# ·- DIS TT. REGISTRAR & COLLECTOR, HYDERABAD AND ANR v. CANARA BANK ETC

- **Citation:** [2004] Supp. 5 S.C.R. 833
- **Court:** Supreme Court of India
- **Decided:** 2004-11-01
- **Case number:** Civil Appeal Nos. 6350-6374 of 1997
- **Bench:** R.C. Lahoti, Ashok Bhan
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/dis-tt-registrar-collector-hyderabad-and-anr-v-canara-bank-etc-20267
- **Pages:** 33

## Headnote

Indian Stamp Act, 1899 as amended by the Andhra Pradesh Act, 1986
(Act 17 of 1986): Section 73--Constitutionality of Constitution of JndiaArt.14.
A
B
c
Stamp duty-Evasion-Safeguarding the revenue of the state-Public
documents or public records of private documents-Jn the custody of public
officer-Not tendered in evidence nor produced before any public officelnspection, impounding and levying with duty-Banks directed to remit
deficit duty on the documents, retained in course of loan advancing D
transactions, and to recover the same from the parties concerned-Held,
amended provision confers unbridled power without any guidelinesUnreasonable, violative of Article 14 of the-Constitution-Hence ultra vi res.
Constitution of India-Art. 21.
Right to Privacy-Held, exists with respect to persons and not places.
Scope-Confidentiality of bank documents-Held, State cannot have
unrestricted access to inspect and seize banks records relating to a customer,
without any reliable information prior to such inspection-Nature of
banks-customer relationship.
Interpretation of statutes:
Fiscal legislation-Interpretation of -Held, to be construed strictlyNo scope of equity or judiciousness.
E
F
Remedial statutes and statutes enacted on demand of permanent public G
policy-Held, to be interpreted liberally.
Section 73 of the Indian Stamp Act in its application to the State of
Andhra Pradesh was amended by the Andhra Pradesh Act, 1986 (Act 17 of
1986). The amended entirely substituted provision conferred power on the
833
I-I
834
SUPREME COURT REPORTS (2004) SUPP. 5 S.C.R.
A collector or any person authorized by him to inspect any public office and any
registers, books, records etc. the custody of public officer and empowered
the inspecting officers to seize and impound 'the deficitly stamped documents
and impound the same during inspection or collect the deficit duty from the
custodian and to recover the same from the parties concerned. Several writ
petitions challenging the vires of the amended provision were filed before the
B High Court The High Court found the impugned provision to be ultra vires
of the constitution. Hence this appeal.
The appellant contended that the amendments are directed towards
safeguarding the revenue of the State and striking at the evil of stamp duty
C evasion and, therefore, the validity of such reasonable legislation was not liable
to be questioned as unconstitutional.
The respondents contended that the impugned amendment was not
constitutionally valid and as such ultra vires the Constitution of India. Further
attack was on the ground of unreasonableness, inconsistency and excessive
D delegation of powers and also on account of drastic powers having be.en
conferred on executive authorities without laying down guidelines. It was also
contended that the impugned provision interferes with the personal liberty of
citizens inasmuch as it allows an intrusion into the privacy and property of
the citizens.
E
Dismissing the appeal, the court
HELD: I.I. Power to impound a document and to recover duty with or
without penalty thereon has to be construed strictly and would be sustained
only when falling within the four corners and letter of the law. This has been
F the consistent view of the Courts. (846-CI
Mussammat Jai Devi v. Gokal Chand, (1906) 7 PLR 428, Munshi Ram
v. Harnam Singh, AIR (1934) Lahore 637(1) and L. Puran Chand, Proprietor,
Dalhousie Dairy Farm v. Emperor, AIR (1942) Lahore 257, referred to.
G
1.2. The right to privacy deals with 'persons and not places', the
H
documents or copies of documents of the customer which are in Bank, must
continue to remain confidential vis-a-vis the person, even if they are no longer
at the customer's house and have been voluntarily sent to a Bank. Therefore,
unless there is some probable or reasonable cause or reasonable basis or
material before the Collector for reaching an opinion that the documents in
DISTT. REGISTRAR & COLLECTOR v. CANARA BANK
835
the possession of the Bank tend, to

## Text

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·-
DIS TT. REGISTRAR & COLLECTOR, HYDERABAD AND ANR.
v.
CANARA BANK ETC.
NOVEMBER 1, 2004
[R.C. LAHOTI, CJ. AND ASHOK BHAN, J.]
Indian Stamp Act, 1899 as amended by the Andhra Pradesh Act, 1986
(Act 17 of 1986): Section 73--Constitutionality of Constitution of JndiaArt.14.
A
B
c
Stamp duty-Evasion-Safeguarding the revenue of the state-Public
documents or public records of private documents-Jn the custody of public
officer-Not tendered in evidence nor produced before any public officelnspection, impounding and levying with duty-Banks directed to remit
deficit duty on the documents, retained in course of loan advancing D
transactions, and to recover the same from the parties concerned-Held,
amended provision confers unbridled power without any guidelinesUnreasonable, violative of Article 14 of the-Constitution-Hence ultra vi res.
