Section 34 of the Act, thus, provides a procedure to recover the stamp duty and a penalty at the rate of 2 per cent of the deficient portion of the stamp duty for every month or part thereof, from the date of execution of an instrument which either of the parties to the proceedings seeks to produce in evidence and which is either not duly stamped or insufficiently stamped. Perusal of Section 34 of the Act clearly shows that though the date of execution of the instrument is relevant for both, duty and penalty, the duty payable would be at the rate prevailing on the date of execution of the instrument and the penalty would be at the rate prevailing on the date on which the insufficently stamped instrument is sought to be tendered in evidence. This is logical, because, the duty becomes payable on execution, whereas, the penalty becomes payable when the deficiency in the instrument is sought to be removed or regularised. The use of the words "from the date of execution of such instrument" cannot be construed to mean that the penalty is leviable at the rate prevailing on the date of execution of the instrument. It merely means that the insufficiently stamped instruments executed prior to 1.5.2001 can become admissible in evidence, if penalty at the rate of 2 per cent of the deficient portion is paid from the date of execution of the instrument. Once Clause (a)(ii) of Section 34 is substituted with effect from 1.5.2001, the substituted provision would apply for all the insufficiently stamped instruments whether executed prior or after 1.5.2001. The argument of the respondent that Section 34 as amended by 2001 Amendment is not applicable to the insufficiently stamped instruments executed prior to 1.5.2001 runs counter to the expressed words used therein. If the intention of the leglislature was to restrict the amended provision to the instruments executed only after 1.5.2001 it would have expressly stated so. In the absence of any such restriction to read words "from the date of execution of such instrument" in the substituted Section 34(a)(ii) to apply only to the instruments executed after 1.5.2001, would mean adding the words to section which is not permissible in law.
2. Rule, returnable forthwith. By consent of the parties taken up for final hearing. Mr. Suryawanshi, learned Counsel waives service for the respondents.
3. The petitioner-plaintiff has filed a special civil suit No.632 of 1998 under Section 6 of the Specific Relief Act, 1963 against the respondent-defendants, who allegedly dispossessed the petitioner forcibly from the suit premises. In the suit, the petitioner sought to produce two documents, alongwith his affidavit in lieu of an examination in chief, namely, an agreement for sale and a general power of attorney, both dated 6th April, 1996. The first respondent by filing an application at Exhibit-109 prayed for the impounding of these documents on the ground that they are neither registered nor sufficiently stamped. The Trial Court by an order dated 3.2.2006 allowed the application and impounded both these documents and directed the plaintiff to pay deficit stamp duty with ten times penalty within 30 days from date of the order. The plaintiff filed miscellaneous application No.298 of 2006 seeking review of the order dated 3.2.2006. The said application was also dismissed by the judgment and order dated 19.12.2006. This judgment and the order dated 3.2.2006 are impugned in the present writ petition.
4. This petition raises a short, yet important question whether a penalty leviable under Section 34(a)(ii) of the Bombay Stamp Act, 1958 (for short "the Act") in respect of insufficiently stamped instruments executed prior to 1.5.2005, the date on which the amendment of Section 34(a)(ii) by Mah.Act 22 of 2001 (for short "Amendment of 2001" or "2001 Amendment") came into force, would be under Section 34(a)(ii) of the Act prevailing before or after the 2001 Amendment. In other words, the question is, if an instrument is executed prior to the amendment of 2001, whether the provisions of Section 34 of the Act, as it stood prior to 2001 amendment, would apply or the provisions of this section as it stands after the amendment of 2001 would apply for charging the penalty under Sub-clause (ii) of Page 1265 Clause (a) of Section 34 of the Act. To address this question it is necessary to notice the relevant dates. The agreement and the power of attorney both are dated 6.4.1996. The order of impounding the documents on the application filed by the defendant at Exhibit-109 is dated 3.2.2006. The Amendment of 2001 came into force with effect from 1.5.2001.
