AGREEMENT TO SELL WITH POSSESSION OF PROPERTY ; NATURE AND STAMP DUTY
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 7350 OF 2008
(Arising out of SLP (C) No. 8651 of 2007)
Avinash Kumar Chauhan ....
Appellant
Versus
Vijay Krishna Mishra ....
Respondent
JUDGMENT
S.B. SINHA, J.
1. Leave
granted.
2.
Interpretation of Sections 33 and 35 of the Indian Stamp Act 1899
(for short `the Act') calls for our consideration in this
appeal which arises
out of a judgment and order dated 27th February, 2007
passed by a learned
1
Single Judge of the High Court of Chattisgarh at Bilaspur
dismissing a
petition filed by the appellant herein under Article 227
of the Constitution
of India against the orders dated 14th November, 2006 and
9th January, 2007
passed in Civil Suit No.1-B/2006 by the Additional
District Judge,
Gariaband, Raipur.
3. The
undisputed fact of the matter is that the respondent herein, who is
said to be a member of the Scheduled Tribe intended to
transfer a house and
land admeasuring 10150 sq. ft. situated at Village
Gariyaband, District
Raipur. A sum of Rs.2,70,000/- fixed by way of
consideration towards the
aforementioned transfer was paid to the respondent by the
appellant.
Possession of the said property had also been delivered.
4. Indisputably
for the purpose of effecting transfer of the said land,
permission of the Collector was required to be obtained
in terms of Section
165 (6) of the C.G. Land Revenue Code, 1959, which was
applied for but
rejected.
2
5. Appellant
herein filed a suit for recovery of Rs.2,70,000/-. In support
of his case, the agreement dated 4th August, 2003 which
was sought to be
registered as a sale-deed has been relied upon.
The same was
directed to be impounded by an order dated 9th January,
2007, stating :-
" Under the Section
35(a) of the Stamp Act
there
is a provision that for any such instrument or
bill
of exchange or promissory note, subject to all
just
exceptions, will be admitted in evidence on
payment of the duty with which the
same is
chargeable or, in the case of an instrument
insufficiently stamped, of the amount required to
make
up such duty, together with a penalty of five
rupees,
or, when ten times the amount of the
proper
duty or deficient portion thereof exceeds
five
rupees, of a sum equal to ten times such duty
or
portion.
In the matter the agreement of sell produced
is
valued Rs.2,70,000/- which as per Article 23 of
Indian
Stamp Act and as per Schedule 5, on the
said
amount stamp duty of 5.6% is leviable and the
7.5%
of Rs.2,70,000/- comes to Rs.20,250/-. In
the agreement to sell Rs.60/- is
mentioned as
stamp
which means reducing the Rs.20,250 -
Rs.60
= Rs.20,190 is less stamp duty paid, 10
times
penalty of which will be leviable as per
Section 35 of the Stamp Act means Rs.201900/-
stamp
duty will be leviable. In this regard relevant
case
law is `Kapur Constructions vs. Lita Nagraj
and
Ors.,' AIR 2005 Karnataka 032. The plaintiff
3
has
paid Rs.20,850/- in the C.C.D. so the rest of
the
amount of Rs.181050 be deposited within the
next
date of hearing and the Opposite Party shall
also
file its counter reply by the next date of
hearing."
6. As noticed
hereinbefore the High Court by reason of the impugned
judgment refused to interfere with the said order.
7. Mr. A.K.
Bajpai, learned counsel appearing on behalf of the appellant
would submit that having regard to the fact that the said
unregistered deed
of sale was sought to be put in evidence not for the
purpose of enforcement
of the contract but only for the purpose of recovery of
the amount of
consideration, which indisputably has been paid to the
respondent and such
a purpose, it was urged, being a collateral one, the
provisions of Sections 33
and 35 of the Act shall not be attracted.
Reliance in
this behalf has been placed on the proviso appended to
Section 49 of the Indian Registration Act as also on the
decision of this
Court in Bondar Singh v. Nihal Singh, [ (2003) 4 SCC 161
],
4
8. Mr. Suhail
Dutt, learned counsel appearing on behalf of the
respondent, on the other hand, would support the impugned
judgment.