Constitution of India-Art. 21.
Right to Privacy-Held, exists with respect to persons and not places.
Scope-Confidentiality of bank documents-Held, State cannot have
unrestricted access to inspect and seize banks records relating to a customer,
without any reliable information prior to such inspection-Nature of
banks-customer relationship.
Interpretation of statutes:
Fiscal legislation-Interpretation of -Held, to be construed strictlyNo scope of equity or judiciousness.
E
F
Remedial statutes and statutes enacted on demand of permanent public G
policy-Held, to be interpreted liberally.
Section 73 of the Indian Stamp Act in its application to the State of
Andhra Pradesh was amended by the Andhra Pradesh Act, 1986 (Act 17 of
1986). The amended entirely substituted provision conferred power on the
833
I-I
834
SUPREME COURT REPORTS (2004) SUPP. 5 S.C.R.
A collector or any person authorized by him to inspect any public office and any
registers, books, records etc. the custody of public officer and empowered
the inspecting officers to seize and impound 'the deficitly stamped documents
and impound the same during inspection or collect the deficit duty from the
custodian and to recover the same from the parties concerned. Several writ
petitions challenging the vires of the amended provision were filed before the
B High Court The High Court found the impugned provision to be ultra vires
of the constitution. Hence this appeal.
The appellant contended that the amendments are directed towards
safeguarding the revenue of the State and striking at the evil of stamp duty
C evasion and, therefore, the validity of such reasonable legislation was not liable
to be questioned as unconstitutional.
The respondents contended that the impugned amendment was not
constitutionally valid and as such ultra vires the Constitution of India. Further
attack was on the ground of unreasonableness, inconsistency and excessive
D delegation of powers and also on account of drastic powers having be.en
conferred on executive authorities without laying down guidelines. It was also
contended that the impugned provision interferes with the personal liberty of
citizens inasmuch as it allows an intrusion into the privacy and property of
the citizens.
E
Dismissing the appeal, the court
HELD: I.I. Power to impound a document and to recover duty with or
without penalty thereon has to be construed strictly and would be sustained
only when falling within the four corners and letter of the law. This has been
F the consistent view of the Courts. (846-CI
Mussammat Jai Devi v. Gokal Chand, (1906) 7 PLR 428, Munshi Ram
v. Harnam Singh, AIR (1934) Lahore 637(1) and L. Puran Chand, Proprietor,
Dalhousie Dairy Farm v. Emperor, AIR (1942) Lahore 257, referred to.
G
1.2. The right to privacy deals with 'persons and not places', the
H
documents or copies of documents of the customer which are in Bank, must
continue to remain confidential vis-a-vis the person, even if they are no longer
at the customer's house and have been voluntarily sent to a Bank. Therefore,
unless there is some probable or reasonable cause or reasonable basis or
material before the Collector for reaching an opinion that the documents in
DISTT. REGISTRAR & COLLECTOR v. CANARA BANK
835
the possession of the Bank tend, to secure any duty or to prove or to lead to A
the discovery of any fraud or omission in relation to any duty, the search or
taking notes or extracts, therefore, cannot be valid. The above safeguards must
necessarily be read into the provision relating to search and inspection and
seizure so as to save it from any unconstitutionality. (862-H, 863-A-C)
1.3. The impugned provision in sec. 73 enabling the Collector to B
authorize 'any person' whatsoever to inspect, to take notes or extracts from
the papers in the public office suffers from the vice of excessive delegation as
there are no guidelines in the Act and more importantly, the section allows
the facts relating to the customer's privacy to reach non-governmental persons
and would, on that basis, be an unreasonable encroachment into the customer's C
rights. This part of the Section 73 permitting delegation to 'any person' suffers
from the above serious defects and for that reason is, in our view,
unenforceable. The State must clearly define the officers by designation or
state that the power can be delegated to officers not below a particular rank
in the official hierarchy, as may be designated by the State. (863-C-EJ
1603 (5 Coke's Rep. 9la) (77 Eng. Rep. 194) (KB) Semayne's case,
Entick v. Carrington, (1765) (19 Howells' State Trials 1029) (95 Eng Rep
807) and Boydv. United States (1886) 116 US 616 (~26), referred to.
Universal Declaration of Human Rights (1948), International Covenant
D
of Civil and Political Right European Convention on Human Rights, E
Canadian Charter of Rights and Freedoms s New Zealand Bill of Rights,
referred to.
Entick v. Carrington, (1765) Boyd v. United States, (1886) 116 US 616
(627), referred to.
Olmstead v. United States, (1928) 277 US 438, Griswold v. State of
Connecticut, (1965) 381US278, Warden v. Heyden, (1967) 387 US 294, Katz
v. United States, (1967) 389 US 347, Terry v. Ohio, (1968) 392 US 1,
Thornburgh v. American College of 0 and G, (1986) 476 US 747 and Whalen
v. Roe (1977) 429 US 589, referred to.
Constitution and Criminal Procedure, First Principles by Prof Akhil
Amar, Yale University Press (1997), p.183 fn.42, referred to.
