Skip to content


Harish Chander Sharma Vs. Priti Sharma Etc. - Court Judgment

LegalCrystal Citation
SubjectArbitration
CourtDelhi High Court
Decided On
Case NumberSuit Appeal No. 213 of 1974
Judge
Reported inILR1976Delhi142; 1976RLR267
ActsStamp Act, 1899 - Sections 2(15); Arbitration Act, 1940 - Sections 23
AppellantHarish Chander Sharma
RespondentPriti Sharma Etc.
Advocates: H.D. Triyogi,; Arun Kumar and; S.S. Dalal, Advs
Cases ReferredIn Hamirmal Mehta v. Samrathmal Mehta and
Excerpt:
indian stamp act (1899) - sections 2(15), 17--arbitration award directing partition of an immovable property with the intervention of court--whether liable to stamp duty--arbitration act (1940), section 230(i).; that an instrument of partition has been defined in section 2(15) of the indian stamp act to mean any instrument whereby co-owners of any property divide or agree to divide such property in severalty, and includes also a final order for effecting a partition passed by any revenue-authority or any civil court and an award by an arbitrator directing a partition. thus, an instrument of partition includes in its definition an award by an arbitrator directing a partition and if it is not sufficiently stamped it is inadmissible in evidence. the definition brings within its fold awards..........12 of schedule i of the act reads as follows :- 'descriptionof instrument proper stamp duty award, that is to say, any decision in writing by an arbitrator or umpire, not being an award directing a parti- tion, on a reference made otherwise than by an order of the court jn the course of a suit- (a) where the amount or value of the the same duty as a bond property to which the award relates (no. 15) for such amount. as set forth in such award does not exceed rs. l,000.00 ; (b) in any other case .. ... five rupees. 'article 45 of schedule i reads as follows :- 'partitioninstrument of (as defined the same duty as the bond (no. 15) ned bys. 2(15) for the amount of the value of the separated shares of the property. n.b.-the largest share remaining after the property is partitioned.....
Judgment:

S.S. Chadha, J.

(1) Shri Harish Chander Sharma, the plaintiff, filed the present suit for partition of the joint Hindu family properties. In the plaint it was alleged

(2) When the award was filed by the arbitrator, the Deputy Registrar noticed that it was unstamped, prima facie, it being an instrument of partition. The Deputy Registrar, after hearing the counsel for the parties, recorded a note on 18th of December, 1974 and listed the case before the Registrar for orders. The Registrar issued notice to the Chief Revenue Controlling Authority and after hearing the counsel for the parties as well as the Standing Counsel for Chief Revenue Controlling Authority, directed that the matter be laid before the court for a decision on the two points :-

1. Whether an award on a reference made in a pending Suit dividing immovable property of the value of Rs. 100.00 or more must be engrossed on a requisite stamp paper; and

2.If it is not so done before filing in court, should it be impounded under section 38 of the Stamp Act as unstamped instrument of partition.

(3) Mr. Harnam Dass, the learned counsel for the plaintiff, contends that an award made in pursuance of an order of reference made by the Court under Chapter Iv of the Arbitration Act, 1940, is exempt from payment of any stamp duty. Reliance is placed on Article 12 of Schedule I of the Indian Stamp Act, 1899 (hereinafter called the Act'). The other contention is that the instrument of partition, as defined in section 2(15) of the Act, includes a final order for effecting a partition passed by any revenue authority or any Civil Court and an award by an arbitrator directing a partition. Final order, according to the counsel, also has reference to an award by an arbitrator directing a partition. The submission is that the award is liable to ba set aside in pursuance of the objections which may be accepted against the award; the award is not a final order and as such not liable to stamp duty under Article 45 of Schedule I of the Act.

