SUPREME COURT OF INDIA

Before:- S.B. Sinha and Cyriac Joseph, JJ.

Civil Appeal No. 7350 of 2008 (Arising out of SLP(C) No. 8651 of 2007). D/d. 17.12.2008.

Avinash Kumar Chauhan - Appellant

Versus

Vijay Krishna Mishra - Respondent

For the Appellant :- A.K. Bajpai, M.F. Khan and Goodwill Indeevar, Advocates.

For the Respondent :- Suhai Dutt, Ram Gupta, Jagjit Singh Chhavra and Ravin Rao,
Advocates.

NUTSHELL

Agreement to sell property reduced in writing - No stamp duty is required to be paid,

but stamp duty will be required to be paid if possession is delivered.

NUTSHELL

An under stamped and an unregistered sale deed is neither admissible in a suit for
specific performance nor for recovery of consideration money nor for any collateral
purpose.

A. Stamp Act, 1899, Section 35 - Agreement to sell property reduced in writing -

Possession given to purchaser - Stamp duty has to be paid if possession is delivered to
purchaser - Agreement to sell will not be admissible as evidence without payment of
stamp duty - Held, although ordinarily an agreement to sell would not be subject to
payment of stamp duty which is payable on a sale deed, but having regard to the
purpose and object it seeks to achieve the legislature thought it necessary to levy duty
on an instrument whereby possession has been transferred - But stamp duty will be
payable, if possession is delivered.

[Para 15]

B. Stamp Act, 1899 Sections 35 and 33 - Agreement to sell property executed between
parties - Possession of property given to purchaser under the said agreement - It is
necessary to levy stamp duty on an instrument whereby possession has been
transferred - Held :

Although ordinarily an agreement to sell would not be subject to payment of stamp duty
which is payable on a sale deed, but having regard to the purpose and object it seeks to
achieve the legislature thought it necessary to levy stamp duty on an instrument whereby
possession has been transferred.

[Paras 15 and 17]

C. Stamp Act, 1899 Sections 33 and 35 - Impounding of instrument not duly stamped -
Section 33 casts a duty upon every person who has authority to receive evidence and
every person incharge of a public office before whom the instrument is produced, if it
appears to him that the same is not duly stamped, to impound the same.

[Paras 10 and 17]

D. Stamp Act, 1899, Sections 35 and 33 - Registration Act, 1908, Sections 49 and 17 - Sale
of property for consideration of Rs. 2,70,000/- lakhs - Consideration money paid and
possession delivered to purchaser - Sale deed neither registered nor stamped - Seller
failed to transfer the property - Suit for recovery of Rs. 2,70,000/- lakhs by purchaser -
Unstamped document is neither admissible in evidence for recovery of consideration
money nor for specific performance nor for any collateral purpose.

[Paras 15, 17 and 18]

Cases Referred :-

Kapur Constructions v. Lita Nagraj, AIR 2005 Karnataka 032.

Bondar Singh v. Nihal Singh, 2003(2) RCR (Civil) 222 : [(2003)4 SCC 161].

Pandey Oraon v. Ram Chander Sahu, 1992 Supp (2) SCC 77.

Amrendra Pratap Singh v. Tej Bahadur Prajapati, (2004)10 SCC 65.

Ram Rattan v. Parmananad [AIR 1946 Privy Council 51].

Bhaskarabhotla Padmanabhaiah v. B. Lakshminarayana [ AIR 1962 Andhra Pradesh 132].

Sanjeeva Reddi v. Johanputra Reddi AIR 1972 Andhra Pradesh 373.

B. Rangaiah v. B. Rangaswamy, (1970) 2 Andh WR 181.

T. Bhaskar Rao v. T. Gabriel [ AIR 1981 Andhra Pradesh 175.

Firm Chuni Lal Tukki Mal v. Firm Mukat Lal Ram Chanda [ AIR 1965 Allahabad 164].

Chandra Sekhar Misra v. Gobinda Chandra Das [ AIR 1966 Orissa 18].

JUDGMENT

S.B. Sinha, J. - Leave granted.

2. Interpretation of Sections 33 and 35 of the Indian Stamp Act 1899 (for short 'the Act') calls
for our consideration in this appeal which arises out of a judgment and order dated 27th
February, 2007 passed by a learned Single Judge of the High Court of Chattisgarh at Bilaspur
dismissing a petition filed by the appellant herein under Article 227 of the Constitution of
India against the orders dated 14th November, 2006 and 9th January, 2007 passed in Civil
Suit No. 1-B/2006 by the Additional District Judge, Gariaband, Raipur.

