020-SLLR-SLLR-2006-V-2-CEYLEASE-FINANCIAL-SERVICES-LTD.-vs.-SRIYALATHA-AND-ANOTHER.pdf

In these circumstances it is evident that the contention of the learnedPresident’s Counsel for the appellant is not tenable.
Learned President’s Counsel for the appellant during the course of thehearing took up the position, relying on section 31 and 33 of the StampDuty Act, that the appellant is entitled to rectify the deficiency of stampduty with a subsequent payment and that he should be allowed to pay thedeficit without rejecting the Guarantee and Indemnity in issue.
Section 33(1) of the Stamp Duty Act, deals with the admissibility of adocument and/or an instrument and states as follows :
“ No instrument chargeable with stamp duty shall be receivedor admitted in evidence by any person having by law or consentof parties authority to receive evidence or registered orauthenticated or acted upon by any person or by any officer ina public office or corporation or bank or approved credit agencyunless such instrument is duly stamped.”
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Sri Lanka Law Reports
(2006) 2 Sri L R.
The contention of the learned President's Counsel for the appellant isthat, even if the document in question is not duly stamped at the time ofexecution, it could be stamped at a later stage and be admitted in evidencein Court and such admission cannot be questioned, as there is no timeperiod that has been stipulated for the purpose of paying the stamp dutyand the penalty for a document, which is insufficiently stamped.
Learned Counsel for the respondent conceded that the appellant wasentitled to rectify the deficiency of the stamp duty with the payment of apenalty. However, his position was that the said payment of the penaltyshould be done prior to the production of the document in evidence.
Based on the submissions of the learned President’s Counsel for theappellant, two questions have emerged in terms of the provisions of theStamp Duty Act. The questions thus would be,
Whether the deficiency in stamping would be fatal to theadmissibility of the document in issue; and
Whether such defect could be regarded as curable ?
With regard to these two (2) questions, learned Senior State Counseldrew our attention to the two (2) decisions of the Court of Appeal byEdussuriya, J.
I n the case of Yousoof Mohamed and Another v Indian Overseas Bank*’*the Court had to consider whether the annexures A1 to A5, which werewith the plaint should be rejected, as they were not stamped.
After considering the provisons applicable, the Court of Appeal heldthat,
there is no provision which directs the rejection of a plaint, whichis not duly stamped or a dismissal of an action on that basis;
where a plaint is insufficiently stamped due to any annexures,which have been filed as part and parcel of the plaint, not beingduly stamped, the Court cannot reject or refuse to entertain theplaint or dismiss the action but must necessarily call for thedeficiency in stamps.
SCCeylease Financial Services Ltd Vs. Sriyalatha and another183
(Shirani Bandaranayake, J.)
Having said that, the Court also was of the view that if there was afailure to supply the deficiency in stamps within a time fixed by Court, theplaint may rejected. Accordingly it was stated that,
“ However, where a plaintiff fails to supply the deficiency instamps within a time fixed by Court, the plaint may berejected (emphasis added)”
This position was again considered in Wickremasinghe and Othersv the Goodwill Marine Academy (pvt.) Ltd.™ (200T) where the plaintiff-respondent in that matter sought to mark in evidence the bond X2, andobjection was taken on the basis that the bond X2 was not duly stampedin accordance with the provisions of the Stamp Duty Act. Considering theapplicable provisions of the Stamp Duty Act, the Court held that under theproviso to section 33(1) of the said Act, an unstamped bond may beadmitted in evidence upon payment of the proper duty or the amount requiredto make up the same and a penalty not exceeding three times the properduty, However, the Court considering the status of the bond in questionclearly stated that,
“This had not been done at the time the documentwas sought to be marked in evidence when the objectionwas taken. Hence the objection must necessarily beupheld.”
On an examination of the rationale of these two decisions, it isapparent that the Court has considered the applicability of section 33 ofthe Stamp Duty Act as imperative, but is curable, if attended to in terms ofthe provisions of the said Act. However, it is also to be borne in mind thatthe Court had taken the view that an attempt to cure the defect should bedone prior to the marking of the document (Wickremasinghe and Others vThe Goodwill Marine Academy (Pvt.) Ltd. (supra).
In the light of the aforementioned, let me now consider thecircumstances of the present appeal.
It is not disputed that, when this matter was before the High Court,the learned Counsel for the respondent had objected to the admissiblilityof the Guarantee and Indemnity, as it has not been prepared in terms of
2 – CM 8096
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(2C0S) 2 Sri L R.
the provisions of the Stamp Duty Act. When this matter came up in theHigh Court on 02.03.2004, the appellant had moved for a date to makesubmissions and it had been fixed for 25.03.2004. On that day the appellanthad moved for further time and it was fixed for 03.05.2004, on which dayagain the appellant had moved for further time. On 18.05.2004 appellantmoved for time to file written submissions in respect of the objectionstaken by the respondent.
The steps taken by the appellant in the High Court as stated by thelearned Judge of the High Court in his order further indicates that, whenthe respondent raised the preliminary objection that the appellant had notpaid the required stamp duty in terms of the Stamp Duty Act, the learnedCounsel for the appellant had moved for time for the payment of the saidamount. Thereafter the case had been called on three occasions for thatpurpose, but at the end of that period learned Counsel for the appellanthad submitted that they have affixed sufficient amount of stamps and thatthere is no necessity to pay any further dues as stamp duty. Accordinglythe appellant on 18.05.2004 had moved court for an order on the objectionsraised by the respondent. Referring to this position learned Judge of theHigh Court had clearly stated in his judgment as follows:

It is thus quite clear that, although sufficient time and an opportunitywas given to the appellant to rectify the deficiency of stamp duty on theGuarantee and Indemnity, he had not taken any steps in that regard.
In such circumstances the question that needs consideration is whetherthe deficiency of stamps is a curable defect, which can be rectified uponthe payment of the outstanding stamp duty and the requisite penalty asprovided for under the provisions of the Stamp Duty Act ?

added)”
(emphasis
sc
Ceylease Financial Services Ltd Vs. Sriyalatha andt Another
(Shirani Bandaranayake, J.)
185
In terms of the proviso to section 33(1) of the Stamp Duty Act, aninstrument, which is not duly stamped may be admitted in evidence uponpayment of the proper duty with which it is chargeable on the amountrequired to make up the same and a penalty not exceeding three timesthe proper duty. The Stamp Duty Act, therefore had made clear provisionto cure the deficiency of an instrument, which is not duly stamped, inorder for such an instrument to be admitted in evidence. Therefore it isapparent that, if there is a deficiency of stamps in an instrument, thatshould be regarded as a curable defect that could be rectified upon thepayment of the outstanding stamp duty and the required penalty in termsof the provisions of the Stamp Duty Act. In fact, referring to the provisionsin the Stamp Ordinance, Lord Goddard, in the Privy Council decision in(Karunapejjalage Bilindi v Wellawa Attadassi Thero) (1945) 47 N.L.R. 7)stated that,
“it would be an unfortunate and probably unintended
result of the Stamp Ordinance if a litigant should be debarredfrom an appeal on a ground which is from a practical point ofview capable of easy remedy without injustice to anyone.”
I am in complete agreement with the view expressed by the Privy Council,as an objection of purely a technical nature should not be upheld to preventthe course of justice.However, it is also necessary to be borne in mindthat, a Court should not allow a process that would pave the way tounwarranted delay, which also would result in thwarting the course of justice.
Accordingly, although it is not specified in the Stamp Duty Act, it wouldbe necessary to consider whether there is a time frame in permitting thepayment of the proper duty and the penalty, when an instrument is notduly stamped. Section 33 of the Stamp duty Act, which is referred toearlier, clearly specifies that no instrument chargeable with stamp duty beadmitted in evidence, unless such instrument is duly stamped. It is thusevident that, stamp duty should be paid prior to the admission of therelevant instrument. In the circumstances, where an instrument has to beadmitted in evidence and if it is not duly stamped, the deficiency has to becured prior to the instrument being marked in evidence.
In the present case, as stated earlier, the learned Judge of the HighCourt had granted time for the appellant to cure the deficiency in stampduty, but the appellant had not taken any steps in this regard.
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(2CG6) 2 Sri L R.
Learned Presidenf s Counsel for the appellant submitted that the StampDuty Division of the Department of Inland Revenue had been closed duringthe relevant period and therefore he was unable to obtain an order from therelevant authority, However, it is apparent that as stated earlier, learnedJudge of the High Court after considering the submissions on behalf of theappellant had granted time more than on three (3) occasions for the appellantto pay the proper stamp duty and it is abundantly clear that the appellanthad taken no steps to cure the deficit of the stamp duty.
In such circumstances, when ample time and opportunity had beengranted to the appellant, quite rightly by the learned Judge of the Highcourt, it would not be possible for this Court to grant further time at thisjuncture for the appellant to pay the deficit in stamp duty.
Although the Court should be mindful of not permitting mere technicalitiesto hinder the process of justice, it must also be taken into considerationthat unwarranted delay would also necessarily result in thwarting the courseof justice. Although it is necessary to grant time in remedying the deficit instamp duty, that should be done, prior to the relevant instrument/documentbeing marked in evidence and more importantly within the time fixed bythe Court.
In the circumstances it is evident that the appellant has failed andneglected to rectify the deficiency in stamp duty paid on the Guaranteeand Indemnity and therefore the learned Judge of the High Court wascorrect in holding that he cannot be allowed to produce and mark the saidGuarantee and Indemnity.
There is one other matter I wish to refer to before I part with this Judgment.
Learned President’s Counsel for the appellant submitted that if thiscourt holds that the Guarantee and Indemnity is a document subject tostamp duty under item 7 of the Gazette Extraorinary No. 224/3 dated20.12.1982 as amended by Gazette Extraordinary No. 948/15 dated06.11.1986, the stamp duty would be a large sum of money the lesseewould have to bear thereby burdening the lessee with such stamp duty inaddition to the lease rental and taxes, which he is already obliged to payfor the main lease agreement. He further submitted that the guarantorswill not accept to be liable to pay a large sum of money as stamp duty.
SCCeylease Financial Services Ltd Vs. Sriyalatha and anotherJ87
(Shirani A. Bandaranayake, J.)
The person liable to pay stamp duty is clearly stated in the Stamp DutyAct. Section 24 refers to the person liable to pay stamp duty and refers tovarious categories where as section 24(f) states that,
“ (24) Except where there is an agreement to the contrary,stamp duty shall be payable-
(f) in the case of any other instrument, by the person drawing,making or executing such instrument.” .
The person, who draws, makes or executes the relevant instrumentspertaining to a lease agreement undoubtedly is the Leasing Company andtherefore unless and otherwise there is an agreement to the contrary, theliability of paying the stamp duty would be with the Leasing Companies orthe relevant Financial Institutions.
The purpose and the intent of the Stamp Duty Act, is to facilitate thecollection of revenue. Therefore when provision is made for the impositionof stamp duty on instruments and documents, it is necessary to adhere tothe said provisions although it may seem to be a burden on certain parties.It is also to be noted that, Regulations are made in terms of Section 69 ofthe Stamp Duty Act and the role of this Court is to give effect to the saidprovisions as it is the bounden duty of any Court and the function of everyJudge to impart justice within the given parameters.
For the reasons aforementioned, I answer the three (3) questions onwhich leave to appeal was granted in the negative. This appeal is accordinglydismissed and the order of the High Court dated 03.08.2004 is affirmed.
I make no order as to costs.
GAMINI AM AR ATUNGA, J. — / agree.
SALEEM MARSOOF, J. — / agree.
Appeal dismissed.