for  the court to order him to do it  will be a  misfeasance and  a breach of the statutory duty if he does not do  it  " The judgment did not end by relying only on that portion  of section  51 (1)of the Indian Income Tax Act, 1918.  It  pro- ceeds to state as follows :--"Put that case aside.  The rule here is supported upon the earlier part of the section.   No doubt that part does not say that he shall state a case,  it only  says that he may.  And as the learned counsel for  the respondent  rightly  urged,  ’may’ does  not  mean  ’shall’. Neither are the words ’it shall be lawful’ those of  compul- sion.  Only the capacity or power is given to the Authority. But when a capacity or power is given to a public  authority there  may  be circumstances which couple with the  power  a duty to exercise it.  To use the language of Lord Cairns  in the case of Julius v. Bishop of Oxford (1):  ’ There may  be something  in the nature of the thing empowered to be  done, something  in the object for which it is to be  done,  some- thing in the conditions under which it is to be done,  some- thing in the title of the person or persons for whose  bene- fit the power is to be exercised, which may couple the power with a duty,  and make it the duty of the person in whom the power is reposed to exercise that power when called upon  to do  so.’   In their Lordships’ view, always  supposing  that there is a serious point of law to be considered, there does lie a duty upon the Chief Revenue Authority to state a  case for the opinion of the Court, and if he does not  appreciate that  there is such a serious point, it is in the  power  of the Court to control him and to order him to state a case."      This reasoning and conclusions, although they have  not now  the compelling force they had before the 26th of  Janu- ary,  1950, are entitled to great respect. Apart from  that, we  entirely agree with that line of reasoning and the  con- clusion.  In our opinion, in ’the present case the power  to make a reference under section 57 is not only for the  bene- fit of the appellant. (1.) 5 A.C. 214, 222. 545 It  is coupled with a duty cast on him, as a public  officer to  do the right thing and when an important  and  intricate question of law in respect of the construction of a document arises,  as  a  public servant it is his duty  to  make  the reference.   If he omits to do so it is within the power  of the  Court to direct him to discharge that duty and  make  a reference to the Court.     Mr. Daphtary on behalf of the appellant tried to distin- guish this case on the ground that the scheme of the  Income Tax Act was different from the scheme of the Stamp Act.   In our  opinion, the observations quoted above and the  princi- ples underlying the same are applicable to the duty cast  on the  appellant under section 57 of the Stamp Act  and  minor points  of distinction between the schemes of the  two  Acts are immaterial for the present discussion.  In the words  of Lord  Cairns  the very nature of the thing empowered  to  be done by the appellant and the conditions under which he  has to  fix  the amount of the duty, couple the power  with  the



duty  to  state  a case for the opinion of  the  Court.  The provisions  of section 51 (1) and (a) run on the same  lines as section 59 of the Stamp Act.  Mr.  Daphtary next  pointed out  that there was a difference in the scheme of  the  Act, because  when the Collector issued a certificate under  sec- tion  32,  even though his assessment might  be  faulty  and against  the interest of the State, the State or the  appel- lant  had  no remedy. This overlooks the provisions  of  the section  empowering the Collector to issue the  certificate. The scheme of the Stamp Act may be briefly noticed.  Chapter II contains provisions about the liability of instruments to duty, of the time of stamping instruments, of valuations for duty  and provisions as to the person by whom duty is  ’pay- able.  Chapter  III which contains only two  sections  deals with  the adjudication as to stamps. The first (section  31) is where an instrument, whether executed or not and  whether previously stamped or not, is brought to the Collector  with an application to have his opinion as to the duty with which it is chargeable.  For obtaining that opinion the  applicant has  to pay a fee.  The Collector may call  for  information and take evidence.  After he has done so he determines the 546 amount of the stamp duty and certifies under section 32 that the full duty with which it is chargeable has been paid.  It is obvious that the party applying is interested in  obtain- ing  the opinion and therefore he cannot object to the  cer- tificate  of the Collector.  If the Collector himself is  in doubt  he has the power under section 56 (2) to ask for  the opinion  of  the appellant. It is therefore  clear  that  in respect of these two provisions under Chapter III no  griev- ance could exist on either side.  From section 33 and  Chap- ter IV onwards there are provisions in which the opinion  of the Stamp Officer and of the party interested in paying  the stamp  duty may come in conflict.  The sections in  Chapters IV,  V and VI ending with section 61, deal  with  situations arising  from  such difference of opinion.  Section  57  (1) falls  under this heading.  In our opinion, therefore,  this contention of the appellant fails.     The  next  point urged was whether the  High  Court  has jurisdiction to order the Revenue Authority to state a  case in  face of the provisions of section 226 of the  Government of  India Act, 1935.  The argument was urged in  two  parts: Firstly, that this being a. revenue matter, the jurisdiction of  the Court was excluded.  Secondly, that the  matter  had ceased to be in the stage of assessment but had reached  the stage  of  collection  of stamp duty.  On  that  ground  the present  case was sought to be distinguished  from  Alcock’s case(1). In our opinion this argument of the appellant  must also  fail.  A similar argument based on the wording of  the corresponding  section  106 (2) of the Government  of  India Act,  1915,  as  mentioned  above,  was  urged  in  Alcock’s case(1).  On that point their Lordships observed as  follows :--" Upon the point thus broadly stated their Lordships have no  difficulty in pronouncing a decision.  To argue that  if the  legislature says that a public officer, even a  revenue officer, shall do a thing and he, without cause or  justifi- cation,  refused to ,do that thing, yet the Specific  Relief Act  would not be applicable and there would be no power  in the Court to compel him to give relief to the subject is  to state a (1) 50 I.A. 227. 547 proposition  to which their Lordships must  refuse  assent." In dealing with the argument that because of section 106 (2) of the Government of India Act, 1915, the High Court had  no



jurisdiction  to make the order, the Board observed as  fol- lows :--" In their Lordships’ view the order of a High Court to  a revenue officer to do his statutory duty would not  be the exercise of original jurisdiction in any matter concern- ing the revenue." In our opinion, in the present case  also, the  respondent seeks the Court’s intervention to  make  the appellant perform his statutory duty to state a case.   That is not exercising the original jurisdiction of the Court  in any  matter  concerning the revenue. It is only  asking  the appellant to perform his statutory duty.  The further  argu- ment that the proceedings in this case had passed beyond the stage  of assessment and had reached the stage of  enforcing payment is again irrelevant because by the relief granted by the  High Court no attempt is made to obstruct  the  Revenue Authority  in the discharge of his duties.  At one stage  an injunction  was granted against the appellant but  that  has been  cancelled.  In fact, this aspect of the discussion  is only academic because if payment is enforced and the opinion of  the Court, on the statement of the case is  against  the appellant,  he  will  have to act in  conformity  with  that opinion  under  section 59 (2) of the Stamp Act  and  refund whatever may be held to be recovered in excess.     In  our opinion therefore the contentions of the  appel- lant fail and the appeal is dismissed with costs. Appeal dismissed. Agent for the appellant: R.S. Narula.. Agent for the respondent: Tanubhai C. Desai. 71 548