Bombay High Court
M/S. Dharati Developers Through ... vs Madhukar Atmaram Patil And Ors on 13 December, 2017
Bench: Dr. Shalini Phansalkar-Joshi
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vks
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELLATE JURISDICTION
WRIT PETITION NO. 1192 OF 2016
M/s Dharati Developers ]
A partnership firm through its partners ]
1. Shri. Digambar Sadashiv Govardhane ]
age: 49 years,Occn. Business and agriculture ]
] Petitioners
2. Shri. Prakash Punaji Tidke ] Original
age: 49 years, Occn. Business a`nd agriculture ] Plaintiffs.
]
both residing at Madhura Society ]
Sambhaji Chowk, Untawadi Road ]
Nashik 2 ]
V/s.
1. Madhukar Atmaram Patil ]
age:; 68 years, Occn. Doctor, ]
residing at: 103/6, Navdurga Apartment ]
Opp. Lakme Compound, Deonar ]
Mumbai 400 088 ]
]
2. Shri. Rajendra Keshavchand Bora ] Respondents
age: 55 years, Occn. Business, ] Original
residing at: Samrat House 39-D 1/6 ] Defendants.
Shankarsheth Road, ]
Pune 37. ]
]
3. Shri. Balasaheb Barku Kolhe ]
age: 46 years, Occn. Business and agriculture ]
residing at Stadium complex, Mahatma Gandhi ]
Road, Nashik ]
Mr. Sachin Gite for the Petitioners.
Mr. R. D. Soni a/w V.R. Kasale i/by Ram &
1/12
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Co. for Respondent No.2.
CORAM : DR.SHALINI PHANSALKAR-JOSHI, J.
DATE : 13 th DECEMBER, 2017.
ORAL JUDGMENT :
1] Heard learned counsel for the petitioner and learned
counsel for respondent No.2.
2] Rule.
3] By consent of learned counsel for both the parties, rule
made returnable forthwith.
4] By this writ petition filed under Articles 226 and 227 of
the Constitution of India, the petitioners are challenging the order
dated 27th February 2015, passed by the 6th Joint Civil Judge Senior
Division, Nashik, in Special Civil Suit No.360 of 2013, thereby
allowing application filed at Exh.53 by respondent No.2 and directing
the petitioners-plaintiffs to pay deficit Stamp on the Memorandum of
Understanding executed on 24th January, 2011, on the basis of which
the suit for specific performance of the said agreement is filed.
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5] The submission of learned counsel for the petitioners is
that perusal of the said Memorandum of Understanding (for short
referred to as, "MOU") makes it clear that, on the basis of the same or
in pursuance of the same neither the entire consideration amount
was paid nor the possession of the suit property was delivered.
Conversely, the averments in the said MOU are clear that the
agreement to sale was to be executed subsequently and thereafter
sale deed was to be executed. The possession of the suit property was
also agreed to be given at the time of agreement to sale. In such
situation according to learned counsel for petitioners, the trial Court
has committed an error in impounding the said document and
directing the petitioners to pay deficit stamp holding that it is an
agreement to sale and the possession was agreed to be given
thereunder.
6] Per contra, learned counsel for respondent No.2 submits
that the Explanation 1 to Article 25 of the Maharashtra Stamp Act,
1958 makes it clear that even when the possession is agreed to be
given by virtue of execution of any document, then such document is
required to be construed as " Deemed Conveyance" and the stamp
duty thereon will be payable accordingly. Here in the case, according
to learned counsel for the respondent No.2, the recitals in the MOU
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are clear to the effect that the possession was agreed to be given at
the time of execution of agreement to sale and therefore the recitals
in the MOU satisfy necessary condition as laid down in Explanation-I
to Article 25 of the Maharashtra Stamp Act. Hence according to him,
the trial Court has rightly directed the petitioners to pay the deficit
Stamp thereon. In his opinion, therefore, the impugned order passed
by the trial Court being just, legal and correct, no interference is
warranted therein.
7] In order to substantiate their respective contentions,
learned counsel for both parties have relied upon judgments of
Division Bench of this Court. However, before adverting to those
judgments, it would be useful and advantageous to refer the
provisions of Explanation 1 to Article 25 of the Maharashtra Stamp
Act and those provisions can be reproduced as follows :-
"[Explanation-I} - For the purpose of this article, where in the
case of agreement to sell an immovable property, the possession
of any immovable property is transferred or agreed to be
transferred to the purchaser before the execution, or at the time
of execution, or after the execution of, such agreement, 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 32A shall apply
mutatis mutandis to such agreement which is deemed to be a
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conveyance as aforesaid, as they apply to a conveyance under
that section:
Provided further that, where subsequently a conveyance
is executed 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.
Provided also that where proper stamp duty is paid on a
registered agreement to sell an immovable property, treating it
as a deemed conveyance and subsequently a conveyance deed is
executed without any modification then such a conveyance shall
be treated as other instrument under Section 4 and the duty of
one hundred rupees shall be charged"
8] Thus, these provisions are clear to the effect that where in
a document pertaining to sale of an immovable property, the
possession of immovable is transferred or agreed to be transferred to
the purchaser before the execution or at the time of execution or after
execution of such agreement, then such agreement is deemed to be
conveyance and stamp duty thereon shall be leviable accordingly.
9] Here in the case, if one goes through the MOU, then clause
(1) of the terms and conditions thereof lays down that the total
consideration price of the suit property was fixed as Rs.4,31,00,008/-.
Out of that amount an amount of Rs.41 lacs was paid on the date of
execution of MOU; whereas the remaining of the 50% of the total
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consideration was to be paid on the date of agreement of sale, 25% of
the remaining was to be paid within three months from the date of
agreement of sale and balance 25% was to be paid on the date of
execution of the sale deed.
10] Clause (7) of the MOU further provides that the
possession of the property was to be handed over on the date of
agreement of sale. Even clause No.(2) also provides that the
agreement of sale was to be executed after the sale deed was executed
in favour of the vendor by the bank.
11] In the considered opinion of this Court, these recitals in
the MOU are more than sufficient to show that on the execution of the
MOU or by virtue of MOU, the possession was not to be handed over,
but it was to be handed over at the time of agreement of sale. The
entire consideration amount was also not paid on the date of MOU, but
only part of the consideration was paid and balance was to be paid
subsequently. 50% of the remaining consideration amount was to be
paid at the time of agreement of sale, when possession was to be
delivered.
12] The real issue for consideration is the clause No.7 which
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states that the possession of the property was agreed to be given on
the date of agreement of sale. According to learned counsel for
respondent, this term in clause No.(7) of the MOU clearly attracts
Explanation-I to Article 25 of the Maharashtra Stamps Act and
therefore, stamp duty is required to be paid as leviable on the
conveyance deed.
13] This very term, "possession was agreed to be given" as
used in the MOU, came for consideration before the Division Bench of
this Court in the case of Balwantgir Ganpatgir Giri through his
Lrs Nanibai wd/o Balwant Giri and ors -vs- Manasi Construction
and Developers, 2006 (5) Mh. L. J. 306, relied upon by the
learned counsel for the petitioner. In that case also the argument
advanced was that the document of MOU clearly discloses an
agreement for delivery of possession in terms of said agreement for
sale of the property and therefore it was required to be stamped in
accordance with the provisions of law comprised under Explanation-I
to Article 25 of the Schedule I of the Maharashtra Stamps Act. This
argument was upheld by the trial Court, on the ground that there was
clear mention in the agreement that the possession was to be
delivered on the date of agreement to sale of property. The point,
therefore, raised for consideration before the Division bench was,
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whether the document in question discloses agreement for delivery of
possession in terms of agreement of sale and, therefore, it was a
conveyance within the meaning of Explanation-I to Article 25.
14] While deciding this point, it was held in paragraph 9 of the
judgment that,
"the fact that, agreement in question clearly contemplates
delivery of possession only on execution of the sale deed being
not in dispute, in fact, that itself is sufficient to reject all the
contentions sought to raise on behalf of appellant".
