Recovery Against Legal Representatives Of Defaulter U/S 48 Stamp Act Limited To Inherited Estate: Allahabad High Court
Court clarifies that while recovery proceedings can continue against heirs of a deceased defaulter, their liability is restricted to the extent of the deceased’s property in their hands.
The Allahabad High Court by interpreting Section 48 of the Stamp Act, 1899 alongside Section 181 of the Uttar Pradesh Revenue Code, 2006 has held that legal representatives are treated as "defaulters" for the purpose of continuing recovery processes. However, the Court noted that this statutory fiction does not permit the State to attach the personal funds or properties of the heirs that were not derived from the deceased.
The Bench clarified that although recovery proceedings for deficiency in stamp duty do not abate upon the death of the primary defaulter, the financial liability of the legal heirs is not personal or unlimited. Instead, such liability is strictly confined to the value and extent of the movable or immovable assets of the deceased that have actually come into the hands of the representatives.
Justice Kshitij Shailendra observed, “…even if the recovery certificate is given effect to, the liability of the petitioners would be confined to the extent of the property of their deceased father which has come to their hands”.
Senior Advocate Anupam Kulshreshtha appeared for the petitioner.
The brief facts of the case involved two sons of late Rakesh Kumar Verma, where the father had purchased agricultural plots via registered sale deeds in 2020, leading to proceedings under Section 47-A of the Stamp Act.
On May 12, 2022, the Additional District Magistrate (Finance and Revenue), Agra, determined a deficiency in stamp duty and imposed a penalty totaling approximately Rs. 16.55 lakhs. A recovery certificate was subsequently issued against the father in 2022.
As per the facts, the father challenged the deficiency order through a stamp revision before the Commissioner. During the pendency of this revision, Rakesh Kumar Verma passed away, and his sons were substituted as revisionists to contest the matter on merits.
The revision was ultimately dismissed in August 29, 2025, leading to the revival of the original recovery proceedings. The petitioners approached the High Court seeking a writ of mandamus to prevent coercive action against their personal properties, claiming they had not inherited any assets from their father.
Thus now, the Court noted that under Section 181 of the Revenue Code, 2006, recovery proceedings (excluding arrest and detention) may be continued against legal representatives as if they were the defaulters themselves. However, the proviso to this section explicitly limits this liability to the extent of the property of the deceased which has come to their hands.
“The proviso to sub-Section (1) of Section 181 clearly provides that the legal representatives shall be liable only to the extent of the property of the deceased which has come to their hands. Therefore, though, as per Section 48 of the Stamp Act, the Collector may adopt any of the modes of recovery as prescribed under sub-section (1) of Section 170 against the petitioners, the same would, however, be subject to the rider contained under the proviso to sub-Section (1) of Section 181...”, it noted.
The Court rejected the petitioners' argument that the civil court's declaration of the sale deeds as null and void absolved them of liability, noting that stamp duty is referable to the date of execution of the instrument. The Bench also referenced Section 159 of the Income Tax Act to illustrate similar principles of surviving liability in fiscal statutes.
“…once the provisions are found unambiguous and the liability of the legal representatives ‘as defaulters’ and also the mode and extent of recovery from legal representatives stand well recognized under the statutes, the answer in clear terms lies in the provisions as referred to hereinabove. Somewhat identical provisions are found under section 159 of the most widely applied fiscal statute Income Tax Act, 1961, wherein also, liability of the legal representatives, after death of the assessee, continues to remain alive until it is discharged as per the provisions of the said Act”, it further noted.
Furthermore, the Bench issued several operative directions, granting the petitioners liberty to file detailed objections before the Collector, Agra, within one month, supported by their father's and their own Income Tax Returns to verify the extent of inheritance.
The Collector was directed to conduct an inquiry into these objections and pass a reasoned order within four months. Pending this inquiry, the petitioners are restrained from creating third-party rights in any properties or withdrawing bank sums exceeding the recovery amount. Crucially, the Court ordered that no coercive action, including arrest or detention, be taken against the petitioners during this four-month period.
Cause Title: Raj Kumar Verma and another v. The State of U.P. and 4 others [Neutral Citation: 2026:AHC:61816]
Appearances:
Petitioners: Anupam Kulshreshtha, Senior Advocate, Shatakshi Shukla and Madnesh Prasad Singh, Advocates.
Respondents: -