1. Aggrieved by the orders of the District Munsif of Kodada in I.A No. 125/96 in O.S No. 34/92 on an application filed by the petitioner under Sec. 38(2) of the Indian Stamp Act wherein the District Munsif refused to forward the document in question to the R.D.O for impounding and levied ten times penalty under the impression that this court directed him to do so while, disposing of CRP No. 3769/95 dated 28-12-1995, the present Revision Petition is filed.

2. The brief facts of the case are that the petitioner purchased an extent of Ac. 2-00 of land for a consideration of Rs. 64,000/- under an agreement of sale executed on five rupees stamp paper on 28-5-1989 from one Nalajala Tulisamma.

3. But the vendor without executing a regular sale deed filed O.S No. 877/89 on the file of the District Munsif Court, Kodada for a permanent injunction and failed to get a temporary injunction. In those circumstances, the vendor executed a registered sale deed in favour of the respondent on 26-1-1990 and on the basis of that sale deed the respondent filed the present suit O.S No. 34/92 seeking permanent injunction against the petitioner.

4. At the time of trial, on an objection taken by the respondent with regard to admissibility of the document by contending that the document being a regular sale deed the same is inadmissible in evidence as it was not properly stamped. The petitioner contended that it is only an agreement of sale but not a regular sale deed. By order dated 30-10-1995, the Trial Court held that it is a sale deed and directed the petitioner to pay stamp duty and penalty within ten days from the date of the order.

5. Questioning the said orders, the petitioner filed CRP No. 3769/95. After hearing the arguments on both sides, by order dt. 28-12-1995 I held that the document has to be treated as an agreement of sale and the evidentiary value of the document has to be considered by the Court below by treating the same as an agreement of sale. Having decided the nature of the document on the other question with regard to payment of stamp duty in the light of Sec. 47A in Schedule IA issued under the first proviso to Sec. 3 of the Indian Stamp Act in the end of the judgment the following observation is made:

“Further under Sec. 35 of the Indian Stamp Act, a document can be received by impounding required stamp duty plus penalty to the extent of ten times and the order of the Court below did not specify the penalty that was levied on the document. The Court below shall pass an order with regard to penalty levied on the document.”

6. After disposal of the CRP the petitioner filed I.A No. 125/96 under Sec. 38(2) of the Indian Stamp Act requesting the Court to send the document to the R.D.O for purpose of assessing and collecting stamp duty and penalty. The trial Court by its order dt: 4-5-1996 on mis-interpretation of my order came to the conclusion that this Court directed him to levy ten times penalty and if the document is sent to the Collector at this stage it amounts to violation of the orders of the High Court referred supra. Aggrieved by the said order the petitioner failed the present revision by contending that this Court never directed the Trial Court to levy penalty by ten times. Mr. Venkateshwarlu, learned counsel appearing for the respondent vehemently contested the claim of the petitioner by contending that having presented the document in the Court to receive it as an evidence and submitted the same to the jurisdiction of the Civil Court he cannot turn round and contend that the document should be sent to the Collector for impounding and levying penalty. Under Sec. 35(1)(a), the Court cannot impose a penalty less than ten times. Hence the Trial Court is perfectly justified in levying penalty by ten times over the deficit portion of the duty payable on the instrument. I am afraid I cannot agree with the contention raised by the respondent's counsel. First of all I would like to clarify my earlier order by stating that this Court never directed the Court below to levy penalty by ten times on the deficit stamp duty payable on the instrument. In fact, while observing that the document can be impounded by receiving the deficit stamp duty before admitting the same in evidence, a penalty can levied to an extent. Further a reading of the order makes it very clear that as the Court below failed to specify the penalty levied on the document this Court directed it to pass orders with regard to penalty leviable on the document. From this it is evident that nowhere in the order this Court directed the Trial Court to levy ten times penalty as held by the Court below.

7. Now adverting to the contentions of the learned counsel for the respondent, the whole scheme of the enactment makes it abundantly clear that the Collector is alone competent to decide the nature of the document and if he is of the opinion that the instrument is insufficiently stamped he shall direct the party to pay proper duty or to make up the deficit court fee and levy a penalty of Rs. 5/- or if he thinks fit he is empowered to levy a penalty not exceeding ten times of the amount of the proper duty or of the deficit portion thereof whether such amount exceeds or falls short of Rs. 5/-. This is evident from a reading of Secs. 31, 32, 39 and 40 of the Indian Stamp Act. Chapter IV of the Act deals with the instrument not duly stamped. Under Sec. 33 of the Act except an officer in-charge of the police station every person in-charge of public office who comes across with an instrument should first examine whether the instrument was properly stamped and whether the description given to the document is proper or not as required by law in force in India. Sec. 35 places an embargo on the admissibility of an instrument which is neither properly stamped nor insufficiently stamped, to be received in evidence or to be acted upon by the authority concerned unless such an instrument is duly stamped. Under Sub-Sec. (a) to Sec. 35 of the Act a power is given to the officer concerned to admit the instrument in evidence on payment of duty with which the instrument is chargeable or if the instrument is insufficiently stamped require the party to make up such duty together with a penalty of Rs. 15/- or by ten times when the amount of the proper duty or deficit thereof exceeds Rs. 15/- of a sum equal to ten times of such duty or portion. From this it is evident that the authority concerned is given power to admit the document by collecting proper stamp duty with a penalty of Rs. 15/- or ten times of the duty payable on the instrument or ten times of the deficit portion of the stamp duty and admit the same in evidence. The relevant sections for purpose of deciding the controversy in this revision are as follows:

Sec. 38. Instruments impounded how dealt with:—

(1) When the person impounding an instrument under Sec. 33 has, by law or consent of parties authority to receive evidence and admits such instrument in evidence upon payment of a penalty as provided by Sec. 35 or of duty as provided by Sec. 37, he shall send, to the Collector, an authenticated copy of such instrument together with a certificate in writing, stating the amount of duty and penalty levied in respect thereof, and shall send such amount to the Collector, or to such person as he may appoint in this behalf.

(2) In every other case, the person so impounding an instrument shall send it in original to the Collector.

Sec. 39 Collector's power to refund penalty paid under Sec. 38, Sub-sec. (1):—

(1) When a copy of an instrument is sent to the Collector under Sec. 38 Sub-sec. (1), he may if he thinks fit, refund any portion of the penalty in excess of five rupees, which has been paid in respect of such instrument.

(2) When such instrument has been impounded only because it has been written in contravention of Sec. 13 or Sec. 14, the Collector may refund the while penalty so paid.

Sec. 40. Collector's power to stamp instrument impounded:—

(1) When the Collector impounds any instrument under Sec. 33, or receives any instrument, sent to him under Sec. 38, Sub-sec. (2) not being an instrument chargeable with a duty of twenty paise only or a mortgage of a crop (Article 36(a) of Schedule 1-A) chargeable under clause (aa) or (bb) of Sec. 3 with a duty of forty paise or a bill of exchange or promissory note; he shall adopt the following procedure:—

(a) if he is of opinion that such instrument is duly stamped, or is not chargeable with duty, he shall certify by endorsement thereon that it is duly stamped, or that it is not so chargeable, as the case may be;

(b) If he is of opinion that such instrument is chargeable with duty and is not duly stamped, he shall require the payment of the proper duty or the amount required to make up the same, together with a penalty of five rupees; or, if he thinks fit, (an amount not exceeding) ten times the amount of the proper duty or of the deficient portion thereof, whether such amount exceeds or falls short of five rupees.

Provided that when such instrument has been impounded only because it has been written in contravention of Sec. 13 or Sec. 14, the Collector may if he thinks fit, remit the whole penalty prescribed by this section.

(2) Every certificate under Clause (a) of Sub-sec. (1) shall, for the purpose of this Act, be conclusive evidence of the matters stated therein.

(3) Where an instrument has been sent to the Collector under Sec. 38, Sub-sec. (2), the Collector shall, when he has dealt with it as provided by this section, return it to the impounding officer.

