Deputy Commissioner of Stamp Duty cannot decide the validity of the document or the validity of the trust deed for the purpose of determining the stamp duty payable as per the Transfer of Property Act, 1882.
Sri B R Jagadhish vs District Registrar on 3 June, 2019
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 03RD DAY OF JUNE, 2019
THE HON’BLE MR. JUSTICE B. VEERAPPA
Aged about 52 years,
R/at 492/G, 7th Cross,
7th Block (West), Jayanagar,
Bengaluru-560 070. … Petitioner
(By Sri. Ashok Haranahalli, Sr.Counsel for
Sri. Abhijit Haranahalli, Adv.,)
- District Registrar &
Deputy Commissioner for Stamps,
- Senior Sub-Registrar,
Bengaluru-560 050. … Respondents
(By Sri.Dinesh Rao.N, Addl. Advocate Generalv/s Sri.V.Shiva Reddy, HCGP)
The petitioner who claims to be a donee under a gift deed dated 13.12.2013 is before this Court for a writ of certiorari and to quash the order dated 20.03.2014 passed by the first respondent – Deputy Commissioner for Stamps, vide Annexure `A’ and a writ of mandamus directing the second respondent – Senior sub-Registrar, to register the gift deed dated 13.12.2013 without insisting on payment of stamp duty under Article 28(a) of the Karnataka Stamp Act, 1957, and to release the registered gift deed in favour of the petitioner vide Annexure `C’.
- It is the case of the petitioner that the petition schedule properties were originally owned by late Sri. Thilisandra Rudrappa who had two wives, Smt. Nanjamma and Smt. Basamma. He had one son Thilisandra Chennasetru from Smt. Nanjamma and from Smt. Basamma, he had no children. Sri. Thilisandra Chennasetru married Smt. Puttamma and out of their wedlock they had no children. Smt. Puttamma died and later Sri. Thilisandra Chennasetru got married to Smt. T.C.Gowramma and they had two children – Sri. Shivarudrappa and Nanjamma. Sri. Thilisandra Rudrappa, the original propositor executed a will during his life time, bequeathing all the properties in favour of his grandson late Shivarudrappa. In the year 1925, Sri. Shivarudrappa passed away without leaving any heirs. As such the schedule properties got reverted and vested in late T.C.Gouramma who became the sole and absolute owner of the scheduled properties. Smt. Nanjamma, the daughter of T.C.Gouramma had only one daughter – T.N. Sarvamangala.
- It is the further case of the petitioner that during the life time of T.C.Gouramma, she established a private trust with herself, her daughter – Nanjamma and her grand daughter – T.N. Sarvamangala as the trustees and properties were managed by them during their life time. The Trust had two important clauses : (i) That the trustees will have only life time interest and they do not have the right to sell, mortgage or take loan over the property; and
(ii) the Trust automatically dissolves when a male child is born and in case a male as well as a female children are born, the property will be divided as two shares to male child and one share to female child and if only a female child is born, she once again becomes a Trustee and will have only life interest in the properties.
- It is further contended that the family trust created by T.C.Gowramma was in violation of the rules of Perpetuity under the provisions of Section 14 of the Transfer of Property Act, 1882. Thus, the family trust became null and void and inoperative in the eyes of law being void ab initio. Therefore, T.N. Sarvamangala, being a female member having acquired limited interest under the trust deed became the full owner as the trust deed was void and also by virtue of Section 14 of the Hindu Succession Act, 1956. Smt. T.N. Sarvamangala had two children – the petitioner herein and a daughter Smt. Renuka Pujar. It is further contended, Smt. T.N. Sarvamangala in consideration of the natural love and affection towards her children intended to gift the properties to her son – B.R. Jagadish, the petitioner herein (born out of the wedlock between T.N. Sarvamangala and T.N. Rudraiah) and her daughter – Smt. Renuka Pujar (born out of the wedlock between T.N. Sarvamangala and N.A. Kumar). Accordingly, the gift deed dated 13.02.2013 came to be executed by Smt. T.N. Sarvamangala and the same was presented to the second respondent – Senior sub-Registrar for registration along with an amount of Rs.2,300/- as the gift was within the family members. After examining the instrument along with other documents, the second respondent impounded the instrument on the ground that the stamp duty paid was not in accordance with law and the impounded instrument was sent to the first respondent for taking necessary action. The first respondent issued a notice calling upon the petitioner to appear and participate in the proceedings, to which the petitioner submitted a written reply stating that the stamp duty paid on the gift deed is proper, since the gift is between the family members. Despite the reply, the first respondent has erroneously passed the impugned order demanding Rs.26,09,120/- to be paid as stamp duty being 5.6% the value of the immovable property intended to be gifted holding that the gift is from a Trust and not between family members and further holding that the properties belong to Trust and are not the property of Smt. T.N.Sarvamangala, the donor.
