Full Judgment Text
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PETITIONER:
BANARSI DAS AHLUWALIA
Vs.
RESPONDENT:
THE CHIEF CONTROLLING REVENUE AUTHORITY, DELHI
DATE OF JUDGMENT:
28/09/1967
BENCH:
SHELAT, J.M.
BENCH:
SHELAT, J.M.
SHAH, J.C.
SIKRI, S.M.
CITATION:
1968 AIR 497 1968 SCR (1) 685
ACT:
Indian Stamp Act, 1899, s. 57(1) and (2)-Application to Re-
venue Authority to state a case for opinion of High
Court--Substantial question of law involved-If Authority
bound to state a case whether there is a ’pending case or
not’.
HEADNOTE:
The appellant executed a deed of trust on December 20, 1961,
in respect of certain properties on a stamp paper of Rs.
30/- on the footing that the deed was a declaration of
trust. The SubRegistrar to whom it was presented for
registration, impounded the deed and forwarded it to the
Collector for action under see. 38 (2) of the Indian Stamp
Act, 2 of 1899. The Collector thereafter directed the
appellant to deposit additional stamp duty and penalty
amounting to Rs. 36,685/- but the Chief Controlling Revenue
Authority, Delhi, reduced the amount in revision to Rs.
3,780/-. The appellant then applied to that Authority to
state a case to the High Court under section 57(1) but this
application was rejected and a writ petition filed by the
appellant challenging this rejection was dismissed by the
High Court.
In appeal to this Court it was contended on behalf of the
appellant that the Authority was, under section 57(1), bound
to refer the case to the High Court even though there was no
pending case before it and by its refusal to do so the
Authority failed to discharge its statutory duty; that the
High Court was in the circumstances competent to direct the
reference and the summary dismissal of the writ petition by
if was wrong. On the other hand the respondent’s contention
was that section 57(1) postulates the existence of a pending
case; that the word "case" in the sub-section means a case
which has not been finally decided by the revenue
authorities and which is capable of being disposed of, where
a reference is made to the High Court, in accordance with
the opinion of the Court as provided by sec. 59(2),
Held: When a reference has been made to the Authority or
the case has otherwise come to his notice, if an application
is made under s. 57(1) and it involves a substantial
question of law, whether the case is pending or not, the
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Authority is bound to state the case in compliance with its
obligation. [695 A-B]
Section 57 affords a remedy to the citizen to have his case
referred to the High Court against an order of a revenue
authority imposing stamp duty and/or penalty provided the
application involves a substantial question of law and
imposes a corresponding obligation on the Authority to refer
it to the High Court for its opinion. Such a right and
obligation cannot be construed to depend upon any subsidiary
circumstance such as the pendency of the case before the
Authority. [694 F-G]
The Authority therefore was in error in refusing to state
the case and the High Court was equally in error in
summarily dismissing the writ petition as the question
whether the document was a declaration of trust or was a
deed of settlement was a substantial question of law. [695
C]
686
Chief Controlling Revenue Authority v. Maharashtra Sugar
Mills Ltd., [1950] S.C.R. 536; relied upon and explained.
Case law reviewed.
JUDGMENT:
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 53 of 1965
Appeal by special leave from the judgment and order dated
April 16, 1963 of the Punjab High Court, Circuit Bench at
Delhi in Civil Writ No. CW-267-D of 1963.
I. M. Lall, E. C. Agrawala and P. C. Agrawala, for the
appellant.
N. S. Bindra, R. N. Sachthey and S. P. Nayar, for the res-
pondent.
The Judgment of the Court was delivered by
Shelat, J. This appeal by special leave is directed against
the order of the High Court of Punjab (Delhi Bench)
dismissing the appellant’s petition for an appropriate writ
directing the Chief Controlling Revenue Authority, Delhi, to
state the case to the High Court under sec. 57(1) of the
Indian Stamp Act, 2 of 1899.