3. The undisputed fact of the matter is that the respondent herein, who is said to be a
member of the Scheduled Tribe intended to transfer a house and land admeasuring 10150
sq. ft. situated at Village Gariyaband, District Raipur. A sum of Rs. 2,70,000/- fixed by way of
consideration towards the aforementioned transfer was paid to the respondent by the
appellant. Possession of the said property had also been delivered.

4. Indisputably for the purpose of effecting transfer of the said land, permission of the
Collector was required to be obtained in terms of Section 165(6) of the C.G. Land Revenue
Code, 1959, which was applied for but rejected.

5. Appellant herein filed a suit for recovery of Rs. 2,70,000/-. In support of his case, the
agreement dated 4th August, 2003 which was sought to be registered as a sale-deed has
been relied upon.
The same was directed to be impounded by an order dated 9th January, 2007, stating :-

" Under the section 35(a) of the Stamp Act there is a provision that for any such
instrument or bill of exchange or promissory note, subject to all just exceptions, will 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 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 portion.

In the matter the agreement of sell produced is valued Rs. 2,70,000/- which as per
Article 23 of Indian Stamp Act and as per Schedule 5, on the said amount stamp duty of
5.6% is leviable and the 7.5% of Rs. 2,70,000/- comes to Rs. 20,250/-. In the agreement to
sell Rs. 60/- is mentioned as stamp which means reducing the Rs. 20,250 - Rs. 60 = Rs.
20,190 is less stamp duty paid, 10 times penalty of which will be leviable as per Section
35 of the Stamp Act means Rs. 201900/- stamp duty will be leviable. In this regard
relevant case law is Kapur Constructions v. Lita Nagraj and Ors., AIR 2005
Karnataka 032. The plaintiff has paid Rs. 20,850/- in the C.C.D. so the rest of the
amount of Rs. 181050 be deposited within the next date of hearing and the Opposite
Party shall also file its counter reply by the next date of hearing."

6. As noticed hereinbefore the High Court by reason of the impugned judgment refused to
interfere with the said order.

7. Mr. A.K. Bajpai, learned counsel appearing on behalf of the appellant would submit that
having regard to the fact that the said unregistered deed of sale was sought to be put in
evidence not for the purpose of enforcement of the contract but only for the purpose of
recovery of the amount of consideration, which indisputably has been paid to the
respondent and such a purpose, it was urged, being a collateral one, the provisions of
Sections 33 and 35 of the Act shall not be attracted.

Reliance in this behalf has been placed on the proviso appended to section 49 of the Indian
Registration Act as also on the decision of this Court in Bondar Singh v. Nihal Singh,
2003(2) RCR (Civil) 222 : [(2003)4 SCC 161].

8. Mr. Suhail Dutt, learned counsel appearing on behalf of the respondent, on the other
hand, would support the impugned judgment.

9. The Act was enacted to consolidate and amend the law relating to Stamps.

"Conveyance" has been defined in Section 2(10) to mean :-

" "conveyance" includes a conveyance on sale and every instrument by which

property, whether moveable or immoveable, is transferred inter vivos and which is
not otherwise specifically provided for by Schedule I ;"

"Receipt" has been defined in section 2(23) of the Act to mean :-

" "receipt" includes any note, memorandum or writing -

(a) whereby any money, or any bill of exchange, cheque or promissory note is
acknowledged to have been received, or

(b) whereby any other moveable property is acknowledged to have been received in
satisfaction of a debt, or
 (c) whereby any debt or demand, or any part of a debt or demand, is acknowledged to
have been satisfied or discharged, or

(d) which signifies or imports any such acknowledgement ;

and whether the same is or is not signed with the name of any person."

"Stamp" has been defined in Section 2(26) to mean :-

" "Stamp" means any mark, seal or endorsement by any agency or person duly
authorised by the State Government, and includes an adhesive or impressed stamp, for
the purposes of duty chargeable under this Act."