- Hence, the present writ petition is filed.
- I have heard the learned counsel for the parties to the lis.
- Sri. Ashok Harnahalli, learned Senior counsel appearing for the petitioner, contended with vehemence, that the impugned order passed by the first respondent directing the petitioner to pay the stamp duty holding that the gift deed presented under Article 28(a) of the Stamp Act amounts to conveyance is erroneous and contrary to material on record. He would further contend that the provisions of Section 14 of the Hindu Succession Act, 1956, mandates that, any property possessed by a female Hindu, whether acquired before or after the commencement of this Act, shall be held by her as full owner thereof and not as a limited owner. Even when a limited interest is created in a property in favour of a female Hindu, if she had a pre-existing right in such property, the limited rights will get converted into absolute rights and the female Hindu will have full ownership over such a property. In the instant case, Smt. Sarvamangala acquired the rights in the schedule properties by inheritance through her mother Smt. Nanjamma. Therefore, she became the full owner by virtue of Section 14(1) of the Hindu Succession Act, 1956.
- He would further contend, while deciding the stamp duty in respect of the gift deed, the Deputy Commissioner for Stamps can only decide the stamp duty payable under the provisions of Sections 33 and 39 of the Stamp Act and he has no jurisdiction to decide about the title of the properties or object for transaction of the gift deed. Therefore, he sought to allow the writ petition.
- In support of his contentions, the learned Senior Counsel relied upon the following judgments :
(i) In the case of L & T Komatsu Limited vs. Senior Sub-Registrar, Yelahanka and others reported in AIR 2004 Kar. 308 – paras 24, 25 and 26 to the effect that the Deputy Commissioner for Stamps has to consider the instrument while deciding the stamp duty and he has no jurisdiction to the validity of the document.
(ii) In the case of Black Pearl Hotels Private Limited vs. Planet M. Retail Limited reported in (2017) 4 SCC 498 to the effect that, what is delegated under the proviso (b) of sub-section 2 of Section 33 is only to examine the instrument for the purpose of determining as to whether the instrument is duly stamped or not and for impounding the same.
- Per contra, Sri. Dinesh Rao, learned Additional Advocate General along with Sri. V. Shiva Reddy, learned High Court Government Pleader, sought to justify the impugned order and contended that the petitioner – Jagadish is not a relative of the donor – Sarvamangala and he is the son of the second husband of Sarvamangala. Therefore, the provisions of Section 28(a) of the Karnataka Stamp Act, 1957, applies and therefore the stamp duty is applicable to conveyance under Article 20(1) of the Stamp Act. Therefore, he has to pay the stamp duty as directed by the Deputy Commissioner for Stamps. Therefore, he sought to dismiss the writ petition.
