TMI Blog2008 (2) TMI 850X X X X Extracts X X X X X X X X Extracts X X X X ..... on 47A of the Indian Stamp Act as amended by A.P. Act 8 of 1998 which requires a party to deposit 50% deficit stamp duty as a condition precedent for a reference to the Collector under Section 47A is unconstitutional. By the impugned judgment the High Court has declared it unconstitutional. Hence, this appeal. 4. Under Section 3 of the Indian Stamp Act, 1899 certain instruments are chargeable with the duty mentioned in the Schedule to the Act. Item 23 in the Schedule to the Act mentions a `conveyance' as one of the documents requiring payment of stamp duty. A `conveyance' is defined in Section 2(10) of the Act and includes a sale deed. Since in the present case we are concerned with payment of stamp duty on a sale deed, we have referred to the above provisions. 5. Experience showed that there was large scale under valuation of the real value of the property in the sale deeds so as to defraud the Government's proper revenue. In the original Stamp Act there was no provision empowering the revenue authorities to make an enquiry about the value of the property conveyed for determining the correct stamp duty. Hence amendments were made to the Indian Stamp Act from time ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was not executed pursuant to the decree, Execution Petition No.5 of 2000 was filed. An officer of the Court was deputed to present the sale deed, which was stamped according to the directions of the Senior Civil Judge. 9. The registering authority raised objection with regard to the quantum of non-judicial stamp on which the sale deed was engrossed. By letter no.288/2000 dated 19.2.2000, the registering authority, the Sub-Registrar, Malkajigiri, Ranga Reddy District, conveyed to the Second Senior Civil Judge, City Civil Court, Hyderabad that the document has to be referred under Section 47A and as a condition precedent for such reference, called upon the party i.e. the respondent herein, to pay duty on 50% of the differential amount according to the estimate made by him. Against this demand the respondent filed a writ petition in the High Court. 10. In the writ petition filed by the respondent herein, it was inter-alia, contended that the estimate made by the registering authority was only provisional, and that will attain finality only after the Collector on a reference under Section 47A adjudicates the same, and for the reference for such adjudication no obligation can be i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 13. In the impugned judgment the High Court has observed : The imposition of deposit of 50% of the differential stamp duty for referring the document to the Collector runs beyond the object and intendment of the above statutory provision. The object and intendment of the Stamp Act is to collect the proper stamp duty and such proper stamp duty is dependent upon the determination of the market value of the subject matter of the document and such determination is only made by the Collector and until such determination is made by the Collector, the document which is received for registration even after collection of whatever stamp duty deposited and the registration fee is paid by the party, is not released to the party, but is kept pending registration and such document kept pending registration is not having any evidentiary value and is not entered into the books of registration and no certified copy of the same can be granted and no rights flow from such document, be it sale, exchange, gift, mortgage, lease, etc. By keeping the document pending registration, there is enough safeguard for collecting the deficit stamp duty, as in the event of the Collector accepting th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tutional. 15. Section 33(1) of the Stamp Act states : 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 in his functions shall, if it appears to him that such instrument is not duly stamped, impound the same . 16. A perusal of the said provision shows that when a document is produced (or comes in the performance of his functions) before a person who is authorized to receive evidence and a person who is in charge of a public office (except a police officer) before whom any instrument chargeable with duty is produced or comes in the performance of his functions, it is the duty of such person before whom the said instrument is produced to impound the document if it is not duly stamped. The use of the word 'shall' in Section 33(1) shows that there is no discretion in the authority mentioned in Section 33(1) to impound a document or not to do so. In our opinion, the word 'shall' in Section 33(1) does not mean 'may' but means `shall& ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AIR 1955 SC 661 (685) this Court held that if there is hardship in a statute it is for the legislature to amend the law, but the Court cannot be called upon to discard the cardinal rule of interpretation for mitigating a hardship. 21. It has been held by a Constitution Bench of this Court in Income Tax Officer vs. T.S Devinatha Nadar AIR 1968 SC 623 (vide paragraph 23 to 28) that where the language of a taxing provision is plain, the Court cannot concern itself with the intention of the legislature. Hence, in our opinion the High Court erred in its approach of trying to find out the intention of the legislature in enacting the impugned amendment to the Stamp Act. 22. In this connection we may also mention that just as the reference under Section 47A has been made subject to deposit of 50% of the deficit duty, similarly there are provisions in various statutes in which the right to appeal has been given subject to some conditions. The constitutional validity of these provisions has been upheld by this Court in various decisions which are noted below. 23. In Gujarat Agro Industries Co. Ltd. vs. Municipal Corporation of the city of Ahmedabad and Ors. 1999(4) SCC 468, this Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. Supposing the correct value of a property is Rs. 10 lacs and that is the value stated in the sale deed, but the registering officer erroneously determines it to be, say, Rs. 2 crores. In that case while making a reference to the Collector under Section 47A, the registering officer will demand duty on 50% of Rs.2 crores i.e. duty on Rs.1 crore instead of demanding duty on Rs. 10 lacs. A party may not be able to pay this exorbitant duty demanded under the proviso to Section 47A by the registering officer in such a case. What can be done in this situation? 29. In our opinion in this situation it is always open to a party to file a writ petition challenging the exorbitant demand made by the registering officer under the proviso to Section 47A alleging that the determination made is arbitrary and/or based on extraneous considerations, and in that case it is always open to the High Court, if it is satisfied that the allegation is correct, to set aside such exorbitant demand under the proviso to Section 47A of the Indian Stamp Act by declaring the demand arbitrary. It is well settled that arbitrariness violates Article 14 of the Constitution vide Maneka Gandhi vs. Union of India AIR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder. The Constitution is the highest law of the land, and no law which is in conflict with it can survive. Since the law made by the legislature is in the second layer of the hierarchy, obviously it will be invalid if it is in conflict with a provision in the Constitution (except the Directive Principles which, by Article 37, have been expressly made non enforceable). 35. The first decision laying down the principle that the Court has power to declare a Statute unconstitutional was the well-known decision of the US Supreme Court in Marbury vs. Madison 5 U.S. (1Cranch) 137 (1803). This principle has been followed thereafter in most countries, including India. B. How and when should the power of the Court to declare the Statute unconstitutional be exercised? Since, according to the above reasoning, the power in the Courts to declare a Statute unconstitutional has to be accepted, the question which then arises is how and when should such power be exercised. 36. This is a very important question because invalidating an Act of the Legislature is a grave step and should never be lightly taken. As observed by the American Jurist Alexander Bickel judicial review is a counter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y drawn legal document like a title deed to be technically construed; it is rather a matter of great outlines broadly drawn for an unknowable future. Often reasonable men may differ about its meaning and application. In short, a Constitution offers a wide range for legislative discretion and choice. The judicial veto is to be exercised only in cases that leave no room for reasonable doubt. This rule recognizes that, having regard to the great, complex ever-unfolding exigencies of government, much which will seem unconstitutional to one man, or body of men, may reasonably not seem so to another; that the Constitution often admits of different interpretations; that there is often a range of choice and judgment; that in such cases the Constitution does not impose upon the legislature any one specific opinion, but leaves open this range of choice; and that whatever choice is not clearly in violation of a constitutional provision is valid even if the Court thinks it unwise or undesirable. Thayer traced these views far back in American history, finding, for example, that as early as 1811 the Chief Justice of Pennsylvania had concluded: For weighty reasons, it has been assumed as a princ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... our opinion, there is one and only one ground for declaring an Act of the legislature (or a provision in the Act) to be invalid, and that is if it clearly violates some provision of the Constitution in so evident a manner as to leave no manner of doubt. This violation can, of course, be in different ways, e.g. if a State legislature makes a law which only the Parliament can make under List I to the Seventh Schedule, in which case it will violate Article 246(1) of the Constitution, or the law violates some specific provision of the Constitution (other than the directive principles). But before declaring the statute to be unconstitutional, the Court must be absolutely sure that there can be no manner of doubt that it violates a provision of the Constitution. If two views are possible, one making the statute constitutional and the other making it unconstitutional, the former view must always be preferred. Also, the Court must make every effort to uphold the constitutional validity of a statute, even if that requires giving a strained construction or narrowing down its scope vide Mark Netto vs. Government of Kerala and others AIR 1979 SC 83 (para 6). Also, it is none of the concern of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uggle between different conceptions of good and bad. It is far too wise to gamble for Utopia or nothing to be fooled by its own romantic verbiage. Above all, it knows that none of the numerous clashing social forces is apt to be completely without both vice and virtue. By give and take, the legislative process seeks not final truth, but an acceptable balance of community interests. In this view the harmonizing and educational function of the process itself counts for more than any of its legislative products. To intrude upon its pragmatic adjustments by judicial fiat is to frustrate our chief instrument of social peace and political stability. Second, if the Supreme Court is to be the ultimate policy-making body without political accountability how is it to avoid the corrupting effects of raw power? Can the Court avoid the self-inflicted wounds that have marked other episodes of judicial imperialism? Can the Court indeed satisfy the expectations it has already aroused? A third cluster of questions involves the competence of the Supreme Court as a legislative body. Can any nine men master the complexities of every phase of American life which, as the post 1961 cases sugg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xpressed in memorable language: It is a misfortune if a judge reads his conscious or unconscious sympathy with one side or the other prematurely into the law, and forgets that what seem to him to be first principles are believed by half his fellow men to be wrong. (See Frankfurter's 'Mr. Justice Holmes and the Supreme Court') 49. In our opinion the legislature must be given freedom to do experimentations in exercising its powers, provided of course it does not clearly and flagrantly violate its constitutional limits. 