Ramesh Mishrimal Jain v. Avinash Vishwanath Patne

Case snapshot

Sections / provisions: Bombay Stamp Act

Questions before the Court / Tribunal

• Stamp duty on instrument contemplating delivery of possession: The reported Supreme Court ruling reiterates that stamp duty attaches to the instrument and considers when an agreement contemplating possession is deemed a conveyance for stamp-duty purposes.

Material facts and background

2012 before the Court of Civil Judge, Senior Division, Ratnagiri, for specific performance of the agreement to sell deed dated 03.09.2003 and other reliefs. Repudiating the same, the Respondent Nos.1 and 2 filed their written statement. Pending the suit, the respondents filed an application under section 34 of the Bombay Stamp Act, 1958, for impounding the document stating that the agreement in question was executed on a stamp paper of Rs.50 /- and the suit property was situated within the limits of Khed Municipal Council and hence, stamp duty of Rs.44,000/- was required to be paid, besides penalty of Rs.1,31,850/-. The said application was resisted by the appellant by stating that the agreement of sale was not an agreement of conveyance and hence, no stamp duty was payable on the same. However, by order dated 03.08.2015, the trial Court allowed the said application, impounded the sale agreement dated 03.09.2003 and directed the document to be sent to the Registrar of Stamps for recovery of the stamp duty and penalty on it as per law. Challenging the same, the appellant preferred W.P.No.3246 of 2016, which was dismissed by the High Court, by the order impugned in this appeal.

Thus, according to the learned counsel, Explanation I to Article 25 of Schedule I of the Bombay Stamp Act, 1958, does not apply to the facts of the present case, wherein, the conditions necessary for its application are not satisfied viz., (i)no possession was transferred under the agreement to sell; (ii)no agreement to transfer possession exists until the sale deed is executed; and (iii)the possession of the appellant remains that of a tenant, which is legally distinct and independent; and hence, no stamp duty can be levied on the agreement to sell dated 03.09.2003. However, the trial Court erred in holding that Explanation I applies to the present case and directed the document to be sent to the Registrar of Stamps for recovery of stamp duty and penalty from the appellant; and the same was also affirmed by the High Court by the order impugned herein. Therefore, the learned counsel prayed to allow this appeal by setting aside the order of the High Court.

Appellant / assessee submissions

According to the learned counsel for the appellant, Explanation I to Article

has also been delivered, it is certainly open to the State to charge such instruments at a particular rate which is akin to a conveyance and that is exactly what has been done in the present case. Therefore, it cannot be said that levy of duty is not upon the instrument but on the transaction. Therefore, we reject the contention raised on behalf of the appellants in that regard. 9. The learned counsel for the appellants urged that the character of an instrument cannot be determined by reason of a subsequent event to take place such as handing over of possession. But a close examination of the provisions of the Explanation will make it clear that in the case of an agreement to sell immovable property possession is transferred at any time without executing the conveyance in respect thereof and such an instrument is deemed to be a “conveyance”. The object of the Explanation is clear 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. 10. It is clear that the object of the...

Revenue / respondent submissions

The judgment copy does not separately set out this component in a distinct section; refer to the full order and the reasoning section below.

Court / Tribunal analysis and reasoning

Bombay Stamp Act, agreement to sell is to be treated as a “conveyance” if possession is (i) handed over immediately; or (ii) agreed to be transferred without mentioning any particular time. In the present case, the appellant was already in possession as a tenant and in terms of agreement to sell, it was agreed to transfer possession within 11 months thereto or extended time, and therefore the said agreement to sell will be a ‘deemed’ conveyance within the meaning of explanation I to Article 25 of Schedule I of Bombay Stamp Act and stamp duty as provided thereunder is leviable. In support of his contention, the learned counsel placed reliance on the decisions of this court in Veena Hasmukh Jain and

states that the possession of the appellant is on a rental basis and the same will not form part of the sale transaction; that, possession on ownership will be given only upon completion of the sale transaction and execution of the sale deed; and therefore, the question of treating the agreement as a deemed conveyance does not arise. It is also stated that the decisions referred to on the side of the respondents are not applicable to the present case as they are factually different and distinct. 9.

reiterating the above stated legal position: (i) In Veena Hasmukh Jain v. State of Maharashtra5, while dealing with the question as to whether the agreement to sell can be treated as a document of conveyance, liable for levy of stamp duty, this Court held as follows: “8. The duty in respect of an agreement covered by the Explanation is leviable as if it is a conveyance. The conditions to be fulfilled are that if there is an agreement to sell immovable property and possession of such property is transferred to the purchaser before the execution or at the time of execution or subsequently without executing any conveyance in respect thereof, such an agreement to sell is deemed to be a “conveyance”. In the event a conveyance is executed in pursuance of such agreement subsequently, the stamp duty already paid and recovered on the agreement of sale which is deemed to be a conveyance shall be adjusted towards the total duty leviable on the conveyance. Now, in the present case, the agreement entered into clearly provides for sale of an immovable property and there is also a specific time within which possession has to be delivered. Therefore, the document in question clearly falls within...

has also been delivered, it is certainly open to the State to charge such instruments at a particular rate which is akin to a conveyance and that is exactly what has been done in the present case. Therefore, it cannot be said that levy of duty is not upon the instrument but on the transaction. Therefore, we reject the contention raised on behalf of the appellants in that regard. 9. The learned counsel for the appellants urged that the character of an instrument cannot be determined by reason of a subsequent event to take place such as handing over of possession. But a close examination of the provisions of the Explanation will make it clear that in the case of an agreement to sell immovable property possession is transferred at any time without executing the conveyance in respect thereof and such an instrument is deemed to be a “conveyance”. The object of the Explanation is clear 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. 10. It is clear that the object of the...

(ii) Referring to the aforesaid judgment, this Court in Shyamsundar Radheshyam Agrawal v. Pushpabai Nilkanth Patil6, held that the object of the Explanation is clear 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 relevant paragraphs of the same read as under: “16. In the instant case, in the documents, though there was a clause for conveyance between the vendors and purchasers in relation to the respective properties, the value of the properties were above Rs 100 and there was also a clause by which possession was admittedly handed over on the date of the agreement, implying acquisition of possessory rights protected under Section 53-A of the Transfer of Property Act, which requires payment of proper stamp duty and registration as mandated under Section 17 of the Registration Act. Further, as per Section 4(2) of the Maharashtra Stamp Act, the parties are at liberty to determine as to which of the document shall be principal document. 17. As noted above, the...

Operative decision and relief

with the orders passed by the Courts below. Accordingly, this appeal stands dismissed as devoid of merits. No costs. Pending application(s), if any, shall stand closed.

Authorities and precedents appearing in the judgment

• Agrawal v. Pushpabai Nilkanth Patil4
• Avinash Vishwas Patne v. Ramesh Mishrilal Jain
• In Veena Hasmukh Jain v. State of Maharashtra5
• Agrawal v. Pushpabai Nilkanth Patil6
• Andhra Pradesh High Court in B. Ratnamala v. G. Rudramma7
• Veena Hasmukh Jain v. State of Maharastra

This list is machine-assisted from the judgment text and is not a substitute for checking the full citation chain in the PDF.

Ratio and legal principle

The decision turns on Stamp duty on instrument contemplating delivery of possession. The operative result is classified as Dismissed. Read the rule only with the statutory version, factual findings and precedent chain recorded in the full judgment.

Why this judgment matters

The case is relevant to taxpayers, advisers and litigators dealing with Stamp duty on instrument contemplating delivery of possession. Its practical value lies in the interaction between the statutory text, the evidentiary record and the procedural route followed in this case.

Practitioner action points

• Use the judgment as a fact-specific precedent: match the statutory version, assessment period, procedural stage and evidentiary record before relying on the result.
• Check whether a later High Court/Supreme Court order has affirmed, reversed, distinguished or rendered the decision academic.
• For litigation, attach the full judgment/order to the working paper and cite the paragraph/page supporting the proposition rather than relying on a headnote alone.

Full judgment and source trail

Read / download the authenticated official judgment PDF

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