(1) This petition for revision is directed against the decision of Shri O. P. Saini, Additional Judge Small Cause Court, Delhi.
(2) A suit for recovery of Rs. 961/- on account of principal and interest was filed by the plaintiff against the defendants mahan Singh and Deep Chand sons of Kirpa Ram on the basis of the balance struck by them his bahi on 20-12-1963. The defendants contested the suit. It was pleaded that the bahi was not admissible in evidence because the acknowledgment was not property stamped. It was also pleased that the plaintiff was money-lender and that he could not bring the suit without getting the Money-lenders' Licence. The liability to pay the amount in question was also denied. It is common ground that if the acknowledgment is not admissible in evidence the plaintiff's suit must fall.
(3) The trial Court held that the plaintiff was a money-lender and that he had a Money-lender's Licence. The defendant admitted the execution of the balance amounted to an acknowledgment and not an agreement and therefore, it being not properly stamped was not admissible in evidence. The trial Court also held that the entry is dispute amounted to an acknowledgment and was therefore not admissible in evidence, and that the amounting question has not been paid by the defendants. The suit was accordingly dismissed. Against, the decision the present petition for revision was preferred to this Court, which came up for hearing before Capoor J. on the 28th February, 1961, who passed the following order:--
"One of the points raised in this case by Mr. D. K. Kapoor on behalf of the petitioner is that the extension of the Indian Stamp (East Punjab Amendment) Act, 1949 (East Punjab Act No. XXVII of 1949) to Delhi State by a notification in the official Gazette No. SRO-422 dated the 21st March, 1951, Legislature of the Delhi State by section 2 of the Part C States (Laws)Act, 1950 (Act No. XXX of 1950) inasmuch as by that extension it was a Central Act that is the Indian Stamp Act, which was supported to be amended, Prima Facie, there is some force in the contention and I would therefore, direct the notice be issued to the Advocate-General, who may make any submission he desires on this point.'
The matter was then placed before me on the 3rd December, 1962, and in view of the constitution question involved in the case I directed that the matter be decided by a Division Bench. That is in the matter has been placed before us.
(4) It is common ground that the acknowledgment is stamped with one anna stamp. Up to the 21st March 1951, acknowledgment required and one anna stamp. After this date the requisite stamp has been raised to anna two. This has been done in the following manner: In the year 1949 the Indian Stamp (East Punjab Amendment Act, 1949 (No. XXVII of 1949) was passed. The Act brought about various amendments in the Indian Stamp Act. This Act was extended to Delhi to a notification No. SRO-422 dated 21st March 1951 published in the Gazette of India Part II--Section 3 dated the 31st March 1951. The power to extended laws prevailing in other States has been conferred on the Central Government under section 2 of the Part C States (Laws) Act, 1950 (No. XXX of 1950). Section 2 of this Act is in these terms:--
"The Central Government may be notification in the Official Gazettes extend to any Part C State (other than Coorg and Andaman and Nicobar Islands) or to any part of such State with such restrictions and modifications as it thinks fir any enactment which is in force in a Part A State at the date of the notification; and provision may be made in any enactment so extended for the repeal or amendment of any corresponding law (other than a Central Act) which is for the tine being applicable to that Part C, state.'
It is in view of the change brought about in the Stamp Act applicable to Delhi i. e., the Central Act that enhanced stamp of two annas was required on acknowledgment instead of the original stamp of the one anna. If the enhanced stamp of two annas is not justified, then the document is properly stamped and could not have been rules out of evidence. The learned counsel for the petitioner has raised three contentions before us:
1. that the Indian Stamp Act was applicable to Delhi and that it could have been made by recourse to section 2 of the Part C States (Laws) Act, 1950;
2. that even if it be held that the necessary amendment could have been made by recourse to section 2 of the Part C States (Laws) Act, 1950, the amendment having not been made in accordance with Article 265 of the Constitution of India, is of no effect; and
3. that in view of the decision of the supreme Court in re: Art. 143, Constitution of India and Delhi laws Act (1912) etc., AIR 1951 SC 332 half of section 2 of the Part C states (Laws) Act, 1950, being ultra vires, no recourse to this section can be made to amend the Central Act.
(5) As some of the consideration are common to the first and the third contention, I have deemed it proper to deal with both these contentions to gather in the first instance. The earlier provision before section 2 of the Part C States (Laws) Act, 1950, was enacted was section 7 of the Delhi Laws Act, 1912, which is in these terms:--
"7. The Provincial Government may be notification in the Official Gazette extend with such restrictions and modifications as it thinks fit to the Province of Delhi or any part thereof, any enactment which is in force in any part of the provinces at the date of such notification."
This provision was repeated by the Part C States (Laws) Act 1950 and its place was taken by section 2 of that Act. Section 2 was considered by the Supreme Court in Delhi Laws Act case Special Reference No. 1 of 1951: (AIR 1951 SC 332). This was a decision by a Bench of seven Judges presided over by Kania C. J,. Fazi ali Patanjali Sastri and A. R. Das JJ. held section 7 of the Delhi Laws Act and section 2 of the Part C States (Laws) Act to be valid in entirety Kanta C. J. and M. C. Mahajan J. held both these provisions to be invalid Mukherjea and Bose JJ. held the following part of section 2 of the Part C States (Laws) Act as invaild:--
"*****provision may be made in any enactment so extended for the repeal or amendment of any corresponding law (other than Central Act) which is for the time being applicable to the Part C State.'
It will therefore to apparent that the majority held part of section 2 of the aforesaid Act as invalid. It will therefore, the be appropriate at his stage to set out the ratio of the Supreme Court decision with regard to this part of section 2 of the Act. I may with respect, quote the observations of Mukherjea J. They occur at page 408 of the report and are set out below in extenso:--
"It will be noticed that the powers conferred by this section upon the Central Government are far in excess of those conferred by the other two legislative provision at least in accordance with the interpretation which I have attempted to put to them. As has been stated already it is quite an intelligible policy that so long as a property legislative machinery is not set up in a particular area the Parliament might empower an executive authority to introduce laws validity passed by a competent the country to such area, with such modifications and restriction as the authority thinks property the changes of a minor character. But this pre-supposes that there is no existing law on that particular subject actually in force in other areas it would certainly amount to an unwarranted delegation of legislative powers. To repeal or abrogate an existing law is the exercise of an essential legislative power and the policy behind such acts must be the policy of the legislature itself. If the legislature invests the executive the power to determine as to which the legislature has already laid down. Thus the power of extension which is contemplated by section 2 of the Part C States (Laws) Act, includes the powers of introducing laws which may be in actual conflict with the laws validity established and already in operation in that territory. This shows how the practice which was adopted during early British period as an expedient an possibly harmless measure with the object of provided laws for a newly acquired territory or backward area till it grew up into full-fledged administrative are political unit is being resorted to tin later times for no other purposes than that of vesting almost unrestricted legislative powers with regard to certain areas in the executive government. The executive government is given the authority to after repeal or amend any laws in existence at that area under the guise of bringing in laws there which are valid in the parts of India. This is my opinion is an un warrantable delegation of legislative powers in being a delegation of essential legislative powers in being a delegation of essential legislative powers in favour of a body not competent to exercise it and to that extent the legislation must be held to be void. This portion is however serverable; and so the entire section need not be declared invalid. The result is that in my opinion the answer to the three questions referred to us would be as follows: (1) Section 7 of the Delhi Laws Act, 1912, is in its entirely intra vires the powers of Parliament as being a delegation of essential legislative powers in favour of a body not competent to exercise it and to that extent the legislation must be held to be void. This portion is however serverable; and so the entire section need not be declared invalid. The result is that in my opinion the answer the three questions referred to us would be as follows: (1) Section 7 of the Delhi Laws Act, 1912, is in its entirely intra vires the legislature which passed it and no portion of in its invalid. (2) The Ajmer Merwara (Extension of Laws) Act, 1947, or any of its provisions are not ultra vires the legislature which passed the Act (3) Section 2 of the Part C States (Laws) Act, 1950, is ultra vires to the extend that if empowers the Central Government to extend to Part C States laws which are in force in Part A States even though such laws might conflict with or affect laws already in existence in the area to which they are extended. The power given by the last portion enactment for the repeal or amendment of any corresponding provincial law, which is for the time being applicable to that Part C States is therefore illegal and ultra vires."
(6) Mr. Kapur learned counsel for the petitioner argues that it is apparent from S. 2 of Part C States (Laws) Act that a Central Act cannot be either amended or repeated. If the Central Government is denied this power the learned counsel goes on to argue, it cannot achieve that result indirectly by extending laws prevailing in Part A States which have also modified or amended the Central Acts applicable to those States. The extension of the laws indirectly replaces the existing laws or Central enactments which are for the time being applicable to Part C States.
(7) This argument seems to have force. The scheme of Section 2 of the Part C States (Laws) Act is that Central Acts applicable to Part C States Act is not given the power by the Parliament in any way to amend or modify the Central Acts applicable to Part C States. Parliament is the legislature for Part C States and is competent to make for such States. It appears that for this reasons no power was conferred on the Central Government either to amend or alter a Central Act. That power was with the Parliament and it remained with it. If the Central Government cannot amend or modify a Central Act, which is applicable to a Part C State, it cannot, in my view achieve that result by an indirect method, that is by extending a law prevailing in Part A State which was modified or amended the Central Act.
