However, in the present case, we find that the objection as to the admissibility of the document on account of insufficiency of the stamp was raised and was decided by the trial Court when the document was tendered in evidence. Once it was decided that decision became final and cannot be reopened in this appeal in view of the judgment of the Apex Court in Javerchand's case supra. We would therefore, have to hold that the agreement of sale (Exhibit A), though in our opinion is improperly stamped, would be admissible in evidence and at any rate, we cannot go behind the order of the trial Court holding that the document was admissible in evidence. We are also fortified in this view by Section 35 of the Bombay Stamp Act which reads as under :--
"Where an instrument has been admitted in evidence, such admission shall not, except as provided in Section 58, be called in question at any stage of the same suit or proceeding on the ground that the instrument has not been duly stamped".
15. When the instrument is admitted in evidence, such admission cannot be called in question at any stage of the same suit or proceedings (which includes an appeal) on the ground that instrument has not been duly stamped except as provided in Section 58 of the Bombay Stamp Act1
Bombay High Court
Naginbhai P. Desai vs Taraben A. Sheth on 22 November, 2002
Equivalent citations: AIR 2003 Bom 192, 2003 (4) BomCR 313, 2003 (1) MhLj 994
Bench: S Radhakrishnan, D Karnik
1. This appeal was initially dismissed in limine by an order dated 15th March 2002. In Civil Appeal No. 4926/02, the Hon'ble Supreme Court set aside the order of dismissal of the appeal in limine and restored to the appeal to the original number directing it to be heard and decided after hearing both the parties. The virtual effect of the order of the Apex Court was that it stood admitted for final hearing. Accordingly, the record was called and the appeal was heard finally.
The brief facts necessary for the decision of the appeal may be stated thus:
2. The appellant (who was original defendant and referred to as such hereafter) was the owner of the immovable property bearing flat No. 2, situated on 4th floor of Parimal Co-operative Housing Society Limited, 22, Tilak Mandir Road, Vile Parle (East), Bombay 400 057 (for short "the suit property"). By an agreement to sell dated Igt September 1988, he agreed to sell the suit property to the respondents (who were the original plaintiffs and referred to such hereafter). The original agreement is written in Gujarati language on a stamp paper of Rs. five and the true translation thereof is annexed to the plaint as Annexure "B". Under the agreement, the defendant agreed to sell the suit property to the plaintiffs for a sum of Rs. 9,11,000/- and paid an earnest of Rs. 1,50,000/-. The balance of Rs. 7,11,000/- was to be paid on or before 31st December 1988. A further sum of Rs. 50,000/- was paid on 1-9-1988 and the time for possession was extended upto 31st January 1989 at the request of the defendants. The plaintiffs alleged that they were ready and willing to perform their part of the contract but the defendant declined to execute the sale deed and therefore, filed a suit for specific performance of the agreement. The trial Judge after recording of the evidence, by a Judgment and Order dated 28th February 2001 decreed the suit. This judgment is challenged in this appeal.
3. Mr. Seervai, learned counsel for the appellant defendant canvassed only two points before us. Firstly, he contended that the agreement dated 1st September 1988 was not properly stamped and was therefore not admissible in evidence under Section 34 of the Bombay Stamp Act 1958. Secondly, he contended that the agreement dated 1st September 1988 amounted to a transfer of an interest in the property and therefore, required compulsory registration under Section 17 of the Registration Act, 1908. As the document was not registered, the document was not admissible in evidence under Section 49 of the Registration Act, 1908. Mr. Seervai further contended that the learned trial Judge erred in recording to and relying upon the said document which was not admissible in evidence and decreeing the suit.
4. Regarding Stamp Duty :
As stated earlier, the agreement Exhibit-A which is an agreement to sell a residential flat by the owner (defendant to the plaintiffs, is written on the stamp paper of Rs. 5/-. Article 25 of the Bombay Stamp Act prescribes what is the stamp duty payable on a conveyance. Explanation 1 to Article 23 of the Schedule 1 to the Bombay Stamp Act, 1988, as it stood in the year 1988 reads as under :,
"Explanation 1 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 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 : Provided that, the provisions of Section 32A shall apply mutatis mutandis to such agreement which is deemed to be a conveyance as aforesaid, as they apply to a conveyance under that section :
Provided further that, where subsequently a conveyance is executed in pursuance of such agreement of sale, the stamp duty, if any, already paid and recovered on the agreement of sale which is deemed to be a conveyance, shall be adjusted towards the total duty leviable on the conveyance.
In Veena Hasmukh Jain and Anr. v. State of Maharashtra, , the Apex Court had an occasion to consider the true meaning of Explanation 1 to Article 25 of Schedule I to the Bombay Stamp Act. In that case, an agreement to sell a flat admeasuring about 473 sq.ft. was executed between parties on 8th October 1987 and the possession was to be handed over by 30th November 1987. The vendor was obliged to hand over possession even before the execution of conveyance. The Apex Court held that the agreement was "a conveyance" for the purposes of stamp duty under the Bombay Stamp Act. The object of the explanation is clear and that if an agreement is entered into which contemplates delivery of possession of the property before the execution of the conveyance then such an agreement shall be deemed to a conveyance for the purpose of stamp duty leviable under the Bombay Stamp Act.
5. Our attention was invited to paragraph No. 4 of the agreement dated 1st September 1988 which reads as under :
"I agree and confirm to give vacant and peaceful possession of the said flat to you on your final payment on or before 31st December 1988."
Paragraph No. 3 of the agreement provides that out of the purchase price of Rs. 9,11,000/- Rs. 1,50,000/- were paid immediately and balance Rs. 7,61,000/-were to be paid on or before 1st December 1988. Thus, the entire consideration was to be paid and the possession was also to be delivered on or before 31st December 1988. There is no mention as to when the conveyance was to be executed indicating thereby that conveyance may or may not be executed by 31st December 1988 when the possession was to be handed over. Thus, agreement dated 1st September 1988 clearly contemplated delivery of a possession on a specified date without executing conveyance. Agreement was therefore, squarely covered by Explanation 1 to Article 25 of the Schedule I to the Bombay Stamp Act and was chargeable as a conveyance. The agreement admittedly did not bear the stamp duty as a conveyance.
6. Mr. Narula, learned counsel for the plaintiffs contended that agreement was not covered by explanation 1 to Article 25 but was covered by Clause (h) of Article 5 of Schedule I to the Bombay Stamp Act. We are not in agreement with this submission. Even assuming this submission to be correct even then stamp duty under Clause (h) of Article 5 was Rs. 10/- and the agreement admittedly was written on a stamp paper of Rs. 5/- and thus, in any view of the matter, the agreement was not properly stamped and the document was not therefore admissible in evidence under Section 34 of the Bombay Stamp Act.
7. Admissibility of the document and effect of overruling the objection by the Trial Court.
At the trial, when the document was tendered as an evidence, the defendant's counsel rightly objected to the admission of the document. The objection was taken at the earliest when the document was so tendered. The learned judge rejected the said objection in the following words :
"The defendant objected to the admission of this document on the ground that it is hit by Section 34 of the Bombay Stamp Act. However, this being only an agreement of sale and not being the conveyance which is not hit by Section 34 which has been executed by vendee in favour of the vendor. Hence, objection is overruled."
8. We are clearly of the opinion that the document was liable to be stamped not as an agreement under Clause (h) of Article 5 but as a conveyance in view of the explanation 1 to Article 25 of Schedule I of the Bombay Stamp Act. The document (agreement of sale) was therefore, not admissible in Evidence in view of the bar under Section 34 of the Bombay Stamp Act.
9. Effect of overruling objection by the trial court.
Mr. Narulla, learned counsel for the plaintiffs invited our attention to the judgment of the Apex Court in Javer Chand v. Pukhraj Surana . In that case, the plaintiffs sued for
recovery of money on the basis of two hundis. The defendant raised objection to the admissibility of the said hundis alleging that they were unstamped and were inadmissible in evidence. An issue was raised regarding the stamping and admissibility of the document and it was held that the document was properly stamped and admissible in evidence.
