T. Bhaskar Rao v. T. Gabriel And Others

1. In this revision the order passed by the Principal District Munsif in O.S No. 350/78 refusing to admit the document sought to be received by the plaintiff on the ground that it was insufficiently stamped and unregistered, is challenged. The petitioner filed the suit O.S No. 350/78 for recovery of possession of plaint ‘A’ schedule property measuring 0-49 cents. The plaintiff was examined as P.W 1 and he tendered exchange deed dated 14-6-1958 in support of his case as to possession. The plaintiff wanted to prove that possession was delivered to respondent in pursuance of the document in question. According to the plaintiff, the first plaintiff purchased ‘A’ schedule property measuring 0-49 cents under a registered sale deed dated 6-5-1958 from the defendant and obtained possession in pursuance of the sale deed. At that time the defendant's father was in possession of ‘B’ schedule property measuring 0.34 cents. The plaintiff and the defendant wanted to have exchange of these two properties. The plaintiff agreed to exchange ‘A’ schedule property measuring 0-49 cents for 0-34 cents of ‘B’ schedule property belonging to the defendant and the defendant agreed for the same. Hence the exchange deed was executed and in pursuance of the exchange deed the plaintiff took possession of 0-34 cents from the defendant delivering his 0-49 cents to him. The defendant failed to substantiate his title in respect of the 0-34 cents given to the plaintiff in exchange of the 0-49 cents and hence the plaintiff filed a suit for recovery of possession of 0.49 cents given to the defendant.

2. The plaintiff now wants to prove that the defendant has been in possession of 0.49 cents given to him under the exchange deed and hence he tendered the document for proving the fact that he delivered possession of the ‘A’ schedule property to the defendant. Since the document was not stamped, it was sent to the R.D.O for duty and penalty. The R.D.O impounded the same and imposed duty and penalty and appended a certificate to that effect. But, when the document was tendered in evidence, after the certificate was appended by the R.D.O, the Court refused to admit the same on the ground that surcharge to the extent of 5% of the value of the property was not paid as per the provisions of Ss. 69 and 73 of the Gram Panchayat Act, which came into force in 1964.

3. It is not in dispute that every transaction in respect of immovable property under the jurisdiction of the village panchayat requires payment of 5% of the value of the property as surcharge. Since the surcharge as required by the Gram Panchayat Act was not collected by the R.D.O along with the duty and penalty while impounding the document, the learned District Munsif refused to admit the document.

4. Sri Ramkrishna Raju the learned counsel for the petitioner contends that the lower Court committed jurisdictional error in refusing to receive the document, ignoring the legal position that the document can be received in evidence if it is tendered for collateral purpose and the non-payment of surcharge as required by the Gram Panchayat Act is not governed by the provisions of Section 35 of the Stamp Act.

5. Section 35 of the Stamp Act mandates that an instrument chargeable with duty should be stamped so as to make it admissible in evidence. Proviso A to Section 35 of the Stamp Act enables a document to be received in evidence on payment of stamp duty and penalty if the document is chargeable, but not stamped or on payment of deficit duty and penalty, if it is insufficiently stamped. The bar against the admissibility of an instrument which is chargeable with stamp duty and is not stamped is of course absolute whatever be the nature of the purpose, be it for main or collateral purpose, unless the requirements of proviso (A) to Section 35 are complied with. It follows that if the requirements of proviso (A) to Section 35 are satisfied, then the document which is chargeable with duty, but not stamped, can be received in evidence.

6. Sri E. Ramanatham the learned counsel for the respondent contends that the document is an exchange deed conveying title and interest in immovable property and it should, therefore, be registered and an unregistered document cannot be received in evidence even if the provisions of Section 35 of the Stamp Act are complied with. It is true that an exchange deed requires registration, since it conveys title in respect of immovable property for which it was executed and if the document is not registered, it cannot be received in evidence for proving the fact that title was obtained under the exchange deed. But, Sri Ramakrishna Raju the learned counsel for the petitioner contends that he is relying upon the document for collateral purpose i.e, for proving possession, but not title in respect of the suit property.

7. It is now well settled that there is no prohibition under Section 49 of the Registration Act, to receive an unregistered document in evidence for collateral purpose. But the document so tendered should be duly stamped or should comply with the requirements of Section 35 of the Stamp Act, if not stamped as a document cannot be received in evidence even for collateral purpose unless it is duly stamped or duty and penalty are paid under Section 35 of the Stamp Act.

