- 1 - IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 16TH DAY OF SEPTEMBER 2025 BEFORE THE HON'BLE DR. JUSTICE K.MANMADHA RAO WRIT PETITION NO.16385 OF 2022 (GM-CPC) BETWEEN: SMT. ASHA CHETAN KUMAR, AGED ABOUT 36 YEARS, WIFE OF SHRI. CHETAN KUMAR, RESIDING AT NO.14, KHB COLONY, JB KAVAL, CORPORATION WARD NO.10, KRISHNANANDA NAGAR, BEHIND POLICE QUARTERS, BENGALURU – 560 096. ... PETITIONER (BY SRI. ANANDA GANGENURA, ADVOCATE) AND: MR. K. A. MOHAMMAD ALI, SON OF ABDUL KHADEER, AGED ABOUT 68 YEARS, RESIDING AT NO.29, ERUMAPALAYAM, SALEM, TAMIL NADU – 636 015. REPRESENTED BY HIS POWER OF ATTORNEY HOLDER, MRS. KOMALA SP. D/O SRINIVASAPURA PRAKASH, WIFE OF RAGHAVENDRA, AGED ABOUT 35 YEARS, RESIDING AT NO.36/1, II FLOOR, XI CROSS, I MAIN, I STAGE, INDIARANAGAR, BENGALURU – 560 038. ... RESPONDENT (BY SRI. ACHAPPA.P.B., ADVOCATE) - 2 - THIS WRIT PETITION IS FILED UNDER ARTICLE 227 OF THE CONSTITUTIN OF INDIA PRAYING TO SET ASIDE THE IMPUGNED ORDER, DATED 28.07.2022 PASSED BY THE HON’BLE LXXXVI ADDITIONAL CITY CIVIL JUDGE AT BENGALURU (CCH-87) IN COM O.S.NO.945/2021 VIDE ANNEXURE-‘A’. THIS PETITION HAVING BEEN HEARD AND RESERVED FOR ORDERS ON 07.08.2025 AND COMING ON FOR PRONOUNCEMENT THIS DAY, THE COURT MADE THE FOLLOWING: CORAM: HON'BLE DR. JUSTICE K.MANMADHA RAO CAV ORDER This writ petition has been filed seeking to set aside the order dated 28.07.2022 on I.A.No.IX passed in Com.O.S.No.945/2021 on the file of the LXXXVI Addl. City Civil Judge at Bengaluru (for short, 'the trial Court'). 2. The Petitioner herein is the defendant and the respondent is the plaintiff before the Trial Court. 3. The Brief facts are as follows: - 3 - In 2017, September, the Respondent and his representative (herein after collectively referred to as Respondents), with an intent to establish and operate a beauty salon business, took up certain premises located in HMT Layout on CBI Road, Bangalore on lease from the landlord, Shri S.Naga by entering into lease agreement for a period of 09 years and 09 months. Then, on 07.11.2017, the respondents entered into a Limited Liability Partnership agreement constituting a Limited Liability Partnership firm named as “Goldenratio Health Care LLP” to establish and maintain the beauty salon. Thereafter, the Respondents approached the petitioner with a proposal to appoint her as manager to look after and maintain the saloon business with a decent salary, which was accepted by her. As matter stood thus, the Respondents started requesting money from petitioner for the development of salon business. As per the assurances, the petitioner and her husband started lending loans to the respondents from time to time, a sum of Rs. 10,00,000/- in the month of October 2017, a sum of Rs. 14,00,000/- in the month of February 2018, a sum of - 4 - Rs. 3,00,000/- in the month of April 2018 to the Respondents aggregating to a sum of Rs. 27,00,000/-. When the petitioner sought refund of the amounts lent, the respondents expressed inability to run the business and convinced the petitioner to take over the complete ownership of the business and assured the transfer of the trade license in the name of the petitioner. Accordingly, on 03.08.2018, the respondent requested the petitioner to enter into an agreement for sale of Stock-in-trade, furniture and effects, i.e., the business of the beauty salon, under which the respondents in turn agreed to sell the LLP’s business for the total sale consideration of Rs. 56,00,000/-. After these events, the respondents failed to fulfil their obligations and failed to complete the transactions as mentioned above and respondents continued to remain as the owner of the said business and lessees of the said business. This being the situation, Petitioner by an email, on 03.10.2018 cancelled the said agreement dated 03.08.2018 and called the Respondents to - 5 - refund the sum of Rs.27 Lakhs paid by the petitioner with a sum of Rs. 7 Lakhs as loss suffered in Eight Months and with simple interest of 1% per month as agreed in the Agreement. Respondents, on receipt of email, did not put any efforts to refute or deny the petitioner’s cancellation of the said agreement dated 03.08.2018. On 05.12.2018, the respondent wrote to the landlord, Mr. S. Naga to transfer the lease to the petitioner and also that if petitioner fails to pay rent, to terminate the lease. In response to letter by Respondents, Landlord, Naga addressed a letter dated 27.12.2018 to respondents, alleging that premises have been sub-let to the petitioner