5. I have heard learned Counsel for the parties and with their assistance perused the impugned orders and the other material placed before me including the relevant provisions of the Act and the judgments of the Supreme Court and High Courts relied upon by them. Mr.Limaye, learned Counsel for the petitioner submitted that for determining the stamp duty what is relevant is the date of execution of the instrument whereas for levying a penalty, the date when it is tendered in the evidence is relevant and since both the instruments in the present case were tendered by the plaintiff after the amendment of 2001, the impugned direction to pay ten times penalty as per the provisions of Section 34(a)(ii) prevailing prior to the 2001 amendment is totally illegal. He further submitted that Section 34 being a procedural law the amendment of 2001 will have a retrospective operation and, therefore, the penalty in respect of the instruments executed prior to the Amendment of 2001, would be leviable under Section 34(a)(ii) as it stands today. According to Mr. Limaye, it is also evident from the proviso appended to Section 34(a)(ii) by which the legislature has provided a cap on the penalty amount. Lastly, Mr.Limaye submitted that Section 34 comes into operation only when the document is tendered in evidence.
6. On the other hand, the submission, which has been urged by Mr.Suryawanshi is that Section 34 as amended by 2001 Amendment is not applicable to insufficiently stamped instruments executed prior to 1.5.2001. He submitted that the Amendment of 2001 does not extend any benefit, so far as penalty is concerned, to the instruments executed prior to the date on which 2001 Amendment came into force. He submitted, the relevant date for both, the duty and a penalty, would be the date of execution of the instrument. In support of this submission Mr.Suryawanshi placed reliance upon the judgment of the Full Bench of the Madras High Court in Viraraghava Reddy v. Subbakka reported in 5 Mad. 394 (F.B.). Then, Mr. Suryawanshi, after inviting my attention to the provisions of Section 34 of the Act, submitted that it being a fiscal measure enacted to secure revenue for the State it has to be interpreted strictly to mean that the instruments prior to 1.5.2001 would be governed by old provision. In support of this proposition he placed reliance upon the judgment of the Supreme Court in Hindustan Steel Ltd. v. Dilip Construction Co. AIR 1969 SC 1238. He next submitted that from mere perusal of the said provision the intention of the legislature is clear which intended to fix the penalty from the date of execution of an instrument. He, therefore, submitted that the dates of execution of the documents assumes importance and since both the documents in question were executed much before the amendment of 2001, the provisions of Section 34 of the Act, as were prevailing then, would apply. Putting a cap on the penalty amount, according to Mr.Suryawanshi, further supports his contention that the legislature intended to give benefit only to the documents executed after the introduction of the amendment Page 1266 and, therefore, in any case it cannot have retrospective effect. He further submitted that since, in the present case, no rights are affected or no new obligations upon the petitioner are created by reduction of the amount of penalty, 2001 amendment would not apply to the instruments executed prior to 1.5.2001. In support of this proposition he placed reliance upon the judgment of the Supreme Court in Govindas and Ors. v. The Income Tax Officer and Anr. .
7. The controversy involved and the question raised in the instant writ petition relates to the interpretation of Section 34 of the Act, before and after the amendment of 2001. It would be advantageous to reproduce the relevant provisions of Section 34, as it stood before its amendment by Mah. Act 22 of 2001, to the extent as may be necessary, reads thus:
34. Instruments not duly stamped inadmissible in evidence etc.
No instrument chargeable with duly shall be admitted in evidence for any purpose by any person having by law or consent of parties authority to receive in evidence, or shall be acted upon, registered or authenticated by any such person or by any public officer unless such instrument is duly stamped (or if the instrument is written on sheet of paper with impressed stamp (such stamp paper is purchased in the name of one of the parties to the instrument).
Provided that --
(a) any such instrument shall, subject to all just exceptions, be admitted in evidence on payment of, -(i) the duty with which the same is chargeable, or in the case of an instrument insufficiently stamped, the amount required to make up such duty, and
(ii) a penalty of five rupees or, ten times the amount of deficient portion thereof, whichever is higher.
