TRUSTEES OF H.C. DHANDA TRUSTversusSTATE OF MADHYA PRADESH & ORS.

268                      [2020]REPORTS
               SUPREME COURT   11 S.C.R. 268              [2020] 11 S.C.R.


A                  TRUSTEES OF H.C. DHANDA TRUST
                                        v.
                  STATE OF MADHYA PRADESH & ORS.
                     (Civil Appeal Nos. 3195-3196 of 2020)
B                            SEPTEMBER 17, 2020
            [ASHOK BHUSHAN, R. SUBHASH REDDY AND
                       M. R. SHAH, JJ.]
             Stamp Act, 1899: s.40(1)(b) – Imposition of maximum penalty
      when instrument not duly stamped – Propriety of – In the instant
C
      case, a resolution was passed by the Executors/Trustees of the
      appellant-Trust to transfer and vest immovable properties to the
      beneficiaries by executing a Deed of Transfer – However,
      subsequently a Deed of Assent was executed between them on
      payment of stamp duty of Rs.200 whereunder the Trustees gave
D     assent to complete title of the Legatees and vest absolutely in favour
      of beneficiaries – Collector of Stamps held the Deed of Assent as
      Gift Deed and demanded deficit duty to the extent of Rs.1.28 lakhs
      and also imposed ten times penalty – Board of Revenue upheld the
      order of Collector – Aggrieved appellant-Trust filed writ petition
      which was also dismissed – In the instant case, the issue is whether
E
      the ten times penalty was validly imposed by the Collector of Stamps
      under s.40 – Held: The statutory scheme of s.40(1)(b) vest discretion
      to the Collector to impose the penalty amount not exceeding ten
      times – When statute transfers discretion to an authority, the
      discretion is to be exercised in furtherance of objects of the
F     enactment – Imposition of penalty of ten times under s.40(1)(b) is
      neither automatic nor can it be mechanically imposed – Imposition
      of such extreme penalty cannot be based on the mere factum of
      evasion of duty – The Collector while imposing ten times penalty in
      his order gave reason that the party had not mentioned the actual
      nature of the document with the intention to escape the duty – No
G
      other reason was given either by the Collector or by the High Court
      justifying the imposition of maximum penalty of ten times – It was
      not the case of Collector that the conduct of the appellant was
      dishonest or contumacious – High Court noticed that although the
      resolution was passed to execute the Deed of Transfer by Trustees
H     but later on they deliberately executed the deed in the name of Deed
                                        268
TRUSTEES OF H.C. DHANDA TRUST v. STATE OF MADHYA                          269
                  PRADESH & ORS.

of Assent on a stamp paper of Rs.200/- - Thus, for the reason given       A
by the Collector as well as by the High Court that there was intention
to evade the stamp duty in describing the document as Deed of
Assent, the imposition of the penalty was called for, but in the facts
and circumstances and the reasons given by the Collector, it was
not a case of imposition of extreme penalty of ten times of deficiency
                                                                          B
of stamp duty – In the ends of justice, penalty reduced to the extent
of half i.e. five times of deficiency in the stamp duty.
      Penalty: Imposition of, by public authority – Held: The purpose
of penalty generally is a deterrence and not retribution – When
discretion is given to a public authority, such public authority should
exercise such discretion reasonably and not in oppressive manner          C
– The responsibility to exercise discretion in reasonable manner
lies more in cases where discretion vested by the statute is unfettered
– Stamp Act, 1899 – s.40(1)(b).
      Partly allowing the appeals, the Court
                                                                          D
      HELD: 1.1 Section 40 of Indian Stamp Act, 1899 provides
for Collectors power to stamp instruments impounded. According
to Section 40(1)(b), if the Collector is of opinion that such
instrument is chargeable with duty and is not duly stamped, he
shall require the payment of the proper duty or the amount
required to make up the same, together with a penalty of the five         E
rupees; or, if he thinks fit, an amount not exceeding ten times
the amount of the proper duty or of the deficient portion thereof.
The statutory scheme of Section 40(1)(b) indicates that when the
Collector is satisfied that instrument is not duly stamped, he shall
require the payment of proper duty together with a penalty of the         F
five rupees. The relevant part of Section 40(1)(b) which falls for
consideration in these appeals is: “or, if he thinks fit, an amount
not exceeding ten times the amount of the proper duty or deficient
portion thereof.” [Paras 15, 16][275-F-G; 276-D-F]
      1.2 The expression “an amount not exceeding ten times”              G
is preceded by expression “if he thinks fit”. The statutory
scheme, thus, vest the discretion to the Collector to impose the
penalty amount not exceeding ten times. Whenever statute
transfers discretion to an authority the discretion is to be
exercised in furtherance of objects of the enactment. The
                                                                          H
270            SUPREME COURT REPORTS                      [2020] 11 S.C.R.


A     discretion is to be exercised not on whims or fancies rather the
      discretion is to be exercised on rational basis in a fair manner.
      The amount of penalty not exceeding ten times is not an amount
      to be imposed as a matter of force. Neither imposition of penalty
      of ten times under Section 40(1) (b) is automatic nor can be
      mechanically imposed. [Para 17][276-G; 277-A]
B
             1.3 Section 35 contemplates that when ten times the amount
      of the proper duty of or deficient portion thereof exceeds five
      rupees, of a sum equal to ten times such duty or portion is
      required to be deposited. Under Section 39, Collector is
      empowered to refund penalty. Under Section 35(a) there is no
C     option except to pay sum equal to ten times of such duty or
      deficient portion but Section 39 empowers the Collector to refund
      any portion of the penalty in excess of five rupees which is
      expressed in following words: “if he thinks fit refund any portion
      of the penalty in excess of five rupees which has been paid in
D     respect of such instrument.” The legislative intent which is clear
      from reading of Sections 33, 35, 38 and 39 indicates that with
      respect to the instrument not duly stamped, ten times penalty is
      not always retained and power can be exercised under Section
      39 to reduce penalty in regard to that there is a statutory discretion
      in Collector to refund penalty. [Paras 18, 19][277-E-F, G]
E
            Gangtappa and another vs. Fakkirappa (2019) 3 SCC
            788 : [2018] 13 SCR 603 – referred to.
            2.1 The purpose of penalty generally is a deterrence and
      not retribution. When a discretion is given to a public authority,
F     such public authority should exercise such discretion reasonably
      and not in oppressive manner. The responsibility to exercise the
      discretion in reasonable manner lies more in cases where
      discretion vested by the statute is unfettered. Imposition of the
      extreme penalty i.e. ten times of the duty or deficient portion
      thereof cannot be based on the mere factum of evasion of duty.
G     The reason such as fraud or deceit in order to deprive the
      Revenue or undue enrichment are relevant factors to arrive at a




H
 TRUSTEES OF H.C. DHANDA TRUST v. STATE OF MADHYA                           271
                   PRADESH & ORS.

decision as to what should be the extent of penalty under Section           A
40 (1) (b). [Para 21][278-G-H; 279-A]
      Peteti Subba Rao vs. Anumala S. Narendra (2002) 10
      SCC 427 – relied on.
       2.2 The Collector by imposing ten times penalty in his order
has given the reason for imposition as “the party has not                   B
mentioned the actual nature of the document with the intention
to escape the duty”. When the Collector found intention to escape
the duty, it was the case of imposition of penalty but whether the
reason given by the Collector is sufficient for imposition of
extreme penalty of ten times is the question which needs to be              C
further considered. No other reasons have been given either by
the Collector or by the High Court justifying the imposition of
maximum penalty of ten times. It is not the case of Collector that
the conduct of the appellant was dishonest or contumacious.
Taking into consideration all facts and circumstances of the case,
in the ends of justice, the penalty imposed is reduced to the extent        D
of the half i.e. five times of deficiency in the stamp duty. [Paras
24, 25, 26][279-F-G; 280-B-E]
                        Case Law Reference
[2018] 13 SCR 603                referred to            Para 20             E
(2002) 10 SCC 427                relied on              Para 22
      CIVIL APPELLATE JURISDICTION: Civil Appeal No. 3195-
3196 of 2020.
      From the Judgment and Order dated 04.09.2017 passed by the
                                                                            F
Division Bench of the High Court of Madhya Pradesh, Bench at Indore
in Writ Appeal No. 265 of 2017 and the Judgment and Order dated
30.03.2017 passed by Single Judge of the High Court of Madhya Pradesh,
Bench at Indore in Writ Petition No. 8888 of 2011.
      Purushaindra Kaurav, AG, Tushar Mehta, SG, Saurabh Mishra,
AAG, A.K. Chitale, Kapil Sibal, Veer Kumar Jain, Sr. Advs., Niraj Sharma,   G
Puneet Jain, Harsh Jain, Harshit Khanduja, Ms. Christi Jain, Arjun Garg,
Ms. Rati Tandon, Aakash Nandolia, Vikas Mahajan, Vinod Sharma, Anil
Kumar, Aakash Varma, Rishi Tiwari, Zubair Waris, Advs. for the
appearing parties.
                                                                            H
272            SUPREME COURT REPORTS                         [2020] 11 S.C.R.


A           The Judgment of the Court was delivered by
            ASHOK BHUSHAN, J.
            1. Leave granted.
              2. The appellant by these appeals challenges the judgment of
B     learned Single Judge of the High Court of Madhya Pradesh, Bench at
      Indore in Writ Petition No.8888 of 2011 dated 30.03.2017 dismissing the
      Writ Petition of the appellant as well as the judgment dated 04.09.2017
      of the Division Bench dismissing the Writ Appeal filed by the appellant
      against the judgment of the learned Single Judge. The Division Bench
      has dismissed the writ appeal vide its judgment dated 04.09.2017 holding
C     it as not maintainable.
            3. Brief facts of the case giving rise to these appeals are:
             Late Shri Harish Chand Dhanda, a Minister in erstwhile
      Government of Maharaja Holkar of Indore received the free gift of land
D     measuring 108,900 sq.ft. (one lac eight thousand nine hundred) situate
      at Yeshwant Niwas Road, Indore by Order No.58 of 22.04.1946. Late
      Shri H.C. Dhanda got constructed in the above piece of land, a building
      known as ‘Hotel Lantern’. Another piece of land situate at 5, Ravindra
      Nath Tagore Marg, Indore was gifted to Late Shri H.C. Dhanda by his
      father-in-law late Col. V.B. Jadhav on 05.10.1948. Late Shri H.C. Dhanda
E     possessed various other movable and immovable properties in the city
      of Indore with which we are not concerned in the present appeals. Late
      Shri H.C. Dhanda executed his last Will dated 26.10.2002. In his Will he
      mentioned his movable and immovable properties apart from the above
      two immovable properties and by his Will he created a Trust in which he
F     appointed his son, Yogesh Dhanda as Chairman of Trust, Shri B.J. Dave,
      Chartered Accountant, Indore and one Shri Chhaganlal Nagar as member.
      The above two immovable properties apart from other properties were
      put in Trust under the aforesaid Will. All Trustees under the Will were
      the executors of the Will. Shri H.C. Dhanda died on 05.07.2003.
            4. A meeting of Board of Trustees was held on 06.04.2005. A
G
      resolution was passed by Executors/Trustees to transfer and vest area
      by executing a Deed of Transfer with a site plan from the trustees to
      beneficiaries by registering the same. On 21.04.2005 a Deed of Assent
      was executed between M/s H.C. Dhanda Trust, a private trust as one
      part and Jogesh Dhanda and others as other part. By Deed of Assent
H
 TRUSTEES OF H.C. DHANDA TRUST v. STATE OF MADHYA                              273
        PRADESH & ORS. [ASHOK BHUSHAN, J.]

the Trustees/Executors gave assent to complete the title of the Legatees       A
and vest absolutely and forever in their favour both Lantern Hotel and
Jahaj Mahal property. A notice was issued by the Collector of Stamps,
District Indore stating that in Deed of Assent dated 21.04.2005 proper
stamp duty has not been paid, 22.03.2007 was fixed for appearance.
The notice further stated that why deficit stamp duty of Rs. 1,62,82,150/
                                                                               B
- on the document dated 21.04.2005, and ten times penalty should not
be imposed. The Trust appeared before the Collector of Stamps and
filed its objection. The Collector of Stamps passed an order dated
22.09.2008 holding the Deed of Assent dated 21.04.2005 as a gift deed.
The Collector held that under Indian Stamp Act, 1899, the stamp duty
payable on a gift deed would be 8% of the market value, Municipal duty         C
1% and Janpad duty 1%. The Collector found deficit duty to the extent
of Rs.1,28,09,700/- and also imposed ten times penalty i.e.
Rs.12,80,97,000/-. The order called upon the Trust to deposit amount of
Rs.14,09,06,700/- within thirty days. Aggrieved against the order of
Collector, Reference Application was filed by the appellant before the
                                                                               D
Board of Revenue, Madhya Pradesh, Gwalior. Board of Revenue vide
its order dated 25.10.2011 upheld deficiency of stamp duty of
Rs.1,28,09,700/- and ten times penalty of Rs.12,80,97,000/-. The order
called upon the Trust to deposit amount of Rs.14,09,06,700/- within thirty
days. Board of Revenue vide its order dated 25.10.2011 upheld the order
of the Collector dated 22.09.2008 and dismissed the Reference                  E
Application. Challenging the order of the Board of Revenue as well as
the Collector of Stamps a Writ Petition No.8888 of 2011 was filed by the
appellant in the High Court of Madhya Pradesh. Learned Single Judge
of the High Court vide its judgment dated 30.03.2017 dismissed the writ
petition. Learned Single Judge upheld the order of the Collector by which
                                                                               F
deficiency in the stamp duty and ten times penalty was imposed.
      5. An SLP was filed in this Court challenging the order of the
learned Single Judge by the appellant which was withdrawn by the
appellant on 4.5.2017 seeking liberty to file writ appeal in the High Court.
The writ appeal was filed by the appellant being Writ Appeal No.255 of
2017 which has been dismissed by the Division Bench on 4.9.2017 holding        G
the writ appeal as not maintainable. Aggrieved against the aforesaid two
orders these appeals have been filed by the appellant.
        6. This Court by its order dated 10.11.2017 issued limited notice
to the following effect:
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274             SUPREME COURT REPORTS                          [2020] 11 S.C.R.


A                 “Issue notice, returnable in six weeks, limited to the quantum
            of penalty that has been imposed by the Collector (Stamps).
                  Subject to the condition that stamp duty is paid within a
            period of one month, there shall be stay of the order qua the
            penalty.”
B           7. In response to the above notice the respondents have appeared.
             8. We have heard Shri A.K. Chitale, learned senior counsel, for
      the appellant and Shri Tushar Mehta, learned Solicitor General, for the
      State.

C            9. Shri A.K. Chitale, learned senior counsel appearing for the
      appellant submits that the Deed of Assent executed on 21.04.2005 is
      referable to Section 331 and 332 of Indian Succession Act, 1925. Shri
      Chitale submitted that document in question is not a Gift Deed. Shri
      Chitale submits that the penalty imposed by the Collector of Stamps was
      wholly illegal. There was no dishonest conduct on the part of the appellant,
D     Deed of Assent was executed bona fide on which there was no
      deficiency in the stamp duty. Shri Chitale submits that no reason has
      been given by the Collector of Stamps as to why maximum penalty of
      ten times was imposed on the appellant while determining the stamp
      duty. Shri Chitale submits that the Collector of Stamps has not exercised
E     his jurisdiction in reasonable and fair manner and imposition of ten times
      penalty on the appellant deserves to be set aside.
             10. Shri Tushar Mehta, learned Solicitor General refuting the
      submission of counsel for the appellant contends that nature of document
      having been found to be gift the Collector has rightly determined the
F     deficiency in the stamp duty and imposed ten times penalty. Shri Mehta
      submits that there was clear intention of the appellant to evade the
      payment of stamp duty which clearly called for imposition of ten times
      penalty. Shri Mehta referred to the order of Board of Revenue and
      submits that Board of Revenue has also upheld imposition of ten times
      penalty by holding that the applicant has executed Deed of Assent
G     suppressing the facts intentionally due to which there has been loss of
      stamp duty. This can neither be termed as wrong nor illegal.
             11. We have considered the submissions of the parties and perused
      the records.

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 TRUSTEES OF H.C. DHANDA TRUST v. STATE OF MADHYA                             275
        PRADESH & ORS. [ASHOK BHUSHAN, J.]

