TaxTMI 
TaxTMI 
2016 (3) TMI 1144
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....n and declare that the Maharashtra Tax Laws(Levy and Amendment)Act, 2013 insofar as it enacts the Stamp Act Amendment (Exhibit A) is ultra vires and void on account of being viiolative of Article 14 of the Constitution and being beyond the legislative competence and power of the Stte Legislature and also for being vague, arbitrary and irrational and be pleased to quash the same. (b) that this Hon'ble Court be pleased to issue a writ of Certiorari or a writ in the nature of Certiorari or any other appropriate writ, order and/or direction to declare that the Maharashtra Act No. X of 2012 insofar as it enacts Registration Act Amendments (Exhibit B) is ultra vires and void on account of not only being repugnant to sub-section (f) of Section 58 of the Transfer of Property Act but also being vague, arbitrary and irrational and be pleased to quash the same. (c) that this Hon'ble Court be pleased to issue a writ of Certiorari or a writ in the nature of Certiorari or any other appropriate writ, order and/or direction to quash and set aside the Circular dated August 8, 2013 (Exhibit C) issued by Respondent No.2 on account of the same being ultra vires, void and invalid and be pleas....
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....ated by the Reserve Bank of India (RBI) and accordingly the RBI is the sole regulator of the banking business and activities of banks in India. Further, sub-section (2) of section 6 of the Banking Regulation Act specifically provides that a banking company shall not carry on any activities other than those stipulated in sub-section (1) of section 6 of the Banking Regulation Act. 9. To the utter shock and surprise of the petitioners, the respondent No.2 issued the Circular notifying the petitioners of the Stamp Act Amendment which makes all the banks and financial institutions liable for payment of proper stamp duty on instruments specified under section 30(a) to (g) of the Stamp Act, creating a right in favour of such banks and financial institutions. 10. In view of the aforesaid arbitrary and unreasonable enactment, not only will all the banks and financial institutions be liable to make payment of proper stamp duty on instruments executed on or after 1st May, 2013, but in terms of sub-section (2) of the impugned section 30A, also verify that too by 30th September, 2013, whether adequate stamp duty has been paid on all instruments executed prior to the aforesaid date and ....
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....ng financial undertaking, liable to ensure that proper stamp duty is paid. 14. Without prejudice to the contention as regards the constitutional validity of the Stamp Act Amendments, the petitioners state that it is ex facie unreasonable, irrational and arbitrary for respondents Nos.1, 2 and 3 to expect that banks and financial institutions and their officers should undertake the aforesaid cumbersome, time consuming and voluminous exercise at every stage and every year, especially given that the representatives of the banks cannot be expected to be aware of or know the appropriate stamp duty payable on any instrument. In any event there is also no guidance awarded for such officer to check or cross verify his/her interpretation of relevant section of the Maharashtra Stamp Act. That apart the arbitrariness and irrationality of the said section is evident in view of the fact that the same does not provide for any consequence or mechanism in the event the adjudication by such officer of duty payable is incorrect or improper. 15. The petitioners further state that the effect of section 10D is that the officer so nominated assumes the role of an adjudicating authority as if such offic....
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....ing intimated of a mortgage being created by way of deposit of title deeds, causing, under duress, every such transaction of mortgage by deposit of title deeds to be executed through a written agreement, which entitles them to mandatorily require the agreement to be stamped and registered. In view of the above, it is submitted that the section 89B amendments that are, in any event, void and unconstitutional on account of being repugnant to sub-section (f) of section 58 of the Transfer of Property Act, are being abused and misused by the Registration Authority. Accordingly, it is submitted that the section 89B amendments ought to be declared ultra vires and invalid on this ground as well. 18. It is pertinent to note that while section 89B amendment only stipulates that if the notice of intimation is not filed within 30 days of creation of a mortgage by way of deposit of title deeds, any further transaction undertaken by the mortgagor, where the mortgaged property is the subject matter, shall be void. On the other hand, the circular goes beyond the scope of section 89B amendment and stipulates that the failure by the mortgagor to file the notice of intimation within 30 days of creat....
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....duty has been paid on the documents of which registration is not compulsory to the State Government through Government Receipt Accounting System in respect of such instruments as may be specified in the Notification passing through their system or related to their functioning. Our attention has been invited to the sub-sections of section 10-D and even this provision is under challenge. 22. After the petition was filed and copies thereof were served, an affidavit-in-reply has been filed on behalf of the State in which these amendments are justified. 23. In paragraph 2 to 7 and 17 of the affidavit, this is what is stated : 23(a) At the outset, the petition is misconceived, does not disclose any cause of action against the Respondent Nos.1 to 3. I say that by this petition, the petitioners are challenging the validity of section 30A of the Maharashtra Stamp Act, 2013, which is annexed as Exhibit A at page 38 to the petition on the ground that it is violative of Article 14 of the Constitution of India since it is discriminatory in nature as it differentiates only bank and financial institutions from other commercial institutions for imposition of obligation and penalties in t....
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.... the amended section 30A of the Maharashtra Stamp Act, further duty is cast on the banks and financial institutions to impound on or before 30th September, 2013 such instrument which are executed prior to the commencement of the date of Maharashtra Tax Law (Levy and Amendment) Act 2013 (Maharashtra Act VIII of 2013) in which proper stamp duty is not paid and to forward it to the Collector for recovery and on failure to do so, the concerned banks and financial institutions shall be liable to pay penalty equivalent to stamp duty payable on instrument. The said amendment has come into force with effect from 1st May, 2013. I say that obligation on financial institutions and banks to impound document under amended Section 30A(2) of the Maharashtra Stamp Act is incidental to levy of stamp duty. The aforesaid obligation under section 30A(2) of Maharashtra Stamp Act is in respect of outstanding loan or alive loan which is still being administered by the bank and financial institution. 23(d) I say that under section 34 of the Maharashtra Stamp Act, 1958, instruments which are not stamped are not admissible in evidence in Court of law. Hence, the instrument created by or in favour of financ....
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....here is nexus with the object sought to be achieved. I deny that it interferes with the banking activities which are regulated by Banking Regulation Act, 1949. I deny that State Government has no power to lay down aforesaid amendment in Maharashtra Stamp Act, 1958, in respect of the document executed by financial institutions for purpose of payment and recovery of stamp duty and impounding of documents not properly stamped. I say that the penalty laid down in section 30A(3) of Maharashtra Stamp Act is incidental to enforcement of stamp duty. I say that unreasonableness is not the same as hardship as alleged or at all. I say that it must be unreasonable in law and not in fact. I say that the stamp duty is a tax and hardship is not relevant in interpreting fiscal statutes are well known principles. In the field of taxation the legislature enjoys greater latitude for classification. 23(g) I say that the obligation impounded by the Amendment to the Maharashtra Stamp Act by inserting section 30(A) has only laid down the responsibility of payment of stamp duty in respect of those documents and transactions to which the financial institution is a party. I say that the object of the Mahar....
