Dismissed

M/S.Thibbadevi Hotels and Resorts Pvt. Ltd. v. M/S Aaditya Inc.

Karnataka HC29 Mar 2023WP/11907/2022

Case brief

AI extract

What is this about?

The High Court dismissed a writ petition challenging a lower court order. The petitioner sought to direct the respondent to pay stamp duty and penalty under Section 30, while the court had impounded the lease under Section 33. The High Court held the petitioner, who relies on the document, must pay the duty.

What did the court decide?

The writ petition filed under Article 227 to quash the impounding of the lease agreement and the order rejecting the application for stamp duty was dismissed.

M/S.Thibbadevi Hotels and Resorts Pvt… — Contract and Commercial Disputes | Karnataka HC (2023)

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 29^TH DAY OF MARCH, 2023

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BEFORE

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THE HON’BLE MR. JUSTICE SACHIN SHANKAR MAGADUM

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WRIT PETITION NO.11907 OF 2022 (GM-CPC)

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BETWEEN:

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M/S. THIBBADEVI HOTELS AND RESORTS PVT.LTD., A COMPANY REGISTERED UNDER THE PROVISIONS OF COMPANIES ACT, 1956, HAVING ITS REGISTERED OFFICE AT NO.6/108, KHATRIGUPPE MAIN ROAD, BSK 3^RD STAGE, BENGALORE-560 085, REPRESENTED BY ITS MANAGING DIRECTOR, SRI.D.SHIVALINGAIAH.

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...PETITIONER

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(BY SMT. VAIDYA RAVI LAXMINARAYANA, ADVOCATE)

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AND:

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M/S AADITYA INC A PARTNERSHIP FIRM HAVING ITS REGISTERED OFFICE, AT NO.143, 43^RD CROSS, 8^TH BLOCK, JAYANAGAR, BANGALORE-560 070, R/BY ITS PARTNER SRI. S.JAGANNATH.

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…RESPONDENT

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(BY SRI.S.R.MURALIDHAR, ADVOCATE FOR C/R)

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THIS PETITION IS FILED UNDER ARTICLE 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE ORDER DTD.7.6.2022 PASSED BY THE LEARNED X ADDL. DISTRICT AND SESSIONS JUDGE (COMMERCIAL COURT), BANGALORE RURAL DISTRICT AT BANGALORE ON IA NO.6 AND 7 IN COM.O.S.NO.981/2021 AT ANNEXUR-F AND ETC.,

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THIS PETITION HAVING BEEN HEARD AND RESERVED FOR ORDERS ON 22.07.2022, COMING ON FOR PRONOUNCEMENT OF ORDER THIS DAY, THE COURT MADE THE FOLLOWING:

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ORDER

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The captioned writ petition is filed by the plaintiff feeling aggrieved by the order of the learned Judge passed on I.A.Nos.6 and 7, wherein plaintiff sought a direction against the defendant to pay stamp duty and penalty in terms of Section 30 of the Karnataka Stamp Act, 1957 (for short ‘the Act’) on the lease agreement, while defendant filed an application under Section 33 of the Act requesting the learned Judge to impound the lease agreement based on which the present suit is instituted. The learned Judge by order dated 07.06.2022 has rejected the application filed by the plaintiff in

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I.A.No.6, while I.A.No.7 filed by the defendant is allowed and the document styled as “lease agreement” dated 25.01.2019 is impounded as it is insufficiently stamped. The said common orders are under challenge at the instance of the plaintiff.

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The plaintiff has instituted a commercial suit in Com.O.S.No.981/2021 alleging that plaintiff has let out the suit schedule property on lease basis and accordingly, lease agreement is executed on 25.01.2019. Though plaintiff is placing reliance on this lease agreement, he has come up with an application in I.A.No.6 to issue direction to the defendant/tenant to pay deficit stamp duty and penalty on the lease agreement dated 25.01.2019. Plaintiff’s claim is that in terms of Section 30 of the Act, it is the defendant who has to make good the deficit stamp duty and penalty and therefore, the penalty has to be levied on defendant in terms of Section 30 of the Act. The learned Judge, however, has declined to accede to the contentions canvassed by the plaintiff and has proceeded to reject the application filed in I.A.No.6 by holding

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that since plaintiff is placing reliance on the document, he is liable to pay duty and penalty while he can recover the amount from the defendant as per Section 43 of the Act.

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Heard learned counsel appearing for the petitioner and learned counsel appearing for the respondent.

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The short question that needs consideration at the hands of this Court is, as to who has to pay duty and penalty in the present case on hand. Admittedly, plaintiff has approached the Court seeking possession from defendant/tenant and has also claimed arrears of rent and interest to the tune of Rs.3,87,99,761/-. If plaintiff who wishes a document to be admitted in evidence, is the one who is originally bound to bear the expenses of providing the stamp duty. Therefore, plaintiff could not have filed an application seeking a direction against the defendant/tenant.

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Admittedly, the lease agreement is a suit document

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based on which the present suit is instituted. Very often a person wishing to admit the instrument in evidence is different from a person who is originally bound to bear the expenses of stamp. Therefore, often a question may arise where a person who is originally liable to pay the stamp duty and if he does not chose to pay the requisite stamp duty and penalty, can the Court compel such a person to pay the same. My answer is “No”. If plaintiff has produced the lease agreement in support of his claim and if the said document is not duly stamped, primarily he is the person from whom requisite stamp duty and penalty has to be recovered, even though defendant is bound to bear the expenses of providing proper stamp. Therefore, plaintiff cannot insist and seek a direction against the defendant who may not chose to pay the penalty and deficit stamp duty.

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The consequences of non-payment of deficit stamp

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duty and penalty will affect the rights of the plaintiff and not defendant. If the suit document is taken out, it is the plaintiff’s right which would be seriously prejudiced. If the Act provides a remedy to the plaintiff to seek recovery under Section 43 of the Act, this Court is unable to understand as to why the plaintiff is unnecessarily litigating the dispute relating to payment of stamp duty and penalty in the present case on hand. Plaintiff’s substantive rights in seeking possession from defendant and recovery of arrears needs to be adjudicated and therefore, plaintiff ought to have paid the deficit stamp duty and penalty and proceeded to recover it under Section 43 of the Act.

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What is lost sight of is that if the document stands impounded, then plaintiff who intends to seek possession based on lease agreement will not be able to make use of it unless and until necessary duty and penalty is paid. I do not

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find any infirmities in the order under challenge. The judgments cited by the learned counsel for the petitioner are

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not applicable to the present case on hand.

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Accordingly, the writ petition is dismissed.

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Sd/JUDGE

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M/S.Thibbadevi Hotels and Resorts Pvt. Ltd. v. M/S Aaditya Inc.

Case brief

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M/S.Thibbadevi Hotels and Resorts Pvt. Ltd. v. M/S Aaditya Inc.

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