REPORTABLE

IN THE SUPREME COURT OF INDIA

CRIMINAL APPELLATE JURISDICTION

CRIMINAL APPEAL No.  730 OF 2009

(Arising out of SLP (Crl.) No. 1529 of 2007)

V.V.S. Rama Sharma & Ors.          ..…Appellants

Versus

State of U.P. & Ors.                                        .….Respondents

JUDGMENT

Dr. Mukundakam Sharma, J.

1. Leave granted.

2. This appeal arises out of the final order dated 3.8.2006 passed

by the High Court of Allahabad at Allahabad in Criminal Misc. Writ

Petitions  Nos. 8967,  10514 and 7227 of  2004 whereby the above

three  separate  writ  petitions  filed  by  the  appellants  herein  were

dismissed. In the said writ petitions the appellants herein challenged

the FIR registered against them under Sections 420 and 409 of the

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Indian Penal Code, 1860 (in short ‘IPC’) and under Sections 64 and

69 of the Indian Stamp Act, 1899 (in short  ‘Stamp Act’).

3. Brief facts necessary for the purpose of disposal of present appeal

are as follows:

Appellants herein were working as officers in different capacities

at relevant point of time in the Life Insurance Corporation of India (in

short  ‘LIC’) and were then posted in different offices in the State of

Uttar  Pradesh.  All  the  three  appellants  have  since  retired  from  the

service of the LIC.  

1. It has been stated that various branch offices of the LIC in the

course of their business have to purchase large quantity of adhesive

stamps for affixation on their policies and for issuing receipts etc.

While the stamps used for receipts are the normal revenue stamps,

the stamps used in respect of the policies issued by LIC are special

‘insurance  stamps’  which  are  affixed  at  the  rates  fixed  under  the

Stamps Act.  

2. For the purposes of execution of insurance policies by the LIC,

under the law at the  relevant point of time, on a sum of Rs. 1,000/-

the rate of ‘stamp duty’ is fixed at 40 paise on each policy. In order

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to execute the insurance policies promptly, from time to time, heavy

purchases of insurance stamps are stated to be done by the LIC. The

LIC used to purchase the same from the Treasury in any district as

well as from authorised licensed stamp vendors.

3. On  30.07.2004,  a  First  Information  Report  (in  short  ’FIR’)

bearing  Crime  No.  271/04  was  lodged  against  the  appellants  at

Police  Station  Bhelupura,  Tehsil  Sadar,  District  Varanasi  for  the

offences  punishable  under  Sections  420/409  of  IPC  and  under

Sections  64/69  of  the  Stamps  Act  in  relation  to  the  purchase  of

certain stamps.  A perusal of the FIR shows that it was lodged on the

basis  of  a  letter  bearing  No.  11912/Stamps-693(P)/2002-2003(83-

84)  dated 26.06.2004 written  by the Commissioner,  Stamps,  U.P.,

Allahabad  and  letter  No.  237245-6  (2003-04)  Mu,  Ra,  La.  dated

28.7.2004  written  by  the  Commissioner,  Varanasi  Division,

Varanasi. It has been stated in the FIR that the Divisional Office of

the LIC, Varanasi has not purchased the Insurance Stamps from the

Treasury office of U.P. but the same was purchased from the Stamp

Vendors, outside of State, which caused loss of Rs. 1,67,21,520.00/-

to the State Government.

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4. The appellants herein approached the Allahabad High Court for

quashing  of  the  aforesaid  FIR.  However,  the  High  Court  on

03.08.2006 dismissed all the three writ petitions vide three separate

but  identical orders holding that the FIR prima facie discloses the

commission  of  cognizable  offence  and  there  was  no  ground  of

interference.

5. Aggrieved by the said orders of the High Court, the appellants

have preferred the present appeal. It was contended by the appellants

that  the  FIR  was  lodged  only  on  the  directions  of  the  higher

authorities for the purpose of arresting the present appellants so as to

humiliate and harass them. It has been submitted that the provisions

of  the  Stamp Act  and  relevant  provisions  of  Constitution  clearly

indicates the untenability of the allegations made in the FIR.

