Delhi High Court
The Instalment Supply Limited vs Khaitan Hotels Pvt Ltd & Anr on 19 August, 2016
$~A-38
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Date of decision: 19.08.2016
+ CM(M) 793/2016
THE INSTALMENT SUPPLY LIMITED ..... Petitioner
Through Mr.Sudhanshu Batra, Sr.Adv. with
Mr.Ravi Varma and Mr.Yash
Srivastava, Advs.
versus
KHAITAN HOTELS PVT LTD & ANR ..... Respondent
Through Mr.Vikas Dhawan, Mr.S.P.Das and
Mr.S.Panda, Advs. for R-1
CORAM:
HON'BLE MR. JUSTICE JAYANT NATH
JAYANT NATH, J. (ORAL)
CM No. 30083/2016(exemption)
Allowed subject to all just exceptions.
CM(M) 793/2016, CM Nos. 30082 & 30084/2016(directions)
1. By the present petition the petitioner seeks to impugn the order dated
29.7.2016 passed by the trial court impounding the tripartite agreement
dated 11.12.2002 under section 33 of the Indian Stamp Act, 1899 and
directing the petitioner to deposit Rs.14,75,800/- in terms of section 33 and
35 of the Indian Stamp Act.
2. The background facts are that a suit was filed by the petitioner for
possession of plot No.46, Janpath, New Delhi. Prior to purchase of the suit
property by the petitioner, the property was stated to be under tenancy of
respondent No.1. On 11.12.2002 the parties entered into two agreements i.e.
tripartite joint agreement between the petitioner, respondent No.1,
CM(M) 793/2016 Page 1
respondent No.2, a third party. A supplementary agreement was also
executed. Respondent No.2 was allowed to run a restaurant for a period of
nine years. The terms and conditions of the agreement were stated.
Subsequently on expiry of nine years the tenure of the agreement i.e. the
Joint Arrangement could not be continued further. The petitioner/landlord
filed a suit for possession of the property. Respondent No.2 filed a cross suit
seeking the same relief. The keys of the suit property were handed over by
respondent No.2 to the High Court where the suit was then pending.
Thereafter two separate applications were filed by petitioner and respondent
No.1 in their cross-suits seeking that the keys/possession of the property be
handed over to them. On 6.6.2016, the trial court treated the two
applications as being under Order 12 Rule 6 CPC.
3. The impugned order noted the submissions of the petitioner/landlord
that the Agreement dated 11.12.2002 is a lease deed for a period of nine
years whereby the petitioners/landlord entered into a tripartite agreement
with the old tenant and the new sub-tenant. The trial court concluded that
based on the submissions of the petitioner the provisions of Section 33,35
and 38 of the Indian Stamp Act are attracted and that the court is bound to
impound the document in question inasmuch as it is the claim of the
petitioner that the document is a lease deed. The trial court also noted that
the entire case of the petitioner rests on the fact that the joint venture
agreement is a lease deed and compulsorily registrable under section 17 of
the Registration Act and appropriate stamp duty is payable as per the Indian
Stamp Act. The trial court relied upon Yellapu Uma Maheshwari and Ors.
vs. Buddha Jagadheeswararao and Ors., AIR 2015 SC 6184.
The trial court further noted that the defendant/respondent No.1
CM(M) 793/2016 Page 2
supported the counsel for the petitioner relying on Omprakash vs.
Laxminarayan and Others, (2014) 1 SCC 618 to contend that for the
purpose of impounding only the recitals contained in the documents have to
be looked into. This contention was rejected by the trial court.
Accordingly, the trial court computed the amount payable by the
petitioner at Rs.14,75,800/-. The trial court also directed a copy of the plaint
to be sent to Chairman, NDMC to look into the documents to see as to
whether it was a mechanism to evade unpaid property tax. Liberty was also
granted to NDMC to inspect the judicial file and collect additional
documents. It also noted that the court has been apprised that such like
cleverly worded agreements were in vogue in New Delhi area especially in
Connaught Place for the purpose of evasion of property tax; and Chairman,
NDMC was requested to look at every similar instances. The order was
passed stating that it would have no bearing on the stand taken by
respondent No.1.
4. I have heard learned senior counsel for the petitioner and learned
counsel for respondent No.1. Both have submitted that under section 33 of
the Stamp Act the trial court was first obliged to come to a conclusion as to
whether the document in question was a lease deed or not. Merely, on the
basis of submissions of the petitioner the documents could not have been
impounded and the stamp duty with penalty imposed. Reliance was also
placed on Omprakash vs. Laxminarayan and Others (supra) to contend
that the recital of the documents was important for determining the nature of
the document.
5. Section 33(1) of the Indian Stamp Act reads as follows:-
"33. Examination and impounding of instruments-
CM(M) 793/2016 Page 3
(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."
6. Hence, every person so stated before whom any instrument
chargeable is produced, where in the opinion of the officer the document
appears to him that such instrument is not duly stamped would impound the
same. The officer/authority has to hence first form an opinion that the
instrument is chargeable with duty and that such instrument has hence not
been duly stamped.