      12. Only question to be determined in these appeals is as to whether    A
the imposition of ten times penalty by the Collector of Stamps under
Section 40 of the Indian Stamp Act, 1899 was validly imposed or not.
      13. The Collector of Stamps vide its order dated 22.09.2008
determined the nature of document dated 21.04.2005 as Gift Deed. The
Collector of Stamps in his order also proceeded to determine the market       B
value of property, Lantern Hotel situate at Yashwant Niwas Road and
Jahaj Mahal situate in Ravindra Nath Tagore Marg, on the market value
of both above properties stamp duty payable was determined as
Rs.1,28,09,900/-, stamp duty of Rs.200/- only having been paid on the
document deficit duty was determined as Rs.1,28,09,700/-. The Collector
of Stamps by the same order also imposed ten times penalty of                 C
Rs.12,80,97,000/-.
       14. Before we proceed to consider the respective submissions, it
is useful to extract the order of the Collector of Stamps which contains
the discussion regarding imposition of penalty, which is as follows:
                                                                              D
             “……In the above background, the deed in question is
      classified in the category of a gift deed. The total market value of
      the property in question in the position of year 2005-06 under the
      document is fixed at market value Rs.12,80,99,000/-, on which
      total stamp duty of Rs.1,28,09,900/- is payable. Only Rs.200/-
      stamp duty has been paid on the document. Thus, remaining stamp         E
      duty Rs.1,28,09,700/- and, since the party has not mentioned the
      actual nature of the document with an intention to escape the
      duty, therefore, under Section 40 of the Indian Stamp Act, 1899,
      ten times penalty Rs.12,80,97,000/- is imposed. Thus, total
      Rs.14,09,06,700/- shall be deposited in the treasure within 30 days.”   F
       15. Section 40 of Indian Stamp Act, 1899 provides for Collectors
power to stamp instruments impounded. Section 40(1) which is relevant
for the present case which is as follows:
             “40. Collectors power to stamp instruments impounded. —
      (1) When the Collector impounds any instrument under section            G
      33, or receives any instrument sent to him under section 38, sub-
      section (2), not being an instrument chargeable with a duty not
      exceeding ten naye paise only or a bill of exchange or promissory
      note, he shall adopt the following procedure: —
                                                                              H
276             SUPREME COURT REPORTS                          [2020] 11 S.C.R.


A               (a) if he is of opinion that such instrument is duly stampeded or
                is not chargeable with duty, he shall certify by endorsement
                thereon that it is duly stamped, or that it is not so chargeable,
                as the case may be;
                (b) if he is of opinion that such instrument is chargeable with
B               duty and is not duly stamped, he shall require the payment of
                the 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 duty
                or of the deficient portion thereof, whether such amount
                exceeds or falls short of five rupees:
C
                       Provided that, when such instrument has been impounded
                only because it has been written in contravention of section 13
                or section 14, the Collector may, if he thinks fit, remit the whole
                penalty prescribed by this section.”
D            16. According to Section 40(1)(b) if the Collector is of opinion
      that such instrument is chargeable with duty and is not duly stamped, he
      shall require the payment of the of the proper duty or the amount required
      to make up the same, together with a penalty of the five rupees; or, if he
      thinks fit, an amount not exceeding ten times the amount of the proper
      duty or of the deficient portion thereof. The statutory scheme of Section
E     40(1)(b) as noticed above indicates that when the Collector is satisfied
      that instrument is not duly stamped, he shall require the payment of
      proper duty together with a penalty of the five rupees. The relevant part
      of Section 40(1)(b) which falls for consideration in these appeals is: “or,
      if he thinks fit, an amount not exceeding ten times the amount of the
F     proper duty or deficient portion thereof.”
             17. The amount of penalty thus can be an amount not exceeding
      ten times. The expression “an amount not exceeding ten times” is
      preceded by expression “if he thinks fit”. The statutory scheme, thus,
      vest the discretion to the Collector to impose the penalty amount not
G     exceeding ten times. Whenever statute transfers discretion to an authority
      the discretion is to be exercised in furtherance of objects of the enactment.
      The discretion is to be exercised not on whims or fancies rather the
      discretion is to be exercised on rational basis in a fair manner. The amount
      of penalty not exceeding ten times is not an amount to be imposed as a
      matter of force. Neither imposition of penalty of ten times under Section
H
 TRUSTEES OF H.C. DHANDA TRUST v. STATE OF MADHYA                             277
        PRADESH & ORS. [ASHOK BHUSHAN, J.]

