Collector can not impose extreme penalty of ten times of deficient stamp duty unless dishonest or contumacious intention of evading stamp duty is found

According to Section 40(1)(b) if the Collector is of opinion that such instrument is chargeable with duty and is not duly stamped, he shall require the payment of the of the proper duty or the amount required to make up the same, together with a penalty of the five rupees; or, if he thinks fit, an amount not exceeding ten times the amount of the proper duty or of the deficient portion thereof. The statutory scheme of Section 40(1)(b) as noticed above indicates that when the Collector is satisfied that instrument is not duly stamped, he shall require the payment of proper duty together with a penalty of the five rupees. The relevant part of Section 40(1)(b) which falls for consideration in these appeals is: “or, if he thinks fit, an amount not exceeding ten times the amount of the proper duty or deficient portion thereof.”[Para No.16]

    The amount of penalty thus can be an amount not exceeding ten times. The expression “an amount not exceeding ten times” is preceded by expression “if he thinks fit”. The statutory scheme, thus, vest the discretion to the Collector to impose the penalty amount not exceeding ten times. Whenever statute transfers discretion to an authority the discretion is to be exercised in furtherance of objects of the enactment. The discretion is to be exercised not on whims or fancies rather the discretion is to be exercised on rational basis in a fair manner. The amount of penalty not exceeding ten times is not an amount to be imposed as a matter of force. Neither imposition of penalty of ten times under Section 40(1)(b) is automatic nor can be mechanically imposed. The concept of imposition of penalty of ten times of a sum equal to ten times of the proper duty or deficiency thereof has occurred in other provisions of the Act as well. We may refer to Section 35(a) in this context is as follows:

“35. Instruments not duly stamped inadmissible in evidence, etc. — No instrument chargeable with duty shall be admitted in evidence for any purpose by any person having by law or consent of parties authority to receive evidence, or shall be acted upon, registered or authenticated by any such person or by any public officer, unless such instrument is duly stamped :

Provided that—

(a)any such instrument shall be admitted in evidence on payment of the duty with which the same is chargeable, or, in the case of any instrument insufficiently stamped, of the amount required to make up such duty, together with a penalty of five rupees, or, when ten times the amount of the proper duty or deficient portion thereof exceeds five rupees, of a sum equal to ten times such duty or portion;

(b)…    …     …     …”[Para No.17]

    Section 39(1)(b) of the Indian Stamp Act, 1899 came for consideration before this Court in Gangtappa and another vs. Fakkirappa, 2019(3) SCC 788 (of which one of us Ashok Bhushan, J. was a member). This Court noticed the legislative scheme and held that the legislature has never contemplated that in all cases penalty to the extent of ten times should be ultimately realized. In paragraph 16 following has been laid down by this Court:

“16. Deputy Commissioner under Section 38 is empowered to refund any portion of the penalty in excess of five rupees which has been paid in respect of such instrument. Section 38 Sub-section (1) again uses the expression "if he thinks fit". Thus, in cases where penalty of 10 times has been imposed, Deputy Commissioner has discretion to direct the refund of the penalty in facts of a particular case. The power to refund the penalty Under Section 38 clearly indicates that legislature have never contemplated that in all cases penalty to the extent of 10 times should be ultimately realised. Although the procedural part which provides for impounding and realisation of duty and penalty does not give any discretion Under Section 33 for imposing any lesser penalty than 10 times, however, when provision of Section 38 is read, the discretion given to Deputy Commissioner to refund the penalty is akin to exercise of the jurisdiction Under Section 39 where while determining the penalty he can impose the penalty lesser than 10 times.”[Para No.19]

    The expression “if he thinks fit” also occurs in Section 40 sub-clause (b). The same legislative scheme as occurring in Section 39 is also discernible in Section 40(b), there is no legislative intentment that in all cases penalty to the extent of ten times the amount of proper stamp duty or deficient portion should be realised. The discretion given to Collector by use of expression “if he thinks fit” gives ample latitude to Collector to apply his mind on the relevant factors to determine the extent of penalty to be imposed for a case where instrument is not duly stamped. Unavoidable circumstances including the conduct of the party, his intent are the relevant factors to come to a decision.[Para No.20]

It is mandatory for the Court to issue an heirship certificate, if no objector comes forward within one month from the date of citation publication

Proceeding for heirship certificate can not be suspended till the decision of separate suit for partition filed by the objector

    This writ petition challenges the order dated 18.07.2018 passed by the Civil Judge, Junior Division, Ghatanji, whereby an application filed by the petitioner under Section 2 of the Bombay Regulation Act, 1827 for grant of heirship certificate has been kept suspended, till conclusion of civil suit pending between the parties.[Para No.2]

    The petitioner had filed the aforesaid application before the Court below claiming that she was the only wife of deceased Ramniklal Gandecha and that they had no children. On this basis, the petitioner prayed for grant of heirship certificate under the aforesaid provision to be declared the only heir of the said deceased Ramniklal Gandecha.[Para No.3]

    In the said proceeding, the respondent no.1, who was the sister of the said deceased Ramniklal Gandecha, filed an objection. In the said objection, it was pointed out that the said objector had filed a civil suit bearing Regular Civil Suit No. 7 of 2016 before the Civil Judge, Junior Division, Ghatanji, being a suit for partition and separate possession, wherein the petitioner, brother and sister of the said objector were defendants. It was contended by the said objector (respondent no.1) that if heirship certificate was granted to the petitioner, she would approach the competent authority for mutation of her name in the house property in which she was residing. It was contended that, according to the objector -respondent no.1, the said house property belonged to her father, in respect of which the aforesaid suit for partition and separate possession had been filed.[Para No.4]

    By the impugned order, the Court below has come to the conclusion that when the aforesaid suit for partition and separate possession had been already filed by the respondent no.1(objector), the application filed by the petitioner under Section 2 of the aforesaid Act would have to wait final adjudication of rights of parties in the aforesaid suit. On this basis, the proceedings in the application filed by the petitioner were suspended till the conclusion of the civil suit.[Para No.5]

    A perusal of Section 2 of the aforesaid Act and the application filed by the petitioner thereunder shows that the only prayer made by the petitioner is for grant of heirship certificate to declare that she is the only heir of the deceased Ramniklal Gandecha. A perusal of the objection raised on behalf of respondent no.1 shows that the said respondent has admitted the fact that the petitioner was the only wife of the deceased Ramniklal Gandecha and that they had no children. In view of the aforesaid facts, it would be evident that the claim made in the application filed by the petitioner under the provisions of the said Act, even if granted, would not result in recognition of any rights of the petitioner in respect of the said house property and that an application for mutation before the competent authority, if preferred by the petitioner, would be decided as per law after issuance of notice by the competent authority. Grant of heirship certificate would not ipso facto lead to recognition or crystallization of any rights of the petitioner in the house in question. At best, it would assist the petitioner in claiming that she was entitled to the rights that the deceased Ramniklal Gandecha was entitled, as his only heir.[Para No.6]

    Therefore, apprehension expressed by the objector before the Court in the present proceedings was misconceived. The Court below also erred in suspending the proceeding in the present case only on the ground that the aforesaid suit filed by the respondent no.1 was pending before the said Court. The issues raised in the said suit, filed for partition and separate possession, would certainly be decided on merits by the Court and mere pendency of the aforesaid suit ought not to result in suspension of proceedings in the present case. This is fortified by a decision referred to by the learned counsel appearing for the petitioner in the case of Ganpati Vinayak Achwal - 2015(2) All MR 285 wherein this Court held as follows: