Supreme Court of India
OMPRAKASHversusLAXMINARAYAN & ORS.
- Citation
- 2013 INSC 685
- Decided
- 7 October 2013
- Disposal
- Appeal(s) allowed
- Bench
- C K PRASAD
Holding
An agreement to sell that recites transfer of possession is a conveyance under the Stamp Act and must be duly stamped; otherwise it is inadmissible, and admissibility is determined by the document's recital, not the opponent's plea.
Summary
The plaintiffs filed a suit for specific performance, possession and injunction based on an agreement to sell dated 27 December 2000, which recited that physical possession of the land had been handed over to them. The defendants denied the execution of the agreement and the delivery of possession. The trial court held the agreement inadmissible as it was not sufficiently stamped, treating it as a conveyance under the Indian Stamp Act, 1899. The High Court reversed this, holding that because the defendants denied possession, the recital in the agreement lost significance and the document was admissible. The Supreme Court allowed the appeal, ruling that the recital in the document governs admissibility, that an agreement to sell with a possession clause is a "conveyance" under s.2(10) of the Stamp Act and must be duly stamped, and that an insufficiently stamped instrument is inadmissible under s.35. Consequently, the High Court order was set aside and the trial court's decision restored.
Issues considered
- The admissibility of a document depends on the recital contained in the document or on the plea of the adverse party?
- Whether an agreement to sell containing a recital of possession transfer is a "conveyance" within the meaning of Section 2(10) of the Indian Stamp Act, 1899 and thus liable to stamp duty?
- Whether an instrument not duly stamped is inadmissible in evidence under Section 35 of the Indian Stamp Act.
Legislation cited
- Indian Stamp Act, 1899s. 2(10), s. 3, s. 35
- Indian Stamp (Madhya Pradesh Second Amendment) Act, 1990s. Article 23 of Schedule 1-A (Explanation)
- Registration Act, 1908
Subjects
Stamp dutyAdmissibility of evidenceConveyanceAgreement to sellIndian Stamp ActSection 35Specific performancePossessionLegal fiction
Judgment
[2013] 9 S.C.R. 923
OM PRAKASH A
v.
LAXMINARAYAN & ORS.
(Civil Appeal No. 9032 of 2013)
OCTOBER 7, 2013
B
[CHANDRAMAULI KR. PRASAD AND KURIAN
JOSEPH, JJ.]
STAMP ACT, 1899:
c
s.35 rlw s.2(10), Schedule 1-A, Art. 23, as substituted by
s. 6 of Act 22 of 1990 - Instrument not duly stamped,
inadmissible in evidence - "Conveyance" - Agreement to sell
containing recital that possession had been handed over to
purchaser - Held: In the instant case, the agreement to sell 0
with possession is an instrument which requires payment of
the stamp duty applicable to a deed of conveyance -- Duty
as required, has not been paid and, therefore, trial court rightly
held the same to be inadmissible in evidence.
EVIDENCE: E
Agreement to sell - Containing the recital of delivery of
possession - Held: At the time of considering the question of
admissibility of document, it is the recital therein which shall
govern the issue -- It does not mean that the recital in the F
document shall be conclusive but for the purpose of
admissibility it is the terms and conditions incorporated therein
which shall hold the field -- Deeds and Documents.
During the trial of a suit for specific performance of
contract, possession and permanent injunction in respect G
of the suit land, admissibility of the agreement to sell was
objected to by defendant no. 1 as the same contained a
recital that possession had been handed over to the
923 H
924 SUPREME COURT REPORTS [2013) 9 S.C.R.
A purchaser and, therefore, it was a conveyance on which
the required stamp duty was not affixed. The trial court,
accordingly, held the deed of agreement to be
inadmissible. However, in the writ petition filed by the
plaintiffs, the single Judge of the High Court accepted
B their case that since the defendant denied the
possession having been delivered, the recital in the
agreement was of no consequence, and held the
agreement to sell to be admissible in evidence. .
In the instant appeal filed by the defendant, the
C questions for consideration before the Court were:
"whether the admissibility of a document produced by
the party would depend upon the recital in the document
or the plea of the adversary in the suit" and "whether the
document in question is "conveyance" as defined under
D the Stamp Act, 1899 and was duly stamped".
