# 7 36 HINDUSTAN STEEL LTD v. M/S. DALIP CONSTRUCTION COMPANY

- **Citation:** [1969] 3 S.C.R. 736
- **Court:** Supreme Court of India
- **Decided:** 1969-02-18
- **Bench:** J. C. Shah, V. Ramaswami, A. N. Grover
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/7-36-hindustan-steel-ltd-v-m-s-dalip-construction-company-4635
- **Pages:** 6

## Headnote

B
bufion Stamp Act, ss. 35, 36 ~
42r-Unstamped document filed in
.::oUTt-lmpounded-Whether can be acted upon after payment of duty
and. penalty.
The dispute between the appellant and the respondents in relation to
a c:Pntract were referred in accordance with their contract to arbitration.
The award was filed in the District Court and notice of filing was given
to the parties. The appellant applied to the Court under ss. 30 and 33
of the Indian Arbitration Act, 1940 to have the award set aside on the
around inter alia that it was unstamped. The District Judge ordered the
doannent to be impounded and directed that an authenticated copy of
the instrument be sent to the Collector together with a certificate in writing •tatin.g the receipt of the amount of duty and penalty. Against tha\,
order the appellant moved the High Court of Madhya Pradesh in exercise
of ita revision3.i jurisdiction. The High Court rejected the petition. By
special leave appeal was filed in thill Court. Relying on the difference ia
tho phraseology between ss. 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 s. 35 operates as
a bar to the admission in evidence of an instrument not duly stamped as
well u to its being acted upon, and the Legislature has by s. 36 in the
conditiona set out tbeuin removed the bar only aaainst admission in
evidttlce of the instrument.
HELD: The appellant's argument ignored the true import of s. 36.
By that section an instrument once admitted in evidence shall not be
oalled in question at any stage of the same suit or proceedings on the
ground that it bas not been duly stamped. S:ction 36 does not, prohibit
a challenge against an instrument that it shall not be acted upon becau.e
it is not duly stamped, but on that account thc*'e is no bar against an instrwnent not duly stamped being acted upon after payment of the stamp
dnty and penalty according to the procedure presc!pbed by the Act. The
doubt if any is resolved by the terms of s. 42(2) which enact in terms
unmistakable, that every instrument endorsed by the Collector under s.
<42(1) shall be admissible in evidence and may be acted upon as if it l>ae
been duly stamped. [740 C-EJ
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, s. 40 provides the procedure
for the instrument being impounded, sub... (I) of s. 42 provides for
certifying that an instrument is duly stamped, and sub-6. (2) of s. 42
enacts the consequences resulting from such certification. [740 F-G]
c
D
E
F
G
H
A
c
D
E
F
G
H
HINDUSTAN STEEL V, DALIP CONST. CO. (Shah, J.)
737
Ob.ervations of Desai, J. in Mst. Bittan Bibi and Anr. v. Kantu Lill
•n« Anr., l.L.R. [1952) 2 All, 984, disapproved.
Civn, APPELLATE JURISDICTION : Civil Appeal• 'No, 2425
ot 1968.
Appeal by special leave from the judgment and order daled
August 30, 1968 of the Madhya Pradesh High Court in Civil
Revision No. 764 of 1967.
C. K. Daphtary, and /. N. Shroff, for the appellant.
Rameshwar Nath and Mahinder Narain for the respondent.
The Judgment of the Court .. was delivered by
Shah, J. The respondents entered into a contract witJa
Hindust!lj]l Steel Ltd. for 'raising, stacking, carting natl loadi-.g into wagons limestone at Nandini Mines".
Dispute whicJa
arose between the parties was referred to arbitration, pursaant
to cl. 61 of the agreemQ!J!.
The arbitrators differed, and t

## Text

7 36
HINDUSTAN STEEL LTD.
v.
M/S. DALIP CONSTRUCTION COMPANY
February 18, 1969
A
[J. C. SHAH, V. RAMASWAMI AND A. N. GROVER, JJ.]
