Delhi High Court

Ajit Singh vs Vinod Kumar & Ors on 15 January, 2014

Author: Badar Durrez Ahmed

         IN THE HIGH COURT OF DELHI AT NEW DELHI

                                             Judgment delivered on: 15.01.2014

FAO(OS) 504/2013 & CM 17624/2013

AJIT SINGH                                                             ..... Appellant

                            versus



VINOD KUMAR & ORS                                                  ..... Respondents

Advocates who appeared in this case:
For the Appellant   : Mr Rajesh Yadav, Ms Chandrani Prasad and Mr Nakul Gandhi.
For the Respondents : Mr Ankit Sibbal.

CORAM:
HON'BLE MR. JUSTICE BADAR DURREZ AHMED
HON'BLE MR. JUSTICE SIDDHARTH MRIDUL

                                JUDGMENT

BADAR DURREZ AHMED, J (ORAL)

1. This appeal is directed against the order dated 01.10.2013 passed by a

learned Single Judge of this court in IA No.20617/2012 in CS(OS)

No.2661/2012. The said application was filed by the defendant/appellant

herein under Order 7 Rule 11 CPC for rejection of the plaint filed by the

respondent/plaintiff. The suit is one for specific performance and injunction.

2. By virtue of the impugned order the said application under Order 7

Rule 11 CPC was dismissed. While doing so the learned Single Judge

considered the provisions of Section 17(1A) of the Registration Act, 1908 as

also Section 49 thereof. This was the first point urged by the learned counsel

for the appellant. The second point was with regard to the provisions of

Section 33 and 35 of the Indian Stamp Act and article 23A of Schedule-1A

as applicable to Delhi and as amended by the Indian Stamp (Delhi

Amendment) Act, 2001.

3. Insofar as the plea regarding the provisions of the Registration Act is

concerned, it had been contended by the learned counsel for the

appellant/defendant that Section 17(1A) thereof clearly stipulated that, if

documents containing contracts to transfer immovable property for

consideration falling within Section 53A of the Transfer of Property Act,

1882, are not registered (after 2001) then, such documents shall have no

effect for the purposes of Section 53A of the Transfer of Property Act, 1882.

It was therefore contended by the learned counsel for the appellant that the

agreement dated 05.08.2011 which is sought to be specifically enforced by

the respondent/plaintiff would have no effect at all and, therefore, the suit

itself cannot be maintained. However, the learned Single Judge rejected this

plea by holding that Section 17(1A) of the Registration Act, 1908 would not

apply to the facts and circumstances of the present case. It was held that, on

the other hand, the provisions of Section 17(2)(v) would be applicable,

inasmuch as the agreement to sell did not itself create any right, title or

interest in the immoveable property. The learned Single Judge also relied

upon the provisions of Section 49 of the Registration Act, 1908 and, in

particular, upon the proviso therein to hold that an unregistered document

such as the agreement to sell in question which was required to be registered

could be received as an evidence of a contract in a suit for specific

performance under Chapter-II of the Specific Relief Act, 1877 or as evidence

of any collateral transaction not required to be effected by registered

instrument. In other words, the learned Single Judge was of the view that

even if it were to be considered that the agreement to sell in question was to

be compulsorily registered under Section 17(1A) of the Registration Act, the

same could still be received as evidence of a contract in a suit for specific

performance.

4. The learned counsel for the appellant conceded that even compulsorily

registerable documents could be received in evidence provided they fell

within the four corners of the proviso to Section 49 of the Registration Act,

1908 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."

5. However, the learned counsel for the appellant submitted that the

learned Single Judge fell in error in concluding that the sale agreement dated

05.08.2011 did not fall under Section 17(1A) but came within the purview of

Section 17(2)(v) of the said Act. The learned counsel for the appellant also

drew our attention to the finding recorded by the learned Single Judge in

paragraph 11 of the impugned order to the effect that the plaintiff had not

sought any relief based on part performance under Section 53A of the

Transfer of Property Act and, that being so, Section 17(1A) of the

Registration Act, 1908 was not attracted and, therefore, the agreement in

question did not require registration. While we agree with the conclusion

arrived at by the learned Single Judge that because of the proviso to Section

49, even the sale agreement dated 05.08.2011, which was an unregistered

document, could be received as evidence of a contract in a suit for specific

performance, we do not agree with the conclusion arrived at by the learned

Single Judge that the said document did not fall within the purview of

Section 17(1A) of the Registration Act since the relief was not based on

Section 53A of the Transfer of Property Act. We may point out that Section

53A of the Transfer of Property Act, 1882 is for the benefit of a transferee.

In other words, if a document of the type mentioned in Section 53A of the

Transfer of Property Act is not registered, the transferee will not be able to

take benefit of the said provision of Section 53A. It, however, does not mean

that such a document does not require to be compulsorily registered. We,

therefore, set aside the findings of the learned Single Judge on this aspect of

the matter and leave it open to be examined in the suit at an appropriate

stage.

6. The second point taken by the learned counsel for the appellant was

with regard to the provisions of the Indian Stamp Act and Schedule 1A as

applicable to Delhi. The learned counsel for the appellant drew our attention

to Sections 33 and 35 of the Indian Stamp Act and submitted that any

instrument which was chargeable to duty on which the appropriate stamp is

not affixed is liable to be impounded on production. The relevant provisions

are as under:-

"33. Examination and impounding of instruments.- (1) Every person having by law or consent of parties, authority to receive evidence, and every person in charge of a public office, except an officer of police, before whom any instrument, chargeable, in his opinion, with duty, is produced or comes in the performance of his functions, shall, if it appears to him that such instrument is not duly stamped, impound the same.

