Summary
The Supreme Court upheld the impounding of six agreements for sale that recorded delivery of possession to the purchasers, holding that under Explanation I to Article 25 of Schedule I of the Maharashtra Stamp Act, 1958 they were chargeable as conveyances. Section 4 of the Act did not help the appellants because the agreements were separate transactions between different parties, and the later stamped sale deed did not discharge the duty payable on them; recovery was limited to the difference in duty plus penalty.
Issues
- Whether agreements for sale recording transfer of possession were liable to stamp duty as conveyances and to impounding, although a duly stamped sale deed had later been executed for the same properties.
- Whether Section 4 of the Maharashtra Stamp Act, 1958, which charges full duty only on the principal instrument where several instruments complete one transaction, exempted the earlier agreements.
- What stamp duty and penalty could be recovered on the impounded agreements.
Provisions considered
- Section 4, Maharashtra Stamp Act, 1958Applies only where several instruments are executed to complete a single transaction; the six agreements were distinct transactions between different vendors and purchasers over different periods. Duty is charged on the instrument, not the transaction, and an agreement deemed a conveyance was the principal instrument, so Section 4 gave no relief. (¶¶ 9, 10, 12, 13, 14)
- Schedule I, Article 25, Explanation I and its provisos, Maharashtra Stamp Act, 1958An agreement to sell immovable property under which possession is transferred or agreed to be transferred is deemed a conveyance and chargeable accordingly; as each agreement recorded delivery of possession on its date, leaving only the formality of a sale deed, it attracted conveyance duty. The proviso allowing duty paid on the agreement to be adjusted against duty on the later conveyance does not cover the converse situation. (¶¶ 12, 13, 14, 15, 16)
- Section 53A, Transfer of Property Act, 1882Delivery of possession under the agreements implied acquisition of possessory rights protected by part performance, which in turn required payment of proper stamp duty and registration. (¶ 14)
- Section 17, Registration Act, 1908The agreements conferring possession had to be registered as mandated by this provision, besides being duly stamped. (¶¶ 3, 14)
- Section 34, Maharashtra Stamp Act, 1958Until the defect in stamping is cured by meeting the requirements of this provision, the impounded documents cannot be used in evidence. (¶ 16)
Held
- The duty chargeable on an instrument depends on its true meaning, gathered from the intention of the parties as expressed in the whole document; the name the parties give it is immaterial. (¶ 8)
- Section 4 applies only where several instruments are employed to complete one transaction, in which case the principal instrument bears the duty. The six agreements were separate transactions between different vendors and purchasers executed at different times, and stamp duty is levied on the instrument rather than on the transaction. (¶¶ 10, 12, 13)
- Under Explanation I to Article 25, an agreement for sale under which possession is handed over or agreed to be handed over is deemed a conveyance. Since each agreement recorded that possession was delivered on its date, leaving only execution of the sale deed, the agreement was the principal instrument on which duty was payable; payment of duty on the later sale deed did not by itself absolve the liability that arose when the agreement was executed, and the agreements had to be stamped and registered. (¶¶ 13, 14)
- The trial court rightly impounded the agreements and sent them to the Collector of Stamps for adjudication of duty and penalty, and the High Court rightly declined to interfere. (¶ 15)
- Because the State cannot recover more stamp duty than it is entitled to, recovery is confined to the difference in duty together with the entire penalty from the date of the agreement until the date of payment; until the defect is cured under Section 34, the impounded documents cannot be used in evidence. (¶ 16)
Result
Appeal dismissed; impounding of the six agreements and their reference to the Collector of Stamps for adjudication upheld, with recovery limited to the difference in stamp duty plus penalty from the date of execution of each agreement until payment.