Karnataka High Court

Hiranappa And Ors vs M/S Sriram Finance Co. Ltd. And Ors on 19 September, 2022

Bench: M.G.S.Kamal

          IN THE HIGH COURT OF KARNATAKA
                                                 R
                  KALABURAGI BENCH

     DATED THIS THE 19th DAY OF SEPTEMBER 2022

                        BEFORE

      THE HON'BL E MR.JUSTICE M.G.S.KAMAL

           RFA NO 200058 OF 2020 (RES)

BETWEEN

1. HIRANAPPA S/O MALLAPPA,
SINCE DECEASED, REP. BY LR.

SHANTABAI,
W/O.LATE HIRANAPPA,
AGE: 78 YEARS,
R/O.REVANOOR VILLAGE,
TALUK: JEWARGI,
DIST: KALABURAGI.

2 . BEERLING S/O SIDRAMAPPA
AGED ABOUT 16 YEARS,
MINOR, THROUGH NEXT FRIEND
HIRANAPPA-APPELLANT NO.1.

3 . MALAPPA S/O SIDRAMAPPA
AGED ABOUT 15 YEARS,
MINOR, THROUGH NEXT FRIEND
HIRANAPPA-APPELLANT NO.1.

4 . SMT. SHIVALEELA
D/O SIDRAMAPPA
AGED ABOUT 24 YEARS,
OCC: HOUSEHOLD,
R/O: ARALHALU,
TALUK: SHAHAPUR,
DIST: YADGIRI-585229.
                           2




5 . SMT. ROOPA D/O SIDRAMAPPA
AGED ABOUT 21 YEARS,
OCC: HOUSEHOLD,
R/O: ATNOOR VILLAGE,
TALUK: AFZALPUR,
DIST: KALABURAGI-585302.
                                           ...APPELLANTS
(BY SRI.AMEET KUMAR DESHPANDE, SR. ADVOCATE
FOR SRI.GANESH S. KALBURGI, ADVOCATE)


AND

1 . M/S SRIRAM FINANCE CO. LTD.,
THROUGH ITS POWER OF ATTORNEY HOLDER
SAIDAPPA, S/O SOMALINGAPPA BIJJARAGI,
AGED ABOUT 40 YEARS,
OCC: ASSISTANT CREDIT MANAGER,
M/S SRIRAM FINANCE CO. LTD.,
KANDUR MALL, S.V.P. CIRCLE,
KALABURAGI-585102.

2 . SIDDU @ SIDRAMAPPA S/O HIREANNA
AGED ABOUT 50 YEARS, OCC: AGRICULTURE,
R/O: REVANOOR, TALUK: JEWARGI,
DIST: KALABURAGI-585226.

3 . RAMESH S/O KHEMU NAIK
AGED ABOUT 41 YEARS,
OCC: AGRICULTURE, R/O: SASTRI CHOWK,
TQ: JEWARGI, DIST: KALABURAG-585226.

4 . MAHESH S/O SHANTAPPA PATIL
AGED ABOUT 28 YEARS,
OCC: AGRICULTURE & BUSINESS,
R/O: JEWARGI, TQ: JEWARGI,
DIST: KALABURAGI-585226.
                                         ...RESPONDENTS
(BY SRI.D.P.AMBEKAR, ADVOCATE FOR R1,
SRI.BEEMANNA GOLLALAPPA, ADVOCATE FOR R2
SRI.SACHIN M.MAHAJAN, ADVOCATE FOR R4,
NOTICE TO R3 DISPENSED WITH)
                                 3




     THIS RFA IS FILED U/S 96 READ WITH ORDER 21 RULE
103 OF CPC, PRAYING TO ALLOW THIS APPAL AND TO SET
ASIDE THE ORDER/DECREE DATED 29.02.2020 PASSED IN
E.P.NO.54/2015 ON THE FILE OF THE III ADDL. DISTRICT AND
SESSIONS JDUGE, KALABURAGI.

     THIS APPEAL HAVING BEEN HEARD AND RESERVED,
COMING ON FOR 'PRONOUNCEMENT OF JUDGMENT', THIS DAY,
THE COURT DELIVERED THE FOLLOWING:

                          JUDGMENT

Present appeal is filed by appellants/petitioners being

aggrieved by the order dated 29.02.2020 passed in

Execution Case No.54/2015 on the file of III Additional

District and Sessions Judge at Kalaburagi, by which the

application filed under Order 21 Rules 97, 98 and 101 of

CPC by the appellants/petitioners is rejected.

