Government of Uttar Pradesh and Others vs Raja Mohammad Amir Ahmad Khan
Rewritten Version Notice: This is a rewritten version of the original judgment.
Court: Supreme Court of India
Case Number: Civil Appeal No. 369 of 1957
Decision Date: 16 February 1961
Coram: J.L. Kapur, M. Hidayatullah, J.C. Shah
In this case the Supreme Court of India considered a petition filed by the Government of Uttar Pradesh and others against Raja Mohammad Amir Ahmad Khan, with the judgment rendered on 16 February 1961. The opinion was authored by Justice J. L. Kapur, who sat with Justices M. Hidayatullah and J. C. Shah. The case is reported in the citations 1961 AIR 787 and 1962 SCR (1) 97, and it concerns the administration of stamp duty under the Indian Stamp Act of 1899, specifically sections 31, 32 and 33.
The factual backdrop, as recorded in the headnote, is that the respondent executed an instrument and, seeking clarification of the applicable stamp duty, presented the instrument to the Collector for an opinion pursuant to section 31 of the Stamp Act. The Collector, uncertain of the correct duty, referred the matter to the Board of Revenue, which after considerable deliberation determined the amount of duty payable. Following this determination the Collector impounded the instrument and directed that the duty be deposited within fifteen days. Subsequently a notice was served upon the respondent requiring payment of the assessed stamp duty together with a penalty of five rupees within one month, and warning that failure to comply would result in recovery proceedings treating the amounts as arrears of land revenue.
The respondent challenged the legality of both the impoundment of the instrument and the demand for duty and penalty. The Court held that once the Collector had made a determination of the stamp duty, he became functus officio and could no longer impound the instrument nor impose a penalty. Section 31 merely obliges the Collector to ascertain the correct duty; if the person executing the instrument wishes to give effect to it or to use it as evidence, he must pay the duty, after which the Collector, under section 32, affixes the necessary endorsement. Section 33, however, empowers any public officer before whom an instrument chargeable with duty is produced in the performance of his functions to impound the instrument if it is not duly stamped. The Court explained that an instrument presented to the Collector for duty determination does not fall within the situation contemplated by section 33, because the instrument is not being produced before a judicial or other officer performing evidentiary functions, nor is it coming before an officer for purposes such as registration.
The judgment further referred to earlier authorities, noting that in Re Cooke and Kelly (1932) I.L.R. 59 Cal. 1171 a statement was made obiter, and that cases such as Collector, Ahmednagar v. Rambhau Tukaram Nirhali (A.I.R. 1930 Bombay 392), Paiku v. Gaya (I.L.R. 1948 Nag. 950) and Chunduri Panakala Rao v. Penugonda Kumaraswami (A.I.R. 1937 Madras 763) were also cited for guidance.
The matter arose on appeal from a civil judgment and decree dated 27 January 1956 of the Allahabad High Court (Lucknow Bench), issued in Civil Miscellaneous Application No. 17 of the year 1954, and was identified as Civil Appeal No. 369 of 1957. The Court’s reasoning clarified the limited scope of the Collector’s powers after duty determination and set the legal position that the imposition of additional penalty and the continued holding of the instrument were beyond statutory authority.
In the appeal decided on 16 February 1961, the judgment was delivered by Justice Kapur, J. Counsel C. B. Agarwala and C. P. Lal appeared for the appellant, while counsel V. D. Misra represented the respondent. The matter before the Supreme Court was an appeal against the judgment and order of the Allahabad High Court that had been issued on a certificate granted by that court. The respondent had earlier filed a petition under article 226 of the Constitution, contending that the imposition of stamp duty by the Collector of Sitapur, amounting to Rs 85,595 ⅞, together with a penalty of Rs 5, was contrary to law, could not be enforced against him, and therefore the order should be set aside. On 12 September 1948 the respondent executed a wakf by orally reciting the Sigha; the recitation was subsequently reduced to writing on a stamped paper, signed by the respondent and attested by a witness. Three days later, on 15 September 1948, the respondent presented this document to the Collector for his opinion under section 31 of the Stamp Act as to the duty payable. The Collector, uncertain of the correct duty, referred the question to the Board of Revenue, which after a considerable delay held that the document was liable to duty in accordance with article 58 of the Stamp Act. Consequently, on 29 October 1951 the Collector fixed the stamp duty at Rs 85,598 ⅞ and directed that the amount be deposited within fifteen days. A notice to that effect was served on the respondent on 10 November 1951. The respondent then filed another petition in the High Court under article 226, but the petition was dismissed on 3 November 1952 on the ground that it was premature. On 2 February 1954 a further notice was served upon the respondent, requiring him to pay the assessed stamp duty together with a penalty of Rs 5 within one month, otherwise proceedings would be instituted against him under section 48 of the Stamp Act. Thereafter, on 1 March 1944, the respondent again invoked article 226 of the Constitution before the Allahabad High Court, challenging the legality of both the stamp duty and the penalty and seeking a writ of certiorari. The full bench of the High Court set aside the Collector’s order, a decision that was appealed by the State of Uttar Pradesh to this Court. The resolution of the appeal turns on the interpretation of sections 31, 32 and 33 of the Stamp Act. Section 31(1) provides that when any instrument, whether executed or not and whether previously stamped or not, is brought to the Collector and the person presenting it applies for the Collector’s opinion on the duty, if any, and pays a prescribed fee not exceeding five rupees and not less than eight annas as directed by the Collector, the Collector shall determine, in his judgment, the duty, if any, chargeable on the instrument. It is admitted that the disputed document was indeed submitted to the Collector for his opinion under this provision.