50. As observed by Mr. Justice Brandeis of the U.S. Supreme Court in his dissenting judgment in New State Ice Co. vs. Liebmann 285 U.S. 262 (310-11) : The discoveries in physical science, the triumphs in invention, attest the value of the process of trial and error. In large measure, these advances have been due to experimentation There must be power in the States and the Nation to re-mould, through experimentation, our economic practices and in situations to meet changing social and economic needs. To stay experimentation in things social and economic is a grave responsibility. Denial of the right to experiment m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y whose suffrage it comes into existence . 55. In our opinion, the Court should, therefore, ordinarily defer to the wisdom of the legislature unless it enacts a law about which there can be no manner of doubt about its unconstitutionality. 56. As observed by the Constitution Bench decision of this Court in M.H. Quareshi vs. State of Bihar AIR 1958 SC 731 (vide para 15) : The Court must presume that the legislature understands and correctly appreciates the needs of its own people, that its laws are directed to problems made manifest by experience and that its discriminations are based on adequate grounds. It must be borne in mind that the legislature is free to recognize degrees of harm and may confine its restrictions to those cases where the need is deemed to be the clearest, and finally that in order to sustain the presumption of constitutionality the Court may take into consideration matters of common knowledge, common report, the history of the times, and may assume every state of facts which can be conceived existing at the time of the legislation. (See also Moti Das vs. S.P. Sahi AIR 1959 SC 942(947). 57. In the light of the above observations, the impugned amendmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n which the relevant passage runs as follows : It must be presumed that a legislature understands and correctly appreciates the need of its own people, that its laws are directed to problems made manifest by expression and that its discriminations are based upon adequate grounds. (emphasis supplied) and this view has been consistently followed thereafter. 59. Thus in M/s. B.R. Enterprises vs. State of U.P. and others AIR 1999 SC 1867 this Court observed : Another principle which has to be borne in mind in examining the constitutionality of a statute is that it must be assumed that the legislature understands and appreciates the need of the people and the laws it enacts are directed to problems which are made manifest by experience and that the elected representatives assembled in a legislature enact laws which they consider to be reasonable for the purpose for which they are enacted. Presumption is, therefore, in favour of the constitutionality of an enactment, vide Charanjit Lal Chowdhury vs. Union of India 1950 SCR 869: AIR 1951 SC 41); State of Bombay vs. F.N. Bulsara, 1951 SCR 682: (AIR 1951 SC 318), Mahant Moti Das vs. S.P. Sahi (AIR 1959 SC 942) . The foll ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bihar and others vs. Bihar Distillery Ltd. AIR 1997 SC 1511 (vide para 18) a Constitution Bench of this Court observed : The approach of the Court, while examining the challenge to the constitutionality of an enactment, is to start with the presumption of constitutionality. The Court should try to sustain its validity to the extent possible. It should strike down the enactment only when it is not possible to sustain it. The Court should not approach the enactment with a view to pick holes or to search for defects of drafting, much less inexactitude of language employed. Indeed, any such defects of drafting should be ironed out as part of the attempt to sustain the validity/constitutionality of the enactment. After all, an Act made by the Legislature represents the will of the people and that cannot be lightly interfered with. The unconstitutionality must be plainly and clearly established before an enactment is declared as void. 62. The same view has been taken by the Constitution Bench of this Court in Hamdard Dawakhana and another vs. Union of India AIR 1960 SC 554 (vide para 9) which observed : Another principle which has to be borne in mind in examining th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d above, it is only when there is no manner of doubt that the Statute is unconstitutional that it should be declared to be so. However, even reasonable men can sometimes differ as to whether there is a doubt or not about the constitutional validity. In other words, sometimes there can be a doubt whether there is a doubt at all. About some statutes there can be no doubt that they are unconstitutional e.g. if discriminatory treatment is given to redheads, or if a statute excluded owners of a certain make of motor vehicle from voting in a general election. However, there are other statutes about which one cannot be absolutely sure about their constitutional validity, and difficulties would then arise in this connection. 67. Some broad principles to resolve these difficulties are given below. 68. As regards fiscal or tax measures greater latitude is given to such statutes than to other statutes. Thus in the Constitution Bench decision of this Court in R. K. Garg vs. Union of India and others 1981 (4) SCC 675 (vide para 8) this Court observed: Another rule of equal importance is that laws relating to economic activities should be viewed with greater latitude tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upreme Court in Secretary of Agriculture v. Central Reig Refining Company, be converted into tribunals for relief from such crudities and inequities. There may even be possibilities of abuse, but that too cannot of itself be a ground for invalidating the legislation, because it is not possible for any legislature to anticipate as if by some divine prescience, distortions and abuses of its legislation which may be made by those subject to its provisions and to provide against such distortions and abuses. Indeed, howsoever great may be the care bestowed on its framing, it is difficult to conceive of a legislation which is not capable of being abused by perverted human ingenuity. The court must therefore adjudge the constitutionality of such legislation by the generality of its provisions and not by its crudities or inequities or by the possibilities of abuse of any of its provisions. If any crudities, inequities or possibilities of abuse come to light, the legislature can always step in and enact suitable amendatory legislation. That is the essence of pragmatic approach which must guide and inspire the legislature in dealing with complex economic issues . (emphasis supplied) 69 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation the Court gives great latitude to the legislature when adjudging its constitutionality, a very different approach has to be adopted by the Court when the question of civil liberties and the fundamental rights under Part III of the Constitution arise. 74. In paragraph 8 of the Constitution Bench decision in R.K. Garg's case (supra) it was observed (as quoted above) that laws relating to economic activities should be viewed with greater latitude than laws touching civil rights such as freedom of speech, freedom of religion etc. Thus, the Constitution Bench decision in R.K Garg's case (supra) is an authority for the proposition which has been stated herein, namely, when a law of the legislature encroaches on the civil rights and civil liberties of the people mentioned in Part III of the Constitution (the fundamental rights), such as freedom of speech, freedom of movement, equality before law, liberty, freedom of religion etc, the Court will not grant such latitude to the legislature as in the case of economic measures, but will carefully scrutinize whether the legislation on these subjects is violative of the rights and liberties of the citizens, and its approach must ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... triction on free speech was constitutionally valid. As Mr. Justice Holmes observed, the question in every case is whether the words used are used in such circumstances and are of such a nature as to create a clear and present danger that they will bring about substantive evils that Congress has a right to prevent . 79. We respectfully endorse the view of Mr. Justice Holmes, as stated above. 80. In Abrams vs. U.S. 250 U.S. 616 624 (1919), Mr. Justice Holmes observed : Persecution for the expression of opinions seems to me perfectly logical. If you have no doubt of your premises or your power and want a certain result with all your heart you naturally express your wishes in law and sweep away all opposition. To allow opposition by speech seems to indicate that you think the speech impotent, as when a man says that he has squared the circle, or that you do not care wholeheartedly for the result, or that you doubt either your power or your premises. But when men have realized that time has upset many fighting faiths, they may come to believe even more than they believe the very foundations of their own conduct that the ultimate good desired is better reached by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t by a temporary majority would be actually to reduce the integrity of the processes of transforming that transient majority into a minority - a processes essential to the very concept of democracy. Professor Chafee years ago remarked the fact that the Justices, including Holmes, who tended to uphold wide legislative control over business were often the very same men who tended to invalidate wide legislative control over discussion. These Justices , said Chafee, know that statutes, to be sound and effective, must be preceded by abundant printed and oral controversy. Discussion is really legislation in the soft. Drastic restrictions on free discussion are similar to rigid constitutional limits on lawmaking . 83. In our opinion, therefore, while Judges should practice great restraint while dealing with economic statutes, they should be activist in defending the civil liberties and fundamental rights of the citizens. This is necessary because though ordinarily the legislature represents the will of the people and works for their welfare, there can be exceptional situations where the legislature, though elected by the people may violate the civil liberties and rights of the people ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in print. 90. In Ghani vs. Jones (1970) 1 Q.B. 693 (709) Lord Denning observed: A man's liberty of movement is regarded so highly by the law of England that it is not to be hindered or prevented except on the surest ground. 91. The above observation has been quoted with approval by a Constitution Bench decision of this Court in Maneka Gandhi vs. Union of India, AIR 1978 SC 597 (vide para 99). 92. Why is it that the Courts both in India and in America have taken an activist approach in upholding the civil liberties and rights of the citizens? In our opinion, this is because freedom and liberty is essential for progress, both economic and social. Without freedom to speak, freedom to write, freedom to think, freedom to experiment, freedom to criticize (including criticism of the Government) and freedom to dissent there can be no progress. 93. Scientific ideas initially were often condemned because they were regarded as opposed to religious dogma. For instance, Charles Darwin's theory or Copernicus' theory at one time were condemned because they were regarded as opposed to the Bible. It was only by freedom of speech, freedom to think and freedom to dissent ..... X X X X Extracts X X X X X X X X Extracts X X X X
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