(8) It is settled principle of law that what cannot be done directly cannot be done indirectly. Thus on the terms of section 2 this argument must prevail and any modification of the Indian Stamp Act by the Indian By Indian prevail and any modification of the Indian Stamp Act by the Indian Stamp (East Punjab Amendment) Act, 1949, would be inoperative.
(9) It cannot be disputed and indeed it was not that a Part A State has the right to enact a law on any of the items in List III (Concurrent List). It has also the power to modify or amend any Central Act if it relates to an item falling in that List. The State Legislature has no power to enact to law with regard to items in List 1 (Union List). If a State Legislature wants to enact a law with regard to an item in List III, which covers the same field which is covered by an existing law or by an Act of Parliament, it can only do so in accordance with the procedure prescribed in Article 254 of the Constitution. This course could not be adopted for Delhi but Parliament could make such a law. But recourse cannot be had to Section 2 of the Part C States (Laws) Act to achieve this object. The extenuated Act (The Indian Stamp (East Punjab Amendment) Act, 1949) not only raised the rates to stamp duty but made a substantial modifications in Section 35 of the Indian Stamp Act. No trouble would have arisen if the extended Act had merely the matter would have possible stood concluded by the majority decision in Delhi laws Act case, Air 1951 SC 332. The trouble has arisen because the Indian Stamp (East Punjab Amendment) Act amended Section 35 of the Indian Stamp Act, Section 35 of the Indian Stamp Act as applicable to Delhi before its amendment by the Indian Stamp (East Punjab Amendment) Act, was in these terms:
"35. No instruments chargeable with duty shall be admitted in evidence for any purpose 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:
(a) any such instrument not being an instrument chargeable with duty of one anna or half as anna only, or a bill of exchange or promissory note shall subject to all just exceptions be admitted in evidence on payment of the duty with which the same in chargeable, or, in the case of an instrument insufficiently stamped of the amount required to make up such duty together with a penalty of the rupees, or, when ten times the amount of the proper duty or deficient portion thereof exceeds five rupees, of a sum equal to ten times such day or portion:
(b) * * * * *
(c) * * * * *
(d) * * * * *
(e) * * * * *."
After amendment by the East Punjab Amendment Act, it reads thus:
"35. No instrument chargeable with duty shall be admitted in evidence for any purpose by any person having by law or consent of parties authority to receive evidence or shall be acted upon reported or authenticated by any such person or by any public officer, unless such instrument is duly stamped:
(a) any such instrument not being an instrument chargeable with a duty of one anna or half anna only or a bill of exchange or promissory not or acknowledgment or delivery order shall subject to all just exceptions to admitted in evidence on payment of the duty with which the same is chargeable, or in the case of an 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 proper duty or deficient portion thereof exceeds five rupees of a sum equal to ten times such duty or portion;
(10) The substantial change brought about was that acknowledgment were placed on the same footing as the bills of exchange and promissory notes etc.
(11) This is would take out the acknowledgment outside of the enabling provision in S. 35, Indian Stamp Act as it stood before its amendment by the extended Act. The power to legislate about the rates of stamp duty is vested in the State Legislature See List II, Schedule VII:
"Item 63, Rates of stamp duty in respect of documents other than those specified in the provisions of List I with regard to rate of stamp duty." The only restrictions on this power is in List I Item 91 which is in these terms:
"91 Rates of stamp duty in respect of bills of exchange, cheques, promissory notes, bills of fading letters of credit, policies of insurance, transfer of shares, debentures proxies and respects."
(12) It will be obvious form item No. 91 (List I) that acknowledgment is not one of the documents which has been taken out of item 63 (List 11), There fore, regarding acknowledgments, the State Legislature was competent to increase the rate of stamp duty within the limits of its own jurisdiction. Whether this increase could have been given effect to in a Part C State under the provision of Section 2 of the Part C State (Laws) Act Possibly would have presented no difficulty because such an extension would not offend the majority view in the Delhi Laws Act case. The learned counsel for both the parties are agreed that so far as the increase in rates is concerned no fault can be found with the extension of the Indian Stamp (East Punjab Amendment) Act. The entire argument has centered round the extension of Indian Stamp (East Punjab Amendment) Act so far as it amends Section 35 of the Indian Stamp Act.