8. By the amendment of 2001, Sub-clause (ii) of Clause (a) of Section 34 only was substituted and it was brought into force with effect from 1.5.2001. The amended Sub-clause (ii) read thus:
(ii) a penalty at the rate of 2 per cent of the deficient portion of the stamp duty for every month or part thereof, from the date of execution of such instrument:
Provided that, in no case, the amount of the penalty shall exceed double the deficient portion of the stamp duty.
This amendment was introduced to enhance the stamp duty of certain documents and to provide cap on the penalty amount.
9. Perusal of the provisions contained in Section 34 of the Act show that it deals with admissibility of an instrument either not duly stamped or insufficiently stamped. This section provides a procedure for admission of such instrument in evidence on payment of the duty with which the same is chargeable, or in the case of an instrument insufficiently stamped, the amount required to make up such duty and in addition thereto a penalty.
Page 1267
This is so because if an instrument chargeable with the duty is produced before court by any person to receive it in evidence is not admissible unless it is duly stamped. In other words, such instrument, subject to all just exceptions, could be admitted in evidence only on payment of the duty with which the same is chargeable and if the instrument is insufficiently stamped, the amount required to make up such duty, and in addition thereto the penalty at the rate provided for under Section 34 (a)(ii) of the Act.
10. Section 34 of the Act, thus, provides a procedure to recover the stamp duty and a penalty at the rate of 2 per cent of the deficient portion of the stamp duty for every month or part thereof, from the date of execution of an instrument which either of the parties to the proceedings seeks to produce in evidence and which is either not duly stamped or insufficiently stamped. Perusal of Section 34 of the Act clearly shows that though the date of execution of the instrument is relevant for both, duty and penalty, the duty payable would be at the rate prevailing on the date of execution of the instrument and the penalty would be at the rate prevailing on the date on which the insufficently stamped instrument is sought to be tendered in evidence. This is logical, because, the duty becomes payable on execution, whereas, the penalty becomes payable when the deficiency in the instrument is sought to be removed or regularised. The use of the words "from the date of execution of such instrument" cannot be construed to mean that the penalty is leviable at the rate prevailing on the date of execution of the instrument. It merely means that the insufficiently stamped instruments executed prior to 1.5.2001 can become admissible in evidence, if penalty at the rate of 2 per cent of the deficient portion is paid from the date of execution of the instrument. Once Clause (a)(ii) of Section 34 is substituted with effect from 1.5.2001, the substituted provision would apply for all the insufficiently stamped instruments whether executed prior or after 1.5.2001. The argument of the respondent that Section 34 as amended by 2001 Amendment is not applicable to the insufficiently stamped instruments executed prior to 1.5.2001 runs counter to the expressed words used therein. If the intention of the leglislature was to restrict the amended provision to the instruments executed only after 1.5.2001 it would have expressly stated so. In the absence of any such restriction to read words "from the date of execution of such instrument" in the substituted Section 34(a)(ii) to apply only to the instruments executed after 1.5.2001, would mean adding the words to section which is not permissible in law.
