1981 (1) TMI 293 - HC - Indian Laws

Court allows Civil Revision Petition to admit document for limited purpose

The court allowed the Civil Revision Petition, setting aside the lower court's order. It directed the lower court to admit the document for the limited ... Admissibility of an instrument on payment of stamp duty and penalty under the proviso to Section 35 of the Stamp Act - admissibility of an unregistered document for collateral purpose under Section 49 of the Registration Act - proof of possession as a collateral purpose - registration requirement for instruments conveying immovable property - levy of transfer duty/surcharge under the Gram Panchayat Act and its non-application to the proviso to Section 35 of the Stamp ActAdmissibility of an instrument on payment of stamp duty and penalty under the proviso to Section 35 of the Stamp Act - An unstamped or insufficiently stamped instrument can be received in evidence if it satisfies the requirements of the proviso to Section 35 of the Stamp Act by payment of duty and penalty. - HELD THAT: - Section 35 renders unstamped or insufficiently stamped instruments inadmissible, but Proviso (A) to Section 35 permits reception in evidence upon payment of the required stamp duty and penalty. The Court observed that the bar under Section 35 is absolute unless the proviso's conditions are complied with; once the R.D.O. impounded the document, levied duty and penalty and appended the requisite certificate, the requirement of Section 35 stood satisfied and the instrument became admissible. [Paras 5, 8, 9]The document satisfied the requirements of the proviso to Section 35 and may be received in evidence.Admissibility of an unregistered document for collateral purpose under Section 49 of the Registration Act - proof of possession as a collateral purpose - registration requirement for instruments conveying immovable property - An unregistered exchange deed which requires registration to affect title may nevertheless be received in evidence for a collateral purpose (proof of possession), provided the instrument is duly stamped or complies with Section 35. - HELD THAT: - While exchange deeds conveying title in immovable property require registration and cannot be admitted to prove title if unregistered, there is no prohibition under Section 49 of the Registration Act against receiving an unregistered document for collateral purposes. The Court accepted that proof of possession is a collateral purpose. However, admissibility for collateral purpose remains subject to Stamp Act compliance; an unregistered document is admissible for collateral purposes only if it is duly stamped or the defect is cured under Section 35. [Paras 7, 8, 9, 16, 17]The exchange deed, though unregistered, is admissible in evidence for the limited collateral purpose of proving possession, having complied with the requirements of Section 35.Levy of transfer duty/surcharge under the Gram Panchayat Act and its non-application to the proviso to Section 35 of the Stamp Act - Non-payment of the surcharge/transfer duty leviable under the Gram Panchayat Act does not render a document inadmissible under Section 35 of the Stamp Act and cannot be insisted upon as a pre-condition to reception of evidence in the absence of express statutory provision. - HELD THAT: - The Gram Panchayat Act prescribes a surcharge on transfers of property, and its provisions make Sections 27 and 64 of the Stamp Act applicable for levy and collection; however, the Gram Panchayat Act does not incorporate Section 35 or its proviso. The Court followed reasoning in analogous decisions under municipal Acts that imported only specified Stamp Act provisions for collection of transfer duty and did not make the penal bar of Section 35 applicable to surcharge. Consequently, insisting on payment of surcharge as a condition precedent to reception of the document was held to be unwarranted in the absence of clear legislative direction. [Paras 3, 19, 21, 22, 23]The lower Court was not justified in refusing admission of the document on the sole ground of non-payment of surcharge under the Gram Panchayat Act.Final Conclusion: Revision allowed; the order of the Principal District Munsif refusing to admit the exchange deed is set aside and the document is to be received in evidence for the limited purpose for which it was tendered (proof of possession). The defendant remains at liberty to challenge the genuineness of the document and raise other contentions; petition allowed without costs. Issues Involved:1. Admissibility of an insufficiently stamped and unregistered document.2. Compliance with the Gram Panchayat Act regarding surcharge.3. Use of an unregistered document for collateral purposes.4. Impact of non-payment of surcharge on admissibility.Issue-wise Detailed Analysis:1. Admissibility of an Insufficiently Stamped and Unregistered Document:The plaintiff sought to admit an exchange deed dated 14-6-1958 to prove possession of the disputed property. The Principal District Munsif refused to admit the document due to insufficient stamping and lack of registration. The court emphasized that under Section 35 of the Stamp Act, an instrument chargeable with duty must be stamped to be admissible in evidence. The proviso to Section 35 allows a document to be received in evidence upon payment of stamp duty and penalty if initially unstamped or insufficiently stamped. The court noted that the document in question had been impounded by the R.D.O., who imposed duty and penalty, and a certificate was appended confirming compliance with Section 35. Thus, the document satisfied the requirements of Section 35 and could be admitted for collateral purposes.2. Compliance with the Gram Panchayat Act Regarding Surcharge:The lower court refused to admit the document because the surcharge required by Sections 69 and 73 of the Gram Panchayat Act was not paid. It was undisputed that transactions involving immovable property under village panchayat jurisdiction require a 5% surcharge on the property's value. The court found that the R.D.O. did not collect this surcharge when impounding the document. The court held that the non-payment of surcharge under the Gram Panchayat Act does not fall under the provisions of Section 35 of the Stamp Act, which governs the admissibility of documents based on stamp duty and penalty.3. Use of an Unregistered Document for Collateral Purposes:The plaintiff argued that the document was tendered for collateral purposes, specifically to prove possession rather than title. The court acknowledged that under Section 49 of the Registration Act, an unregistered document can be received in evidence for collateral purposes if it complies with Section 35 of the Stamp Act. The court cited precedent where unregistered documents were admitted for collateral purposes, such as proving possession, in conformity with the proviso added by the Amendment Act of 1929 to Section 49 of the Registration Act.4. Impact of Non-payment of Surcharge on Admissibility:The court determined that the lower court's refusal to admit the document based on non-payment of surcharge was unjustified. The court noted that the Gram Panchayat Act and its relevant rules do not incorporate Section 35 of the Stamp Act concerning the duty on property transfers. The court referred to a Division Bench decision in Manavala Naicker v. K. R. Gopala, which dealt with a similar issue under the Madras District Municipalities Act. The court concluded that the legislature did not intend for the surcharge under the Gram Panchayat Act to affect the admissibility of documents under Section 35 of the Stamp Act. Consequently, the document could be admitted in evidence for the limited purpose for which it was tendered, despite the non-payment of surcharge.Conclusion:The court set aside the lower court's order and directed it to receive the document in evidence for the limited purpose of proving possession. The defendant retained the right to challenge the document's genuineness and raise other contentions. The Civil Revision Petition was allowed without costs.