Summary
The Supreme Court held that a Lok Adalat compromise decree in a suit for declaration and injunction, which concerned only the suit land and recognised the plaintiff's pre-existing right rather than creating a new one, was exempt from compulsory registration under Section 17(2)(vi) of the Registration Act, 1908 and, being a court decree that conveyed nothing, was not chargeable with stamp duty as a conveyance; the stamp duty demand was set aside and mutation directed.
Issues
- Whether a compromise decree passed in a Lok Adalat, declaring the plaintiff's possession and entitlement to mutation of the suit land, required compulsory registration under Section 17 of the Registration Act, 1908.
- Whether such a compromise decree was chargeable with stamp duty as a conveyance under the Indian Stamp Act, 1899 as applicable in Madhya Pradesh, for the purpose of mutation.
- Whether the compromise decree was shown to be collusive and a device to evade stamp duty.
Provisions considered
- Section 17(1)(b) and Section 17(2)(vi), Registration Act, 1908Section 17(1) lists compulsorily registrable documents and sub-section (2)(vi) exempts any decree or order of a court, except a compromise decree comprising immovable property other than the subject-matter of the suit. Following Bhoop Singh and Mohd. Yusuf v. Rajkumar, the Court held the exemption applies to a non-collusive compromise decree relating to the suit property which declares a pre-existing right; the appellant's decree met these conditions. (¶¶ 7, 10, 10.1, 11, 12)
- Section 3 read with Schedule I and Schedule I-A, Article 22, Indian Stamp Act, 1899 (as applicable to Madhya Pradesh)The Court read Section 3 and held that a court order or decree is not among the instruments chargeable under Schedule I or I-A; as the consent decree only asserted a pre-existing right and transferred nothing, it did not operate as a conveyance under Article 22 of Schedule I-A, and the Collector's stamp duty demand for mutation could not stand. (¶¶ 9, 13)
- Section 33, Indian Stamp Act, 1899The Collector of Stamps had initiated proceedings under this section on a reference by the Tehsildar during mutation and demanded stamp duty on the market value of the land; the demand was set aside since the decree was not chargeable. (¶¶ 3, 9, 14)
Held
- Registration of a document and payment of stamp duty on it are separate and distinct questions. (¶ 7)
- Under Section 17(2)(vi) of the Registration Act, a decree or order of a court is exempt from compulsory registration unless it is a compromise decree comprising immovable property other than the subject-matter of the suit; a compromise recorded before a Lok Adalat and its award take the character of a decree under Order XXIII Rule 3 CPC and fall within this provision. (¶ 7)
- To claim the exemption under Section 17(2)(vi), the compromise decree must be in terms of a compromise without collusion, must relate to the property in suit, and must recognise a pre-existing right rather than create a right afresh. (¶¶ 10, 10.1)
- Revenue entries are not documents of title. Where the plaintiff sued for declaration and injunction on the basis of long, continuous possession and cultivation, and the defendant whose name stood in the revenue records compromised, the decree asserted the plaintiff's pre-existing right; following Ravinder Kaur Grewal v. Manjit Kaur, perfected adverse possession confers right, title and interest. The High Court's reliance on its own earlier orders, which rested on a decision later reversed in Mohd. Yusuf v. Rajkumar, was unsustainable. (¶ 11)
- The State's allegation that the suit and compromise were collusive to evade stamp duty was unsupported by concrete evidence or any rival claim; the compromise decree had become final as the State never challenged it, and no court had found collusion. (¶ 12)
- Stamp duty is not chargeable on an order or decree of a court, as it is not an instrument listed in Schedule I or I-A read with Section 3 of the Stamp Act; a consent decree that merely asserts a pre-existing right transfers nothing and does not operate as a conveyance, so no stamp duty is payable for mutation on its basis. (¶ 13)
Result
Appeal allowed; the High Court's order and the orders of the Collector of Stamps and the Board of Revenue set aside; the authority directed to mutate the revenue records for the subject land in the appellant's favour; no order as to costs.