40(1)(b) is automatic nor can be mechanically imposed. The concept of         A
imposition of penalty of ten times of a sum equal to ten times of the
proper duty or deficiency thereof has occurred in other provisions of the
Act as well. We may refer to Section 35(a) in this context is as follows:
             “35. Instruments not duly stamped inadmissible in
      evidence, etc. — No instrument chargeable with duty shall be            B
      admitted in evidence for any purpose by any person having by
      law or consent of parties authority to receive evidence, or shall be
      acted upon, registered or authenticated by any such person or by
      any public officer, unless such instrument is duly stamped :
          Provided that—                                                      C
          (a) any such instrument shall be admitted in evidence on
             payment of the duty with which the same is chargeable, or,
             in the case of any instrument insufficiently stamped, of the
             amount required to make up such duty, together with a
             penalty of five rupees, or, when ten times the amount of the     D
             proper duty or deficient portion thereof exceeds five rupees,
             of a sum equal to ten times such duty or portion;
             (b)…        …        …        …”
       18. It is relevant to notice that Section 35 contemplates that when
ten times the amount of the proper duty of or deficient portion thereof       E
exceeds five rupees, of a sum equal to ten times such duty or portion is
required to be deposited. Under Section 39 Collector is empowered to
refund penalty. As noticed above under Section 35(a) there is no option
except to pay sum equal to ten times of such duty or deficient portion but
Section 39 empowers the Collector to refund any portion of the penalty        F
in excess of five rupees which is expressed in following words: “if he
thinks fit refund any portion of the penalty in excess of five rupees which
has been paid in respect of such instrument.”
       19. The legislative intent which is clear from reading of Sections
33,35,38 and 39 indicates that with respect to the instrument not duly
                                                                              G
stamped, ten times penalty is not always retained and power can be
exercised under Section 39 to reduce penalty in regard to that there is a
statutory discretion in Collector to refund penalty.
      20. Section 39(1)(b) of the Indian Stamp Act, 1899 came for
consideration before this Court in Gangtappa and another vs.
                                                                              H
278            SUPREME COURT REPORTS                            [2020] 11 S.C.R.


A     Fakkirappa, 2019(3) SCC 788 (of which one of us Ashok Bhushan,
      J. was a member). This Court noticed the legislative scheme and held
      that the legislature has never contemplated that in all cases penalty to
      the extent of ten times should be ultimately realized. In paragraph 16
      following has been laid down by this Court:
B                   “16. Deputy Commissioner under Section 38 is empowered
            to refund any portion of the penalty in excess of five rupees which
            has been paid in respect of such instrument. Section 38 Sub-section
            (1) again uses the expression “if he thinks fit”. Thus, in cases
            where penalty of 10 times has been imposed, Deputy Commissioner
            has discretion to direct the refund of the penalty in facts of a
C           particular case. The power to refund the penalty Under Section
            38 clearly indicates that legislature have never contemplated that
            in all cases penalty to the extent of 10 times should be ultimately
            realised. Although the procedural part which provides for
            impounding and realisation of duty and penalty does not give any
D           discretion Under Section 33 for imposing any lesser penalty than
            10 times, however, when provision of Section 38 is read, the
            discretion given to Deputy Commissioner to refund the penalty is
            akin to exercise of the jurisdiction Under Section 39 where while
            determining the penalty he can impose the penalty lesser than 10
            times.”
E
                   20. The expression “if he thinks fit” also occurs in Section
            40 sub-clause (b). The same legislative scheme as occurring in
            Section 39 is also discernible in Section 40(b), there is no legislative
            intentment that in all cases penalty to the extent of ten times the
            amount of proper stamp duty or deficient portion should be realised.
F           The discretion given to Collector by use of expression “if he thinks
            fit” gives ample latitude to Collector to apply his mind on the
            relevant factors to determine the extent of penalty to be imposed
            for a case where instrument is not duly stamped. Unavoidable
            circumstances including the conduct of the party, his intent are
            the relevant factors to come to a decision.
G
             21. The purpose of penalty generally is a deterrence and not
      retribution. When a discretion is given to a public authority, such public
      authority should exercise such discretion reasonably and not in oppressive
      manner. The responsibility to exercise the discretion in reasonable manner
      lies more in cases where discretion vested by the statute is unfettered.
H     Imposition of the extreme penalty i.e. ten times of the duty or deficient
 TRUSTEES OF H.C. DHANDA TRUST v. STATE OF MADHYA                             279
        PRADESH & ORS. [ASHOK BHUSHAN, J.]

