Ten times penalty envisaged under Karnataka Stamp Act only in extreme cases: Supreme Court

New Delhi: The Supreme Court has said the penalty under the Karnataka Stamp Act for deficient duty on an instrument may extend to ten times of the amount payable but that is the farthest limit which is meant only for very extreme situations.

A bench Hrishikesh Roy and S V N Bhatti said the Karnataka Stamp Act, being a regulatory and remedial statute, a party who follows the regulation, and pays the stamp duty and penalty, as per Sections 34 or 39, the legal objection emanating from Section 33 of the Act alone is effaced and the document is admitted in evidence.

The court also pointed out the Deputy Commissioner or the District Registrar has discretion to levy and collect commensurate penalty, and a contesting party cannot oppose it.

"Paying/depositing the deficit duty and penalty would result in the instrument becoming compliant with the checklist of the Act. The finality is subject to the just exceptions envisaged by the Act addressing different contingencies," the bench said.

The court also said, "The quantum of penalty is primarily between the authority/court and the opposing party has little role to discharge."

In a judgment on Monday, the court summed up steps required to be taken under the Act for the benefit of practice and procedure, while setting aside an order directing a plaintiff to pay ten times penalty due to deficient stamp duty with regard to sale agreement of a plaint schedule property.

The court allowed an appeal filed by Seetharama Shetty against the Karnataka High Court's order of 2021, by holding the imposition of penalty of ten times in the facts and circumstances of this case was illegal and contrary to the steps under the Act.