7. Reference in this context may be had to the judgment of this Court in
the case of M.Mohan vs. Maheshwar AIR 1987 DELHI 115. The issue
there also pertained to a lease deed which was deficient in duty and was
unregistered. The High Court held as follows:-
"5....Section 33 provides for the examination of instruments by
judicial officers for the purpose of ascertaining whether the
document is duly stamped, and in cases where such officer is
satisfied that it is not, for the impounding of the same. The
Section casts a duty on all judicial officers to examine and, if
found to be inadequately stamped, to impound any such
instrument. Where a judicial officer impounds an instrument
under this Section he must, unless he has by law or consent of
parties authority to receive evidence and admits the instrument
on payment of a penalty, send the instrument to the
Collector...."
8. Reference may also be had to the judgment of the Supreme Court in
the case of Ram Rattan vs. Bajrang Lal, AIR 1978 SC 1393. The Supreme
CM(M) 793/2016 Page 4
Court held as follows:-
"6. When the document was tendered in evidence by the
plaintiff while in witness box, objection having been raised by
the defendants that the document was inadmissible in evidence
as it was not duly stamped and for want of registration, it was
obligatory upon the learned trial judge to apply his mind to the
objection raised and decide the objection in accordance with
law........"
9. Hence, it would be for the trial court to first determine the issue as to
whether the document is insufficiently stamped. For that purpose the trial
court would also have to determine whether the document fulfils the
definition of lease as in the Indian Stamp Act. Based on the interpretation of
the document and the conclusion arrived at, the trial court would then follow
the procedure as prescribed under section 33 of the Indian Stamp Act.
10. The trial court has relied on the judgment of the Supreme Court in the
case of Yellapu Uma Maheshwari and Ors. vs. Buddha Jagadheeswararao
and Ors. (supra) to reach its conclusion. The Supreme Court in the said
judgment held that an unstamped instrument is not admissible in evidence
even for collateral purposes, until the same is impounded. Hence, if the
party wants to mark these documents for collateral purpose it is open for
them to pay the stamp duty together with penalty and get the document
impounded and the trial court is at liberty to mark the documents as exhibits.
In that case the issue related to marking of documents which according to
the defendant was a deed of Memorandum witnessing an earlier partition
and an agreement between the parties. The issue was as to whether the
agreement and the memorandum can be construed as a relinquishment deed
which requires compulsory registration. The Supreme Court after reading
CM(M) 793/2016 Page 5
the documents concluded that there is a relinquishment of rights in respect
of immoveable property and that the two documents fell within the ambit of
Section 17(i)(b) of The Registration Act, 1908 and are compulsorily
registrable. The Supreme Court first arrived at a conclusion about the nature
of the document and then passed appropriate orders for the purpose of
imposition of stamp duty. On the issue of construction of the document, the
Supreme Court held as follows:-
"17. It is well settled that the nomenclature given to the
document is not decisive factor but the nature and substance of
the transaction has to be determined with reference to the terms
of the documents and that the admissibility of a document is
entirely dependent upon the recitals contained in that document
but not on the basis of the pleadings set up by the party who
seeks to introduce the document in question......"
11. To the same effect is the judgment of the Supreme Court in the case
of Omprakash vs. Laxminarayan & Ors., (supra). The relevant part of the
judgment reads as follows:-
"11......Though the Defendants dispute that, but in our opinion,
for determination of the question of admissibility of a
document, it is the recital therein which shall be decisive.
Whether the possession in fact was given or not in terms of the
agreement to sell is a question of fact which requires
adjudication. But, at the time of considering the question of
admissibility of document, it is the recital therein which shall
govern the issue. It does not mean that the recital in the
document shall be conclusive but for the purpose of
admissibility it is the terms and conditions incorporated therein
which shall hold the field. Having said that, we proceed to
consider as to whether the document in question is
"conveyance" within the meaning of Section 2(10) of the Act."
CM(M) 793/2016 Page 6
12. In the present case the respondent does not admit the two documents
dated 11.12.2002 to be a lease deed. It is a question which the trial court
would have to consider as per law. The trial court has, however, gone solely
on the basis of contentions made by the petitioner and directed impounding
of the document. The trial court would have to first record a finding as per
law that the document(s) is a lease deed. It is only then the provisions of
sections 33 and 35 of the Indian Stamp Act would be attracted.
13. In view of the above, the impugned order dated 29.7.2016 is quashed.
The matter is remanded back to the trial court for fresh consideration, as
above.
14. I may mention that the direction of the trial court directing that a copy
of the agreement be sent to Chairman, NDMC is a direction that does not
flow from the lis between the a parties. Being a civil dispute between the
plaintiff and defendants, the said direction is beyond the scope of the present
proceedings. The directions were not necessary.
15. Petition stands disposed of. All the pending applications also stand
disposed of.
JAYANT NATH, J
AUGUST 19, 2016/n/v
CM(M) 793/2016 Page 7