6. It is the case of the appellant that purchasing of stamps assumes

urgency because the insurance contract must be executed along with

insurance policies at the earliest possible time and immediately on

receipt of the first premium and if there is any delay in issuing the

insurance  stamps  and  if  in  the  meantime  there  is  a  death  of  life

assured,  then  difficulties  arise  regarding  payment  of  insurance

money/claim. As there are various sources for purchase of insurance

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stamps viz.  from the Treasury of any district  throughout  the State

and also from any duly authorised licensed stamp vendors, the LIC is

entitled  to  purchase  the  insurance  stamps  from  any  such  stamp

vendors throughout the country. It has been submitted that there is

no prohibition under the law and in the Stamp Act which mandates

that  the  LIC  will  purchase  the  insurance  stamps  only  from  a

particular district or from a particular State.

7. On the other hand, it  is the case of the respondent that if the

stamps are permitted to be purchased from any other State other than

the State in which the instrument is to be first executed, it shall not

only cause huge loss of revenue to the State in which the instrument

is  executed  but  would  also  render  the  rules  framed  by  the  State

Government for regulation of sale and supply of the stamps and the

administrative  machinery  established  therein  as  futile  and

meaningless. It is also the case that it would further prevent the State

Government from examining as to whether the stamps are fake or

genuine.

8. The  law which  governs  the  rate  of  payment  of  ‘stamp duty’  in

respect of policies of insurance and certain other transactions has been

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dealt  under  Entry  91  of  List  1(Union  List)  of  7th Schedule  to  the

Constitution of India (in short ‘Constitution’). It reads as follows:  

“91.  Rates  of  stamp duty in  respect  of  bills  of  exchange, cheques, promissory notes, bills of lading, letters of credit, policies of insurance, transfer of shares, debentures, proxies and receipts.”

1. Our attention has been drawn towards Entry 63 of List  II (State

List) of 7thSchedule which provide for power to the State Legislatures in

regard to the rate of ‘stamp duty’ other than those specified in List I

(Union List).

“63. Rates of stamp duty in respect of documents other than those specified in the provisions of List I with regard to rates of stamp duty.”

1. Other relevant entry which has been cited is Entry 44 of List III

(Concurrent List) which excludes ‘rates of stamp duty’.

“44. Stamp  duties  other  than  duties  or  fees  collected  by means of judicial stamps,  but  not  including rates of stamp duty.”

1. The above-mentioned various entries in the three lists are the

fields  of  legislation  with  regard  to  stamps.  They  are  designed  to

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define and delimit the respective areas of legislative competence of

the Union and State  Legislatures.  Under  Entry 44 of  List  III,  the

power to levy stamp duty on all documents, is concurrent. But the

power to prescribe the rate of such levy is excluded from Entry 44 of

List III and is divided between Parliament and the State Legislatures.

If the instrument falls under the categories mentioned in Entry 91 of

List I, the power to prescribe the rate will belong to Parliament, and

for all  other instruments or documents, the power to prescribe the

rate  belongs  to  the  State  Legislature  under  Entry  63  of  List  II.

Therefore, the meaning of Entry 44 of List III is that excluding the

power to prescribe the rate, the charging provisions of a law relating

to  stamp  duty  can  be  made  both  by  the  Union  and  the  State

Legislature, in the concurrent sphere, subject to Article 254 in case

of repugnancy.  

2. With regards to the polices of life insurance the rates of stamp duty

have been stipulated by Parliament in the Schedule I to the Stamp Act

though the proceeds thereof are assigned to the States under Article 268

of the Constitution. It reads as follows:

“268.  Duties  levied  by  the  Union  but  collected  and appropriated by the States.-  

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(1) Such stamp duties and such duties of excise on medicinal and toilet  preparations as are mentioned in the Union List shall  be  levied  by  the  Government  of  India  but  shall  be collected-  (a)  in  the  case  where  such  duties  are  leviable  within  any [Union  territory],  by the  Government  of  India,  and  (b)  in other  cases,  by  the  States  within  which  such  duties  are respectively leviable.

(2)  The  proceeds  in  any  financial  year  of  any  such  duty leviable  within  any  State  shall  not  form  part  of  the Consolidated  Fund  of  India,  but  shall  be  assigned  to  that State”

1. Now,  it  would  be  useful  at  this  stage  to  discuss  relevant

provisions of the Stamp Act.  

“27. Facts affecting duty to be set forth in instrument - (1)  The  consideration  (if  any)  and  all  other  facts  and circumstances affecting the chargeability of any instrument with  duty,  or  the  amount  of  the  duty  with  which  it  is chargeable, shall be fully and truly set forth therein.