(1968) Yale Law Journal 475 and (1976) 64 Cal L Rev 1447, referred
F
G
to 'American Constitutional Law', (1988), 2nd Ed, ch. 15 by Prof Lawrence H
836
SUPREME COURT REPORTS [2004] SUPP. 5 S.C.R.
A H Tribe R v. Jeffries, (1994) 1 NZLR 290 (CA), referred to.
United States v. Orito, (1973) 413 US 139, Stanley v. Georgia, (1969)
394 US 557, referred to.
MP.Sharma v. Satish Chandra, (1954) SCR 1077 and Kharak Singh v.
-;
B State of UP., (196411 SCR332, referred to.
Munn v. Illinois, (1876) 94 US 113 and Wolfv. Colorado, (1948) 338 US
25, referred to.
c
Govindv. State of MP, [1975[ 2SCC148, R. Rajagopalv. State o/Tamil
Nadu, [1994) 6 SCC 632, PUCL v. Union of India, (1997] l SCC 301, Mr. X
v. Hospital 'Z' (1998) 8 SCC 296, People's Union for Civil Liberties v. Union
of India, [2003) 4 SCC 399 and Sharda v. Dharmpal, [20031 4 SCC 4931,
relied on.
D
Griswold v. Connecticut, (1965) 381 US 479, Jane Roe v. Henry Wade,
(1973) 410 US 113 and Olmsteadv. United States, (1927) 277 US 438 (471),
referred to.
'Privacy, Banking Records and Supreme Court: A Before and Afterlook
at Miller' by Richard Alexander published in South West University Law
E Review(1978) Vol.to (pp.13-33), referred to.
United States v. Miller, (1976) 425 US 435, referred to.
'Search and Seizure' by Polyviou G. Polyviou (Duckworth, 1982),
'Search and Seizure' (1978) by La F ave, 'Comparative Constitutions law'
F by Profs. Jackson and Tushnet (20011, 'Note, Government Access to Bank
Records' (19741 83 Yale Law Journal 1439 and 'A Bank customer has no
reasonable expectation of Privacy of Bank Records', referred to.
1-
.~
\-
t.4. The amendment permits inspection being carried out by the
G
Collector by having access to the documents which are· in private custody i.e.
custody other than that of a public officer. It is clear that this provision
empowers invasion of the home of the person in whose possession the
documents 'tending' to or leading to the various facts stated in sec. 73 are in
existence and sec. 73 being one without any safeguards as to probable or
reasonable cause or reasonable basis or materials violates the right to privacy
H both of the house and of the person. The right to personal liberty also means
DISTT. REGISTRAR & COLLECTOR v. CANARA BANK
837
the life free from encroachments unsustainable in law and such right flowing A
from Article 21 of the Constitution. Any law interfering with personal liberty
of a person must satisfy a triple test: (i) it must prescribe a procedure; (ii)
the procedure must withstand the test of one or more of the fundamental rights
conferred under Article 19 which may be applicable in a given situation; and
(iii) it must also be liable to be tested with reference to Article 14. As the test B
propounded by Article 14 pervades Article 21 as well, the law and procedure
authorizing interference with personal liberty and right of privacy must also
be right and just and fair and not arbitrary, fanciful or oppressive. If the
procedure prescribed does not satisfy the reqμirement of Article 14 it would
be no procedure at all within the meaning of Article 21. [863-E-F; 864-A-C)
Smt. Maneka Gandhi v. Union of India and Anr., [1978} 1 SCC 248,
relied on.
R. Rajagopal v. State of Tamil Nadu, [199416SCC632, referred to.
c
1.5. The Unbridled power available to be exercised by any person whom D
the Col_lector may think proper to authorize without laying down any
guidelines as to the persons who may be authorized and without recording
the availability of grounds which would give rise to the belief, on the existence
where of only, the power may be exercised deprives the provision of the quality
of reasonableness. Possessing a document not duly stamped is not by itself
any offence. Under the garb of the power conferred by Section 73 the person E
authorized may go on rampage searching house after i.e. residences of the
persons or the places used for the custody of documents. The possibility of
any wild exercise of such power may be remote but then on the framing of
Section 73, the provision impugned, the possibility cannot be ruled out. The
exercise may prove to be absolutely disproportionate with the purpose sought p
to be achieved and, therefore, a reasonable nexus between stringency of the
provision and the purpose sought to be achieved ceases to exist.
[864-F-H; 865-A-B)
Air India v. Nergesh Meerza and Ors., [198114 SCC 335, relied upon.
1.6. Section 73 of the Indian Stamp Act as amended in its application to
the State of Andhra Pradesh by Andhra Pradesh Act No. 17of1986, therefore,
is ultra vires the Constitution. (865-C)
G
2.1. Stamp Act is a piece of fiscal legislation. Remedial statutes and
statutes which have come to be enacted on demand of the permanent public H
838
SUPREME COURT REPORTS [2004] SUPP. 5 S.C.R.
