Case Note & Summary
The appellant, Ramesh Mishrimal Jain, filed a suit for specific performance of an agreement to sell dated 03.09.2003 in respect of a property in Khed, Ratnagiri. The respondents, Avinash Vishwanath Patne and another, filed an application under Section 34 of the Bombay Stamp Act, 1958 to impound the agreement, alleging that it was insufficiently stamped. The trial court allowed the application, impounded the document, and directed it to be sent to the Registrar of Stamps for recovery of deficit stamp duty and penalty. The appellant challenged this order in the Bombay High Court, which dismissed the writ petition. The appellant then appealed to the Supreme Court. The core legal issue was whether the agreement to sell, which stated that possession would be transferred only after execution of the sale deed, could be treated as a 'deemed conveyance' under Explanation I to Article 25 of Schedule I of the Bombay Stamp Act, 1958, thereby attracting stamp duty. The appellant argued that since possession was not transferred under the agreement and he remained a tenant, Explanation I did not apply. The respondents contended that the agreement agreed to transfer possession within 11 months, and thus it was a deemed conveyance. The Supreme Court held that stamp duty is levied on the instrument, not the transaction, and it is immaterial whether possession was actually handed over or only agreed to be transferred. The Court relied on precedents including Veena Hasmukh Jain v. State of Maharashtra and Shyamsundar Radheshyam Agrawal v. Pushpabai Nilkanth Patil. The Court dismissed the appeal, upholding the orders of the trial court and the High Court, and directed that the document be sent to the Registrar of Stamps for recovery of stamp duty and penalty as per law.
Headnote
A) Stamp Act - Deemed Conveyance - Explanation I to Article 25, Schedule I, Bombay Stamp Act, 1958 - Agreement to sell immovable property where possession is transferred or agreed to be transferred before, at, or after execution without executing conveyance is deemed a conveyance - Court held that stamp duty is on the instrument and not on the transaction; it is immaterial whether possession was actually handed over or only agreed to be transferred - The agreement to sell dated 03.09.2003, which provided for transfer of possession after execution of sale deed, falls within Explanation I and is liable to stamp duty as a conveyance (Paras 9-10). B) Stamp Act - Impounding of Document - Section 34, Bombay Stamp Act, 1958 - Court can impound an insufficiently stamped document and send it to the Registrar of Stamps for recovery of deficit stamp duty and penalty - The trial court's order impounding the agreement to sell and directing recovery of stamp duty and penalty was upheld by the High Court and Supreme Court (Paras 2-3, 11).
Issue of Consideration
Whether the appellant is liable to pay stamp duty and penalty on the agreement to sell dated 03.09.2003 under Explanation I to Article 25 of Schedule I of the Bombay Stamp Act, 1958, when possession was not actually transferred but was agreed to be transferred after execution of sale deed.
Final Decision
The Supreme Court dismissed the appeal, upholding the orders of the trial court and the High Court. The agreement to sell dated 03.09.2003 is deemed a conveyance under Explanation I to Article 25 of Schedule I of the Bombay Stamp Act, 1958, and the document shall be sent to the Registrar of Stamps for recovery of deficit stamp duty and penalty as per law.
Law Points
- Stamp duty is on the instrument
- not the transaction
- Explanation I to Article 25 of Schedule I of the Bombay Stamp Act
- 1958 applies when possession is transferred or agreed to be transferred under an agreement to sell
- even if possession is to be transferred after execution of sale deed
- agreement to sell can be deemed a conveyance for stamp duty purposes
