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2007 Supreme(All) 919
KRISHNA MURARI, J.
Pawan Kumar Gupta and Anr.
Versus
Mohammad Shakir and Ors.
C. M. W. P. No.46839 of 2004
Decided On : 6-4-2007.
Y. K. Sinha, for Petitioners; Ratnesh Kumar Pandey, S. C., for Respondents.
The central legal point established in the judgment is the interpretation of Article 23 of the Indian Stamp Act, specifically the explanation clause, to determine the applicability of stamp duty to a document transferring possession of immovable property.
Headnote:
Stamp Duty - Agreement to Sell - Indian Stamp Act, Article 23
Fact of the Case:
The petitioners entered into an agreement for sale of a property with respondent No. 1. After receiving a partial payment and delivering possession, respondent No. 1 executed a sale deed in favor of respondent No. 2 instead of the petitioners. The petitioners filed a suit for specific performance of the contract and produced the letter of possession as evidence. Respondent No. 2 moved to impound the document, alleging insufficient stamp duty.
Finding of the Court:
The Court held that the document was chargeable as a conveyance under Article 23 of the Indian Stamp Act and was insufficiently stamped. The explanation clause of Article 23 was invoked to treat the document as a conveyance, and the court found no illegality in impounding the document.
Issues: The main issue was whether the letter of possession, produced as evidence in a suit for specific performance, should be treated as a conveyance and subjected to stamp duty under Article 23 of the Indian Stamp Act.
Ratio Decidendi: The court interpreted the explanation clause of Article 23 to include any document where possession of immovable property is transferred under an agreement or agreed to be transferred without executing the conveyance, and held that such document should be treated as a conveyance chargeable with stamp duty.
Final Decision: The writ petition was dismissed, upholding the impoundment of the insufficiently stamped document produced by the petitioners in evidence.
2. Challenge in this petition has been made to the order dated 7-9-2004 passed by Civil Judge (Senior Division), Ghaziabad impounding the document/letter of possession produced by the petitioners in evidence.
3. Facts are that respondent No. 1 entered into an agreement for sale of the property in question in favour of the petitioners for a consideration of Rs. 12,85,000/-. A registered agreement to sell was executed on 21-6-2003 under the terms of which respondent No. 1 received a sum of Rs. 1,85,000/- as part payment. A sum of Rs. 51,500/- was paid as stamp duty. It was agreed between the parties that the balance amount of sale consideration would be paid at the time of execution of sale deed and the possession of the property in question shall also be delivered at that time. Subsequently, respondent No.1 after receiving a sum of Rs. 2,00,000/- out of balance sale consi-deration, delivered the possession of the property in question in favour of the petitioners. The fact of delivery of possession in part performance of the agreement to sell as well as receipt of a sum of Rs. 2,00,000/- towards balance sale consideration was acknowledged by executing a letter of possession before Notary public dated 26-8-2003. The said document was executed on a non-judicial stamp worth Rs. 100/-. However, respondent No.l instead of executing sale deed in favour of the petitioners in performance of the agreement to sell between them, executed sale deed of the property in question in favour of respondent No. 2. Petitioners filed a suit for specific performance of contract and prohibitory injunction which was registered as original suit No. 706 of 2004. In the said suit, petitioners filed the document namely, letter of possession, in evidence. Respondent No. 2 moved an application to impound the same on the allegation that the aforesaid letter of possession is chargeable as a conveyance in view of Article 23 of Schedule 1B of the Indian Stamp Act as applicable in the State of U.P. and the deed being insufficiently stamped is liable to be impounded. The application was contested by the petitioners. The Court below holding that the document is chargeable as a conveyance as provided by Article 23 of Schedule 1B of the Act and was insufficiently stamped directed to impound the same and referred it to the Collector, Ghaziabad for realization of the proper stamp duty. Aggrieved by the same, the petitioners have approached this Court.
4. Article 23 of Schedule 1B of the Indian Stamp Act as applicable in the State of U.P. reads as under :
(a) if relating to immovable property where the amount or value of the consideration of such conveyance as set forth therein or the market value of the immovable property which is the subject of such conveyance whichever is greater does not exceed Rs. 500.
Sixty rupees
Where it exceeds Rs. 500 but does not exceed Rs. 1000 and for every Rs. 1000 or part thereof in excess of Rs. 1000
One hundred and twenty five rupees One hundred and twenty five rupees
Provided that the duty payable shall be rounded off to the next multiple of ten rupees.
(b) if relating to movable property-where the amount or value of the consideration of such conveyance as set forth therein does not exceed Rs. 1000.
Twenty rupees
and for every Rs. 1000 or part thereof in excess of Rs. 1000 Twenty rupees
"23. CONVEYANCE as defined by Section 2(10) not being a transfer charged or exempted under No. 62 -
Assignment of copy right in musical works by resident of, or first published in India.
Explanation - For the purposes of this Article, in the case of an agreement to sell an immovable property, where possession is elivered before the execution or at the time of execution, or is agreed to be delivered without executing the conveyance, the agreement shall be deemed to be a conveyance and stamp duty t