A policy generally receive a liberal interpretation. However, fiscal statutes cannot
be classed as such, operating as they do to impose burdens upon the public
and are, therefore, construed strictly. A few principles are well settled while
interpreting a fiscal law. There is no scope for equity or judiciousness ifthe
letter of law is clear and unambiguous. The benefit of any ambiguity or conflict
in different provisions of statute shall go for the subject. (845-A-CJ
B
Dowlatram Harji and Anr. v. Vitho Radhoti and Anr., (1881) 5 ILR (Born.)
188 and Surajmull Nagoremull v. Triton Insurance Co. Ltd., AIR (1925) PC
83, relied on.
C
CIVIL APPELLATE JURISDICTION : Civil Appeal Nos. 6350-6374 of
1997.
From the Judgment and Order dated 27.9.96 of the Andhra Pradesh High
Court in W.P. Nos. 10300/89, 14320, 14924, 15456, 16595, 17724, 4948, 5330,
5373/88, 366, 4475, 13347/89, 1157/91, 16733, 18632/93, 21872, 29007, 29052/95,
D 1670, 3165, 3242, 6370, 6533, 6782, 6783of1996.
WITH
C.A. No. 7079 of2004.
E
Mrs. K. Amareswari, T.V. Ratnam, K. Subba Rao, O.S.G. Prasuna, K.Ram
F
Kumar, Pradeep Dewan, Dr. Manmohan Sharma, Pramod B. Agrawala, Ms.
Pravina Gautam, Ms. Anupam Dhingra, S. Srinivasan, A. Ranganadhan, Buddy
Ranganadhan, A.V. Rangam, P.P. Singh, S.N. Bhat, Y. Prabhakara Rao, Y. Raja
Gopala Rao, V. Sudeer, M.B. Rama Subba Raju, Balaji Srinivasan, Ms. S.
Sunita, Devendra Singh and Ghan Shyam with her for the Appearing Parties.
The Judgment of the Court was delivered by
R.C. LAHOTI, CJ. Leave granted in SLP (C) No. 11607/2001.
Section 73 of the Indian Stamp Act, 1899 as incorporated by Andhra
G Pradesh Act No. 17 of 1986, by amending the Central Act in its application
to the State, has been struck down by the High Court of Andhra Pradesh as
ultra vires the provisions of the Indian Stamp Act as also of Article 14 of
the Constitution. The District Registrar and Collector, Registration and Stamps
Department, Hyderabad and the Assistant Registrar have come up in appeal
H by special leave.
DISTT. REGISTRAR & COLLECTOR v. CANARA BANK [LAHOTI, CJ.]
839
Relevant Statutory Provisions under the Central Act :
Section 73 of the Indian Stamp Act (before the insertion of the text
under the impugned State Legislation in its applicability to the State of
Andhra Pradesh) reads as under:-"
A
"73. Every public officer having in his custody any registers, B
books, records, papers, documents or proceedings, the inspection
whereof may tend to secure any duty, or to prove or lead to the
discovery of any fraud or omission in relation to any duty, shall at all
reasonable times permit any person authorized in writing ~y the
Collector to inspect for such purpose the registers, books, papers, C
documents and proceedings, and to take such notes and extracts as
he may deem necessary, without fee or charge."
The term 'public officer' is not defined in Section 73 nor in the interpretation
clause. However, the term 'public office' is found to have been used in
Section 33. Sub-Section (3) of Section 33 provides as under:-"
D
"33. (3) For the purposes of this section, in cases of doubt -
(a) the State Government may determine what offices shall be
dP.emed to be public offices; and
(b) the State Government m1y determine who shall be deemed to
be persons in charge of public offices."
E
The term 'public officer having in his custody any registers etc.' as
occurring in Section 73 can be defined by having regard to the expression
'public office' as occurring in Section 33. The central legislation including F
Section 73 took care to see that the power to inspect was confined only to
documents in the custody of public officer which documents would necessarily
be either public documents or public record of private documents. The purpose
of inspection is clearly defined. It is permissible to have inspection carried out
only in these circumstances:- (i) when it may tend to secure any duty, or (ii)
when it may tend to prove any fraud or omission in relation to any duty, and G
(iii) when it may tend to lead to the discovery of any fraud or omission in
relation any duty.
The State Amendments (1986)
The A.P. Act No.17 of 1986 has amended the Indian Stamp Act, 1899 H
840
SUPREME COURT REPORTS [2004] SUPP. 5 S.C.R.
A in its application to the State of Andhra Pradesh. The Act was reseryed by
the Government of A.P. on 24th April, 1986 for the consideration and assent
of the President and received such assent on 17th July, 1986 which was
published in the Andhra Pradesh gazette for general information on 22nd July,
1986. Out of the several amendmel)ts made by the A.P. Act 17of1986, the
relevant one for our purpose is Section 73 as substituted in place of the
B original Section 73 of the Indian Stamp Act by Section 6 of A.P. Act No.17
of 1986. The same is reproduced hereunder:-
c
D
E
F
G
H
6. For section 73, of the principal Act, the following section shall
be substituted, namely:-
73 (1) Every public officer or any person having in his custody
any registers, books, records, papers, documents or proceedings, the
inspection whereof may attend to secure any duty, or to prove or lead
to the discovery of any fraud or omission in relation to any duty, shall
at all reasonable times permit any person authorized in writing by the
Collector to enter upon any premises and to inspect fer such purposes
the registers, books, records, papers, documents and proceedings,
and to take such notes and extracts as he may deem necessary,
without fee or charge and if necessary to seize them and impound the
same under proper acknowledgement:
Provided that such seizure of any registers, books, records, papers,
documents or other proceedings, in the custody of any Bank be made
only after a notice of thirty days to make good the deficit stamp duty
is given.
Explanation :-For the purposes of this proviso 'bank' means a
banking company as defined in section 5 of the Banking Regulation
Act, 1949 and includes the State Bank of India, constituted by the
State Bank of India Act, 1955 a subsidiary bank as defined in the State
Bank of India (Subsidiary Banks) Act, 1959, a corresponding new
bank as defined in the Banking Companies (Acquisition and Transfer
of Undertaking) Act, 1970 and in the Banking Companies (Acquisition
and Transfer of Undertakings) Act, 1980, a Regional Rural Bank
established under the Regional Rural Banks Act, 1976, the Industrial
Development Bank of India established under the Industrial
Development Bank of India Act, 1964, National Bank for Agriculture
and Rural Development established under the National Bank for
.-
DISTT. REGISTRAR & COLLECTOR v. CANARA BANK [LAHOTI, CJ.]
84}
Agriculture and Rural Development Act, 1981, the Life Insurance A
Corporation oflndia established under the Life Insurance Corporation
Act, 1956, The Industrial Finance Corporation of India established
under the Industrial Finance Corporation Act, 1948, and such other
financial or banking institution owned, controlled or managed by a
State Government or the Central Government, as may be notified in
this behalf by the Government.
B
(2) Every person having in his custody or maint<.ining such
registers, books, records, papers, documents or proceedings shall,
when so required by the officer authorized under sub-section ( l ),
produce them before such officer and at all reasonable times permit C
such officer to inspect them and take such notes and extracts as he
may deem necessary.
(3) If, upon such inspection, the person so authorized is of opinion
that any instrument is chargeable with duty and is not duly stamped,
he shall require the payment of the proper duty or the amount required D
to make up the same from the person liable to pay the stamp duty;
and in case of default the amount of the duty shall be recovered as
an arrear of land revenue.
The Statement of Objects ana Reasons states that the Government have
been considering for quite some time the question of plugging the loopholes E
in the Indian Stamp Act, 1899 in its application to this State so as to arrest
the leakage of stamp revenue and also to augment the stamp revenu'! in the
State. The State of Andhra Pradesh in doing so was inspired by the amendments
made in the State of Kamataka. As to Section 73 the SOR states "As per
Section 73 of the said Act, the Collector or any person authorized by him shall F
inspect any public office and the public officer having in his custody any
registers, books, records etc., shall pennit him to take copies of extracts of
those records. However, the inspecting officer cannot seize the deficitly
stamped documents and impound the same during inspection. On account of
this loophole, the inspecting officers are not able to seize and impound the
deficitly stamped documents and collect the deficit stamp revenue. It has G
therefore been decided to empower the Inspecting Officers to enter any
premises and seize the documents and impound them."
[For a detailed Statement of Objects and Reasons see The Andhra
Pradesh Gazette Extraordinary Part IV-A dated March 20, 1986 pp. 9 11.]
H
842
SUPREME COURT REPORTS [2004] SUPP. 5 S.C.R.
A The A.P. S(ate Rules (1986)
In exercise of the powers conferred by Section 7 5 of the Indian Stamp
Act, 1899 and of all other powers hereunto enabling and in supersession of
the earlier rules the Governor of Andhra Pradesh framed rules for the collection
of duties secur~d in the course of inspection under Section 73 of the Indian
B Stamp (Andhra Pradesh Amendment) Act, 1986 which rules came into force
on the 16th day of August, 1986. The relevant part of the rules is extracted
and reproduced hereunder:
c
D
E
F
l. In these rules unless the context otherwise requires:-
(a) 'Act' means, the Indian Stamp (A.P. Amendment) Act, 1986.
· (b) "Inspector-General of Registration and Stamps" includes the
person authorized in writing by him as the Collector appointed under
section 73 of the Act to exercise the powers under that Section.
(c) 'Head of Office' means, the head of the Office inspected by
the Inspector General of Registration and Stamps under section 73.
(d) 'Section' means a section of the Act.
(e) 'Any premises' includes any public office or any place where
registers, books, documents etc., are kept under the custody of a
person the inspection whereof may tend to secure any duty.
2. (l) The notes of inspection under section 73 shall be sent to
the Head of office with a copy to the Head of the District office, if
the office inspected is subordinate to him, or with a copy to the Head
of the Department concerned, if the office inspected is the District or
Regional Office.
(2) The first reports of compliance shall be sent to the Inspector
General of Registration and Stamps, immediately on receipt of the
G
notes of inspection by the Head of Office, with a copy to the Head
of the District Office concerned, if the office inspected is subordinate
to him or with a copy to the Head of the Department, if the office
inspected is a District or Regional Office.