B
bufion Stamp Act, ss. 35, 36 ~
42r-Unstamped document filed in
.::oUTt-lmpounded-Whether can be acted upon after payment of duty
and. penalty.
The dispute between the appellant and the respondents in relation to
a c:Pntract were referred in accordance with their contract to arbitration.
The award was filed in the District Court and notice of filing was given
to the parties. The appellant applied to the Court under ss. 30 and 33
of the Indian Arbitration Act, 1940 to have the award set aside on the
around inter alia that it was unstamped. The District Judge ordered the
doannent to be impounded and directed that an authenticated copy of
the instrument be sent to the Collector together with a certificate in writing •tatin.g the receipt of the amount of duty and penalty. Against tha\,
order the appellant moved the High Court of Madhya Pradesh in exercise
of ita revision3.i jurisdiction. The High Court rejected the petition. By
special leave appeal was filed in thill Court. Relying on the difference ia
tho phraseology between ss. 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 s. 35 operates as
a bar to the admission in evidence of an instrument not duly stamped as
well u to its being acted upon, and the Legislature has by s. 36 in the
conditiona set out tbeuin removed the bar only aaainst admission in
evidttlce of the instrument.
HELD: The appellant's argument ignored the true import of s. 36.
By that section an instrument once admitted in evidence shall not be
oalled in question at any stage of the same suit or proceedings on the
ground that it bas not been duly stamped. S:ction 36 does not, prohibit
a challenge against an instrument that it shall not be acted upon becau.e
it is not duly stamped, but on that account thc*'e is no bar against an instrwnent not duly stamped being acted upon after payment of the stamp
dnty and penalty according to the procedure presc!pbed by the Act. The
doubt if any is resolved by the terms of s. 42(2) which enact in terms
unmistakable, that every instrument endorsed by the Collector under s.
<42(1) shall be admissible in evidence and may be acted upon as if it l>ae
been duly stamped. [740 C-EJ
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, s. 40 provides the procedure
for the instrument being impounded, sub... (I) of s. 42 provides for
certifying that an instrument is duly stamped, and sub-6. (2) of s. 42
enacts the consequences resulting from such certification. [740 F-G]
c
D
E
F
G
H
A
c
D
E
F
G
H
HINDUSTAN STEEL V, DALIP CONST. CO. (Shah, J.)
737
Ob.ervations of Desai, J. in Mst. Bittan Bibi and Anr. v. Kantu Lill
•n« Anr., l.L.R. [1952) 2 All, 984, disapproved.
Civn, APPELLATE JURISDICTION : Civil Appeal• 'No, 2425
ot 1968.
Appeal by special leave from the judgment and order daled
August 30, 1968 of the Madhya Pradesh High Court in Civil
Revision No. 764 of 1967.
C. K. Daphtary, and /. N. Shroff, for the appellant.
Rameshwar Nath and Mahinder Narain for the respondent.
The Judgment of the Court .. was delivered by
Shah, J. The respondents entered into a contract witJa
Hindust!lj]l Steel Ltd. for 'raising, stacking, carting natl loadi-.g into wagons limestone at Nandini Mines".
Dispute whicJa
arose between the parties was referred to arbitration, pursaant
to cl. 61 of the agreemQ!J!.
The arbitrators differed, and the
dispute was referred to an umpire who made and published his
award on April 19, 1967. The umpire filed the award in the
Caurt of the
District Judge,
Rajnandgaon
in the State of
Madhya Pradesh and gave notice of the filing of the award to
tbe parties to the dispute. On July 14, 1967 the appellant filed aD.
application for setting aside the ward under ss. 30 and 33 of
the Indian Arbitration Act, 1940. One of
the contentions
railed by the appellants was that the award was unstamped and
on that account "invalid and illegal 3llld Hable to be set aside".
The respondents then applied to the
District Court that
the
award be impounded and validated by levy of stamp duty and
penalty.
By order dated
September 29, 1967, the
District
Judge directed that the award be impounded.