11. It is thus clear, the provisions contained in Section 34 of the Act would come into play only when the insufficiently stamped document is produced on record in the proceedings before the court and is sought to be relied upon in evidence. It provides a payment of the duty and a penalty at the rate of 2 per cent, to make the instrument admissible in evidence. It does not even remotely suggest that the instruments executed after the Amendment of 2001 only would be leviable under Section 34(a)(ii) of the Act. The procedural provisions usually would apply retrospectively unless it expressly indicates otherwise. From perusal of this provisions, there is no such indication. Therefore, the question of admissibility of a document being a matter of procedure the law applicable is the law in force at the time Page 1268 when such instrument is sought to be admitted. Such indication is also seen in the proviso appended to Sub-clause (ii) of Clause (a) of Section 34 which was introduced in 2001 by the said amendment. It provides that in no case the amount of penalty shall exceed double the deficient portion of the stamp duty. It provides cap on the penalty. Moreover, it is well settled position in law that if the enactment is capable of either interpretation, in taxing/penal provisions, the interpretation beneficial to the assessee, has to be given. This is reiterated by the Supreme Court in Hindustan Lever Ltd. (supra)
12. The following conclusions emerge from the above discussion. The instruments tendered in evidence, if they are found to be insufficiently stamped, Section 34 of the Act would come into play and in such cases unless the duty with which such instruments are chargeable or in case of the instruments insufficiently stamped the amount required to make up such duty and the penalty, as provided for under Section 34(a)(ii), is paid such instruments cannot be admitted in evidence. In such eventuality, for payment of the stamp duty, the date of execution would be relevant and for levying the penalty the date when such instruments are tendered in evidence becomes relevant. The provisions contained in Section 34(a)(ii) as it stands today, insofar as penalty is concerned, would apply even to the instruments executed prior to 1.5.2001 if such instruments are sought to be produced in evidence after 1.5.2001. The penalty cannot be levied on the basis of the provisions of Section 34, as applicable prior to 1.5.2001, if the instrument was executed and sought to be produced after this date. In view of the clear provisions contained in Section 34(a)(ii) of the Act in my opinion, the Full Bench judgment of the Madras High Court, relied upon by the Respondents has no application to the facts of the present case.
13. In the present case the court below has taken the view that the provision which was in operation on the date on which the documents in question were executed would apply and hence the petitioner is liable to pay penalty at the rate of ten times of the deficient stamp duty, in my opinion, cannot be sustained in law. The provisions of Section 34, as observed earlier, are enacted with a view to recover the deficient portion of the stamp duty and not to recover penalty to secure revenue for the State. Section 34(a)(ii) of the Act would come into play only when an instrument insufficiently stamped is produced in evidence in the proceedings before court and, therefore, the penalty at the rate of 2 per cent of the deficient portion, in the present case, will have to be levied and since both the documents are produced after the amendment of 2001, the penalty at the rate of 2 per cent of the deficient portion of the stamp duty for every month or part thereof from the date of execution of these documents will have to be levied as provided for under Section 34(a)(ii) of the Act.
14. In the result, the petition is allowed and the order impugned, insofar as it directs to pay ten times penalty, is set aside and the petitioner is directed to pay the penalty at the rate of 2 per cent of the deficient portion of the stamp duty for every month or part thereof from the date of execution of both the documents keeping in view the cap on the penalty amount as provided for in the proviso appended to Sub-clause (ii) of Clause (a) of Section 34. Rule is, accordingly, made absolute. No costs.
Print Page
Bombay High Court
Krishna Sheena Shetty vs Suresh Anant Sawant And Nandkumar ... on 8 April, 2008
Equivalent citations: 2008 (110) Bom L R 1262
1. Heard learned Counsel for the parties.2. Rule, returnable forthwith. By consent of the parties taken up for final hearing. Mr. Suryawanshi, learned Counsel waives service for the respondents.
3. The petitioner-plaintiff has filed a special civil suit No.632 of 1998 under Section 6 of the Specific Relief Act, 1963 against the respondent-defendants, who allegedly dispossessed the petitioner forcibly from the suit premises. In the suit, the petitioner sought to produce two documents, alongwith his affidavit in lieu of an examination in chief, namely, an agreement for sale and a general power of attorney, both dated 6th April, 1996. The first respondent by filing an application at Exhibit-109 prayed for the impounding of these documents on the ground that they are neither registered nor sufficiently stamped. The Trial Court by an order dated 3.2.2006 allowed the application and impounded both these documents and directed the plaintiff to pay deficit stamp duty with ten times penalty within 30 days from date of the order. The plaintiff filed miscellaneous application No.298 of 2006 seeking review of the order dated 3.2.2006. The said application was also dismissed by the judgment and order dated 19.12.2006. This judgment and the order dated 3.2.2006 are impugned in the present writ petition.