64. Penalty for omission to comply with provisions of section  27 -  Any  person  who,  with  intent  to  defraud  the Government, - (a)  executes  any  instrument  in  which  all  the  facts  and circumstances required by section 27 to be set forth in such instrument are not fully and truly set forth ; or (b) being employed or concerned in or about the preparation of  any instrument,  neglects  or  omits  fully and truly to  set forth therein all such facts and circumstances ; or (c) does any other act calculated to deprive the Government of any duty or penalty under this Act, shall  be  punishable  with  fine  which  may  extend  to  five

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thousand rupees.

69. Penalty for breach of rule relating to sale of stamps and for unauthorized sale-  

(a) Any person appointed to sell stamps who disobeys any rule made under section 74, and

(b) any person not so appointed who sells or offers for sale any stamp (other than a   [ten naye paise or five naye paise] adhesive stamp),

shall  be  punishable  with  imprisonment  for  a  term which may extend to  six  months,  or  with  fine which may extend to five hundred rupees, or with both.”

1. Section 64 of the Stamp Act provides for the penalty in case of

omission to comply with the provisions of Section 27. On the other

hand, Section 69 deals with the penalty to be imposed for breach of

rule relating to sale of stamps and for unauthorised sales.

2. Pursuant to rule making powers given to States under Section 74

and 75 of the Stamp Act, the State of U. P. has made rules called the

United  Provinces  Stamp  Rules,  1942  (in  short  ‘Stamps  Rules’.  Our

attention  has  been  drawn towards  Rule 3  of  the  Stamp Rules  which

provides the description of stamps as follows:

“Rule 3. Description of Stamps. - (1) Except as otherwise provided by the Indian Stamp Act, 1899 or by these rules-

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(i) all duties with which any instrument is chargeable shall be paid and such payment shall  be  indicated  on  such instrument by means of stamps issued by the Government for the purposes of the Act, and

(ii) a stamp which by any word or words on the face of it is appropriated to any particular kind of instrument shall not be used for an instrument of any other kind.

(2) There shall  be three kinds of stamps for indicating the payment of duty with which instruments  are  chargeable, namely:-

(a) impressed stamps, that is to say stamped papers bearing the words ‘Indian non- judicial’  printed  thereon,  which have been sold by a person duly authorised in that  behalf  as  hereafter  provided  to  any person  for  his  use  in accordance with these rules:

Provided that no stamp shall be deemed to be sold unless it is clearly bears the name and address of the authorised vendor thereof and of the person to whom it is sold;

(b)  impressed stamps bearing  the word ‘Hundi’  printed  or embossed thereon; and

(c)  adhesive  stamps bearing  the words  ‘Special  adhesive’, ‘Insurance’,  ‘Foreign  Bill’,  ‘Share  Transfer’,  ‘Notarial’, ‘Brokers note’, ‘agreement’ or ‘revenue’ printed thereon:

Provided always that  the  stamps of the above descriptions over-printed  with  the  words ‘Uttar  Pradesh’  or  the  letters ‘U.P.’ shall continue to be used for payment of duty till such time as the State Government does not prohibit their use.”

(emphasis underlined)

1. Further, Rule 115-A of the Stamps Rules provides for the mode of

sale of such stamps. It reads as follows:

“Rule 115-A. Stamps which are the property of the central

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Government and which are required to be sold to the public through post offices, e.g., Central Excise, Revenue stamps, Defense/or  National  savings  stamps,  shall  be  obtained  by post offices from local and branches and depots and sold to the public in the same manner as ordinary postage stamps.  

Tobacco Excise duty labels and insurance agent license fee stamps shall be sold to the public of local and branch depots at which they are stocked.”

1. Placing reliance on the above-mentioned rules, it was contended

on  behalf  of  the  State  of  U.P.  that  the  acts  of  the  appellants  of

purchasing insurance stamps from outside the State was contrary to

above-mentioned rules. However, one cannot lose sight of the fact

that the Stamp Act being a central legislation is covered under List I

(Union List) of the 7th Schedule of the Constitution.  Rule making

power has been given to the States under Section 74 and 75 of the

Stamp Act which deals with ‘power to make rules relating to sale of

stamps’  and  ‘power  to  make  rules  generally  to  carry  out  Act’

respectively. The scope of such rule making power of the State are

only upto the  extent  as  provided under the  central  law i.e.  Stamp

Act.   

