STATE OF M.P. versus RAKESH KOHLI & ANR.

Citation: [2012] 6 S.C.R. 661 · Decided: 11-05-2012 · Supreme Court of India · Bench: RAJENDRA MAL LODHA · Disposal: Appeal(s) allowed

Cited by 7 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

[2012] 6 S.C.R. 661 
STATE OF M.P. 
v. 
RAKESH KOHLI & ANR. 
(Civil Appeal No. 684 of 2004) 
MAY 11, 2012 
[R.M. LODHA AND H.L. GOKHALE, JJ.] 
A 
B 
Stamp Act, 1899 - Article 45(d) of Schedule 1-A [as 
introduced by Stamp (Madhya Pradesh Amendment) Act, 
2002] - Constitutional validity of - Test of classification - Power C 
of Attorney to sell/transfer immovable properly situated in the 
State of Madhya Pradesh - Article 45(d) prescribing stamp 
duty on market value of property when power of attorney given 
without consideration to a person other than the kith and kin 
- Distinction carved out in Article 45(d) between an agent who 
D 
was a blood relation and who was an outsider - Challenge to 
- High Court held Article 45(d) as violative of Article 14 of the 
Constitutiof} - Justification of - Held: Not justified - By creating 
two categories, namely, an agent who is a blood relation and 
an agent other than the kith and kin, without consideration, the 
E 
Legislature sought to curb inappropriate mode of transfer of 
immovable properties - The legislative idea behind Article 
45(d) was to curb tendency of transferring immovable 
properties through power of attorney and inappropriate 
documentation - In effect, by bringing in this law, the Madhya 
Pradesh State Legislature sought to levy stamp duty on such 
ostensible document, the real intention of which was transfer 
F 
of immovable properly - Classification between blood relative 
and outsider not without any rationale - It has a direct nexus 
to the object of the Act - Constitution of India, 1950 - Article 
G 
14. 
Constitution of India, 1950 - Part Ill and Article 245 -
Statute enacted by Parliament or State Legislature -
Constitutional validity of - Judicial review - Scope - Held: Sans 
661 
H 
662 
SUPREME COURT REPORTS 
[2012] 6 S.C.R. 
A 
flagrant violation of the constitutional provisions, the law made 
by Parliament or a State Legislature cannot be declared bad 
- Legislative enactment can be struck down by Court only on 
two grounds, namely (i}, that the appropriate Legislature did 
not have competency to make the law and (ii}, that it did not 
B 
take away or abridge any of the fundamental rights 
enumerated in Part - Ill of the Constitution or any other 
constitutional provisions. 
Constitution of India, 1950 - Article 14 - Constitutional 
validity of a statute - Judicial review - Scope - Held: When 
C 
provision enacted by the State Legislature is not found to be 
discriminatory, it cannot be struck down on the ground that it 
was arbitrary or irrational. 
Tax I Taxation - Constitutional validity of taxation law -
o Scope of Judicial review - Guiding principles stated viz.(i) 
presumption in favour of constitutionality of a law made by 
Parliament or State Legislature, (ii) no enactment can be 
struck down by just saying that it;is arbitrary or unreasonable 
or irrational, unless some constitutional infirmity found, (iii) 
E 
F 
Court is not concerned with the wisdom or unwisdom, the 
justice or injustice of the law as the Parliament and State 
Legislatures are supposed to be alive to the needs of the 
people whom they represent, (iv) hardship is not relevant in 
pronouncing on the constitutional validity of a fiscal statute 
or economic law and (v) in the field of taxation, the Legislature 
enjoys greater latitude for classification - Interpretation of 
Statutes - Fiscal statute. 
By the Indian Stamp (Madhya Pradesh Amendment) 
Act, 2002 [M.P. 2002 Act], stamp duty relating to power 
G of attorney has been prescribed in Article 45 of Schedule 
1-A of the Indian Stamp Act, 1899. Clause(d) thereof 
prescribes stamp duty @ 2% on the market value of the 
property which is subject matter of power of attorney 
when power of attorney is given without consideration 
H to a person. other than father; mother, wife or husband, 
STATE OF M.P. v. RAKESH KOliLI & ANR. 
663 
son or daughter, brother or sister in relation to the 
A 
executant and authorizing such person to sell immovable 
property situated in Madhya Pradesh. The validity of the 
said provision was challenged. It was contended that the 
distinction carved out in Article 45, Clause (d) between 
an agent who was a blood relation and who was an 
8 
outsider is legally impermissible; and that the impugned 
provision violates Article 14 of the Constitution. The High 
Court held Article 45,Clause (d) as violative of Article 14 
of the Constitution being arbitrary, unreasonable and 
irrational. The said deci

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