The facts leading to the said petition may be briefly
stated: On December 20, 1961 the appellant executed a, deed
of trust in respect of certain properties on a stamp paper
of Rs. 30 on the footing that the said deed was a
declaration of trust. The SubRegistrar to whom it was
presented for registration, impounded it and forwarded it to
the Collector for action under sec. 38(2). The Collector
served a notice on the appellant to show cause why he should
not be charged with deficient stamp duty of Rs. 3,365 and a
penalty of Rs. 33,650. After hearing Counsel the Collector
directed the appellant to deposit the aggregate amount of
Rs. 36,685. The appellant filed a revision before the Chief
Controlling Revenue Authority, Delhi, who reduced the amount
of deficit duty and penalty to Rs. 630 and Rs. 3,150
respectively. On December 9, 1962 the appellant applied to
the said Authority to state the case to the High Court under
section 57(1). That was rejected and the appellant filed a
writ petition but the High Court dismissed- it in limine.
The appellant’s contention is that the Authority was under
section 57(1) bound to refer the case to the High Court even
though there was no pending case before it, that by its
refusal to do so the Authority failed to discharge its
statutory duty, that the High Court was in the circumstances
competent to direct the reference and therefore the High
Court’s summary dismissal of the writ petition was wrong.
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The respondent’s contention, on the other hand, is that
section 57(1) postulates the existence of a pending case,
that the word "case" in the sub-section means a case which
has not been finally decided by the revenue authorities and
which is capable of being disposed of, if a reference is
made and the High Court pronounces its opinion on such
reference, in accordance with such opinion as provided by
see. 59(2). It is contended that therefore the High Court
cannot direct the Autho-
687
rity to state the case except where the case is still
Depending before the Revenue Authorities. How can the
Authority, it was argued, dispose of the case conformably to
the High Court’s opinion when there is no case pending
before it which it can dispose of?
To appreciate the rival contentions it is necessary to read
at this stage the relevant provisions of the Act. Section
56(1) provides that the powers exercisable by a Collector
under Chapter IV and Chapter V and under clause (a) of the
first proviso to section 26 shall in all cases be subject to
the control of the Chief Controlling Revenue Authority.
Sub-section 2 provides:--
"If any Collector, acting under section 31,
section 40 or section 41 feels doubt as to the
amount of duty with which any instrument is
chargeable, he may draw up a statement of the
case, and refer it, with his own opinion
thereon, for the decision of the Chief
Controlling Revenue Authority."
Section 57(1) provides:
"The Chief Controlling Revenue Authority may
state any case referred to it under section
56, sub-section (2), or otherwise coming to
its notice, and refer such case, with its own
opinion thereon.....
Section 59 provides that the High Court upon the hearing of
any such case, shall decide the questions, raised, thereby
and shall deliver its judgment thereon containing the
grounds on which such decision is founded. Section 59(2)
provides that the High Court shall send to the Revenue
Authority by which the case was stated a copy of such
judgment and the Revenue Authority shall, on receiving such
copy, dispose of the case conformably to such judgment.
Some of the earlier decisions of the High Courts of Madras
and Calcutta took the view that though the words "otherwise
coming to its notice" in sec. 57(1) are of Wide import
apparently enabling the Authority to state a case sub-
section 1 of that section has to be construed in such a
manner as to harmonise with the provisions of section 59(2)
so that those provisions can be worked out. Therefore
unless section 57(1) is construed to mean that, it is only
when there is a pending case which the Authority can state
and can dispose of in conformity with the opinion of the
High Court that a reference can be made by it under that
sub-section. Thus, in the Reference Under the Stamp Act,
Section 57(1) the High Court of Madras held that an
adjudication by a Collector under section 31, of the Act as
to the duty with which an instrument is chargeable is by
section 32 made final and such a case cannot be referred to
the High Court under section 57. Two documents purporting
to be mortgages of crops to secure repayment of Rs. 2,300
and odd and )Rs. 2 lacs and odd containing also an
688
ancilliary lien on the estates where the crops were to be
grown were adjudicated by the Deputy Collector as chargeable