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....Regulation Act, 1949. The VIIth Schedule of the Constitution of India contains the Lists, namely, Union List, State List and Concurrent List. Union List is termed as List-I. Therein, falls the subject of banking (See Entry No.45). We do not see how by the obligation under the Banking Stamp Act, 1958, which is extremely limited and restricted and equally in public interest can it be said that the State legislature has overreached or has taken over taken over or interfered with the field occupied by the Banking Regulation Act, 1949. 29. As already held, the competence of the State to enact the Maharashtra Stamp Act, 1958, is not disputed. The power in that regard is to be found in Entry No.63 of List II, namely, the State List of the very schedule to the Constitution of India. That deals with rates of stamp duty in respect of documents other than those specified in the provisions of List-I. With regard to rates of stamp duty. 30. In such circumstances, it is not possible to agree with Mr. Tulzapurkar that the impugned amended provision in the Maharashtra Stamp Act, 1958, should be be struck down on the ground that the purports to take over or occupied the field occupied by the Ban....
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....xchange, cheque, promissory note, bill of lading, letter of credit, policy of insurance, transfer of share, debenture, proxy and receipt; Explanation.- The term "document" also includes any electronic record as defined in clause (t) of subsection (1) of section 2 of the Information Technology Act, 2000." 32. Mr. Tulzapurkar then relied upon the definition of the term 'market value' in section 2(na), 'mortgage deed' appearing in section 2(p), the word 'Schedule' as defined in section 2(s) and submits that by section 3 of the Act, the instruments chargeable with duty are set out. Chapter II, according to Mr. Tulzapurkar, has the broad heading Stamp Duties and under that sub-heading '(A) Of the Liability of Instruments to Duty' appears in section 3. Mr. Tulzapurkar submits that how an instrument would be charged with duty, namely, the nature thereof, how if a single transaction is embodied and contained in several instruments is a matter dealt with by section 4 and instruments relating to several distinct matters are dealt with by section 5. Mr. Tulzapurkar then invites our attention to the sections in this Chapter and would urge that the sub-headings....
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....entities who are parties or the beneficiaries of the commercial contracts or agreements. There are various government authorities such as customs, excise, Director General of Foreign Trade and private parties such as real estate companies, insurance companies, share brokers, mutual fund companies, telecom and power sectors etc., who are either a party to or a beneficiary of a commercial contract or agreement, however on such other commercial entities no similar obligation has not been imposed. Therefore, in view of the discriminatory nature of the Stamp Act Amendment, the Stamp Act Amendment clearly violates Article 14 of the Constitution in as much as it differentiates and isolates only banks and financial institutions from other commercial entities for imposition of obligations and penalties in terms of the Stamp Act Amendment. There is no legally justifiable reason or ground as to why only banks, financial institutions and housing finance companies should be required to undertake the heavy responsibility of verifying payment of proper stamp duty and no other entities have any such obligation, with respect to future transactions and more so in case of past transactions and only w....
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.... authority has the jurisdiction or legal competence to impose any obligations or duties on banks especially since sub-section (2) of Section 6 of the Banking Regulation Act specifically provides that a banking company shall not carry on any activities other than those stipulated in sub-section (1) of Section 6 of the Banking Regulation Act. In view thereof, the Stamp Act Amendment enacted by the State Legislature is beyond the legislative competence and power of the State Legislature and hence ultra vires the Constitution. To ensure the payment of Stamp Duty is not a part of the banking business and the function of ensuring the payment of proper stamp duty cannot be and is not the activities of business or function which can be imposed on banks in as much as, by doing so, the banks will be forced to discharge functions contrary to Section 6 of the Banking Regulation Act. (d) Further, without prejudice to the aforesaid, assuming for the sake of argument that even if the State Legislature is competent to enact the said Stamp Act Amendment, the Stamp Act Amendment ought to be declared void and invalid on account of its inherent arbitrariness, vagueness and ambiguity. Section 30A of t....
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....cting the branch manager to be aware of the stamp duty payable on each of the documents as of the relevant date is arbitrary, irrational and absurd. (e) Unreasonable obligations imposed by the Stamp Act Amendment imposing on the banks and financial institutions to undertake the cumbersome, time consuming and voluminous exercise of ascertaining whether proper stamp duty has been paid on all instruments executed prior to the coming into force of the Stamp Act Amendment (i.e. May 1, 2013) by September 30, 2013 and to impound all such instruments clearly would be an extremely expensive and impractical exercise for the banks and financial institutions. Such a harsh imposition would not only increase the unnecessary expense of the banks and financial institutions but also hamper the current on-going business of the banks, as they would have to dedicate a large part of their resources, manpower and time to perform such a cumbersome activity and time consuming exercise. Therefore, it is evident that such a retrospective liability is too severe and unreasonable and such imposition would cripple the business of the banks as the banks would now have to dedicate its resources and time primari....
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.... Act Amendment banks and financial institutions are foisted with the duty to ensure payment of correct stamp duty with the onerous obligation that failure to ensure would result in the liability being fastened on the banks and financial institutions. Further, unlike sub-section (1) of Section 30A of the Maharashtra Stamp Act, where the State Legislature atleast gave a right to the bank to recover the amount of stamp duty paid by the bank from the borrower/obligor, sub-section (2) of the Stamp Act Amendment does not even give any such right to recover the penalty so imposed upon banks for failure to impound the documents, from the borrowers/obligors even if a corresponding right is available to the banks under the agreements/documents in question. Accordingly, it is abundantly clear that the banks and financial institutions are heavily prejudiced because of the unreasonableness, arbitrariness and harshness inflicted by the Stamp Act Amendment. (h) It is urged that levy of tax, collection of tax levied and verification whether the payment of tax by the tax-payers is adequate and in accordance with law are the functions of the authorities of the Government which levies the tax and su....
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.... bank may be open to challenge by the borrower since the Stamp Act Amendment does not authorize the banks to overrule the borrowers' objections. Therefore, it is abundantly clear that the State Legislature has not considered all aspects thoroughly before hastily enacting the law thereby imposing the obligations upon only banks and financial institutions and housing finance companies to determine the proper stamp duty payable on the documents/instruments and to find out the deficiency in payment of stamp duty and thereafter to impound such documents/instruments. In these circumstances, it is ex facie unreasonable, arbitrary and irrational for the Stamp Act Amendments to require the banks and financial institutions to impound all documents on which they consider insufficient stamp duty to have been paid, failing which the banks and financial institutions would be liable to a penalty equal to the stamp duty payable on such instrument, without a right to recover it from the borrower/obligor, as may otherwise be provided for in the agreement/ document. (j) The State Legislature has not considered the probability that since some of the documents/instruments are pertaining to transaction....
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....on of such liabilities upon banks and financial institutions is unreasonable in the first instance. (l) The Stamp Act Amendment is vague and unclear as to whether the penalty imposed upon the banks and financial institutions under sub-section (2) of the Stamp Act Amendment is over and above and in addition to the penalty provisions already in place under the Stamp Act? It appears that the intention of the Respondent No.1 is to enrich itself by prescribing a penalizing provision under Section 30A (2) when there are provisions already in place under the Stamp Act to which also adequately protects the interest of revenue of the State. Therefore, the Stamp Act Amendment enacted gives unbridled power to the State to impose further penalties over banks and financial institutions, irrespective of the fact that the banks and financial institutions may not be at fault. The Supreme Court has observed that "an instrument which is not duly stamped cannot be received in evidence by any person who has authority to receive evidence and it cannot be acted upon by that person or by any public officer. This is the penalty which is imposed by law on the person who may seek to claim any benef....
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....alties on banks and financial institutions with heavy financial and other costs and obligation that would though generate revenue for the State but will cripple the on-going business activities of the banks and financial institutions. (n) Without Prejudice to all that is stated above, a bare perusal of the Circular and the Stamp Act Amendment annexed to it evidences that there are certain contradictory provisions in the Circular and Section 30A which renders the Stamp Act Amendment uncertain and ambiguous. While, on one hand the Circular provides that 'in case of documents executed before May 1, 2013 and are effective, it should be verified whether proper stamp duty has been paid or not. If it has not been paid, it should be ensured that proper stamp duty (which includes penalty, if any) is paid by September 30, 2013 by the partly liable to pay it. Else the documents have to be impounded and forwarded to the Collector of Stamps before September 30, 2013. Failure to do this would result in penalty (equal to Stamp Duty Payable) being levied on Banks/ FIs.',on the other hand, Section 30A provides that 'In respect of any such instrument executed before the date of commencement of the....
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....anks, private sector banks, foreign banks, co-operative banks, regional rural banks, other development financial institutions like SIDBI, Exim Bank, National Housing Bank, Reserve Bank of India, International Finance Corporation, and it is not clear whether all such institutions are expected to comply with the Stamp Act Amendment enacted to the Stamp Act. 34. Thus, the sum and substance of Mr. Tulzapurkar arguments are that section 30A by sub-section (1) and which opens with a non obstante clause, merely because any writing in favour of any financial institution is created by the instrument referred to in clauses (a) to (g) of section 30, the liability contrary to the mandate of that section and ordinarily understood of paying stamp duty is foisted and thrusted upon the bank and financial institution. If that is not discharged then the bank may face several consequences, including penalties. Secondly, any instrument of the nature specified in sub-section (1) but effective before the commencement of the Maharashtra Tax Laws (Levy and Amendment) Act, 2013, and the proper stamp duty is not paid, the same would have to be impounded. Apart from the enormity and impracticality, the obli....
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....n Act, apart from being violative of Article 14 of the Constitution of India and it isolates only banks and financial institutions controlled or substantially financed by the State Government or any class of them. Secondly, by obliging the Nationalized banks to collect duties and remit them would not just create a collection centre, but require the banks to perform a host of other functions and duties not contemplated by the Stamp Act, 1958. 37. It is clear that when sub-section (3) of sub-section 30- A provides for imposition of penalty that is understood to be a civil liability. In the case of Director of Enforcement vs. MCTM Corporation Pvt. Ltd. AIR 1996, SC, 1100, the Supreme Court holds that breach of civil obligation also attracts penalty and when the law so enacts it is not understood to be a penalty in the sense of criminal law. Imposition of penalty for the breach of civil obligation laid down under the Act does not impose any "sentence" for the commission of any offence. The explanation "penalty" is a word of wide significance. Some times it means recovery of an amount as a penal measure even in civil proceedings. 38. Further elaborating this concept in a latter decis....
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....fficers and filed. 40. Mr. Tulzapurkar submits that the Registration (Maharashtra Amendment) Act, 2010 (Mah. X of 2012) seeks to add in sub-section (1) of section 17 as clauses (e), (f) , (g) and (h) an agreement relating to the deposit of title deeds, where such deposit has been made by way of security for the repayment of a loan or an existing or future debt, a sales certificate issued by any competent officer or authority under any recovery act, irrevocable Power of Attorney relating to transfer of immovable property in any way, executed on or after the commencement of the Registration (Maharashtra Amendment) Act, 2010 (Mah. X of 2012) with effect from 1st April, 2013. If these are the documents of which registration is made compulsory, then, they cannot be out of public domain. There is nothing secretive or clandestine about them. 41. Yet, what one finds by introduction of section 89-B and particularly sub-section (2) thereof is that non filing of a notice of intimation, of having mortgaged an immovable property by way of a deposit of title deeds, to the registering officer within the local limits of whose jurisdiction the whole or any part of the property is situate, as requ....
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....4. Additionally, Mr. Samdani outlined the difference between power to adjudicate and power to impound which powers are to be found in the sections under distinct Chapters of the Maharashtra Stamp Act, 1958. Mr. Samdani would submit that sub-section (2) of section 30A employs the word 'effective'. In a way, that means valid and binding. Therefore, the banks would be required to impound the instrument within the meaning of this sub-section if it is effective and that would entail a process by which it will have to adjudicate. That power to impound without adjudication cannot be exercised and the bank must necessarily undertake this exercise. Therefore, there cannot be a delegation or outsourcing of an adjudicatory function or power. Once there is a power in the financial institution to seize or take possession of an instrument then conferment of such a power and failure to exercise it resulting in penalty would denote as to how the amendments to the Stamp Act are completely unconstitutional or unworkable. 45. Mr. Kamdar, learned senior counsel appearing for the Indian Banks Association, while adopting the arguments submitted that classification of documents broadly made has ....
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....possible in the taxing provision. The incidence and imposition of tax could be sustained and the rigours that are ordinarily applied would have to be relaxed in the case of a taxing statute. Once there is a wide discretion and latitude in the Legislature, then, it would be apparent that the financial institutions such as banks, non-banking financial company, housing finance company or alike deal with large number of instruments. These instruments are in favour of or executed by such entities. It came to the notice of the State that in relation to such instruments and which are of the nature referred to in clause (a) to (g) of section 30, the proper stamp duty has not been collected. Therefore, section 30A was inserted by Maharashtra Act No.8 of 2013 with effect from 1st May, 2013. The Statement of Objects and Reasons to this amendment would indicate as to how there was a revenue loss. The State could not afford to loose revenue in the form of stamp duty on these instruments. The sweep of the banking transactions having increased manifold, large scale urbanization having taken place, banks deal in number of ways with its constituents, customers, clients and others, the services pro....