2. Brief facts of the case leading up to filing of the

appeal are as under:

a) The aforesaid execution case in E.P.No.54/2015

has been filed by decree-holder seeking to execute the

award dated 30.08.2013 passed in Arbitration Case

No.259/2013 for an amount of Rs.4,40,743/- together with

interest at 18% p.a. from 29.03.2013 to 29.05.2015

amounting to Rs.2,51,221/- with further interest at the

rate of 18% p.a., till the date of payment against

respondents No.2 and 3/Judgment Debtors. That along

with the aforesaid Execution Petition, an application was

filed by the respondent No.1/Decree Holder under Order 21

Rule 13 read with Section 151 of CPC seeking attachment

of immovable property bearing Survey No.72/1 measuring

3 acres 10 guntas situated at Revanoor village, Jewargi.

b) The appellants/petitioners in their aforesaid

application contended that the appellant No.1/Petitioner

No.1 is the father of respondent No.2/Judgment Debtor

No.1. Appellant Nos.2 to 5/Petitioners No.2 to 5 are the

sons and daughters of the respondent No.2/Judgment

Debtor No.1. The appellant Nos.2 and 3/Petitioners No.2

and 3 are minors and are under care and custody of their

grandfather, appellant No.1/Petitioner No.1. That their

father Siddaramappa - Judgment Debtor No.1, was not

taking care of the interest of appellant Nos.2 and

3/Petitioners 2 and 3. As such, they were represented by

appellant No.1/Petitioner No.1. Appellants/Petitioners and

the respondent No.2/Judgment Debtor No.1 constituted a

Hindu Undivided Family and there was no partition of the

joint family property amongst them. That the aforesaid

land in Survey No.72/1 measuring 3 acres 10 guntas is the

ancestral property. That on 16.02.2019, the

appellants/petitioners learnt that a bailiff was to come to

deliver possession of the same to one Mahesh, son of

Siddaramappa Patil of Jewargi, who claims to be a

purchaser of the said land in the Court auction. That

respondent No.2/Judgment Debtor No.1 is not the

exclusive owner of the said property and the

appellants/petitioners have got 1/5th share each therein.

That the decree-holder had no right to auction the said

land to recover the alleged dues. The auction conducted

was thus not binding on the appellants/petitioners. That

there were irregularities in conducting the auction. That

the appellants/petitioners are not the parties to the loan

transaction. They cannot be dispossessed of from the land.

It is also contended that since proper stamp duty on the

above award has not been paid by the decree-holder, the

said award could not be executed without collecting proper

stamp duty thereon.

c) Objections were filed to the said application by

the Respondent No.4/auction purchaser denying the

averments made in the above application. It is contended

that as per records of rights for the year 2004-05, land in

Survey No.72/A was measuring 14 acres 27 guntas. That

after partition an extent measuring 3 acres 10 guntas had

been allotted to the share of respondent No.2/Judgment

Debtor No.1 and the said fact is evident from the records of

right pertaining to the year 2008-09. Therefore, the claim

of the appellants/petitioners of property being joint family

property and no partition having taken place between the

family members is incorrect. Further it is also contended

that respondent No.2/Judgment Debtor No.1 had obtained

loan from the decree-holder to meet his family necessity by

offering aforesaid land as security and since he failed to

repay the loan, proceedings were initiated, award was

accordingly passed. In the proceeding for recovery of

award amount sufficient opportunity was provided to the

respondent No.2/Judgment Debtor No.1, as there was no

response from him, the property was put to auction in

which the Respondent No.4/auction purchaser emerged as

the highest bidder for the bid amount of Rs.17,50,000/-. A

sale certificate has been issued in favour of the auction

purchaser. Thereafter, the Respondent No.4/auction

purchaser has moved an application for delivery of vacant

possession of the subject land. That in order to defeat the

rights of the Respondent No.4/auction purchaser, the

present application has been filed in collusion between the

respondent No.2/Judgment Debtor No.1 and the

appellants/petitioners.

3. The appellants/petitioners in support of their

contentions examined appellant No.1/Petitioner No.1 as

P.W.1 and two more witnesses as P.Ws.2 and 3 and

exhibited 18 documents marked Ex.P1 to Ex.P18. The

auction purchaser examined as D.W.1 and exhibited for

documents as Ex.D1 to Ex.D4.

4. Based on the aforesaid contentions, the

Execution Court framed the following points for its

consideration:

"i) Whether the petitioner proves, the property in question is joint and ancestral property of the petitioner and Judgment Debtor No.1?

ii) Whether the petitioners proves that the sale auction conducted by this Court is in violation of Rule 64 of Order 21 of the Code of Civil Procedure?

iii) Whether at this stage, execution of award cannot be proceeded without payment of stamp duty by the decree-holder?

iv) What order?"

5. The Executing Court while answering the

aforesaid point Nos.(i) to (iii) in negative, has taken into

consideration the categoric admission made by Petitioner

No.1 who has admitted that the respondent No.2/Judgment

Debtor No.1 is living separately with his wife and children

and appellant No.1/Petitioner No.1 is not living with them.

