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CASE NO.: Appeal (civil)  4696 of 2007

PETITIONER: Hariom Agrawal

RESPONDENT: Prakash Chand Malviya

DATE OF JUDGMENT: 08/10/2007

BENCH: B.N. AGRAWAL,P.P. NAOLEKAR & P. SATHASIVAM

JUDGMENT: J U D G M E N T  (arising out of Special Leave Petition (Civil)No.12573 of 2006)

P.P. NAOLEKAR, J.:

1.              Leave granted.       2.              The facts necessary for deciding the question  involved in the case are that one Maganlal Jain was the  original tenant of Prakash Chand Malviya, the respondent- landlord.  Maganlal Jain had given the shop to the appellant  for carrying out the business.  On a dispute being arisen  between the respondent-landlord, the original tenant Maganlal  Jain and the appellant herein,  an agreement was executed on  28.3.1988 by the respondent (landlord) and the appellant  (subsequent tenant),  whereby the landlord tenanted the shop  to the appellant on payment of an advance amount of  Rs.4,75,000/- which was received by the landlord in cash in  front of the witnesses.  The agreement further provided that in  case the landlord requires eviction of the tenant from the shop  he will have to give notice of 6 months to the tenant and will  also refund the payment of Rs.4,75,000/- to the tenant.  On  the other hand, if the tenant wants to vacate the shop he will  have to give prior notice of 6 months to the landlord and the  landlord will pay back Rs.4,75,000/- to the tenant.  This  document was affixed with a notarial stamp of Rs.4/-.  Under  the Indian Stamp Act, 1899 (for short \023the Act\024), agreement of  this nature requires affixture of a stamp of Re.1/- under  Schedule I, Item 42 of the said Act.  3.              On 12.5.2003 a suit for eviction was filed by the  respondent-landlord before the Civil Judge, Bhopal under  Section 12(1)(f) of the Madhya Pradesh Accommodation  Control Act, stating the bonafide need for the use of the  accommodation by his elder son.  It was the case of the  appellant-tenant that the original copy of the agreement which  was with him was stolen and thus he was unable to produce  the original document dated 28.3.1988, but was in possession  of a photostat copy of the agreement and made a prayer for  receipt of the photocopy of the agreement as secondary  evidence under Section 63 of the Indian Evidence Act, 1872.   The trial court allowed the application for admission of the  photocopy of the document and admitted it as secondary  evidence under Section 63 of the Evidence Act. 4.              On being aggrieved by the order of the trial court,  the respondent-landlord filed a writ petition before the High  Court. The High Court set aside the order of the trial court and

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remitted the matter back to decide the question as to whether  a photocopy of an improperly stamped original document can  be received in secondary evidence.  After hearing the parties,  the trial court by its order dated 9.8.2005 ordered that the  document be impounded, it being insufficiently stamped; the  document was sent to the Collector of Stamps for affixing  appropriate stamp duty and thereafter for sending the  document back to the court.  This order was challenged by the  respondent in a review petition which was dismissed by the  trial court.   Thereafter, a writ petition was filed before the  High Court.  The High Court by its judgment dated 3.5.2006  held that the impugned document which is a photocopy of the  agreement, original of which is lost, cannot be admitted in  evidence; and that such a document can neither be  impounded nor can be accepted in secondary evidence.   5.              It is an admitted fact that the photostat copy which  is sought to be produced as secondary evidence does not show  that on the original agreement proper stamp duty was paid.   The photostat copy of the agreement shows that the original  agreement carried only a notarial stamp of Rs.4/-.  Thus the  original instrument bears the stamp of sufficient amount but  of improper description.  From the facts of the case, the issue  which requires consideration is: Whether the court can  impound the photocopy of the instrument (document) of  improper description exercising its power under the provisions  of the Indian Stamp Act, 1899?.  For answering this question,  Sections 33 and 35 of the Act might render some help.   Relevant extracts of the Sections are :            \02333.  Examination and impounding of  instruments \026 (1)  Every person by law or consent  of parties, authority to receive evidence, and every  person in charge of a public office, except an officer  of police, before whom any instrument, chargeable,  in his opinion, with duty, is produced or comes in  the performance of his functions, shall, if it appears  to him that such instrument is not duly stamped,  impound the same.                   (2)     For that purpose every such person shall  examine every instrument so chargeable and so  produced or coming before him, in order to  ascertain whether it is stamped with a stamp of the  value and description required by the law in force  in(India) when such instrument was executed or  first executed:

