Report No. 67

20.11. Re-draft recommended.-

The following re-draft of the relevant portions of section 49(d)(1) and the proviso, indicates roughly the amendment which could be made to implement the point made above:-

"(1) has been afterwards found by the parties to be absolutely void in law from the beginning;

(1A) has been afterwards found by the court to be absolutely void in law from the beginning, under section 31 of the Specific Relief Act, 1963.

Provided that-

(i) in the case of an executed instrument other than one falling under sub-clause (IA) of clause (d), no legal proceeding has been commenced in which the instrument could or would have been admitted or offered in evidence, and

(ii) the instrument is given up to be cancelled, or has been already given up to the court to be cancelled."

We may mention that the suggested amendment has been favoured by most of the replies to our Questionnaire.1

1. Question 57 (section 49).

20.12. Section 50-Introductory.-

Section 50 provides that the application for relief under section 49 (refund in respect of spoiled stamps) shall be made within the period specified in section 50, The periods are two months and 6 months respectively-two months if refund is claimed on the ground of refusal of a party to act under an instrument or to advance money thereunder or to accept any office thereunder, and 6 months in other cases. There is a detailed provision in the proviso for computing the starting point of the period of 6 months, in certain special cases.

20.13. Hardship caused by time limits.-

It should be pointed out that although the section prescribes the time limits mentioned above, in practice they were found to cause considerable hardship. In the beginning, the Central Government, by executive orders, permitted the local governments to grant refund within one year, but even this concession was not found to be adequate, and, in 1908, by a Resolution, Local Governments1 were authorised to allow, irrespective of any time limit, refunds or renewals of spoilt or useless non-judicial stamps, or the re-purchase of non-judicial stamps no longer required in cases in which holders of such stamps had, without any fraudulent motive, been unavoidably prevented from making application within the period prescribed by law.

1. Resolution of the Government of India in the Finance Department, No. 4738-Exc., dated the 14th August, 1908.

20.14. Recommendation.-

We are of the opinion that in view of what is stated above, the time limit in section 50 should be made more liberal. Section 49 already empowers the State Government to make rules as to the evidence to be required or the enquiry to be made before refund can be claimed under that section. Dishonest claims for refund are thus provided against. We, therefore, think that section 50 should be made more liberal. We may state a large number of the replies to our Questionnaire agree.1 We recommend that the period under section 50 should be one year from the date of discovery of circumstances giving rise to the claim for refund. This will avoid hardship in many situations and is, in any case, a rational course.

1. Question 58 (section 50).

20.15. Section 51.-

It sometimes happens that bankers or companies or other corporations get a number of forms printed in respect of instruments frequently used by them, and such forms are printed on stamped papers because the instrument are chargeable with duty. Later, such forms cease to be required by the banker or company or corporation, and the money spent on stamp papers goes waste. This may particularly happen where business is to be wound up. Section 51 provides for such cases, by empowering the Chief Controlling Revenue Authority to make allowance for the stamp papers so used, if satisfied that the duty in respect of such stamp papers has been duly paid. This power can be delegated to the Collector by the Chief Controlling Revenue Authority. No changes are required in the section.

20.16. Section 52.-

Stamps are sometimes inadvertently used in situations where, notwithstanding the expenditure on the stamp, the stamp does not serve the purpose for which it is intended. This situation arises, for example, where the stamp used is of a description other than that prescribed for such instrument by the rules made under the Act, or where a stamp of greater value than was necessary is used, or where the instrument is not chargeable with any duty, or where the stamp has been rendered useless under section 15 by reason of the fact that the instrument was written in contravention of the provisions of sections 13 and 14, dealing with the mode in which an instrument should be written and prohibiting the use of a stamp paper for more than one instrument. For stamps so misused, an allowance can be made under section 52 by the Collector, on an application made within the prescribed period.

As regards stamps of an improper description, a party has an alternative remedy, namely, getting the instrument certified under section 37. If he does so, then the procedure under section 52 will not apply. We are recommending an amendment of section 37 whereby it will not be necessary for the applicant to pay the duty again1 where he resorts to that section. The case under section 52, however, stands on a different footing, because, under section 52, the applicant will get back the money value of his misused stamps of improper description.2 It is not, therefore, necessary to amend section 52 on this point.

1. See recommendation as to section 37.

2. See section 53.

20.17. Recommendation.-

It is, however, desirable to widen the scope of section 52 in relation to stamps of improper description, as recommended1 under section 37. We may mention that such an amendment has been favoured by many of the replies to our Questionnaire.2

1. Cf recommendation as to section 37.

2. Question 59 (section 52).

20.18. Section 52(a)-Refund of duty paid by mistake.-

Although the Act contains elaborate provisions as to refund of stamp duty in certain cases, an important case-duty paid by mistake-seems to have been left to implication. A recent decision reveals this lacuna, which, it seems to us, requires consideration. It has been held by the Andhra Pradesh High Court1 (Majority view) that a case of voluntary or mistaken payment of stamp duty does not fall under the Act. It is not covered by any provision in the Stamp Act, empowering the Board of Revenue to refund the excess stamp duty paid, voluntarily or by mistake, by a party. The Chief Controlling Revenue Authority, which is the Board of Revenue, is not, therefore, competent to direct refund of the excess stamp duty paid voluntarily or under a mistaken impression of law by the party at the time of the registration of a document.