He has also admitted that the land in Survey No.72 which

originally measured 14 acres 27 guntas was partitioned

amongst the appellant No.1/Petitioner No.1 and his sons in

which 3 acres 10 guntas each was allotted to his four

children and he has retained the remaining land. That the

subject land was allotted to the share of respondent

No.2/Judgment Debtor No.1 whose name was appearing in

the revenue records. The said witness has also deposed

regarding respondent No.2/Judgment Debtor No.1 availing

the loan to purchase vehicle and a case having been filed

for recovery of the said loan.

6. While adverting to the contention regarding

non-compliance of Order 21 Rule 64 of CPC, the Executing

Court has observed that before issuance of the attachment

warrant, certified copy of the market value has been

produced by the Decree-holder and Sub-Registrar of

Jewargi had furnished market value of properties of

Revanoor village as on 11.04.2018. That as per the

Government guidelines, the value of land in Survey

No.72/1 of Revanoor village was Rs.2,66,000/- per acre

and that only after verifying the market value as per the

guidelines issued by the Government, the Executing Court

had issued attachment warrant and sold the land in

question.

7. With regard to the contentions of non-payment

of stamp duty, the Executing Court while noting that the

award was impounded and sent for collection of duty, has

observed that the non-payment of stamp duty is a curable

defect and the same cannot be a ground for dismissal of

the execution petition. That a letter was received by the

District Registrar stating that the stamp duty payable was

Rs.3,405/- and on payment of such stamp duty, the

original award would be sent back. With these

observations, the execution court rejected the application

filed by the appellants/petitioners by its order dated

29.02.2020 which is called in question.

8. Being aggrieved by the aforesaid order, present

appeal under Section 96 of CPC is filed by the

appellants/petitioners.

9. Sri.Ameet Kumar Deshpande, learned senior

counsel appearing for Sri.Ganesh Kalaburagi, learned

counsel for the appellants/petitioners reiterating the

grounds urged in the memorandum of appeal submitted

that:

a) That the property still remains the joint family

property of the appellants/petitioners more particularly of

appellants Nos.2 to 5/petitioner Nos.2 to 5 and they have

vested right in the property and as they have not been

made parties either to the loan transaction or to any

previous proceedings, any order passed in respect of the

said property would not bind them.

b) That the Executing Court has not complied with

the requirement of holding an enquiry under Order 21 Rule

64 of CPC before attaching the property.

c) That the award is insufficiently stamped and

the Executing Court, by its order 10.01.2020, impounded

the award which was sought to be executed. The award is

non executable and executing Court seizes to have

jurisdiction. Unless sufficient stamp duty is paid on the

award, it cannot be executable at all. A non-executable

award cannot be relied upon for any purpose whatsoever

much less for attachment, sale and delivery of possession

of the property in favour of decree-holder or any auction

purchasers. The Executing Court not having taken this

aspect of the matter into consideration, has committed

serious error of jurisdiction going to the root of the matter

vitiating the entire process. Therefore, he submits that no

sanctity can be attached to the orders and consequent

steps taken by the executing court including attachment,

auction, issuance of sale certificate and process of delivery

of possession have become null and void.

d) Referring to provisions of Section 34 of the

Karnataka Stamp Act, 1957, learned Senior counsel

submits that an instrument insufficiently stamped shall not

be admitted in evidence and cannot be looked into even for

collateral purposes. He further submits that the term

"shall" used in the said provision is mandatory non-

compliance of which would render the entire process illegal

and non est in the eyes of law.

e) That the Executing Court is not having

territorial jurisdiction to entertain the execution petition as

the award in question has passed at Chennai and the

Courts at Chennai alone have got jurisdiction to try the

matter. He relies upon the following Judgments in support

of his submissions:

i) ANASUYA DEVI AND ANOTHER vs. MANIK REDDY AND OTHERS (2003 SUPP.4 SCR 853);

ii) L & T FINANCE LIMITED, MUMBAI, MAHARASHTRA vs. RADHE SHYAM SAHU AND OTHERS [2015(3) AIR JHARKHAND HIGH COURT REPORTS 496];

iii) JAYALAKSHMI REDDY vs. TIPPANNA AND OTHERS (ILR 2002 KAR 5163).

10. On the other hand, Sri.D.P.Ambekar, learned

counsel for Respondent No.1 justifying the order passed by

the Executing Court submitted that:

a) Even as admitted by P.W.1, there was a family

partition in which the subject land was allotted to the share

of the Judgment Debtor. The raising of the loan by the

judgment debtors was for his business purposes, which

invariably amounts to a family necessity. The

appellant/petitioners being aware of these aspects of the

matter cannot be permitted to raise the said objection at

this stage.

b) There was sufficient compliance of the

requirement of Order 21 Rule 64 of CPC even as observed

by the Executing Court in the impugned order wherein

before passing the order of attachment, the Executing

Court had obtained the information from the jurisdictional

Sub-Registrar with regard to the value of the property

which was just about Rs.2,66,000/- per acre whereas the

decreetal amount was Rs.6,93,000/-.

c) He further submits that despite the order of

attachment, the respondent No.2/Judgment Debtor No.1

has sold the subject property by executing and registering

a deed of sale dated 25.06.2018 in favour of one

Mr.Damodar for a sum of Rs.8,65,000/- which according to

the respondent No.2/Judgment Debtor No.1 was the

maximum and appropriate price payable. Appellant

No.1/Petitioner No.1-Veeranna has joined execution of the

said deed of sale as one of the witnesses. He submits that

in the Court auction of the subject property, the maximum

sale price fetched is Rs.17,50,000/- which is far in excess

than the amount for which the aforesaid deed of sale has

been executed. Therefore, the appellants/petitioners

cannot have any grievance regarding the auction of the suit

property. He further submits that the conduct of the

respondent No.2/Judgment Debtor No.1 and the appellant

No.1/petitioner No.1, more particularly of not coming to

the Court with clean hand cannot be ignored. Thus, he

submits that no grounds are made out warranting

interference.

d) Non-payment of stamp duty cannot make

award non-executable inasmuch as it is only a fiscal matter

of payment of stamp duty, which is rectifiable. He submits

that non-payment of stamp duty has no consequences of

rendering the award non-executable or rendering the

proceedings of the executing Court a nullity. No such

provisions are available under the Karnataka Stamp Act,

1957.

11. Sri.Sachin Mahajan, learned counsel for the

Respondent No.4 purchaser of the subject property in the

Court auction submits that the property was auctioned for

a highest bid amount of Rs.17,50,000/-. The amount

recoverable in execution is Rs.6,93,000/-. The respondent

No.2/Judgment Debtor No.1 would be entitled for refund of

excess amount after satisfaction of the award amount. He

further submits that the total extent of subject land being 3

acres 10 guntas and the same being agricultural land could

not have been sold in fragmentation. Besides, even as per

Ex.D15, the sale deed, the total value of 3 acres 10 guntas

was Rs.8,65,000/- and the guidance value as per the

report of Sub-Registrar was Rs.2,66,000/- per acre.

Therefore, as on the date of the auction, the expected base

price for the entire property was closer to the decreetal

amount and there was no possibility of selling the portion

of the land.

12. Heard the learned counsel for the parties and

perused the records.

13. The point that arises for consideration in this

appeal is that:

"Whether the executing court on the facts and circumstances is justified in rejecting the application filed by the appellant/petitioners under Order 21 Rule 97, 98 and 101 of CPC?"

REGARDING CLAIM OF PROPERTY BEING JOINT FAMILY PROPERTY:

14. It is the primary contention of the

appellants/petitioners the subject land is the joint family

ancestral property not having been partitioned amongst the

family members, respondent No.2/Judgment Debtor No.1

could not have encumbered the same. The creation of third

party rights therefore, would not bind the

appellants/petitioners. As seen from the depositions of the

PW.1 who is the father of respondent No.2/Judgment

Debtor no.1 and grand father of the appellant Nos.2

to 5/petitioners Nos. 2 to 5 wherein he has categorically

stated that the entire land in survey No.72 was measuring

14 Acres 27 guntas and was partitioned between him and

his children in which portion of land measuring 3 acres 10

guntas was allotted to the share of respondent

No.2/Judgment Debtor No.1 Perusal of exhibits P.1 to

P.13, RTC extracts for the years 2005-06 to 2017-18

wherein column No.10 refers to the mutation entries

effected in the year 2004-05 pursuant to a partition dated

26.03.2005 in which an extent of 3 acres has been

mutated in the name of respondent No.2/Judgment Debtor

No.1 vide MR 20/2004-2005. Ex.P.15 is the deed of sale

dated 25.06.2018 in terms of which respondent

No.2/Judgment Debtor No.1 has sold the aforesaid land

measuring 3 acres 10 guntas in Sy.No.72/1 in favour of

said Damodar. The wife of respondent No.2/Judgment

Debtor No.1 has joined execution of the said sale deed -

Ex.P15 as consenting witness. Besides, appellant

No.1/petitioner No.1 has also joined as a witness to the

said document. Ex.P.14 is the RTC for the year 2017-18

in which name of the Damodar s/o Timmana Shastry is

mutated vide MR No.H6/2018-19 pursuant to the sale at

Ex.P15. It is to be noted that the said property has been

attached in the aforesaid execution proceedings by order

dated 12.08.2017 and order of attachment has also been

issued on 31.08.2017. Thus, the sale of the said property

on 25.06.2018 as per Ex.P.15 is during the subsistence of

the attachment order clearly manifesting the oblique

intentions of the appellant No.1/petitioner No.1 and the

respondent No.2/Judgment Debtor No.1 to avoid

attachment and sale of the said property towards recovery

of amounts due. The Executing Court has taken note these

aspect of the matter, therefore, the contention of the

appellants/petitioners that the property is still a joint family

property not being subject to the petitioner cannot be

countenanced.

15. Even otherwise, as rightly pointed by the

learned counsel for respondent No.1 admittedly loan was

raised by the judgment debtor for his business purposes

which amounts to meeting the family necessity, therefore,

the objection of the appellants/petitioners lack merits.

REGARDING COMPLIANCE WITH ORDER 21 RULE 64 OF CPC:

16. The award amount with interest recoverable from

the judgment is Rs.6,93,464/-. The value of the property

as ascertained by the Executing Court even as per the

guidance value as on the date of auction is Rs.2,66,000/-

per acre. The judgment debtors and appellant

No.1/petitioner No.1 have themselves admittedly sold the

subject property in terms of the Ex.P.15 for a sum of

Rs.8,65,000/-, which according to them was the best price.

The subject property being agricultural land measuring

about 3 acres 10 guntas could not have been sold in parts.

However, it is to be seen that in the auction held by the

executing Court the auction purchaser/respondent No.4

herein has offered the highest bid in a sum of

Rs.17,50,000/-. There is no allegation of any collusion in

the process of auction. In fact, the appellants/petitioners

and the judgment debtors had no right over the property

as they had already sold the same. The

appellants/petitioners and the judgment debtors, if

concerned about preserving the subject property, would

not have sold the same for a sum of Rs.8,65,000/- which is

far less than the amount recovered by Court auction.

17. In the circumstances, it is to be noted that

even after satisfaction of the award amount of

Rs.6,93,464/- payable to the decree holder, there is still

excess of amount far more than the amount realised by the

judgment debtors by selling the same under Ex.P15.

Respondent No.2/the Judgment Debtor No.1 having sold

the subject property, with appellant No.1/petitioner No.1

being witness to the document cannot be heard to say that

there is no compliance of provisions of Rule 64 Order 21 of

CPC. There appears to be substantial compliance of the

requirement of Rule 64 of Order 21 CPC in which the

executing Court taking into consideration of the amount

recoverable and the guidance value of the property as on

the date of the auction deemed it appropriate to auction

the entire property. There cannot be any grievance by the

appellants/petitioners in this regard.

REGARDING NON PAYMENT OF STAMP DUTY:

18. Adverting to the contentions of the

appellants/petitioners with regard to non-payment of the

stamp duty rendering the award inadmissible and non-

executable eventually resulting in the executing court not

having jurisdiction and the entire process becoming null

and void, it is necessary to refer to certain provisions of

Chapter of IV the Karnataka Stamp Act, 1957 (hereinafter

referred to as 'Stamp Act').

19. Section 33 of the Stamp Act provides for

examination and impounding of an instrument not duly

stamped. Section 34 of the Stamp Act provides for

inadmissibility of insufficiently stamped instrument in

evidence. Section 35 of the Stamp Act provides that where

an instrument has been admitted in evidence such

admission shall not, except as provided in Section 58 of

Stamp Act be called in question at any stage of the same

proceedings on the ground that the instrument has not

been duly stamped. Section 36 of the Stamp Act provides

for admission of improperly stamped instrument on

payment of duty with which it is chargeable and certified to

be duly stamped on. Any instrument so certified shall then

be deemed to have been duly stamped. Section 37 of the

Stamp Act provides for the manner and mode of dealing

with impounded instruments for insufficient of stamp duty.

20. Section 41 of the Stamp Act provides that when

duty and penalty leviable on any instrument has been paid

under Sections 34, 39 or 40 of the Stamp Act, an

endorsement thereon be made regarding the payment and

on such endorsement the instrument shall be admissible in

evidence, and may be registered and acted upon and

authenticated as if it had been duly stamped and be

delivered to the person as provided thereunder. Section 46

of the Stamp Act deals with the mode of recovery of duties

and penalties and other sums payable under the chapter

along with interest by distress and sale of movable

property of the person from whom the same are due, or by

any other process for the time being in force for the

recovery of arrears of land revenue.

21. Perusal of aforesaid provisions, of Chapter IV

of the Stamp Act, makes it clear the entire object of the

Stamp Act is to ensure payment of stamp duty and

recovery of duty and penalty payable on the instrument

required to be stamped under the Act. Though, non

payment of stamp duty would result in instrument

becoming inadmissible, no where in the said Act, is there

any provision rendering any Act done or purported to be

done upon an insufficiently stamped instrument an illegal

act. On the other hand, all the provisions would only insist

and provide for manner of payment and mode of recovery

of stamp duty. Sections 36 and 41 of the Stamp Act

clarifies the position wherein upon payment of duty and

penalty an endorsement be made and on such endorsement

it shall be acted upon and authenticated as if it has been

duly stamped. Thereby validating all acts done or cause to

be done based on insufficiently stamped instrument.

22. This Court in its judgment rendered in

Satamma Vs. Pavadi Gouda and Others reported in

1999 (2) KAR.LAW Journal 650, has held that the

instruments cannot be rejected on the ground that they are

inadmissible for not being properly stamped when the

requisite duty and penalty is recoverable and recovered.

Once the Court rightly or wrongly admits document in

evidence, admission cannot be called in question at any

stage of the suit or proceedings on the ground that

document is insufficiently stamped as Section 35 bars any

such objection except a revision of such decision in the

manner provided under Section 58 of the Stamp Act.

23. It is pertinent to note that Respondent

No.2/Judgment Debtor No.1 has remained absent

throughout the execution proceedings despite service of

notice. In fact as noted above, he along with Appellant

No.1/Petitioner No.1 and his wife has sold the subject

property in terms of Ex.P15 during the operation of

attachment order. No objection with regard to admissibility

of award is raised until the present appellants/petitioners

filed the application under Order 21 Rules 97, 98 and 101

of CPC. Once an instrument is admitted rightly or wrongly,

the admission cannot be called in question at any stage of

the suit or proceedings on the ground of insufficiency of

payment of stamp duty.

24. A three Judge Bench of the Hon'ble Apex Court

in its judgment rendered in the case of Hindustan Steel

Ltd. Vs. Dilip Construction Company reported in (1969)

1 SCC 597, at paragraph Nos.4 to 7 has held as under;

"4. The award, which is an "instrument"

within the meaning of the Stamp Act was required to be stamped. Being unstamped, the award could not be received in evidence by the Court, nor could it be acted upon. But the Court was competent to impound it and to send it to the Collector with a certificate in writing stating the amount of duty and penalty levied thereon. On the instrument so received the Collector may adjudge whether it is duly stamped and he may require penalty to be paid thereon, if in his view it has not been duly stamped. If the duty and penalty are paid, the Collector will certify by endorsement on the instrument that the proper duty and penalty have been paid.

5. An instrument which is not duly stamped cannot be received in evidence by any person who has authority to receive evidence, and it cannot be acted upon by that person or by any public officer. Section 35 provides that the admissibility of an instrument once admitted in evidence shall not, except as provided in Section 61, be called in question at any stage of the same suit or proceeding on the ground that the instrument has not been duly stamped.

6. Relying upon the difference in the phraseology between Sections 35 and 36 it was urged that an instrument which is not duly stamped may be admitted in evidence on payment of duty and penalty, but it cannot be acted upon because Section 35 operates as a bar to the admission in evidence of the instrument not duly stamped as well as to its being acted upon, and the Legislature has by Section 36 in the conditions set out therein removed the bar only against admission in evidence of the instrument. The argument ignores the true

import of Section 36. By that section an instrument once admitted in evidence shall not be called in question at any stage of the same suit or proceeding on the ground that it has not been duly stamped. Section 36 does not prohibit a challenge against an instrument that it shall not be acted upon because it is not duly stamped, but on that account there is no bar against an instrument not duly stamped being acted upon after payment of the stamp duty and penalty according to the procedure prescribed by the Act. The doubt, if any, is removed by the terms of Section 42(2) which enact, in terms unmistakable, that every instrument endorsed by the Collector under Section 42(1) shall be admissible in evidence and may be acted upon as if it has been duly stamped.

7. The Stamp Act is a fiscal measure enacted to secure revenue for the State on certain classes of instruments: It is not enacted to arm a litigant with a weapon of technicality to meet the case of his opponent. The stringent provisions of the Act are conceived in the interest of the revenue once that object is secured according to law, the party staking his claim on the instrument will not be defeated on the ground of the initial defect in the instrument. Viewed in that light the scheme is clear. Section 35 of the Stamp Act operates as a bar to an unstamped instrument being admitted in evidence or being acted upon; Section 40 provides the procedure for instruments being impounded, sub-section (1) of Section 42 provides for certifying that an instrument is duly stamped, and sub-section (2) of Section 42 enacts the consequences resulting from such certification."

(Emphasis Supplied)

25. Thus, making it clear insufficiency of stamp

duty cannot be a ground for invalidating any act or action

taken thereupon. Further, if any action is to be held or

considered to be an illegal act the same ought to be

expressly provided under the provisions of the Act and in

the absence of any such provision it cannot be presumed to

be so. If no consequence is provided for breach of a

provision despite the usage of the term "Shall" normally it

has to be construed as directory and not mandatory.

26. In this regard, it is useful to refer to the

Judgment of the Apex Court in the case of STATE OF

BIHAR AND OTHERS vs. BIHAR RAJYA BHOOMI

VIKAS BANK SAMITHI, BIHAR, JHARKHAND reported

in AIR 2018 SC 3862 wherein the Apex Court has dealt

with the provisions of Sections 29A and 34(5) of the

Arbitration of Conciliation Act, 1996, specifically referring to

the term "shall" used therein. The Apex Court has referred

to the similar provisions provided under Consumer

Protection Act, 1986, and Section 154(2) of the Code of

Civil Procedure, 1973 and to hold that despite mandatory

nature of the language used in the provision, no

consequence was provided if it was breached. Adverting to

its earlier Judgment in the case of BIKHARAJA JAYAPURIYA

vs. UNION OF INDIA (1962)2 SCR 880; (AIR 1962 SC 113),

at Paragraph No.19 has held as under:

19. However, Shri Tripathi has relied strongly upon the judgment of Bikhraj Jaipuria v. Union of India, (1962) 2 SCR 880. In that case, this Court held that the provision contained in Section 175(3) of the Government of India Act, 1935, which requires that contracts on behalf of the Government of India shall be executed in the form prescribed, was mandatory in nature, despite the fact that the Section did not set out any consequence for non-compliance. This Court referred to an instructive passage in Maxwell on Interpretation of Statutes, 10th Edn, p. 376, as follows:

"It has been said that no rule can be laid down for determining whether the command is to be considered as a mere direction or instruction involving no invalidating consequence in its disregard, or as imperative, with an implied nullification for disobedience, beyond the fundamental one that it depends on the scope and object of the enactment. It may perhaps be found generally correct to say that nullification is the natural and usual consequence of disobedience, but the question is in the main governed by considerations of convenience and justice, and when that result would involve general inconvenience or injustice to innocent persons, or advantage to those guilty of the neglect, without promoting the real aim and object of the

enactment, such an intention is not to be attributed to the legislature. The whole scope and purpose of the statute under consideration must be regarded."1

It then went on to hold that the provision was in the interest of the general public because the question whether a binding contract has been made between the State and the private individual should not be left open to dispute and litigation. We must not forget that, as has been laid down in Maxwell (supra), considerations of convenience and justice are uppermost, and if general inconvenience or injustice results, without promoting the real aim and object of the enactment, the provision must be declared to be directory.

27. Thus, mere use of term 'shall' would not make

the provision in the statute mandatory, non compliance of

which would result in nullification of the action taken

thereon. The entire purpose, aims and objects of the statue

needs to be kept in mind.

28. In the light of aforesaid settled principles of law,

as seen from the provisions of the Stamp Act no

consequences for insufficiency of stamp duty in the nature

of rendering the act a nullity is provided for. It only

provides for modes and methods of imposition and recovery

of duty and penalty. Thus, it could not be inferred that

action taken pursuant to and upon an insufficiently stamped

document would be illegal, null and void and non est in the

eye of law in the absence of any specific provisions thereof.

29. Thus, the term "shall" used in Section 34 of the

Stamp Act in the absence of any consequences provided

thereof, may have to be read only as for the purpose of

meeting the requirement of the Act and nothing beyond. As

already noted, though, an insufficiently stamped

instrument is inadmissible and cannot be relied upon even

for collateral purpose, it would not render the action taken

thereon illegal or void. More particularly, when on payment

of stamp duty and penalty thereon the same would become

admissible and the payment thereon is deemed to have

been made on the date of its execution. In other words,

retrospectively, validating the act.

30. The document in question, namely award has

been impounded by the Executing Court by its order dated

10.01.2020 and has directed the office to send the original

award to the district registrar for adjudication keeping the

certified copy of the award on the file. The Registrar by his

letter dated 13.02.2020 has issued a calculation memo

calculating the stamp duty payable at Rs.3,405/-. In the

meanwhile, the order rejecting the application filed by the

appellants/petitioners have been stayed by this Court and

records from Executing Court have been called for including

the original award. The Stamp Duty has not been paid in

view of the pendency of this matter and interim order

granted by this Court. In view of the provisions of the

Stamp Act and the principles of law, that on the payment

of stamp duty, interest and penalty if any, the documents

become admissible and it relates back to the date of

execution, therefore, the contention of the learned counsel

for the appellant that the entire process and the action

taken by the executing court have been rendered illegal

and without jurisdiction cannot be countenanced.

31. It is also pertinent to note the Apex Court in

the case of Ansuya Devi (Supra) dealing with case

involving payment of stamp duty on award in proceeding

under Section 34 of the Arbitration and Conciliation Act,

1996 and has at paragraph Nos.2 to 6 observed as under;

"2. The Principal Sub-Judge, Hyderabad, by an order dated 4th August, 2000 rejected the said petitions. Aggrieved, the respondents filed the appeals before the High Court of Judicature at Andhra Pradesh under Section 37(1). (b) of the Act. The High Court was of the view that since the Award was not stamped and registered, it was, therefore, invalid and without jurisdiction. It is against the said judgment of the High Court, the appellants are in appeal before us.

3. Shri Rakesh Dwivedi, learned senior counsel appearing for the appellants urged that a perusal of Award would show that it has not created any right or liability in favour of any party, but it requires a subsequent documentation by the parties. He submitted, in that view of the matter, the Award was not required to be stamped and registered and in fact subsequent documentation would definitely requires stamping and registration. However, Shri V.K.. Reddy, learned senior counsel appearing for the respondents, urged that the Award did create rights in favour of the parties and as such it required registration and the view taken by the High Court is in conformity with law.

4. After we heard the matter, we are of the view that in the present case this issue was not required to be gone into at the stage of proceedings under Section 34 of the Act. In fact, this issue was pre-mature at that stage. Section 34 of the Act provides for setting aside of the Award on the ground enumerated therein. It is not dispute that an application for setting aside the Award would

not lie on any other ground, which is not enumerated in Section 34 of the Act. The question as to whether the Award is required to be stamped and registered, would be relevant only when the parties would file the Award for its enforcement under Section 36 of the Act. It is at this stage the parties can raise objections regarding its admissibility on account of non-registration and non-stamping under Section 17 of the Registration Act. In that view of the matter the exercise undertaken to decide the said issue by the Civil Court as also by the High Court was entirely an exercise in futility. The question whether an Award requires stamping and registration is within the ambit of Section 47 of the Code of Civil Procedure and not covered by Section 34 of the Act.

5. For the aforesaid reasons, the judgment under challenge deserves to be set aside. Consequently, it is set aside.

6. The appeals are, accordingly, allowed. Since the High Court has not dealt with other objections raised under Section 34 of the Act, we remit the matter to the High Court to decide the same. We make it clear that the issue with regard to the stamping and registration of the Award or documentation thereof, it would be open to the parties to raise the same before the Court at the stage of proceeding under Section 36 of the Act. The High Court may decide the mater expeditiously and also consider any interim prayer which may be made by the parties in the appeals. There shall be no order as to costs."

32. It is seen that for the purpose of proceedings

under Section 34 of the Arbitration and Conciliation Act,

1996, payment of stamp duty would not be a ground. A

clear exception is carved out in this regard. Though, a

question with regard to payment of stamp duty and

admissibility of the document may be raised at the time of

enforcement of the award under Section 36 and same

would not in any case be read to render non-enforceability

of the award in itself. The holistic reading of the provisions

of the Stamp Act, 1957 with the object and purport of

Arbitration and Conciliation Act, 1996, which is to achieve

the expeditious disposal of the disputes by way of alternate

dispute resolution mechanism, it cannot be held that non-

payment of stamp duty on the instrument or any action

taken thereof would render the entire process illegal and

without jurisdiction.

REGARDING OBJECTIONS ON TERRITORIAL JURISDICTION:

33. As regards the objections to the territorial

jurisdiction of the executing Court to entertain the

execution petition, learned counsel relied upon the

judgment in the case of L and T Finance Ltd., Mumbai,

(Supra), wherein, the learned judge of the Jarkhand High

Court relying upon the judgment of the Apex Court in the

case of Bharat Aluminum Company vs. Kaiser

Aluminum Technical Service Incorporation and

Others reported in (2012) 9 SCC 552 dealing with

distinction between subject matter of arbitration and

subject matter of suit with reference to Section 2 (1) (e) of

the Arbitration and Conciliation Act, 1996, has held that the

jurisdiction of the executing Court would be the place of

the arbitration proceedings as the subject matter in the

arbitration was the amount claimed with interest and not

the immovable property. That merely because the

immovable property which sought to be sold for satisfying

the award is situated within the jurisdiction of the

executing court it cannot be filed there, but can be

transferred for execution.

34. While there may not be any disagreement with

the said principle of law, in the instant case, objection to

the territorial jurisdiction is raised for the first time before

this Court at the time of arguments. It is relevant at this

juncture to refer to Section 21 of CPC provides as under:

"21. 1[(1)] No objection as to the place of suing shall be allowed by any appellate or Revisional Court unless such objection was taken in the Court of first instance at the earliest possible opportunity and in all cases where issues or settled at or before such settlement, and unless there has been a consequent failure of justice.

2[(2) No objection as to the competence of a Court with reference to the pecuniary limits of its jurisdiction shall be allowed by any Appellate or Revisional Court unless such objection was taken in the Court of first instance at the earliest possible opportunity, and in all cases where issues are settled, at or before such settlement, and unless there has been a consequent failure of justice.

(3) No objection as to the competence of the executing Court with reference to the local limits of its jurisdiction shall be allowed by any Appellate or Revisional Court unless such objection was taken in the executing Court at the earliest possible opportunity, and unless there has been a consequent failure of justice.]"

35. Thus, objection to the territorial jurisdiction

needs to be raised at the first instance and the same

cannot be raised thereafter.

36. For the aforesaid reasons and analysis, this

Court is of the considered view that no grounds are made

out warranting interference with the judgment and order

passed by the executing Court. Points raised above are

answered accordingly.

37. Hence, the following:

ORDER

(a) The appeal in RFA No.200058/2020 is

dismissed.