Report No. 67
Instruments Not Duly Stamped-impounding by Public officers-Sections 33-34
16.1. Section 33.-
Section 33 requires persons in charge of public offices to impound unstamped documents produced before them, or coming before them in the performance of public functions. The object of the section is to prevent the parties from withdrawing instruments produced by them, when it is found that stamp duty and penalty have to be paid on the instruments. The section reads-
"33. Examination and impounding of instruments.-(1) Every person having by law or consent of parties authority to receive evidence, and every person in charge of a public office, except an officer of police, before whom any instrument, chargeable, in his opinion, with duty, is produced or comes in the performance of his functions, shall, if it appears to him that such instrument is not duty stamped, impound the same.
(2) For that purpose every such person shall examine every instrument so chargeable and so produced or coming before him, in order to ascertain whether it a stamped with a stamp of the value and description required by the law in force in India when such instrument was executed or first executed:
(a) nothing herein contained shall be deemed to require any Magistrate or Judge of Criminal Court to examine or impound, if he does not think fit so to do, any instrument coming before him in the course of any proceeding other than a proceeding under Chapter XII or Chapter XXXVI of the Code of Criminal Procedure, 1898;
(b) in the case of a Judge of a High Court, the duty of examining and impounding any instrument under this section may be delegated to such officer as the Court appoints in this behalf.
(3) For the purposes of this section, in cases of doubt-
(a) the State Government may determine what offices shall be deemed to be public offices; and
(3) the State Government may determine who shall be deemed to be parson in charge of public offices.
16.2. Whether document should be valid in law.-
Several questions have arisen on the section. The first question is this: Is it necessary that the document of transfer which can be impounded under this section is valid in law There has been a difference of opinion between the Madras High Court1 and the Andhra Pradesh High Court,2 in regard to the question whether the document should be valid in law. A full Bench of the Madras High Court3 was dealing with an unattested and unregistered document dated 22-3-1948, one of the clauses of which was construed as creating a mortgage over the borrower's floating assets etc.
In deciding the question whether this document was a mortgage deed, the full Bench held that the transfer provided in section 2(17) of the Stamp Act is a 'transfer' which is valid in law, and there can be no transfer by way mortgage unless the requirements of section 59 of the Transfer of Property Act are satisfied. Where the specified immovable property is worth Rs. 100 or upwards, a document purporting to be a mortgage deed of such property requires attestation and registration. Where it is neither attested nor registered, it is not liable to stamp duty. The Court pointed out that the document was neither attested nor registered, and the impounding authority could not have enforced registration, and that, in any case, it could not cure the failure to attest, which by itself was enough to invalidate the document as an instrument of mortgage.
It further held, that the document might be an "instrument", but it was not an instrument chargeable with duty as a "mortgage-deed" as defined in section 2(17) of the Stamp Act. The very difference between the definition of "instrument" in section 2(14) and the definition of "mortgage deed" in section 2(17) showed that the transfer must be valid in law. To make a document liable to stamp duty as a mortgage, it is not enough if the document purports to effect a transfer. It must "transfer".
1. Crompton engineering Co v. C.C. Revenue Authority, AIR 1953 Mad 764 (766), para. 21 (Rajamannar, C.j., Rajgopalan and Venkataraman Aiyar, JJ.).
2. Hazrami Cangarain v. Kamlabai, AIR 1968 Al' 213 (FB) (5 Judges), infra.
3. Crompton Engineering Co. v. C.C. Revenue Authority, AIR 1953 Mad 764 (766), para. 11 (FB).
16.3. The Andhra Pradesh High Court1 has, however, disagreed with the view of the Madras High Court, and held that there is no warrant for the importation of the requirements of either the Transfer of Property Act or the Registration Act, in construing documents or instruments under the Stamp Act, as the Stamp Act itself specifically defines the terms used therein. Further, to hold that an instrument must be a valid one under law before it is liable to stamp duty, will be to ignore the requirements of the definition and to make them otiose. In that case, the document was an unregistered mortgage deed. The High Court held that it was chargeable to duty.
