TaxTMI 
TaxTMI 
2009 (4) TMI 910
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.... the State of Uttar Pradesh. All the three appellants have since retired from the service of the LIC. 1. It has been stated that various branch offices of the LIC in the course of their business have to purchase large quantity of adhesive stamps for affixation on their policies and for issuing receipts etc. While the stamps used for receipts are the normal revenue stamps, the stamps used in respect of the policies issued by LIC are special 'insurance stamps' which are affixed at the rates fixed under the Stamps Act. 2. For the purposes of execution of insurance policies by the LIC, under the law at the relevant point of time, on a sum of Rs. 1,000/- the rate of 'stamp duty' is fixed at 40 paise on each policy. In order to execute the insurance policies promptly, from time to time, heavy purchases of insurance stamps are stated to be done by the LIC. The LIC used to purchase the same from the Treasury in any district as well as from authorised licensed stamp vendors. 3. On 30.07.2004, a First Information Report (in short 'FIR') bearing Crime No. 271/04 was lodged against the appellants at Police Station Bhelupura, Tehsil Sadar, District Varanasi for the offences punishable under....
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....r from a particular State. 7. On the other hand, it is the case of the respondent that if the stamps are permitted to be purchased from any other State other than the State in which the instrument is to be first executed, it shall not only cause huge loss of revenue to the State in which the instrument is executed but would also render the rules framed by the State Government for regulation of sale and supply of the stamps and the administrative machinery established therein as futile and meaningless. It is also the case that it would further prevent the State Government from examining as to whether the stamps are fake or genuine. 8. The law which governs the rate of payment of 'stamp duty' in respect of policies of insurance and certain other transactions has been dealt under Entry 91 of List 1(Union List) of 7th Schedule to the Constitution of India (in short 'Constitution'). It reads as follows: "91. Rates of stamp duty in respect of bills of exchange, cheques, promissory notes, bills of lading, letters of credit, policies of insurance, transfer of shares, debentures, proxies and receipts." 1. Our attention has been drawn towards Entry 63 of List II (State List) of 7thSchedu....
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.... the Consolidated Fund of India, but shall be assigned to that State" 1. Now, it would be useful at this stage to discuss relevant provisions of the Stamp Act. "27. Facts affecting duty to be set forth in instrument - (1) The consideration (if any) and all other facts and circumstances affecting the chargeability of any instrument with duty, or the amount of the duty with which it is chargeable, shall be fully and truly set forth therein. 64. Penalty for omission to comply with provisions of section 27 - Any person who, with intent to defraud the Government, - (a) executes any instrument in which all the facts and circumstances required by section 27 to be set forth in such instrument are not fully and truly set forth ; or (b) being employed or concerned in or about the preparation of any instrument, neglects or omits fully and truly to set forth therein all such facts and circumstances ; or (c) does any other act calculated to deprive the Government of any duty or penalty under this Act, shall be punishable with fine which may extend to five thousand rupees. 69. Penalty for breach of rule relating to sale of stamps and for unauthorized sale- (a) Any person appointed to se....
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....me as the State Government does not prohibit their use." (emphasis underlined) 1. Further, Rule 115-A of the Stamps Rules provides for the mode of sale of such stamps. It reads as follows: "Rule 115-A. Stamps which are the property of the central Government and which are required to be sold to the public through post offices, e.g., Central Excise, Revenue stamps, Defense/or National savings stamps, shall be obtained by post offices from local and branches and depots and sold to the public in the same manner as ordinary postage stamps. Tobacco Excise duty labels and insurance agent license fee stamps shall be sold to the public of local and branch depots at which they are stocked." 1. Placing reliance on the above-mentioned rules, it was contended on behalf of the State of U.P. that the acts of the appellants of purchasing insurance stamps from outside the State was contrary to above-mentioned rules. However, one cannot lose sight of the fact that the Stamp Act being a central legislation is covered under List I (Union List) of the 7th Schedule of the Constitution. Rule making power has been given to the States under Section 74 and 75 of the Stamp Act which deals with 'power to ....
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.... 741, para 5) "(1) Where the allegations made in the complaint or the statements of the witnesses recorded in support of the same taken at their face value make out absolutely no case against the accused or the complaint does not disclose the essential ingredients of an offence which is alleged against the accused; (2) Where the allegations made in the complaint are patently absurd and inherently improbable so that no prudent person can ever reach a conclusion that there is sufficient ground for proceeding against the accused; (3) Where the discretion exercised by the Magistrate in issuing process is capricious and arbitrary having been based either on no evidence or on materials which are wholly irrelevant or inadmissible; and (4) Where the complaint suffers from fundamental legal defects, such as, want of sanction, or absence of a complaint by legally competent authority and the like." 1. In State of Haryana v. Bhajan Lal, 1992 Supp. (1) SCC 335, a question came up for consideration as to whether quashing of the FIR filed against the respondent Bhajan Lal for the offences under Sections 161 and 165 IPC and Section 5(2) of the Prevention of Corruption Act was proper and....
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.... are so absurd and inherently improbable on the basis of which no prudent person can ever reach a just conclusion that there is sufficient ground for proceeding against the accused. (6) Where there is an express legal bar engrafted in any of the provisions of the Code or the concerned Act (under which a criminal proceeding is instituted) to the institution and continuance of the proceedings and/or where there is a specific provision in the Code or the concerned Act, providing efficacious redress for the grievance of the aggrieved party. (7) Where a criminal proceeding is manifestly attended with mala fide and/or where the proceeding is maliciously instituted with an ulterior motive for wreaking vengeance on the accused and with a view to spite him due to private and personal grudge." 1. This Court in the case of Indian Oil Corpn. v. NEPC India Ltd., (2006) 6 SCC 736, at page 747 has observed as under : "12. The principles relating to exercise of jurisdiction under Section 482 of the Code of Criminal Procedure to quash complaints and criminal proceedings have been stated and reiterated by this Court in several decisions. To mention a few-Madhavrao Jiwajirao Scindia v. Sambhajira....
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....ercial transaction or breach of contract, for which a civil remedy is available or has been availed, is not by itself a ground to quash the criminal proceedings. The test is whether the allegations in the complaint disclose a criminal offence or not." 1. This Court has recently in R. Kalyani v. Janak C. Mehta and Others, (2009) 1 SCC 516, observed as follows: "15. Propositions of law which emerge from the said decisions are: (1) The High Court ordinarily would not exercise its inherent jurisdiction to quash a criminal proceeding and, in particular, a First Information Report unless the allegations contained therein, even if given face value and taken to be correct in their entirety, disclosed no cognizable offence. (2) For the said purpose, the Court, save and except in very exceptional circumstances, would not look to any document relied upon by the defence. (3) Such a power should be exercised very sparingly. If the allegations made in the FIR disclose commission of an offence, the court shall not go beyond the same and pass an order in favour of the accused to hold absence of any mens rea or actus reus. (4) If the allegation discloses a civil dispute, the same by its....