Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2008 Supreme(SC) 1881

2009(1) Supreme 58
SUPREME COURT OF INDIA
S.B. Sinha and Cyriac Joseph, JJ.
Avinash Kumar Chauhan — Appellant
versus
Vijay Krishna Mishra — Respondent
Civil Appeal No. 7350 of 2008
(Arising out of SLP (C) No. 8651 of 2007)
Decided on : 17-12-2008

Advocates appeared:
For the Appellant :A.K. Bajpai, M.F. Khan, Goodwill Indeevar, Advocates.
For the Respondent:Suhail Dutt, Ram Gupta, Jagjit Singh Chhavra, Ravin Rao, Advocates.

IMPORTANT POINT
Bar against admissibility of an instrument which is chargeable with stamp duty and is not stamped is absolute whatever be the nature of the purpose, be it for main or collateral purpose, unless requirements of proviso (A) to Section 35 of Indian Stamp Act are complied with.

Headnote:Indian Stamp Act, 1899 – Sections 33 and 35 – Transfer of a land by respondent to appellant for a consideration of Rs . 2,70,000/- suit for recovery of Rs. 2,70,000/- filed by appellant relying upon sale deed – Order passed directing impounding of said sale deed – Petition thereagainst – Dismissed by High Court – Appeal – Plea of appellant that since unregistered deed of sale was sought to be put in evidence not for purpose of enforcement of contract but only for purpose of recovery of amount of consideration, such a purpose being a collateral one, provisions of sections 33 and 35 of Act would not be attracted – No dispute that said instrument was executed – By reason of such an instrument not only entire amount of consideration was paid, but possession of property had also been transferred – The unregistered deed of sale was an instrument which required payment of stamp duty applicable to a deed of conveyance – Adequate stamp duty admittedly was not paid – The court hence was empowered to pass an order in terms of Section 35 of Act – Even though there is no prohibition u/s 49 of Registration Act to receive an unregistered document in evidence for collateral purpose – But the document so tendered should be duly stamped or should comply with requirements of Section 35 of Stamp Act, if not stamped as a document cannot be received in evidence even for collateral purpose unless it is duly stamped – Contention of appellant that document was admissible for collateral purpose, held not correct – Appeal having no merit, dismissed. (Paras 16 to 23)
       Facts of the case :
        1. Land was transferred by respondent to appellant for a consideration of Rs. 2,70,000/- herein in the instant case. A suit for recovery of Rs. 2,70,000/- was filed by appellant relying upon sale deed. However an order was passed directing impounding of said document. Petition there against was dismissed by High Court.
        2. Present appeal has been filed against said order of High Court.
       Findings of the Court :
        Even though there is no prohibition u/s 49 of Registration Act to receive an unregistered document in evidence for collateral purpose. But document so tendered should be duly stamped or should comply with requirements of Section 35 of Stamped Act, if not stamped as a document cannot be received in evidence even for collateral purpose unless it is duly stamped. Contention of appellant that document was admissible for collateral purpose was held not correct. Appeal having no merit was dismissed.
       Result : Appeal dismissed.

Judgement Key Points

Key Points: - The instrument in question was an unregistered deed of sale used to claim recovery of consideration; court held it is not admissible unless properly stamped and duty paid under Section 35 (!) (!) (!) . - Section 35 bars admission of any instrument chargeable with duty unless duly stamped, with proviso allowing admission on payment of duty/deficiency and penalties in certain cases (!) (!) (!) . - Even though there is no prohibition under Section 49 of the Registration Act to receive an unregistered document for collateral purposes, such document must be duly stamped or comply with Section 35; otherwise inadmissible for collateral purposes (!) (!) . - The Court treated possession transfer and conveyance-like aspects as subject to stamp duty; an agreement to sell with possession transferred is deemed a conveyance for stamp duty purposes under Article 23 and its Explanation (!) (!) . - The decision discusses the balance between admissibility for main vs collateral purposes and cites Ram Rattan v. Parmanand and subsequent authorities on collateral use limits (!) (!) (!) . - The appeal was dismissed for lack of merit due to non-compliance with stamping requirements; there is no merit in admitting the unstamped instrument (!) (!)

Question 1?

What is the admissibility of an unstamped/unregistered instrument relied upon for collateral or separate purposes under the Indian Stamp Act?

Question 2?

What is the effect of Section 35 on admissibility of instruments not duly stamped for any purpose whatsoever?

Question 3?

What is the permissible use of unregistered documents for collateral purposes in light of the Indian Registration Act, 1908 and its provisos?

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 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.

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 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,1 [(2003) 4 SCC 161].

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 eve

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