Tuesday, 25 November 2014

Whether draft sale deed is compulsorily registerable?

In the background referred to above, neither Section 49, nor Section 77 of the Registration Act get attracted. The document is, no doubt, registerable, but it was not even executed. It is only on execution of a document, that the requirement of registration would arise. In a nascent form, the document cannot be said to be compulsorily registerable. At any rate, since the rights are claimed directly under the document, the purpose cannot be treated collateral. Section 77 of the Registration Act does not get attracted, since it is not a case where the Registrar refused to register the document, though it has been executed by the vendors, and presented for registration.

Andhra High Court
T.Jai Singh vs Mrs. Pyaro Kaur And Others on 27 June, 2014
Citation;AIR 2014 Hyderabad 19
This revision raises certain basic questions, referable to the Indian Stamp Act and the Registration Act.
The respondents 1 to 6 are said to be the joint owners of premises, bearing No.9-1-34/10, Lunger House, Hyderabad, admeasuring 642 sq.yards. They are said to have agreed to sell the property to the petitioner, received the entire consideration of Rs.10,00,000/-, and as per their instructions, a sale deed was also prepared in March, 2006. Pending determination of the actual stamp duty, the draft sale deed is said to have been prepared on stamp papers of Rs.100/-. Respondents 1, 2, 4, 5 and 6 are said to have signed the draft sale deed, but on account of failure or refusal by the 3rd respondent, to sign it, the document could not be presented for registration, and thereafter, all the respondents are said to have resiled.
The petitioner filed O.S.No.305 of 2006 in the Court of II Additional Chief Judge, City Civil Court, Hyderabad for the relief of specific performance, in the form of a direction to the respondents to register the sale deed, or in the alternative for a decree of perpetual injunction, or for delivery of possession of the property. A draft sale deed was filed as one of the documents, along with the suit. In the context of receiving and marking the documents, the office of the trial Court raised an objection. The petitioner filed I.A.No.2390 of 2009, under Section 151 C.P.C. with a prayer to mark the draft sale deed as Ex.A-4. It was pleaded that there cannot be any objection to receive the document in its present form, without any necessity to pay the deficit stamp duty, or registration charges, or penalty. It was also pleaded that Section 49, and not Section 77, of the Registration Act, would apply to the facts of the case.
The application was opposed by the respondent No.8, by filing a counter. It was pleaded that the I.A. is filed only to circumvent the requirement under Section 35 of the Stamp Act. He further pleaded that Sections 77 and 49 of the Registration Act do not have any application to the facts of the case. Through its order dated 30-09-2009, the trial Court dismissed the I.A. Hence, this revision.
Sri H. Srinivasa Rao, learned counsel for the petitioner submits that this is a typical case in which, the draft sale deed was signed by almost all the vendors, and the occasion to pay the stamp duty, or penalty, would arise, if only all the signatories have signed it and it is presented for registration. It is pleaded that the document cannot be treated as an agreement with possession, since it is clearly, a draft sale deed, and that it cannot be treated as a sale deed, since it is yet to be signed by some of the parties. Learned counsel further submits that when the total consideration for the property, as mentioned in the draft sale deed, is only Rs.10 lakhs, requiring the petitioner to pay a sum of about Rs.60 lakhs towards deficit stamp duty and penalty would not only be totally unjust and inequitable, but also would lead to absurdity. He submits that when the petitioner or the Court are not sure about the relief, that may be granted in the suit, the question of such huge amount being paid can never be said to be in contemplation of the adjudicatory system.
Smt. Manjari S. Ganu, learned counsel for the respondents, on the other hand, submits that the petitioner had indulged in speculative business and unless the requisite stamp duty and penalty are paid on the document, the document cannot be the subject-matter of adjudication.
The petitioner herein as well as the trial Court are placed in a typical situation. In the transaction relating to transfer of immovable properties, the relief of specific performance is generally claimed, on the basis of the agreements of sale. If the agreement contains any recital as to delivery of possession, it is required to be registered. If, on the other hand, it does not contain such a recital, it can be received in evidence, just by ensuring payment of proper stamp duty. Even where a document, which was otherwise required to be registered, but was not registered, there may be occasions to invoke Section 49 of the Registration Act, provided, it is filed for collateral purposes. If any relief is claimed on the strength of a sale deed, which is already executed, the question of the party being required to pay any deficit stamp duty or penalty does not arise. In the instant case, the document relied upon by the petitioner is neither an agreement of sale, nor a sale deed. It is a draft sale deed signed by some of the vendors. The extent to which the petitioner can derive rights out of it, needs to be decided in the suit.
            In the suit, three alternative reliefs, viz.,

a)      specific performance in the form of a direction
to the respondents to register the document,
b)      perpetual injunction, and
c)      decree for delivery of possession

are prayed for. The consideration for the property is said to have been agreed by the parties to be at Rs.10 lakhs. The very execution of the document, as well as the contents thereof are subject to proof. As the things stand now, the petitioner is claiming different kinds of reliefs.
In the background referred to above, neither Section 49, nor Section 77 of the Registration Act get attracted. The document is, no doubt, registerable, but it was not even executed. It is only on execution of a document, that the requirement of registration would arise. In a nascent form, the document cannot be said to be compulsorily registerable. At any rate, since the rights are claimed directly under the document, the purpose cannot be treated collateral. Section 77 of the Registration Act does not get attracted, since it is not a case where the Registrar refused to register the document, though it has been executed by the vendors, and presented for registration.
Now comes the question of application of Section 35 of the Stamp Act: The purpose underlying the provision is to ensure that no document, which is executed with on an improper or deficit stamp, is received in evidence. Here again, one has to keep in view, the fact that the question as to whether a document was executed on a proper stamp paper, can be verified, if only the execution part of it, has already taken place. If the document, irrespective of its description is yet to be executed, the question of its being subjected to any stamp duty, or levying deficit stamp duty much less penalty, does not arise. The true test would be as to whether on payment of the deficit stamp duty, the document can fit into the description of a document, under the relevant entry in Schedule I-A of the Stamp Act. A draft sale deed does not figure anywhere in Schedule I-A. Therefore, its being subjected to stamp duty and penalty, at this stage, is a step, beyond the scope of the Stamp Act.
It is not as if the petitioner would be extended the relief without being subjected to the payment of stamp duty and registration charges. In case the suit is decreed, the stamp duty and registration charges are to be paid at the stage of registration of the document. If, on the other hand, the respondents, or any of them are successful in resisting the suit, the petitioner would not only stand to loose the consideration, said to have been paid under the document, but also the phenomenal some of about Rs.60 lakhs, which is now required to be paid towards deficit stamp duty and registration charges. Even if the suit is decreed, the burden remains and continues to be unbearable. This was never the intention under the Act.
Therefore, the C.R.P is allowed, and the order under revision is set aside. The trial Court is directed to receive the document in evidence and leave the question of stamp duty and registration charges, depending upon the result, that may be granted in the suit.
There shall be no order as to costs.
_______________________ L. NARASIMHA REDDY, J.
Dt.27-06-2014
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