10. Chapter II of the Act provides for stamp-duties.

Section 3, which is the charging Section reads as under :-

"3. Instruments chargeable with duty. - Subject to the provisions of this Act and the
exemptions contained in Schedule I, the following instruments shall be chargeable
with duty of the amount indicated in that Schedule as the proper duty therefor,
respectively, that is to say -

(a) every instrument mentioned in that Schedule which, not having been previously
executed by any person, is executed in India on or after the first day of July, 1899;

(b) every bill of exchange payable otherwise than on demand or promissory note
drawn or made out of India on or after that day and accepted or paid, or resented for
acceptance or payment, or endorsed, transferred or otherwise negotiated, in India;
and

(c) every instrument (other than a bill of exchange or promissory note) mentioned in
that Schedule, which, not having been previously executed by any person, is executed
out of India on or after that day, relates to any property situate, or to any matter or
thing done or to be done, in 8 [India] and is received in India.

Provided that no duty shall be chargeable in respect of -

(1) any instrument executed by, or on behalf of, or in favour of, the Government
incases where, but for this exemption, the Government would be liable to pay the duty
chargeable in respect of such instrument;

(2) any instrument for the sale, transfer or other disposition, either absolutely or
byway of mortgage or otherwise, of any ship or vessel, or any part, interest, share or
property of or in any ship or vessel registered under the Merchant Shipping Act 1894,
or under Act 19 of 1838, or the Indian Registration of Ships Act, 1841, as amended by
subsequent Acts.

(3) any instrument executed by, or, on behalf of, or, in favour of, the Developer, or Unit
or in connection with the carrying out of purposes of the Special Economic Zone,

Explanation - For the purposes of this clause, the expressions "Developer", "Special
Economic Zone" and "Unit" shall have meanings respectively assigned to them in
clause(g), (za) and (zc) of Section 2 of the Special Economic Zones Act, 2005."

The other provisions contained in the said chapter deal with the mode and manner of
payment etc.
Chapter III of the Act provides for adjudication with regard to proper stamps; whereas
Chapter IV deals with instruments not duly stamped.

Section 33 casts a duty upon every person who has authority to receive evidence and every
person incharge of a public office before whom the instrument is produced, if it appears to
him that the same is not duly stamped, to impound the same. Sub-section (2) of Section 33 of
the Act lays down the procedure for undertaking the process of impounding. Section 35
provides that an instrument shall be inadmissible in evidence if the same is not duly
stamped in the following terms :-

"35 - Instruments not duly stamped inadmissible in evidence, etc.

No instrument chargeable with duty shall 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 :

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 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 portion ;

(b) where any person from whom a stamped receipt could have been demanded, has
given an unstamped receipt and such receipt, if stamped, would be admissible in
evidence against him, then such receipt shall be admitted in evidence against him on
payment of a penalty of one rupee by the person tendering it;

(c) where a contract or agreement of any kind is effected by correspondence consisting

of two or more letters and any one of the letters bears the proper stamp, the contract
or agreement shall be deemed to be duly stamped;

(d) nothing herein contained shall prevent the admission of any instrument in
evidence in any proceeding in a Criminal Court, other than a proceeding under
Chapter XII or Chapter XXXVI of the Criminal Procedure Code 1898;

(e) nothing herein contained shall prevent the admission of any instrument in any
Court when such instrument has been executed by or on behalf of the Government or
where it bears the certificate of the Collector as provided by section 32 or any other
provision of this Act."

11. Section 36 of the Act provides that where an instrument has been admitted in evidence,
such admission shall not, except as provided in Section 21 thereof, be called in question at
any stage of same suit or proceeding on the ground that the instrument has not been duly
stamped. Section 38 provides for the mode and manner in which the instrument
impounded is to be dealt with.

12. The Parliament has, in Section 35 of the Act, advisedly used the words "for any purpose
whatsoever". Thus, the purpose for which a document is sought to be admitted in evidence
or the extent thereof would not be a relevant factor for not invoking the aforementioned
provisions.

13. The land in the instant case is situated in a Scheduled Area. Execution of a deed of
conveyance in respect of the land situated in the scheduled area is statutorily barred. All
transactions can be affected only upon obtaining the permission of the collector in terms of
the provisions of Section 165 (6) of the C.G. Land Revenue Code, 1959. We are, however, not
concerned with the said provisions.

14. Indisputably an instrument was executed. By reason of such an instrument not only the
entire amount of consideration was paid but possession of the property had also been
transferred.

Explanation appended to Article 23 of Schedule IA of the Stamp Act as substituted by M.P.