9. The Act was
enacted to consolidate and amend the law relating to
Stamps.
"Conveyance" has been defined in Section 2(10) to mean :-
" "conveyance"
includes a conveyance on sale
and
every instrument by which property, whether
moveable or immoveable, is transferred inter vivos
and
which is not otherwise specifically provided
for by
Schedule I ;"
"Receipt" has been defined in section 2(23) of the Act to mean
:-
" "receipt"
includes any note, memorandum
or
writing-
(a)
whereby any money, or any bill of exchange,
cheque
or promissory note is acknowledged to
have
been received, or
(b)
whereby any other moveable property is
acknowledged to have been received in
satisfaction of a debt, or
(c)
whereby any debt or demand, or any part of a
debt or
demand, is acknowledged to have been
5
satisfied or discharged, or
(d)
which signifies or imports
any such
acknowledgement ;
and
whether the same is or is not signed with the
name of
any person."
"Stamp" has been defined in Section 2(26) to mean :-
" "Stamp" means
any mark, seal or
endorsement by any agency or person duly
authorised by the State Government, and includes
an
adhesive or impressed stamp, for the purposes
of duty
chargeable under this Act."
10. Chapter II of
the Act provides for stamp-duties.
Section 3,
which is the charging Section reads as under :-
"3. Instruments chargeable with duty. - Subject to
the
provisions of this Act and the exemptions
contained in Schedule I, the following instruments
shall
be chargeable with duty of the amount
indicated in that Schedule as the proper duty
therefor, respectively, that is to say-
(a) every instrument mentioned
in that
Schedule which, not having been previously
6
executed by
any person, is executed in India
on or after
the first day of July, 1899;
(b) every bill of
exchange payable otherwise
than on
demand or promissory note drawn
or made out
of India on or after that day and
accepted or
paid, or resented for acceptance
or payment,
or endorsed, transferred or
otherwise
negotiated, in India; and
(c) every
instrument (other than a bill of
exchange or
promissory note) mentioned in
that
Schedule, which, not having been
previously
executed by any person, is
executed out
of India on or after that day,
relates to
any property situate, or to any
matter or
thing done or to be done, in 8
[India] and
is received in India.
Provided that no duty shall be chargeable in
respect of-
(1) any instrument executed by, or on behalf of,
or in favour of, the Government incases where, but
for this exemption, the Government would be
liable to pay the duty chargeable in respect of such
instrument;
(2) any instrument for the sale, transfer or other
disposition, either absolutely or byway of
mortgage or otherwise, of any ship or vessel, or
any part, interest, share or property of or in any
ship or vessel registered under the Merchant
Shipping Act 1894, or under Act 19 of 1838, or
the Indian Registration of Ships Act, 1841, as
amended by subsequent Acts.
7
(3)
any instrument executed ,by, or , on behalf
of,
or, in favour of, the Developer , or Unit or in
connection with the carrying out of purposes of
the
Special Economic Zone,
Explanation- For the purposes of this clause, the
expressions "Developer", "Special Economic
Zone" and "Unit" shall have meanings respectively
assigned to them in clause(g), (za) and (zc) of
Section
2 of the Special Economic Zones Act,
2005."
The other
provisions contained in the said chapter deal with the mode
and manner of payment etc.
Chapter III
of the Act provides for adjudication with regard to proper
stamps; whereas Chapter IV deals with instruments not
duly stamped.
Section 33
casts a duty upon every person who has authority to
receive evidence and every person incharge of a public
office before whom
the instrument is produced, if it appears to him that the
same is not duly
stamped, to impound the same. Sub-section (2) of Section
33 of the Act
lays down the procedure for undertaking the process of
impounding.
Section 35 provides that an instrument shall be
inadmissible in evidence if
the same is not duly stamped in the following terms :-
8
"35 - Instruments not duly stamped inadmissible in
evidence, etc.