It was further held that,
"Under the Explanation-I to Article 25, the delivery of
possession which transposes the agreement to conveyance
in terms of said Explanation-Is only in case of agreement to
deliver the possession in terms of the agreement and not in
terms of the sale deed agreed to be executed consequent to
such agreement. Indeed in case of execution of the sale deed
it would carry the stamp duty which is required to be paid
on a conveyance in accordance with the Article 25 of
Schedule I. Being so, once the sale deed is executed by
paying required stamp duty in terms of Article 25, the
occasion to deprive the Government revenue cannot arise.
For the said reason, once the agreement discloses that
delivery would be on execution of the sale deed, it is
needless to say that there could be no opportunity for the
parties to defraud the Government. Being so, an agreement
which restricts delivery of possession or execution of sale
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deed cannot by any stretch of imagination construed to be a
conveyance within the meaning of the said expression
under Explanation-I to Article 25 of Schedule I of the said
Act".
15] In the facts of the present case, clause (7) of the MOU
clearly discloses that the possession was to be given at the time of
execution of agreement of sale, therefore possession was not given or
agreed to be given on the date when the MOU was executed. In such
situation, if the expression, "possession agreed to be given" as
explained in the decision of Division Bench is considered, then it
follows that the requisite stamp fee would be definitely payable at the
time of execution of the agreement to sale when possession was to be
delivered and not at the stage when MOU was executed. If the
possession was to be given by virtue of agreement of sale and not by
virtue of MOU, then it follows, as held in the above said judgment that,
at this stage Explanation-I of Article 25 cannot be made applicable.
16] In this respect it is pertinent to note that the entire
consideration is also not paid. MOU clearly goes to show that it is not
an agreement, but this is just an understanding arrived at between
the parties by virtue of which no possession or title is delivered and
the possession is agreed to be delivered and is to be delivered only at
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the time of agreement of sale. Therefore, when MOU is purely an
agreement or understanding arrived at between the parties; wherein
there is no recital for delivery of possession, it cannot be considered
as conveyance within the meaning of the said Explanation-I to Article
25 of schedule I of the Act.
17] As regards the judgment relied upon by learned counsel
for respondent No.1, it can be seen that in this case of
Bhupendrabhai Rambhai Patel -vs- Sau. Lilabai Mahadeorao
Labde and anr, CDJ 2010 BHC 1653, agreement of sale contained
stipulation for delivery of possession, but there was refusal to hand
over possession and hence it was held that the fact that possession
was not handed over cannot be relevant for the purpose of deciding
whether it can be treated as conveyance within the meaning of
Explanation-I to Article 25 of the Stamps. Act. Hence this judgment
cannot be of any assistance.
18] Learned counsel for respondent also submits that if the
petitioner is seeking specific performance for execution of the sale
deed on the basis of this document, which is styled as MOU, then it
follows that he has to pay court fee stamp on the MOU as if it is an
agreement to deliver the possession. In his opinion, therefore, if the
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MOU, is being treated as an agreement by the petitioner himself, the
petitioner cannot escape from the liability of paying stamp duty
thereon. According to him, the averments made in the plaint are
required to be considered while deciding the nature of the document
styled as MOU.
19] However, if one considers the recitals in the MOU, it is
clear that it is merely an understanding arrived at between the
parties. As agreement of sale was agreed to be executed subsequently
by which possession of the property was to be given. Now even if
despite that the petitioner is asking for execution of MOU, he is doing
so at his own risk. Now merely because he is asking for execution of
the sale deed on the basis of MOU and that too without paying
requisite stamp duty, then he is doing so at his own peril.
20] From the facts of present case, suffice it to say the
possession was agreed to be given in pursuance of the agreement of
sale to be executed subsequently as a follow up of this MOU.
Therefore MOU does not come within the purview of Explanation-I of
Article 25 of the Maharashtra Stamps Act.
21] As a result, this writ petition is allowed.
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22] The impugned order passed by the trial Court below
Exh.53 in Special Civil Suit No.360 of 2013 stands quashed and set
aside.
23] Rule made absolute in above terms.
[DR.SHALINI PHANSALKAR-JOSHI, J.]