3. When deficitly stamped documents are detected during the
H
course of inspection the following procedure shall be followed:-
DISTT. REGISTRAR & COLLECTOR v. CANARA BANK [LAHOTI, CJ.]
84 3
(i) The Inspector General of Registration and Stamps or the person A
authorized by him shall seize and impound such documents and after
giving an opportunity to the parties levy deficit duties if any, without
penalty and collect the same from the persons liable to pay under subsection (3) of the section 73 and add the following certificate on the
original document:-
xxx
xxx
(iI) If the parties fail to pay the deficit duty under sub-rule (i), it
shall be collected by the head of office. The amounts so collected
shall be remitted to the Treasury under the following head of account
by means of a challan.
xxx
xxx
B
c
(iii) If the parties failed to pay such deficit duties, the Inspector
General of Registration and Stamps shall forward the original·document
to the Collector exercising powers under section 48 of the Indian D
Stamp Act, 1899 over the area for effe~ting recovery by coercive
process. After the amounts are so collected, the procedure laid down
in sub-rule (i) shall be followed.
(iv) In the absence of original documents, and on the basis of E
copies of such documents, if they are found to be not duly stamped,
the procedure for collection of the duty as laid down in rule (iii) shall
be followed.
4. If the parties are aggrieved by the levy of duties they may
apply to the Inspector General of Registration and Stamps for revision p
before the certificate prescribed under rule 3 is added.
5.
X\X
xxx
xxx
6.
X\X
xxx
xxx
[For full text of Rules see Andhra Pradesh Gazette, Rules supplement to Part- G
II Extraordinary dated August 14, 1986 pp. 4-77.]
The Challenge
There were 25 writ petitions filed in the High Court. Out of these, I \ H
844
SUPREME COURT REPORTS [2004) SUPP. 5 S.C.R.
A were by different banks. A few writ petitions were filed by institutions,
corporate or incorporate bodies and a few were filed by sugar companies. The
grievances arose because the documents executed between private parties
and received and retained in the custody of the bank in ordinary course of
their loan advancing transactions were inspected and then the banks were
served with a request to remit the amount of deficit duty on the documents
B inspected and to recover the same from the parties concerned. The grievance
of the sugar companies is that in the course of their business they were
entering into agreements with the sugarcane growers selling sugarcane to the
sugar companies in compliance with the provisions of A.P. Sugarcane Control
Order, 1965 in the proforma prescribed by Control Order. Several agreements
C entered into in the prescribed proforma were treated as unstamped (though
they were not liable to be stamped, in the submission of sugar companies)
and therefore were sought to be impounded. The grievance of private persons
is that the documents in their possession are sought to be inspected,
impounded and levied with duty though they were not tendered in evidence
nor produced before any public office.
D
A perusal of the judgment of the High Court shows that in holding the .
impugned Section 73 of the Act ultra vires of the Constitution and other
provisions of the Indian Stamp Act, the High Court has arrived at four
findings: firstly, that the amended Section 73 is inconsistent with the other
E provisions of the Act; secondly, that the provision is violative of the principles
of natural justice; thirdly, the provision is arbitrary and unreasonable and
hence violative of Article 14 of the Constitution; and fourthly, there are no
guidelines provided for the exercise of power by the authorized persons under
the amended Section 73 which is either arbitrary and unreasonable or vitiated
on account of excessive delegation of statutory powers.
F
During the course of hearing Mrs. K. Amareswari, the learned senior
counsel for the appellants has vehemently attacked the correctness of the
impugned judgment submitting that the A.P. Amendments are directed towards
safeguarding the revenue of the State and striking at the evil of stamp duty
evasion, and therefore the validity of such reasonable legislation was not
G liable to be questioned as unconstitutional. On the other hand, the learned
counsel appearing for the respondents have defended the judgment of the
High Court by reiterating the same grounds of attack on the constitutional
validity of the impugned amendment as were urged in the High Court; of
course enlarging the reach of submissions by developing the dimensions
H thereof. We will deal with the submissions so made before us.
DISIT. REGISTRAR & COLLECTOR v. CANARA BANK [LAHOTI, Cl]
845
Nature of stamp legislation
A
Stamp Act is a piece of fiscal legislation. Remedial statutes and statutes
which have come to be enacted on demand of the pennanent public policy
generally receive a liberal interpretation. However, fiscal statutes cannot be
classed as such, operating as they do to impose burdens upon the public and
are, therefore, construed strictly. A few principles are well settled while B
interpreting a fiscal law. There is no scope for equity or judiciousness if the
letter of law is clear and unambiguous. The benefit of any ambiguity or
conflict in different provisions of statute shall go for the subject.
In
Dowlatram Harji and Anr. v. Vitho Radhoti and Anr., (1881) 5 ILR (Born) 188,
the Full Bench indicated the need for balancing the harshness which would C
be inflicted on the subjects by implementation of the Stamp Law as against
the advantage which would result in the form of revenue to the State; the
latter may not be able to compensate the discontent which would be occasioned
amongst the subjects.