\005                            \005                                    \005\024

    \02335.    Instruments not duly stamped  inadmissible in evidence, etc.  -  No instrument  chargeable with duty shall be admitted in evidence  for any person having by law or consent of parties to  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:

\005                            \005                                    \005\024             6.              Section 33 gives power to the authority to check  whether the instrument has been duly stamped and in case it  is not duly stamped, to take steps to impound the same by

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proper stamp duty on the said document.  This power can be  exercised in regard to an ‘instrument\022.  Section 2(14) of the   Act defines ‘instrument\022  as:

\023Instrument\024 includes every document by  which any right or liability is, or purports to  be, created, transferred, limited, extended,  extinguished or record.\024                       7.              The instrument as per definition under Section  2(14) has a reference to the original instrument.  In State of  Bihar   v.  M/s. Karam Chand Thapar & Brothers Ltd., AIR  1962 SC 110, this Court in  paragraph  6  of the judgment  held as under :-

\0236.  It is next contended that as the copy of  the award in court was unstamped, no decree  could have been passed thereon.  The facts are  that the arbitrator sent to each of the parties a  copy of the award signed by him and a third  copy also signed by him was sent to the court.   The copy of the award which was sent to the  Government would appear to have been  insufficiently stamped.  If that had been  produced in court, it could have been validated  on payment of the deficiency and penalty  under S.35 of the Indian Stamp Act, 1899.   But the Government has failed to produce the  same.  The copy of the award which was sent  to the respondents is said to have been seized  by the police along with other papers and is  not now available.  When the third copy was  received in court, the respondents paid the  requisite stamp duty under S.35 of the Stamp  Act and had it validated.  Now the contention  of the appellant is that the instrument actually  before the court is, what it purports to be, \023a  certified copy\024, and that under S.35 of the  Stamp Act there can be validation only of the  original, when it is unstamped or insufficiently  stamped, that the document in court which is  a copy cannot be validated and \023acted upon\024  and that in consequence no decree could be  passed thereon.  The law is no doubt well- settled that the copy of an instrument cannot  be validated.  That was held in Rajah of Bobbili   v.  Inuganti China Sitaramasami Garu, 26 Ind  App 262, where it was observed :

       \023The provisions of this section  (section 35) which allow a document  to be admitted in evidence on  payment of penalty, have no  application when the original  document, which was unstamped or  was insufficiently stamped, has not  been produced; and, accordingly,  secondary evidence of its contents  cannot be given.  To hold otherwise  would be to add to the Act a provision  which it does not contain.  Payment  of penalty will not render secondary  evidence admissible, for under the  stamp law penalty is leviable only on

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an unstamped or insufficiently  stamped document actually produced  in Court and that law does not  provide for the levy of any penalty on  lost documents\024

\005                            \005.                           \005\024

This Court had an occasion again to consider the scope and  ambit of Sections 33(1), 35 and 36 of the Act and Section 63 of  the Indian Evidence Act in Jupudi Kesava Rao  v.   Pulavarthi Venkata Subbarao and  others  AIR 1971 SC  1070 and held that :-

\02313.  The first limb of Section 35 clearly shuts  out from evidence any instrument chargeable  with duty unless it is duly stamped.  The  second limb of it which relates to acting upon  the instrument will obviously shut out any  secondary evidence of such instrument, for  allowing such evidence to be let in when the  original admittedly chargeable with duty was  not stamped or insufficiently stamped, would  be tantamount to the document being acted  upon by the person having by law or authority  to receive evidence.  Proviso (a) is only  applicable when the original instrument is  actually before the Court of law and the  deficiency in stamp with penalty is paid by the  party seeking to rely upon the document.   Clearly secondary evidence either by way of  oral evidence of the contents of the unstamped  document or the copy of it covered by Section  63 of the Indian Evidence Act would not fulfil  the requirements of the proviso which enjoins  upon the authority to receive nothing in  evidence except the instrument itself.  Section  35 is not concerned with any copy of an  instrument and a party can only be allowed to  rely on a document which is an instrument for  the purpose of Section 35.  ‘Instrument\022 is  defined in Section 2(14) as including every  document by which any right or liability is, or  purports to be created, transferred, limited,  extended, extinguished or recorded.  There is  no scope for inclusion of a copy of a document  as an instrument for the purpose of the Stamp  Act.