Act No. 19 of 1989 reads as under :-

"Explanation. - For the purpose of this Article, where in the case of agreement to sell
immovable property, the possession of any immovable property is transferred to the
purchaser before execution after execution of such agreement without executing the
conveyance in respect thereof, then such agreement to sell shall be deemed to be a
conveyance and stamp duty thereon shall be leviable accordingly :

Provided that the provisions of section 47A shall apply mutatis mutandis to such
agreement which is deemed to be a conveyance as aforesaid, as they apply 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 conveyance shall be adjusted towards the
total duty leviable on the conveyance subject to a minimum of Rs. 10."

15. The said explanation has been inserted by M.P. Act 19 of 1989 with effect from 15th
November, 1989. By reason of the said provision, thus, a legal fiction has been created.
Although ordinarily an agreement to sell would not be subject to payment of stamp duty
which is payable on a sale deed, but having regard to the purpose and object it seeks to
achieve the legislature thought it necessary to levy stamp duty on an instrument whereby
possession has been transferred.

The validity of the said provision is not in question.

16. 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 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 Indian Registration Act, 1908.

17. We have noticed heretobefore that Section 33 of the Act casts a statutory obligation on
all the authorities to impound a document. The court being an authority to receive a
document in evidence is bound to give effect thereto.

18. 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 not paid. The
court, therefore, was empowered to pass an order in terms of Section 35 of the Act.

19. The contention of learned counsel for the appellant that the document was admissible
for collateral purpose, in our opinion, is not correct. In Bondar Singh (supra) this Court was
not concerned with the provisions of the Act. Only interpretation of the provisions of the
Registration Act, 1908 was in question. It was opined :-

" The main question, as we have already noted, is the question of continuous
possession of the plaintiffs over the suit lands. The sale deed dated 9-5-1931 by Fakir
Chand, father of the defendants in favour of Tola Singh, the predecessor-in-interest of
the plaintiffs, is an admitted document in the sense its execution is not in dispute. The
 only defence set up against the said document is that it is unstamped and unregistered
and therefore it cannot convey title to the land in favour of the plaintiffs. Under the
law a sale deed is required to be properly stamped and registered before it can convey
title to the vendee. However, legal position is clear law that a document like the sale
deed in the present case, even though not admissible in evidence, can be looked into
for collateral purposes. In the present case the collateral purpose to be seen is the
nature of possession of the plaintiffs over the suit land. The sale deed in question at
least shows that initial possession of the plaintiffs over the suit land was not illegal or
unauthorized..."

In this case, by reason of the statutory interdict, no transfer at all is permissible. Even
transfer of possession is also not permissible. [See Pandey Oraon v. Ram Chander Sahu,
1992 Supp (2) SCC 77 and Amrendra Pratap Singh v. Tej Bahadur Prajapati and Others,
(2004)10 SCC 65]

20. The Registration Act, 1908 provides for such a contingency in terms of the proviso
appended to Section 49 thereof, which reads as under :-

"49. Effect of non-registration of documents required to be registered. -

No document required by section 17 or by any provision of the Transfer of Property

Act, 1882 (4 of 1882), to be registered shall -

(a) affect any immovable property comprised therein, or

(b) confer any power to adopt, or

(c) be received as evidence of any transaction affecting such property or conferring

such power,

unless it has been registered :

Provided that an unregistered document affecting immovable property and required

by this Act or the Transfer of Property Act, 1882 (4 of 1882), to be registered may be
received as evidence of a contract in a suit for specific performance under Chapter II
of the Specific Relief Act, 1877 (3 of 1877) or as evidence of any collateral transaction
not required to be effected by registered instrument."

21. Section 35 of the Act, however, rules out applicability of such provision as it is
categorically provided therein that a document of this nature shall not be admitted for any
purpose whatsoever. If all purposes for which the document is sought to be brought in
evidence are excluded, we fail to see any reason as to how the document would be
admissible for collateral purposes.

22. The view we have taken finds support from the decision of the Privy Council in Ram
Rattan v. Parmananad [AIR 1946 Privy Council 51]. wherein it was held :-

"That the words 'for any purpose' in Section 35 of the Stamp Act should be given their
natural meaning and effect and would include a collateral purpose and that an
unstamped partition deed cannot be used to corroborate the oral evidence for the
purpose of determining even the factum of partition as distinct from its terms."

