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Court noted that the case was covered by Section 34 of the Karnataka Stamps Act
The Supreme Court recently upheld the Karnataka High Court's decision to refrain from intervening in a trial court's order that imposed a tenfold penalty on a plaintiff for inadequate stamp duty under the Karnataka Stamps Act.
A bench comprising Justices Hrishikesh Roy and S V N Bhatti rejected the appeal filed by one N M Theerthegowda, concluding that there were no grounds to justify interfering with the challenged order.
The court said the high court had rightly rejected the plea of the appellant as he himself invited the trial court to impose the penalty.
In 2015, the appellant filed a suit seeking specific performance of a sale agreement dated November 4, 1996, which was allegedly executed by the respondents. He also sought to have the sale deed of August 13, 2003, which was executed by the first and second respondents in favor of the third respondent, set aside. He claimed possession of suit schedule property as part of performance under the agreement of sale of November 04, 1996.
An agreement of sale coupled with possession is deemed to be a conveyance warranting payment of ad valorem stamp duty. The trial court thus directed the plaintiff to pay a duty and penalty total of Rs 15,81,800.
"Admittedly, the suit agreement is written on stamp papers worth Rs 200. Article 5(e)(i) of the Schedule of the Karnataka Stamp Act, read with amended Stamp Act No 8 of 1995, prescribes the duty as payable on a conveyance. The appellant has not produced the original agreement in suit of 2015. The explanation offered by him is that the agreement is filed in a connected matter between the parties," the court noted.
From the trial court's order of August 14, 2015, it appeared that the appellant expressed readiness to pay duty and penalty on the certified copy of the agreement of sale of November 04, 1996, now filed along with the plaint, the bench added.
In his plea before the high court, the appellant argued that the deficit stamp duty should alone be collected at the time of the passing of the judgment and decree, and the levy of penalty was illegal and erroneous. The high court, however, rejected it.
Before the top court, the advocate for the appellant contended that the document should have been sent to the District Registrar to determine deficit stamp duty and penalty under Section 39 of the Act, instead of the court deciding under Section 34 of the Stamp Act.
The bench, however, said, "The argument is untenable to the facts and circumstances of this case."
In the present case, the bench pointed out, that the appellant wanted the suit agreement to be admitted in evidence at the interlocutory stage.
"The suit was filed on 12.08.2015. On 14.08.2015, the case was posted before the court, and the counsel for the appellant in the trial court agreed to pay proper/sufficient stamp duty and penalty on the certified copy of the agreement to sale. In other words, the appellant invited the court to decide under Section 34(1) of the Act," the bench said.
Being so, when the trial court imposed ten times penalty on the deficit stamp duty, the appellant argued in the high court that he would pay the stamp duty when the decree of specific performance was granted, the court recorded.
"In our considered view, the case of appellant is covered by Section 34 of the Act, and rightly ten-times penalty is imposed. Further, the appellant having invited the court cannot now express the willingness to exercise the option under Section 37(2) of the Act. On the contrary, Section 37(1) of the Act would apply in the present case," the bench held.
Case Title: N M Theerthegowda Vs Y M Ashok Kumar And Others
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