The legislative competence of the State of Andhra Pradesh to amend D
and mQdify the Indian Stamp Act, a Central legislation, in its applicability to
the State of Andhra Pradesh, has not been questioned and rightly so in view
of the State enactment having been reserved for the consideration of the
President and having received his assent under Article 254(2) of the
Constitution. The attack is on the ground of unreasonableness, inconsistency E
and excessive delegation of powers and also on account of drastic powers
having been conferred on executive authorities without laying down guidelines.
The provisions of Section 29 providing for the persons by whom duties
are payable have been left untouched. So is with Section 31 dealing with
'adjudication as to proper stamp' which confers power on the Collector to F
adjudicate upon the duty with which a document shall be chargeable, though
such document may or may not have been executed. The scheme of Section
31 involves an element of voluntariness. The person seeking adjudication
must have brought the document to Collector and also applied for such
adjudication. The document cannot be compdled to be brought before him G
by the Collector. Section 33 confers power of impounding a document not
duly stamped subject to the document being produced before an authority
competent to receive evidence or a person incharge of a public office. It is
necessary that the document must have been produced or come before such
authority or person incharge in performance of its functions. The document
shoμld'have been voluntarily produced. At the same time, Section 36 imposes H
846
SUPREME COURT REPORTS [2004] SUPP. 5 S.C.R.
A an embargo on the power to impound, vesting in the authority competent to
receive evidence, by providing that it cannot question the admission of
document in evidence once it has been admitted. None of these provisions
have been amended by the State of Andhra Pradesh.
In Surajmull Nagoremull v. Triton Insurance Co. Ltd, AIR (1925) PC
B 83, their Lordships of the Privy Council made it clear that the provisions of
the Stamp Act cannot be· held to have been framed solely for the protection
of revenue and for the purpose of being enforced solely at the instance of
the revenue officials.
C
Power to impound a document and to recover duty with or without
penalty thereon has to be construed strictly and would be sustained only
when falling within the four corners and letter of the law. This has been the
consistent view of the Courts. Illustratively, three decisions may be referred.
In Mussammat Jai Devi v. Gokal Chand, (1906) 7 PLR 428, a document not
duly stamped was produced in the Court by the plaintiff alongwith the plaint
D but the suit came to be dismissed for non-prosecution. It was held by the Full
Bench that the document annexed with the plaint cannot be said to have been
produced in the Court in evidence and the court had no jurisdiction to call
for the same and impound it. In Munshi Ram v. Harnam Singh, AIR (I 934)
Lahore 637(1), the suit was compromised on the date of first hearing and
E decree was passed based on the compromise. The original entry in a bahi was
not put in evidence and, therefore, the Special Bench held it was not liable
to be- impounded. In L. Puran Chand, Proprietor, Dalhousie Dairy Farm v.
Emperor, AIR (1942) Lahore 257, the power to impound was sought to be
exercised after the decision in the suit and when the document alleged to be
not duly stamped had already been directed to be returned as not proved
F though it . was not physically returned. The Special Bench held that the
document was not available for being impounded.
Though an instrument not duly stamped may attract criminal prosecution
under Section 62 of the Act but the Parliament and the Legislature have both
G treated it to be a minor offence punishable with fine only and not cognizable.
Here again it is well settled that such offence is liable to be condoned by
payment of duty and penalty on the document and no prosecution can be
launched except in the case of a criminal intention to evade the Stamp Law
or in case of a fraud and that too after giving the person liable to be
proceeded against, an opportunity of being heard.
H
DISTT. REGISTRAR & COLLECTOR v. CANARA BANK [LAHOTI, CJ.]
84 7
A bare reading of Section 73 as substituted by A.P. Act No.17 of 1986 A
indicates the infirmities with which the provision suffers. The provision
empowers any person authorized in writing by the Collector to have access
to documents in private custody or custody of a public officer without regard
to the fact whether the documents are sought to be used before any authority
competent to receive evidence and without regard to the fact whether such
document would ever be voluntarily produced or brought before a public B
officer during the performance of any of his specified functions in his capacity
as such. The power is capable of being exercised by such persons at all
reasonable times and it is not preceded by any requirement of the reasons
being recorded by the Collector or the person authorized for his belief
necessitating search. The person authorized has been vested with authority C
to impound the document. It is only in case of documents in custody of any
bank that an exception has been carved out for giving a 30 days previous
notice to the bank to make good the deficit stamp duty before seizing and
impounding the document. Not only there is no valid reason-none pointed
out either in the pleadings nor at the hearing-for drawing the distinction
between a bank and other public office or any person having custody of D
document. Even in the case of a bank, the power to adjudicate upon the need
for impounding the document has been vested in the person authorized. The
provision does not lay down any guidelines for determining the person who
can be authorized by the Collector to exercise the powers conferred by
Section 73.
