Saturday, 14 December 2013

When an agreement can not be construed as conveyance as per Explanation-I to Article 25 of Schedule-I of Bombay Stamp Act, 1958


2006(6)ALLMR109, 2007(1)BomCR212, 2006(44)MhLj306, 2006(5)MhLj306
IN THE HIGH COURT OF BOMBAY (NAGPUR BENCH)
L.P.A. No. 99 of 2005
Decided On: 12.07.2006
Appellants: Balawantgir Ganpatgir Giri through his LRs. Nanibai Wd/o Balwant Giri and Ors.
Vs.
Respondent: Manasi Construction and Developers and Ors.
Hon'ble Judges/Coram:
R.M.S. Khandeparkar and S.R. Dongaonkar, JJ.

Property - Conveyance - Issue was whether the document in question discloses an agreement for delivery of possession in terms of agreement for sale and therefore, it is a conveyance within the meaning of said expression under Explanation-I to Article 25 of Schedule-I of Bombay Stamp Act, 1958 - Held, Agreement dated 3rd March, 2000 was purely an agreement for sale wherein there was no recital for delivery of possession in terms of the agreement - Terms of agreement are to the effect that the possession would be delivered on execution of the sale deed - Such an agreement cannot be construed as a conveyance within the meaning of the said expression under Explanation-I to Article 25 of Schedule-I of the said Act - Appeal dismissed


R.M.S. Khandeparkar, J.
1. Admit. By consent heard forthwith.
2. The appellants challenge the judgment dated 21-3-2005 passed by the learned Single Judge in Writ Petition No. 149 of 2005. By the impugned judgment, the learned Single Judge has held that document dated 3-3-2000 executed between the parties is a mere agreement for sale without any understanding for delivery of possession prior to the execution of the sale deed and that, therefore, the same cannot be considered as conveyance within the meaning of the said expression under Explanation 1 of Article 25, Schedule-I of the Bombay Stamp Act, 1958 (hereinafter referred as "the said Act").
3. The facts relevant for the decision are that the respondents herein have filed Special Civil Suit No. 9 of 2003 against the appellants for specific performance of an agreement stated to have been entered into between the respondents and the predecessor of the appellants in relation to the property bearing survey No. 88/1 situated at mouza Lohara, tahsil and district Yavatmal. The agreement is stated to have been executed on 3-3-2000. In the course of recording of evidence, while attempting to establish the case of the respondents in relation to the alleged agreement, the respondents sought to produce the document dated 3-3-2000 on record which was objected to by the appellants on the ground that the agreement, in spite of being a conveyance in terms of Explanation-I of Article 25, Schedule-I of the said Act, has not been properly stamped, and therefore, it cannot be admitted in evidence and therefore it cannot be exhibited.
4. It was the contention of the appellants that the document clearly discloses an agreement for delivery of possession in terms of the 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 Schedule-I of the said Act. The trial Court upheld the objection raised on behalf of the appellants holding that the document in question is an agreement for sale and it clearly mentions the possession to have been agreed to be delivered on the date of the sale of the property, and therefore, it could not have been scribed on a stamp paper of Rs. 100/- but it was required to be stamped with the duty payable in terms of the Explanation-I to Article 25 of Schedule-I of the said Act and having not done so, the document is not admissible in evidence. The trial Court by its order dated 30-11-2004 therefore, upheld the objection and disallowed the document in evidence. The order was sought to be challenged by way of Writ Petition No. 149 of 2005 and the same was allowed by the impugned judgment.
5. The point which arises for consideration is; whether the document in question discloses an agreement for delivery of possession in terms of agreement for sale and that, therefore, it is a conveyance within the meaning of said expression under Explanation-I to Article 25 of Schedule-I of the said Act?
6. The relevant clause of the agreement of sale dated 3-3-2000 reads thus: Plain reading of the above quoted clause would reveal that the parties had agreed that it would be the obligation of party No. 2 to obtain income tax clearance certificate at the time of completion of the sale. It was further agreed that party No. 1 would be delivered with the possession of the property on the day of the sale thereof by personally remaining present in loco. It is this later part of the agreement which has led to the dispute in question. As far as the term of the agreement which discloses that the delivery of possession was intended to be given on the day of the sale of the property, there is no dispute between the parties. It is also not in dispute that the expression: "the day of the sale" means the day on which the deed of sale was to be executed.
7. Explanation-I to Article 25 of Schedule-I of the said Act reads thus:
For the purposes 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.
8. The Explanation clearly requires an agreement for sale to carry the stamp duty as payable on a conveyance, when such agreement contemplates for delivery of possession either before execution of the agreement or at the time of execution of agreement or any time after execution of the agreement. Referring to the last eventuality under which the agreement requires to carry stamp duty payable on a conveyance, it is sought to be contended that expression "after the execution of such agreement" would include any period or any day after the execution of the agreement irrespective of the fact whether such possession is to be delivered prior to or after the execution of the actual sale deed. The contention on behalf of the appellants is that bearing in mind the intention of the legislature in incorporating the Explanation being with a view to avoid the opportunity to defraud the Government by representing the document to be a mere agreement and not a conveyance when in fact the conduct of the parties reveals from the terms of agreement that the same to be a transaction in the nature of conveyance; besides once the possession is delivered, the parties choose to neglect to execute a sale deed in spite of the fact that the property is actually transferred from one person to another. To avoid such eventuality the said Explanation having been incorporated in the statutory provision, according to the appellants the strict interpretation of the said Explanation would require that every agreement which contemplates delivery of possession at any time after the execution of such agreement should be construed as a conveyance and would require a stamp duty payable on conveyance. On the other hand it is the contention on behalf of the respondents that the Explanation having been introduced to safeguard the revenue interest of the Government and in cases where the agreement specifically contemplates the requirement of the execution of the sale deed and the delivery of possession being linked to the execution of the sale deed, there would be no occasion to defraud the Government of the revenue and such an agreement cannot be construed as a conveyance within the meaning of the said expression under the said Explanation. The learned advocate for the appellants has also sought to rely upon the decision of the learned Single Judge in Sheshrao Bhikaji Kale v. Damodar Pandhare reported in MANU/MH/0217/2004 : 2004(6)BomCR354
9. The fact that the 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 be raised on behalf of the appellants. Besides, as rightly submitted on behalf of the respondents, the Explanation to Article 25, the delivery of possession which transposes an agreement into a conveyance in terms of the 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 on execution of the sale deed cannot be 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.
10. Being so, no fault can be found with the impugned order setting aside the order of the trial Court and directing the document to be admitted in evidence as an agreement for sale and not as a conveyance within the meaning of the said expression under Explanation-I to the Article 25 of the said Act.
11. It is true that in Sheshrao Bhikaji v. Damodar (supra) the learned Single Judge has observed that when the agreement of sale is executed and the possession is also agreed to be transferred, the agreement be deemed to be a conveyance and stamp duty liable to be paid accordingly. That was a case wherein an agreement for sale which was executed on 23-8-1999 and undisputedly there was a recital to the effect that a possession had been delivered. Obviously, that was a case wherein the possession of the property was delivered in terms of the agreement for sale itself. It was not a case wherein the possession was agreed to be delivered only after the execution of the sale deed. Clearly the decision is distinguishable on facts.
12. One more factor which is to be noted in the matter in hand is that the agreement for sale dated 3-3-2000 discloses that the conveyance of the property was agreed for the total consideration of Rs. 12,30,000/- and out of the said amount, sum of Rs. 1,00,000/- was paid on execution of the agreement, the sum of Rs. 2,00,000/- was agreed to be paid on or before 25-3-2000 and the balance of Rs. 9,30,000/- by 25-1-2001. The sale deed was agreed to be executed only after payment of the entire amount. And only thereafter possession was agreed to be delivered. These facts clearly disclose that the document was clearly an agreement for sale whereby even the entire consideration which is agreed to be paid was not paid on the date of the execution of the agreement. Though mere non-payment of consideration by itself may not relieve the parties from their obligation to pay stamp duty, in terms of Explanation-I to Article 25 when the delivery of possession of the property is made or agreed to be in terms of the agreement, yet when these facts disclose the intention of the parties as well as the conduct of the parties, both factors being relevant to ascertain the real nature of the transaction between the parties, and that the possession was to be delivered after conclusion of sale deed, the agreement cannot be said to be conveyance within the meaning of the said expression under the Explanation-I to Article 25 of Schedule-I of the said Act.
13. Taking into consideration all the facts and circumstances on record, it is therefore, clear that the agreement dated 3-3-2000 is purely an agreement for sale wherein there is no recital for delivery of possession in terms of the agreement. On the contrary, the terms of agreement are to the effect that the possession would be delivered on execution of the sale deed. Hence, such an agreement cannot be construed as a conveyance within the meaning of the said expression under Explanation-I to Article 25 of Schedule-I of the said Act.
14. For the reasons stated above, therefore, there is no case for interference in the impugned order. The appeal, therefore fails and is dismissed. There shall be no order as to the costs.
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