1. Manganti Suryanarayana v. Board of Revenue, Government of Andhra Pradesh, (1975) 2 AP 14 256 (FR) (Yearly Digest for March 1976, column 533): AIR 1976 AP 150 (May 1976 part-majority view).

20.19. This ruling was given on a reference made by the Board. In order to appreciate the scope of the reference in the Andhra case, it is necessary to state the facts that gave rise to the question. Sri Jasti Venkataratnam and his sons had executed a document styled as "sale deed" on June 12, 1962, in favour of Shri Manganti Suryanarayana (the petitioner) in respect of land for a consideration of Rs. 5,980. The "purchaser" paid a sum of Rs. 1,000 as advance, and agreed to pay the balance of the sale consideration with interest on June 11, 1963 and to obtain another deed so as to complete the transaction. The "purchaser" was put in possession of the property and the document was registered as document No. 2014/62 in the Sub-Registrar's Office, Kaikalur with the requisite stamp duty for a sale deed. In accordance with the terms stipulated in the deed dated June 12, 1962, another document was executed on September 2, 1963, whereunder the executant-vendor acknowledged the full consideration (i.e., the intended sale amount and the interest thereon).

It also indemnified the claims against a loss t6 an extent of Rs. 2,700. The document was executed on a stamp paper worth Rs. 44 only, treating it as a "supplemental deed" confirming the original sale deed which was registered as document No. 2014/62. The Sub-Registrar, Kaikalur, before whom the second instrument was presented for registration, impounded it as deficiently stamped. On a dispute raised by the petitioner with regard to the nature of the second document, the District Registrar, Krishna, adjudicated the document as a regular deed of sale for a cash consideration of Rupees 6,492 and ordered the collection of the deficient stamp duty of Rs. 475 together with a penalty of Rs. 5. Aggrieved by the decision of the District Registrar, the petitioner filed a revision petition under section 56(1) of the Act before the Board of Revenue which framed the following two issues for its own consideration and order:

(1) Whether the earlier document executed and registered as document No. 2014/62 of S.R.O. Kaikalur was a sale deed for a consideration of Rs. 5,980 or an agreement to sell, and

(2) Whether the subsequent document executed on 2-9-1963 is a sale deed for Rupees 6,492 or a supplemental deed confirming the earlier sale with an indemnity for a sum of Rs. 2,700?

20.20. The Board of Revenue, on a consideration of the facts and circumstances, held that the first document which was styled as a sale deed, was only an agreement of sale, executed primarily to record the receipt of a portion of the purchase price in order to safeguard the purchaser against fresh demand as the purchaser was put in possession of the land, and that the second document was a regular sale deed for a case considergtion of Rs. 6,492 and, therefore, the stamp duty as a sale deed was leviable on it. In the result, the Board of Revenue upheld the decision of the District Registrar and allowed the revision petition on March 9, 1965, observing that "since stamp duty leviable on a sale deed was collected on the earlier document, the party is at liberty to seek refund of the excess duty paid under section 45 of the Stamp Act and that the party may approach the District Collector, Krishna under section 45 with a refund application."

20.21. The Inspector General of Registration and Stamps, Andhra Pradesh, Hyderabad however pointed out to the Board of Revenue that stamp duty on the first document was paid voluntarily. It had not been paid either under section 35 or section 40 of the Act. Section 45 of the Act was confined to the refund of stamp duty charged either under section 35 or section 40, and so the petitioner was not at all entitled to the refund. The Board of Revenue, after examining the entire material on record, realised the mistake committed by it on being apprised by the Inspector General, Registration and Stamps, and rectified its earlier order dated 9-3-1965 in so far as the observation relating to the refund of stamp duty on document No. 2014/62 of S.R.O. Kaikalur was concerned, after affording reasonable opportunity to the petitioner.

A Writ Petition filed by the petitioner to quash the aforesaid orders of the Board of Revenue was rejected by the High Court on March 22, 1968. A Division Bench allowed the Writ Appeal preferred by the petitioner against the order of dismissal of the writ petition and directed the Board to make a reference to the High Court under section 57 of the Act, as, in its opinion, a substantial question of law arose. Hence this reference to the High Court. The High Court held by a majority that there was no provision in the Act empowering the Board to direct refund of duty paid voluntarily or under mistake.