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High Court of Judicature at Madras
K. VENKATARAMAN, J.
P.V. Mahadevan, Chennai
Versus
The Head of the Registration Department Cum The Chief Revenue Controlling Authority Chennai & Others
W.P.No.25899 of 2011 & M.P.Nos.1 & 2 of 2011
Decided on : 16-10-2012
Stamp Duty - Settlement Deed - Indian Stamp Act, 1899 - Article 58(a)(i) - Section 2(24)(b)
Fact of the Case:
The petitioner executed a settlement deed in favor of his son and daughter, which was treated as a gift deed by the authorities, leading to a demand for additional stamp duty. The petitioner challenged this in court.
Finding of the Court:
The court held that the deed should be construed as a settlement deed and not a gift deed, as the petitioner retained a significant portion of the land and the settlement was made within the family members.
Issues: Interpretation of the nature of the deed - Whether it should be treated as a settlement deed or a gift deed.
Ratio Decidendi: The court analyzed the provisions of the Indian Stamp Act, 1899 and the Transfer of Property Act to determine the nature of the deed and concluded that it should be considered a settlement deed.
Final Decision: The court set aside the orders of the authorities and directed them to return the settlement deed to the petitioner after registering it by accepting the stamp duty paid as per Article 58(a)(i) of the Act.
1. The present writ petition has been laid challenging the impugned proceedings of the first respondent dated 28.05.2011 in confirming the proceedings of the second respondent dated 25.01.2010 and consequently, direct the respondents to release the registered settlement deed presented by the petitioner on 25.09.2005 before the third respondent by accepting the stamp duty already paid for registering the settlement deed without insisting further duty.
2. The short matrix of the matter is set out here under:
(a) The petitioner was the owner of Plot No.472, 28th Cross Street, Indira Nagar, Chennai measuring an extent of 3791 square feet which he has bought from the Tamil Nadu Housing Board through a registered sale deed on 18.04.2001. He entered into a joint venture agreement with one M/s. VAS Housing, Chennai on 21.02.2003 who happens to be a promoter for converting his land into residential units. The neighbouring land owner one Mrs. Jyothiraj who owns plot no.471-A also gave the plot to the same developer for putting up residential units.
(b) The promoter decided to combine both the land belonging to the petitioner as well as his neighbour to put up construction. The agreement enables the promoter to give undivided share in the land to each and every one of the buyer in proportion to the area of the flats they buy, leaving apart an extent of 2161 sq.ft of land in the petitioner's plot to his share of undivided share. The balance extent of land alone was taken by the promoter for allotting to others.
(c) The petitioner after selling one flat retained two flats and its corresponding share of undivided share of 1400 sq.ft. Out of the total construction put up by the promoter, an extent of 3541 sq.ft of constructed flat area was allotted to the petitioner. Thus, the petitioner retained 2161 sq.ft of undivided share of land and got 3541 sq.ft of constructed area.
(d) In pursuant to the agreement referred to above, the petitioner became the owner of flat nos.3, 6 and 11 and got possession of the same. The petitioner decided to settle two flats viz., flat no.6 and 11 together with its respective undivided share of land owned by him in favour of his son and daughter. Accordingly, he has executed a settlement deed dated 25.09.2005 in their favour. The petitioner has paid a sum of Rs.10,000/- as stamp duty for the registration of the settlement deed as envisaged under Article 58(a)(i) of the Indian Stamp Act, 1899 (herein after called as the Act).
(e) The Joint Sub-Registrar No.1, the third respondent herein, after registering the document has impounded the same by treating the document as gift deed under Section 33 of the Act and not as settlement as per Section 2(24)(b) of the Act and referred the matter to the second respondent. In pursuant to the same, the second respondent issued a show cause notice calling upon the petitioner to show cause as to why a sum of Rs.3,90,000/- should not be collected as additional stamp duty from the petitioner.
(f) The petitioner replied to the said show cause notice stating that the document registered by the petitioner in favour of his son and daughter shall be treated only as a settlement deed and the stamp duty that has been paid by the petitioner is absolutely in accordance with the Act. However, in spite of the said reply, no order came to be passed by the second respondent and hence, the petitioner was constrained to move before this Court by filing a writ petition in W.P.No.12758 of 2009 to quash the said show cause notice.
(g) This Court by order dated 20.07.2009 directed the second respondent to pass final orders within a period of two weeks. Finally, the second respondent passed an order on 25.01.2010 directing the petitioner to pay a sum of Rs.3,90,000/-as deficit stamp duty. Aggrieved over the said order, the petitioner preferred an appeal before the first respondent. The first respondent by his proceedings dated 28.05.2011 rejecting the appeal and therefore the petitioner
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