Allowing the appeal, the Court
HELD: 1.1 At the time of considering the question of
E admissibility of document, it is the recital therein which
shall govern the issue. It does not mean that the recital
in the document shall be conclusive, but for the purpose
of admissibility it is the terms and conditions
incorporated therein which shall hold the field. In the
instant case, the agreement to sell acknowledges
F payment of the part of consideration money and further
giving actual physical possession to the purchaser by the
seller. [para 9] [929-F-H; 930-A]
1.2 From a plain reading of s.2(10) of the Stamp Act,
G 1899 defining "conveyance", it is evident that an
instrument by which movable or immovable property is
transferred, comes within the expression "conveyance".
In the instant case, an immovable property has been
transferred on payment of part of the consideration and
H handing over the possession of the property. It is
OM PRAKASH v. LAXMINARAYAN & ORS. 925
significant to note that by the Indian Stamp (Madhya A
Pradesh Second Amendment) Act, 1990, Article 23 of
Schedule 1-A has been substituted and Explanation
added to it creates a legal fiction, in that the agreement
to sell shall be deemed to be a conveyance and stamp
duty is leviable on an instrument whereby possession 8
has been transferred. Thus, the agreement to sell in
question is a conveyance within the meaning of s.2 (10)
of the Act and is to be duly stamped. [para 10 and 11]
[930-E-F; 931-D-E]
Avinash Kumar Chauhan v. Vijay Krishna Mishra, 2008 C
=
(17) SCR 944 (2009) 2 sec 532 - relied on.
Laxminarayan & Ors. v. Omprakash & Ors., 2008 (2)
MPLJ 416 - stood overruled (in Man Singh (deceased}
through Lrs. Smt Sumranbai and Ors. vs. Rameshwar
decided by Madhya Pradesh High Court on 22.1.2010). D
1.3 From a plain reading of s.35, it is evident that an
authority to receive evidence shall not admit any
instrument unless it is duly stamped. An instrument not
duly stamped shall be admitted in evidence on payment E
of the duty with which the same is cbargeable or in the
case of an instrument insufficiently stamped, of the
amount required to make up such duty together with
penalty. In the instant case, the deed of agreement having
been insufficiently stamped, the same was inadmissible
in evidence. The agreement to sell with possession is an F
instrument which requires payment of the stamp duty
applicable to a deed of conveyance. Duty as required, has
not been paid and, therefore, the trial court rightly held
the same to be inadmissible in evidence. The order of the
High Court is unsustainable and, as such, is set aside G
and that of the trial court restored. [para 12, 15-16] [932-
C-F; 934-B-C]
Case Law Reference:
2008 (17) SCR 944 relied on para 12 H
926 SUPREME COURT REPORTS [2013] 9 S.C.R.
A 2008 (2) MPLJ 416 stood overruled para 13
CIVIL APPELLATE JURISDICTION : Civil Appeal No.
9032 of 2013.
From the Judgment and Order dated 27.02.2008 of the
B High Court of Madhya Pradesh, Indore in W.P. No. 7237 of
2007.
Niraj Sharma, Sumit Kumar Sharma for the Appellant.
Fakhruddin, Khalid Noor Fakhruddin, Raj Kishor
c Choudhary, Neeru Sharma, Surya Kamal Mishra (for Mushtaq
Ahmad) for the Respondents.
The Judgment of the Court was delivered by
D CHANDRAMAULI KR. PRASAD, J. 1. Plaintiffs filed a
suit for specific performance of contract, possession and
permanent injunction in respect of un-irrigated land having an
area of 0.506 hectares bearing Survey No. 16012 in Village
Arniapitha situated within Tahsil Jaora in District Ratlam in the
State of Madhya Pradesh. It is founded on an agreement to sell
E
dated 27th December, 2000. It is the case of the plaintiffs that
the properties in question were delivered to them on payment
of the part consideration money in pursuance of the agreement
to sell and such a recital finds place in the said agreement.
Paragraph 1 of the agreement to sell reads as under:
F
"1.That while selling the aforesaid land I the seller, have
received Rs. 1, 15,000/- (Rupees one lac fifteen thousand)
cash as a token amount before the witnesses and, by
remaining present at the spot, actual physical possession
G has been handed over to the purchaser, and after receiving
remaining sale consideration amount Rs. 25,000/- (Rupees
twenty five thousand) from the purchaser within a year I,
the purchaser, will get the sale deed of the said land
registered in the name of the purchaser."