and thereby committing a breach of terms of lease and hence asking them to vacate the premises. Eventually, by a letter dated 06.02.2019 addressing to respondents, Landlord Naga terminated the lease and asked the respondents to pay the rent. However, the respondents neither challenged the termination of lease nor agitated the same but locked the lease premises and thereby restraining the petitioner from entering into the premises. - 6 - In the year 2022 in January, on receipt of summons stating that Respondents had filed suit for recovery of money from her, the petitioner, went to saloon to enquire with the respondents about the case, where she could get to know that the name of the salon has been changed and someone else has been inducted to operate the lease. Respondents have also filed a case under Negotiable Instruments Act, in CC No. 51657 of 2019, which is pending before 33rd ACMM at Bangalore for Consideration. Additionally, Respondents have also filed Com. O.S. 945 of 2021 contending that petitioner is liable to pay 16 Lakhs. On receipt of summons, the petitioner appeared filed an I.A. No- IX under section 33 of the Karnataka Stamp Act, 1957 read with Section 151 of C.P.C requesting the Hon’ble Court to impound the said agreement dated 03.08.2018. The Trail court after hearing both the parties allowed the application, but directed the petitioner to pay the deficit stamp duty. Aggrieved by the same. Petitioner is before this court. - 7 - 4. The Learned counsel for the petitioner would contend that the Trial Court erred by grossly ignoring the law laid down by this Court in Sri P.N Babu vs K S Ananth on 13 August 2019 in C.R.P.No.505 of 2018 that “if the document is found to be insufficiently stamped, then interms of the proviso (a) to section 34, the court shall call upon the person, who is tendering the said document to pay duty and ten times penalty and thereafter admit the document in evidence.” 5. It was further contended that the Trial Court has grossly erred in calculating the stamp duty under Article 5(g) of the Schedule to the Karnataka Stamp Act, 1957 and failed to consider that the agreement is chargable under article 5 (g) (i) of the schedule to the Karnataka Stamp Act, 1957. 6. It was also contended that the Trial Court instead of directing the Respondents, directed the Petitioner to pay the deficit stamp duty. - 8 - 7. The Counsel for the petitioner would rely upon the following decisions: i) W.P.NO.16606/2017(GM-CPC)-Syed Akhail vs Mallikarjuna Rao “9. Having heard the learned counsel for the parties, it is clear that the present respondents have filed S.C.\ No.1929/2016 for ejectment contending that the present petitioner was the tenant. The present petitioner filed the written statement and admitted the tenancy, but denied the ground on which ejectment is sought. It is also not in dispute that during the pendency of the proceedings, the defendant filed an application under Sections 33 and 34 of the Stamp Act praying the Court to impound the rental agreement – Ex.P1 produced by the plaintiffs. The plaintiffs/landlords have produced the rental agreement– Ex.P1 and the same was marked at their instance. Though Section30(b) of the Stamp Act says that the stamp duty is payable by a lessee or intended lessee, this Court while considering the very identical issue in W.P. No.19198/2005 dated 17.4.2008 cited supra” ii) W.P. No. 5075/2024 - Dr. Bantwal Mohan Mahesh Rao vs Sri Vrishabendra Kumar G (Order dated 23.01.2025), wherein at Para No.2 it was observed as follows: - 9 - “The Trial Court has no power to calculate the penalty and stamp duty. Under the same Act, they are to be referred to the competent authority, i.e., the District Registrar.” 8. The Respondents relied upon the following decisions of this Court: a) Late Indravathi Srinivasa and ors vs Dr. Sunitha Venugopal & Ors., WP. 17829 of 2018 dated 07.10.2021. 26. Section 34 does not speak of stopping of the proceedings. It only speaks of admitting the document in evidence or acting upon the same. Therefore, even assuming that the document is liable to be impounded, this Court does not find any merit in the contention that this Court cannot proceed with the matter unless the document is impounded and duty and penalty is collected. This Court can proceed with the matter based on admissions in the pleadings or otherwise regarding the landlord tenant relationship and termination of tenancy. b) Mr. K.S. Periyaswamy vs State of Karnataka and Ors. In W.P. No. 29493 of 2019 dated 16.08.2019. 17. The Central Court Fees Act is a central legislation and therefore, in case of repugnancy between the Central and State Acts, it is the Central Act which will prevail. In the State Act, in case of a settlement before the Lok Adalat, the entitlement for refund is only to the extent of 75%. But under Section 21 of the said Act of 1987, it is 100%. Thus, Section 21 of the said Act of 1987 will prevail. There is no manner of doubt that so far - 10 - as awards made in the suits before the Lok Adalat are concerned, Section 16 of the Central Court Fees Act will apply and 100% refund of the court fees paid will have to be made. 9. Learned counsel for the petitioner submitted on relying on the Judgment in Writ petition No.5075/2024 dated 23rd January 2025 and the same was considered and delivered relying on the Apex Court Judgment in the case of Seetharama Shetty vs. Monappa Shetty reported in AIR 2024 SC 5327. This Judgment clearly reveals that the trial Court has no power to calculate the penalty and stamp duty. Under the same Act, they are to be referred to the competent authority, i.e., the District Registrar. The relevant portion of the above Judgment is extracted below: “21.8. The scheme does not prohibit a party to a document to first invoke directly the jurisdiction of the District Registrar and present the instrument before Court/Every Person after complying with the requirement of duty and penalty. In such an event, the available objection under Sections 33 or 34 of the Act is erased beforehand. The quantum of penalty is primarily between the authority/court and the opposing party has little role to discharge. - 11 - 22. Reverting to the circumstances of the case by keeping in perspective the steps summarised in the preceding paragraph, we notice that, before the stage of admission of the instrument in evidence, the respondent raised an objection on the deficit stamp duty. Therefore, it was the respondent who required the suit agreement to be impounded and then sent to the District Registrar to be dealt with under Section 39 of the Act. In this case, the respondent desired the impounding of the suit agreement and collect the deficit stamp duty and penalty. The trial court is yet to exercise its jurisdiction under Section 34 of the Act. On the contrary, the trial court has called for a report from the District Registrar, so for all purposes, the suit instrument is still at one or the other steps summed up in paragraph 21. Therefore, going by the request of the respondent, the option is left for the decision of the District Registrar. Contrary to these admitted circumstances, though the suit instrument is insufficiently stamped, still the penalty of ten times under Section 34 of the Act is imposed through the impugned orders. The imposition of penalty of ten times at this juncture in the facts and circumstances of this case is illegal and contrary to the steps summed up in paragraph 21. The instrument is sent to the District Registrar, thereafter the District Registrar in exercise of his jurisdiction under Section 39 of the Act, decides the quantum of stamp duty and penalty payable on the instrument. The appellant is denied this option by the impugned orders. It is trite law that the appellant must pay what is due, but as is decided by the District Registrar and not the Court under Section 34 of the Act.” - 12 - 10. Hence, for the above reasons, the direction to pay Rs.660/- as the penalty of the deficit stamp duty merits interference and accordingly, set aside. The trial Court is directed to send the agreement for sale of stock in trade, furniture and effects dated 03.08.2018 to the District Registrar to determine the Stamp Duty and Penalty payable. Upon receipt of the compliance certificate from the District Registrar, without reference to an objection under the Act, the suit document be received in evidence. All objections are available to the respondents. 11. In view of the above, following Order is passed: i) The petition is Allowed. ii) The Order dated 28.07.2022 on I.A. No. IX passed in Com O.S.No.945/2021 on the file of the LXXXVI Addl. City Civil Judge at Bengaluru, is hereby set aside. - 13 - iii) The trial Court is directed to send the Agreement dated 03.08.2018 to the District Registrar to determine the requisite stamp duty and penalty payable. iv) The trial Court, upon receipt of the compliance certificate from the District Registrar, to proceed with the matter. Sd/- (DR. K.MANMADHA RAO) JUDGE BNV CT: UR