An agreement of sale does not attract higher stamp duty as a sale deed unless it evidences a transfer of possession, which was not established in this case.

Order:

The respondent Nos.1 and 2 herein, had entered into an agreement of Sale cum General Power of Attorney (GPA), dated 13.11.2006 with the respondent Nos.3 and 4 for the purchase of the suit-schedule property. This agreement of Sale cum GPA was registered under Document No.9149 of 2006.

2. Based on this document, respondent Nos.1 and 2 entered into an agreement of sale on the same day with the petitioners herein. The petitioners, subsequently filed O.S.No.287 of 2017 before the learned Principal District Judge, Guntur, for specific performance of the said agreement. During the Trial, the agreement of sale, dated 13.11.2006 was sought to be marked as an exhibit. At that stage, respondents Nos.1 and 2 objected, claiming that the document was not properly stamped and could not be admitted as an evidence without the payment of penalty and appropriate stamp duty.

3. The case of the respondent Nos.1 and 2 was that the document falls within the ambit of Explanation-I to Article 47-A of Schedule 1A of the Indian Stamp Act, 1899 , as applicable in the State of Andhra Pradesh. It is contended that, on account of this fact, the stamp duty that is payable on the agreement of sale, dated 13.11.2006 should be the same as the duty for a sale deed. In the light of the deficit stamp duty, they argued that the document could not be admitted without the payment of the penalty prescribed under the Stamp Act.

4. The Trial Court, accepted this argument and held that, the agreement of sale, dated 13.11.2006, required stamp duty as if it were a sale deed and further, that the penalty should be paid. Aggrieved by this finding in the order, dated 04.09.2024, the petitioners have approached this Court.

5. The learned counsel for the petitioners contends that, Explanation-I apply to an agreement of sale only where the agreement is followed by the handing over of possession or evidence prior to the handing over of possession. The learned counsel took this Court through the agreement of sale as well as the specific recitals in the agreement of sale, which was relied upon by the Trial Court, and contends that, none of these recitals make out a case of transfer of possession.

6. On the other hand, the learned counsel for the respondents submits that the recitals in the agreement of sale, stipulating that, it would be open to the petitioners to enter the land and develop it by dividing the same into plots for sale to third parties are sufficient to conclude that possession has been transferred. The learned counsel relies upon the judgment of the learned Single Judge of this Court in the case of Nellore Sujanamma vs. Desireddy Somasekhar Reddy, [2023 (4) ALT 384 (AP)] , where, after reviewing extensive judgments on this subject, the Court held that, limited transfer of possession under an agreement of sale did not amount to a transfer of possession that would attract the provisions of Explanation-I to Article 47-A of Schedule 1A of the Stamp Act.

7. The principle that can be adduced from the review of various judgments is that, while an agreement of sale falling under Explanation-I to Article 47-A of Schedule I-A of the Stamp Act requires payment of stamp duty as if it were a sale deed, whether a document attracts such stamp duty depends on a case-by-case factual interpretation.

8. The provisions of Explanation-I to Article 47-A are extracted below:

“Explanation-I:- An agreement to sell followed by or evidencing delivery of possession of the property agreed to be sold shall be chargeable as a “Sale” under this Article:

Provided that, where subsequently a sale deed is executed in pursuance of an agreement of sale as aforesaid or in pursuance of an agreement referred to in Clause (b) of Article, the stamp duty, if any, already paid or recovered on the agreement of sale the adjusted towards the total duty leviable on the sale deed”.

9. In the present case, the learned counsel for the respondents contends that, the recital in the agreement of sale permitting the petiti