Ext.P3 order of the second respondent and Ext.P11 order by which the fifth respondent confirmed Ext.P3 order in appeal, are under challenge in the writ petition.
2. A company called M/s.Periyar and Pareekanni Rubbers Ltd owned 6.63 hectors of rubber plantation. On 25.08.1988, a firm was constituted in the name and style 'Isdale Plantations', as per Ext.P6 partnership. M/s.Periyar and Pareekanni Rubbers Ltd was one of the partners of the newly constituted firm. As per the terms of the partnership, the company brought the said item of property into the stock of the firm. Consequent thereto, the mutation of the property was also changed to the name of the firm. Ext.P6 partnership was reconstituted as per Ext.P8 deed by which M/s. Periyar and Pareekanni Rubbers Ltd retired from the firm and the rest of the partners continued as partners. On 20.11.2012, the firm 'Isdale Plantations' sold the said property to the petitioner as per Ext.P1 sale deed for a total consideration of Rs 13,56,000/-. However, when Ext.P1 document was presented for registration, the Sub Registrar entertained a doubt as to the correctness of the stamp duty paid on the document and consequently, impounded the document, in exercise of his powers under section 33 of the Kerala Stamp Act ('the Act', for short). Thereupon, the document was sent to the District Registrar for determination of the stamp duty payable on the instrument under section 39 of the Act and the District Registrar as per Ext.P3 order held that the property was brought into the stock of the firm fixing a value of Rs.80,000/- without executing any instrument and without remitting the stamp duty payable and therefore, the petitioner is liable to pay the stamp duty which should have been paid at the time of bringing the property into the stock of the firm also. The petitioner though challenged Ext.P3 order in appeal before the fifth respondent, as per Ext.P11 order, the fifth respondent confirmed Ext.P3 order reiterating the stand taken in Ext .P3 order.
3. Section 33 of the Act dealing with impounding of documents reads as follows:
33. Examination and impounding of instruments -- (1) Every person having by law or consent of parties authority to receive evidence, and every person in charge of a public office, except an Officer of Police, before whom any instrument, chargeable in his opinion, with duty, is produced or comes in the performance of his functions, shall, if it appears to him that such instrument is not duly stamped, impound the same.
(2) For that purpose every such person shall examine every instrument so chargeable and so produced or coming before him, in order to ascertain whether it is stamped with a stamp of the value and description required by the law in force in the State when such instrument was executed or first executed :
Provided that --
(a) nothing herein contained shall be deemed to require any Magistrate or Judge of a Criminal Court to examine or impound, if he does not think fit so to do, any instrument coming before him in the course of any proceeding other than a proceeding under Chapter XII or Chapter XXXVI of the Code of Criminal Procedure, 1898;
(b) in the case of a Judge of the High Court, the duty of examining and impounding any instrument under this section may be delegated to such officer as the Court appoints in this behalf.
(3) For the purpose of this section, in cases of doubt, the Government may determine--
(a) what offices shall be deemed to be public offices; and
(b) who shall be deemed to be persons in charge of public offices.”
Section 39 of the Act dealing with the power of the Collector to determine and require payment of stamp duty reads as follows;
“39:- Collector's power to stamp instruments impounded:- (1) When the Collector impounds any instrument under Section 33, or receives any instrument sent to him under sub-section (2) of Section 37, not being an instrument chargeable with a duty of [twenty paise] or less, he shall adopt the following procedure:-
(a) if he is of opinion that such instrument is duly stamped 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 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 [ten 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 [ten rupees]:
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.
(2) Every certificate under clause (a) of sub-section (1) shall, for the purposes of this Act, be conclusive evidence of the matters stated therein.
(3) Where an instrument has been sent to the Collector under sub-section (2) of Section 38, the Collector shall, when he has dealt with it as provided by this section, return it to the impounding officer.”
Ext.P3 is seen issued invoking the power under Section 39(1)(b) of the Act. It is evident from the provision in Section 39(1)(b) of the Act that the said provision is attracted only when the Collector is of the opinion that an instrument chargeable with duty is not duly stamped. In the instant case, neither the third respondent nor the fifth respondent has any case that Ext.P1 document is not duly stamped. Instead both the aforesaid authorities maintained the stand that since the vendor of the property has not obtained an instrument in respect of the property after remitting the stamp duty at the time of acquisition, the stamp duty which should have been paid at the time of acquisition shall also be paid while transferring the property to a third party. As such, the powers under Sections 33 and 39 of the Act could not have been invoked in respect of Ext.P1 sale deed.
4. That apart, even the ground stated in Exts.P3 and P11 orders for requiring payment of stamp duty is unsustainable in law. Section 14 of the Partnership Act dealing with the properties of the firm reads thus;
“14:-The property of the firm:- Subject to contract between the partners, the property of the firm includes all property and rights and interests in property originally brought into the stock of the firm, or acquired, by purchase or otherwise, by or for the firm, or for the purposes and in the course of the business of the firm, and includes also the goodwill of the business.
Unless the contrary intention appears, property and rights and interests in property acquired with money belonging to the firm are deemed to have been acquired for the firm”
The Act does not prescribe any particular mode for bringing the individual property of the partners into the common stock of the firm. As such, as soon as the partners intend that their individual property should become the property of the firm and the property is treated as the property of the firm, it becomes the property of the firm by virtue of the provision contained in Section 14 of the Partnership Act. [See George v. George (2010(2) KLT 692)]. While bringing an item of immovable property of the partner into the common stock of the firm towards the contribution of that partner to the capital of the firm, he reduces his exclusive rights in the property to a shared right with the remaining partners of the firm. While he does not lose his rights over the property altogether, what he enjoys thereafter is only an abridged right which cannot be identified with the fullness of the right which he enjoyed in the property before it was brought into the common stock of the firm. [See Sunil v. I.T.Commissioner, Ahmedabad (AIR 1986 SC 368)]. It is settled that on account of the said reasons, while bringing the individual immovable property of the partner into the common stock of the firm in terms of a written instrument, it does not require registration compulsorily, for, that transaction cannot be considered as transfer of a right, title or interest in immovable property, within the meaning of Section 17(1)(b) of the Registration Act. [See George v. George (supra)]. If the said transaction cannot be treated as transfer of a right, title or interest in immovable property, within the meaning of Section 17(1)(b) of the Registration Act, the same would not come within the meaning of 'conveyance', as defined in the Kerala Stamp Act to attract the liability to pay stamp duty on that document, for, to attract the liability to pay stamp duty, the instrument shall be an instrument, by which immovable property is transferred inter vivos and which is not otherwise specifically provided for by the Schedule. For the aforesaid reasons, Exts.P3 and P11 orders are liable to be quashed.
5. In the result, the writ petition is allowed and Exts.P3 and P11 orders are quashed. The third respondent is directed to return the original of Ext.P1 sale deed to the petitioner within one month from the date of receipt of a copy of this judgment.
Sd/-
P.B. SURESH KUMAR, JV JUDGE