Karnataka Stamp Act | Supreme Court Approves Levy Of Ten Times Penalty On Deficit Stamp Duty To Admit Document In Evidence
The Supreme Court in a recent judgment justified the imposition of ten times penalty on a deficit stamp duty being unpaid by the litigant under the Karnataka Stamp Act, 1957 (“Act”).
The Appellant wanted the suit agreement to be admitted in evidence at the interlocutory stage, however, the agreement was not sufficiently stamped. Therefore, in terms of Section 34 of the Act, the Appellant was directed to pay ten times of deficit stamp duty by the trial court as a penalty for not paying sufficient stamp duty. The trial court's order was sustained by the High Court. Following this, an appeal was preferred before the Supreme Court.
Before the Supreme Court, it was argued by the Appellant/litigant that the deficit stamp duty should alone be collected at the time of the passing of the judgment and decree, and the levy of penalty is illegal and erroneous.
Rejecting the Appellant's contention, the bench comprising Justices Hrishikesh Roy and SVN Bhatti observed that since the Appellant's case squarely falls within Section 34 of the Act, which makes instruments not duly stamped to be inadmissible in evidence, the levy of penalty by the trial court i.e., ten times the deficit stamp duty amount could not be interfered with.
“Being so, when the trial court imposed ten times penalty on the deficit stamp duty, the appellant argued in the High Court that he would pay the stamp duty when the decree of specific performance was granted. In our considered view, the case of appellant is covered by Section 34 of the Act, and rightly ten-times penalty is imposed.”, the judgment authored by Justice SVN Bhatti observed.
On the aspect of whether the trial court has the discretion to levy a lesser amount of penalty than ten times the deficit stamp duty amount, the Court drew reference from the case of Gangappa and another v. Fakkirappa (2018) where it was held that while admitting insufficiently stamped documents, trial courts have no discretion in levying the penalty.
Accordingly, the appeal was dismissed.
Appearance:
For Petitioner(s) Mr. Chand Qureshi, AOR Mr. Parikshit Angadi, Adv. Mr. Anirudh Sanganeria, AOR
For Respondent(s) Mr. Anand Sanjay M Nuli, Sr. Adv. Mr. Suraj Kaushik, Adv. Mr. Nanda Kumar, Adv. M/S. Nuli & Nuli, AOR Mr. Prateek K. Chadha, A.A.G. Mr. V. N. Raghupathy, AOR Mr. Sreekar Aechuri, Adv.
Case Title: N.M. THEERTHEGOWDA Versus Y.M. ASHOK KUMAR AND OTHERS, CIVIL APPEAL NO. 10038 OF 2024
Citation : 2024 LiveLaw (SC) 668
Click here to read/download the judgment