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....amp duty in cases of instruments executed before the date of commencement of the Amendment Act and in the event such instruments are effective, but where proper stamp duty is not paid, then the financial institution shall impound such instrument on or before the date specified in sub-section (2) and forward the same to the Collector for recovery. Once again, this is a power to facilitate collection of duty and through the bank. The bank has to impound the instrument on which proper stamp duty is not paid and forward it to the Collector for recovery. The Collector would proceed in terms of his powers under Chapter III or the further Chapters and recover the duty in accordance with law. There is absolutely no force in the contentions that the bank would be discharging any quasi judicial functions or exercising adjudicatory power or there is any outsourcing of the said adjudicatory powers in their favour. The impounding is only when on effective instruments, the proper stamp duty is not paid. The payment of stamp duty is evident and proof thereof is to be found on the face of the instrument itself. If the payment is made, then it is impressed with stamps. If it is not so impressed, ....
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....mended Section 30A deals with duties payable by financial institutions with regard to instruments referred to in Section 30. It begins with a non-obstante clause which draws these instruments concerning financial institutions out of the purview of instruments specified in Section 30, and makes it the duty of the financial institutions to ensure that the liability to pay proper stamp duty is fulfilled. The very nature of Section 30 and Section 30A is to classify the persons who are liable to pay the duty. There is therefore no justification in the Petitioner's submission that Section 30A creates a class or that such a class has no nexus with the object sought to be achieved. (e) Section 30A has to be seen to operate in a limited sphere of instruments. Although it refers to the instruments covered by Section 30 (a) to (g), it is concerned only with those instruments which create right in favour of the financial institutions. Hence, not every instrument which comes to a financial institution is covered by Section 30A. Only such instruments which create rights in favour of the financial institutions are required to be attended to by the financial institution for the purpose of ensurin....
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....nnot be stretched to mean that it is an adjudicatory activity. (k) Adjudication is a specific power given in Chapter III. Its provisions empower the Collector to perform necessary functions relating to adjudication as to the proper stamp. The term "liability to pay proper stamp duty" used in Section 30A(1) and the term "adjudication as to proper stamps" used in Section 31 need not be confused. The first relates to a calculation required to be made with reference to Schedule I, whereas the latter is in essence a quasi-judicial function permitting receiving of evidence and any further enquiry that may be needed to determine whether the instrument is chargeable. It is not the intendment of the ammendment to confer any adjudicatory power much less impose a duty to adjudicate on the financial institutions. (l) The Petitioners' submission that the failure of the financial institution not to impound and forward an instrument within the period specified in Section 30A(2) which attracts penalty may be answered thus. In a given case, assuming the instrument is impounded after the date specified it would still be dealt with in terms of Section 37(2) which covers cases of instruments that ha....
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.... of the Maharashtra Stamp Act and the compulsorily registrable instruments provided in the Registration Act is not to be confused with an intimation which would be required to be forwarded about the act of deposit of title deeds with an intent to create an equitable mortgage. It is that intimation which must be given and the failure to give it entails the consequences provided by sub-section (2) of section 89-B. The intent is never to nullify the transactions as is apprehended. These amendments have been brought in bearing in mind the recommendations of the Law Commission of India contained in its 178th Report. 54. Thus, the learned Advocate General was supportive of the amendments and invited our attention to the scheme of both the Maharashtra Stamp Act, 1958 and the Registration Act, 1908. Alternatively and without prejudice he would submit that in the event this Court is of the view that sub-section (3) of section 30A which provides for penalty is harsh and that imposition may be excessive, this Court may read down the provision to the effect that imposition of penalty is not automatic. It would be imposed upon the satisfaction of any deliberate or intentional act and, in any....
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....petitioners before this Court are corporate entities / companies / banks / financial institutions. They are artificial persons. No such entity enjoys any fundamental freedom, much less under Article 19(1) (g) of the Constitution of India. That is assured and guaranteed to citizens. A corporate entity cannot be said to be a citizen and, therefore, it is bereft of any such right and freedom. In such circumstances the petition ought to be dismissed even now on this ground. Assuming without admitting that banks and financial institutions have approached this Court relying on the mandate of Article 14 of the Constitution of India, even then they have never been discriminated against and nothing that the law does not envisage or provide for is called upon to be performed or discharged by them. Their banking business is unaffected and untouched. None interferes with the same, much less the State Government. It is their banking business which has resulted in multiple instruments being executed or brought in the State. It is such instruments which are openly and brazenly put in the market without any stamp duty being paid and impressed upon them. It is the transaction evidenced by these ins....
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....tion Act, 1908, or in the scheme thereof. Having travelled much beyond that, it deserves to be struck down. 58. With regard to the amendments to the Maharashtra Stamp Act, Mr. Tulzapurkar reiterates his submissions made in the opening and additionally contends that if the statement of objects and reasons is perused it would be evident that banks and financial institutions are singled out. It is not that the revenue remains outstanding only because of these entities or persons. How the object and purpose of collection of revenue and facilitating the same would be achieved by incorporation and insertion of section 30A of the Maharashtra Stamp Act, 1958, is not clarified at all. It is, therefore, evident that people similarly situated have not been treated similarly. The individuals, mutual funds, insurance companies are left out though they can safely be brought in the purview of the broad term "corporates". Hence the banks have a legitimate right to complain. 59. Mr. Tulzapurkar reiterated the argument on legislative competence and brought to our notice Schedule VII List I Entry 45 of the Constitution of India. He also brought to our notice section 6(2) of the Banking Regulation....
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....der or otherwise;" 64. A bare perusal thereof would indicate as to how any person, association or a company accepting for the purpose of lending or investment deposits of money from the public and repayable on demand or otherwise and withdrawable by cheque, draft, order or otherwise is a banker. Though the word is defined like this, section 30A employs the phraseology in the marginal note "financial institution" and in sub-section (1) that expression is understood as a Bank, Non-Banking Finance Company, Housing Finance Company or alike. Hence, we cannot construe section 30A with the aid of the definition of the term 'banker' for financial institutions are performing diverse functions and discharging various obligations, including acceptance for the purpose of lending and investment, deposit of money from the public. However, their activities and functions are not restricted to this at all. 65. Then the crucial term or word which is defined is "chargeable". That appears in section 2clause (d) and reads as under : "2. Definitions (a) ... ... ... ... (d) "chargeable" means, as applied to an instrument, executed or first executed after the commencement of this Act, charge....
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.... (i) "executed" and "execution" used with reference to instruments, mean "signed" and "signature". ... ... ... (k) "impressed stamp" includes,- (i) labels affixed and impressed by the proper officer; (ii) stamps embossed or engraved on stamped paper; (iii) impression by franking machine; (iv) impression by any such machine as the State Government may, notification in the Official Gazette, specify; (v) receipt of e-payment; (l) "instrument" includes every document by which any right or liability is, or purports to be created, transferred, limited, extended, extinguished or recorded, but does not include a bill of exchange, cheque, promissory note, bill of lading, letter of credit, policy of insurance, transfer of share, debenture, proxy and receipt." 69. The submissions are belied by these definitions themselves for anything that the instrument bears would be an adhesive or impressed stamp of not less than the proper amount and that such stamp has been affixed or used in accordance with law for the time being in force in the State. The word 'impressed stamp' includes what falls in sub-clause (k) of section 2 and all this read together with the definition of ....
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...., relates to any property situate, or to any matter or thing done or to be done in this State and is received in this State; Provided that a copy or extract, whether certified to be a true copy or not and whether a fascimile image or otherwise of the original instrument on which stamp duty is chargeable under the provisions of this section, shall be chargeable with full stamp duty indicated in the Schedule 1 if the proper duty payable on such original instrument is not paid. Provided further that no duty shall be chargeable in respect of- (1) any instrument executed by or on behalf of, or in favour of , the Government in cases, where, but for this exemption, the Government would be liable to pay the duty chargeable in respect of such instrument or where the Government has undertaken to bear the expenses towards the payment of the duty. (2) any instrument for the sale, transfer or other disposition, either absolutely or by way of mortgage or otherwise, of any ship or vessel, or any part, interest, share or property of or in any ship or vessel registered under the Bombay Coasting Vessels Act, 1838, or Merchant Shipping Act, 1958." 72. From a reading of section 3, it is apparent ....
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.... "10D. Certain departments, organisations, institutions etc., to ensure payment of stamp duty (1) Notwithstanding anything contained in this Act, the State Government may, by notification in the Official Gazette, direct that any State Government Department, institution or local self-Government, semi Government organization, banking or non-banking financial institution or the body owned, controlled or substantially financed by the State Government or any class of them, shall ensure that the proper duty is paid to the State Government through Government Receipt Accounting System (G.R.A.S.) in respect of such instruments, as may be specified in the notification passing through their system or related to their functioning of which registration is not compulsory. (2) The Chief Controlling Revenue Authority shall authorise a person nominated by such Department or body, etc.. as mentioned in sub-section (1) as a proper officer for defacing the challan and making the endorsement on such instruments. (3) It shall be the duty of the proper officer so authorised under sub-section (2) to make an endorsement on the instruments after defacing the challan, as follows :- "Stamp duty of Rs.___....
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....ement as set out in section 10A. Therefore, this provision has been inserted only to facilitate the bodies owned and controlled by the State or Central Government, Insurance Companies and Nationalized Banks to pay duty either through their Head Office, Regional Office or Zonal Office by way of cash or by way of the mode specified in section 10A. This could certainly, therefore, not be challenged and similarly the banks are not concerned with the obligation of the Stock Exchange etc. as set out in section 10B and duty to be paid in cash or by demand draft or by pay order by notary. These sections, namely, sections 10A and 10C are opening with the words "Notwithstanding anything contained in section 10" and section 10B opens with the words "Notwithstanding anything contained in this Act ". Section 10D which is then relevant, has already been reproduced by us above. 78. We do not think from a reading of these provisions that they are in any way onerous, arbitrary or excessive, much less violative of the mandate of Articles 14 and 300A of the Constitution of India. It does not oblige the bank to carry on any function or perform any duty de hors the Banking Regulation Act, 1949 ....
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....eaching by the State legislature, much less directing taking over of or performing any function as such. To ensure payment of proper stamp duty to the State Government in relation to such instruments as are specified and noted above would not, therefore, be said to be unconstitutional, ultra vires and illegal. 79. Then we come to the further sections of Chapter II, namely section 11 and which are pertaining to use of adhesive stamps; section 12 - cancellation of adhesive stamps and by section 13, what we find is that instruments stamped with impressed stamps have to be written in such manner that the writing may appear on the face and if required on the reverse of such sheet so that it cannot be used for or applied to any other instrument. This, to our mind, completely falsifies the complaint by the banks and financial institutions that they would have to determine the proper rate of duty. By sections 14 and 14A it is apparent that only one instrument to be on same stamp and alterations in instruments also have to be charged in the manner set out in section 14A. Section 15 shows that instruments written contrary to sections 13, 14 or 14A would be termed as not duly stamped and the....
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....debenture is liable to duty or not, except debentures provided for by section 8 of the Indian Stamp Act, 1899. No. 59(b) Transfer of any interest secured by a bond or mortgage deed or policy insurance), by the person drawing or making such instrument; (b) in the case of a conveyance (including by a conveyance of mortgaged property) by the grantee; in the case of a lease or agreement to lease by the lessee or intended lessee; (c) in the case of a counter part of a lease by the lessor; (d) in the case of an instrument of exchange by the parties in equal shares; (e) in the case of an instrument of exchange by the parties in equal shares; (f) in the case of an instrument of partition by the parties thereto in proportion to their respective shares in the whole property partitioned, or, when the partition is made in execution of an order passed by a Revenue Authority or Civil Court or Arbitrator, in such proportion, as such Authority, Court or arbitrator directs; (f-a) in case of instruments of works contract as provided in Article 63 of SCHEDULE I, by the person receiving the contract. (g) in any other case, by the person executing the instrument. 30A. Duties payable by financi....
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....the bank / financial institution. Further, it is restricted to the instruments of the above nature, namely, in favour of or by any financial institution such as bank etc. and which create any right in favour of such financial institution. No difficulty, much less of any insurmountable nature can be experienced when in only limited number of instruments the liability to pay the stamp duty is on the bank / financial institution, but without affecting its corresponding right to recover it. Therefore, we see no reason to strike down this sub-section. It is in relation to limited instruments that the liability to pay stamp duty is of the banks / financial institutions and for good reasons. That is because the banks and financial institutions post urbanisation, industrialisation, liberalisation and privatisation era are handling and dealing in varied transactions evidenced by such instruments. Now, banking activity has undergone a radical change by passage of time. In the modern era banks and financial institutions are undertaking multiple assignments for their clients, customers and constituents and others located nationally and internationally. A large number of dealings and transactio....
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....nk that the statement of objects and reasons is silent for there is a clear indication therein that to facilitate and rather accelerate collection of revenue, namely, stamp duty that this provision is enacted. It subserves larger public interest and works for public good. Lest everybody forgets, taxes are not imposed only to collect revenue but, to reduce inequality. In the case of Sri Srinivasa Theatre & Ors. vs. Government of Tamil Nadu & Ors. AIR 1992 SC 999, the Hon'ble Supreme Court had to consider a challenge which was somewhat identical. Before us, there is no challenge to the machinery provisions in a taxing statute. The challenge is only to the mode of collection and recovery. Once far more latitude and freedom is available to the State in these matters, then, we do not see any substance in the challenge. The Supreme Court held thus : "9. Article 14 of the Constitution enjoin upon the State not to deny to any person 'Equality before law' or 'the equal protection of laws' within the territory of India. The two expressions do not mean the same thing even if there may be much in common. Section 1 of the XIV Amendment to U.S. Constitution uses only the lat....
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...., no doubt since repealed, Wealth Tax Act and Gift Tax Act are all measures in the same direction. It is for the reason that while applying the doctrine of classification-developed mainly with reference to and under the concept of "equal protection of laws"- Parliament is allowed more freedom of choice in the matter of taxation vis-a-vis other laws. If this be the situation in the case of direct taxes, it should be more so in the case of indirect taxes, since in the case of such taxes the real incidence is upon some other than upon the person who actually makes it over to the State, though, it is true, he cannot avoid the liability on the ground that he has not passed it on. In the matter of taxation it is, thus, not a question of power but one of constraints of policy-the interests of economy, of trade, profession and industry, the justness of the burden, its 'acceptability' and other similar considerations. We do not mean to say that taxation laws are immune from attack based upon Article 14. It is only that parliament and legislatures are accorded a greater freedom and latitude in choosing the persons upon whom and the situation and stages at which it can levy tax. We ar....
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....tled that a very wide latitude is available to the legislature in the matter of classification of objects, persons and things for purposes of taxation. It must need to be so, having regard to the complexities involved in the formulation of a taxation policy. Taxation is not now a mere source of raising money to defray expenses of government. It is a recognised fiscal tool to achieve fiscal and social objectives. The differentia of classification presupposes and proceeds on the premise that it distinguishes and keeps apart as a distinct class hotels with higher economic class hotels with higher economic status reflected in one of the indicia of such economic superiority. The presumption of constitutionality has not been dislodged by the petitioners by demonstrating how even hotels, not brought into the class, have also equal or higher chargeable receipts and how the assumption of economic superiority of hotels to which the Act is applied is erroneous or irrelevant." 14. We shall now proceed to examine the contentions before us in the light of the above principles, but before we do that we think it appropriate to remind ourselves of the following dictum : "...in the ultimate analy....
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....u Gram Panchayats Act as the basis or prescribing the rate of taxation. But it must be remembered that it was not obligatory upon the legislature to do so. It could have adopted any other basis. It is only for the sake of convenience that the existing local areas, convenient existing units of reference, were adopted. It is not a question of power but one of the convenience. There was nothing precluding the legislature to have declared in the very first instance (i.e. at the time of 1978 Amendment Act) that the admission system was to continue in force now only in the corporation areas but also in five kilometer radius (belt) abutting each of those areas. The only question then would have been, as not it is, whether such a course brings about an unreasonable classification or whether it amounts to treating unequals on a uniform basis." 87. These principles which we have reproduced above from the judgment of the Hon'ble Supreme Court in Srinivasa (supra) and those referred therein are from times immemorial. Once it is not obligatory upon the legislature to choose only one mode of collection and recovery and there is a wide choice in that behalf, then, any other basis or choice....
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....anking and financial business by enacting the above referred measures. So considered, the challenge must fail. 89. We repeatedly questioned the learned counsel as to how there is any prejudice, much less serious and for the banks and financial institutions as a whole or such loss which has compelled them to raise the challenge. Beyond submitting that the banks would have to first decide and determine what is proper stamp duty and secondly in determining whether the instrument creates any right in favour of the financial institution it would necessitate scrutinizing the underlying transaction, there are no grounds assigned. 90. We would analyze these reasons and assigned so strenuously by the senior counsel. We have already indicated and with sufficient reasoning of our own that the banks do not have to determine and decide the proper stamp duty. That is already decided and determined by the statute. It cannot be left to anybody's whims and fancies what is the quantum of tax or duty. The charging section is absolutely clear when it says that certain instruments are chargeable to stamp duty, their description and the rate of duty with which they are charged are both set out in....
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....lready specified in the statute vide clauses (a) to (g) in section 30. There is no need to interpret the writing or its clauses. A broad identity such as agreement acknowledging the debt mortgaging the property to secure it or securing it by other modes is enough to understand the legislative prescription. Once one of the instrument could be an agreement relating to deposit of title-deeds, deed of hypothecation, pawn or pledge, a writing to bind oneself such as indemnity bond, further charge, mortgage, transfer of debentures being marketable securities, transfer of any interest secured by a bond or mortgage, conveyance, lease etc., then, we do not see how any detailed analysis, much less an adjudication is called for. The banks and financial institutions are sufficiently familiar with such instruments and the obligations created thereby. There is nothing to shock or surprise them for they handle and deal with such instruments day in day out. They pass through them as well. It is, therefore, no ground to urge that the bank would have to determine whether the instrument creates any right in its favour or not. The bank or person proceeded against in terms of section 30-A can, in a gi....
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....er stamp duty which is not paid. This is termed as a requirement of undertaking of an adjudication or exercising quasi judicial power. We are unable to see any force in such contentions either. The plain dictionary meaning of the term "effective" is operative, existing in fact though not formerly acted as such. Therefore, it is not a adjudication which is required to be undertaken nor is any outsourcing of the adjudicatory function done by the State. The State has not delegated any such power nor has divested itself of it. The impounding has to be done by the banks / financial institutions of an instrument which is in operation and existing in fact. If that instrument is not cancelled, then, it has to be impounded and forwarded to the Collector for recovery. It is clear that such a power to impound has already been conferred in terms of section 33 upon every person having by law or consent of parties authority to receive evidence and every person in charge of 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. If it appears to him that such instrument is not duly stamped h....
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....without any merit. The moment sub-section (3) talks of penalty and liability to pay a penalty, then all the principles which go into imposition of a penalty would be applicable. In this case, the penalty is a civil liability. It would be imposed for some deliberate and intentional act. The word 'failure' itself has been construed and interpreted judicially as explained in Law Lexicon by P. Ramanatha Aiyar, 3rd Edn. Reprint 2007 (Book 2). The meaning of this term as judicially understood is set out thus : "Failure means 'a falling short', 'deficiency' or 'lack'." It has also referred to a judgment of Allahabad High Court in the case of Ram Kishore vs. Bimla Devi, AIR 1957, All. 658. 94. Even in common parlance and going by the dictionary meaning it means the omission of expected or required action. Therefore, if that cannot be attributed then the penalty may not be necessarily imposed. Everything ultimately depends upon the facts and circumstances of each case and merely because the failure to impound attracts penalty ipso facto does not render the substantive provision or the penalty provision unconstitutional. Even in a taxing statute, one finds ....
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....institutions have merely to look at the instrument and if it is effective and where proper stamp duty is not paid then the financial institution shall impound such instrument and forward the same to the Collector for recovery. Its failure to impound such instrument as provided in sub-section (2) results in the imposition of penalty. 98. It is not as if the bank is required to take some elaborate and detailed action on par with the other provisions in the Stamp Act. All that the bank is required to do is to impound the instrument so long as it is effective. The bank can ascertain from the instrument itself whether proper stamp duty is not paid and if that is so, it shall impound it. We have already outlined the difference between examination and impounding of an instrument which is an exercise contemplated by section 37 wherein the concerned officer or person has to record an opinion that the instrument is not duly stamped and that is irrespective whether the instrument is or is not valid in law. In the case before us under sub-section (2) not every old or ancient instrument, as is complained, would have to be impounded. Such instruments may not be effective for they have worked th....
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.... right to equality and equal protection of laws or in other words equality before law and equal protection of laws is a positive concept. It is not a negative one. Hence, it cannot be founded on a plea that one wrongdoer or a defaulter goes scot free or benefits by any inaction all others must be treated in the same way. By that process nobody can be penalised ever. It also mandates if one wrong or one injury is committed that cannot be perpetuated for all times to come. Thus the argument that these amendments have no nexus with the object sought to be achieved deserves to be rejected for its foundation is totally faulty and unsound. The object sought to be achieved is apparent and clear, namely, augmentation of revenue and collection thereof expeditiously. If the Legislature as a matter of broader policy thinks and views the large volume of documents and instruments dealt with by the banks and treats them as a class, then, that classification cannot be interfered with, leave alone nullified on the specious ground and as urged by Mr. Tulzapurkar. It is not necessary for the Legislature to demarcate or specify and with details as to how many instruments passing through the banks and....
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....d in Section 61, be called in question at any stage of the same suit or proceeding on the ground that the instrument has not been duly stamped. Relying upon the difference in the phraseology between Section 35 and 36 it was urged that an instrument which is not duly stamped may be admitted in evidence on payment of duty and penalty, but it cannot be acted upon because Section 35 operates as a bar to the admission in evidence of the instrument not duly stamped as well as to its being acted upon, and the Legislature has by S. 36 in the conditions set out therein removed the bar only against admission in evidence of the instrument. The argument ignores the true import of Section 36. By that section an instrument once admitted in evidence shall not be called in question at any stage of the same suit or proceeding on the ground that it has not been duly stamped. Section 36 does not prohibit a challenge against an instrument that it shall not be acted upon because it is not duly stamped, but on that account there is no bar against an instrument not duly stamped being acted upon after payment of the stamp duty and penalty according to the procedure prescribed by the Act. The doubt, if any....
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....ring officer, the procedure specified in this sub-section shall be followed in respect of the property within the jurisdiction of each of such officers. (2) If, the person who has mortgaged the property as aforesaid fails to file a notice within thirty days as stated in sub-section (1) before the registering officer or officers, as the case may be, and enters into any transaction in relation to or affecting the immovable property which is the subject matter of the mortgage, with a third party; such a transaction shall be void and the third party shall be entitled to refund of any amount paid by him together with interest at twelve per cent from the date of payment and also to compensation for any damages suffered by him, from the transferor. (3) The amount recoverable by such transferee as specified in sub-section (2) shall be a charge on the interest of the mortgagor, in the mortgaged property: Provided that, nothing in this section shall apply to the instruments of agreement relating to mortgage by deposit of title deeds which are duly registered as per the provisions of this Act." 101. The reasons for such amendment are essentially contained in the 178th Report of the Law Co....
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....s or property, by the loss or destruction of deeds relating to transactions of the nature of those above specified." 27. I therefore say that it is important to register anything affecting immovable property under the Registration Act. If a deed is executed, but not registered, society at large would deal with the earlier person as if he/she is the holder of rights. This will shake the foundations on which the property rights exist. The tremors could pass on to financial markets; Innocent third parties might end up purchasing properties which have already been mortgaged. The seriousness of the problem has increased manifold in the recent years due to rapid urbanization. 28. I say that in a rural setting, people know the real right-holders of the property and the charges created therein. An urbanized environment relies mostly on documents. In that scenario, hiding certain rights over a particular property, whether intentionally or unintentionally, by not registering related documents on time, will sound death-knell to the stability of property system as well as financial system. Emerging materialism in the society and rapidly increasing real estate rates have compounded the proble....
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....art of the property is situate. The obligation of the officer is then to file the same in Book No.1. If the jurisdiction of more than one registering officer is involved for the mortgaged property falls also within that part or area, then, the same procedure will have to be followed in respect of the property within the jurisdiction of each such officers. 103. By sub-section (2), the failure to file a notice before the registering officer or officers may not invite other consequences, with which we are not concerned. It is only in case where the mortgagor who has mortgaged the property but has not filed a notice within the stipulated period entering into any transaction relating to or affecting the immovable property which is the subject matter of a mortgage with a third party that invites the consequences and the restriction on the rights of the third party. 104. What we find is that this failure invites these consequences because it is not just a subsequent mortgage which would invite the consequences, but any transaction in relation to or affecting the immovable property which is the subject matter of mortgage and with a third party which would invite them. 105. Mr. Tulzapurk....
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.... referred to by the preceding words. Therefore, to raise a general and vague contention that all second mortgages or subsequent mortgages would be necessarily void and press the same for acceptance will not be proper. 106. The Registration Act, as we have noted above, consolidates the enactments relating to registration of documents. The statement of objects and reasons to the Amendment Act No.48 of 2001 refers to Conference of Chief Ministers and Finance Ministers of States and the conclusions arrived at therein, inter alia, the registration of the Power of Attorney which is in the nature of a contract to sell immovable property be made compulsory and consequential amendments be made in the Registration Act, 1908, the Transfer of Property Act, 1882 and the Indian Stamps Act, 1899. After this we have noticed as to how the States gave effect to these recommendations in consonance with the conclusion at the Conference and in Part III which is titled as "Of Registrable Documents" added clauses (f), (g) and (h) in sub-section (1) of section 17. Therefore, an agreement relating to the deposit of title deeds where such deposit has been made by way of security for the repayment of a loan....
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.... be complied with. Section 22 deals with description of houses and land by reference to Government maps or surveys. 109 These provisions would, therefore, indicate that adequate care has been taken to register the documents and while registering them every aspect of the same, namely, interlineations, blanks, erasures or alterations and description of property and maps or plans are placed on record. Once the document is registered and the above information is provided, then, it would alert everybody else and sufficiently. After Part IV come Part V and Part VI and which would enable us to hold that to facilitate registration, the law has made several enabling provisions. These confer powers of varied nature on the officers in charge of implementing and enforcing the Act. A perusal of Part V and Part VI, including compulsory affixing of photographs, would enable this Court to further conclude that in the Registration Act, apart from section 89-B in relation to compulsory registrable documents, there are sufficient safeguards. In relation to those documents as well and upon such enquiries and satisfaction of officers, Part X has been inserted in the Act which deals with the effects of....