No instrument chargeable with duty shall be
admitted in evidence for any purpose by any
person having by law or consent of parties
authority to receive evidence, or shall be acted
upon, registered or authenticated by any such
person or by any public officer, unless such
instrument is duly stamped :
Provided that--
(a) any such instrument shall be admitted in
evidence on
payment of the duty with which
the same is
chargeable, or, in the case of an
instrument
insufficiently stamped, of the
amount required
to make up such duty, together
with a penalty
of five rupees, or, when ten
times the
amount of the proper duty or deficient
portion thereof
exceeds five rupees, of a sum
equal to ten
times such duty or portion ;
(b)where any person from whom a stamped receipt
could have been
demanded, has given an
unstamped
receipt and such receipt, if stamped,
would be
admissible in evidence against him,
then such
receipt shall be admitted in evidence
against him on
payment of a penalty of one
rupee by the
person tendering it;
(c)where a contract or agreement of any kind is
effected by
correspondence consisting of two
or more letters
and any one of the letters bears
the proper stamp, the contract or agreement
shall be deemed
to be duly stamped;
(d)nothing herein contained shall prevent the
admission of any
instrument in evidence in any
9
proceeding
in a Criminal Court, other than a
proceeding under Chapter XII or Chapter
XXXVI of the Code of Criminal Procedure
1898;
(e)nothing herein contained shall prevent the
admission
of any instrument in any Court when
such
instrument has been executed by or on
behalf of the Government or where it bears the
certificate of the Collector as provided by
section 32 or any other provision of this Act."
11. Section 36 of
the Act provides that where an instrument has been
admitted in evidence, such admission shall not, except as
provided in
Section 21 thereof, be called in question at any stage of
same suit or
proceeding on the ground that the instrument has not been
duly stamped.
Section 38 provides for the mode and manner in which the
instrument
impounded is to be dealt with.
12. The
Parliament has, in Section 35 of the Act, advisedly used the
words "for any purpose whatsoever". Thus, the purpose for which a
document is sought to be admitted in evidence or the
extent thereof would
not be a relevant factor for not invoking the
aforementioned provisions.
10
13. The land in
the instant case is situated in a Scheduled Area.
Execution of a deed of conveyance in respect of the land
situated in the
scheduled area is statutorily barred. All transactions
can be affected only
upon obtaining the permission of the collector in terms
of the provisions of
Section 165 (6) of the C.G. Land Revenue Code, 1959. We
are, however,
not concerned with the said provisions.
14. Indisputably
an instrument was executed. By
reason of such an
instrument not only the entire amount of consideration
was paid but
possession of the property had also been transferred.
Explanation
appended to Article 23 of Schedule IA of the Stamp Act
as substituted by M.P. Act No. 19 of 1989 reads as under
:-
"Explanation.- For the purpose of this Article,
where
in the case of agreement to sell immovable
property, the possession of any immovable
property
is transferred to the purchaser before
execution after execution of such agreement
without
executing the conveyance in respect
thereof, then such agreement to sell shall be
deemed
to be a conveyance and stamp duty
thereon
shall be leviable accordingly:
Provided that the provisions of section 47A shall
apply
mutatis mutandis to such agreement which
11
is
deemed to be a conveyance as aforesaid, as they
apply
to a conveyance under that section:
Provided further that where subsequently a
conveyance is effected in pursuance of such
agreement of sale, the stamp duty, if any, already
paid
and recovered on the agreement of sale,
which
is deemed to be a conveyance shall be
adjusted towards the total duty leviable on the
conveyance subject to a minimum of Rs.10."
15. The said
explanation has been inserted by M.P. Act 19 of 1989 with
effect from 15th November, 1989. By reason of the said
provision, thus, a
legal fiction has been created. Although ordinarily an
agreement to sell
would not be subject to payment of stamp duty which is
payable on a sale
deed, but having regard to the purpose and object it
seeks to achieve the
legislature thought it necessary to levy stamp duty on an
instrument
whereby possession has been transferred.
The validity
of the said provision is not in question.
16. It is not in
dispute that the possession of the property had been
delivered in favour of the appellant. He has, thus, been
exercising some
right in or over the land in question. We are not concerned with the
enforcement of the said agreement. Although the same was
not registered,
12
but registration of the document has nothing to do with
the validity thereof
as provided for under the provisions of the Indian
Registration Act, 1908.
17. We have
noticed heretobefore that Section 33 of the Act casts a
statutory obligation on all the authorities to impound a
document. The court
being an authority to receive a document in evidence is
bound to give effect
thereto.
18. The
unregistered deed of sale was an instrument which required
payment of the stamp duty applicable to a deed of
conveyance. Adequate
stamp duty admittedly was not paid. The court, therefore,
was empowered
to pass an order in terms of Section 35 of the Act.
19. The
contention of learned counsel for the appellant that the document
was admissible for collateral purpose, in our opinion, is
not correct. In
Bondar Singh (supra) this Court was not concerned with
the provisions of
the Act. Only interpretation of the provisions of the
Registration Act, 1908
was in question. It was opined :-
" The main question, as
we have already
noted,
is the question of continuous possession of
13
the
plaintiffs over the suit lands. The sale deed
dated
9-5-1931 by Fakir Chand, father of the
defendants in favour of Tola Singh, the
predecessor-in-interest of the plaintiffs, is an
admitted document in the sense its execution is not
in dispute. The only defence set up
against the said
document is that it is unstamped and unregistered
and
therefore it cannot convey title to the land in
favour
of the plaintiffs. Under the law a sale deed
is required to be properly stamped and
registered
before
it can convey title to the vendee. However,
legal
position is clear law that a document like the
sale
deed in the present case, even though not
admissible
in evidence, can be looked into for
collateral purposes. In the present case the
collateral purpose to be seen is the nature of
possession of the plaintiffs over the suit land. The
sale
deed in question at least shows that initial
possession of the plaintiffs over the suit land was
not
illegal or unauthorized..."
In this case,
by reason of the statutory interdict, no transfer at all is
permissible. Even transfer of possession is also not
permissible. [See
Pandey Oraon v. Ram Chander Sahu 1992 Supp (2) SCC 77 and
Amrendra
Pratap Singh v. Tej Bahadur Prajapati and Others (2004)
10 SCC 65]
20. The
Registration Act, 1908 provides for such a contingency in terms
of the proviso appended to Section 49 thereof, which
reads as under :-
"49. Effect of
non-registration of documents
required to be registered.-
14
No
document required by section 17 or by any
provision of the Transfer of Property Act, 1882 (4
of
1882), to be registered shall--
(a)
affect any immovable property comprised
therein, or
(b) confer any power to adopt, or
(c) be
received as evidence of any transaction
affecting such property or conferring such power,
unless
it has been registered:
Provided that an unregistered document affecting
immovable property and required by this Act or
the
Transfer of Property Act, 1882 (4 of 1882), to
be
registered may be received as evidence of a
contract in a suit for specific performance under
Chapter
II of the Specific Relief Act, 1877 (3 of
1877)
or as evidence of any collateral transaction
not
required to be effected by registered
instrument."
21. Section 35 of
the Act, however, rules out applicability of such
provision as it is categorically provided therein that a
document of this
nature shall not be admitted for any purpose whatsoever.
If all purposes for
which the document is sought to be brought in evidence
are excluded, we
15
fail to see any reason as to how the document would be
admissible for
collateral purposes.
22. The view we
have taken finds support from the decision of the Privy
Council in Ram Rattan v. Parmananad, [AIR 1946 PC 51]
wherein it was
held :-
"That the words `for any purpose' in Section 35 of
the
Stamp Act should be given their natural
meaning and effect and would include a collateral
purpose and that an unstamped partition deed
cannot
be used to corroborate the oral evidence for
the
purpose of determining even the factum of
partition as distinct from its terms."
The said
decision has been followed in a large number of decisions by
the said Court.
In Bhaskarabhotla Padmanabhaiah and others v.
B.
Lakshminarayana and others [ AIR 1962 A.P. 132 ], it has
been held :-
"9. In this case, the learned
Subordinate Judge
has
observed that what the plaintiff was trying to
prove
was not the division in status but to show
that
the property was divided under the partition
deed. In any case, the fact that the
document is
inadmissible due to want of being stamped is
clear.
For, in Ram Rattan v. Parmanand, AIR
1946
PC 51, their Lordships of the Privy Council
16
held
that the words `for any purpose' in S. 35 of
the
Stamp Act should be given their natural
meaning
and effect and would include a collateral
purpose
and that an unstamped partition deed
cannot
be used to corroborate the oral evidence for
the
purpose of determining even the factum of
partition as distinct from its terms."