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under Arts. 40(c) and 41. The Deputy Collector levied
duties amounting to Rs. 70-12-0 and Rs. 688-12-0
respectively. The duties were accordingly paid and the
Deputy Collector certified and endorsed the documents under
section 32. The mortgagees applied to the Board of Revenue
for a refund of duty stating that Art. 40(c) did not apply
and thereupon the Board referred the case under section
57(1). The High Court held that on a reading of section
57(1) with section 59(2) the word "case meant a matter which
had yet to be disposed of by the revenue authorities
conformably to the judgment of the High Court and that the
effect of section 32 was that once the Collector endorsed
the document the matter was finally determined. There being
no pending case, the Board could not make a reference. The
reason given in this decision for holding the reference
incompetent was that the words "dispose of conformably to
the judgment of the High Court" in section 59(2) suggested
that there must be a pending case before the authorities
which on a reference to the High Court and on the High Court
pronouncing its judgment can be disposed of in conformity
with such judgment. A similar question once again arose, in
the Reference Under Stamp Act, Section 57(1) reported in the
same volume at page 752. In this case the Sub-Registrar
impounded the documents under section 33 and forwarded them
to the Collector for action under section 38(2). The
Collector certified by his endorsement under section 40 that
they were not chargeable with duty. The matter was referred
to the Board of Revenue which disagreed with the Collector
and referred the case to the High Court. The question was
whether this was a "case" which could be referred? Arnold
White, C.J. held that it was-, because under section 56(1)
powers exercisable by a Collector were subject to the
control of the Revenue Board, therefore a case brought to
its notice would be a. "case otherwise coming to the notice"
of the Board and a case which has to be disposed of under s.
59(2) conformably to the judgment which the High Court may
pronounce. He held that though the words in sec. 56(1) are
powers "exercisable" by the Collector they would also mean
"exercised" by the Collector. Bhashyam Ayyangar and Moore,
JJ. disagreed with the Chief Justice and held following the
decision in 25 Mad. 751, that the reference was not
competent and the High Court had no jurisdiction to decide
it. After analysing the different sections, Bhashyam
Ayyangar, J. held that though section 56(1) gave wide
control to the Revenue Board over the action of the
Collector, it could be exercised only until the Collector
had, not yet exercised his power under sec. 40 and issued
his certificate. Once the certificate was issued and the
document with his endorsement was returned to the party as
one either properly stamped or exempt from duty there was no
power in the Board to recall the document from the party and
to levy duty where the Collector had certified it to be
exempt and hence the Board had no power to refer such a
689
case under sec. 57(1). The effect of this decision is that
the Collector by exercising his power and certifying the
document exhausts the Board’s power of control under section
56(1). The case having been concluded there would also be
no pending case which the Board could refer to the High
Court. He also disagreed with the Chief Justice that the
word "exercisable" in section 56(1) could not mean
"exercised" as the legislature had used the word
"exercisable" deliberately to mean that once such power was
exercised, the Board’s control over such a case was
exhausted. Following this decision, the Allahabad High
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Court in a Stamp Reference by the Board of Revenue(1) held
that once the Collector had taken action under sec. 40(1)
and, had received the deficient duty and penalty imposed by
him and certified the document the jurisdiction of the Chief
Controlling Revenue Authority to refer such a case to the
High Court was ousted, In that case a sale deed was
forwarded to the Collector under sea. 38(2) who held that it
was insufficiently stamped; the deficit according to him,
amounted to Rs. 4/- and he levied penalty of Rs. 5/-. The
deficit and the penalty were paid and presumably the
Collector endorsed the document. Under s. 40(a) such a
certificate is conclusive. The High Court in these
circumstances held that the case before the Collector having
been concluded and there being no pending case the
controlling power of the Revenue Board was exhausted and it
had no power to refer such a case under s. 57(1). The case
In re. Cooke and Kalvay(2) was a case falling under sec.
56(2), i.e., a case "otherwise coming to the notice" of the
Board of Revenue. Rankin C.J. held in this case that though
those words were wide, they could be given effect to only in
cases where the concluding words of s. 59 could also be
given effect to. He held, therefore, that if the Collector
had in that case impounded the document which he had not but
only decided the duty payable on it, the Board could inter-
fere and refer the case under s. 57(1) provided such
interference was made before the Collector completed the
case. In the Board of Revenue v. Lakshmipat Singhania(3)
certain share transfer deeds were filed in the Court. The
Court impounded them and forwarded them to the Collector
under sec. 38(2). The Collector passed an order determining
the duty payable. Both the duty and penalty as decided by
the Collector were paid and the Collector certified and
endorsed the deeds. The matter having come to the notice of
the Revenue Board, it made the reference. The High Court
held that the purpose of section 57(1) was a practical one
and that that section could not apply unless there was a
case pending before the Authority whether it was a case
referred to it under section 56(2) or otherwise coming to
its notice and in respect of which that Authority could give
effect to the advisory opinion of the High Court. Therefore
the Collector having certified, the case
(1) [1913] I.L.R. 40 All. 128.
(2) I.L.R. (1932) 59 Cal. 1171,
(3) I.L.R. (1958) 2 All. 246.
690
before him was concluded and there remained nothing, pending
in respect of which a, reference could be competent. A
similar view has also been taken by the Mysore High Court in
Shri Rama Krishna Theatre v. Chief Revenue Controlling
Authority.(1)
The view first expressed in I.L.R. 25 Mad. 752 appears to
have prevailed until the question arose whether sec. 57(1)
confers a discretion on the authority whether to state a
case or not or whether it casts an obligation on that
Authority to state the case when a subject calls upon it to
do so in a case involving a substantial question of law.
Such a question was mooted in the Chief Controlling Revenue
Authority v. Maharashtra Sugar Mills Ltd. (2). In that case
the Mills executed on March 22, 1945 the document in
question in favour of the Central Bank of India for
borrowing a certain amount and stamped it with a stamp of
Rs. 16-8-0 ’on the basis that it was a deed of
hypothecation. It was sent to the Registrar of Companies
and the Registrar sent it to the Superintendent of Stamps.
On April 4, 1945, the Assistant Superintendent of Stamps
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informed the Mills that the document was a mortgage with
possession and hence was not duly stamped. On July 19,
1945, that officer informed the Mills of his decision that
the document being a mortgage with possession was chargeable
with a duty of Rs. 56,250 and called upon the Mills to pay
the deficit of Rs. 56,238/8/- and Rs. 5,000 as penalty. The
Mills paid up the amounts and on that the Assistant Supdt.
of Stamps informed the Mills that the document would be
certified and returned to the Registrar.The Mills thereafter
filed a suit for rectification of the document. On December
9, 1945 the Assistant Supdt. informed the Mills that the
Collector had been requested to recover the said deficit
duty and penalty and on January 11, 1946 the Collector
demanded the said amounts. On January 25, 1946, the High
Court passed a decree rectifying the said document. On
February 1, 1946 the Mills requested the Assistant
Superintendent to refer the case to the Authority under
section 56(2). The Mills applied to the Authority on
February 5, 1946 that the said order should either be
rescinded or a case should be stated to the High Court under
section 57(1). On July 4, 1945 the Authority rejected the
application. The Mills applied to the High Court against
the Authority for a direction that he should be asked to
state the case. The Trial Judge granted relief under s. 45
of the Specific Relief Act calling upon the Authority to
state the case on the ground that a substantial question of
law as to the effect of rectification had arisen. In the
Letters Patent Appeal by the Authority the Division Bench of
the High Court confirmed the said decree and held that the
words "otherwise
(1) I.L.R. [1962] Mys. 396.
(2) A.I.R, 1948 Bom. 254.
691
comes to his notice" in section 57(1) were very wide and did
not cover only the cases which the Revenue Authority wanted,
to move the High Court at its own instance but also covered
cases where an application was made to it in that behalf by
the citizen. The High Court observed that looking to the
scheme and the object of the Act, the one solitary safeguard
which the citizen had was to get his liability to pay stamp
duty determined by the High Court in cases where important
and substantial questions of law were involved.
Consequently, where a serious question of law was involved
there was a duty cast on the Authority to state the case and
the citizen had a right to have such a case determined by
the High Court. There would be a breach of duty if the
Authority failed to appreciate that there was a serious
point of law involved and such breach of duty could be
enforced by an order under sec. 45 of the Specific Relief
Act.
