Banarsi Das Ahluwalia Vs. The Chief
Controlling Revenue Authority, Delhi  INSC 223 (28 September 1967)
28/09/1967 SHELAT, J.M.
CITATION: 1968 AIR 497 1968 SCR (1) 685
Indian Stamp Act, 1899, s. 57(1) and
(2)-Application to Revenue 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'.
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 Sub Registrar 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 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.,  S.C.R.
536; relied upon and explained.
Case law reviewed.
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 respondent.
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
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 dismissedit 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.
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 Authority 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)
"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
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 subsection 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 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
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 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 interfere
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)  I.L.R. 40 All.
(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
On April 4, 1945, the Assistant
Superintendent of Stamps 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.  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
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 obligatory, the case was concluded long before
the Mills' 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)  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
Two decisions to which our attention was
drawn need consideration. 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 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.  Mad. 1037.
(3) A.I.R. 1959 Mad. 1086.
(4) I.L.R.  Pun. 140.
(5) A.I.R. 1958 All. 320.
(6)  S.C.R. 536.
(7) A.I.R.  Mad. 811.
(8) I.L.R.  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 reference is made and the (1) A.I.R. 1960
Cal. 340. (2) I.L.R.  59 Cal. 1171.
(3)  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.