2. In the case at hand, the Stamp Rules were framed by the U.P.

Government in the year 1942. A perusal of the statement of object of

the said Rules shows that the such Rules was framed in exercise of

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the  powers  conferred  by  the  Stamp Act  and  in  pursuance  of  the

powers  conferred  by the notification  of  the Government  of  India,

Finance Department (Central Revenues) No. 9/Stamps, dated the 13th

November, 1937, and in supersession of all previous notifications of

the  Government  of  India  and  the  Provincial  Government  in  this

behalf.  Undoubtedly,  when  these  Rules  were  framed  the  present

constitutional scheme was not in place.  

3. As mentioned earlier, Under Entry 44 of List III, the power to

levy stamp duty on all documents, is concurrent. But the power to

prescribe the rate of such levy is excluded from Entry 44 of List III

and is divided between Parliament and the State Legislatures. If the

instrument falls under the categories mentioned in Entry 91 of List I,

the power to prescribe the rate will belong to Parliament, and for all

other  instruments  or  documents,  the  power  to  prescribe  the  rate

belongs to the State Legislature under Entry 63 of List II. Therefore,

the meaning of Entry 44 of List III is that excluding the power to

prescribe the rate, the charging provisions of a law relating to stamp

duty can be made both by the Union and the State Legislature, in the

concurrent sphere, subject to Article 254 in case of repugnancy. So,

in the case at hand, it is Entry 91 of List I of the 7th Schedule which

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would  be  applicable  and  the  States  does  not  have  the  power  to

circumvent a central law.

4. As far as quashing of FIR is concerned, the scope of power under

Section 482 CrPC has been explained in a series of decisions by this

Court.  In  Nagawwa v. Veeranna Shivalingappa Konjalgi,  (1976) 3

SCC 736, it was held that the Magistrate while issuing process against

the accused should satisfy himself as to whether the allegations in the

complaint,  if  proved,  would  ultimately  end  in  the  conviction  of  the

accused. It was held that the order of Magistrate issuing process against

the accused could be quashed under the following circumstances: (SCC

p. 741, para 5)

“(1)  Where  the  allegations  made  in  the  complaint  or  the statements of the witnesses recorded in support of the same taken at their face value make out absolutely no case against the accused or the complaint does not disclose the essential ingredients  of  an  offence  which  is  alleged  against  the accused;

(2) Where the allegations made in the complaint are patently absurd and inherently improbable so that no prudent person can ever reach a conclusion that  there is  sufficient  ground for proceeding against the accused;

(3)  Where  the  discretion  exercised  by  the  Magistrate  in issuing process is capricious and arbitrary having been based either  on  no  evidence  or  on  materials  which  are  wholly irrelevant or inadmissible; and

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(4)  Where  the  complaint  suffers  from  fundamental  legal defects, such as, want of sanction, or absence of a complaint by legally competent authority and the like.”

1. In  State of Haryana v. Bhajan Lal, 1992 Supp. (1) SCC 335, a

question came up for consideration as to whether quashing of the FIR

filed against the respondent Bhajan Lal for the offences under Sections

161 and 165 IPC and Section 5(2) of the Prevention of Corruption Act

was proper and legal. Reversing the order passed by the High Court,

this Court explained the circumstances under which such power could

be exercised. Apart from reiterating the earlier norms laid down by this

Court,  it  was  further  explained  that  such  power  could  be  exercised

where the allegations made in the FIR or complaint are so absurd and

inherently improbable on the basis of which no prudent person can ever

reach a just  conclusion that  there is  sufficient  ground for proceeding

against the accused. It observed as follows in para 102:

“102. In  the  backdrop  of  the  interpretation  of  the  various relevant  provisions of the Code under Chapter XIV and of the principles of law enunciated by this Court in a series of decisions relating to the exercise of the extraordinary power under Article 226 or the inherent powers under Section 482 of the Code which we have extracted and reproduced above, we  give  the  following  categories  of  cases  by  way  of illustration wherein such power could be exercised either to prevent  abuse  of  the  process  of  any court  or  otherwise  to secure the ends of justice, though it may not be possible to lay  down  any  precise,  clearly  defined  and  sufficiently

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channelised and inflexible guidelines or rigid formulae and to give an exhaustive list of myriad kinds of cases wherein such power should be exercised.

(1) Where  the  allegations  made  in  the  first  information report or the complaint, even if they are taken at their face value  and  accepted  in  their  entirety  do  not  prima  facie constitute  any  offence  or  make  out  a  case  against  the accused.