It will be noticed that when the Assistant Supdt. of Stamps
decided on July 19, 1945 that the document was a mortgage
chargeable with the duty of Rs. 56,250 and ordered the Mills
to pay the deficit and the penalty, the case before him was
concluded. In fact he wrote to the Registrar of Companies
returning the document that it would be certified by him on
payment of the said amounts. The Collector thereafter was
requested to recover the two amounts and a demand was also
made on the Mills. It is true that the application of the
Mills dated February 1, 1945 to the Collector under sec.
56(2) was not decided when the Mills on February 5, 1946
asked the Authority to state the case. But unlike section
57(1) the Collector under sec. 56(2) may refer the case, if
he is in doubt. The duty of the Collector not being obli-
gatory, the case was concluded long before the Mills’
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application dated February 5, 1946. In any event as the
Collector did not refer the case under sec. 56(2) to the
Authority it cannot be said that there was any pending case
either before him or the Authority and yet the High Court
ordered the Authority to state the case. The Authority
appealed to this Court and as reported in Chief Controlling
Revenue Authority v. Maharashtra Sugar Mills Ltd.(1) urged
three points: (i) whether under sec. 57 there is an
obligation on the Authority to state a case; (ii) whether
having regard to s. 226 of the Government of India Act, 1935
the High Court had jurisdiction to order a reference, the
matter being one of revenue and (iii) that the matter having
proceeded beyond the stage of assessment and having reached
the stage of recovery the High Court could not direct a
reference of the case-, in other words, there being no case
pending before the Authority a reference by it would not be
competent and the High Court therefore would have no
jurisdiction either to direct or to decide such reference
even if made. This Court after referring with approval to
the decision of the Privy Council in Alcock Ashdown v. Chief
Revenue Authority, Bombay(2) and to section 51 of the
Income-tax Act, 1918 which contained provisions similar to
section 59 of the Stamp
(1) [1950] S.C.R. 536 (2) 50 I.A. 227,
L/P(N)7SCI-5
692
Act held that though sec. 57(1) used the word "may" the
Power to state the case was coupled with the duty of the
Authority as a public officer to do the right thing and
therefore the word "may." as held by the Privy Council must
mean "shall". Though the case had gone beyond the stage of
assessment and even steps for recovery were already taken
and the case was therefore concluded this Court upheld the
High Court’s decision to issue the mandamus. The decision
thus establishes that the fact that the case is concluded
and is no longer pending cannot make a reference incompetent
or disable the High Court from pronouncing its judgment
thereon. This decision has since then been followed in
Appalanarasimhalu v. Board of Revenue,(1) Shanmugha Mudaliar
v. Board of Revenue,(2) Saradambal v. Board of Revenue,(3)
and Sarup Singh v. Union of India(4).
Two decisions to which our attention was drawn need con-
sideration. In Nanak Chand v. Board of Revenue, U.P.(5) the
High Court of Allahabad held that a reference under sec. 57
can be made only when a case is pending and in which the
question about the amount of stamp duty is yet to be
decided. It also held that once the Authority has decided
the case the fact that proceedings for realisation of duty
remain pending would not make the case a pending case. At
page 321 of the report the High Court observed that the
language of sec. 57, viz., that "the authority may state any
case referred to it under section 56(2) or otherwise coming
to its notice", and "refer such case with its own opinion
thereon" made it clear that the reference has to be made at
the stage when the case is still pending before it. When
the High Court’s attention was &awn to the decision in
Maharashtra Sugar Mills’(6) case and Appalanarasimhalu v.
Board of Revenue(7) and Shanmugha v. Board of Revenue(8) the
High Court distinguished the Maharashtra Sugar Mills’(6)
case on the ground that the application for reference made
under s. 56(2) to the Collector had not been decided when
the Authority was asked to state the case under section
57(1) and that therefore it was possible to say that the
case was still pending. As regards the two Madras decisions
the High Court agreed that the reference applied there was
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after the cases were concluded but observed that the Madras
High Court had not examined the question whether reference
under s. 57(1) was in such cases competent and that it
relied on the decision in Maharashtra Sugar Mills’(6) case
without noticing that in that case reference was applied for
while the application asking the
(1) A.I.R. 1952 Mad. 811.
(2) I.L.R. [1955] Mad. 1037.
(3) A.I.R. 1959 Mad. 1086.
(4) I.L.R. [1965] Pun. 140.
(5) A.I.R. 1958 All. 320.
(6) [1950] S.C.R. 536.
(7) A.I.R. [1952] Mad. 811.
(8) I.L.R. [1955] Mad. 1037.
693
Collector to refer the case under section 56(2) to the
Authority had not been disposed of. In the Eastern
Manganese and Minerals v. State of West Bengal(1) the
Calcutta High Court following In re Cook and Kelvey(2)
refused to direct reference on the ground that when an
adjudication as to proper stamp has been made under sec. 31
and the duty is paid without the document having been
impounded or when the document is not sent to the Collector
under sec. 38(2) there is no case pending before the
Authority and the Authority cannot state a case or cannot
similiarly be asked to state the case. With respect, the
reasons given in these two decisions for distinguishing the
Maharashtra Sugar Mills(1) do not seem to be correct. As
aforesaid, it is clear from the facts of that case that
there was no case pending before the Authority or any other
Revenue Authority and yet mandamus granted by the High Court
was confirmed by this Court. Therefore that decision was
binding on both the High Courts.
Whatever may have been the view in the past on the scope of
section 57(1), the position after the decision in
Maharashtra Sugar Mills’ case(3) is settled that sec. 57(1)
imposes a duty on the Authority to state a case when it
raises a substantial question of law. As the Privy Council
stated in Alcock Ashdown v. Chief Revenue Authority,
Bombay(4), "To argue that if the legislature says that a
public officer, even a revenue officer, shall do a thing and
he without cause or justification refuses to do that thing,
yet the Specific Relief Act would not be applicable, and
there would be no power in the Court to give relief to the
subject, is to state a proposition to which their Lordships
must refuse assent." It also must now be taken as settled
that that duty is not affected by the question whether the
case is pending before the Authority or not. The principle
underlying the decision is that sec. 57 affords a remedy to
the citizen to have his case referred to the High Court
against an order of a revenue authority imposing stamp duty
and/or penalty provided the application involves a
substantial question of law and imposes a corresponding
obligation on the authority to refer it to the High Court
for its opinion. Such a right and obligation cannot be
construed to depend upon any subsidiary circumstance such as
the pendency of the case before the Authority. If the
position is as held in I.L.R. 25 Mad. 752 the mere fact that
the Collector has determined the duty and closed the case
would render nugatoty not only the controlling, jurisdiction
of the Authority but the remedy which sec. 57(1) gives to
the citizen as also the obligation of the Authority to state
the case. The difficulty which the learned judges felt in
I. L. R. 25 Mad. 752 and repeated in subsequent decisions is
not, in our views, a real one because as soon as a
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reference is made and the
(1) A.I.R. 1960 Cal. 340. (2) I.L.R. [1932] 59 Cal. 1171.
(3) [1950] S.C.R. 536. (4) 50 I.A. 227, 233.
L/P(N)7SCI-5 (a)
694
High Court pronounces its judgment the decision of the
Authority is it large and the Authority, as required by sec.
59(2) would have to dispose of the case in conformity with
such judgment. The position therefore is that when a,
reference has been made to the Authority or the case has
otherwise come to his notice, if an application is made
under s. 57(1) and it involves a substantial question of
law, whether the case is pending or not, the Authority is
bound to state the case in compliance with its obligation.
The Authority is in a similar position as the Income-tax
Tribunal under analogous provisions in the Income-tax Act.
In our view, the Authority was in error in refusing to state
the case and the High Court was equally in error in
summarily dismissing the writ petition as the question
whether the document was a declaration of trust or was a
deed of settlement is a substantial question of law. The
appeal is therefore allowed and the High Court’s order is
set aside. We direct the Chief Controlling Revenue
Authority, Delhi, to state the case to the High Court under
sec. 57(1). There will be no order as to costs.
R.K.P.S Appeal allowed.
695