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....e proviso to section 48 is very important and that enacts that a mortgage by deposit of title deeds as defined in section 58 of The Transfer of Property Act, 1882, shall take effect against the mortgage deed subsequently executed and registered which relates to the same property. Section 49 states that no document required by section 17 or by any provision of the Transfer of Property Act, 1882, to be registered shall affect any immovable property comprised therein or confer any power to adopt or be received as evidence of any transaction affecting such property or conferring such power unless it has been registered. However, the proviso to section 49 must be noted and that relates to an unregistered document affecting immovable property and required by the Registration Act, 1908, or the Transfer of Property Act, 1882, to be registered but not registered may still be received as evidence of a contract in a suit for specific performance under Chapter II of the Specific Relief Act, 1963, or as evidence of any collateral transaction not required to be effected by a registered instrument. Hence, "affecting the immovable property" and "relating to the immovable property" are the words em....
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....deeds but not evidenced by any writing would necessarily and inevitably bring about the consequences as enumerated in subsection (2). If the rigour of the conditions which are more stricter is capable of being relaxed, then, the difference between the effect of non-registration of a document compulsorily registrable and the effect of non-filing of a notice of intimation of a mortgage effected by depositing title deeds would have to be considered. The latter one of filing of notice of intimation within the meaning of section 89-B(1) not being complied with, the consequences cannot be so drastic as are highlighted before us by Mr. Tulzapurkar and others. We cannot agree with them that the words and expression in sub-section (2) of section 89-B "such a transaction shall be void" would mean giving a go-by to all the rights and liabilities arising out of mortgages of immovable property and charges as enumerated in Chapter IV of the Transfer of Property Act, 1882. Clause (f) of section 58 which was added by Act 20 of 1929 in the Transfer of Property Act, 1882, refers to a mortgage by deposit of title deeds and concerns a person in any of the towns, namely, the towns of Calcutta, Madras a....
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.... If the consequences have to be regarded, then, a construction that results in hardship, serious inconvenience, injustice, absurdity or anomaly or which leads to inconsistency or uncertainty and friction in the system which the statute purports to regulate has to be rejected and preference should be given to that construction which avoids such results. In Principles of Statutory Interpretation by Justice G.P. Singh, this principle has been enunciated and by referring to several judgments of the Hon'ble Supreme Court of India and the Courts abroad. 113 It may be that this principle has certain limitations. However, to highlight them if the grammatical construction leads to some absurdity or some repugnance or inconsistency with the rest of the instrument, it may be departed from so as to avoid that absurdity and inconsistency. This principle has been further amplified and elaborated in the case of Tirath Singh vs. Bachinttar Singh reported in AIR 1955, SC 830. 114 The other principle is with regard to the presumption that a statute is intended to be just and reasonable. The law does not compel the doing of impossibilities. Similarly, if the acts which are referred to in the e....
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....erious general inconvenience will be created to innocent persons without very much furthering the object of enactment, the same will be construed as directory and equally they would not be construed and interpreted so as to visit such persons with drastic consequences." Moreso, when noncompliance of mandatory requirements results in nullification of the act and when performance as the requirement is impossible it is then excused. The principle that is evolved is to be found in the decision reported in AIR 1997 SC 1879 Biharilal vs. Bhuri Devi . That principle is enunciated as under : ".... ... ... ... ... ... This view obviated the inconvenience and injustice to innocent persons which the Federal Court felt in J.K. Gas Plant Manufacturing Co. Ltd. v. The King Emperor (1947)FCR 141 at 156, 157) and at the same time protects Government. We feel that some reasonable meaning must be attached to Article 299 (1). We do not think the provisions were inserted for the sake of mere form. We feel they are there to safeguard Government against unauthorised contracts. If in fact a contract is unauthorised or in excess of authority it is right that Government should be safeguarded. On the other....
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....ved to be void in law in C.R.P. 3696 of 1977, filed by the first respondent. In our opinion, even a void order or decision rendered between parties cannot be said to be non- existent in all cases and in all situations. Ordinarily, such an order will, in fact be effective inter parties until it is successfully avoided or challenged in higher forum. Mere use of the word "void" is not daterminative of its legal impact. The word "void" has a relative rather than an absolute meaning. It only conveys the idea that the order is invalid or illegal. It can be avoided. There are degrees of invalidity, depending upon the gravity of the infirmity, as to whether it is, fundamental or otherwise and in this case, the only complaint about the initiation of the suo moto proceedings by Board was, that it was not initiated on intimation by the State Land Board about the nonfiling of the statement as required by Section 85(7) of the Kerala Land Reforms Act. In our opinion, this is not a case where the infirmity is fundamental. It is unnecessary to consider the matter further. 7. In Halsbury's Laws of England, 4th edition, (Reissue) Volume 1(1) in paragraph 26, page 31, it is stated, thus:- "If....
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....itution Bench decision of this Court in Janardhan Reddy & others vs. State of Hyderabad and others, (A.I.R. 1951 SC 217) is of great relevance. In that case, the Court found that there is no specific order of the civil administrator making over the case covered by charge- sheet No. 14 dated 20.7.1949 [charge sheet No. 14 (2)] to the Tribunal. Therefore, the Court held that prima facie there was room to hold that case No. 17. which was affected by the charge sheet No. 14 (2) was never properly made over to the Tribunal and the trial of the accused in that case was, therefore, without jurisdiction. But the matter was carried in appeal before the High Court of Hyderabad and the convictions and sentences were confirmed. It was urged before the Supreme Court that notwithstanding the decision rendered by the High Court in appeal since the decision of the Tribunal was without jurisdiction, the detention was invalid. In repelling this piea, Fazl Ali, J. observed at page 225, thus:- "Evidently, the appellate Ct. in a case which properly comes before it on appeal, is fully competent to decide whether the trial was with or without jurisdiction, & it has jurisdiction to decide the matter righ....
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....ar persons. It is used to lay down a general policy applicable to every citizen. The word void has to be understood to have its full meaning as when it is used with the word null to indicate nullity." 118 Thus, the word conveys different ideas dependent upon the context. As a result of the above discussion we find that both sections of the Maharashtra Stamp Act, 1958, and the Registration Act, 1908, read and understood so also interpreted in the above manner need not be struck down. 119 While arriving at the above conclusion, we have taken the aid and assistance of the very principles which have been pressed into service by Mr. Tulzapurkar. We need not advert to each and every judgment relied upon by counsel. We have referred to the very principles and which are enunciated in the case of State of Madhya Pradesh vs. Rakesh Kohli & Anr. (supra) about constitutional validity of taxing statutes. 120 We are not in agreement with Mr. Tulzapurkar that the provisions of the Stamp Act and particularly, section 30A need to be struck down on the anvil that they violate the mandate of Articles 14, 19(1)(g) and 300A of the Constitution of India. We do not think that section 30A is in any way....