14.     If Section 35 only deals with original  instruments and not copies Section 36 cannot  be so interpreted as to allow secondary  evidence of an instrument to have its benefit.   The words \023an instrument\024 in Section 36 must  have the same meaning as that in Section 35.   The legislature only relented from the strict  provisions of Section 35 in cases where the  original instrument was admitted in evidence  without objection at the initial stage of a suit  or proceeding.  In other words, although the  objection is based on the insufficiency of the  stamp affixed to the document, a party who  has a right to object to the reception of it must  do so when the document is first tendered.  

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Once  the time for raising objection to the  admission of the documentary evidence is  passed, no objection based on the same  ground can be raised at a later stage.  But this  in no way extends the applicability of Sec.36 to  secondary evidence adduced or sought to be  adduced in proof of the contents of a  document which is unstamped or   insufficiently stamped.\024   

8.              It is clear from the decisions of this Court and a  plain reading of Sections 33, 35 and 2(14) of the Act that an  instrument which is not duly stamped can be impounded and  when the required fee and penalty has been paid for such  instrument it can be taken in evidence under Section 35 of the  Stamp Act.  Sections 33 or 35 are not concerned with any copy  of the instrument and party can only be allowed to rely on the  document which is an instrument within the meaning of  Section 2(14).  There is no scope for the inclusion of the copy  of the document for the purposes of the Indian Stamp Act.    Law is now no doubt well settled that copy of the instrument  cannot be validated by impounding and this cannot be  admitted as secondary evidence under the Indian Stamp Act,  1899.   9.              The learned counsel for the appellant submitted  that the High Court was guided by the decisions rendered by  this Court while deciding the question involved in the case  whether original document was unstamped or not properly  stamped and not in regard to a document which was although  stamped but was improperly stamped.  As per the learned  counsel, the case in hand shall be governed by Section 37 of  the Act and not by Section 33 read with Section 35 of the Act.   The learned counsel further urged that the High Court has  committed an error in overlooking Section 48-B inserted by  Indian Stamp (Madhya Pradesh Amendment) Act, 1990 (No. 24  of 1990], which received assent of the President and was  published in the Madhya Pradesh Gazette (Extraordinary)  dated 27.11.1990, applicable in the State of Madhya Pradesh  whereby the Collector is authorized even to impound copy of  the instrument. 10.             Section 33 refers to the power of the authority to  impound the instrument not duly stamped, and by virtue of  Section 35 any document which is not duly stamped shall not  be admitted in evidence.     11.             Section 37 of the Act reads as under:      \02337.    Admission of improperly stamped  instruments.-  The State Government may make  rules providing that, where an instrument bears a  stamp of sufficient amount but of improper  description, it may, on payment of the duty with  which the same is chargeable be certified to be duly  stamped, and any instrument so certified shall then  be deemed to have been duly stamped as from the  date of its execution. \023             Under this provision, the State Government is authorized to  make rules providing therein to impound any instrument  which bears a stamp of sufficient amount but of improper  description and on payment of chargeable duty to certify it to  be duly stamped and to treat such document as duly stamped  as on the date of its execution.   12.             In the State of Madhya Pradesh, Rule 19 of the  Madhya Pradesh Stamp Rules, 1942 permits payment of duty

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on the instrument which carries stamp of proper amount but  of improper description.  The said Rule reads as under: \023When an instrument bears a stamp of proper  amount but of improper description, the Collector  may, on payment of the duty with which the  instrument is chargeable, certify by endorsement  that it is duly stamped:

Provided that if application is made within three  months of the execution of the instrument, and  Collector is satisfied that the improper description  of stamp was used solely on account of the difficulty  of inconvenience of procuring one of the proper  description, he may remit the further payment of  duty prescribed in this rule.\024   13.             Section 37 of the Act would be attracted where  although the instrument bears a stamp of sufficient amount  but such stamp is of improper description, as in the present  case where the proper stamp duty of Re.1/- under the Act has  not been paid but a notarized stamp of Rs.4/- was affixed on  the document.  The sufficient amount of the stamp duty has  been paid but the duty paid by means of affixture of notarized  stamp is of improper description.  By virtue of Rule 19 of the  Madhya Pradesh Stamp Rules, 1942, the Collector of Stamp is  authorized to receive the proper stamp duty on an instrument  which bears a stamp of proper amount but of improper  description, and on payment of the adequate duty chargeable  under the Act he would certify by endorsement on the  instrument that the instrument is duly stamped.  Under the  proviso to the Rule, the Collector may pardon the further  payment of duty prescribed in this Rule provided the person  holding the original instrument moves the Collector within  three months of the execution of the instrument for  certification by endorsement and the Collector is satisfied that  the stamp of improper description was used solely on the  account of the difficulty or inconvenience of the holder of the  instrument to procure the adequate stamp duty required to be  paid on the instrument.  But the  power under Section 37 and  Rule 19, even after framing the rules by the State Government,  could only be exercised for a document which is an instrument  as described under Section 2(14).  By various authorities of  this Court, an instrument is held to be an original instrument  and does not include a copy thereof.  Therefore, Section 37  and Rule 19 would not be applicable where a copy of the  document is sought to be produced for impounding or for  admission as evidence in a case. 14.             Section 48-B is a provision applicable in the State of  Madhya Pradesh which was inserted by Indian Stamp (M.P.  Amendment) Act, 1990 (No. 24 of 1990] in Chapter IV under  heading \023Instrument not duly stamped\024 of the Act.  This  Section reads as under: \02348-B.  Original instrument to be produced  before the Collector in case of deficiency. \026  Where the deficiency of stamp duty is noticed from  a copy of any instrument, the Collector may by  order require the production of original instrument  from a person in possession or in custody of the  original instrument for the purpose of satisfying  himself as to the adequacy of amount of duty paid  thereon. If the original instrument is not produced  before him within the period specified in the order,  it shall be presumed that the original document is  not duly stamped and the Collector may proceed in  the manner provided in this Chapter:

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       Provided that no action under this section  shall be taken after a period of five years from the  date of execution of such instrument.\024  

15.             On a plain reading of Section 48-B, we do not find  that the submission of the learned counsel for the appellant  that by virtue of this provision the Collector has been  authorized to impound even copy of the instrument,  is  correct.  Under this Section where the deficiency of  stamp  duty is noticed from the copy of any instrument, the Collector  may call for the original document for inspection, and on  failure to produce the original instrument could presume that  proper stamp duty was not paid on the original instrument  and, thus, recover the same from the person concerned.   Section 48-B does not relate to  the instrument, i.e., the  original document to be presented before any person who is  authorized to receive the document in evidence to be  impounded on inadequacy of stamp duty found.  The Section  uses the phraseology \023where the deficiency of stamp duty is  noticed from a copy of any instrument\024.  Therefore, when the  deficiency of stamp duty from a copy of the instrument is  noticed by the Collector, the Collector is authorised to act  under this Section.  On deficiency of stamp duty being noticed  from the copy of the instrument, the Collector would order  production of original instrument from a person in possession  or in custody of the original instrument.  Production is  required by the Collector for the purpose of satisfying himself  whether adequate stamp duty had been paid on the original  instrument or not.   In the notice given to person in possession  or in custody of original instrument, the Collector shall provide  for time within which the original document is required to be  produced before him.  If, in spite of the notice, the original is  not produced before the Collector, the Collector would draw a  presumption that original document is not duly stamped and  thereafter may proceed in the manner provided in Chapter IV.   By virtue of proviso, the step for recovery of adequate stamp  duty on the original instrument on insufficiency of the stamp  duty paid being noticed from the copy of the instrument, can  only be taken within five years from the date of execution of  such instrument.  The words \023the Collector may proceed in the  manner provided in this Chapter\024 has reference to Section 48  of the Act.  Under this Section, all duties, penalties and other  sums required to be paid under Chapter IV, which includes  stamp duty, would be recovered by the Collector by distress  and sale of the movable property of the person who has been  called upon to pay the adequate stamp duty or he can  implement the method of recovery of arrears of land revenue  for the dues of stamp duty.  By  virtue of proviso to Section  48-B, the Collector\022s power to adjudicate upon the adequacy of   stamp duty on the original instrument on the basis of  copy of  the instrument is restricted to the period of five years from the  date of execution of the original instrument.  This Section only  authorizes the Collector to recover the adequate stamp duty  which has been avoided at the time of execution of the original  instrument.  This Section does not authorize the Collector to  impound the copy of the instrument. 16.              For the reasons stated above, the appeal fails and  is dismissed. 17.             There shall be no order as to costs.