4. This petition raises a short, yet important question whether a penalty leviable under Section 34(a)(ii) of the Bombay Stamp Act, 1958 (for short "the Act") in respect of insufficiently stamped instruments executed prior to 1.5.2005, the date on which the amendment of Section 34(a)(ii) by Mah.Act 22 of 2001 (for short "Amendment of 2001" or "2001 Amendment") came into force, would be under Section 34(a)(ii) of the Act prevailing before or after the 2001 Amendment. In other words, the question is, if an instrument is executed prior to the amendment of 2001, whether the provisions of Section 34 of the Act, as it stood prior to 2001 amendment, would apply or the provisions of this section as it stands after the amendment of 2001 would apply for charging the penalty under Sub-clause (ii) of Page 1265 Clause (a) of Section 34 of the Act. To address this question it is necessary to notice the relevant dates. The agreement and the power of attorney both are dated 6.4.1996. The order of impounding the documents on the application filed by the defendant at Exhibit-109 is dated 3.2.2006. The Amendment of 2001 came into force with effect from 1.5.2001.
5. I have heard learned Counsel for the parties and with their assistance perused the impugned orders and the other material placed before me including the relevant provisions of the Act and the judgments of the Supreme Court and High Courts relied upon by them. Mr.Limaye, learned Counsel for the petitioner submitted that for determining the stamp duty what is relevant is the date of execution of the instrument whereas for levying a penalty, the date when it is tendered in the evidence is relevant and since both the instruments in the present case were tendered by the plaintiff after the amendment of 2001, the impugned direction to pay ten times penalty as per the provisions of Section 34(a)(ii) prevailing prior to the 2001 amendment is totally illegal. He further submitted that Section 34 being a procedural law the amendment of 2001 will have a retrospective operation and, therefore, the penalty in respect of the instruments executed prior to the Amendment of 2001, would be leviable under Section 34(a)(ii) as it stands today. According to Mr. Limaye, it is also evident from the proviso appended to Section 34(a)(ii) by which the legislature has provided a cap on the penalty amount. Lastly, Mr.Limaye submitted that Section 34 comes into operation only when the document is tendered in evidence.
6. On the other hand, the submission, which has been urged by Mr.Suryawanshi is that Section 34 as amended by 2001 Amendment is not applicable to insufficiently stamped instruments executed prior to 1.5.2001. He submitted that the Amendment of 2001 does not extend any benefit, so far as penalty is concerned, to the instruments executed prior to the date on which 2001 Amendment came into force. He submitted, the relevant date for both, the duty and a penalty, would be the date of execution of the instrument. In support of this submission Mr.Suryawanshi placed reliance upon the judgment of the Full Bench of the Madras High Court in Viraraghava Reddy v. Subbakka reported in 5 Mad. 394 (F.B.). Then, Mr. Suryawanshi, after inviting my attention to the provisions of Section 34 of the Act, submitted that it being a fiscal measure enacted to secure revenue for the State it has to be interpreted strictly to mean that the instruments prior to 1.5.2001 would be governed by old provision. In support of this proposition he placed reliance upon the judgment of the Supreme Court in Hindustan Steel Ltd. v. Dilip Construction Co. AIR 1969 SC 1238. He next submitted that from mere perusal of the said provision the intention of the legislature is clear which intended to fix the penalty from the date of execution of an instrument. He, therefore, submitted that the dates of execution of the documents assumes importance and since both the documents in question were executed much before the amendment of 2001, the provisions of Section 34 of the Act, as were prevailing then, would apply. Putting a cap on the penalty amount, according to Mr.Suryawanshi, further supports his contention that the legislature intended to give benefit only to the documents executed after the introduction of the amendment Page 1266 and, therefore, in any case it cannot have retrospective effect. He further submitted that since, in the present case, no rights are affected or no new obligations upon the petitioner are created by reduction of the amount of penalty, 2001 amendment would not apply to the instruments executed prior to 1.5.2001. In support of this proposition he placed reliance upon the judgment of the Supreme Court in Govindas and Ors. v. The Income Tax Officer and Anr. .
