' This revision petition, calls in question the validity of the order dated 23-1-1984, passed by the learned Civil Judge, Wazirabad, whereby the document dated 20-8-1975 described by the petitioner as a receipt, was, treated as a sale-deed, impounded and 11 times of the stamp duty, imposed thereon.
The circumstances which led to the passing of the impugned order are that the petitioner brought a suit against the respondents for declaration that he, was owner of the land in dispute, which he claimed to have been sold away to him, by their predecessor-in-interest namely Abdullah, for a consideration of Rs, 1,20,000. The respondents contested the suit. On 23-1-1984, while appearing as his own witness, the petitioner deposed that he purchased the land from Abdullah deceased for a sum of Rs, 1,20,u00, for which the latter issued a receipt. This document was sought to be tendered in evidence by the petitioner, as a receipt but the opposite-party raised an objection that it constituted a sale deed, and being unstamped, was, liable to be impounded his argument prevailed with the learned trial Court.
2. I have heard the learned counsel for the parties. On behalf of the petitioner, his learned counsel has raised two objections, firstly ; the document in question is a receipt, embodying acknowledgment of payment of of sale price, but the learned Civil Judge illegally categorized it as a sale-deed ; secondly, whatever may be the character of the document, the learned Civil Judge, after impounding the same, should have proceeded under section 38(2) of the Stamp Act and rorwarded it to the Collector for action under section 40 of the Act ; the order for payment of the stamp duty, could be passed only, if the petitioner expressed his willingness to have the document admitted in evidence on payment of proper duty, together with 10 times of such auty, as penalty.
He stated that the petitioner was never ready to pay such duty and penalty and thus, the only course open to the learned Civil Judge, was, to proceed under section 38(2).
3. The impugned order is composite in nature, inasmuch as the document has been impounded, and further it imposes eleven times of the duty leviable on the sale-deed, which practically means, the imposition of proper duty plus, ten times of such duty. As regards the impounding of the document, since the learned Civil Judge found, that it was not properly stamped, under section 33, he was duty bound to impound it. The petitioner styled it as a receipt but the respondent pleaded that it constituted a conveyance. While impounding the documents this controversy, had to be adjudicated upon by the learned trial Court, and it has given certain reasons in holding the document as a sale-deed. I have gone through the document to weigh these reasons and do not feel persuaded to differ with the learned trial Court. A bare reading of this instrument would show that the title to the land, described in detail therein, was, conveyed by the deceased to the petitioner, against a consideration of Rs, 1,20,000. Both of them signed it as a vendor and vendee respectively, alongwith two marginal witnesses. The document bears all the characteristics of a sale-deed and thus, being unstamped, has rightly been impounded.
4. The next question arises as to whether or not after impounding the document, the fuither step taken by the learned Civil Judge, in imposing the duty and penalty, can be upheld. The learned counsel appearing for the respondents relying on Muhammad Ashraf v. Shah-ud-Din (1) has endeavoured {{FOOT NOTE}}
(1) PLD 1967 Lab. 564 {{FOOT NOTE}} ' to support the impugned order. He drew my attention to the proceedings recorded by the trial Court on 23-1-1984 to point out, that during the course of his statement, the petitioner tendered the document in evidence, and it was because of the respondents' objection that it was not admitted in evidence. He then referred to section 35 of the Act and argued that the learned Civil Judge acted well within his jurisdiction, in requiring the petitioner to pay the duty, leviable on the sale-deed, together with a sum equal to ten times of such duty as a penalty.
5. For determination of this controversy, it is to be noticed that under section 35, no instrument, unless it is duly stamped, can be admitted in evidence or acted upon. However, the person having by law or consent of parties, authority to receive evidence, can admit in evidence, an insufficiently or unstamped instrument, on payment of the requisite duty alongwith a penalty of Rs, 5; if ten times of the duty leviable, exceeds Rs, 5, the penalty payable is fixed at a sum equal to ten times of such duty. When, upon payment of the duty and the penalty the instrument in question is admitted in evidence, such person or the Court, as the case may be, has got to proceed under subsection (1) of section 38 and send to the Collector or such other person, as may be appointed in this behalf, its authenticated copy, together with a certificate of payment of duty and penalty alongwith the amount thereof. On the other hand, if the impugned document is not admitted in evidence, under subsection (2) the person or the Court, impounding it, must send it, in original, to the Collector, who on receiving the document must follow the procedure prescribed by section 40 and adjudge as to whether or not the instrument, is properly stamped. If he comes to the conclusion, that it is not properly stamped, he has to assess the duty and recover the came, together with the penalty.
6. After a document has been impounded, it is the choice of the litigant to tender it in evidence on payment of requisite duty and penalty or to ask the Court to refer the matter to the Collector under subsection (2) of section 38. If the party does not want to produce the document in evidence or otherwise prefers to have the course laid down in section 38(2) adopted by the Court, the latter cannot embark upon determination and realization of the duty and the penalty. It is noteworthy that when a party offers to tender an unstamped or insufficiently stamped document in evidence and the 10 times of the duty, payable on the instrument exceeds Rs, 5, the Court must impose a penalty, equal to 10 times of the duty chargeable thereon and in view of the provisions of section 35, is, not left with any choice, to inflict a lesser penalty. However, in this behalf, under section 40, the Collector appears to be possessed of wider powers. This is obvious from clause (b) of subsection (1) of section 40 which is reproduced below :- "(b) if he is of opinion that such instrument is chargeable with duty an is not duly stamped, he shall require the payment of the proper duty of the amount required to make up the same, together with a penalty of five rupees or, if he thinks fit (an amount not exceeding) to times the amont of the proper duty or of the deficient portion thereof whether such amount exceeds or falls short of five rupees."
' The language of this clause amply demonstrates that when an unstamped or insufficiently stamp instrument is brought before the Collector, two courses are open to him ; he can either charge the proper duty, together with a penalty of Rs, 5 or such duty, plus an amount not exceeding 10 time thereof. If instead of imposing the penalty of Rs, 5, the Collector elects t' adopt the second course, the expression, "if he thinks fit" figuring in clause (bibid, confers on him a wide discretion, that in consonance with the circumstances of the case, he my not impose the maximum penalty of ten times of the property duty, and inflict a lesser penalty.
7. It may be added, that the imposition of penalty by the Court, is open to review by the Collector, for, under section 39, if he thinks fit, can refund any portion of the penalty, in excess of Rs, 5 paid on the instrument, copy whereof, is, received by him under subsection (I) of section 38. But notwithstanding the inconclusiveness of the proceedings conducted by the Court under section 38(1) and ultimate amenability thereof to the Collector, a party may be tempted to have his case referred to the latter under section 38(2) instead of inviting the decision of the Court. It, therefore, appears necessary that after impounding the instrument the Court must ask the party interested to produce it in evidence, as to whether or not he wants the document to be admitted in evidence, on payment of the duty and the penalty described under section 35. The available record does not disclose that such a choice was given to the petitioner ; but rather indicates that the learned Civil Judge laboured under the impression, that the imposition of the duty and penalty is the essential corollary of the orders impounding the document. The precedent relied upon by the learned counsel for the respondents also lays down, that it is only when the document is sought to be admitted in evidence, by either party that the Court has the power to pass an order under clause
(a) of the proviso to section 35. This ruling, therefore, does not support the respondents. It is thus, obvious, that the procedure followed by the learned Civil Judge is not countenanced by law, and the impugned order to the extent of imposition of duty and penalty is in excess of the jurisdiction, vested in him.
8. For the foregoing reasons this revision petition is partly accepted and the impugned order to the extent of imposition of duty and penalty set aside. The learned Civil Judge shall proceed under section 38(2) and send the document in question to the Collector for action under section 40. The parties are left to bear their own costs.