In the present matter the Collector was asked to give his opinion on the amount of stamp duty that ought to be levied on a particular instrument, as provided for by section 31 of the Stamp Act. Section 32 of the Act then requires that when an instrument is presented to the Collector under section 31, the Collector must determine either that the instrument has already been fully stamped or that a duty is payable, and that the duty is subsequently paid. Upon making such determination, the Collector is required to certify on the instrument, by means of an endorsement, that the full duty has been paid; once this endorsement is affixed, the instrument is to be regarded as fully stamped or, where appropriate, as not chargeable to duty. The proviso to section 32 further provides that the Collector is not authorized to make the endorsement if the instrument is brought to him more than one month after its date of execution. The judgment then turned to the provisions of section 33, which states that every person who, by law or by the consent of the parties, has authority to receive evidence, and every person in charge of a public office, except a police officer, who is presented with an instrument that in his opinion is chargeable with duty, must, if he finds that the instrument is not duly stamped, impound it. Sub‑section (2) requires such persons to examine each instrument produced before them to ascertain whether it bears a stamp of the value and description required by the law in force in British India at the time of the instrument’s execution or first execution. A proviso stipulates that no magistrate or criminal‑court judge is required to examine or impound an instrument unless he deems it appropriate, except in proceedings under Chapters XII or XXXVI of the Code of Criminal Procedure, 1898; and that a High Court judge may delegate the duty of examination and impoundment to an officer appointed by the court. Sub‑section (3) provides that, in cases of doubt, the collecting Government may determine which offices are to be regarded as public offices and who are the persons in charge of such offices. The appeal hinged on how the words “before whom any instrument chargeable … is produced or comes in the performance of his functions” should be interpreted. The High Court held, with respect, that the judges in the earlier Chuni Lal Burman case correctly understood these words in section 33 to refer to the production of the instrument in evidence or for the purpose of reliance by either party.
In this case the Court observed that the purpose of paying the entire stamp duty was to enable the instrument to be admitted as evidence, to have it acted upon, to be registered, or to be authenticated in accordance with sections 32(3), 35, 38(1) and 48(1) of the Stamp Act. Counsel for the State drew the Court’s attention to several provisions of the Act, beginning with the definitions contained in Section 2(11), which explains the meaning of “duly stamped”, Section 2(14), which defines “instrument”, and Section 9(12), which defines “executed”. The counsel then referred to Section 3, which explains the term “chargeable”, and to Section 17, which requires that every instrument that is chargeable with duty and executed by any person in British India must be stamped either before or at the time of its execution. Further reference was made to Sections 35 and 38(1), as well as to Sections 40(1)(a), 41, 42 and 48; however, the Court noted that it was not necessary to discuss those provisions in detail for the purpose of the present determination.
The central issue concerned the legal effect of a person applying to the Collector for a determination of the proper stamp duty payable on an instrument. The State, which was the appellant, submitted that when an instrument—whether stamped or unstamped—is presented to the Collector for his opinion before it has been executed (that is, before it has been signed), the Collector’s duty is limited to giving his assessment of the duty payable and returning the document to the applicant. The State argued that a different result follows when the document is written on stamped or unstamped paper and has already been executed; in that circumstance the State contended that Section 33 of the Stamp Act obliges the Collector to confiscate, or impound, the instrument if the Collector finds that it is not duly stamped.
Conversely, the respondent submitted that once the Collector has rendered his opinion on the duty, the Collector ceases to have any further authority under Section 33 and therefore cannot impound the instrument. These competing submissions formed the two rival contentions that the Court needed to resolve.
After an unusually long delay, the Collector finally determined the amount of duty that was payable and proceeded to impound the document. The power to impound lies in Section 33 of the Act, which provides that any person who is a judge or who is in charge of a public office, before whom an instrument chargeable with duty is produced or comes in the performance of his functions, must seize the instrument if it appears to him not to be duly stamped. The Court therefore examined whether the power of impoundment under Section 33 was applicable in the present facts.
