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Ergo Update

28-Nov-2018

In a recent decision, the Karnataka High Court considered whether a Judge, other than the Judge of a High Court, is empowered to delegate the duty of examining and impounding any instrument under Section 33 of the Karnataka Stamp Act, 1957 (Act) to any other officer. The High Court answered the question in the negative.

Facts of the matter

In a suit filed before the City Civil Court, Bengaluru (Court), the defendant had produced an insufficiently stamped document as evidence. The Court passed an interlocutory order impounding the document produced and directed the office to compute the stamp duty and penalty on the document.  The defendant, however, did not subsequently deposit the stamp duty and penalty computed by the office. Therefore, the Court ordered that the case be proceeded without relying on the insufficiently stamped document.  This order of the City Civil Judge was challenged by the defendant before the Karnataka High Court in a writ petition.

Interpretation of the section and decision

The question essentially involved interpretation of Section 33 of the Karnataka Stamp Act, 1957. The Karnataka High Court held that as per Section 33 of the Act, impounding of an instrument by the person referred to in Section 33(1) of the Act shall be preceded by a reasoned order on adequacy of stamping of the instrument, failing which, impounding of the document shall be unsustainable in law.  The Karnataka High Court further held that the power to delegate the duty of examining and impounding an insufficiently stamped instrument is provided only to the Judge of a High Court and, in the absence of a similar provision, no judge other than a judge of the High Court is empowered to delegate the duty of examining and impounding any instrument under Section 33 of the Act to any other person or officer.  Accordingly, the order of the City Civil Judge was set aside.

Comment

By the instant order, the High Court has made impounding of an instrument without a reasoned order unsustainable in law. Further, the delegation of the duty to examine and calculate stamp duty and penalty often resulted in errors and miscalculation, thereby giving rise to further disputes. This judgment will hopefully reduce such errors and miscalculations. 

  • Udayarkar Rangarajan (Partner) and Avinash Balakrishna (Associate)

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