1. Sensmal and his father and brother separated in October 1952, and a deed of partition was executed between them on the 11th of October 1952, on a stamp worth Rs. 229. This document was presented for registration before the Sub-Registrar, Jalor, on the same day. The Sub-Registrar came to the conclusion that there was a deficiency in stamp amounting to Rs. 531. He seems to have made a demand for the deficit stamp as well as for a penalty ten times the amount.
It was then pointed out to him on behalf of the applicant that he had no such . authority and that all he could do was to impound the document under Section 33(2) of the Stamp Act. Thereupon, the Sub-Registrar impounded the document and submitted it to the Collector under Section 38(2) of the Act. The Collector, after hearing parties, ordered recovery of Rs. 531 as deficit stamp duty and, according to the applicant, this was done under Section 40(1) of the Stamp Act.
It is said that the applicant deposited the deficit stamp worth Rs. 531 as directed by the Collector and thereafter the Collector certified the document to be duly and properly stamped and forwarded it to the Sub-Registrar for registration. It is said that when this document was received by the Sub-Registrar along with the Collector's certificate, he took steps for its registration. Before however, the document could be registered, the Inspector of Registration made an inspection and found that the earlier report of the Sub-Registrar that there was only deficiency of Rs. 531 was incorrect.
According to the Inspector, the instrument was chargeable under Article 45 of the Stamp Law. The Inspector was ,of the view, and we think rightly, that under that article, only one share and that the largest is exempt in the case of a partition deed and duty has to be paid on the remaining shares which are deemed to be the separated share or shares. Inthis case, the largest share was valued at Rs. 37,900. while two other shares were valued at Rs. 26,126 and Rs. 36,000 respectively. The duty should have been charged, therefore, on Rs. 62,126 and it worked out to Rs. 1,260. The Inspector thought that the previous Sub-Registrar was wrong in coming to the conclusion that the duty was only Rs. 760.
He, therefore, ordered that this deficiency should also be realised. Thereupon, on the 13th of October 1953, a report was made again by the Sub-Registrar to the Collector that further stamp duty of Rs. 500 over and above the deficit stamp of Rs, 531 was due on the instrument. It was also reported that a penalty of Rs. 5,000 should be recovered from the executants. On receipt of this report, the Collector of Jalor, who was by now a different person from the one who had passed the original order in December 1952, passed the following order :--
'This office order dated 11-12-1952 be taken as cancelled and proceedings for recovery of the deficit amount be effected if warranted by law Returned with the above remarks.'
2. Thereafter, proceedings started for recoveryof a further amount of Rs. 500 as deficit stamp dutyand a sum of Rs. 5,000 as penalty. It is in consequence of these proceedings that the present application has been made and the applicant contendsthat the order of the Collector dated 11th of December 1952 was final and his successor had no authorityto cancel it and that, in any case, it could not becancelled without notice to the executants of thedeed. .
The application has been opposed on behalf of the State and it is being contended that the order passed by the Collector under Section 40(1)(b) is not a final order and that even in spite of a certificate under Section 42(2), it is open to the Sub-Registrar to question that order and certificate and make another report as was done in this case. The main question, therefore, that calls for determination is about the effect of the order of the Collector under Section 40(1)(b) and the certificate under Section 42(2).
3. When the Collector receives an instrument under Section 38(2), he proceeds under Section 40 to decide whether the instrument is sufficiently stamped or not, provided the instrument is not one chargeable with a duty of one anna or half anna. Section 40 does not specifically provide for notice to the executant of the document. But it is expected that the Collector, before he decides whether the instrument is properly stamped or not, would give notice to the executant so that he may put forward his point of View before the Collector, in case he desires to do so.
Thereafter, the Collector after taking into account the report submitted by the impounding officer and any submissions of the executant, in case he appears in reply to the notice given to him, may come to one of two conclusions. He may come to the cqn-clusion that the instrument is duly stamped and is not chargeable with duty at all. In that case, under Clause (a) of Section 40(1) he certifies by endorsement on the document that it is duly stamped or that it is not so chargeable.
Thereupon, under Sub-section (2) of Section 40, such a certificate becomes conclusive evidence of the matters stated therein. On the other hand, the Collector may come to the conclusion that the documentis deficiently stamped in which case under- Clause (sic)of Section 40(1), he passes an order requiring the deposit of the proper duty or the amount required to make up the same together with a penalty.
This penalty can either be a sum of Rs. 5 or any amount up to ten times the amount of the proper duty or of the deficient portion thereof. It is in the discretion of the Collector to decide whether to charge only Rs. 5 or any Sum up to ten times the proper duty or the deficient duty, if it is more than Rs. 5.
4. Then comes Section 42. ' Under Sub-section (1) of that section, the Collector issues a certificate by en-dorsing on the document itself that the proper duty and pesalty stating the amount of each has been levied in respect thereof, and the name and residence of the person paying them. When such endorsement has been certified on the document, the consequences mentioned in Sub-section (2) of Section 42 follow, namely, thereafter the document becomes admissible in evidence and may be registered and acted upon it as if it had been duly stamped.
The contention on behalf of the State is that as -Sub-section (2) of Section 42 uSes the words 'may be registered', it is open to the Sub-Registrar, after a certificate has been given under Section 42(1) to register the document or to refuse to register it and impound it again. We are of opinion that this contention is incorrect. Section 40(1) as we have already mentioned, provides for two contingencies depending upon what the decision of the Collector is. In the contingency provided in Clause (a) of Section 40(1), the consequences mentioned in Sub-section (2) of Section 40 follow.
In the contingency provided in Clause (b) of Section 40(1), there is to be a further act by the executant, namely, deposit of the duty and the penalty and it is only after that has been done that the Collector issues a certificate under Section 42(1). As soon as that certificate has been issued, the matter, in our opinion, is concluded so far as the Sub-Registrar, who made the , reference, is concerned. He has thereafter to register the instrument. It is true that the word 'may' appears before the words be registered.
But it is unthinkable that the intention was-that after the Collector had come to a decision under Section 42(1), the Sub-Registrar should question that decision by refusing to register the document. The word 'may' in this context has in our opinion the same force as 'shall'. If the executive authorities are dissatisfied with the order of the Collector, their remedy is by way of a revision to the Chief Controlling Revenue authority under Section 56(1) of the Act. We may also point out that there is no provision anywhere in the Stamp Act for cancellation of his order by the Collector, once it has been passed under Section 40(1)(a) or (b).
We are in no doubt that no Collector has power to pass this sort of order which was passed on 24th of February 1954, by the successor Collector in this case. We have already set out the terms of that order. In the first place, the order cancels the earlier order without even giving a chance to the person in whose favour the earlier order had been passed to be heard. In the second place, the Collec-tor did not even apply his mind to the matter. All that he says is 'that proceedings for recovery of the deficit amount be effected if warranted by law'.
He thus decides nothing and leaves it to the Sub-Registrar, who made the report to decide whe-ther any deficiency is there and any penalty should be levied. This is not contemplated by the provisions of Sections 40 and 42 of the Stamp Act. It is the Collector who has to exercise his mind and decide. whether there is deficiency or not and whether any penalty should be levied and if so, what amount.
The order, therefore that was passed by the successor Collector on 24th of February 1954 cancelling the order of 11th of December 1952 was clearly a wrong order and of no effect whatsoever and without jurisdiction. The proceedings, therefore, that have taken place after 24th of February 1954 by virtue of this wrong order are all uncalled for and must stop. The result of our declaring the order of 24th of February 1954 as without jurisdiction is that the order of llth of December 1952 stands.
5. Let us now see what happened after this order of llth of December 1952. Under the law, the executants should thereafter have deposited the duty as well as the penalty before the Collector. It seems that the Collector in - this case levied no penalty at all, which was not in accordance with Section 40(1)(b) under which he has to levy a minimum penalty of Rs. 5/- where ten times the deficit duty is more than Rs. 5/-. However, he can endorse a certificate under Section 42(1) after the duty and penalty on the document have been paid.
In this case, all that we know is that there is a separate certificate dated llth of December 1952; but that certificate does not show that the duty and the penalty had been paid on llth of December 1952 when it was issued. It merely says that the deficiency of Rs. 531/- may now be recovered from the executants. So that though we are told that the deficit amount of Rs. 531/- has been deposited, the Collector has not yet issued a certificate under Section 42(1) as contemplated therein.
The position, therefore, is that the applicant should go to the Collector and ask him to endorse a certificate on the document after payment of the requisite duty and penalty. But there is no doubt that the order of 24th of February 1954 by which the earlier order of llth of December 1952 was cancelled is wrong and it must be set aside and any proceedings taken in pursuance of that must stop.
6. We therefore, allow the application anddeclare that the order of 24th of February 1954 isof no effect and any proceedings taken in pursuance of that order must stop. For the rest, it is forthe Collector to proceed further from the order ofllth of December 1952 as explained above. Weorder parties to bear their own costs, in the circumstances of the case.