Refund Of Stamp Duty Cannot Be Denied On Ground Of Delay If Application Got Belated Due To Judicial Proceedings : Supreme Court

The Supreme Court has exercised powers under Article 142 of the Constitution to order refund of stamp duty to a person, noting that the delay in making the application was due to the delay in deciding his consumer case before the National Consumer Disputes Redressal Commission.

The Court decided to exercise the powers under Article 142, after noting that there was no provision in the relevant statute, the Maharashtra Stamp Act, barring refund of stamp duty when the application for the same was belated due to judicial delay.

The Court expressed the view that when the application was delayed due to the prolonged judicial proceedings, the refund cannot be denied on the ground of delay.

The relevant observation from the judgment is as follows :

"We are conscious of the fact that as a general rule of law, the right to refund is a statutory creation. A refund can be sought in terms envisaged by statute. As discussed above, the case of the appellant is not specifically barred by any substantive provision. It is an established principle that this Court while exercising its power under Article 142 of Constitution must not ignore and override statutory provisions but must rather take note of the express statutory provisions and exercise its discretion with caution. Therefore, if a statute prescribes a limitation period, this Court must be slow to interfere with the delay under Article 142.

However, in the case of an eventuality such as the instant case where the facts of the case are not covered by the statute, this Court under Article 142 will have the power to do complete justice by condoning the delay. We are of the view that since the delay in filling the application for refund in the instant case was due to the prolonged proceedings before the NCDRC, the application cannot be rejected on the ground of delay. A litigant has no control over judicial delays. A rejection of the application for refund would violate equity, justice and fairness where the applicant is made to suffer the brunt of judicial delay. Therefore, this is a fit case for the exercise of the power under Article 142 of the Constitution".

A Bench of Justices D.Y.Chandrachud and B.V.Nagaratha made the above observations in a judgement involving the question of limitation period for return of stamp paper in a case titled Mr.Rajeev Nowhar vs Chief Controlling Revenue Authority Maharastra Case, Pune.

Factual Background

The appellant has booked a residential apartment however there soon arose a dispute with the builder leading to a consumer complaint. By an order dated 6 May 2016, the NCDRC allowed the complaint. The appellant was given the option to either execute the agreement with the developer, in which event the developer would pay compensation in the amount of Rs 10 lakhs, or in the alternative, if the appellant was not willing to execute an agreement, the developer was directed to refund the entire consideration together with interest at the rate of 12% per annum from the date of receipt of each installment until the date of refund along with compensation of Rs.10,00,000. The appellant exercised the option of  seeking a refund of consideration together with interest. The developer issued a cheque on 11 July 2016 for the refund of the consideration in terms of the order of the NCDRC. The appellant thereupon applied on 16 July 2016 for refund of the stamp duty of Rs 8,44,500 to the Collector of Stamps. By a communication dated 5 August 2016, the Collector of Stamps forwarded the file to the Deputy Inspector General of Registration with a recommendation that the refund should be denied on the ground that the appellant had not applied for refund within six months. By an order dated 27 September 2016, the Deputy Inspector General of Registration rejected the application for refund of stamp duty on the ground that the application for refund was not made within six months as mandated by Section 48(3) of the Maharashtra Stamp Act 1958.

This was challenged before the Bombay High Court. The Bombay High Court in its impugned judgement agreed with the view of the revenue authorities that application for refund by barred by limitation for not having preferred within a period of six months since the date of the purchase of the e-stamp.

Counsels for Appellants and Respondents relied on S.47, S.48, S.52 and S.52A of the Maharashtra Stamp Act, 1958.

Reasoning

The judgement authored by Justice D.Y.Chandrachud observes that S.47 of the Act and S.48 which prescribes for cases falling within S.47 deal with cases of "allowances for spoiled stamps". S.47, the judgement explains, would cover three classes of cases: (i) spoiled; (ii) obliterated; and (iii) unfit for the purpose by an error in writing or any other means. Rejecting the Respondent's argument that the appellant's case would fall within the purview of the third category of 'unfit for the purpose', the judgement explains:

"The expression 'any other means' must be read in the context of the words which immediately precede it, namely 'error in writing'. The expression "by any other means" would indicate that the legislature intended to refer to the defacement of a stamp paper in any manner analogous to an error in writing the instrument on the stamp paper. "Any other means" refers to any other modality by which the stamp paper is rendered unfit for the purpose for which it was purchased." (Para 14)

Thus, the judgement explains, the emphasis of S.47 is not on the purpose but on unfit stamps. Therefore, in cases where the stamp is not utilised at all because it is not needed subsequent to the purchase will not fall within the purview of S.47. Further, the judgement explains that S.48 would apply to only those cases where the relief is governed by S.47. Thus, the period of limitation of 6 months under S.48 would have no application to the appellant's case since it's not a case of unfit stamps.

With respect to S.52 of the Act, the judgement explains that S.52 deals with the provision of allowance in case of stamps that are not required for use due to the occurrence of any subsequent event that renders the purpose of the stamp void of nugatory. However, crucially, the judgement explains that S.52 would apply to only those cases where the applicant had knowledge that the stamp paper would not be required for use within six months from the date of purchase.

It holds:

"The provision cannot be arbitrarily applied to cases where the purchaser of the stamp had no knowledge that the stamp would not be required for use within six months from the purchase of the stamp. In the instant case, the appellant had no knowledge of the fact that the stamp was not needed within six months from the purchase of it. He was in a bona fide contest over his rights with the builder. Therefore, the case of the appellant would not fall under Section 52 of the Act as well." (Para 22)

Explaining the import of S.52A of the Maharashtra Stamp Act, the judgement explains that S.52A cannot be treated as a residual clause by applying it to classes of cases that do not fall within the purview of any other provisions. It explains:

"A contrary interpretation would create an artificial class based on economic capacity, as cases where the stamp duty paid exceeds Rupees five lakhs will alone be adjudicated without application of any limitation period as a residual case, while cases falling within the same class but where stamp duty paid is less than Rupees five lakhs cannot take recourse to the provision……in interpretation which leads to an invidious discrimination must be eschewed." (Para 27)

Further, the judgement relies on Committee-GFIL vs Libra Buildtech Private Limited and Others (2015) 16 SCC 31, a case where a two-bench of the Supreme Court held that the six-months limitation period under S.50 of the Indian Stamp Act, 1899 must be read to mean six months from the date of the order of the Court in case the transaction which was court-monitored could not be fulfilled for reasons beyond the control of the action-purchasers.

Having explained the import of S.47, S.50 and S.52, the judgement holds that the appellant's case does not fall within the ambit of any of these sections. And since there was nothing untoward in the conduct of the appellant and the delay in the outcome of the proceedings at NCDRC was not due to the actions of the appellants, it cannot be held there was a delay on part of the appellant in applying for a refund of stamp duty.

Based on the above reasoning, the judgment holds that since the appellant's case was not specifically barred by any substantive provision and the delay in application or refund was due to prolonged proceedings before the NCDRC, the Court could exercise its powers to do complete justice under Art.142 of the Constitution and condone the delay.

"A rejection of the application for refund would violate equity, justice and fairness where the applicant is made to suffer the brunt of judicial delay."

The Bench allowed the appeals and set aside the impugned judgement of the Bombay High Court. It further held that the appellant would be entitled to interest at the rate of 6% per annum from 16 July 2016 until the date of refund.

Case Title : Mr.Rajeev Nowhar vs Chief Controlling Revenue Authority Maharastra Case, Pune

Citation : LL 2021 SC 569

Click here to read/download the judgment