South Eastern Coalfields Ltd. v. State Of M.P And Others

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In this writ petition petitioner challenges the action of the Collector, Shahdol, legality, validity and enforceability of the illegal demands for additional stamp duty on the three of Mining Leases duly registered in the year 1978 and 1979 demanding deficit stamp duty as per Annexures P. 1, P. 2 and P. 3 issued on 23-8-1986.

2. On 26-8-1978 an Instrument of a Mining Lease was executed by and between the Governor of M.P. acting through the Collector, Shahdol on the one part and the Western Coalfields Ltd. acting through its General Manager, Sohagpur Area, Dhanpuri on the other part. In one of the Instrument lease is for a period of 30 years and it relates to an area of 454.62 acres of lands spread over in the villages of Sukha, Pali and Dhurai in Sohagpur Tehsil of Shahdol District. An application was filed on 1-5-1973 for grant of Mining Lease, the average annual production of the mineral of coal from the said area was shown as 1,45,333 M.T. but in the Instrument of Lease the average annual production of mineral of coal was shown as 35,000 M.T. On the basis of the figure of 35,000 M.T., stamp duty of Rs. 550,400-00 was paid and thereafter the Collector, Shahdol endorsed a certificate certifying that this document is stamped on Rs. 50,400/- as such is duly stamped.

3. Another application was filed for grant of Mining Lease on 29-3-1975, the average annual production of mineral of coal from the area was shown as 59,333 M.T. However, in the instrument of Lease the average annual production was shown as 30,000 M.T. On the basis of 30,000 M.T. of average annual production, a stamp duty of Rs. 42,000/- was paid vide challan No. 27/1, dated 2-2-1979 credited in the State Bank of India, Shahdol and on that very day, the Collector of Stamps, Shahdol, District Shahdol, endorsed a certificate in exercise of power under section 42 of Stamp Act that this lease deed has been duly stamped on payment of stamp duty of Rs. 42,000/- credited by challan No. 27/1, dated 2-2-1979 in the State Bank of India, Shahdol by the Western Coalfields Ltd. Sohagpur Area. After the certificate dated 21-2-1979, the Instrument of Lease was presented on 21-2-1979 for registration before the Sub-Registrar, Shahdol, and was duly registered and after registration the Instrument of Lease was duly delivered over to the Western Coalfields Ltd.

4. Collector opined with respect to stamp duty payable under the Indian Stamp Act, 1899. Collector made endorsement on the all three Instrument Annexure P. 18, P. 19 and P. 20 way back in the year 1979 as to the amount of stamp duty payable on each of the instrument. Accordingly the stamp duty was paid and the lease deeds were registered. On 23-8-1986 the then General Manager, Sohagpur Area, Dhanpuri was served with three letters Annexures P. 1, P. 2 and P. 3 which were sent by Collector, Shahdol. In these three letters demand for additional stamp duty was raised and additional registration charges were also demanded. Petitioner further avers that upto 20-3-1986. Collector, Shahdol has not initiated any proceeding under the M. P. Prevention of Under Valuation of Instruments Rules, 1975, (hereinafter referred to as 'the Rules'). Office of Collector, Shahdol issued the notices Annexures P. 1, P. 2 and P. 3. Petitioner submitted reply Annexures P. 4 and P. 5. Petitioner submitted that the demands raised were without authority of law. The office of Collector, District Shahdol sent letters Annexures P. 10, P. 11, P. 12. Thereafter the District Registrar, Shahdol, sent letter to the General manager, South Eastern Coalfields Ltd. Sohagpur Area demanding a total sum of Rs. 499705-00. Petitioner submits that demands have not been raised under the provisions of the Rules. The demands made on account of alleged stamp duty have been raised after expiry of long period from the date of registration. Petitioner submits that the protection of section 47-A is not available as it was incorporated in the year 1975 by the State Amendment. The same is prospective and the five years period has been prescribed for re-opening the question of stamp duty paid on an instrument.