(4) My attention is invited to a Division Bench judgment in Abdul Hassain Khan v. Mt. Mahmudi Begam and others, Air 1935 Lah 364. The question that had arisen in that case was whether a decree passed on an award directing a partition is liable to stamp duty notwithstanding that such an award is also chargeable. In that case the award that was made, was an instrument of partition chargeable with duty. The award was unstamped but a decree in terms of the award was passed. The decree that followed the award was also unstamped. The Division Bench held that the decree so far as it elected partition in that case was and is chargeable with stamp duty under Article 45 and should not be admitted in evidence without payment of duty and penalty. In this view of the case, the Division Bench did not thought it necessary to determine whether any objection could then be taken to the award on the ground of want of stamp when no such objection was taken at the time when it merged in the decree. I fail to comprehend how this authority supports the contention urged by the learned counsel for the plaintiff. It only lays down that if the award were not so stamped, the decree would be chargeable to full stamp duty as prescribed in Article 45.

(5) Reference was also invited to the judgment of the Full Bench Case in Smt. Praveena Bhardwaj v. State, I.L.R. 1975 Delhi 153 wherein the question referred was about the point of time or stage when the petitioner should be directed to pay the court fee on the probate or letters of administration under the Court Fees Act. The Full Bench made an observation while answering the question, that the insistence upon payment of court fee along with the application would be unfair to the petitioner inasmuch as he cannot get a refund of the amount in case the probate or letters of administration are not granted. This unfairness was avoided by interpreting Section 19-I of the Court Fees Act read with other relevant provisions. The Full Bench answered the question as follows :-

'(i) When a petition for grant of probate or letters of administration under Section 276(1) of the Indian Succession Act is made, the court-fee payable thereon is the fixed court-fee prescribed in Article I of Schedule Ii to the court-fees Act.

(II)The Court-fee payable on the probate or letters of ad- ministration as prescribed in Article Ii of Schedule I to the Court-fees Act need not be paid along with the application.

(III)The petitioner has to State in the petition, inter alia, the amount of assets which are likely to come to his hands as required by Section 276(1)(d) and (3) of the Indian Succession Act. He has further to file in Court, either along with the application or at a later stage, a valuation of the property in the form set forth in the Third Schedule to the Court-fees Act as required by Section 19-I(i) of the said Act. The said valuation has to be verified by the Collector and, if necessary, the Court, has to determine the valuation on a motion by the Collector as provided in Section 19-H of the Court-fees Act. This proceeding regarding the valuation may take place simultaneously with the proceedings in the Court for the grant of probate or letters of administration.

(IV)If, after the Court records evidence and hears arguments on behalf of the parties in the proceedings for the grant of probate or letters of administration, it has to pass an order giving its finding as to whether the propounded will has been proved to be genuine or not. If it finds that the will has not been proved to be genuine, it dismisses the application for probate or letters of administration. If, on the other hand, it finds that the will has been proved to be genuine, it has to state in the same order that by virtue of its finding it appears to it that probate or letters of administration should be granted to the petitioner, that its finding or order does not entitle the petitioner to the grant of probate or letters of administration until he files in the Court a valuation of the property the form set forth in the Third Schedule to the Court-fees Act and pays the court-fees mentioned in Article Ii of the First Schedule to the said Act on such valuation. In the said order, the Court may fix some reasonable time for the petitioner to get the valuation finalised if it has not been done already and pay the court-fee mentioned in Article Ii of the First Schedule to the Court-fees Act on such valuation.

(V)If the petitioner does not pay the court-fee, the Court has to pass a further order dismissing the petition for probate or letters of administration. On the other hand, if the petitioner pays the court-fee to the satisfaction of the Court the Court has to pass a further order granting the probate or the letters of administration under its seal in the form set forth in Schedule Vi to the Indian Succession Act. The actual issuance of the probate with the seal of the Court is a ministerial act to be performed by the Office of the Court in pursuance of the order of the Court granting the probate or letters of Administration.'

It would thus be seen that this Full Bench case has no application to the case before me. So far as an award is concerned, under Section 17 of the Act, all instruments chargeable with duty and executed by any person in Indian shall be stamped before or at the time of execution. The outside-time limit of paying the stamp duty on the instrument is the time of its execution.