- Having heard the learned counsel for the parties, it is an undisputed fact that the petitioner is claiming his right under a gift deed dated 13.12.2013 and presented the gift deed for registration before the second respondent, who in turn referred the same to the first respondent. The first respondent while considering the document has to decide the stamp duty payable. The first respondent while determining the stamp duty has recorded a finding that according to the petitioner, under the provisions of Section 14 of the Hindu Succession Act, the Deputy Commissioner cannot decide the ownership while deciding the stamp duty under the Stamp Act, but in view of the contents of the trust deed, the property belongs to the Trust and the petitioner is not a member and therefore stamp duty has to be paid under Article 28(a) of the Stamp Act. Though several contentions are raised in support of the arguments advanced by the learned Additional Advocate General, the fact remains, in the gift deed dated 13.12.2013 the relationship of the donor and donee is mentioned as under:
“Relationship – The donor was married to N.Rudraiah and out of the said wedlock, donee No.1 – B.R.Jagadish was born. The marriage between the donor and N.Rudraiah was dissolved by a decree of divorce and later the donor was married to N.A.Kumar. Out of the said wedlock, donee No.2 – Renuka Pujar was born. Therefore, the donor is the mother of the donees and are residing in the above mentioned address.”
- When the contents of the gift deed stated supra clearly state that Jagadish – the petitioner herein, was born out of the wedlock between the donor – T.N. Sarvamangala and her husband N.Rudraiah, it clearly states that the donor is the mother and the donee is her son. While deciding the stamp duty under the provisions of Sections 33 and 39 of the Stamp Act, the recitals of the document has to be looked into. The Deputy Commissioner for Stamps cannot decide the validity of the document or the validity of the Trust deed. It is for the person who disputes the gift deed or the Trust deed to approach the competent Civil Court. The authorities exercising powers under the provisions of the said Act have to consider the recitals to determine stamp duty and they have no jurisdiction to decide title between the parties.
- This Court while considering the provisions of Section 33 of the Stamp Act in the case of L & T Komatsu Limited vs. Senior Sub-Registrar, Yelahanka and others, reported in AIR 2004 Kar. 308 at paras 24, and 26 has held as under ;
“24. It is a well settled principle of interpretation that in understanding a Deed or a document, particularly a document conveying title, it should be read as a whole and the property transferred under the instrument is the property which is expressly recited as to be transferred under the instrument itself. The question of payment of stamp duty under the Act is essentially dependent on the nature of the instrument namely the nature of the transaction and what is conveyed or transferred under the instrument. It is not in dispute that the instrument is one of conveyance as understood within the meaning of Section 2(1)(d) of the Act and attracting stamp duty under Article 20 of the schedule to the Act. Then the next question will be what is the subject matter of conveyance. It is only on this aspect there is dispute.
- What is to be looked into in the instrument for the purpose of enquiry under Section 33 of the Act is as to whether the stamp duty payable on the instrument and on the valuation of the subject matter has been paid or not. If the instrument is accepted at its face value, the stamp duty paid even according to the respondents, is the correct stamp duty and it is an instrument which is duly stamped. But what the respondents have done is that the version of the instrument itself is disbelieved and the instrument is interpreted and understood as an instrument conveying properties of the value of Rs.210,64,00,000/-. No doubt respondents have sought to place reliance on the recitals in the agreement dated 30-7-1997 for transfer, for such conclusion. But it is not open to the authorities acting under Section 33 of the Act to interpret a document or understand a document in such a manner as to discard the express recitals therein and substitute therein own understanding of the recitals and arrive at a conclusion that the value mentioned is not the proper value of the property conveyed and as such it is not duly stamped. This is not the function of an officer exercising power or jurisdiction under Section 33 of the Act or under Section 39 of the Act. The power under Section 33 of the Act is not one for interpretation of a document, but one for inferring as to whether proper stamp duty on the nature of the transaction has been paid. May be a transaction in the nature of conveyance being wrongly described as a transaction in the nature of a mere lease or a mortgage and stamp duty paid on such an instrument becomes subject matter of Section 33 of the Act, but not on the understanding that the value of the subject matter and the very subject matter has not been properly described. The clear intention under the instrument being one to convey the property comprising land, building and structures, stamp duty payable is only on the value of these properties and nothing more. The interpretation sought to be placed on the instrument for exercise of power under Section 33 of the Act was not one which is either tenable or acceptable on the face of the recitals in the instrument itself or and said to constitute a justifiable fact situation for exercise of power under Section 33 of the Act and for pursuing further action.”
