Case Note & Summary
The appellants, Shyamsundar Radheshyam Agrawal and another, filed a suit for declaration and injunction in Special Civil Suit No.200 of 2008. During the suit, Defendant No.46 applied under Sections 33, 34, and 37 of the Maharashtra Stamp Act, 1958 read with Section 17 of the Registration Act to impound six original agreements for sale produced by the appellants, arguing that these documents included a clause transferring physical possession of the properties but were not duly stamped, thus requiring payment of stamp duty as conveyance. The trial court allowed the application on 26.10.2016, impounding the documents and directing their transmission to the Collector of Stamp, Thane, for adjudication of stamp duty and penalty. The appellants challenged this order in the High Court of Judicature at Bombay via Writ Petition No.4695 of 2017, which was dismissed on 03.03.2021. The appellants then appealed to the Supreme Court. The Supreme Court examined the six documents: three agreements for sale-cum-development dated 20.07.1994 and 12.10.1994 between different parties (Vinayak Kashinath Gharat and others in favour of Naresh N. Jain and others, and Naresh N. Jain in favour of M/s.Chedda Enterprises) on Rs.20 stamp paper, and three agreements dated 19.09.2004 and 27.04.2006 between M/s.Sunshine Builders and Developers and the appellants on Rs.100 stamp paper. The court noted that these documents were not part of a single transaction between the same parties; they involved different vendors and purchasers across different periods. The court held that under Section 4 of the Maharashtra Stamp Act, 1958, several instruments can be treated as part of a single transaction only if they are executed in furtherance of that transaction between the same parties. Since the agreements were between different parties and executed at different times, they could not be considered part of a single transaction with the subsequent sale deed. Additionally, Explanation I to Article 25 of Schedule I of the Act deems an agreement to sell as a conveyance if possession is transferred or agreed to be transferred before or at the time of execution, without executing a conveyance. The court found that the agreements contained clauses transferring possession, thus they were deemed conveyances liable to stamp duty. The court also noted that the language of Explanation I was amended with effect from 17.08.1994, deleting the words "without executing the conveyance in respect thereof," but this did not affect the applicability. Relying on Veena Hasmukh Jain v. State of Maharashtra, (1999) 5 SCC 725, the court affirmed that stamp duty is on the instrument, not the transaction. Consequently, the Supreme Court dismissed the appeal, upholding the orders of the trial court and the High Court, and confirming that the agreements to sell were liable to stamp duty and penalty as deemed conveyances.
Headnote
A) Stamp Duty - Instrument vs. Transaction - Section 4, Maharashtra Stamp Act, 1958 - The court held that stamp duty is levied on the instrument and not on the transaction; for several instruments to be treated as part of a single transaction under Section 4, they must be between the same parties and in furtherance of a single transaction. (Paras 8, 10, 12) B) Stamp Duty - Agreement to Sell - Deemed Conveyance - Explanation I to Article 25, Schedule I, Maharashtra Stamp Act, 1958 - An agreement to sell where possession is transferred or agreed to be transferred before or at the time of execution, without executing a conveyance, is deemed to be a conveyance and liable to stamp duty accordingly. (Paras 12-13) C) Stamp Duty - Impounding of Documents - Sections 33, 34, 37, Maharashtra Stamp Act, 1958 - The trial court correctly impounded six agreements to sell that were not duly stamped and directed their transmission to the Collector for adjudication of stamp duty and penalty, as they were not part of a single transaction with the subsequent sale deed. (Paras 3, 7, 11-13)
Issue of Consideration
Whether the appellants are liable to pay stamp duty and penalty on agreements to sell executed prior to the sale deed in their favour, where possession was transferred under those agreements.
Final Decision
The Supreme Court dismissed the appeal, affirming the orders of the trial court and the High Court. The six agreements to sell are not part of a single transaction with the subsequent sale deed; they are deemed conveyances under Explanation I to Article 25 of Schedule I of the Maharashtra Stamp Act, 1958, and are liable to stamp duty and penalty. The documents shall be sent to the Collector of Stamp, Thane, for adjudication.
Law Points
- Stamp duty is on the instrument
- not on the transaction
- several instruments used in a single transaction must be part of the same transaction between same parties
- agreement to sell with transfer of possession is deemed a conveyance under Explanation I to Article 25 of Schedule I of Maharashtra Stamp Act
- 1958
- Section 4 of the Act applies only when multiple instruments complete a single transaction.