8. From this it is clear that the authority impounding the instrument under Sec. 35 of the Act has to send the instrument to the Collector an authenticated copy of the instrument with a certificate in writing stating the amount of duty and penalty levied in respect thereof and shall send the amount so collected to the Collector under Sec. 38 of the Act. In every other case the officer concerned after impounding shall send it in original to the Collector who is expected to take action as contemplated under Sec. 40 of the Act. Under Sec. 39 of the Act it is made clear that when once the instrument is received by the Collector under Sec. 38(1) of the Act if he thinks fit he may refund any portion of the penalty in excess of Rs. 5/- which has been paid in respect of such instrument. In fact under Sec. 39(2) if the instrument is impounded because it was written in contravention of Secs. 13 or 14, the Collector is empowered to refund the whole penalty so paid. From the language employed in Secs. 31, 32, 39 and 40 of the Act, the ultimate power to decide the nature of the instrument and the stamp duty payable on such instrument rests with the Collector but no other authority. Even though a person in-charge of public office is given the power to admit the document in evidence by collecting the insufficient stamp duty and also levies penalty under Sec. 35(a) of the Act. It is only a provisional order and the said authority has to send it to the Collector for final assessment of the value of the stamp duty payable on the instrument and pass either of the orders contemplated under Sec. 39 or Sec. 40 of the Act. The words used in Sec. 35 “any person having, by law or consent of parties,” authority to receive evidence” and the words used in Sec. 38 “when the person impounding any instrument in Sec. 33 has, by law or consent of the parties, authority to receive evidence or admits such instrument in evidence” gives an impression that he can impound the document himself with the consent of the parties but not otherwise, before admitting the same in evidence or he can forward the same to the Collector who is the ultimate authority under the Act to decide the nature of the document and duty to paid thereon with or without penalty. I am fortified in my view in the light of the language used in Sec. 38(2) of the Act which says in every other case the person so impounding an instrument shall send it in original to the Collector. Though under Sec. 35(a) a power is given to the person in-charge of public office who is given authority to admit the document in evidence by collecting the proper stamp duty and also by levying penalty for purpose of admitting the instrument in evidence. If the parties have not consented for deciding the nature of the instrument and the stamp duty payable thereon and the penalty to be levied by the person in-charge holding public office he shall simply forward the same to the Collector for impounding the document.

9. The learned counsel for the respondent further contended that the question of collecting proper duty and levying penalty by the Court comes into play only after the document is admitted by the Court and the petitioner having produced the document before the Court seeking its admission he cannot ask the Court to send the same to the Collector under Sec. 38(2) of the Act. In support of his contention he cited a judgment of this Court in B.V.R Reddy v. The Adoni Co-operative Central Stores Ltd., reported in AIR 1975 AP 96. I have gone through the said judgment and the same is more in favour of the petitioner than that of the respondent. The question of admitting the document in evidence will arise only after the same is impounded when it was found to be not properly stamped by collecting the duty payable on the instrument along with the penalty contemplated under law. In this case the stage of admitting the document has not yet arisen and it is still at the stage of impounding the same by collecting proper stamp duty with penalty. Unless that process is completed the same cannot be admitted in evidence. I am fortified in my view by the observation of this Court in the above judgment. A reading of Sec. 38 says that if the party who filed the document wants it to be admitted in evidence then only the Court shall collect the stamp duty and penalty and then admit the instrument in evidence. But if the party instead of requiring the document to be admitted in evidence merely wants the Court to send it to the Collector to be dealt with under Sec. 40 the Court has no option but send it to the Collector as provided in Sec. 38(2). The Court cannot compel the party to pay duty and penalty and have it admitted in evidence.

10. For all the above reasons, I hold that the order of the Court below cannot be sustained in law and accordingly the same is set aside. Consequently a direction is given to the Trial Court to send the document to the Collector for fixing proper stamp duty payable on the document and to collect the deficit stamp duty along with penalty by using its discretion vested in it under Sec. 40 of the Act.

11. The C.R.P is accordingly allowed.

12. No costs.