7. The controversy involved and the question raised in the instant writ petition relates to the interpretation of Section 34 of the Act, before and after the amendment of 2001. It would be advantageous to reproduce the relevant provisions of Section 34, as it stood before its amendment by Mah. Act 22 of 2001, to the extent as may be necessary, reads thus:
34. Instruments not duly stamped inadmissible in evidence etc.
No instrument chargeable with duly shall be admitted in evidence for any purpose by any person having by law or consent of parties authority to receive in evidence, or shall be acted upon, registered or authenticated by any such person or by any public officer unless such instrument is duly stamped (or if the instrument is written on sheet of paper with impressed stamp (such stamp paper is purchased in the name of one of the parties to the instrument).
Provided that --
(a) any such instrument shall, subject to all just exceptions, be admitted in evidence on payment of, -(i) the duty with which the same is chargeable, or in the case of an instrument insufficiently stamped, the amount required to make up such duty, and
(ii) a penalty of five rupees or, ten times the amount of deficient portion thereof, whichever is higher.
8. By the amendment of 2001, Sub-clause (ii) of Clause (a) of Section 34 only was substituted and it was brought into force with effect from 1.5.2001. The amended Sub-clause (ii) read thus:
(ii) a penalty at the rate of 2 per cent of the deficient portion of the stamp duty for every month or part thereof, from the date of execution of such instrument:
Provided that, in no case, the amount of the penalty shall exceed double the deficient portion of the stamp duty.
This amendment was introduced to enhance the stamp duty of certain documents and to provide cap on the penalty amount.
9. Perusal of the provisions contained in Section 34 of the Act show that it deals with admissibility of an instrument either not duly stamped or insufficiently stamped. This section provides a procedure for admission of such instrument in evidence on payment of the duty with which the same is chargeable, or in the case of an instrument insufficiently stamped, the amount required to make up such duty and in addition thereto a penalty.
Page 1267
This is so because if an instrument chargeable with the duty is produced before court by any person to receive it in evidence is not admissible unless it is duly stamped. In other words, such instrument, subject to all just exceptions, could be admitted in evidence only on payment of the duty with which the same is chargeable and if the instrument is insufficiently stamped, the amount required to make up such duty, and in addition thereto the penalty at the rate provided for under Section 34 (a)(ii) of the Act.
10. Section 34 of the Act, thus, provides a procedure to recover the stamp duty and a penalty at the rate of 2 per cent of the deficient portion of the stamp duty for every month or part thereof, from the date of execution of an instrument which either of the parties to the proceedings seeks to produce in evidence and which is either not duly stamped or insufficiently stamped. Perusal of Section 34 of the Act clearly shows that though the date of execution of the instrument is relevant for both, duty and penalty, the duty payable would be at the rate prevailing on the date of execution of the instrument and the penalty would be at the rate prevailing on the date on which the insufficently stamped instrument is sought to be tendered in evidence. This is logical, because, the duty becomes payable on execution, whereas, the penalty becomes payable when the deficiency in the instrument is sought to be removed or regularised. The use of the words "from the date of execution of such instrument" cannot be construed to mean that the penalty is leviable at the rate prevailing on the date of execution of the instrument. It merely means that the insufficiently stamped instruments executed prior to 1.5.2001 can become admissible in evidence, if penalty at the rate of 2 per cent of the deficient portion is paid from the date of execution of the instrument. Once Clause (a)(ii) of Section 34 is substituted with effect from 1.5.2001, the substituted provision would apply for all the insufficiently stamped instruments whether executed prior or after 1.5.2001. The argument of the respondent that Section 34 as amended by 2001 Amendment is not applicable to the insufficiently stamped instruments executed prior to 1.5.2001 runs counter to the expressed words used therein. If the intention of the leglislature was to restrict the amended provision to the instruments executed only after 1.5.2001 it would have expressly stated so. In the absence of any such restriction to read words "from the date of execution of such instrument" in the substituted Section 34(a)(ii) to apply only to the instruments executed after 1.5.2001, would mean adding the words to section which is not permissible in law.