It is submitted on behalf of the respondents (writ petitioners in the High
Court) that impugned Section 73 (as applicable in Andhra Pradesh) interferes
with the personal liberty of citizens inasmuch as it allows an intrusion into
the privacy and property of the citizens. The instruments may have been kept
E
in the residential accommodation of a person or may have been kept at a place F
belonging to the person and meant for the custody of the documents and
both such places can be entered into by any person authorized in writing by
the Collector. It was submitted that the provision is unreasonable and cannot
be sustained on the constitutional anvil.
Right of privacy qua search and seizure - debate in other countries.
G
The right to privacy and the power of the State to 'search and seize'
have been the subject of debate in almost every democratic country where
fundamental freedoms are guaranteed. History takes us back to Semayne 's
case decided in 1603-(5 Coke's Rep. 91a) (77 Eng. Rep. 194) (KB) where it H
848
SUPREME COURT REPORTS [2004] SUPP. 5 S.C.R.
A was laid down that 'Every man's house is his castle'. One of the most forceful
expressions of the above maxim was that of William Pitt in the British Parliament
in 1763. He said: "The poorest man may in his cottage bid defiance to all the
force of th.;: Crown. It may be frail-its roof may shake-the wind may blow
through it-the storm may enter, the rain may enter-but the King of England
cannot enter-all his force dare not cross the threshold of the ruined
B tenement".
When John Wilkes attacked not only governmental policies but the
King himself pursuant to general warrants, State officers raided many homes
and other places connected with John Wilkes to locate his ·controversial
C pamphlets. Entick, an associate of Wilkes, sued the State officers because
agents had forcibly broken into his house, broke locked desks and boxes, and
seized many printed charts, pamphlets and the like. In a landmark judgment
in Entick v. Carrington: (1765) (19 Howells' State Trials 1029) (95 Eng Rep
807), Lord Camden declared the warrant and the behaviour as subversive 'of
all the comforts of society' and the issuance of a warrant for the seizure of
D all of a person's papers and not those only alleged to be criminal in nature
was 'contrary to the genius of the law of England'. Besides its general
character, the warrant was, according to the Court, bad inasmuch as it was
not issued on a showing of probable cause and no record was required to
be made of what had been seized. In USA, in Boyd v. United States, (1886)
E 116 US 616 (626), the US Supreme Court said that the great Entick judgment
was 'one of the landmarks of English liberty .... one of the permanent monuments
of the British Constitution'.
The Fourth Amendment in the US Constitution was drafted after a long
debate on the English experience and secured freedom from unreasonable
F
searches and seizures. It said:
"The right of the people to be secure in their person, houses,
papers, and effects, against unreasonable searches and seizures, shall
not be violated and no Warrants shall issue, but upon probable
cause, supported by oath or affirmation, and particularly describing
G
the place to be searched, and the persons or things to be seized."
Art. 12 of the Universal Declaration of Human Rights ( 1948) rt:fers to privacy
and it states:
"No one shall be subjected to arbitrary interference with his privacy,
H
family, home or correspondence nor to attacks upon his honour and
"·
DISTT. REGISTRAR & COLLECTOR v. CANARA BANK [LAHOTI, CJ.]
849
reputation. Everyone has the right to the protection of the law against A
such interference or attacks."
Art. 17 of the International Covenant of Civil and Political Rights (to which
India is a party), refers to privacy and states that:
"No one shall be subjected to arbitrary or unlawful interference with B
his privacy, family, home and correspondence, nor to unlawful attacks
on his honour and reputation."
The European Convention on Human Rights, which came into effect on
Sept. 3, 1953, also states in Art. 8:
"l. Everyone has the right to respect for his private and family life,
his home and his correspondence.
c
2. There shall be no interference by a public authority except such
as is in accordance with law and is necessary in a democratic society
in the interests of national security, public safety or the economic D
well-being of the country, for the protection of health or morals or for
the protection of the rights and freedoms of others."
The Canadian Charter of Rights and Freedoms declares: 'Everyone has
the right to be secure against unreasonable search and seizure.'
The New Zealand Bill of Rights declares in sec. 21 that "everyone has
the right to be secure against unreasonable search or seizure, whether of the
person, property or correspondence or otherwise".
E
Though the US Constitution contains a specific provision in the Fourth F
Amendment against 'unreasonable search and seizure', it does not contain
any express provision protecting the 'right to privacy'. However, the US
Supreme Court has culled out the 'right of privacy' from the other rights
guaranteed in the US Constitution. In India, our Constitution does not contain
a specific provision either as to 'privacy' or even as to 'unreasonable' search
and seizure, but the right to privacy has, as we shall presently show, been G
spelt out by our Supreme Court from the provisions of Arts. 19(1 )(a) dealing
with freedom of speech and expression, Art. 19( I)( d) dealing with right to
freedom of movement and from Art. 21 which deals with right to life and
liberty. We shall first refer to the case law in US relating to the development
of the right of privacy as these cases have been adverted to in the decisions H
850
SUPREME COURT REPORTS [2004] SUPP. 5 S.C.R.
A of this Court.
Privacy right in US initially concerned 'property':
The American Courts trace the 'right to privacy' to the English common
law which treated it as a right associated with 'right to property'. It was
B declared in Entick v. Carrington, (l 765) that the right of privacy protected
trespass against property.