The said decision has been followed in a large number of decisions by the said Court. In
Bhaskarabhotla Padmanabhaiah and others v. B. Lakshminarayana and others [ AIR
1962 Andhra Pradesh 132]., it has been held :-
 "9. In this case, the learned Subordinate Judge has observed that what the plaintiff was
trying to prove was not the division in status but to show that the property was
divided under the partition deed. In any case, the fact that the document is
inadmissible due to want of being stamped is clear. For, in Ram Rattan v.
Parmanand, AIR 1946 Privy Council 51, their Lordships of the Privy Council held
that the words 'for any purpose' in Section 35 of the Stamp Act should be given their
natural meaning and effect and would include a collateral purpose and that an
unstamped partition deed cannot be used to corroborate the oral evidence for the
purpose of determining even the factum of partition as distinct from its terms."

It was furthermore held :-

"10. In the result, I agree with the learned Munsif-Magistrate that the document is 'an
instrument of partition' under Section 2(15) of the Indian Stamp Act and it is not
admissible in evidence because it is not stamped. But, I further held that if the
document becomes duly stamped, then it would be admissible to evidence to prove the
division in status but not the terms of the partition."

In Sanjeeva Reddi v. Johanputra Reddi [ AIR 1972 Andhra Pradesh 373]., it has been
held :-

"9. While considering the scope of Section 35 of the Indian Stamp Act we cannot bring
in the effect of non-registration of a document under section 49 of the Indian
Registration Act. section 17 of the Indian Registration Act deals with documents, the
registration of which is compulsory and Section 49 is concerned only with the effect of
such non-registration of the documents which require to be registered by Section 17 or
by any provision of the Transfer of Property Act. The effect of non-registration is that
such a document shall not affect any immovable property covered by it or confer any
power to adopt and it cannot be received as evidence of any transaction affecting such
property or conferring such power. But there is no prohibition under Section 49 to
receive such a document which requires registration to be used for a collateral
purpose i.e. for an entirely different and independent matter. There is a total and
absolute bar as to the admission of an unstamped instrument whatever be the nature
of the purpose or however foreign or independent the purpose may be for which it is
sought to be used, unless there is compliance with the requirements of the provisos to
Section 35. In other words if an unstamped instrument is admitted for a collateral
purposes. It would amount to receiving such a document in evidence for a purpose
which Section 35 prohibits. There is nothing in the case of B. Rangaiah v. B.
Rangaswamy, (1970) 2 Andh WR 181 which supports the contention of the petitioner.
That was a case as pointed out by Kuppuswami, J., where there were two instruments
though contained in one document one a settlement in favour of the 4th defendant
therein and the other a will. It was therefore held that part of the instrument which
constitutes a will did not require any stamp and will be admissible in evidence for
proving the bequest contained therein. It was for that reason that the learned Judge
said that Section 35 of the Stamp Act has no application to a case where one of the
separate instruments relating to one such matters would not at all be chargeable
under the Act as in the case before him."

In T. Bhaskar Rao v. T. Gabriel and others [ AIR 1981 Andhra Pradesh 175], it has been
held :-

"5. Section 35 of the Stamp Act mandates that an instrument chargeable with duty
should be stamped so as to make it admissible in evidence. Proviso A to Section 35 of
the Stamp Act enables a document to be received in evidence on payment of stamp
duty and penalty if the document is chargeable, but not stamped or on payment of
deficit duty and penalty, if it is insufficiently stamped. The bar against the admissibility
 of an instrument which is chargeable with stamp duty and is not stamped is of course
absolute whatever be the nature of the purpose, be it for main or collateral purpose,
unless the requirements of proviso (A) to Section 35 are complied with. It follows that
if the requirements of proviso (A) to Section 35 are satisfied, then the document which
is chargeable with duty, but not stamped, can be received in evidence."

It was further held :-

"7. It is now well settled that there is no prohibition under Section 49 of the
Registration Act, to receive an unregistered document in evidence for collateral
purpose. But the document so tendered should be duly stamped or should comply with
the requirements of Section 35 of the Stamp Act, if not stamped, as a document cannot
be received in evidence even for collateral purpose unless it is duly stamped or duty
and penalty are paid under Section 35 of the Stamp Act."

See also Firm Chuni Lal Tukki Mal v. Firm Mukat Lal Ram Chanda and others [ AIR
1965 Allahabad 164] and Chandra Sekhar Misra v. Gobinda Chandra Das [ AIR 1966
Orissa 18]).

23. For the reasons aforementioned, there is no merit in this appeal which fails and is
dismissed. However, in the facts and circumstances of the case, there shall be no order as to
costs.

Appeal dismissed.