The main legal point established in the judgment is that the substance of the transaction embodied in the instrument determines the stamp duty, and parties cannot claim the benefits under a document while contending that it is not executed for the purpose of stamp duty.

( 1. ) THE appellants fifed Civil Suit No. 6-B/2001 before the Fifth Additional District Judge, Chhindwara for recovery of Rs. 1,40,000/- with interest. The plaint averments in brief are :-

1. 1. The first respondent is the legal heir of late Smt. Jugnoo Bai, and adjudicated insolvent. A composition scheme was filed by the first respondent before the Insolvency Court for acceptance under Section 38 of the Provincial Insolvency Act, 1920. The Court fixed the matter for consideration of the said scheme on 9-4-1991.

1. 2. The first respondent expecting that the composition scheme would be accepted and that he would be appointed by the Court as the "appointee" (person in whom the properties of the insolvent would vest with power to sell the properties of the insolvent and deposit the proceeds in Court for distribution among the creditors), entered into an agreement to sell the immovable properties of the insolvent measuring 1,63,936 sq. ft. (less lands already sold to others by the receiver) to the appellants herein for a consideration of Rs. 8 lakhs and received Rs. 1,40,000/- as advance.

1. 3. The said agreement was reduced into writing and was duly executed and attested, one week prior to 9-4-1991 on a white paper, but was not stamped. The date of the agreement and the date of the order of the Insolvency Court permitting the sale, were left blank in the agreement. The said agreement recorded that 50,000 sq. ft. of open land to be sold was delivered to the intending purchasers under the agreement (appellants ).

1. 4. On 9-4-1991, the Insolvency Court accepted the compositior scheme submitted by the first respondent. However, it appointed One Prasun Shrivastava, Advocate and Ex-Receiver, and not the first respondent as the Appointee to sell the properties. As a consequence, the properties of the insolvent did not vest in the first respondent, nor was the first respondent able to execute the sale-deed in pursuance of the agreement. Consequently, the first respondent, it was alleged, was liable to refund the advance of Rs. 1,40,000/- received by him with interest, in all Rs. 1,89,000/-, but failed to do so, necessitating the suit.

( 2. ) IN the said suit, the appellants made an application under Section 33 read with Section 38 (2) of the Indian Stamp Act, 1899 (as applicable in Madhya Pradesh, hereinafter referred to as stamp Act) for impounding the said agreement and sending it to the Collector for determining the nature of the document and validating it. The application was opposed by the first respondent. On considering the said application, the learned Additional District Judge passed an order dated 31-3-2003. Relying on the decision of this Court in Vimla Devi V. Dhanraj Singh [2000 (I) MPWN 82], the Court held that the agreement was chargeable to duty as a conveyance under Article 23 of Schedule 1-A to Indian Stamp Act, 1899 having regard to the fact that possession of the immovable property (50000 sq. ft. out of the area agreed to be sold) was transferred to the purchasers under the agreement. He, therefore determined the amount payable by the appellants towards stamp duty as Rs. 60,000/- and the penalty payable as Rs. 6,00,000/- in all Rs. 6,60,000/-, for admitting the said document in evidence under Section 35 (1 ). He also directed that if the amount was not paid, the instrument shall be impounded and sent to the Collector.

( 3. ) THE said order was challenged by the appellants in Writ Petition No. 27490/2003. The learned Single Judge who heard the matter, dismissed the said writ petition by order dated 12-9-2003. The order of the learned Single Judge is challenged in this Letters Patent Appeal.

( 4. ) THE learned Counsel for the appellants contended that the document is a draft agreement and not an agreement, and, therefore, it is not exigible to stamp duty. Alternatively, he contended that as the vendor under the said agreement (first respondent) did not have any title to the property when the document was executed and