The Court noted that the instrument in dispute had not been produced as evidence, nor had it been presented for registration, nor for endorsement as contemplated by Section 32 of the Stamp Act. Rather, the instrument was brought before the Collector solely for the purpose of obtaining his advice on the correct amount of duty payable. Consequently, the Court focused on whether the circumstances of presenting the instrument for advisory purposes triggered the impoundment power conferred by Section 33.
In this case the Court explained that the expression “every person … before whom any instrument … is produced or comes in the performance of his functions” is intended to apply first to the production of an instrument before a judicial officer or any other officer who is exercising judicial functions for the purpose of proving a fact, and second to officers who are required to carry out a statutory function with respect to such instruments, for example the registration of a document. The provision does not extend to a situation in which a person merely asks the Collector to determine the amount of duty payable on an instrument. Accordingly, the power of impounding under section 33 does not arise when the instrument is presented solely for the purpose of obtaining the Collector’s opinion on the duty. The Court further observed that section 31 deals exclusively with the Collector’s duty to assess the stamp duty, if any, that the instrument is liable to pay. That section ends by directing that the Collector shall determine, in his judgment, the duty that the instrument is chargeable with, and it contains no further requirement for the Collector to take any additional action. The parties conceded that where an instrument is unexecuted—that is, not signed—and a person seeks the Collector’s opinion, the Collector must give his opinion and return the instrument together with that opinion to the requester. The language of the statute makes no distinction between executed and unstamped documents; the Collector’s powers and duties are the same in both cases. When asked to give his opinion, the Collector must determine the duty, and his functions in respect of that matter end there. The next provision, section 32, requires the Collector to certify by endorsement on the instrument, presented under section 31, that the full duty has been paid if the instrument is duly stamped, or that it is unstamped but the duty has been made up, or that it is not chargeable at all. Section 32 allows such endorsement only if the instrument is presented within one month of its execution. The Court noted, however, that where the instrument was executed more than a month before being brought before the Collector, section 31 imposes no time limit on seeking the opinion of duty, and there is no justification for imposing a time limit for that purpose. Chapter IV of the Act, covering sections 33 to 48, deals with instruments that are not duly stamped, providing for their impoundment, the procedure for dealing with impounded documents, the Collector’s power to stamp such instruments and the recovery of duties and penalties. The Court held that it would be an extraordinary situation if a person who merely seeks the Collector’s advice, without intending to use the instrument as evidence or to perform any further act that would give the instrument effect, were to be subjected to the penalties that apply to unstamped instruments used in the manner described in chapter IV. The scheme of the Act, therefore, shows that when a person only requests the Collector’s opinion on the proper duty, he does so under section 31, and no liability under the impounding and penalty provisions of section 33 arises.
When a person wishes to obtain the Collector’s view on the duty that is payable with respect to an instrument, the appropriate statutory provision is section 31. If the instrument has already been properly stamped and the person who executed it intends to give effect to the document or to rely on it as evidence, the duty must be paid and, under section 32, the Collector will endorse the instrument. Once the endorsement is made, the instrument is treated as if it had been duly stamped from the very beginning.
Conversely, where the person seeks only the determination of the duty and does not intend to proceed further, no additional consequence follows. In that situation an executed instrument is regarded in the same manner as an instrument that is both unexecuted and unstamped. After the Collector has fixed the duty, he becomes functus officio; consequently, the provisions of section 33 do not apply. Section 33 is intended for a later stage that involves more than merely asking the Collector’s opinion.
The Court noted that the observations of Rankin C.J. in Be Cooke and Kelly (1) are obiter, because the High Court had held that a reference made under section 57 of the Stamp Act was incompetent. The doctrine of functus officio has been applied in several decisions, for example in Collector, Ahmednagar v. Rambhau Tukaram Nirhali (2). In that case a certificate of sale had been signed but was not stamped; the defect was pointed out when the certificate was sent to the Sub‑Registrar for registration. The Sub‑Registrar informed the Judge, who then retrieved the certificate from the purchaser, believed that he possessed the power to impound the document and to impose a penalty, and sought the opinion of the High Court. The High Court held that, having signed the certificate, the Judge became functus officio and could not act further nor impound the document.
The same principle was later reiterated in (1) I.L.R. 59 Cal. 1171, (2) A.I.R. 1930 Bom. 392, Paiku v. Gaya (1) and Chunduri Panakala Rao v. Penugonda Kumaraswami (2). In the present case, the Court is of the opinion that as soon as the Collector determines the duty, he becomes functus officio and therefore cannot impound the instrument under section 33, nor can any consequential proceedings be instituted. Accordingly, the appeal was dismissed with costs, and the order of dismissal of the appeal stands.