5. The respondents in the return contend that demand of Rs. 4,99,705.00 is valid. There was concealment of correct facts. As such the demand is proper. Petitioner succeeded in obtaining certificates on instruments Annexures P. 18, 19 and 20 from Collector of Stamps by fraud and misrepresentation. Thus, it was open to the Collector in the circumstances of the case to invoke power under section 33 of the Act and to demand the stamp duty.

6. Shri A. N. Choubey, learned counsel for the petitioner, submits that once the Collector has given opinion on the documents Annexures P. 18, P. 19 and P. 20 and has made endorsement that proper stamp duty has been paid that is in the facts of the case endorsement made/opinion given under section 31 of the Act. Thus, it was not open to Collector of Stamp subsequently to raise the demand as per section 33 of the Act. Section 47-A is not applicable.

7. Shri Sanjay K. Agrawal, learned counsel for the respondents, submits that on the endorsement made on the back of document Annexures P. 18, P. 19 and P. 20 though the Collector of Stamp has opined that amount of stamp duty paid is proper but as there was misrepresentation of facts, it was open to the Collector of Stamp to re-open the proceedings and to make the demands under section 33 of the Stamp Act.

8. It is not in dispute that Collector of Stamp has opined as to the amount of stamp duty payable on each of the instruments, on the document Annexure P. 18 Collector certified that the document is stamped on Rs. 50,400/-, as such has been duly stamped. On the back of document Annexures P. 19 and P. 20 it has been mentioned that these lease deeds are certified to be duly stamped under Section 42 of the Stamp Act. On payment of stamp duty of Rs. 42,000/- and Rs. 28,000/- respectively, credited by challan No. 27/4 and 27/1 dated 2-2-1979 in the State Bank of India, Shahdol by the Western Coalfields Ltd. Sohagpur Area, Dhanpiiri.

9. Section 42 of the Stamp Act is attracted when the duty and penalty (if any) leviable in respect of any instrument have been paid as per section 35, section 40 or section 41, the person admitting such instrument in evidence or the Collector, as the case may be, shall certify by endorsement thereon that the proper duty or, as the case may be, the proper duty and penalty have been levied in respect thereof, and the name and residence of the person paying them! Every instrument so endorsed shall thereupon be admissible in evidence, and may be registered and acted upon and authenticated as if it had been duly stamped, and shall be delivered on his application in this behalf to the person from whose possession it came into the hands of the officer impounding it, or as such person may direct. Section 35 provides that no instrument chargeable with duty shall be admitted in evidence for any purpose by any person having by law or consent of parties authority 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. Section 40 deals with the power of Collector of Stamps to impound. When the Collector impounds any instrument under section 33, or receives any instrument sent to him under section 38(2) not being an instrument chargeable with a duty not exceeding ten naye paise only or a bill of exchange or promissory note. Section 41 deals with instruments unduly stamped by accident.

10. Section 31 deals with adjudication by Collector of Stamps as to payment of proper stamp duty. When any instrument whether executed or not and whether previously stamped or not, is brought to the Collector, and the person bringing it applies to have the opinion of that officer as to the duty (if any) with which it is chargeable, and pays a fee of such amount as the Collector may in each case direct, the Collector shall determine the duty (if any) with which, in his judgment, the instrument is chargeable. Section 32 provides for certificate by Collector. When an instrument has been brought to the Collector under section 31 is, in his opinion, one of a description chargeable with duty and the Collector determines that it has been duly stamped or the duty determined by the Collector under section 31 has been paid or such a sum as, with the duty already paid in respect of the instrument, is equal to the duty so determined, the Collector shall certify by endorsement on such an instrument that the full duty (stating the amount) with which it is chargeable has been paid.

