Recently, the Delhi High Court held that Relinquishment Deeds executed by co-owners in favor of another co-owner cannot be treated as Gift Deeds under the Stamp Act, in a matter concerning family property disputes in Greater Kailash, New Delhi, emphasizing that such deeds only release rights without transferring title.
Brief Facts:
The case arose from a property jointly owned by the late Shri Jagdish Prasad Sharma and late Smt. Shanti Devi, who were the parents of the appellant, Shri Ramesh Sharma. Upon the father’s death, the appellant inherited half of the property through a registered Will. During the mother’s lifetime, five sisters of the appellant executed Relinquishment Deeds in favor of their brother, intending to release their rights in the property. These deeds were presented for registration but were impounded by the Sub-Registrar on the ground of deficient stamp duty, treating them as Gift Deeds.
Contentions of the Appellant:
The appellant’s counsel argued that the Relinquishment Deeds were release deeds, not gift deeds, relying on precedents from Andhra Pradesh and Madras High Courts which recognized similar documents as deeds of release. The counsel emphasized that the deeds merely extinguished the sisters’ interests without transferring property for consideration, and were consistent with family inheritance principles.
Contentions of the Respondent:
The respondents, representing the Sub-Registrar and the Collector of Stamps, contended that the deeds were effectively gifts, as they released rights in favor of one co-owner and not all, thereby making them liable for higher stamp duty under the Stamp Act.
Observations of the Court:
The Court examined the nature of Relinquishment Deeds in the context of co-ownership and family inheritance. The Court relied on multiple precedents including Chella Subbanna, Valivety Rama Krishnaiah, and Madula Girish Kumar, noting that, “The relinquishment by one co-owner in favor of another co-owner does not amount to a transfer of title, it merely adds to the existing title of the recipient. Release deeds can only feed title but cannot transfer it.”
The Court clarified that the previous reliance on judgments treating such deeds as gifts was misplaced, particularly where all sisters executed the RDs in favor of the brother. The Court also emphasized that the nomenclature of the deed alone cannot determine stamp duty liability and that the deeds formed part of a single transaction and were executed without any economic consideration.
The Court further observed, “On a plain reading of the RDs, it becomes evident that the sisters executed the RDs to release their share in favour of their brother… All the RDs were basically acknowledging the bequest made by late Sh. Jagdish Prasad Sharma in favour of Sh. Ramesh Sharma.”
The decision of the Court:
The Court allowed the appeal, setting aside the order of the Single Judge. It directed the Collector of Stamps, Hauz Khas, Mehrauli to release the impounded documents and clarified that the Relinquishment Deeds executed by the sisters in favor of their brother are release deeds, not gift deeds for the purposes of the Stamp Act. The Registry was also directed to communicate a copy of the judgment to the Collector of Stamps.
Case Title: Ramesh Sharma vs. Government of N.C.T. of Delhi & Ors.
Case No.: LPA 346/2020
Coram: Justice Anil Kshetarpal, Justice Harish Vaidyanathan Shankar
Advocate for Petitioner: Adv. D.N. Goburdhun (Sr. Adv.), Archit Chauhan, Attin Shankar Rastogi, Shivkant Arora, Vasudeva and Ms. Saloni
Advocate for Respondent: Adv. Abhinav Sharma
Read Judgment @LatestLaws.com
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