Judicial Interpretation

The key judicial interpretation, found in paragraphs 21-21.8, outlines the steps to be followed under Sections 33, 34, 35, 37, and 39 of the Karnataka Stamp Act, 1957. The Court clarifies that the option to have the document sent to the Deputy Commissioner for collecting deficit stamp duty and penalty must be exercised by a party before the Court exercises jurisdiction under Section 34 of the Act.

Court’s View

The Supreme Court held that the imposition of a ten times penalty at the current juncture of the case was illegal and contrary to the steps outlined in the judgment. The Court emphasized that the District Registrar, in exercise of his jurisdiction under Section 39 of the Act, should decide the quantum of stamp duty and penalty payable on the instrument. (Paragraphs 22-23)

Conclusion

The appeals were allowed in part. The direction to pay ten times the penalty of the deficit stamp duty was set aside. The trial court was directed to send the agreement of sale to the District Registrar to determine the deficit stamp duty and penalty payable. (Paragraphs 23-24)

Legal Provisions

Karnataka Stamp Act, 1957 – Sections 33, 34, 35, 37, 39; Indian Stamp Act, 1899 – Sections 33, 35, 36, 37, 38, 39, 40

Case of the Appellant (Seetharama Shetty)

• Argued that the suit document conforms to the requirements of the Act and the suit was for injunction.
• Contended that the trial court ought to have sent the impounded instrument to the District Registrar for determining the stamp duty and penalty.
• Claimed that the case falls under Section 37(2) of the Act, and the impugned orders have denied the appellant the option to have the penalty decided by the District Registrar.

Appellant Relied On

Chilakuri Gangulappa v. Revenue Divisional Officer, Madanpalle

Case of the Respondent (Monappa Shetty)

• Denied the execution of the agreement of sale dated 29.06.1999.
• Argued that the suit agreement is insufficiently stamped and therefore inadmissible in evidence.
• Filed an application before the trial court under Section 33 of the Act to impound the suit agreement to collect the deficit stamp duty and penalty.

Respondent Relied On

Not specifically mentioned in the judgment.

Question & Answer

1. Q: What is the main issue addressed in this judgment? A: The main issue is the scope and application of Sections 33, 34, 37, and 39 of the Karnataka Stamp Act, 1957, particularly regarding the imposition of penalties on insufficiently stamped documents. (Paragraph 3)
2. Q: Can a court automatically impose a ten times penalty on insufficiently stamped documents? A: No, the Court clarified that the ten times penalty is the farthest limit meant only for very extreme situations. The Deputy Commissioner/District Registrar has discretion to levy and collect a commensurate penalty. (Paragraph 21.6)
3. Q: What options does a party have when dealing with an insufficiently stamped document? A: A party can either submit to the scope of Section 34 of the Act and pay duty and penalty, or directly move an application under Section 39 of the Act before the District Registrar. (Paragraph 21.1.1)
4. Q: What is the significance of Section 35 of the Karnataka Stamp Act? A: Section 35 prohibits questioning the admission of an insufficiently stamped instrument in evidence once it has been admitted. (Paragraph 21.3)
5. Q: What was the final decision of the Supreme Court in this case? A: The Court set aside the direction to pay ten times the penalty of the deficit stamp duty and directed the trial court to send the agreement of sale to the District Registrar to determine the deficit stamp duty and penalty payable. (Paragraph 23)

Details of Case

• Court: Supreme Court of India
• Bench: Hrishikesh Roy and S.V.N. Bhatti, JJ.
• Date of Order: September 02, 2024
• Case Name: Seetharama Shetty vs. Monappa Shetty
• Case No.: Civil Appeal Nos. 10039-40 of 2024 (Arising out of S.L.P. (Civil) Nos. 7249-7250 of 2022)