Summary
An insufficiently stamped agreement to sell, marked as an exhibit only subject to objection and referred to the Collector, stays inadmissible under Section 35 of the Stamp Act until the deficit duty and penalty are determined, paid and endorsed under Section 42. A mere offer to pay does not make it admissible, and Section 36 does not apply to such a marking. The Court restored the dismissal of the specific performance suit, but directed the subsequent purchasers to pay the plaintiff Rs. 5,00,000 in place of the Rs. 10,000 advance.
Issues
- Whether an insufficiently stamped agreement to sell becomes admissible in evidence because the plaintiff offers to pay the deficit stamp duty and penalty, when the Collector has not determined them and nothing has been paid.
- Whether Section 36 of the Stamp Act bars an objection to admissibility where the document was marked as an exhibit only subject to objection.
- Whether a suit for specific performance founded on an inadmissible agreement can be decreed.
Provisions considered
- Section 35, Indian Stamp Act, 1899An instrument chargeable with duty is inadmissible for any purpose unless duly stamped, subject to admission on payment of the deficit duty and penalty under the proviso; none of the other exceptions in the proviso applied. With no determination or payment, the agreement remained barred from evidence. (¶¶ 20, 21, 26, 30)
- Section 36, Indian Stamp Act, 1899Section 36 protects only an instrument actually admitted in evidence. Here the agreement was marked as an exhibit subject to objection, which was never resolved, so, following Ram Rattan v. Bajrang Lal and Javer Chand v. Pukhraj Surana, it did not come to the plaintiff's aid. (¶¶ 20, 22, 27, 29)
- Section 40, Indian Stamp Act, 1899Empowers the Collector to determine the proper duty and penalty on an impounded instrument. The trial court referred the agreement to the Collector, but no determination was made and the plaintiff never pursued the proceedings. (¶¶ 18, 19, 20, 23, 26)
- Section 42, Indian Stamp Act, 1899An insufficiently stamped instrument becomes admissible only after the duty and penalty are paid and the Collector or the admitting authority certifies this by endorsement on it. Without that endorsement the agreement could not be admitted or acted upon. (¶¶ 20, 24, 25, 26)
Held
- An insufficiently stamped instrument can be admitted in evidence only after the deficit duty and penalty have been assessed, paid and certified by endorsement under Section 42. The High Court erred in treating the agreement as admissible merely because the plaintiff said he would pay whatever the Collector assessed, when he made no effort, then or later, to have the deficiency determined and paid. (¶¶ 17, 19, 25, 26)
- Marking a document as an exhibit subject to objection only postpones the decision on admissibility; it is not an admission in evidence. Where the objection was never removed or cured, Section 36 does not prevent the document from being held inadmissible. (¶¶ 22, 27, 29)
- As the agreement to sell was the foundation of the suit for specific performance, its inadmissibility made the claim unenforceable, and the trial court's dismissal of the suit was restored. The Court did not decide the other contentions on the validity of the agreement or the alleged coercion. (¶¶ 30, 31)
- As the advance of Rs. 10,000 had been with defendant no.1 for about 25 years and the appellants had since bought the property from him, the Court placed on the appellants the liability to return it, quantified at a rounded Rs. 5,00,000. (¶ 32)
Result
Appeals allowed; High Court judgment set aside and Trial Court's decree dismissing the suit for specific performance restored. Appellants directed to pay Rs. 5,00,000 to the plaintiff within three months.