11. Their Lordships of the Apex Court in Government of Uttar Pradesh and others vs. Raja Mohammad Amir Ahmad Khan, AIR 1961 SC 787 held that where a person is simply seeking the opinion of the Collector as to the proper duty in regard to an instrument, he approaches him under section 31. The Apex Court held that:

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"Chapter IV of the Act which deals with instruments not duly stamped and which contains sections 33 to 48, provides for impounding of documents, how the impounded documents are to be dealt with, Collector's powers to stamp instruments impounded and how the duties and penalties are to be recovered. It would be an extra-ordinary position if a person seeking the advice of the Collector and not wanting to rely upon an instrument as evidence of any fact to be proved nor wanting to do any further act in regard to the instrument so as to effectuate its operation should also be liable to the penalties which unstamped instruments used as above might involve. The scheme of the Act shows that where a person is simply seeking the opinion of the Collector as to the proper duty in regard to an instrument, he approaches him under section 31. If it is not properly stamped and the person executing the document wants to proceed with effectuating the document or using it for the purposes of evidence, he is to make up the duty and under section 32 the Collector will then make an endorsement and the instrument will be treated as if it was duly stamped from the very beginning. But if he does not want to proceed any further than seeking the determination of the duty payable then no consequence will follow and an executed document is in the same position as an instrument which is unexecuted and unstamped and after the determination of the duty the Collector becomes functus officio and the provisions of section 33 have no application. The provisions of that section are a subsequent stage when something more than mere asking of the opinion of the Collector is to be done."

12. In ILR (1902) 25 Madras 751 (F.B.) it was held that effect is to make determination by Collector of Stamp under section 31 duly endorsed under this section final in respect of that instrument. Similar view has been taken in Khub Chand and others, AIR 1918 Allahabad 181.

13. Section 47-A was inserted by the State Amendment with effect from 15-5-1975 and it has been clearly provided under sub-section (3) of section 47-A that the Collector may suo motu within five years from the date of registration of such instrument, not already referred to him under sub-section (1), call for and examine the instrument for the purpose of satisfying himself as to the correctness of the market value of the property which is the subject matter of such instrument and the duty payable thereon and if after such examination, he has reason to believe that the market value of such property has not been truly set forth in the instrument, he may determine the market value of such property and the duty as aforesaid in accordance with the procedure provided for in sub-section (2) of section 47-A.

14. In my opinion, under section 47-A the action could be taken only with respect to the documents registered after the amendment was inserted and that too within the period of five years. Both situations are not available in the instant case. Collector has opined as to the amount of stamp duty payable under section 31. Section 47-A incorporated by State amendment in the year 1975 reads thus :

"47-A. Instruments undervalued how to be dealt with. - - (1) If the registering officer appointed under the Registration Act, 1908 while registering any instrument has reason to believe that the market value of the property which is the subject matter of such instrument has not been truly set forth in the instrument, he may, after registering such instrument, refer the same to the Collector for determination of market value of such property and the proper duty payable thereon.

(2) On receipt of reference under sub-section (1), the Collector shall, after giving the parties a reasonable opportunity of being heard and after holding an enquiry in such manner, as may be prescribed determine the market value of the property which is the subject matter of such instrument and the duty as aforesaid. The difference, if any, in the amount of duty, shall be payable by the person liable to pay the duty.

(3) The Collector may suo motu within five years from the date of registration of any instrument not already referred to him under sub­section (1), call for and examine the instrument for the purpose of satisfying himself as to the correctness of the market value of the property which is the subject matter of any such instrument and the duty payable thereon and if after such examination, he has reason to believe that the market value of such property has not been truly set forth in the instrument, he may determine the market value of such property and the duty as aforesaid in accordance with the procedure provided for in sub­section (2). The difference, if any, in the amount of duty, shall be payable by the person liable to pay the duty; Provided that nothing in this sub-section shall apply to any instrument registered prior to the date of the commencement of the Indian Stamp (Madhya Pradesh Amendment) Act, 1975.

(4) Any aggrieved by an order of the Collector under sub-section (2) or sub-section (3) may, in the prescribed manner appeal against such order to the Commissioner who may either himself decide the appeal or transfer it to the Additional Commissioner of the Division.

(5) Any person aggrieved by an order passed in appeal under sub­section (4) may in the prescribed manner appeal against such order to the Chief Controlling Revenue Authority, Madhya Pradesh.

(6) Every first and second appeal shall be filed within thirty days from the date of the communication of the order against which the appeal is filed, along with a certified copy of the order to which objection is made and shall be presented and verified in such manner as may be prescribed :

Provided that in computing the period aforesaid, the time requisite for obtaining a copy of the order appealed against shall be excluded.