- The Hon’ble Supreme Court while considering proviso (b) of sub-section (2) of Section 33 of the Stamp Act in the case of Black Pearl Hotels Private Limited vs. Planet M. Retail Limited reported in (2017) 4 SCC 498, at para 15 has held as under :
“What is delegated under the proviso (b) of sub- section (2) of Section 33 is only to examine the instrument for the purpose of determining as to whether the instrument is duly stamped or not and for impounding the same. We are disposed to think that Section 33(2)(b) does not contemplate or permit any adjudication as regards the nature and character of the instrument. The delegated power has to be restricted to cover the area, that is, whether the instrument bears the proper stamp and thus complies with the requirement of being “duly stamped”, and the stamp duty payable on the same must be determined only with reference to the terms of the instrument. Proviso (b) to Section 33(2) does not empower the Judge of the High Court to direct the officer of the High Court to enquire and to find out the nature and character of the document. The word “examination” used in proviso (b) to Section 33(2) of the Act cannot be allowed to have such wide amplitude as the context does not so envisage. It has to be conferred restricted meaning which is in consonance with the provision and the scheme of the 1957 Act. And the narrow meaning, as we find, is examination by the officer of the Court is only to determine as to the adequacy of inadequacy of the stamp duty paid and to impound the instrument.”
In view of the aforesaid provisions of the Stamp Act and law laid down by the Hon’ble Supreme Court, the Deputy Commissioner for Stamps can decide the stamp duty payable based on the gift deed presented before him.
- It is relevant to consider Article 28 of the Karnataka Stamp Act, 1957, which reads as under : Article 28. Gift-Instrument of-not being a settlement (No.48) or will or transfer (No.52)
(a). Where the donee is not a The same duty as a family member of the donor. conveyance(Article No.20) for a market value equal to the market value of the property which is the subject matter of gift:
Provided that where an instrument of gift contains any provision for the revocation of the gift, the value of the property which is the subjet to the matter of the gift, shall for the purposes of dutybe determined as if such provision were contained in the instrument.
(b) where the donee is a Rupees one thousand member of the family of the donor Explanation- Family in relation to the donor for this purpose means (father, mother), husband, wife, son, daughter, (daughter-in-law, brothers, sisters) and grand children A plain reading of the said provision makes it clear that Article 28(a) deals with, where the donee is not a family member of the donor, then the same duty as a Conveyance (Article No.20) for a market value equal to the market value of the property which is the subject matter of gift has to be paid. Sub-clause (b) deals with, where the donee is a member of the family of the donor, then the stamp duty of Rupees one thousand has to be paid.
Explanation. – Family in relation to the donor for this purpose means (father, mother) husband, wife, son, daughter, (daughter-in-law, brothers, sisters) and grand children, in view of Act No. 9 of 2009 and Act No. 7 of 2007, with effect from 1.4.2009 and 1.4.2007 respectively.
- The first respondent – Deputy Commissioner for Stamps, while considering the stamp duty payable has to consider the recitals of the document where the relationship of the donor and the donee is clearly mentioned. The first respondent – Deputy Commissioner for Stamps proceeded to pass the impugned order, beyond his jurisdiction, without properly examining the recitals of the document and without looking into the provisions of Sections 2 and 3of the Stamp Act, and erroneously directed the petitioner to pay stamp duty under Article 28(a) of the Stamp Act. Therefore, the impugned order cannot be sustained.
- For the reasons stated above, the writ petitions are allowed. The impugned order passed by the first respondent dated 20.03.2014 in DRI.101/13-14 is hereby quashed. The matter is remanded to the first respondent – Deputy Commissioner for Stamps to reconsider the matter afresh, in the light of the recitals of the gift deed dated 13.12.2013, in terms of the provisions of Sections 33 and 39 of the Karnataka Stamp Act, 1957, and in view of the law laid down in the decisions stated supra and pass orders strictly in accordance with law.
- In case the first respondent – Deputy Commissioner for Stamps comes to the conclusion that the document comes within the purview of Article 28(b) of the Stamp Act, necessary steps be taken in terms of the interim order passed by this Court dated 27.02.2017 and pass appropriate orders, in accordance with law, within a period of two months from the date of receipt of a copy of this order.