portion thereof cannot be based on the mere factum of evasion of duty.        A
The reason such as fraud or deceit in order to deprive the Revenue or
undue enrichment are relevant factors to arrive at a decision as to what
should be the extent of penalty under Section 40(1)(b).
       22. We may refer to judgment of this Court in Peteti Subba Rao
vs. Anumala S. Narendra, 2002 (10) SCC 427. This Court had                    B
occasion to consider in the above case provisions of Section 40 of the
Indian Stamp Act, 1899. Referring to Section 40 this Court made following
observation in paragraph 6:
             “6………The Collector has the power to require the person
      concerned to pay the proper duty together with a penalty amount         C
      which the Collector has to fix in consideration of all aspects
      involved. The restriction imposed on the Collector in imposing the
      penalty amount is that under no circumstances the penalty amount
      shall go beyond ten times the duty or the deficient portion thereof.
      That is the farthest limit which meant only in very extreme
      situations the penalty need be imposed up to that limit. It is          D
      unnecessary for us to say that the Collector is not required by law
      to impose the maximum rate of penalty as a matter of course
      whenever an impounded document is sent to him. He has to take
      into account various aspects including the financial position of the
      person concerned.”                                                      E
       23. This Court in the above case categorically held that it is only
in the very extreme situation that penalty needs to be imposed to the
extent of ten times.
       24. The Collector by imposing ten times penalty in his order has
given the reason for imposition as “the party has not mentioned the actual    F
nature of the document with the intention to escape the duty”. When the
Collector found intention to escape the duty, it was the case of imposition
of penalty but whether the reason given by the Collector is sufficient for
imposition of extreme penalty of ten times is the question which needs to
be further considered. The High Court while considering the question of       G
imposition of penalty of ten times has also given almost same reason in
following words:
      “………But in the present case the complete title has been
      transferred by Trust to Jogesh Dhanda and Ishan Dhanda in the
      name of Deed of Assent. Therefore, there was intention to evade
                                                                              H
280              SUPREME COURT REPORTS                        [2020] 11 S.C.R.


A            the heavy stamp duty on such transaction. Therefore, the Collector
             of Stamp has rightly imposed 10 times penalty which is maximum
             under the Act.
                    In view of the above, I do not find any merit in this writ
             petition. The same is hereby dismissed.”
B            25. No other reasons have been given either by the Collector or
      by the High Court justifying the imposition of maximum penalty of ten
      times. It is not the case of Collector that the conduct of the appellant
      was dishonest or contumacious. The High Court in its judgment has
      noticed that although the resolution was passed on 06.04.2005 to execute
C     the Deed of Transfer by Trustees in favour of Jogesh Dhanda and Ishan
      Dhanda, but later on they deliberately executed the deed in the name of
      Deed of Assent on a stamp paper of Rs.200/-. For the reason given by
      the Collector as well as by the High Court that there was intention to
      evade the stamp duty in describing the document as Deed of Assent the
      imposition of the penalty was called for but in the facts and circumstances
D     and the reasons which have been given by the Collector of Stamps as
      noticed above we are satisfied that this was not a case of imposition of
      extreme penalty of ten times of deficiency of stamp duty. Taking into
      consideration all facts and circumstances of the case, we are of view
      that ends of justice will be served in reducing the penalty imposed to the
E     extent of the half i.e. five times of deficiency in the stamp duty.
             26. In result the appeals are allowed the order of the Collector of
      Stamps dated 22.09.2008 is modified to the extent that penalty imposed
      of ten times of Rs.12,80,97,000/- is modified into five times penalty i.e.
      Rs.6,40,48,500/-. The appeals are partly allowed to the above extent.
F
      Devika Gujral                                          Appeals partly allowed.




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