(13) I may here state the reason for this argument, The petitioner can make good the deficiency of stamp, that is pay an additional one anna, and in addition thereto pay the requisite penalty and thereafter S. 35 will not stand in the way of the admissibility of the acknowledgement into evidence otherwise the acknowledgement being in par with the documents mention in Section 35 provision (a) it will not be admissible in evidence. The enabling provision in proviso (a) to S. 35 of the Indian Stamp Act which allows the deficiency in stamp duty to be made good and the imposition of a penalty so as to make an instrument admissible in evidence is not applicable to document s specified in proviso (a), such as instruments chargeable with stamp duty not exceeding one anna or a bill of exchange etc. The moment acknowledgement is taken out of the category of instruments mentioned in proviso (a) and it being not a document requiring a duty below one anna the enabling provisions of the proviso will be attracted. In the situation the petitioner would be able to parte deficiency in stamp along with the penalty and claim that the acknowledgement be admitted into evidence. the entire basis of the petitioner's suit if the acknowledgement. If the acknowledgement is ruled out as it has been ruled out the suit was bound to fall as it failed.
(14) Going back to the argument, the question that arises is: whether the amendment by the Indian Stamp (East Punjab Amendment) Act, of S. 35 solely relates to rates and, therefore, it could be made applicable to Delhi under Section 2 of the Part C States (Laws) Act? I am unable to holes that this is so. The extended Act affects a central Act and therefore by recourse to Section 2 of the Part and therefore by recourse to Section 2 of the Part C States (Laws) Act it could not have been extended to Delhi. Entry No. 44 in List III, which reads thus:
"44. Stamp duties other than duties or fees collected by means of judicial stamps but not including rates of stamp duty."
gives the power of legislation regarding stamp duties to both the Parliament and the State Legislature. With regards of the rates of such stamp duties the power with regard to all documents excepting those set out in List I, Item 91, is with the State Legislature, vide item No 63, List II. Moreover, Section 35 of the Indian Stamp Act embodies a rule of evidence. What it does is that it prohibits insufficiently stamped documents from being tendered into evidence. Viewed in this manner Section 35 could have very well been enacted under entry No. 12, List III, This entry reads thus:
"12. Evidence and oaths; recognition of laws public acts and records and Judicial proceedings." In either event whether Section 35 can be enacted under entry No. 44 (List III) or entry No. 12 (List III) the legislation with regard to it can be undertaken both by the Union Legislature as well as the State Legislature.
(15) Thus it will be apparent from what has been stated above that the General Government could not extend the provisions of the Indian Stamp (East Punjab Amendment) Act to Delhi by recourse to Section 2 of the Part C States (Laws) Acts because Section 35 of the Indian Stamp Act was applicable to Delhi and no amendment to modification of this provision could be made by recourse to the powers conferred on the Central Government by section 2 of the Part C States (Laws) Act. This follows logically from the provisions of S. 2 and from the decision of the Supreme Court in Delhi Laws act case, AIR 1951 SC 332. I am, therefore, of the view that the contention of the learned counsel for the petitioner is correct and must prevail. The amendment of Section 35 of the Indian Stamp act by the Indian Stamp (East Punjab Amendment) Act 1949 has to be ruled out as being beyond the powers conferred on the Central Government by Section 2 of the Part C States (Laws) act and Even if such a power could be spell out of Section 2, that power is ultra vires for the reasons given in Delhi Laws Act case, AIR 1951 SC
(16) Mr. Bishambar Dayal learned counsel for the Delhi Administration sought to argue that the amendment of S. 35 was an incidental matter-incidental to the enhancement of the rate of stamp duty of certain documents. He however argued that as the State Legislature had the power to legislate about the rates of stamp duty it had also the power incidentally to prescribe penalties for the non-payment of those duties. This argument is not sound in view of the fact that the other matters relating to stamp have been specifically taken out of List II as would be apparent from the corresponding entry in List III that is entry No. 44. If the various entries which I have already dealt with in Lists I, II, and III are kept in view a clear indication is provided that only with regard to the matter of rates of stamp duty with certain exceptions was left to the exclusive jurisdiction of the State Legislature. All other matters regarding imposition of stamp duteis etc, were put in List III. I have therefore no hesitation in repelling the arguments of the learned counsel for the State.
(17) In this view of the matter it is not necessary to advert to the second contention.
(18) For the reasons given above this petition is allowed, the Judgment and decree of the learned Additional Judge Small Cause Court is set aside and the case is remitted to him for decision after admitting into evidence the acknowledgement in dispute after the recovery of the deficient stamp and penalty.
(19) There will be no order as to costs.
(20) The parties are directed to appear before the trial Court on the 12th June, 1964.
Inder Dev Dua, J.
(21) I agree.
(22) Petition allowed.