If the document was to require registration for its legal validity before it can be considered whether it is liable to stamp duty or not, then the Registrar cannot impound it before registration though he is authorised to impound it under section 33 read with section 35 of the Stamp Act. If an instrument is not duly stamped, then it cannot be registered or received in evidence. The definitions in the Act and the terms of every section of the Act indicate clearly that an instrument need not be valid in law or meet the requirements of law as a valid document, before it is chargeable to stamp duty under the Act.
1. Hazrami Gangaram v. Kamlabai, AIR 1968 AP 213 (FB) (5 Judges).
In our view, it is desirable to settle this conflict. The Andhra view is, in our opinion, more persuasive, and should be adopted. There is no reason why liability to stamp duty should depend on the validity of a document. That is an extraneous and irrelevant consideration. A suitable Explanation incorporating the Andhra Pradesh view should be inserted, and we recommend accordingly. We may mention that the suggested amendment has been favoured by most of the replies to our Questionnaire.1
1. Question 40.
16.5. Power of a registering officer to impound a document-Position under section 33.-
There is another matter pertaining to section 33, which has proved to be controversial. In a Full Bench decision of the Madhya Pradesh High Court,1 the majority were of the opinion that after the registration of a document, the registering authority has no power to hold an enquiry regarding the value of the property covered by the deed and to call upon the executant to pay the deficit stamp duty. The minority, however, took a contrary view. According to the majority, the power to impound an instrument under section 33(1) can be exercised only when the instrument is produced before the registering authorities in the performance of their functions-that is, only so long as the function is not performed or completed and not afterwards. As soon as the registering officer registers a document presented to him for registration, the function in the performance of which the document was produced before him is over; and he becomes 'functus officio', and has no power under section 33 to impound the instrument.
1. Kamal Chand v. State of Madhya Pradesh, AIR 1966 MP 20 (22, 23) (FB), paras. 3, 11, 12 (FB).
16.6. This was the majority view. But Golwalker J. dissented from the majority opinion. He observed1 that the expression 'functus officio' means having fulfilled the function, having discharged the duty, having discharged the office, or accomplished the purpose and, therefore, of no further force or authority. The sole function of the registering authority is to receive an instrument when duly presented as required by the Registration Act, and to proceed to register the same in the manner provided therein. It is true that after presentation of the instrument before the registering authority, it can examine the same and see whether it is duly stamped or not, and, if it is not duly stamped, defer its registration till it is impounded and either validated in that respect or certified as duly stamped by the authority concerned. This examination of the instrument, however, would not have been a part of its statutory functions under the Registration Act. Moreover, the insufficiency of stamp duty paid on an instrument is not one of the bars to registration provided in the Registration Act. An instrument not duly stamped can be validly registered under the Registration Act.
The registration of the instrument is not affected by the infirmity in the matter of stamp duty, or by any other infirmity not ousting the jurisdiction of the registering authority. Thus, since the invalidity or insufficiency in the matter of stamp duty on any instrument has no bearing one way or the other on the function of the registering authority, it cannot be said that the registering authority, becomes 'functus officioas soon as it registers the instrument. It is true that under rule 4 of the Rules framed under section 69 of the Registration Act, the registering authority shall examine the instrument with a view to seeing if it is duly stamped or not, but the very fact that the Act itself lays down no such provision, and does not debar the registering authority from registering the instrument not duly stamped, rather supports the view that it is not by way of any function or part of function which the registering authority as such performs under the Registration Act. Moreover, there was no question of any authority being 'functus officio'.
1. Kamal Chand v. State of Madhya Pradesh, AIR 1966 MP 20 (22, 23).
16.7. It is, with due respect to the minority view in the Madhya Pradesh case, suggested that this view is wrong. If it is not part of the registering officers' legal duty to see that the document is duly stamped, then it would not be proper for him to impound the document in any case. The minority view is not, therefore, logical. The point is that once the registering officer has registered the instrument, his function (of registration) is over, and that is all that the majority view emphasises. Practical considerations, also support the majority view. We think that the section should be amended to clarify the position. We may mention that the suggested amendment has been favoured by most of the replies to our Questionnaire.1
1. Question 41.