(7) The appellate authority shall follow such procedure as may be prescribed:

Provided that no order shall be passed without affording opportunity of being heard to the appellant.

(8) The order passed in second appeal or where second appeal is preferred the order passed in first appeal shall be final and subject to orders passed in first or second appeal, as the case may be, the order passed by the Collector under sub-section (2) or sub-section (3) shall be final and shall not be called into question in any Civil Court or before any other authority whatsoever.

15. Counsel for the respondents has tried to justify the order by taking shelter of section 33 of the Stamp Act. Section 33(1) reads as under :

33(1) Examination and impounding of instruments. - Every person having 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."

16. Bare reading of the above quoted provision section 33(1) makes it clear that three conditions must be fulfilled (1) the authority empowered to impound a document must be the authority specified therein; (2) the instrument in question is not stamped according to the Act; and (3) the instrument is produced or comes in the performance of his functions. Section does not empower authorities to direct party to produce document for purpose of ascertaining whether it was properly stamped or not.

17. In Mohd. Amir Ahmed Khan vs. Deputy Commissioner and others, AIR 1956 Allahabad 453, Full Bench held that the phrase "produced or comes in the performance of his function" as used in this section means production of the instrument concerned in evidence or for the purpose of placing reliance upon it by one party or the other. The word 'produce' was considered in Lola Uttam Chand vs. Perma Nand and others, AIR 1942 Lahore 265 and it was held that mere production of a document in compliance with an illegal demand will not confer authority to impound. Word 'produce' means produced in ordinary course of law and not produced under compulsion. To attract section 33 there has to be production of document as contemplated by section 33. This is not a case here. Document has not been produced before any authority as mentioned under section 33.

18. A Full Bench of this Court in Komal Chand and another vs. State of M.P.', 1965 MPLJ 606 - AIR 1966 M.P. 20 considered expression "in the performance of functions" and held that an instrument under section 33 can be impounded only when it is produced before the registering authorities in the performance of their functions. Relying upon the said decision in Komal Chand another Full Bench of this Court in Jainabai vs. State of M.P., 1980 MPLJ 795 = 1981 JZJ 40 held that:

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"The Sub-Registrar before whom a document is produced for registration is a person in-charge of a public office within the meaning of section 33(1), Stamp Act. He has therefore power to impound the document if in his opinion it is not duly stamped and to send the same in original to the Collector-of Stamps under section 38(2) before registering the same because section 35 provides that no document will be registered unless the same is duly stamped. The Stamp Act does not empower the Sub Registrar to impound a document after the same is registered even if it is not duly stamped. After registration, the Sub Registrar becomes functus officio and has no power to impound the document. The Sub Registrar cannot therefore send a document after registration to the Collector of Stamps and the latter has no jurisdiction to hold that the document was not duly stamped and to call upon the executant to make good the deficiency and impose fine."

19. In Vimalchand vs. State of M.P. and others, 1979 MPLJ 734 (FB) = 1979 JLJ 712 a Full Bench.of this Court followed decision of Komal Chand (supra) and held that the Act does not empower the Sub Registrar to impound a document after the same is registered by him even if it is not duly stamped.

20. It is clear in the instant case that document has not been produced before any authority nor has come in the performance of his function before the Collector of Stamps. Thus, section 33 has no application. It is a case where document has been undervalued and for that State Legislature has made State amendment by inserting section 47-A with effect from 15-5-1975. Sub-section (3) of section 47 -A has provided the limitation of five years from the date of registration of any instrument. Proviso to sub-section (3) of section 47-A put a bar to reopen the stamp duty paid on instrument registered prior to the date of commencement of amendment act of state of stamps act. The date of commencement is 15-5-1975. Thus, Collector of Stamp has no jurisdiction to exercise the power under section 47-A. Thus, the demand raised is absolutely illegal and without jurisdiction.

21. Resultantly, the writ petition is allowed. Annexures P. 1, P. 2, P. 3 and P. 13 are quashed. In the facts and circumstances of the case, no order as to costs.

Writ petition allowed.