He then called
upon the respondents to pay the appropriate stamp duty on the
award aind penalty and directed that an authenticated copy of
tac instrument be sent to the Collector, Durg, together with a
certificate in writing stating the receipt of the amount of duty
and penalty.
Against that order the apoe!Jant moved the High
Court of Madhya Pradesh in exercise of its revisional jurisdiction.
The High Court rejected the petition and the appellant.
appeals to this Court with special leave.
It is urged by Co~! for the appellant that an instrument
wllich is not stamped as required by the Indian Stamp Act, may,
Oil payment of stamp duty and penalty, be admitted in evidence,
but cannot be acttd upon, for, "the instrument has no existence
• the eye of law".
Therefore, counsel urged, in proceeding to
entertain the application for filing the award, the District JudiC,
Rajnandgaon, acted without jurisdiction.
The relevant provisions of the Stamp Act may be summarised.
Section 3 of the Act provides :
738
SUPREMI! COURT Rl!PORTS
[1969] 3 S.C.R.
"Subject to the provisions of this Act . . . . . the
A
following instruments shall be chargeable with
duty
of the amount ~icated in that Schedule as the proper duty therefor, respectively, that is to say-
( a) every instrument mentioned in that
Schedule
which, not having been previously
executed
by any person, is
executed in India
on or
ll
after the first day of July, 1899;
"Inatrument" is defined m s. 2(14) as including "every document by which any right or liability is, or purports to be, created, transferred, limited,
extended, extinguished or
recorded".
An instrument is said. to be "duly stamped" within the meaning
of the Stamp Act when the instrument bears an adhesive or imC
prOiSOCI stamp of. not less than the proper a.tnount and that such
stamp has been affixed or used in accordance with the law for
the time being in force in India : s. 2 ( 11).
Item 12 of Sch. I
. pr~ribes the stamp duty payable in respect of an award.
Section 33 ( l) provides, insofar as it is relevant :
" ( l) Every person having by law or consent of
D
parties authority to receive evidence. . . . . before
'lfhom any instrument, chargeable. . . . . with duty,
ill produced or comes in the perfom1ance of his functions, shall, if it appears to him that such instrument
ill not duly stamped, impound the same."
Sectioo 35 of the Stamp Act provides, insofar as it is relevant :
E
"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 imistrument is duly stamped:
F
Provided that .................... "
Section 36 provides :
"Where an instrument has been admitted in evidence, such admission shall not, except as provided
in section 61, be called in question at any stage of the
G
aame suit or proceeding qn the ground that the instrument has not been duly stamped."
Section 38 deals with the impounding of the instruments : it
prcmdes:
" ( l ) When the person inlpounclif1g an instrume~t
H
11Dder sectiQD 3 3 has . . . . . . authonty to receive evidence and admits such instrument in evidence upon
payment of a penialty as provided by section 3 5 or
A
B
c
J)
G
HINDUSTAN STEEL V. DALIP. CONST. CO. (Shah, /.)
739
........ , he shall send to the Collector an authenticated ·copy of such instrument, together with a certificate in writiJig, stating the
amount of duty
and
penalty levied in respect thereof, ........ "
By s. 39 the Collector is authorised to adjudge proper penalty
and to refund any portion of the penalty which has been paid
in respect o.f the instrument, sent to him.
Section 40 prescribes
the procedure to be followed by the Collector in respect of an
i;nstrument impounded by h!m or sent to him under s. 38. If
the Collector is of the opinion that the instrument is chargeable
with duty and is not duly stamped, he shall require the payment
or proper duty or the amount required to make up the same
together with a penalty of five rupees; or, if he thinks fit, an
amount not exceeding ten times the amount of the proper dut)
or of the deficient portion thereof.
Section 42 provides :
" ( 1) When the duty and penalty (if any), Jeviable in respect of a,ny instrument have been paid
under section 3 5, section 40 or ...... , the person
admitting such instrument in evide;nce or the Collector, as the case may be, sha]J certify by endorsement
thereon that the proper duty or, as the case may be,
the proper duty and penalty (stating the amount of
each) have been levied in respect thereof, ..... .