(2) Where the  allegations  in  the  first  information  report and other  materials,  if  any,  accompanying  the  FIR do  not disclose a cognizable offence, justifying an investigation by police  officers  under  Section  156(1)  of  the  Code  except under an order of a Magistrate within the purview of Section 155(2) of the Code.

(3) Where the uncontroverted allegations made in the FIR or  complaint  and the  evidence  collected  in  support  of  the same do  not  disclose  the  commission  of  any  offence  and make out a case against the accused.

(4) Where, the allegations in the FIR do not constitute a cognizable  offence  but  constitute  only  a  non-cognizable offence,  no  investigation  is  permitted  by  a  police  officer without  an  order  of  a  Magistrate  as  contemplated  under Section 155(2) of the Code.

(5) Where the allegations  made in the FIR or complaint are  so  absurd  and  inherently  improbable  on  the  basis  of which  no prudent  person can ever  reach  a  just  conclusion that  there  is  sufficient  ground  for  proceeding  against  the accused.

(6) Where there is an express legal bar engrafted in any of the  provisions  of  the  Code  or  the  concerned  Act  (under which a criminal proceeding is instituted) to the institution and continuance of the proceedings and/or where there is a specific  provision  in  the  Code  or  the  concerned  Act, providing  efficacious  redress  for  the  grievance  of  the aggrieved party.

(7) Where  a  criminal  proceeding  is  manifestly  attended with mala fide  and/or  where the proceeding is  maliciously instituted with an ulterior motive for wreaking vengeance on the accused and with a view to spite him due to private and personal grudge.”

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1. This Court in the case of Indian Oil Corpn. v. NEPC India Ltd.,

(2006) 6 SCC 736, at page 747 has observed as under :  

“12. The principles relating to exercise of jurisdiction under Section  482  of  the  Code  of  Criminal  Procedure  to  quash complaints  and criminal  proceedings  have been stated and reiterated by this Court  in several decisions. To mention a few—Madhavrao  Jiwajirao  Scindia  v.  Sambhajirao Chandrojirao Angre, State of Haryana v. Bhajan Lal, Rupan Deol  Bajaj  v.  Kanwar  Pal  Singh  Gill,  Central  Bureau  of Investigation v. Duncans Agro Industries Ltd., State of Bihar v. Rajendra Agrawalla, Rajesh Bajaj v. State NCT of Delhi, Medchl Chemicals & Pharma (P) Ltd. v. Biological E. Ltd., Hridaya Ranjan Prasad Verma v. State of Bihar, M. Krishnan v.  Vijay  Singh  and  Zandu  Pharmaceutical  Works  Ltd.  v. Mohd.  Sharaful  Haque..  The  principles,  relevant  to  our purpose are:

(i) A complaint can be quashed where the allegations made in the complaint, even if they are taken at their face value and accepted in their entirety, do not prima facie constitute any offence or make out the case alleged against the accused.

For  this  purpose,  the  complaint  has  to  be  examined  as  a whole, but without examining the merits of the allegations. Neither a detailed inquiry nor a meticulous analysis of the material nor an assessment of the reliability or genuineness of  the  allegations  in  the  complaint,  is  warranted  while examining prayer for quashing of a complaint.

(ii)  A complaint  may also  be  quashed  where  it  is  a  clear abuse  of  the  process  of  the  court,  as  when  the  criminal proceeding  is  found  to  have  been  initiated  with  mala fides/malice  for  wreaking  vengeance  or  to  cause  harm, or where the allegations are absurd and inherently improbable.

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(iii) The power to quash shall not, however, be used to stifle or  scuttle  a  legitimate  prosecution.  The  power  should  be used sparingly and with abundant caution.

(iv) The complaint is not required to verbatim reproduce the legal  ingredients  of  the  offence  alleged.  If  the  necessary factual  foundation  is  laid  in  the  complaint,  merely on  the ground that a few ingredients have not been stated in detail, the  proceedings  should  not  be  quashed.  Quashing  of  the complaint is warranted only where the complaint is so bereft of  even the basic facts  which are absolutely necessary for making out the offence.

(v)  A given set  of  facts  may make out:  (a)  purely a  civil wrong; or (b) purely a criminal offence; or (c) a civil wrong as also  a  criminal  offence.  A commercial  transaction  or  a contractual dispute, apart from furnishing a cause of action for seeking remedy in civil law, may also involve a criminal offence. As the nature and scope of a civil  proceeding are different from a criminal proceeding, the mere fact that the complaint  relates to a commercial  transaction or breach of contract, for which a civil remedy is available or has been availed,  is  not  by  itself  a  ground  to  quash  the  criminal proceedings.  The  test  is  whether  the  allegations  in  the complaint disclose a criminal offence or not.”

1. This Court  has  recently in  R. Kalyani  v.  Janak C. Mehta and

Others, (2009) 1 SCC 516, observed as follows:

“15. Propositions  of  law  which  emerge  from  the  said decisions are:

(1)    The  High  Court  ordinarily  would  not  exercise  its inherent jurisdiction to quash a criminal proceeding and, in particular, a First Information Report unless the allegations contained therein, even if given face value and taken to be correct in their entirety, disclosed no cognizable offence.

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(2)   For the said purpose, the Court, save and except in very exceptional circumstances, would not look to any document relied upon by the defence.

(3)   Such a power should be exercised very sparingly. If the allegations  made  in  the  FIR  disclose  commission  of  an offence, the court shall not go beyond the same and pass an order in favour of the accused to hold absence of any mens rea or actus reus.

(4)   If the allegation discloses a civil dispute, the same by itself  may  not  be  a  ground  to  hold  that  the  criminal proceedings should not be allowed to continue.

16.   It is furthermore well known that no hard and fast rule can be laid down. Each case has to be considered on its own merits. The Court, while exercising its inherent jurisdiction, although  would  not  interfere  with  a  genuine  complaint keeping  in  view  the  purport  and  object  for  which  the provisions of Sections 482 and 483 of the Code of Criminal Procedure had been introduced by Parliament but would not hesitate to exercise its jurisdiction in appropriate cases. One of the paramount duties of the superior courts is to see that a person  who  is  apparently  innocent  is  not  subjected  to persecution  and  humiliation  on  the  basis  of  a  false  and wholly untenable complaint.”

1. In  the  case  at  hand,  it  has  been  stated  in  the  FIR  that  the

Divisional  Office  of  the  LIC,  Varanasi  has  not  purchased  the

Insurance stamps from the Treasury office of U.P. but the same was

purchased from the Stamp Vendors, outside of State, which caused

loss to the State exchequer to the tune of Rs. 1,67,21,520.00/- to the

state  government.  So,  the  sole  allegation  against  the  appellants  is

that they have purchased the insurance stamps from outside the State

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of UP. However, as we have already noted that the said act of the

appellant cannot be said to be inconsistent with any provisions of the

Stamp Act or any other rules.  So, the allegation made in the FIR

even if proved by the prosecution does not constitute any offence.  

2. Further, the registration of FIR shows complete non-application

of  mind as  the  said FIR also brings  within  its  ambit  purchase  of

insurance stamps done within the State of U.P. There cannot be any

dispute  with  regard  to  the  insurance  stamps which  has  been duly

purchased from the State of U.P. itself. As already noted, the State of

U.P. has sought to invoke Section 64 (c) of the Stamp Act to contend

that  the  action  of  appellants  was  ‘calculated  to  deprive  the

Government of any duty or penalty’, but there is no denial of the fact

that  appellants  were  indeed  paying  the  duties,  and  by  no  means

‘depriving the government of any duty or penalty’. So, the act of the

respondent is nothing but clear a case of its mala fide intention to

harass  the  appellants  herein.  It  is  wholly  immaterial  whether

appellants  are  purchasing  the  insurance  stamps  from the  State  of

U.P.  or  from any other  State.  In fact,  as  mentioned earlier,  Rules

115-A of the U.P. Stamp Rules itself declares that ‘Stamps which are

the  property  of  the  central  Government’.  That  being  the  legal

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position, it is legally untenable to contend that the insurance stamps

must be purchased from the State of U. P. only. Further, it must be

kept in mind that Section 69 of the Stamps Act will  also have no

application  as,  admittedly,  the  appellants  are  neither  the  stamp

vendors nor doing any unauthorised sale  of  the insurance stamps.

Keeping this  in  mind,  the  High Court  ought  to  have quashed the

criminal proceedings launched against the appellants.

3. Hence, the decision of the High Court is liable to be set aside and

accordingly, we set it aside.  The appeal is accordingly allowed.

       ………………………..J.

                          [S.B. Sinha]

  ...………………………J.

         [Dr. Mukundakam Sharma]

New Delhi

April  15, 2009

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