Maharashtra Stamp Act| Sale Agreement Concluding In Sale Deed Do Not Absolve Primary Liability For Paying Stamp Duty On Sale Agreement When It Is The Principal Document:SC
The Supreme Court observed that, under Maharashtra Stamp Act, the sale agreements ultimately concluding in the sale deed would not absolve the primary liability of paying the appropriate stamp duty at the time of execution of the sale agreement when it is the principal document.
The Court dismissed the challenge against the decision of the Bombay High Court which upheld the decision of the trial court allowing an application under Sections 33, 34, and 37 of the Maharashtra Stamp Act, 1958 (the Act) for impounding sale agreements for adjudication of stamp duty and penalty.
A Bench of Justice Pankaj Mithal and Justice R. Mahadevan observed, “Even considering the contention of the appellant, that the sale agreements ultimately concluded in the sale deed on which stamp duty was paid, would not by ipso facto absolve the primary liability of paying the appropriate stamp duty at the time of execution of the sale agreement as it was the principal document. Therefore, we are of the opinion that Section 4 of the Act cannot come to the aid of the appellants. Therefore, all these six documents ought to have been necessarily stamped and registered.”
Advocate Rohan Thawani represented the appellants, while AOR Abdul Azeem Kalebudde appeared for the respondents.
The appellants had initially produced six agreements, executed between 1994 and 2006, regarding the sale and development of properties in Thane, Maharashtra. These agreements included clauses transferring physical possession to the purchasers. Following a petition by one of the respondents, the trial court allowed an application under Sections 33, 34, and 37 of the Act and Section 17 of the Registration Act, directing the impounding of these documents.
Aggrieved by this decision, the appellants filed a petition before the High Court, which upheld the trial court’s decision. The appellants appealed before the Supreme Court, arguing that the agreements to sell in relation to the same immovable properties ultimately resulted into a sale deed in favour of the appellants and the said sale deed was also duly registered, upon payment of the required stamp duty and therefore, the prior agreements to sell are not required to be registered and stamped.
The Supreme Court had to determine whether the appellants were liable to pay stamp duty and penalty on the agreements to sell executed prior to the sale deed executed in their favour.
“It could be seen that the instruments /documents were not forming part of a single transaction between the same parties and they were different transactions between different vendors and purchasers. Further, for several documents to form part of a single transaction, there must be a transaction in furtherance of which several other documents are executed to complete that transaction and then it becomes imperative to charge stamp duty on the principal instrument/document,” the Court remarked.
The Court clarified that Section 4 of the Act made it clear that the stamp duty was levied only on the instrument and not on the transaction. The Bench referred to its decision in Veena Hasmukh Jain v. State of Maharashtra, (1999), wherein the Apex Court held 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.”
Consequently, the Court observed, “The trial Court rightly observed that the subsequent sale deed cannot be construed as a principal transaction and the agreements to sell would be treated as the principal conveyance as per Explanation I of Article 25 of Schedule-I of the Act and impounded all these documents and directed to send the same to the Collector for adjudication of stamp duty and penalty.”
Accordingly, the Supreme Court dismissed the appeal.
Cause Title: Shyamsundar Radheshyam Agrawal & Anr. v. Pushpabai Nilkanth Patil & Ors. (Neutral Citation: 2024 INSC 730)
Appearance:
Appellant: Advocates Rohan Thawani and Ansh Mittal; AOR C. George Thomas
Respondent: AOR Abdul Azeem Kalebudde, Satyajeet Kumar and Aaditya Aniruddha Pande; Advocates Rajiv Masodkar, Anand Dilip Landge, Siddharth Dharmadhikari, Bharat Bagla, Sourav Singh, Aditya Krishna, Preet S. Phanse and Adarsh Dubey