(2) Every instrument so endorsed shall thereupon
be admissible in evidence. and may be registered and
acted upon and authenticated as if it had been duly
stamped, and shall be delivered on his application in
this behalf to the person from whose possession
it
came into the hands of the officer impoundin~ it, or
as such person may direct :
Provided !;hat-
........... ; ; . ; ; . ; ........... . "
The award, whidh is an "instrument" within the meaning\ oe
the Stamp Act was required to be stamped.
Being unstamped,
the aw.ard could not be received in evidence by the Cami, nor
could 1~ be acted upon.
But the Court was competent to impound 11 and to send it to the Collector with a certificate in
writing s~ating 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, j,f in his view it has not been duly stamped. If th(
duty and penalty are paid, the Collector will certify by endorse
ment on the instrument that the proper duty and penalty hav•
been paid.
740
SUPREME COURT ll.EPORTS
[1969] 3 S.C.R.
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 a•
instrument qnce admitted in evidence shall not, except as provided in s. 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. Relying upon the difference in the phraseology
betweein ss. 35 and 36 it was urged that an instrument whiclt
is not duly stamped may be admitted in evidence. on pa)ment
of duty and penalty, but it cannot be acted upon because s. 35
operates as a bar to the admission
in evidence of the
instrument not duly
stamped
as well as to its being
actcti
upon, and the Legislature has by s. 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 s. 36.
By that section an instrument once admitted in evidence shall
not be called in question at any stage of the same suit or prt:>·
ceeding on the ground that it has not been duly stamped. Sectio•
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 uporr 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 s. 42(2) which enact,
in terms unmistakable, that every instrument endorsed by the
Collector under s. 42 ( 1) shall be admissible in evidence and
may be acted upon as if it had been duly stampoo.
The Stamp Act is a fiscal measure enacted to secure revenue
for the State Ol!l certain classes of instruments : it is not enacted
to a'1ll 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
de.feet in the instrument.
Viewed in that
light the
Scheme
is clear : s. 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 p~ocedure for
instruments being im·
pounded, sub-s. ( 1) of s. 42 provides for certifying that an instrument is duly stamped, and sub-s. (2) of s. 42 enacts
tho
cQ\llsequences resulting from such certmcation.
Our attention was invited to the statement of law by M.C.
Desai, J., in Mst. Bittan Bibi and Another v. Kuntu La~ ami
14.nother(') that : ----
(1) I.LR . .' 195:1 2 All. 9€4.
A
B
c
D
E
F
G
H
A
B
c
D
E
'
•
HINDUSTAN STEEL V. DALIP CONST. CO. (Shah, /.)
7 0
"A court is prohibited from admitting an instrument in evidence ainkl a Coun and a public officer
both are prohibited from
acting upon it.
Thus a
Court is prohibited from both admitting it in evidence
and acting upon it.
It foilows that the acting upon
is not included in the admission aUld that a document
can be admitted in evidence but not be acted upon.
Of course it cannot be acted upon without its being
admitted, but it can be admitted and yet be not acted
upon.
1f every document, upon admission, became
automatically liable to be acted upon, the provision
in s. 35 that an instrument chargeable with duty but
not duly stamped, shall not be
acted upon by the
Court, would be rendered redundant by the provisio11.
that it shall not be admitted in evidence for adv purpose.
To act upon an instrument is to give effect to
it or to enforce it"
In 011r judgment, the learned Judge attributed to s. 36 a meanin~
wlLich the Legislature did not intend.
Attentiqn of the learnca
Judge was apprently not invited to s. 42(2) of the Act which
expte!sly renders an instrument, when certified by endorsement
that proper duty and penalty have been levied i.'l respect thereof.
capable of being acted upon as if it had been duly stamped.
The appeal fails and i~ dismissed with costs.
o.c.
Appeal dismissad.