8. In the case on hand, the document sought to be received in evidence was originally not stamped. Then the plaintiff requested the Court to send it to the R.D.O for impounding, that the request of the plaintiff was accepted and the Court was pleased to send the document to the R.D.O, the R.D.O after impounding the document imposed duty and penalty and after the payment of the duty and penalty, he appended a certificate that the provisions of Section 35 of the Stamp Act are complied with and sent it back to the Court. The document, therefore, satisfied the requirements of S. 35 of the Stamp Act. The document can, therefore, be received in evidence for collateral purpose even though it is an unregistered document. This is permissible under law, since proof of possession comes under collateral purpose. Our learned brother Madhava Rao, J., in Hari Waman Rao v. P. Narsimulu C.R.P 226/76, D/- 10-2-1977 : 1977 AP Judicial Index, page 270 : (AIR 1977 Andh Pra 371) held: “Where a plaintiff filed an unregistered mortgage bond in a suit for possession of the land to show as to how the defendant came into possession of the land, the mortgage bond is admissible in evidence for collateral purpose and this is in conformity with the proviso added by the Amendment Act of 1929 to Section 49 of the Registration Act.

9. It is, therefore, clear that an unregistered document which satisfies the requirements of Section 35 of the Stamp Act, can be tendered in evidence for collateral purpose, namely, for proving possession.

10. Sri R. Ramanatham the learned counsel for the respondent contends that this document is tendered in evidence by the plaintiff in order to defeat the case of the defendant, who claims to have perfected his title by adverse possession, if this document is admitted at this belated stage. He further contends that law prohibits the Court from receiving a document, unstamped and unregistered if it is meant to defeat the defendant's case when he perfected his title by adverse possession. In support of his contention he relied on the decisions in Venkaji Babaji Naik v. Shidramapa Balapa Desai, (1879) ILR 3 Bom 663; Pichandi v. Kandasami, (1884) ILR 7 Mad 539 and Bhukhan Mian v. Radhika, AIR 1938 Pat 479.

11. I do not think that any of these decisions lends support to the contention of the counsel for respondent. There is no judicial pronouncement that the document tendered in evidence is also governed by Limitation Act and it is not sufficient if the requirements of Section 35 are satisfied.

12. In Venkaji Babaji Naik v. Shidramapa Balapa Desai, (1879) ILR 3 Bom 663 (supra) a bond which was not registered was produced in evidence for collateral purpose. Under the said bond ‘A’ assigned to ‘B’ the ‘Vahivat of assessment’ of certain lands as security for a loan of Rs. 10,000/-. The bond says that ‘B’ should receive the assessment, and after making certain payments, should retain the balance in lieu of interest until the principal is paid. The assessment was duly received until April, 1887. In Feb., 1890, ‘B’ filed the suit to recover the principal sum from ‘A’ personally, relinquishing his claim against the land. But, ‘A’ pleaded limitation. Their Lordships held that the bond was tendered to prove the assignment of ‘vahivat of assessment’, which is a benefit arising out of immovable property and it should, therefore, be registered and it cannot be admitted, since not registered.

13. This decision, therefore, makes it abundantly clear that the document sought to be received in evidence was not admitted because it was not registered, because it requires to be registered, since ‘vahivat of assessment’ is a benefit arising out of immovable property and the registration of the document is, therefore, compulsory. This decision does not say that the document should not be received in evidence because it defeats the case of the defendant as to limitation, if it is received in evidence.

14. In Pichandi v. Kandasami ((1884) ILR 7 Mad 539) the plaintiff sued the defendants for recovery of Rs. 109-12-0 due on a bond dated 4-8-1869. But, the suit was filed on 13-4-1869, i.e, beyond 12 years. The plaintiff relied upon a bond which was for Rs. 100/- and by it certain land was mortgaged as security for the repayment, of the debt and it was stipulated that the plaintiff should enjoy the land mortgaged for ten years in lieu of interest. The bond was not registered. The plaintiff alleged that he was in possession of the land by the date of the suit. The lower Court did not admit the document since it was not registered. Hence an appeal was preferred to the High Court. In the High Court it was argued that the bond was receivable in evidence for enforcing the debt, though not admissible for enforcing the mortgage. The High Court held that the document is admissible for enforcing the debt. The learned Judges also held that even though the document is admissible in evidence for enforcing the debt, the debt became barred by limitation since the suit was filed beyond the period of limitation.

15. Even in this case, the Court did not hold that the document should not be received in evidence if it defeats the case of the defendant as to the limitation.

16. In Bhukhan Mian v. Radhika (AIR 1938 Pat 479) (supra) the plaintiffs claimed to have deposited the mortgage monies in the Court, since the defendants refused to receive the monies tendered by the plaintiffs. The question which was mooted in the trial Court and the first. Court of Appeal, was, whether the defendant was a tenant as he contended or whether he was a mortgagee. Both the Courts below came to the conclusion that he was a mortgagee and that decision was affirmed by a single Judge of the High Court. But the admissibility of the two mortgage deeds did not come up for consideration either in the trial Court or in the first appellate Court. Both the mortgages, one for Rs. 300/- and the other for Rs. 100/- were unregistered. It was contended in the High Court that those documents cannot be looked into even for a collateral purpose. The collateral purpose for which the counsel would desire the Court to look at the deeds is to prove the rights of the plaintiffs as mortgagors who, in the circumstances, would be entitled to redeem. The learned Judges held that it is impossible to suggest that was a collateral purpose because mortgagors claimed the right to redeem and therefore, that was not a collateral purpose.

17. The ruling in the above case also does not help the counsel for the respondent, since it is well settled that the rights of the plaintiffs as mortgagors are entitled to redeem and hence it cannot be treated as a collateral purpose.

18. It is, therefore, clear that these decisions do not help the respondent.

19. But, the main ground on which the lower Court refused to receive the document is non-payment of the surcharge. I think that the lower Court is not justified in doing so. Merely because the surcharge is not paid, the document cannot be held to be inadmissible in evidence, as none of the provisions of the Gram Panchayat Act, or the relevant Rules made thereunder, refers to Section 35 of the Stamp Act and makes it applicable to the duty on transfers of property. If the legislature had intended to make such a penal provision as Section 35 of the Stamp Act applicable to such duty, it would not have omitted it from making a clear provision in the Act.

20. Similar question was considered by a Division Bench of this Court in K. Manavola Naicker…Petitioner* (Defendant); v. K.R Gopalakrishniah Chetty… (Plaintiff)., AIR 1969 Andh Pra 417. That case arises under the Madras District Municipalities Act. In that case the petitioner paid the stamp duty and penalty that were so levied against him. But an objection was again taken that the document is inadmissible for the reason that the duty on transfer of property in the form of surcharge leviable under Section 116-A of the Madras District Municipalities Act, had not been paid. The trial Court upheld this objection and held that both surcharge and also penalty are payable in respect of the document under S. 116-A of the Act. It is that order that was assailed in the revision before the High Court. In that case, the learned Judges also examined the scope and effect of Ss. 78-A, 116-A, 116-B and 116-C of the Madras District Municipalities Act Section 78-A provides for the levy of a duty on transfers of property in every municipality. Sections 116-A and 116-B come under the caption “duty on transfers of property”. Section 116-A states that the transfer duty is levied in the form of a surcharge on the stamp duty, at such rates as may be prescribed by the State Government. It, however, prescribes that such duty shall not exceed 5% on the amount specified in the table therein. Section 116-B makes Sections 27 and 64 of the Indian Stamp Act applicable to the levy of the transfer duty. Section 27 of the Stamp Act provides that the consideration, if any, and all other facts and circumstances affecting the charge-ability of any instrument with duty, or the amount of the duty with which it is chargeable, shall be fully and truly set forth therein. Section 64 provides for penalty for omission to Comply with the provisions of Section 27.

21. The learned Judges, therefore, observed that “by importing Ss. 27 and 64 of the Indian Stamp Act into the Madras Municipalities Act, for the purpose of levy and collection of the transfer duty, Sec. 116-B only insists upon the disclosure of all mate-Dial particulars and facts in the document under which a transfer is made so that the property duty (may be) levied and collected. It is also very significant to note that Section 116-B does not make other provisions of the Indian Stamp Act applicable to the levy and collection of transfer duty under the Madras District Municipalities Act while it makes Ss. 27 and 64 alone, applicable”.

22. All these observations of the Division Bench are applicable in toto to the case on hand even with regard to the surcharge required to be paid under Section 64 of the Gram Panchayat Act. Section 73(1)(a) and (b) of the Gram Panchayats Act is analogous to S. 116-A(a) and (b) of the Madras District Municipalities Act and Section 73(2)(a) and (b) of the Gram Panchayats Act is analogous to S. 116-B(a) and (b) of the Madras District Municipalities Act.

23. From Section 73(2)(a) and (b) it is clear that collection of levy of transfer duty is not contemplated along with duty and penalty for the application of Section 35 of the Stamp Act. There is nothing in the Gram Panchayats Act to show that Sec. 35 of the Indian Stamp Act should be read into its provisions. On the other hand, S. 73(2)(a) and (b) of the Gram Panchayats Act makes only Sections 27 and 64 of the Act applicable to the levy of transfer duty. If really the Legislature intends that the document cannot be received in evidence unless surcharge, on the duty imposed by the Stamp Act, on the instrument at the rate fixed by the Government not exceeding 5 per cent is paid, besides duty and penalty, as required by Section 35, nothing prevented the Legislature from stating so. In the absence of such a provision, it is illegal to insist upon the payment of levy of transfer duty. It is under these circumstances that I have no hesitation to hold that there is no bar for receiving a document in evidence even if surcharge on the duty is not paid under Section 73(1)(b) of the Gram Panchayats Act. Hence the view taken by the lower Court is unsustainable and it has to be set aside. I, therefore, set aside the order of the lower Court. The lower Court is directed to receive the document in evidence for the limited purpose for which it is tendered. The defendant is at liberty to raise all the contentions as to the genuineness of the document. Further, the other pleas taken by him in support of his case are not at all prejudiced by the receipt of the document in evidence.

24. In the result, the Civil Revision Petition is allowed, but without costs.

Petition allowed.