Possession Taken Before Date Of Agreement Implies Acquisition Of Possessory Rights; Requires Payment Of Proper Stamp Duty: SC
The Supreme Court emphasised that stamp duty is levied on the instrument and not the transaction.
The Supreme Court explained that possession given before the date of agreement implies acquisition of possessory rights under Section 53A of the Transfer of Property Act which requires payment of proper stamp duty.
The Court dismissed an Appeal filed by the Appellant, upholding the impounding of a sale agreement and the recovery of stamp duty and penalty under the Bombay Stamp Act, 1958 (the Act). The Court held that the document in question was liable for stamp duty as a conveyance under Explanation I to Article 25 of Schedule I of the Act.
A Bench of Justice JB Pardiwala and Justice R Mahadevan held, “This makes it very clear that the suit property was occupied by the appellant on a rental basis and it would not be a part of the sale transaction. Further, there was a clause, by which, timeline was given for execution of sale deed. Since the possession was admittedly given to the appellant even before the date of agreement, implying acquisition of possessory rights protected under Section 53A of the Transfer of Property Act, the same requires payment of proper stamp duty.”
AOR Rooh-e-hina Dua represented the Appellant, while Advocate Awantika Manohar appeared for the Respondents.
Brief Facts
The Appeal challenged the Order of the Trial Court which had impounded an agreement to sell concerning a property and directed its submission to the Registrar of Stamps for assessment of deficit stamp duty and penalty. The Bombay High Court had dismissed the Appellant’s Writ Petition.
The Appellant contended that the agreement to sell clearly stated that he was in possession of the property as a tenant, and possession on ownership basis would be transferred only upon execution of the sale deed. He argued that the document did not constitute a conveyance under the Act and was not liable for stamp duty.
Court’s Reasoning
The Supreme Court held that the stamp duty is on the instrument and not on the transaction. “Furthermore, it is immaterial, whether the possession of the property has been handed over at the time of execution of the agreement to sell or whether it has been agreed to transfer the possession,” it remarked.
Referring to the Judgment in Shyamsundar Radheshyam Agrawal v. Pushpabai Nilkanth Patil (2024), the Court explained that if an agreement is entered into and that agreement itself contemplates the delivery of possession of the property within the stipulated time, then, such an agreement should be deemed to be a conveyance for the purpose of duty leviable under the Bombay Stamp Act.
The Bench explained that “the agreement to sell includes a clause stating that physical possession had already been handed over to the appellant, regardless of the basis of such possession. This satisfies the requirement to treat the instrument as a ‘conveyance’ within the meaning of Explanation I to Article 25 of Schedule I of Bombay Stamp Act, with only the formality of executing the sale deed remaining.”
Consequently, the Court held, “In the light of the above discussion, we do not find any reason to interfere with the orders passed by the Courts below. Accordingly, this appeal stands dismissed as devoid of merits.”
Accordingly, the Supreme Court dismissed the Appeal.
Cause Title: Ramesh Mishrimal Jain v. Avinash Vishwanath Patne & Anr. (Neutral Citation: 2025 INSC 213)
Appearance:
Appellant: AOR Rooh-e-hina Dua; Advocate Harshit Khanduja
Respondents: Advocate Awantika Manohar, Nilesh Sharma, Parul Dhurvey and P Mohit Krishna; AOR Dhawesh Pahuja