H
OM PRAKASH v. LAXMINARAYAN & ORS. 927
[CHANDRAMAULI KR. PRASAD, J.]
2. The defendants in the written statement, however, A
denied the assertion of the plaintiffs and stated that no
agreement to sell was ever executed and possession given.
On the basis of the pleading and the written statement, the trial
court framed several issues. During the course of the trial the
agreement to sell was sought to be proved and admitted in B
evidence by the plaintiffs' witness Shankarlal. This was
objected to by defendant no. 1. Its admissibility was questioned
on the ground that the agreement to sell in question contains a
recital that possession has been handed over to the purchaser
and, therefore, it is a conveyance over which the stamp duty c
as indicated in Schedule 1A of the Indian Stamp Act, 1899 as
substituted by M.P. Act 22 of 1990 is required to be affixed. It
is pointed out that the agreement to sell in question is on a
stamp paper of Rs. 50 only. The submission made by
defendant no. 1 found favour with the trial court and it held the
0
agreement to sell to be inadmissible in evidence as it has not
been sufficiently stamped. It further observed that if the plaintiffs
want to produce the said document in evidence then they can
make proper application as envisaged under Section 35 of the
Indian Stamp Act, hereinafter referred to as 'the Act'. While E
doing so, the trial court observed as follows:
" ......... Therefore, it is found that sale agreement dated
27.12.2000 due to mention of possession being handed over,
should be stamped like a conveyance. In the sale agreement
the cost of the land is mentioned as Rs.1,40,000 and its 7 Y2 F
per cent comes to Rs. 10,500/-. Therefore, it is concluded that
the sale agreement can be admissible in evidence only on being
on stamp of Rs. 10,500/-. Therefore, it is concluded that the
sale agreement is not properly stamped, therefore, not
admissible in evidence. Thus, objection of defendant No. 1 is G
allowed sale agreement dated 27 .12.2000 is refused to be
admitted in evidence. If the plaintiff wants to produce the said
documents in evidence then he may make proper application
H
928 SUPREME COURT REPORTS [2013] 9 S.C.R.
A under Section 35 of the Stamp Act on the next date."
3. Plaintiffs challenged the aforesaid order before the High
Court in a writ petition filed under Article 227 of the Constitution
of India, inter alia, contending that when defendants themselves
have asserted that possession of the property was not
8
delivered, the recital in agreement is of no consequence. It was
also pointed out that plaintiffs themselves have claimed relief
· of possession, which obviously means that they are not in
possession and when this fact is taken into consideration, the
view taken by the trial court appears to be erroneous. The High
C Court by its order dated 27th February, 2008 passed in Writ
Petition No. 7237 of 2007 accepted this contention and held
the agreement to sell to be admissible in evidence. The High
Court, in this connection, has observed as follows:
D "Although there is no dispute with regard to the fact that in
the document in question, which is an agreement alleged
to have been executed by the defendants in favour of the
plaintiffs, and which is basis of the suit, it is recited that
possession of the property in question had been delivered
E to the plaintiffs, but the fact cannot be ignored that a
specific plea has been raised by the defendants in their
written statement denying the execution of the said
agreement and also specifically denying that the
possession of the property had ever been delivered to the
F plaintiff-petitioners. In these circumstances, once, the
defendants themselves have claimed that possession of
the property had not been delivered, then the recital in
agreement looses all significance. In such a situation, the
document cannot be held to be insufficiently stamped
merely because it was not stamped in accordance with
G
Article 23 of Stamp Act."
4. Defendant no. 1 assails this order in the present special
leave petition.
H 5. Leave granted.
OM PRAKASH v. LAXMINARAYAN & ORS. 929
[CHANDRAMAULI KR. PRASAD, J.]
6. We have heard Mr. Niraj Sharma on behalf of the A
appellant and Mr. Fakhruddin, Senior Counsel on behalf of the
respondents.
7. Mr.· Sharma contends that for admissibility of the
document what is relevant is the recital therein. He submits that B
agreement to sell is "conveyance" as defined under Section
2(10) of the Act and shall be chargeable with duty as
contemplated under Section 3 of the Act. According to him, as
the agreement in question is not duly stamped, it shall be
inadmissible in evidence under Section 35 of the Act. Mr. C
Fakhruddin, however, submits that the defendants having joined
the issue with regard to the possession of the plaintiffs in terms
of the agreement to sell, the document in question shall not
come within the expression "conveyance" as defined under the
Act and, hence, it cannot be said that it is not duly stamped.
D
8. In view of the rival submission, the question which falls
for our determination is as to whether the admissibility of a
document produced by the party would depend upon the recital
in the document or the plea of the adversary in the suit and
whether the document in question is "conveyance" as defined E
under the Act and is duly stamped.
9. As stated earlier, the plaintiffs filed a suit for specific
performance of contract and their case is founded on the
agreement to sell executed on 27th December, 2000. The F
agreement to sell acknowledges payment of the part of
consideration money and further giving actual physical
possession to the purchaser by the seller. Though the
defendants dispute that, but in our opinion, for determination
of the question of admissibility of a document, it is the recital
therein which shall be decisive. Whether the possession in fact G
was given or not in terms of the agreement to sell is a question .
of fact which requires adjudication. But, at the time of
considering the question of admissibility of document, it is the
recital therein which shall govern the issue. It does not mean
that the recital in the document shall be conclusive but for the H
930 SUPREME COURT REPORTS [2013] 9 S.C.R.
A purpose of admissibility it is the terms and conditions
incorporated therein which shall hold the field. Having said that,
we proceed to consider as to whether the document in question
is "conveyance" within the meaning of Section 2(10) of the Act.
Section 2(10) of the Act reads as follows:
B
2. Definitions. -In this Act, unless there is something
repugnant in the subject or context, -
)()()( xxx )()()(
c (1 O)"Conveyance" includes a conveyance on sale
and every instrument by which property, whether
movable or immovable, is transferred inter vivos
and which is not otherwise specifically provided for
by Schedule I;
D )()()( xxx xxx''
10. From a plain reading of the aforesaid provision, it is
evident that an instrument by which movable or immovable
property is transferred, comes within the expression
E "conveyance". In the present case, an immovable property is
transferred on payment of part of the consideration and handing
over the possession of the property. It is relevant here to state
that by the Indian Stamp (Madhya Pradesh Second
Amendment) Act, 1990 (Act No.22 of 1990) few Articles
F including Article 23 of Schedule 1-A has been substituted and
Explanation has been added to Article 23. The Explanation
appended to Article 23 of Schedule 1-A of the Stamp Act as
substituted by Section (6) of Act 22 of 1990 reads as follows:
"Explanation.-For the purpose of this article, where in the
G case of agreement to sell immovable property, the
possession of any immovable property is transferred to the
purchaser before execution or after execution of, such
agreement without executing the conveyance in respect
thereof then sucM agreement to sell shall be deemed to be
H
OM PRAKASH v. LAXMINARAYAN & ORS. 931
[CHANDRAMAULI KR. PRASAD, J.]
a conveyance and stamp duty thereon shall be leviable A
accordingly:
Provided that, the provisions of Section 4 7-A shall
apply mutatis mutandis to such agreement which is
deemed to be a conveyance as aforesaid, as they apply
8
to a conveyance under that section:
Provided further that where subsequently a
conveyance is effected in pursuance of such agreement
of sale the stamp duty, if any, already paid and recovered
on the agreement of sale which is deemed to be a C
conveyance shall be adjusted towards the total duty
leviable on the conveyance, subject to a minimum of Rs.
10."