11. It is thus clear, the provisions contained in Section 34 of the Act would come into play only when the insufficiently stamped document is produced on record in the proceedings before the court and is sought to be relied upon in evidence. It provides a payment of the duty and a penalty at the rate of 2 per cent, to make the instrument admissible in evidence. It does not even remotely suggest that the instruments executed after the Amendment of 2001 only would be leviable under Section 34(a)(ii) of the Act. The procedural provisions usually would apply retrospectively unless it expressly indicates otherwise. From perusal of this provisions, there is no such indication. Therefore, the question of admissibility of a document being a matter of procedure the law applicable is the law in force at the time Page 1268 when such instrument is sought to be admitted. Such indication is also seen in the proviso appended to Sub-clause (ii) of Clause (a) of Section 34 which was introduced in 2001 by the said amendment. It provides that in no case the amount of penalty shall exceed double the deficient portion of the stamp duty. It provides cap on the penalty. Moreover, it is well settled position in law that if the enactment is capable of either interpretation, in taxing/penal provisions, the interpretation beneficial to the assessee, has to be given. This is reiterated by the Supreme Court in Hindustan Lever Ltd. (supra)
12. The following conclusions emerge from the above discussion. The instruments tendered in evidence, if they are found to be insufficiently stamped, Section 34 of the Act would come into play and in such cases unless the duty with which such instruments are chargeable or in case of the instruments insufficiently stamped the amount required to make up such duty and the penalty, as provided for under Section 34(a)(ii), is paid such instruments cannot be admitted in evidence. In such eventuality, for payment of the stamp duty, the date of execution would be relevant and for levying the penalty the date when such instruments are tendered in evidence becomes relevant. The provisions contained in Section 34(a)(ii) as it stands today, insofar as penalty is concerned, would apply even to the instruments executed prior to 1.5.2001 if such instruments are sought to be produced in evidence after 1.5.2001. The penalty cannot be levied on the basis of the provisions of Section 34, as applicable prior to 1.5.2001, if the instrument was executed and sought to be produced after this date. In view of the clear provisions contained in Section 34(a)(ii) of the Act in my opinion, the Full Bench judgment of the Madras High Court, relied upon by the Respondents has no application to the facts of the present case.
13. In the present case the court below has taken the view that the provision which was in operation on the date on which the documents in question were executed would apply and hence the petitioner is liable to pay penalty at the rate of ten times of the deficient stamp duty, in my opinion, cannot be sustained in law. The provisions of Section 34, as observed earlier, are enacted with a view to recover the deficient portion of the stamp duty and not to recover penalty to secure revenue for the State. Section 34(a)(ii) of the Act would come into play only when an instrument insufficiently stamped is produced in evidence in the proceedings before court and, therefore, the penalty at the rate of 2 per cent of the deficient portion, in the present case, will have to be levied and since both the documents are produced after the amendment of 2001, the penalty at the rate of 2 per cent of the deficient portion of the stamp duty for every month or part thereof from the date of execution of these documents will have to be levied as provided for under Section 34(a)(ii) of the Act.
14. In the result, the petition is allowed and the order impugned, insofar as it directs to pay ten times penalty, is set aside and the petitioner is directed to pay the penalty at the rate of 2 per cent of the deficient portion of the stamp duty for every month or part thereof from the date of execution of both the documents keeping in view the cap on the penalty amount as provided for in the proviso appended to Sub-clause (ii) of Clause (a) of Section 34. Rule is, accordingly, made absolute. No costs.
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