CRIMINAL PETITION No.10057 OF 2016 19-01-2017 Preetesh Kumar.petitioner The State of Telangana and another. respondents

THE HONBLE SRI JUSTICE M. SATYANARAYANA MURTHY            

CRIMINAL PETITION No.10057 OF 2016    

19-01-2017

Preetesh Kumar.petitioner
       
The State of Telangana and another. respondents

Counsel for the petitioner :  M/s.Sri Pratap Narayan Sanghi

Counsel  for the Respondents:  Sri B.Chandrasen Reddy


<Gist :

>Head Note:

       
? Cases referred:

  29 Ind.Cas.671
2 2014(2) JLJ 408
3 AIR 2009 SC 1489(1)
4 AIR 2008 SC 1640
5 2011 AIR SCW 4484(1)
6 AIR 1985 SC 582(1)
7 2016(6) SCC 635
8 2016(6)SCC 209


THE HONBLE SRI JUSTICE M. SATYANARAYANA MURTHY            

CRIMINAL PETITION No.10057 OF 2016    

ORDER:
        This petition is filed under Section 482 Cr.P.C. to quash the
proceedings dated 24.06.2016 in Crl.R.P.No.111 of 2016 passed by
the IV Additional Metropolitan Sessions Judge, Hyderabad, whereby
confirmed the order dated 18.04.2016 in Crl.M.P.No.1704 of 2015
in C.C.No.33 of 2014 of the IX Special Magistrate Court,
Hyderabad.
2.      The petitioner is the accused in C.C.No.33 of 2014 on the file
of the IX Special Magistrate Court, Hyderabad, for the offence
punishable under Section 138 of the Negotiable Instruments Act,
1881 (for short the Act). The 2nd respondent is the complainant
and filed a private complaint against the petitioner/accused for
the offence punishable under Section 138 of the Act, contending
that there is a legally enforceable debt and that the cheque was
issued towards discharge of legally enforceable debt, which was
dishonoured on presentation. Thereafter, he issued notice in
compliance of Section 138 of the Act demanding the
petitioner/accused to pay the amount covered by cheque. But, the
accused failed to pay the same. Thereby, he filed the complaint
before the trial Court. The allegation in the complaint is that one
Dwaraka Prasad Agarwal, father of the accused, who is no other
than maternal uncle of the complainant requested for financial
assistance for his business needs and he promised to repay the
amount within six months to the complainant. Accordingly, the
complainant advanced an amount of Rs.74,50,000/-between March  
and June, 2013 i.e. within a span of four months to the accused.
But, the accused failed to repay the same even after expiry of six
months as agreed. Despite demands by the complainant, the
petitioner/accused did not repay the same and issued post dated
cheques bearing Nos.221805, 221806, 221820, 221821 dated  
10.08.2014 towards part payment to clear debt due and
Memorandum of Understanding (MoU) was also executed by the  
father of the accused on 14.02.2014. Thus, the basis for the claim
is Memorandum of Understanding, which is unstamped and  
unregistered. Since the claim of the 2nd respondent/complainant is
based on Memorandum of Understanding, the petitioner/accused
filed a petition before the Special Magistrate under Section 33 of
the Indian Stamp Act, to impound the Memorandum of
Understanding dated 14.02.2014. The 2nd respondent/complainant
filed counter contending that the petition is not maintainable,
besides raising several other contentions. Upon hearing argument
of both the counsel, the Special Magistrate held that the document
cannot be impounded and negated the relief.
3.      Aggrieved by the order passed by the Special Magistrate, the
petitioner preferred the Criminal Revision Petition No.111 of 2016
before the IV Additional Metropolitan Sessions Judge, Hyderabad,
and by order dated 24.06.2016 the learned Judge confirmed the
order passed by the Special Magistrate, dismissing the revision
petition.
4.      The order passed by the Sessions Judge is challenged before
this Court on several grounds mainly contending that the
Memorandum of Understanding, which is sought to be marked by  
the respondent, is inadmissible in evidence, since the terms and
conditions of the document do not virtually amount to mortgage.
But, without looking into the contents of the document, the
Special Magistrate dismissed the petition and the same was
confirmed by the revisional Court. Section 33(i) of the Indian
Stamp Act has to be read along with the proviso and it cannot be
read in isolation. Even if Sections 35(d) and 33 of the Indian Stamp
Act are read conscientiously, the document is liable to be
impounded, otherwise it cannot be admitted in evidence. But the
Special Magistrate and Revisional Court did not consider the
purport of Sections 35(d) and 33(i) of the Indian Stamp Act in
proper perspective and committed an error in negating the relief
claimed by the petitioner and prayed to set aside the same and
allow Crl.MP.No.1704 of 2015 directing the Special Magistrate to
impound the document in accordance with the provisions of the
Indian Stamp Act.
5.      During hearing, Sri Pratap Narayan Sanghi, learned counsel
for the petitioner contended that though the Special Magistrate
Court is criminal court, it is designated to try the cases under the
Negotiable Instruments Act, more particularly, the offence
punishable under Section 138 of the Act and virtually the criminal
Court is competent to exercise its discretion to impound the
documents under Section 33 r/w Section 35 of the Stamp Act, but
without construing the document in proper perspective, the relief
claimed by the petitioner is rejected erroneously, and the Court
ought to have impounded the document and collect the stamp duty
and penalty on the document, as per the provisions of the Stamp
Act. When question of collecting stamp duty before the Court
arises, the Court has to consider the provisions strictly, since it is a
loss to Government exchequer and on strict construing of the
document, the Court has to collect stamp duty and penalty payable
and failure to exercise such discretion would amount to denial to
collect the amount due to the Government. Therefore, such
approach cannot be permitted and prayed to set aside the orders
of Special Magistrate and Revisional Court.
6.      Whereas, Sri B.Chandrasen Reddy, the learned counsel for
the 2nd respondent/complainant, argued totally in support of the
order under challenge and requested to dismiss the petition.
7.      In view of the specific contention raised by the learned
counsel for the petitioner/accused, it is relevant to advert to the
provisions of Section 33(2) proviso (a) and Section 35(d) of the
Indian Stamp Act.
33. Examination and impounding of instruments :-- (1) Every
person having by law or consent of parties, authority to receive
evidence, and every person in charge of a public office, except
an officer of a police, before whom any instrument, chargeable,
in his opinion, with duty, is produced or comes in the
performance of his functions shall, if it appears to him that such
instrument is not duly stamped, impound the same.
(2) For that purpose every such person shall examine every
instrument so chargeable and so produced or coming before him,
in order to ascertain whether it is stamped with a stamp of the
value and description required by the law in force in India when
such instrument was executed or first executed :
Provided that--
(a) nothing herein contained shall be deemed to require any
Magistrate or Judge of a Criminal Court to examine or impound,
if he does not think fit so to do, any instrument coming before
him in the course of any proceeding other than a proceeding
under Chapter XII or Chapter XXXVI of the Code of Criminal
Procedure, 1898.
(b) in the case of a Judge of a High Court, the duty of examining
and impounding any instrument, under this section may be
delegated to such officer as the Court appoints in this behalf.
(3) For the purposes of this section, in cases of doubt--
(a) the State Government may determine what offices shall be
deemed to be public offices; and
(b) the State Government may determine who shall be deemed
to be persons in charge of public offices.
35. Instruments not duly stamped inadmissible in evidence etc
:-- 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 any public
officer, unless such instrument is duly stamped:
Provided that--
(a) any such instrument not being an instrument chargeable with
a duty of twenty paise or a mortgage of crop (Article 36(a) of
Schedule I-A) chargeable under clause (aa) or (bb) of Section 3
with a duty of forty paise or a bill of exchange or promissory
note, shall subject to all just exceptions, be admitted in
evidence on payment of the duty with which the same is
chargeable, or, in the case of an instrument insufficiently
stamped, of the amount required to make up such duty, together
with a penalty of * [fifteen rupees], or, when ten times the
amount of the proper duty or deficient portion thereof exceeds *
[fifteen rupees] of a sum equal to ten times such duty or
portion;
(b) where any person from whom a stamped receipt could have
been demanded, has given an unstamped receipt and such  
receipt, if stamped would be admissible in evidence against him,
then such receipt shall be admitted in evidence against him on
payment of a penalty of * [three rupees] by the person tendering
it;
(c) where a contract or agreement of any kind is effected by
correspondence consisting of two or more letters and any one of
the letters bears the proper stamp, the contract or agreement
shall be deemed to be duly stamped;
(d) nothing herein contained shall prevent the admission of any
instrument in evidence in any proceeding in a Criminal Court,
other than a proceeding under Chapter XII or Chapter XXXVI of
the Code of Criminal Procedure, 1898;
(e) nothing herein contained shall prevent the admission of any
instrument in any Court when such instrument has been
executed by or on behalf of the Government, or where it bears
the certificate of the Collector as provided by Section 32 or any
other provision of this Act.
8.      Section 33(i) deals with duty of the public officer to impound
the document but the proviso annexed to sub-clause(2) is clear
that the above provision will have no application to the
proceedings under Chapter-XII or Chapter-XXXIV of Code that Code
of Criminal Procedure (old), 1898 and now Chapters IX and X of
Code of Criminal Procedure, 1975.  Thus, it is clear from proviso
under Section 33(2), the Magistrate can examine and impound the
document in the course of any proceedings only for limited purpose
of deciding any questions under Chapters IX and X of Cr.P.C. not
otherwise.
9.      Section 33 provides for impounding of instruments not duly
stamped but the proviso thereto makes exception in case of
Magistrate or Judge of a criminal Court in the course of any
criminal proceeding the Magistrate or Judge of a Criminal Court
need not be impound any document produced before him in
criminal proceedings if he does not think fit to do so. Therefore,
the power conferred on the Court under the proviso to sub-section
(2) of 33 is purely a discretionary and such discretion has to be
exercised judiciously.
10.     Sub-section (d) of Section 35 is also an exception to receipt
of instrument not duly stamped in evidence. Section 35 mandates
that no instrument chargeable with duty shall be admitted in
evidence for any purpose of 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 any public
officer, unless such instrument is duly stamped.  The Special
Magistrate is a person under authority to receive evidence in a
Calendar Case, Section 35  undoubtedly applicable to the person
authorized to record evidence in any proceedings but clauses (a) to
(e) of proviso are the exceptions in Jagannath Rahatgir v. Pandit
Deokinandan . The proviso (d) is relevant for the purpose of
deciding the present issue and it reads as follows:
35(d) nothing herein contained shall prevent the admission of
any instrument in evidence in any proceeding in a Criminal
Court, other than a proceeding under Chapter XII or Chapter
XXXVI of the Code of Criminal Procedure, 1898(Chapters 9 and 10
of Cr.P.C., 1973);
Proviso (d) to Section 35 permits the Magistrate to receive any
document and admit any instrument in evidence in any proceedings 
in criminal Court but create an interdict on the power of the
Magistrate to receive such insufficiently stamped document in any
proceedings under Chapters IX and X of the Code of Criminal
Procedure, 1973 (for short Cr.P.C.). Chapter-IX of Cr.P.C. deals
with order for maintenance of the wife, children and parents.
Chapter X of Cr.P.C. deals with maintenance of public order and
tranquility covering Sections 125 to 128 and 129 to 148 Cr.P.C.
respectively. Therefore, in the proceedings covered by these
Chapters, the Magistrate is incompetent to receive insufficiently
stamped document but in other cases the Magistrate is entitled to
admit insufficient stamp or unstamped documents in evidence  in
any criminal case pending before it.
11.     A similar issue came up before the High Court of Calcutta in
Jagannath Rahatgir (supra), their Lordships, Charles William
Chitty and Beachcroft, JJ held that when an instrument
insufficiently stamped is produced before a criminal Court and
tendered for admitting the document in evidence, it is optional to
the Magistrate under Section 33 to impound or examine the
document, if it is appeared to be insufficiently stamped. But the
prohibition contained in the first part of Section 35 that no
instrument chargeable with duty shall be admitted in evidence for
any purpose or acted upon unless it be duly stamped, does not
apply to proceedings in a Criminal Court.
12.     In identical question regarding admissibility of a document,
when an appeal for the offence punishable under Section 138 of
the Act came up before Madhya Pradesh High Court in Ramesh Giri
v. Dheeraj Gobhuj , the Single Judge of the Court had an occasion
to deal with a similar petition and while deciding an application
under Section 482 Cr.P.C. challenging the order passed by the
Magistrate and confirmed by the revisional Court, based on Section
33 of the Indian Stamp Act and sub-section (2)(a) proviso held that
proceedings under Section 138 of the Act are summary in nature
and the Magistrate declined to impound the document. The same
was confirmed by the revisional Court since Section 33(2) proviso
(a) does not require impounding the document which has been
produced before the Court by the complainant. In those
circumstances, the Court found that proceedings under Section 138
of the Act are criminal in nature although offence may be in the
nature of civil and the document is admissible and the bar under
Sections 33 and 34 would not apply to the proceedings under
Section 138 of the Negotiable Instruments cases and confirmed the
order passed by the revisional Court declining to direct the
Magistrate to impound the document to levy stamp duty and
penalty.
13.     As discussed above, Section 33(2) proviso (a) and Section
35(d) of the Indian Stamp Act are made clear only for limited
purpose of deciding the matters under Chapters IX and X of Cr.P.C.
In other matters, the Court need not exercise discretion to
impound the document and a Magistrate or a Judge of a criminal
Court is not required to examine any instrument produced before
him or come before him for the purpose of ascertaining whether or
not instrument is properly stamped and not required to impound
the same, if the same is found properly stamped, if such Magistrate
or Judge of criminal Court does not think fit to do so. However,
this exception is not applicable to Chapters IX and X of Cr.P.C,
1973. Thus exception created under proviso (a) is purely discretion
of the Magistrate or Judge of a criminal Court. It is a settled law
that whenever discretion is vested with the Court, it has to be
exercised judiciously.
14.     Having regard to the facts and circumstances of the case on
hand, the exception under proviso (a) to sub-section (2) of Section
33 of the Stamp Act is required to be applicable or not is the
question.
15.     In the present facts of the case, the offence allegedly
committed by the petitioner/accused is punishable under Section
138 of the Act and in Section 33 sub-section (2), proviso (a) is an
exception to impound such document since the proceedings are
criminal trial, where the Court is empowered to impose sentence
against the accused. In those circumstances, the Magistrate is
bound to exercise his discretion to hold that the mandate of sub-
sections 1 and 2 of Section 33 are required to be applied in respect
of any instrument in question insufficiently stamped instrument in
question and non-exercise of discretion so vested in the Magistrate
would result in great hardship and prejudice to the complainant
and therefore when the Magistrate exercised his discretion not to
impound the document by exercising the discretionary power
vested on it  by virtue of Section 33 (2) proviso and Section 35
proviso (d), such orders cannot be enquired, while exercising
jurisdiction under Section 138 of the Act. A similar question came
before Karnataka High Court in Smt.Ravikala v.K.V.Rama Murthy
(MANU/KA/0163/2011) in Crl.P.No.5589 of 2010 C/W  
Crl.P.No.4813 of 2010 decided on 18.03.2011, persuaded by the
principles laid down in the judgments of Bangalore, Madhya
Pradesh and Calcutta High Courts, where it is abundantly clear that
the power vested on the Magistrate or a Judge presiding criminal
Court under Sections 33 and 35 is purely discretionary and the
Magistrate has to exercise its power judiciously based on the facts
of each case. The offence allegedly committed by the petitioner is
punishable under Section 138 of the Act, as discussed above, on
the ground that the document i.e., Memorandum of Understanding
is inadmissible and reject the claim of the complainant while
holding that there is no legally enforceable debt and issue of
cheques were not towards discharge of legally enforceable debt. It
would frustrate the very object of the incorporating Section 138 of
the Act and the power conferred under Section 33(2) proviso (a),
35 proviso (d) of the Stamp Act. Therefore, exercising discretion
not to impound the document under Section 33 is purely based on
the facts of case so as to uphold the intention of the legislature in
incorporating the provisions referred to above and ensure that no
accused shall escape from the criminal liability on mere
technicality. Hence, I find that the Special Magistrate and IV
Additional Metropolitan Sessions Judge at Hyderabad have rightly
exercised their discretion judiciously and it warrants no
interference of the Court, in view of the law referred to above
with reference to the specific provisions under the Indian Stamp
Act.
16.     The learned counsel for the appellant mainly contended that
the Memorandum of Understanding dated 14.02.2014 partakes the  
character of the mortgage and such an unregistered, un-stamped
document cannot be received in evidence and placed reliance on
several judgments of the different Courts. In support of his
contention, he has drawn the attention of this Court in Avinash
Kumar Chauhan v. Vijay Krishna Mishra  and the Apex Court
highlighted the words for any purpose whatsoever and concluded
that the unregistered deed of sale was an instrument and it
requires payment of stamp duty applicable to a deed of
conveyance. Adequate stamp duty admittedly was not paid.
Therefore, the Court is empowered to pass an order in terms of
Section 35 of the Indian Stamp Act since the document was
inadmissible in evidence and even for the collateral purpose and
observed that the Parliament has, in Section 35 of the Act,
advisedly used the words for any purpose whatsoever. Thus, the
purpose for which a document is sought to be admitted in evidence
or the extent thereof would not be a relevant factor for not
invoking the provisions and therefore such document cannot be
admitted in evidence and further drawn attention of this Court to
another judgment reported in Government of Andhra Pradesh v.
Smt.P.Laxmi Devi , wherein the Supreme Court had an occasion to
decide the interpretation of taxing statute and held that all
decisions in the economic and social spheres are essentially ad hoc
and experimental. Since economic matters are extremely
complicated, this inevitably entails special treatment for special
situations. The State must therefore be left with wide latitude in
devising ways and means of fiscal or regulatory measures, and the
Court should not, unless compelled by the statute or by the
Constitution, encroach into this field, or invalidate such law.
Greater latitude must be given to the legislature while adjudging
the constitutionality of the statute because the Court does not
consist of economic or administrative experts. It has no expertise
in these matters, and in this age of specialization when policies
have to be laid down with great care after consulting the
specialists in the field, it will be wholly unwise for the Court to
encroach into the domain of the executive or legislative and try to
enforce its own views and perceptions.  The Apex Court also
adverted to Section 33(i) and concluded that in view of the
language used in Section 33(i) of the Stamp Act there is no
discretion in the authority mentioned in Section 33(i) of the Stamp
Act to impound the document or not to do so. Thus, the Court is
bound to.  In M/s. SMS Tea Estates Pvt. Ltd. v. M/s.Chandmari
Tea Co.Pvt.Ltd , the Apex Court held that when an unregistered
sale deed is inadmissible in evidence, but compulsorily registerable
document, the same cannot be enforced in the courts of law.
17.     He further drawn the attention of this Court to S.Sundram
Pillai v. V.R.Pattabiraman , while discussing about the
interpretation of statutes and functions of the Court held that a
proviso laid down certain guidelines to interpret said legislations
and held as follows:
The next question that arises for consideration is as to what is
the scope of a proviso and what is the ambit of an explanation
either to a proviso or to any other statutory provision. We shall
take up the question of the nature, scope and extent of a
proviso. The well established rule of interpretation of a proviso
is that a proviso may have three separate functions. Normally,  a
proviso is meant to be an exception to something within the
main enactment or to qualify something enacted therein which
but for the proviso would be within the purview of the
enactment. In other words, a proviso cannot be torn apart from
the main enactment nor can it be used to nullify or set at naught
the real object of the main enactment.
17      In Andhra Pradesh State Council of Higher Education v.
Union of India , it was held that provisions of Andhra Pradesh
Reorganization Act, 2014 have to be harmoniously considered.
Similarly, in Casio India Company Pvt. Ltd., v. State of Haryana ,
while interpreting the provisions of sales tax and VAT the Apex
Court reiterated the same principle that the proper manner of
interpreting proviso and main provision was highlighted and held
that except for instances dealt with in the proviso, it should not be
used for interpreting main provision/enactment so as to exclude
something by implication.
18      In all the above referred judgments, the dispute is with
regard to civil rights and interpretation of various provisions, but
the petition before the Special Magistrate is filed in a proceedings
in criminal trial i.e. for the offence punishable under Section 138
of the Act. In the judgments referred supra, fiscal enactments and
economic legislations must be construed directly and they have no
application to the criminal proceedings. The Indian Stamp Act
itself contains exemption to Section 33(1) and (2) and Section 35 of
the Stamp Act. When such exemption is granted by the Act itself,
there is no other scope for interpreting the provisions and the
intention of the legislature in incorporating proviso (a) to sub-
section (2) Section 33 and proviso (d) to Section 35 is only to
enable the Courts to receive un-stamped or insufficient stamped
documents in evidence without insisting for impound of a
document as required under Section 33(i) and (2) and bar under
Section 35 of the Indian Stamp Act is to see that no criminal
proceedings shall be frustrated on account of such interdict
contained in the Act and not to allow any criminal to escape from
the criminal laws, un-punished. If the interpretation given by the
Courts in civil proceedings is applied to the proceedings in a
criminal case, it would frustrate the very object of the legislatures
in incorporating true exemptions referred supra. Therefore, the
interpretation to the provisions of the Stamp Act, as laid down by
the Apex Court in the judgments referred supra, cannot be applied
to the proceedings in a criminal case, in view of exemption clauses
contained in proviso (a) to sub-section (2) of 33 and proviso (d) of
Section 35 of the Stamp Act. Therefore, the principles laid down in
the judgments relied on by the learned counsel for the petitioner
have no relevance to the present facts and when the Special
Magistrate and the Revisional Courts have exercised their
discretion under Sections 33(2) proviso (a) and 35 proviso (d), this
Court cannot interfere with such orders while exercising inherent
power under Section 482 Cr.P.C. Section 482 Cr.P.C. confers
inherent power on the High Court being the highest Court of the
State only for limited purpose of enforcing the orders passed under
the Code, to prevent abuse of process of the Court and to meet the
ends of justice in view of the limited power conferred on it, unless
the order passed by the trial Court and confirmed by the revisional
Court is prima facie erroneous and the court cannot interfere by
exercising inherent power under Section 482 Cr.P.C. Therefore, I
find no illegality in the order passed by the trial Court in exercising
discretion that conferred on the Courts below to set aside the
same, consequently, persuaded by the law laid down by Calcutta 
High Court in as early as in 1950 and in the latter judgment of the
Karnataka and Madhya Pradesh High Courts and interpreting the 
provisions under Sections 33 and 35 of the Stamp Act. I am of the
view that the orders passed by the Special Magistrate confirmed by
the IV Additional Metropolitan Sessions Judge at Hyderabad, by
exercising jurisdiction under Section 397 Cr.P.C., are free from any
illegality and legal infirmity calling for interference of this Court,
while exercising power under Section 482 Cr.P.C. Hence, petition
is devoid of merits and liable to be dismissed.
19.     In the result, the Criminal Petition is dismissed at the stage
of admission.
_____________________________    
M. SATYANARAYANA MURTHY, J      
Date: 19.01.2017

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