1924 JTR(SC) 34
1924 AIR(PC) 221 ; 1923 51 LawReportsInd.App. 332
PRIVY COUNCIL [ON APPEAL FROM THEEAST INDIES]
LORD DUNEDIN, LORD SHAW, LORD CARSON, LORD BLANESBURGH, AND SIR JOHN EDGE.
LACHMI NARAYAN AGARWALLA - Appellant
Versus
BRAJA MOHAN SINGH - Respondents
On appeal from the High Court at Patna.
Decided On : June 26, 1924.
Payment of stamp duty deficiency and penalty under the proviso to Section 35 of the Indian Stamp Act, 1899, makes an instrument effective, thereby removing the limitation on the amount claimable under Section 26 that applies to insufficiently stamped instruments.
Act
Referred
:STAMP ACT
: S.26, S.35
(A) Indian Stamp Act, 1899 - Sections 26 and 35 - Admissibility of insufficiently stamped instruments - Limitation on claims - Effect of payment of deficiency and penalty.
(B) The proviso to Section 35 of the Indian Stamp Act, 1899, is of equal ambit with the body of the section. While an instrument cannot be acted upon unless it has a proper stamp, the payment of the deficiency in stamp duty together with the prescribed penalty under the proviso makes the instrument effective. Consequently, the limitation on the amount claimable under such an instrument, as provided in Section 26, does not apply once the instrument is duly stamped via the proviso.
Facts of the case:
A lease for a coal mine was executed for a term of 999 years, involving a premium and annual royalties. The instrument was insufficiently stamped relative to the potential royalty payments. A suit was subsequently filed for the recovery of royalties. The lessee contended that under Section 26 of the Indian Stamp Act, 1899, the amount claimable was limited to the value for which the stamps actually used would have been sufficient. The trial court admitted the lease into evidence after the deficiency in stamp duty and the penalty were paid under the proviso to Section 35.
Findings of Court:
The court found that the proviso to Section 35 allows an instrument that was not duly stamped to be made effective upon payment of the required duty and penalty, thereby removing the restrictions on recovery.
Issues: Whether the limitation on the amount claimable under an instrument under Section 26 of the Indian Stamp Act, 1899, persists after the instrument has been admitted in evidence upon payment of the deficiency and penalty under the proviso to Section 35.
Ratio Decidendi: The proviso to Section 35 is of equal ambit with the main section. Just as an instrument cannot be acted upon unless it is properly stamped, the payment of the deficiency and penalty under the proviso cures the defect and makes the instrument effective for the full amount claimed, overriding the limitation in Section 26.
Result: Appeal dismissed.
(B) The proviso to Section 35 of the Indian Stamp Act, 1899, is of equal ambit with the body of the section. While an instrument cannot be acted upon unless it has a proper stamp, the payment of the deficiency in stamp duty together with the prescribed penalty under the proviso makes the instrument effective. Consequently, the limitation on the amount claimable under such an instrument, as provided in Section 26, does not apply once the instrument is duly stamped via the proviso.
Facts of the case:
A lease for a coal mine was executed for a term of 999 years, involving a premium and annual royalties. The instrument was insufficiently stamped relative to the potential royalty payments. A suit was subsequently filed for the recovery of royalties. The lessee contended that under Section 26 of the Indian Stamp Act, 1899, the amount claimable was limited to the value for which the stamps actually used would have been sufficient. The trial court admitted the lease into evidence after the deficiency in stamp duty and the penalty were paid under the proviso to Section 35.
Findings of Court:
The court found that the proviso to Section 35 allows an instrument that was not duly stamped to be made effective upon payment of the required duty and penalty, thereby removing the restrictions on recovery.
Issues: Whether the limitation on the amount claimable under an instrument under Section 26 of the Indian Stamp Act, 1899, persists after the instrument has been admitted in evidence upon payment of the deficiency and penalty under the proviso to Section 35.
Ratio Decidendi: The proviso to Section 35 is of equal ambit with the main section. Just as an instrument cannot be acted upon unless it is properly stamped, the payment of the deficiency and penalty under the proviso cures the defect and makes the instrument effective for the full amount claimed, overriding the limitation in Section 26.
Result: Appeal dismissed.
Stamping - Cited by the appellant's counsel to argue that the amount claimable under the lease was limited by Section 26 of the Indian Stamp Act based on the value of the stamps used.
Solicitors for appellants : W. W. Box & Co.
Judgement
Appeal (No. 47 of 1923) from a decree of the High Court (August 9, 1920) affirming a decree of the Subordinate Judge of Purulia.
The respondent granted to the appellants a lease dated December 14, 1906, for 999 years of land for use as a coal mine in consideration of a sum of Rs. 1920 as salami, or premium, and payment of 5 annas per ton of coal raised as royalty with a minimum of Rs. 960 per annum. The instrument was stamped with stamps to the value of Rs. 40, of which Rs. 20 was the amount payable under the Indian Stamp Act, 1899, in respect of the premium.
Sect. 26 of the above Act provides that " where the amount or value of the subject matter of any instrument chargeable with ad valorem duty cannot be .... ascertained at the
08 Law. Rep. 51 Ind. App. 332 ( 1923- 1924) Lachmi Narayan Agarwalla V. Braja Mohan Singh
date of its execution, nothing shall be claimable under such instrument more than the highest amount or value for which, if stated in an instrument of the same description, the stamp actually used would .... have been sufficient." The balance l of Rs. 20 would have been sufficient under the Act for an instrument providing for royalties up to Rs. 2000.
Sect. 35 of the above Act provides that no instrument shall be admitted in evidence " unless such instrument is duly stamped," but provides further that instruments (subject to certain exceptions) shall be admitted in evidence on payment of the duty chargeable, or such an amount as makes up the deficiency in the stamp together with a penalty as therein provided.
In 1917 the respondent brought a suit against the appellants, claiming under the lease royalties for the years 1911 to 1916; he valued his claim at Rs. 39,900. The appellants pleaded (inter alia) that, having regard to s. 26 of the Indian Stamp Act, no more than Rs. 2000 could be claimed.
The Subordinate Judge admitted the lease in evidence under the proviso to s. 35, and rejected the above plea ; he gave the respondent a decree for Rs. 20,622. Upon appeal to the High Court the decision was affirmed. The learned judges (Dawson Miller C.J. and Mullick J.) were of opinion that there was nothing in s. 35 of the Act which excluded its operation in the case of instruments coming within s. 26.
1924. June 26. Sir George Lowndes K.C. and E. B. Raikes for the appellants. Sect. 35 applies only to instruments not duly stamped. But having regard to the special provisions of s. 26 applicable to leases where the annual amount payable is .uncertain, the lease was duly stamped. The amount claimable under it was however, limited by that section to Rs. 2000. [Reference was made to Baijnath v. Ahmed Musaji Salleji . (( 1912) 17 Cal. W. N. 395.)]
The respondents did not appear.
The judgment of their Lordships was delivered by
LORD DUNEDIN. In this case, which has been heard ex parte, Sir George Lowndes has said everything that could be said on behalf of the appellants, but he has not created any doubt in their Lordships minds that the judgment of the High Court at Patna was right. It is clear to their Lordships that the proviso (a) of s. 35 of the Indian Stamp Act, 1899, is of equal ambit with the body of the section, and that just as an instrument cannot be acted upon—that is to say, nothing can be recovered under it unless it has a proper stamp—so by the proviso if there is not a proper stamp it may be put on afterwards on payment of a penalty, and the instrument then becomes effective.
Their Lordships will humbly advise His Majesty that the appeal be dismissed.