Stamp Act — Document insufficiently stamped liable to be impounded — Stamp Act 1899 S. 33, S. 35, S. 38 and S. 40.

[Umesh Kumar Prakashchandra Sharma v. Rajaram Ramchandra
Jat and Anr., AIR 2010 Madhya Pradesh 158]

The petitioner Umesh Kumar had filed a civil suit for
specific performance of the contract and possession of the property. The
petitioner had produced a document dated 2-6-2001, which was admitted. The
document contained recital that the possession was delivered, therefore the
document was required to be executed on appropriate stamp paper and as it was
not on appropriate stamp paper it was liable to be impounded and to pay stamp
duty, penalty, etc. The Trial Court impounded the document in question and
directed the petitioner to pay duty and penalty.

The petitioner challenged the aforesaid order in writ
before the High Court. The High Court held that on perusal of S. 33 of the
Act, it was clear that when a person authorised under law or by consent of the
parties has powers to receive evidence, then such person would be obliged to
impound the document when any document which is insufficiently stamped is
produced before him. The word ‘impound’ does not mean that the Court which is
in possession of the document has immediately to recover duty and penalty. The
word ‘impound’ would only mean to authorise the Court to keep the document in
the custody, because the Court is of the opinion that the document is either
suspected or is insufficiently stamped.

Once a Court comes to the conclusion that the document is
insufficiently stamped, then it has to keep the document in its custody and
then proceed in accordance with law.

Article 5 of the Indian Stamp Act, deals with an agreement
or memorandum of an agreement. If the agreement is in relation to the property
or sale of the same, then ordinarily the stamp duty payable would be Rs.50,
but in case the document contains a recital that the possession of the
property has already been transferred or handed over to the proposed
purchaser, without executing a conveyance or it shall be handed over to the
purchaser without execution of the conveyance in future, then the document
shall come out of the definition of an ‘agreement’, but would become a
‘conveyance’, as provided under Article 23 of Schedule I-A. In the present
matter, the Court below was absolutely justified in holding that because of
the recital in the document, the agreement stood converted into a conveyance
and was chargeable with the duty of 7½% on the market value of the property.
The Court below was also justified in requiring the plaintiff to pay 7½% duty
on the face value of the document and pay ten times penalty in accordance with
S. 33, S. 35 and S. 38 of the Indian Stamp Act. The order passed by the Court
below is not bad.