Case Note & Summary
The writ petition arose from an interlocutory order in O.S. No.17/1999, a suit for declaration that two sale agreements dated 30.03.1996 were concocted. The defendants had filed a memo offering to pay deficit stamp duty of Rs.25 and Rs.35 with ten times penalty, contending that the agreements did not provide for delivery of possession. The plaintiffs objected, asserting that the agreements themselves recited that possession was handed over, thereby attracting stamp duty as on a conveyance under Article 5(e)(i) of the Karnataka Stamp Act, 1957. The trial court accepted the plaintiffs' contention and directed the defendants to pay total stamp duty and penalty of Rs.52,800. Defendant No.1 challenged this order in the High Court. The court examined the recitals in both agreements, which stated in clear terms that possession of the lands was being handed over to the defendants in part performance of the contract. The petitioner argued that the defendants had been in possession prior to the agreements and therefore no delivery occurred, but the court held that the agreements themselves were written evidence of delivery and the fact of prior possession did not alter the character of the instruments. Following Article 5(e)(i) of the Karnataka Stamp Act, which prescribes the same duty as a conveyance on the market value when possession is delivered or agreed to be delivered before execution of conveyance, and noting the concept of part performance under Section 53A of the Transfer of Property Act, 1882, the High Court found no error in the trial court’s order and dismissed the writ petition. The decision reinforces that stamp duty liability is determined by the recitals in the instrument, not by extraneous claims of possession.
Headnote
A) Stamp Duty - Agreement to Sell with Possession - Recital of Delivery of Possession Attracts Conveyance Duty - Karnataka Stamp Act, 1957, Article 5(e)(i); Transfer of Property Act, 1882, Section 53A - The sale agreements explicitly recorded that possession of the properties was handed over to the purchasers. The purchasers-cum-defendants argued that they were already in cultivation and no possession was transferred. Held that the plain language of the agreements showed delivery in part performance of the contract, thus the stamp duty applicable was as on a conveyance under Article 5(e)(i) of the Karnataka Stamp Act, computed on the market value. The trial court's order directing payment of deficit duty and penalty was sustained (Paras 7-16).
Issue of Consideration
Whether a recital in an Agreement of Sale that the defendants were already in possession could be a factor to be considered in determining the stamp duty payable and ignoring the term that possession was being delivered under the Agreement in part performance of the contract?
Final Decision
The High Court dismissed the writ petition, upholding the trial court's order. The court held that the recitals in the agreements unequivocally recorded delivery of possession in part performance, thus attracting stamp duty as a conveyance under Article 5(e)(i) of the Karnataka Stamp Act. The contention that the defendants were already in possession was irrelevant because the agreements themselves expressly state delivery.
Law Points
- Legal points not extracted
- When a sale agreement records that possession is delivered in part performance
- stamp duty as a conveyance is payable under Article 5(e)(i) of the Karnataka Stamp Act
- prior possession of the purchaser does not negate the delivery recital.
Case Details
2026 LawText (KAR) (06) 99
W.P. No.17460/2015 (GM-CPC)
S.V. Prakash, B.S. Prasad
Rajappa (since deceased) by LRs Vasanthakumar T. and Thimmamma
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Nature of Litigation
Civil writ petition challenging an interlocutory order about stamp duty computation on two sale agreements in a declaratory suit.
Remedy Sought
The petitioner (defendant No.1) sought to quash the trial court's order directing payment of Rs.52,800 as deficit stamp duty and penalty, and to accept the calculation of only Rs.25 and Rs.35 with ten times penalty.
Filing Reason
The trial court had wrongly treated the agreements as conveyances on the ground that possession was delivered, while the petitioner contended that defendants were already in possession prior to the agreements.
Previous Decisions
The trial court by order dated 12.03.2015 in O.S. No.17/1999 directed the defendants to pay stamp duty and penalty of Rs.52,800, holding that the agreements indicated delivery of possession in part performance, attracting conveyance duty.
Issues
Whether a recital in an Agreement of Sale that the defendants were already in possession could be a factor to be considered in determining the stamp duty payable and ignoring the term that possession was being delivered under the Agreement in part performance of the contract?
Submissions/Arguments
Petitioner: Defendants were already in possession, so no delivery of possession occurred; stamp duty should be computed on the basis that possession was not delivered under the agreement. Relied on Mr. N. Srinivasa v. Sri Murulesh & Others, 2014(3) KCCR 2125.
Respondent: Agreements themselves clearly state that possession was delivered to the defendants in part performance; therefore, Article 5(e)(i) of the Karnataka Stamp Act applies, and stamp duty must be paid as a conveyance on the market value.
Ratio Decidendi
When a sale agreement explicitly recites that possession of the property has been delivered to the purchaser in part performance of the contract, the fact that the purchaser was already in possession prior to the agreement does not alter the character of the instrument. Such an agreement falls under Article 5(e)(i) of the Karnataka Stamp Act, 1957, and attracts stamp duty at the rate applicable to a conveyance on the market value, and not the lower duty for an agreement without delivery.
Judgment Excerpts
Whether a recital in an Agreement of Sale that the defendants were already in possession could be a factor to be considered in determining the stamp duty payable and ignoring the term that possession was being delivered under the Agreement in part performance of the contract?
A plain reading of the said Article would indicate that if the Agreement relates to the sale of an immovable property and if in part performance of the contract, possession is delivered or is agreed to be delivered without executing the conveyance, then stamp duty on the agreement of sale would have to be paid as would be payable for a conveyance under Article 20 on the market value of the property.
It is, therefore, clear that in both the Agreements of Sale, there are clear recitals that possession of the properties in question were handed over.
Procedural History
In O.S. No.17/1999 pending before the Principal Senior Civil Judge and JMFC, Bhadravathi, the defendants filed a memo to pay deficit stamp duty of Rs.25 and Rs.35 with ten times penalty. The plaintiffs objected, asserting that the agreements evidenced delivery of possession. The trial court, by order dated 12.03.2015, held that the agreements attracted stamp duty as a conveyance and directed payment of Rs.52,800. Against this, defendant No.1 filed the present writ petition under Articles 226 and 227 of the Constitution of India.
Acts & Sections
- Karnataka Stamp Act, 1957: Article 5(e)(i), Article 20
- Transfer of Property Act, 1882: Section 53A
- Constitution of India: Articles 226, 227