(6) It would, thereforee, be necessary to refer to the relevant provisions of the Act. Section 2(15) reads as follows :-

'INSTRUMENTof partition' means any instrument whereby co- owners of any property divide or agree to divide such property in severally, and includes also a final order for effecting a partition passed by any revenue-authority or any Civil Court and an award by an arbitrator directing a partition.'

Article 12 of Schedule I of the Act reads as follows :-

'DESCRIPTIONof Instrument Proper Stamp Duty Award, that is to say, any decision in writing by an arbitrator or umpire, not being an award directing a parti- tion, on a reference made otherwise than by an order of the Court jn the course of a suit- (a) Where the amount or value of the The same duty as a Bond property to which the award relates (No. 15) for such amount. as set forth in such award does not exceed Rs. l,000.00 ; (b) In any other case .. ... Five rupees. '

Article 45 of Schedule I reads as follows :-

'PARTITIONInstrument of (as defined The same duty as the Bond (No. 15) ned bys. 2(15) for the amount of the value of the separated shares of the property. N.B.-The largest share remaining after the property is partitioned (or if there are two or more shares of equal value and not smaller than any of the other shares, then one of such equal shares) shall be deemed to be that from which the other shares are parated: Provided always that- (a) when an instrument of partition containing an agreement to divide property in severally is executed and a partition is sffected in pursuance of such agreement, the duty chargeable upon the instrument effecting such partition shall be reduced by the amount of duty paid in respect of the first instrument, but shall not be less than the eight annas, (b) Where land is held Revenue Settlement for a period not exceeding thirty years and pay the full assess ment the' value for the purpose of duty shall be calculated at not more then five times the annual revenue; (c) Where a final order for effecting a partition passed by any Revenue-authority or any civil court, or an award by an arbitrator direct ing a partition is stamped with the stamp required for an instrument of partition, and an instrument of partition in pursuance of such order or award is subsequently executed, the duty on such instrument shall not exceed eight annas. '

(7) Article 12 of Schedule I of the Act docs not exempt the awards made with the intervention of the Court under Chapter Iv of the Arbitration Act, 1940, from payment of duty, but only provide under the description of instrument, that the award must be on a reference made otherwise than by an order of the Court in the course of a suit. The award has also to be one as not being an award directing a partition. The scope of Article 12 is to provide for private awards as chargeable with duty as specified therein. Awards made on a reference by an order of the court do not fall within this article. The plain language of Article 12 only excludes from its scope the awards on a reference made by an order of the Court in the course of a suit. This does not, however, mean that those awards are exempt from payment of the stamp duty, if otherwise covered by any other provision of the schedule. In Hamirmal Mehta v. Samrathmal Mehta and other, Air 1955 Raj 52, a similar contention was raised and repelled. It was held :-

'THEnext point urged by the learned counsel for the respondents is that it is only an award made on a private reference that is liable to stamp duty. The learned counsel refers me to Art. 12 and points out that all awards following references made by a court are not liable to duty, though awards following references made by a private parties outside the court are subject to stamp duty. The learned counsel suggests that in the case of an instrument of partition following a reference through a court, no stamp duty should be levied on the award itself as the final decree that is to be passed in the case will be liable lo stamp duty and no person should be made to pay twice over. I am unable to attach any weight to this contention either. In case an award is accepted and is made the rule of the court and a decree follows, the final decree will be liable only to nominal stamp duty under proviso (c) to Art. 45. In case the award is set aside, it will be in no worse a position than the award made on a private reference which was not made a rule of the court. Besides I have to interpret the law as it stands and not to pay any attention to considerations of equity.'

