Delhi High Court: A suit was filed by the plaintiff seeking specific performance and a permanent injunction based on an Agreement to Sell dated 23-04-2009, a Memorandum of Understanding (MOU) dated 08-10-2022, and additional agreements dated 18-11-2010. An application was further filed by defendant 3 under Section of the , for impounding of these documents, on the grounds that that they were either insufficiently stamped or unstamped, thus necessitating impounding and subsequent action by the Collector of Stamp for proper determination and payment of stamp duty by the plaintiff. Neena Bansal Krishna, J., held that while the document may have been admitted by the defendants, to be an instrument to operate as a document of transfer of the property, it requires to be duly stamped, in accordance with the Stamp Act and till such time, the requisite stamp duty, is annexed on these documents, they are void and cannot be an instrument on which any party can claim a right, title and interest.
The defendant 3 contended that the Agreement to Sell and related documents, which formed the basis of the plaintiff’s suit, were not properly stamped in accordance with the . The contention was that these documents, being instruments creating a right, title, or interest in immovable property, required compulsory registration and appropriate stamp duty payment, as stipulated under Sections 17 of the Registration Act and 23A of the Stamp Act. The defendants submitted that without adequate stamping, these documents were inadmissible in evidence, rendering the plaintiff’s suit untenable.
The plaintiff argued that the documents in question were agreements to sell and not conveyance deeds, and thus did not transfer the property directly but required further execution of sale deeds. Citing Section 36 of the Stamp Act, the plaintiff contended that once the documents were admitted in evidence, their admissibility could not be questioned later for being insufficiently stamped. The plaintiff asserted that the application lacked merit as the documents were already admitted during the stage of admission/denial of documents by the defendants.
On the aspect of nature of documents, the Court examined the Agreement to Sell dated 23-04-2009, the MOU dated 08-10-2022, and the agreements dated 18-11-2010 observing that these documents involved consideration and acknowledgment of possession transfer, thus creating rights, title, and interest in immovable property.
On the aspect of stamp duty and registration, the Court noted that Article 23A of the Schedule 1 to the Stamp Act mandates that contracts for the transfer of immovable property in part performance under Section of the , require substantial stamp duty, almost equivalent to that on a conveyance deed. The Court found that the documents, being instruments of transfer in the nature of part performance, required appropriate stamp duty, which was not paid.
Relying on N.N. Global Mercantile Private Limited v. Indo Unique Flame Ltd., , the Court clarified that an instrument must be duly stamped to be admitted in evidence and emphasized that the deficiency in stamp duty could be rectified by paying the required duty and penalty, making the document admissible.
The Court addressed the plaintiff’s argument under Section 36 of the Stamp Act, which states that once a document is admitted in evidence, its admissibility cannot be questioned. However, the Court clarified that the primary objective of the Stamp Act is fiscal, i.e., ensuring revenue for the government. The Court further highlighted that admission under Section 36 does not negate the requirement for proper stamping as mandated under Sections 33 and 35.
The Court distinguished between the enforceability and admissibility of documents noting that even if a document is admitted in evidence without objection, it does not automatically become enforceable if it is insufficiently stamped. The court emphasized that such documents could still be impounded to ensure compliance with fiscal laws.
Thus, the Court concluded that the documents in question were indeed insufficiently stamped and required impounding. The Court directed that the documents be sent to the Collector of Stamps for determination and payment of the appropriate stamp duty by the plaintiff. The Court also held that the plaintiff’s suit could not proceed further until the stamp duty deficiency was rectified. Consequently, the application under Section 33 of the Indian Stamp Act was allowed, directing the necessary steps for impounding the documents and ensuring compliance with the statutory requirements.
[Celebration Hotels & Resorts (P) Ltd. v Sartaaj Hotels Apartments & Vilas Pvt. Ltd., CS(OS) 612/2012, decided on 10-06-2024]
Advocates who appeared in this case :
Dr. Anurag Kr. Agarwal, Mr. Umesh Mishra and Mr. Mayank Goel, Advocates for plaintiff
Mr. Suneel Kumar Atreya, Ms. Shivangi Vashishta, Advocates for D1 to D3 with D1.
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