Report No. 67
22.11. Vicarious liability in general.-
The position regarding vicarious liability in general,i.e., in cases not dealt with in sub-section (2), is outside the section. It was held in a Calcutta case,1 that where a servant, in the course of his employment gives an unstamped receipt for an amount exceeding Rs. 20, the master also can be held guilty of an offence under this section. Prima facie, it appears to us that this view may require reconsideration. In fact, we may note that a different view was taken in a later case2 of the same High Court, where a sole surviving partner of a firm was held not liable for the clerk's failure to give a stamped receipt. We have carefully considered the matter, and are not inclined to recommend any widening of the scope of the present provision.
1. Queen Empress v. Khetter Mohan, 1900 ILR 27 Cal 324 (332, 333): 4 CWN 440. (Prinsep and Hill JJ.).
2. Golam Hussain v. Emperor, (1904) 8 CWN 378 (380).
In the light of the above discussion, we recommend that section 62 should be revised as follows:-
"62. (1) Any person-
(a) drawing, making, issuing, endorsing or transferring, or signing otherwise than as a witness, or presenting for acceptance or payment, or executing as an acceptor, paying or receiving payment of, or in any manner negotiating, any bill of exchange (payable otherwise than on demand) or promissory note without the same being duly stamped; or
(b) executing or signing otherwise than as a witness any other instrument chargeable with duty without the same being duly stamped; or
(c) voting or attempting to vote under any proxy not duly stamped; shall, for every such offence, be punishable with fine which may extend to five hundred rupees:
Provided that, when any penalty has been paid in respect of any instrument under section 35, section 40 or section 61, the amount of such penalty shall be allowed in reduction of fine (if any) subsequently imposed under this section in respect of the same instrument upon the person who paid such penalty:
Provided further that nothing in this1 section shall apply unless the act as done with the intention of evading the payment of stamp duty.
Explanation. -A person who receives an unstamped instrument does not, merely by reason of such receipt, become guilty of abetment of an offence under this section.
(2) If a share-warrant is issued without being duly stamped, the company issuing the same, and also every person who, at the time when it is issued, is the managing director or secretary or other principal officer of the company, shall be punishable with fine which may extend to five hundred rupees."
1. See para. 22(9) (If this wide change is made, a saving for section 43, proviso need not be introduced).
22.14. We may mention that the suggested amendment as to section 62(1)(a), and the added Explanation, and the added proviso saving section 43, proviso, has been favoured by most of the replies to our Questionnaire.1
1. Question 67.
22.15. Section 62A (New).-
This disposes of section 62. It will be convenient at this stage to deal with one new provision which appears to be necessary. In our view, where the court of first instance had admitted an instrument after a specific decision that the instrument was duly stamped or that it did not require any stamps, there should be no prosecution. Such a provision should be inserted in the Act, say, as section 62A. What we have stated in this paragraph represents what we contemplate as the gist of the new provision. There should, we hope, be no difficulty in putting it in precise legislative language. Such a provision is needed because the very fact that one court has decided that the instrument did not require stamp affords very cogent grounds for assuming not only that the parties did not wish to evade duty, but also that their legal understanding was prima facie justified. In such circumstances, a prosecution is, in our opinion not justified.
22.16. Section 63-Recommendation.-
Under section 63, any person required by section 12 to cancel an adhesive stamp and failing to cancel such stamp "in manner prescribed by that section", shall be punishable with fine which may extend to one hundred rupees. The only change required is addition of the article "the" before the word "manner", which we recommend.
22.17. Section 64-Introductory.-
Section 64 is one of the important penal provisions of the Act. Clause (a) of the section punishes a person who executes an instrument which does not fully and truly set forth the circumstances which are, by section 27, required to be set forth. Clause (b) punishes a person who, while employed or concerned in the preparation of any instrument, neglects or omits to set forth those facts and circumstances. Clause (c) punishes a person who, with intent to defraud the Government, "does any other act calculated to deprive the Government of any duty or penalty under this Act."
22.18. Controversy as to clause (c).-
The ambit of clauses (a) and (b) is obviously limited, being, speaking broadly, confined to a full and true statement in the instrument of the relevant facts. But clause (c) is wide, and the question that has arisen is whether clause (c) is to be construed ejusdem generis with the preceding clauses (a) and (b)1, or whether it is not to be so cons trued.2 The actual controversy has arisen in respect of a person who receives an unstamped instrument; but it could arise in many other situations.
1. Chhakmal v. Emperor, 1916 ILR 44 Cal 321: AIR 1967 Cal 665.
2. (1934) 153 IC 952 (Nag).
22.19. Overlapping between section 62(c) and section 64(c).-
The marginal note to the section would seem to support a narrower view. No doubt, the wording of clause (c) is capable of a wide construction; but, if taken literally, it would take in almost every case which falls within another sections-section 62. Of course, section 62 does not require an intent to defraud, while section 64 requires such intent. But there would be overlapping as regards the conduct punishable under the two sections. Again the punishment under section 62 (fine up to five hundred rupees) is milder than that under section 64 (fine up to five thousand rupees)-apparently because section 62 does not require mens rea at present. It can, therefore, be argued that clause (c) of section 64 should be given a wide construction in order to cover cases where intentional evasion of duty has taken place. Even then, it appears reasonable to exclude, from clause (c), cases not analogous to clauses (a) and (b). Under the present wording, section 64, clause (c) overlaps not only section 62, but also section 68, as is explained below.
22.20. Overlapping between section 64(c) and section 68(c).-
Section 64, clause (c) overlaps clause (o) of section 68-which punishes a person, who, with intent to defraud the Government of duty, "practises or is concerned in any act, contrivance or device not specifically provided for by this Act or any law for the time being in force." (Punishment is fine up to one thousand rupees). The ingredients are so prescribed that most cases which fall under one will also fall under the other. In fact, section 64(c) would even cover many acts covered by specific laws. For example, the act of manufacturing or selling fictitious stamps would fall under section 64(c), though that act is an offence under the Indian Penal Code, It would not fall under section 68(c), because the acts specifically covered by the Penal Code are excluded by section 68(c). In this respect, section 64(c) creates an anomaly.
22.21. In view of the wide scope of section 64(c) as explained above, and the overlapping between section 64(c) and section 68(c) as mentioned above, as also the anomaly referred to above, it appears to be desirable to confine section 64(c) to acts analogous to violations of section 27, say, false statements (whether made in an instrument or not), calculated to deprive the Government of duty or penalty.