(8) The instrument of partition has been defined to mean any instrument whereby co-owners of any property divide or agree to divide such property in severally, and includes also a final order for effecting a partition passed by any revenue-authority or any Civil Court and an award by an arbitrator directing a partition. Thus an instrument of partition includes in its definition an award by an arbitrator directing a partition and if it is not sufficiently stamped it is inadmissible in evidence. The definition brings within its fold awards directing a partition, whether made on a private reference or on a reference through the Court. The words used arc 'an award' with no qualifications attached to it, and thereforee, are wide enough to include all categories of awards directing a partition. The 'final order' for effecting a partition is related to one passed by any revenue-authority or any Civil Court. The 'final order' has no reference to an award by an arbitrator directing a partition. The legislature has intentionally used the word 'or' between 'revenue-authority' and 'any Civil Court', and the word 'and' thereafter. If it was intended that the 'final order' is also applicable to an award, then the legislature would have used the word 'or' and not 'and'. The 'final order' passed by any revenue authority or any Civil Court is one for effecting a partition. It was intended to exclude from :ts scope an order merely declaring the rights of the parties and directing further proceedings for the ascertainment of the specific portion to be taken by the respective parties or for demarcation of the properties by metes and bound division, such as in a preliminary decree in the partition suit. A final decree or order in such a case normally follows the preliminary decree. The legislature in the definition has used 'directing a partition' specifically to an award by an arbitrator; thus clearly indicating that it did not intend to lay down that an award by an arbitrator directing a partition has to be a final award or a final order. It is not permissible to add words in a statute, while interpreting its provisions, so as to enlarge or restrict its scope. The legislature has not used the word 'final' before the award. The award by an arbitrator directing a partition is ipso facto an instrument of partition. It may be acted upon or filed in Court for being made a rule of the Court.

(9) In Hamirmal Mehta v. Samrathmal Mehta and another(3) (supra), a similar contention was raised but was negatived :-

'THElearned counsel for the respondents have urged that an award by the arbitrators directing the partition would be liable to stamp duty as instrument of partition only if it is a final award and not liable to be set aside by the Civil Court. The suggestion is that if an award is liable to stamp duty as an award and is subsequently set aside, the stamp duty would not be refundable and the parties would have been made to pay twice over. In my opinion, this contention cannot be attached any weight to. The words of the section are clear and lay down that an award by the arbitrator directing partition will be liable to stamp duty. There is nothing said about its being a final award not liable to being set aside by a court of law, and I cannot substract from or add to the definition.'

The award given by an arbitrator directing a partition becomes an instrument of partition chargeable with stamp duty, irrespective of the fact whether it was made in pursuance of an order of reference under section 23(1) of the Arbitration Act, 1940 or made without the intervention of the court. As soon as an award is made, it is liable to stamp duty and there is no question of deferring the payment of stamp duty after the award is upheld in the court of law. Under section 17 of the Act, all instruments chargeable with duty and executed by any person in Indian shall be stamped before or at the time of execution. The executant of the award being the arbitrator, it was his duty to direct the parties to provide him with the necessary stamp paper and then should have made and published his award. After the award has been made and published by the arbitrator, he becomes functus officio and, thereforee, the award cannot be remitted back to him for rewriting on a stamped paper. The award is admittedly unstamped.

(10) The second point raised by the Registrar presents no difficulty. Duty of examining and impounding documents is obligatory on the persons specified in Section 33 of the Act, if the instrument in question is not stamped according to the Act and the instrument is produced or comes in the performance of his functions. The award has been filed in this Court under Chapter Iv of the Arbitration Act, 1940. Under Section 35 of the Act, no instrument chargeable with duty shall be admitted in evidence for any purpose by any person having by law or consent of parties authority to receive evidence or shall be acted upon, registered or authenticated by any such person or by.an public officer, unless such instrument is duly stamped. The Act further provides for the machinery for subsequently paying proper duly together with the penalty and thus making the instrument admissible in evidence. The plaintiff has not volunteered to make good the deficiency of the stamp duty and the penalty under Section 35 of the Act. The award is thus impounded. As the duty and penalty has not been paid, it is sent in original to the Collector under Section 38(2) of the Act, which provides that the person so impounding an instrument shall send it in original to the Collector. The Collector has then to follow the procedure as specified in Section 40 and other provisions of the Act. After the Collector has dealt with it as provided in the Act, the original instrument shall be returned to this Court for further proceedings.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //