# All U.P. Stamp Vendors Assc., Fatehpur v. Union of India & Ors

- **Citation:** (2021) 4 ILRA 240
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2021-04-08
- **Case number:** Writ - C No. 11738 of 2020
- **Bench:** Yashwant Varma
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/all-u-p-stamp-vendors-assc-fatehpur-v-union-of-india-ors-46996
- **Pages:** 26

## Headnote

A. Constitution of India,1950 - Article 226
- Judicial Review - Scope - Personal action
vis-a-viz Public Interest Litigation - while
an individual action is adversarial, a
petition preferred in public interest is not -
while dealing with a PIL it may be
permissible for the Court to assume an
"inquisitorial" role in order to hold the
State liable and obliged to give effect to
the Constitution - whereas an individual
petition
must
proceed
on
material
gathered by the petitioner and challenge
as raised therein - On such a petition it is
neither open for the Court to undertake a
roving enquiry nor can the respondents be
required to produce material in order to
grant a relief - scope of the writ petition
cannot be expanded beyond the grounds
of challenge which are raised and the
reliefs sought in order to subserve some
larger public interest (Para 28)

B. Constitution of India,1950 - Articles 19
(1) (g), Article 19 (6) - Freedom to carry
on any occupation, trade or business -
reasonable restrictions - Held - Rights
conferred
by
Article
19
are
neither
absolute nor unfettered - they are entitled
to be exercised subject to just restrictions
that may be imposed by the Government
"in the interest of general public" - validity
of such restriction is to be tested on the
anvil of reasonableness - Court must
evaluate restrictions reasonableness from
the viewpoint of the community as a
whole & not standing in the shoes of the
person
upon
whom
that
restriction
operates - question to be posed would be
whether the restriction has come to be
imposed to preserve and protect the
larger interests of the community, its
social and economic welfare, public order
or health (Para 49)

C. Constitution of India,1950 - Articles 19
(1) (g), 21, 38 - Right to profit in trade -
Held - what the Constitution essentially
guarantees is the right to engage in a
profession, occupation, trade or business -
It neither proffers nor holds forth a
guarantee of a profit in that trade or
business - petitioner cannot place an
obligation upon the government to frame
a business model which may necessarily
guarantee a return or a profit in a
particular trade or business- A business or
a trade may become unprofitable or
unviable on account of various factors -
but vagaries of trade cannot be recognised
as constituting the infringement of a
fundamental right to carry on that trade
or business (Para 43, 45, 48)

D. Indian Stamp Act, 1899- Uttar Pradesh
Stamp Rules 1942, 161 - U.P. E- Stamping
Rules,
2013-
Discount/Commission
-
petitioners' prayer to fix commission as
per Rule 161 of the Rules, 1942 - Held -
Rule 161 prescribes a discount when a
licensed vendor purchases stamp from the
4 All. All U.P. Stamp Vendors Assc., Fatehpur Vs. Union of India & Ors.
241
Government treasury - aforesaid Rule
cannot be read as governing the sale of e
stamps - sale of e stamps is governed
exclusively by the 2013 Rules which is a
complete
and
comprehensive
code
governing the sale, distribution and use of
e stamps - Commission fixed under the
1942 Rules not to apply to E stamps -
Article 19 of the Constitution cannot be
invoked to require the Court to rework the
terms of the contract which compel a
party to guarantee a particular rate of
profit or return (Para 33)

D. Constitution of India,1950 - Article 19
(1) (g) - Right to trade in stamp paper -
Indian Stamp Act, 1899- Uttar Pradesh
Stamp Rules, 1942 - Petitioner failed to
establish
existence
of
unfettered
or
indefeasible right to trade in stamp paper
- petitioners do not possess an inalienable
right to carry on the trade or business of
stamps except in accordance with the Act
and the Rules framed thereunder(Para 36)

E. Constitution of India,1950 - Article 19
(1) (g) - Right to trade in stamp paper in
its physical form - U.P. E-Stamping Rules,
2013 - Petitioners engaged in sale of
stamp
paper
in
its
physical
form
challenged
terms
of
a
proposed
agreement drawn by the SHCI, CRA for
the appointment of Authorised collection
ce

## Text

_Characters 0–39,789 of 85,012. This is a partial read: ask again with offset=39789 for what follows._

240 INDIAN LAW REPORTS ALLAHABAD SERIES

We in the ultimate analysis are of
the considered view that none of the pleas
raised by the petitioners has any force,
petitions are devoid of merit hence liable to
be dismissed.

The writ petitions are dismissed.
No orders as to cost.
----------
(2021)04ILR A240
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 08.04.2021

BEFORE

THE HON'BLE YASHWANT VARMA, J.

Writ - C No. 11738 of 2020

All U.P. Stamp Vendors Assc., Fatehpur
 ...Petitioner
Versus
Union of India & Ors. ...Respondents

Counsel for the Petitioner:
Sri N.C. Rajvanshi, Sri Vishesh Rajvanshi,
Sri Rajkishore Singh

Counsel for the Respondents:
C.S.C., Sri Kshitijn Shailendra, Sri Sumit
Kakkar

A. Constitution of India,1950 - Article 226
- Judicial Review - Scope - Personal action
vis-a-viz Public Interest Litigation - while
an individual action is adversarial, a
petition preferred in public interest is not -
while dealing with a PIL it may be
permissible for the Court to assume an
"inquisitorial" role in order to hold the
State liable and obliged to give effect to
the Constitution - whereas an individual
petition
must
proceed
on
material
gathered by the petitioner and challenge
as raised therein - On such a petition it is
neither open for the Court to undertake a
roving enquiry nor can the respondents be
required to produce material in order to
grant a relief - scope of the writ petition
cannot be expanded beyond the grounds
of challenge which are raised and the
reliefs sought in order to subserve some
larger public interest (Para 28)

B. Constitution of India,1950 - Articles 19
(1) (g), Article 19 (6) - Freedom to carry
on any occupation, trade or business -
reasonable restrictions - Held - Rights
conferred
by
Article
19
are
neither
absolute nor unfettered - they are entitled
to be exercised subject to just restrictions
that may be imposed by the Government
"in the interest of general public" - validity
of such restriction is to be tested on the
anvil of reasonableness - Court must
evaluate restrictions reasonableness from
the viewpoint of the community as a
whole & not standing in the shoes of the
person
upon
whom
that
restriction
operates - question to be posed would be
whether the restriction has come to be
imposed to preserve and protect the
larger interests of the community, its
social and economic welfare, public order
or health (Para 49)

C. Constitution of India,1950 - Articles 19
(1) (g), 21, 38 - Right to profit in trade -
Held - what the Constitution essentially
guarantees is the right to engage in a
profession, occupation, trade or business -
It neither proffers nor holds forth a
guarantee of a profit in that trade or
business - petitioner cannot place an
obligation upon the government to frame
a business model which may necessarily
guarantee a return or a profit in a
particular trade or business- A business or
a trade may become unprofitable or
unviable on account of various factors -
but vagaries of trade cannot be recognised
as constituting the infringement of a
fundamental right to carry on that trade
or business (Para 43, 45, 48)

D. Indian Stamp Act, 1899- Uttar Pradesh
Stamp Rules 1942, 161 - U.P. E- Stamping
Rules,
2013-
Discount/Commission
-
petitioners' prayer to fix commission as
per Rule 161 of the Rules, 1942 - Held -
Rule 161 prescribes a discount when a
licensed vendor purchases stamp from the
4 All. All U.P. Stamp Vendors Assc., Fatehpur Vs. Union of India & Ors.
241
Government treasury - aforesaid Rule
cannot be read as governing the sale of e
stamps - sale of e stamps is governed
exclusively by the 2013 Rules which is a
complete
and
comprehensive
code
governing the sale, distribution and use of
e stamps - Commission fixed under the
1942 Rules not to apply to E stamps -
Article 19 of the Constitution cannot be
invoked to require the Court to rework the
terms of the contract which compel a
party to guarantee a particular rate of
profit or return (Para 33)

D. Constitution of India,1950 - Article 19
(1) (g) - Right to trade in stamp paper -
Indian Stamp Act, 1899- Uttar Pradesh
Stamp Rules, 1942 - Petitioner failed to
establish
existence
of
unfettered
or
indefeasible right to trade in stamp paper
- petitioners do not possess an inalienable
right to carry on the trade or business of
stamps except in accordance with the Act
and the Rules framed thereunder(Para 36)

E. Constitution of India,1950 - Article 19
(1) (g) - Right to trade in stamp paper in
its physical form - U.P. E-Stamping Rules,
2013 - Petitioners engaged in sale of
stamp
paper
in
its
physical
form
challenged
terms
of
a
proposed
agreement drawn by the SHCI, CRA for
the appointment of Authorised collection
centres - on apprehension of the trade
becoming unprofitable if they were forced
to engage in the sale of e stamps - Held -
Submission that proposed contract being
unprofitable, wholly conjectural - if one
perceive business to be unprofitable, it is
open not to pursue the same- Right to
trade in e stamps is governed by the 2013
Rules - No challenge either raised to the
statutory
Rules,
2013
nor
was
it
contended that the proposed agreement is
in violation of or ultra vires any provision
made in the 2013 Rule - Policy initiative of
e stamping was also not questioned -
petitioners not deprived of the right to
engage in the trade of physical stamp
paper (Para 52)

Dismissed. (E-4)

List of Cases cited:-

1. Manish Jitendrakumar Shah Vs St. of Guj.
Special C.A. No. 16221 of 2019 dt 24.07.2020

2. Ram Krishnan Kakkanth Vs Govt. of Kerala
(1997) 9 SCC 495

3. Stamp Vendors Association Vs St. of U.P. AIR
2001 ALL. 49

4. Malwa Bus Services (P) Ltd. Vs St. of Pun.
(1983) 3 SCC 237

5. Mithilesh Garg Vs U.O.I. (1992) 1 SCC 168

6. Karnataka Live Band Restaurants Assn. Vs St.
of Karn. (2018) 4 SCC 372

(Delivered by Hon'ble Yashwant Varma, J.)

1. The Court has heard Sri N.C.
Rajvanshi, learned senior counsel ably
assisted by Sri Vishesh Rajvanshi for the
petitioner and Sri Kshitij Shailendra
alongwith Sri Sumeet Kakkar learned
counsels who have appeared for the fourth
respondent. Although the State was duly
served and on notice, none has appeared or
addressed submissions on its behalf.

2. The papers of this writ petition
have come to be placed before this Court in
light of the difference of opinion expressed
by the Hon'ble members constituting the
Division Bench of the Court in accordance
with the provisions made in Chapter VIII
Rule 3 of the Rules of the Court. While
Kesarwani J. upon an examination of the
contentions addressed held that the writ
petition would merit dismissal, Bhanot J.
has held that in light of the issues which
arise, the respondents must be required to
file their counter affidavits in the matter to
242 INDIAN LAW REPORTS ALLAHABAD SERIES
enable the Court to deal with the questions
raised in greater detail.

3. The petitioner is an association of
stamp vendors engaged in the occupation
of distribution and sale of judicial and
non-judicial stamp paper in its physical
form. They question the terms of a
proposed agreement drawn by the Stock
Holding Corporation of India,1 the
Central
Record
Keeping
Agency2
appointed as such under the Uttar
Pradesh E-Stamping Rules, 20133. The
constituents of the petitioner association
are licensed vendors appointed in terms
of Rule 151 of the Uttar Pradesh Stamp
Rules, 1942 framed in exercise of the
powers
conferred
on
the
State
Government by Sections 74 and 75 of the
Indian Stamp Act, 1899.

4. In order to delineate the nature of
the challenge which was raised in the writ
petition, it would be appropriate to
reproduce the reliefs sought therein: -

"1. Issue a Writ order or direction
in the nature of certiorari quashing the
agreement issued by the Respondent No. 4
for
the
appointment
of
Authorised
collection centres which has been marked
as Annexure No. 4 to this Writ Petition.

2. Issue a Writ, order or direction
in the nature of Mandamus directing the
Respondent No. 4 to reconsider the
agreement under challenge and to disclose
the commission earned by the Respondent
No. 4 by the State Government.

3. Issue a Writ, order or direction
in the nature of Certiorari quashing the
impugned
Circular
Dated
17.01.2020
marked as Annexure No. 5 to this Writ
Petition.

4. Issue a Writ, order or direction
in the nature of Mandamus directing the
Respondents Nos. 2 and 3 not to
discontinue the printing of physical judicial
and non judicial stamps.

5. Issue a Writ, order or direction
in the nature of Certiorari quashing the
impugned letter/order Dated 25.02.2020
issued by the Respondent No. 3, which has
been marked as Annexure No. 7 to this
Writ Petition.

6. Issue a Writ, order or direction
in the nature of Mandamus directing the
Respondents Nos. 2 and 3 to reconsider the
claim of the Petitioner as per Annexure
No. 6 to this Writ Petition.

7. Issue a Writ, order or direction
in the nature of Mandamus whereby
directing the Respondents Nos. 2 and 3 to
fix the commission of the Petitioner's
members as per Rule 161 of the Rules,
1942."

5. Since the provisions of the Act, the
1942 and the 2013 Rules have been
exhaustively noticed and set forth in the
two opinions rendered, this Court deems it
unnecessary to extract the contents of those
provisions except to briefly notice them in
order to appreciate the challenge that is
raised.

A.
THE
STATUTORY
REGIME UNDER THE 1942 RULES

6. Under the 1942 Rules, Rule 151
envisages two classes of vendors who are
authorised to deal in the distribution and
sale of stamps. While the first category
comprises of those who are recognised as
licensed vendors ex officio, the members of
4 All. All U.P. Stamp Vendors Assc., Fatehpur Vs. Union of India & Ors.
243
the petitioner have been appointed by the
Collector as licensed stamp vendors in
terms of the power granted by clause (x)
of Rule 151. Rule 151-B provides for the
tenure of a license that may be granted to
licensed vendors. Rule 152 provides that
no licensed vendor would be entitled to
sell court fee or non-judicial stamp paper
exceeding the aggregate value of Rs.
15,000
for one
instrument
to
any
individual member of the public. In terms
of Rule 157, licensed vendors are
empowered to purchase stamps from ex
officio vendors on payment of "ready
money" less the discount that may be
prescribed. Rule 161 provides that a
licensed vendor would be entitled to
receive a discount of Rs. 1 per cent of the
face value of the stamp that may be
purchased.

B. E- STAMPING AND THE
2013 RULES

7. E stamping was a system that
evolved and was created post the "Telgi
Stamp Scam" which the country witnessed
and
led
to
the
Union
Government
formulating a "Computerised Stamp Duty
Administration System" [C-SDAS] which
essentially envisaged the stamp duty
payment
system
progressing
and
transforming
into
one
which
would
essentially run on an electronic and
computerised
software
platform
thus
minimizing the chances of forgery and
fabrication of physical stamp paper. For the
purposes of designing and implementing CSDAS, SHCIL was chosen as the CRA.
The events surrounding the advent and
introduction of the e stamping system is
duly noticed in the communication of the
Union Government dated 28 December
2005 which is reproduced hereinbelow:

New
Delhi,
the
28th
December, 2005

"To,

The Finance/Revenue Secretaries,

All State/UTs Government.

Subject:- Authorisation of Stock
Holding Corporation of India Ltd. to act
CRA for the proposed computerization of
Stamps Duty Administration System -
regarding.

Sir,

In
pursuance
to
the
announcement made in the Parliament in
the wake of Stamp paper scam, the
Government of India Ministry of Finance,
Department of Economic Affairs appointed
Industrial Finance Corporation of India
Ltd. (IFCI) as Consultant to suggest
alternative methods of collection of Stamp
Duty.
The
purpose
was
to
devise
mechanism of electronic method of Stamp
duty collection in order to-

i. Prevent the paper and process
related fraudulent practices;

ii. Setting up a Secured and
Reliable
Stamp
Duty
Collection
mechanism;

iii. Storage of information in
secured electronic form and building up of
a Central Data Repository to facilitate easy
verification and generation of MIS reports.

2. The IFCI invited technical and
commercial bids to identify the suitable
agency to function as Central Record
Keeping
Agency
(CRA)
for
244 INDIAN LAW REPORTS ALLAHABAD SERIES
computerization
of
Stamp
Duty
Administration System (hereinafter called
the 'C-SDAS') in select cities on pilot basis
on Build - Operate - Transfer (BOT)
structure, initially for a period of five years.
After due bidding process, M/s Stock
Holding Corporation of India Ltd. (SHCIL)
has been selected and are being authorized
to act as Central Record Keeping Agency
(CRA) for the above mentioned purposes
with immediate effect.

3. SHCIL will broadly provide the
following services to the respective State
Governments, desirous to participate in the
process in view of the fact that Stamp Duty is
a State subject:

i.
Creating
need
based
infrastructure, hardware and software in the
designated places in consultation with the
State Governments and its connectivity with
its main server;

ii. Creating need based hardware
and software in the offices of sub-Registrar(s)
and at authorized collection centers (the point
of contact for payment of Stamp Duty) within
the identified cities/places;

iii.
Training
the
identified
manpower/personnel in the sub-Registrar
offices;

iv. Role of facilitation in selection
of authorized collection centres for Stamp
Duty;

v. Role of coordinator between the
Central Server of authorized collection centre
(banks, etc.) and the sub-Registrar offices.

4. For the above services, the
State Governments would be required to
make payment to CRA 0.65% of the value
of Stamp Duty collected through this
mechanism, as per its financial quote in the
competitive bid. After a period of 5 years,
SHCIL will hand over the operations to the
respective State Governments or the State
Governments may retain their services for a
further
period
based
on
a
mutual
agreement.

The issues with the approval of
competent authority."

8. In order to give effect to the
aforesaid
policy
initiative,
the
State
Government framed the 2013 Rules. The
State Government which is defined to be
the appointing authority under these Rules
is empowered to select and appoint a CRA
which
meets
the
qualifying
criteria
prescribed in Rule 3. The 2013 Rules
define "approved intermediaries" to mean
the CRA and the Authorised Collection
Centers. An ACC is defined to mean an
agent appointed by the CRA with the prior
approval of the Government, to act as an
intermediary between the CRA and the
person who pays stamp duty for the
purposes of collection of tax under the Act.
Rule 10 prescribes that the CRA would be
entitled to an agreed percentage of
commission on the amount of stamp duty
collected
by
ACC's.
The
rate
of
commission is required to be published in
the Gazette. Rule 12 provides that the CRA
would be liable to pay such service charges
or commission to ACC's as may be
mutually agreed between them at its own
level. In essence the liability toward
commission payable to ACC's is to be
borne by SHCIL and no part of that
liability
is
to
be
passed
onto
the
Government.

9. Prior to the First Amendment to the
2013 Rules, licensed vendors such as the
4 All. All U.P. Stamp Vendors Assc., Fatehpur Vs. Union of India & Ors.
245
constituents of the petitioner association
were ineligible to be appointed as ACC's.
However, post promulgation of the 2019
amendments, undisputedly they are now
entitled to be considered for appointment as
ACC's in terms of Rule 13 as it stands now.
All that is required is that they be licensed
vendors under the 1942 Rules and hold the
qualifications that may be prescribed by the
Stamp Commissioner.

C.
CONTENTIONS
ON
BEHALF OF THE PETITIONER

10. The petitioner before the Division
Bench assailed the proposed agreement
principally on the ground of the State
action
violating
the
constitutional
protections guaranteed by Articles 19(1)(g),
21 and 38 of the Constitution. It was
contended that the terms of the agreement
as structured were bound to place licensed
stamp
vendors
in
a
disadvantageous
position and necessarily result in them
suffering a loss. It was submitted that the
commission which was guaranteed to them
under the 1942 Rules should also govern
the trade and distribution of e stamps. The
petitioners invoked Articles 21 and 38 of
the Constitution and the right to livelihood
as flowing from the aforesaid Articles to
seek a direction for the continuance of the
system of physical stamping. They further
sought to assail the agreement proposed by
SHCIL by seeking a direction for the State
respondents
disclosing
the
actual
commission earned by the CRA from the
sale of e stamps in the State.

D. SUBMISSIONS OF THE
STATE

11. Controverting the aforesaid
submissions, it was urged on behalf of the
State that licensed vendors have no
fundamental right to trade or carry on the
business of physical stamps since the
conditions
of
their
engagement
is
circumscribed by the terms of the license
that is granted to them. It was contended
that a stock of physical stamp paper valued
at Rs. 17,000 crores still existed in the State
and
therefore
the
apprehension
that
licensed vendors would be deprived of a
right of livelihood was clearly misplaced.
The State also urged that post the
amendments to the 2013 Rules, licensed
vendors had also became eligible to be
appointed as ACC's and therefore it could
not be said that their rights as conferred by
Article 19 of the Constitution had been
violated. Insofar as the issue of commission
is concerned, it was urged that no cogent
material had been brought on record which
may have even prima facie established that
the business of an ACC would necessarily
be loss making. It was further submitted
that the provisions made under the 1942
Rules for payment of commission could
have no application to the sale of e stamps
since that subject would be governed
exclusively by the provisions made in the
2013 Rules.

E. OPINION RENDERED BY
KESARWANI J.

12. Dealing with the right of licensed
vendors to deal in e stamps Kesarwani J. in
his opinion held:

"20. There is no averment in the
writ
petition
that
members
of
the
petitioner's Association have applied for
appointment
as
"Authorise
Collection
Centre" under the E - Stamp Rules, 2013.
The allegation of bank charges and
expenses are also not supported by any
246 INDIAN LAW REPORTS ALLAHABAD SERIES
evidence. It has been well settled by
Hon'ble Supreme Court in Bharat Singh Vs.
State of Haryana (1988) 4 SCC 534 (Para
13) that "If the facts are not pleaded or the
evidence in support of such facts is not
annexed to the writ petition or to the
counter-affidavit, as the case may be, the
Court will not entertain the point." The
petitioners
are
still
not
Authorised
Collection Centre. They have no right to
dictate the terms of contract. It is wholly
within
their
choice
to
apply
for
appointment as "Authorised Collection
Centre" and enter into contract under Rule
12 to act as an intermediary between the
Central Record Keeping Agency and the
Stamp duty payer for collection of stamp
duty, if they find it beneficial to them. They
have no fundamental or legal right to trade
in E-Stamp or to act an intermediary for
collection of stamp duty which is a tax and
is within the exclusive domain of the
Government."

13. His Lordship went on to observe: -

"Besides above, as per clause
(vii) of the proposed agreement, the
"Authorised Collection Centre" shall be
entitled to 23% of the commission earned
by the respondent No.4 from the State of
U.P. for such e-stamps generated by the
ACC in Uttar Pradesh which is neither
unreasonable looking into the duties of the
respondent No.4 specified under the
aforequoted Rule 9 nor it could be
demonstrated by the petitioners to be
unreasonable."

14. Dealing with the challenge to the
communication of 17 January 2020, his
Lordship held:-

"22. So far as the relief No.3 is
concerned,
we
find
that
it
is
a
correspondence between the Additional
Chief Secretary, Board of Revenue, Uttar
Pradesh, Prayagraj and Chief Treasury
Officer, Kanpur Nagar, regarding stamps
printing. There is no factual foundation in
the writ petition that any licenced stamp
vendor under the U.P. Rules 1942 has been
denied sale of physical stamp under their
licence. Learned counsel for the petitioners
has also not disputed the submissions of
learned Additional Chief Standing Counsel
that the State Government has very huge
stock of stamps in physical form. Under the
circumstances,
the
challenge
to
the
impugned letter of the Additional Chief
Secretary, dated 17.01.2020 is wholly
misconceived. Therefore, the relief No.3
sought for its quashing has no merit and is,
rejected."

15. Dealing with the prayer of the
petitioners for a direction being issued
commanding
the
respondents
not
to
discontinue physical stamps, Kesarwani J.
held: -

"24. The relief so sought by the
petitioners is wholly misconceived in as
much as, firstly, no material has been
placed or pleaded in the writ petition which
may indicate that despite demand the
physical stamp has not been issued to any
licenced vendor under the U.P. Rules 1942
and,
secondly,
the
aforementioned
notification of the Central Government
dated 28.12.2005 indicates that E-Stamp
sale is a policy decision of the Government
for collection of stamp duty which has been
taken pursuant to the announcement made
in the Parliament in the wake of stamp
paper scam. Now e-stamp is governed by
the E-Stamp Rules 2013. The petitioners
being licenced stamp vendors under the
U.P. Rules 1942 have the right for
enforcement of conditions of their licence.
4 All. All U.P. Stamp Vendors Assc., Fatehpur Vs. Union of India & Ors.
247
They can not dictate the Government for
collection of stamp duty under Section 10
of the Act, in the manner as per their
(petitioners) desire."

His Lordship went on to hold: -

".......Thus, stamp duty being a tax and
sale of physical stamp or E-stamp for
collection of revenue being policy decision
of the Government in fiscal matter, no
mandamus under Article 226 of the
Constitution of India can be issued to the
Government
at
the
instance
of
the
petitioner to print physical stamp when the
Government has taken a policy decision
backed by statutory provision for E-stamp
and to permit "ACC" to issue e-stamp of
any amount to a person under the E-Stamp
Rules.

27. The petitioners have not
disputed that the E-Stamp Rules 2013
has been validly framed. The decision of
the Government for sale of E-Stamp and
the legislation made in this regard relates to
economic matter/activities which should be
viewed with greater latitude than laws
touching civil rights such as freedom of
speech, religion etc. While dealing with
economic limitation, Hon'ble Supreme
Court in the case of R.K. Garg Vs. Union
of Inida 1981 (4) SCC 675 (para 8)
observed that the court must always
remember that legislation is directed to
practical problems, that the economic
mechanism
is
highly
sensitive
and
complex, every legislation particularly in
economic matters is essentially empiric and
it is based on experimentation. There, may
be crudities and inequities in complicated
experimental economic legislation but on
that account alone it cannot be struck down
as invalid."

16. Dealing with the challenge to
the rate of commission as prescribed under
the
proposed
contract,
Kesarwani
J.
observed: -

"31. Rule 12 of the E-Stamp
Rules 2013 provides that the Central
Record Keeping Agency may appoint
agent(s) called "Authorised Collection
Centre" to act as an intermediary
between the Central Record - Keeping
Agency and the Stamp duty payer for
collection of Stamp duty. Thus, if
members of the petitioners apply for and
are appointed as "Authorised Collection
Centre" by the respondent No.4, then
their status shall be of an agent of the
respondent No.4. As per the aforesaid
Rule
12
the
Service
Charges,
Commission or fee etc. payable to the
"Authorized Collection Centre" shall be
paid by the Central Record - Keeping
Agency i.e. the respondent No.4 at their
own level as mutually agreed between
them. Thus it is wholly within the choice
of licenced stamp vendors either to agree
to work as agent of respondent No. 4 on
the commission/service charge/fee as
may be offered to them by the respondent
no.4 or not to agree. By no stretch of
imagination it infringe Article 19(1) (g)
or Article 21 or Article 38 of the
Constitution
of
India.
The
entire
submissions of learned counsel for the
petitioners in this regard is totally
baseless and without substance. This
Court
under
Article
226
of
the
Constitution of India cannot direct the
respondent no.4 to agree to pay to ACC
commission/service charge/fee as may be
demanded by the petitioners in contrast to
the mutually agreed amount under Rule
12 of the E-stamp Rules and enter into
contract on that basis with a licensed
248 INDIAN LAW REPORTS ALLAHABAD SERIES
stamp vendor for his appointment as
agent (A.C.C.)."

17. The constitutional challenge was
negatived with his Lordship holding: -

32.
Article
19(1)(g)
of
the
Constitution accords fundamental right to
carry on any profession, occupation, trade
or business which is subject to imposition
of reasonable restriction in general public
interest by the State under Article 19(6).
The petitioners have no fundamental right
to sell E-Stamp or for appointment as an
agent under Rule 12 of the E-Stamp Rules.
Amount of commission/service charge/fee
as may be or has been offered by the
respondent no.4 to persons for appointment
as agent under Rule 12, does not infringe
Article 19(1)(g).

33. Article 21 of the Constitution
provides that no person shall be deprived of
his life or personal liberty except according to
procedure established by law. Apprehension
of lower income than the desired income as
an agent under Rule 12 does not attract
Article 21 of the Constitution.

34. Article 38 is the directive
principle of State Policy. Learned counsel for
the petitioner has completely failed to
demonstrate as to how Article 38 is attracted
and is enforceable under the facts and
circumstances of the present case. Therefore,
his submission with regard to Article 38 is
also rejected.

18. On recording of the aforesaid
conclusions, His Lordship proceeded to hold
that the writ petition was liable to be
dismissed.

F. OPINION PRONOUNCED
BY BHANOT J.

19. Dealing with the validity of the
terms of the agreement, Bhanot J. on the
other hand observed: -

"15. The commission received by
the
Central
Record-keeping
Agency/SHCIL, from the State of Uttar
Pradesh is not revealed in the said proforma
agreement, nor has it been otherwise
disclosed to the petitioner either by the
State Government or by the SHCIL.
Consequently the amount of commission to
which the Authorized Collection Centre is
entitled under the proposed contract with
SHCIL cannot be determined. This makes
the proposed agreement between the
Authorized Collection Centre and the
Central Record-keeping Agency / SHCIL
vague and uncertain."

His Lordship then went on to
observe: -

"16.
.....Accordingly,
the
commission to which the Authorized
Collection Centre will be entitled upon the
sale of e-stamps worth Rs. 1 lakh is Rs.
115/-. The Authorized Collection Centre is
required to predeposit an amount of Rs. 1
lakh in its bank account as advance, for
purchase of e-stamps from the SHCIL /
Central
Record-keeping
Agency
of
equivalent value. Upon deposit of said
amount, a sum of Rs. 250/- is charged by
the bank as cash handling charge. Hence
the Authorized Collection Centre is sure to
suffer a certain financial loss on each
transaction of purchase and sale of stamps.

17. The proposed agreement thus
creates an assurance of certain losses for
the Authorized Collection Centre. Ordinary
prudence would have it that no private
entity will enter into a contract where loss
is certain. (These consequences are being
4 All. All U.P. Stamp Vendors Assc., Fatehpur Vs. Union of India & Ors.
249
drawn on a plain reading of the writ
petition, and without the benefit of
pleadings from the respondents by counter
affidavits)."

20. Evaluating the question of
whether SHCIL could be recognised to be
discharging a public function and that
contracts so entered must be in accord with
principles recognised by public law,
Bhanot J. held:-

"25. The cumulative effect of the
aforesaid facts is that the Central Recordkeeping Agency and Authorized Collection
Centre,
discharge
public
functions.
Consequently their actions including the
proposed agreement can be judicially
reviewed, and the same are accountable to
public law.

26. It is well settled that the court
cannot rewrite the contract between the
parties. Moreso, in this case it is not the ken
of the court to determine the commission to
be paid to either party. However, it is very
much concern of the court to enquire
whether the proposed agreement between
the Central Record-keeping Agency/SHCIL
and the Authorized Collection Centre is
consistent with the law of the land or not."

21. His Lordship then proceeded to
notice the body of precedent as has evolved
with the Supreme Court expanding the
applicability
of
the
principles
of
unconscionable terms of contracts and
unequal bargaining powers of parties to a
contract infused with a public element.
After noticing various precedents rendered
on those subjects, his Lordship observed: -

"28. There are other limitations
on the creation of contracts under the
public law. Some salient aspects of the
proposed agreement between the Central
Record-keeping Agency /SHCIL, and the
Authorized Collection Centre will now be
considered. The proposed agreement is not
a simplicitor commercial contract. Public
functions will be discharged by the parties
in the framework of the said contract.
There is a dominant public law element in
the aforesaid contract. The parties to the
contract also perform statutory functions
under the Rules of 2013. The said
agreement fulfills a statutory purpose. A
contract between the Authorized Collection
Centre, and the Central Record-keeping
Agency is critical to the existence of the
Authorized Collection Centre, and for its
efficient functioning to implement the
scheme of the Act and the Rules of 2013.
The proposed agreement has to
be
compliant with the requirements of public
law.

37.
From
the
pleadings
it
transpires that the exact commission payable
to
the
SHCIL/Central
Record-keeping
Agency from the State Government is not
known, and remains shrouded in opacity.
Consequently, the exact commission to
which the Authorized Collection Centre is
entitled, cannot be determined. Business
decisions cannot be taken in absence of
material facts, which are in the knowledge
of one of the parties but not disclosed to the
other contracting party.

38.
These
features
of
the
proposed agreement run counter to the
requirement of fairness and transparency in
contracts coming in the ambit of public
law. Vague terms and uncertainty in the
contract
can
exist
on
the
pain
of
invalidation under Section 29 of the Indian
Contract Act.
250 INDIAN LAW REPORTS ALLAHABAD SERIES

39. As seen earlier, this is not a
business /commercial contract simplicitor.
Hence the concept of unequal bargaining
power could well apply to the facts of the
case. The SHCIL is apparently exerting its
superior
bargaining
power
over
the
Authorized Collection Centre, to induce the
latter into an unequal contract. The
offending part of the proposed agreement
appears to be opposed to public policy, and
seems unconscionable. But the issue can be
decided with finality only after exchange of
pleadings."

22. Dealing with the applicability of
Article 19(1)(g), his Lordship held: -

45. The right to trade in e-stamps
comes within the embrace of Article
19(1)(g) of the Constitution of India. This,
however, does not mean that any person
has a fundamental right to be appointed as
an Authorized Collection Centre. The
appointment of Authorized Collection
Centre is strictly governed and regulated by
the Rules of 2013, and has to be made
according to the said Rules.

46.
Thus
subject
to
the
restrictions imposed by the law, (in this
case the Indian Stamp Act, 1899, read with
Uttar Pradesh E-Stamping Rules, 2013), the
members
of
the
petitioner
have
a
fundamental right to trade in e-stamps.
According to the petitioner, the offending
condition in the proposed contract and
actions of the respondents, curtail the
fundamental right of the petitioner in
contravention
of
the
permissible
restrictions under Article 19(6) of the
Constitution of India, and violate Article
19(1)(g) of the Constitution of India.

23. Bhanot J. ultimately proceeded to
frame the following operative directions: -

"54. The respondents are granted
four weeks time to file their respective
counter affidavits'. While filing the counter
affidavit, the respondent no. 4-SHCIL shall
also state its organizational details and
structure, constitution of its Board, the
extent of control of the Government both
administrative and financial, and any other
like information.

55. The SHCIL and the State
Government are directed to make the
necessary disclosures regarding the actual
commission being given to the Stock
Holding Corporation of India Limited by
the State Government, and reveal the same
to the petitioner within two weeks from the
date of receipt of a certified copy of this
order."

G. SUBMISSIONS BEFORE
THIS COURT

24. Before this Court Sri Rajvanshi
learned senior counsel has advanced
submissions on lines identical to that as
urged
before
the
Division
Bench.
Additionally, he contended that after
opinion had been rendered by the Division
Bench, the position has worsened with
physical stamp paper not being available
for purchase by licensed vendors at all. As
noted in the very beginning, the State went
unrepresented before this Court with
designated counsel choosing not to appear
or advance submissions.

25. Sri Kshitij Shailendra and Sri
Sumeet Kacker appeared on behalf of
SHCIL. Adopting the objections taken on
behalf of the State respondents before the
Division Bench, the attention of the Court
was additionally drawn to the decision
rendered by the Division Bench of the
Gujarat
High
Court
in
Manish
4 All. All U.P. Stamp Vendors Assc., Fatehpur Vs. Union of India & Ors.
251
Jitendrakumar
Shah
Vs.
State
of
Gujarat to contend that the ban imposed
on the sale and distribution of physical non
judicial stamp paper by the Government of
Gujarat was upheld for reasons recorded
therein. Learned counsels further urged that
in the absence of any challenge to the
policy of e stamping or the 2013 Rules, no
relief could be accorded to the petitioner. It
was contended that the policy initiative of e
stamping as adopted by numerous States
across the country did not merit any
interference. Stress was also laid on Rule
12 of the 2013 Rules on the basis whereof
it was contended that the proposed
agreement
was
in
accord
with
the
provisions made therein. It was further
stated that the rate of commission is to be
mutually agreed upon by parties after
entering into the contract and that the
proposed contract also puts in place a
dispute resolution mechanism which could
always be invoked. The attention of the
Court was also invited to Clause VII of the
proposed agreement which stipulates an
ACC being paid 23% of the commission
earned by SHCIL from the State and that
any change thereto could be made with
mutual consent. It was in that backdrop
submitted that the remuneration payable to
an ACC would never remain static and it
was also not sacrosanct. It would be a
subject which would always remain open
for resolution between parties.

H.THE PRINCIPAL ISSUE

26. Having noticed the two opinions
rendered
by
the
learned
members
comprising the Division Bench and the
submissions advanced, the principal issue
which essentially arises for consideration is
whether the petitioners have been able to
establish a prima facie case against the
action taken by the respondents which
warranted them being required to file a
return
in
these
proceedings.
Before
proceeding to deal with the aforesaid issue,
it would be apposite to enunciate two
fundamental pedestals in the backdrop of
which the challenge would be liable to be
evaluated.

27. Firstly, while approaching the
issue as formulated above, the Court must
necessarily
bear
in
mind
that
the
proceedings instituted by the petitioners are
for a certification of claims which are
personal to the Association and its
members. It is pertinent to underline and
highlight here at the outset that the petition
has not been brought in public interest.
This is evident from the fact that the
petitioners assert that the action of the State
violates the guarantees held forth by
Articles 19(1)(g), 21 and 38 of the
Constitution. This aspect would assume
significance when the Court proceeds to
deal with the question whether the
respondents are obliged to disclose the
terms of the arrangement between SHCIL
and the State Government.

28. It thus becomes necessary and
essential to articulate the clear distinction
which must be recognised to exist when the
Court under Article 226 of the Constitution
exercises its powers of judicial review in
respect of an action which is personal as
opposed and distinct from a petition
preferred in larger public interest and not
really for individual relief being accorded.
The principal distinction is while an
individual action is adversarial, a petition
preferred in public interest is not. While it
may be permissible for the Court while
dealing with a public interest litigation to
assume an "inquisitorial" role in order to
252 INDIAN LAW REPORTS ALLAHABAD SERIES
hold the State liable and obliged to give
effect to the Constitution and the laws, as
opposed to the above, an individual petition
must necessarily rest and proceed on
material gathered by the petitioner and the
validity of the objection and challenge as
raised therein. On such a petition it is
neither open for the Court to undertake a
roving enquiry in order to satisfy itself with
regard to the validity of the impugned
action nor can the respondents therein be
required to produce material on the basis of
interrogatories and directives in order to
sustain or grant a relief that may have
otherwise been sought. Equally important it
would be to bear in mind that the scope of
the writ petition also cannot be expanded
beyond the grounds of challenge which are
raised and the reliefs sought in order to
subserve some larger public interest, a
course
which
would
otherwise
be
permissible in the case of a public interest
litigation.

29. The second aspect which needs to
be clearly and unambiguously spelt out
arises from the following narration of facts.
Undisputedly, the system of e stamping, the
appointment of a CRA, the appointment of
an ACC are subjects which are governed
and controlled by the Uttar Pradesh E-
Stamping Rules, 2013. The proposed
contract as published by SHCIL and
assailed by the petitioners is also traceable
to the provisions made in the 2013 Rules.
However, no challenge was either raised or
laid to the statutory rules as framed nor was
it contended that the proposed agreement is
in violation of or ultra vires any provision
made in the 2013 Rules. The policy
initiative of e stamping was also not
questioned.

30.