(1) When the person impounding an instrument under section 33 has by law or consent of parties authority to receive evidence and admits such instrument in evidence upon payment of a penalty as provided by section 35 or of duty as provided by section 37, he shall send to the Collector an authenticated copy of such instrument, together with a certificate in writing, stating the amount of duty and penalty levied in respect thereof, and shall send such amount to the Collector, or to such person as he may appoint in this behalf.
(2) In every other case, the person so impounding an instrument shall send it in original to the Collector.
Legal Commentary & Landmark Judgments: Section 38
Section 38 of the Indian Stamp Act, 1899 prescribes the procedure for dealing with impounded instruments, regulating transmission to the Collector.
Under sub-section (2), in every other case (i.e. where the party declines to pay the 10x penalty before the court, or where the court does not levy penalty directly), the person impounding an instrument shall send it in original to the Collector for formal adjudication and penalty determination under Section 40.
Under the *Chilakuri Gangulappa* doctrine, a litigant who cannot afford the harsh ten-times penalty before the court under Section 35 should request the court to transmit the impounded original to the Collector under Section 38(2). The Collector has statutory discretion under Section 40 to impose a much lower penalty (minimum five rupees up to ten times).