11. The aforesaid Explanation has come into effect with 0
effect from 26th September, 1990. The Explanation, therefore,
creates a legal fiction. The agreement to sell shall be deemed
to be a conveyance and stamp duty is leviable on an instrument
whereby possession has been transferred. Thus the agreement
to sell in question is a conveyance within the meaning of E
Section 2(10) of the Act and is to be duly stamped. Section
35 of the Act makes instruments not duly stamped inadmissible
in evidence, the relevant portion whereof reads as follows:
"35. Instruments not duly stamped inadmissible in
evidence, etc.-No instrument chargeable with duty shall F
be admitted in evidence for any purpose by any person
having by law or consent of parties authority to receive
evidence, or shall be acted upon, registered or
authenticated by any such person or by any public officer,
unless such instrument is duly stamped: G
Provided that-
(a) any such instrument shall be admitted in evidence
on payment of the duty with which the same is
chargeable or, in the case of an instrument H
932 SUPREME COURT REPORTS [2013] 9 S.C.R.
A insufficiently stamped, of the amount required to
make up such duty, together with a penalty of five
rupees, or, when ten times the amount of the proper
duty or deficient portion thereof exceeds five
rupees, of a sum equal to ten times such duty or
B portion;
xxx xxx xxx."
12. From a plain reading of the aforesaid provision, it is
evident that an authority to receive evidence shall not admit any
C instrument unless it is duly stamped. An instrument not duly
stamped shall be admitted in evidence on payment of the duty
with which the same is chargeable or in the case of an
instrument insufficiently stamped, of the amount required to
make up such duty together with penalty. As we have observed
- D earlier, the deed of agreement having been insufficiently
stamped, the same was inadmissible in evidence. The court
being an authority to receive a document in evidence to give
effect thereto, the agreement to sell with possession is an
instrument which requires payment of the stamp duty applicable
E to a deed of conveyance. Duty as required, has not been paid
and, hence, the trial court rightly held the same to be
inadmissible in evidence. The view which we have taken finds
support from a decision of this Court in the case of Avinash
Kumar Chauhan v. Vijay Krishna Mishra, (2009) 2 SCC 532,
F in which it has been held as follows:
"21. It is not in dispute that the possession of the property
had been delivered in favour of the appellant. He has, thus,
been exercising some right in or over the land in question.
We are not concerned with the enforcement of the said
G agreement. Although the same was not registered, but
registration of the document has nothing to do with the
validity thereof as provided for under the provisions of the ·
Registration Act, 1908.
H 22. We have noticed heretobefore that Section 33 of the
OM PRAKASH v. LAXMINARAYAN & ORS. 933
[CHANDRAMAULI KR. PRASAD, J.]
Act casts a statutory obligation on all the authorities to A
impound a document. The court being an authority to
receive a document in evidence is bound to give effect
thereto. The unregistered deed of sale was an instrument
which required payment of the stamp duty applicable to a
deed of conveyance. Adequate stamp duty admittedly was B
not paid. The court, therefore, was empowered to pass an
order in terms of Section 35 of the Act."
13. To put the record straight, the correctness of the
impugned judgment (Laxminarayan & Ors. v. Omprakash &
Ors., 2008 (2) MPLJ 416) came up for consideration before a C
Division Bench of the High Court itself in Writ Petition No. 6464
of 2008 (Man Singh (deceased) through Legal
Representatives Smt. Sumranbai & Ors. v. Rameshwar') and
same has been overruled by judgment dated January 22, 2010.
The High Court observed as follows: D
"8. A document would be admissible on basis of the
recitals made in the document and not on basis of the
pleadings raised by the parties. In the matter of
Laxminarayan (supra), the learned Single Judge with due E
respect to his authority we don't think that he did look into
the legal position but it appears that he was simply swayed
away by the argument that as the defendant was denying
the delivery of possession, the endorsement/recital in the
document lost all its effect and efficacy. F
9. It would be trite to say that if in a document certain
recitals are made then the Court would decide the
admissibility of the document on the strength of such
recitals and not otherwise. In a given case, if there is an
absolute unregistered sale deed and the patties say .that G
the same is not required to be registered then we don't
think that the Court would be entitled to admit the document
because simply the parties say so. The jurisdiction of the
Court flows from Sections 33, 35 and 38 of the Indian
Stamp Act and the Court has to decide the question of H
934 SUPREME COURT REPORTS [2013) 9 S.C.R.
A admissibility. With all humility at our command we over-rule
the judgment in the matter of Laxminarayan (supra)."
14. We respectfully agree with the conclusion of the High
Court in this regard.
B 15. In view of what we have observed above, the order of
the High Court is unsustainable and cannot be allowed to stand.
16. In the result, the appeal is allowed, the impugned order
of the High Court is set aside and that of the trial court is
c restored but without any order as to costs.
R.P. Appeal allowed.
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