(2) For that purpose every such person shall examine every instrument so chargeable and so produced or coming before him, in order to ascertain whether it is stamped with a stamp of the value and description required by the law in force in India when such instrument was executed or first executed:

Provided that -

(a) nothing herein contained shall be deemed to require any Magistrate or Judge of a Criminal Court to examine or impound, if he does not think fit so to do, any instrument coming before him in the course of any proceeding other than a proceeding under Chapter XII or Chapter XXXVI of the Code of Criminal Procedure, 1898 (5 of 1898);

(b) in the case of a Judge of a High Court, the duty of examining and impounding any instrument under this section may be delegated to such officer as the Court appoints in this behalf.

(3) For the purposes of this section, in cases of doubt,-

(a) the State Government may determine what offices shall be deemed to be public offices; and

(b) the State Government may determine who shall be deemed to be persons in charge of public offices."

"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 not being an instrument chargeable with a duty not exceeding ten naye paise only, or a bill of exchange or promissory note, shall, subject to all just exceptions, 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, 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 Code of Criminal Procedure, 1898 (5 of 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."

(underlining added)

7. From a plain reading of Section 33 it is evident that if, inter alia, the

court before which any instrument chargeable with duty is produced and

such instrument, in the opinion of the court, does not appear to be duly

stamped, the court shall impound the same. Furthermore, Section 35

stipulates that no instrument chargeable with duty shall be admitted in

evidence for any purpose by any person having the authority to receive

evidence unless the instrument is duly stamped. It was submitted by the

learned counsel for the appellant that as per article 23A of Schedule 1A as

applicable in Delhi, the agreement in question required to be stamped with

90% of the duty as payable for a conveyance under article 23. The provisions

of articles 23 and 23A as applicable in Delhi are set out as under:-

Description of Instrument Proper Stamp-duty

23. CONVEYANCE as Three per cent of the defined by section 2(10) not consideration amount set being a Transfer charged or forth in the instrument. exempted under No.62. Further reduced to two per Exemption. - Assignment of cent in respect of copyright under the individually/jointly held Copyright Act, 1957, section immovable property by

18. woman/women:

Provided that in cases of jointly held immovable property, the reduced rate of stamp duty shall apply only to the share(s) held by woman/women.

23A. CONVEYANCE IN Ninety per cent of the duty as THE NATURE OF PART a Conveyance (No.23). PERFORMANCE Contracts for the transfer of immovable property in the nature of part performance in any union

territory under section 53A of the Transfer of Property Act, 1882 (4 of 1882)

8. A plain reading of article 23A shows that it refers to contracts for the

transfer of immoveable property in the nature of part performance in any

union territory under Section 53A of the Transfer of Property Act, 1882. In

the present case the agreement dated 05.08.2011 purports to be on stamp

paper of Rs.10/- only. The learned Single Judge while considering this aspect

of the matter has dealt with it as under:-

"11. Now, with regard to the submissions that the agreement was not properly stamped, as per Article 23A of Schedule 1A of ISTA, I may state without hesitation that Article 23A also was not attracted inasmuch as it applies to the contracts for transfer of properties under Section 53A of the Transfer of Property Act. As noted, the plaintiffs suit is not based on the part performance under Section 53A of the T.P. Act and the agreement to sell could not be said to be conveyance in the nature of part performance as envisaged in Article 23A. As per Section 2(10) of ISTA, "conveyance" includes conveyance of sale and other instruments by which property, whether movable or immovable, is transferred intra-vivous and which is not otherwise specifically provided for by Schedule-I. By any interpretation, such an agreement to sell cannot be termed as conveyance as defined in Section 2(10) of ISTA. That being so, and the agreement to sell in question not creating any right, title or interest over the suit property, except that of the cause of action asking for the execution of the sale deed, Article 23A was not attracted and thus, the provisions of Sections 33 of ISTA is not attracted. As there is no Article in

Schedule-I specifically providing for agreement to sell of immovable property, it would come within the ambit of residuary clause (c) of Article 5 of Schedule 1 of ISTA, which is extended to union territory of Delhi by Delhi Amendment Act of 2001. The stamp duty as per residuary clause (c) of Article 5 thereof is Rs.50/-. The agreement to sell in question being on stamp paper of Rs.10/-, is seen to be deficient of Rs.40/-only and as per Section 35 proviso (a), the same would become admissible in evidence on payment of penalty equivalent to 10 times of the deficient portion of the stamp duty. The deficiency being of Rs.40/- only, the penalty payable comes to Rs.400/- and thus, this penalty and the deficiency of Rs.40/- i.e. Rs.440/- would be payable by the plaintiff for seeking admissibility of this agreement. The plaintiff would be required to do the needful in this regard."

(underlining added)

9. It will be evident from the above extract that the learned Single Judge

held that the agreement would not fall under article 23A and would fall

under residuary provision of article 5(c) of Schedule 1A and would,

therefore, require a stamp duty of Rs.50/-. Since, according to the learned

Single Judge, the agreement was on a stamp paper of Rs.10/- only, it was

held that it was deficient by Rs.40/- and, consequently, by virtue of Section

35 the same could only be admissible in evidence on payment of penalty

equal to ten times of the deficient portion of the stamp duty. Consequently,

the learned Single Judge held that the penalty payable would be Rs.400/- and

the deficient stamp was Rs.40/- and, therefore, the respondent/plaintiff was

required to pay a sum of Rs.440/- (Rs.40/- towards deficient stamp duty and

Rs.400/- as penalty) before seeking admissibility of the said agreement.