It was
furthermore held :-
"10. In the result, I agree with the learned
Munsif-Magistrate that the document is `an
instrument of partition' under Sec. 2(15) of the
Indian
Stamp Act and it is not admissible in
evidence
because it is not stamped. But, I further
held
that if the document becomes duly stamped,
then it
would be admissible to evidence to prove
the
division in status but not the terms of the
partition."
In Sanjeeva
Reddi v. Johanputra Reddi, [ AIR 1972 A.P. 373 ], it
has been held :-
"9. While considering the scope of Section 35 of
the
Indian Stamp Act we cannot bring in the effect
of
non-registration of a document under Section
49 of
the Indian Registration Act. Section 17 of
the
Indian Registration Act deals with documents,
the
registration of which is compulsory and
Section
49 is concerned only with the effect of
such
non-registration of the documents which
require
to be registered by Section 17 or by any
provision of the Transfer of Property Act. The
effect
of non-registration is that such a document
17
shall not affect any immovable property covered
by it or confer any power to adopt and it cannot be
received as evidence of any transaction affecting
such property or conferring such power. But there
is no prohibition under Section 49 to receive such
a document which requires registration to be used
for a collateral purpose i.e. for an entirely different
and independent matter. There is a total and
absolute bar as to the admission of an unstamped
instrument whatever be the nature of the purpose
or however foreign or independent the purpose
may be for which it is sought to be used, unless
there is compliance with the requirements of the
provisos to Section 35. In other words if an
unstamped instrument is admitted for a collateral
purposes. It would amount to receiving such a
document in evidence for a purpose which Section
35 prohibits. There is nothing in the case of B.
Rangaiah v. B. Rangaswamy, (1970) 2 Andh WR
181 which supports the contention of the
petitioner. That was a case as pointed out by
Kuppuswami, J., where there were two
instruments though contained in one document
one a settlement in favour of the 4th defendant
therein and the other a will. It was therefore held
that part of the instrument which constitutes a will
did not require any stamp and will be admissible
in evidence for proving the bequest contained
therein. It was for that reason that the learned
Judge said that Sec. 35 of the Stamp Act has no
application to a case where one of the separate
instruments relating to one such matters would not
at all be chargeable under the Act as in the case
before him."
18
In T. Bhaskar
Rao v. T. Gabriel and others, [ AIR 1981 A.P. 175 ], it
has been held :-
"5. Section 35 of the Stamp Act mandates that an
instrument chargeable with duty should be
stamped
so as to make it admissible in evidence.
Proviso
A to Section 35 of the Stamp Act enables
a
document to be received in evidence on payment
of
stamp duty and penalty if the document is
chargeable, but not stamped or on payment of
deficit
duty and penalty, if it is insufficiently
stamped. The bar against the admissibility of an
instrument which is chargeable with stamp duty
and is
not stamped is of course absolute whatever
be the
nature of the purpose, be it for main or
collateral purpose, unless the requirements
of
proviso
(A) to Section 35 are complied with. It
follows
that if the requirements of proviso (A) to
Section
35 are satisfied, then the document which
is
chargeable with duty, but not stamped, can be
received in evidence."
It was
further held :-
"7. It is now well settled that there is no
prohibition under Section 49 of the Registration
Act, to
receive an unregistered document in
evidence for collateral purpose. But the document
so
tendered should be duly stamped or should
19
comply with the requirements of Section
35 of the
Stamp
Act, if not stamped, as a document cannot
be
received in evidence even for collateral purpose
unless
it is duly stamped or duty and penalty are
paid under Section 35 of the Stamp
Act."
(See also
Firm Chuni Lal Tukki Mal v. Firm Mukat Lal Ram Chanda
and others, [ AIR 1965 All. 164 ] and Chandra Sekhar
Misra v. Gobinda
Chandra Das, [ AIR 1966 Ori. 18 ] ).
23. For the
reasons aforementioned, there is no merit in this appeal which
fails and is dismissed. However, in the facts and
circumstances of the case,
there shall be no order as to costs.
.............................J.
[ S.B. Sinha ]
.............................J.
[ Cyriac Joseph ]
New Delhi
December 17, 2008