10. Though issue was decided in the light of provisions of Indian Stamp Act, both the learned counsel stated that the provisions of the Indian Stamp Act are pari materia with the provisions of the Bombay Stamp Act regarding the admissibility, in evidence of instruments which are unstamped or not properly stamped. While dealing with the question, the Apex Court in paragraph No. 4 observed:
"Where a question as to the admissibility of a document is raised on the ground that it has not been stamped, or has not been properly stamped, it has to be decided then and there when the document is tendered in evidence. Once the Court, rightly or wrongly, decided to admit the document in evidence, so far as the parties are concerned, the matter is closed. Section 35 is in the nature of a penal provision and has far-reaching effects. Parties to a litigation, where such a controversy is raised, have to be circumspect and the party challenging the admissibility of the document has to be alert to see that the document is not admitted in evidence by the Court ..... "Once a document has been admitted in evidence, as aforesaid, it is not open either to the Trial Court itself or to a Court of Appeal or Revision to go behind that order. Such an order is not one of those judicial orders which are liable to be reviewed or revised by the same Court or a Court of superior jurisdiction."
11. Shri Seervai contended that the defendant was diligent and had raised the objection as soon as the document was tendered, but the Court wrongly overruled the said objection. He therefore, submitted that this decision of wrongful overruling objection by the Court could be corrected in the appeal. We are afraid that in view of the mandate in the judgment of the Apex Court in Javer Chand's case (supra) once the court decides the objection, rightly or wrongly, the matter is closed and once the document is admitted in evidence, it is not open to the trial court or to the Court of Appeal to go behind that order.
12. Shri Seervai submitted that often objection that the document is not properly stamped and is therefore, inadmissible in evidence is decided casually when the document is shown to the witness/party while examination in chief is in progress. If the decision of admitting the document in evidence which is often rendered without full application of mind is to be treated as final and binding not only at the trial stage but also unimpeachable in appeal then the consequences would be unjust whatever injustice which Shri Seervai makes grievance of can now be relieved in view of the latest judgment of the Apex Court in Bipin Shantaram Panchal v. State of Gujarat reported in 2001 (3) SCC 1. In that judgment, calling the practise of deciding all objections to the admissibility of any evidence there and then as archaic, Apex Court has prescribed the new methodology of dealing with the objections. In that judgment, the Apex Court observed :
"It is an archaic practice that during the evidence-collecting stage, whenever any objection is raised regarding admissibility of any material in evidence the court does not proceed further without passing order on such objection. But the fallout of the above practice is this : Suppose the trial court, in a case, upholds a particular objection and excludes the material from being admitted in evidence and then proceeds with the trial and disposes of the case finally. If the appellate or the revisional court, when the same question is recanvassed, could take a different view on the admissibility of that material in such cases the appellate court would be deprived of the benefit of that evidence, because that was not put on record by the trial court. In such a situation the higher court may have to send the case back to the trial court for recording that evidence and then to dispose of the case afresh. Why should the trial prolong like that unnecessarily on account of practices created by ourselves. Such practices, when realised through the course of long period to be hindrances which impede steady and swift progress of trial proceedings, must be recast or remoulded to give way for better substitutes which would help acceleration of trial proceedings" ...... "When so recast, the practice which can be a better substitute is this : Whenever an objection is raised during evidence-taking stage regarding the admissibility of any material or item or oral evidence the trial court can make a note of such objection and mark the objected document tentatively as an exhibit in the case (or record the objected part of the oral evidence) subject to such objections to be decided at the last stage in the final judgment. If the court finds at the final stage that the objection so raised is sustainable the Judge or Magistrate can keep such evidence excluded from consideration. In our view there is no illegality in adopting such a course."
13. In view of this as laid down in Bipin Shantaram Panchal v. State of Gujarat (supra), whenever an objection to admissibility of any document an evidence is raised (whether on the ground that the document is not properly stamped or otherwise) such objection need not be decided there and then but the Court can take note of such objection and mark the objected document tentatively as an Exhibit in the case and subject to such objection to be decided at the last stage in the final judgment. If this course is followed, then perhaps no injustice would be caused of the order overruling the objection of insufficiency of stamp being binding on the trial court as well as the appellate court because the decision as to the admissibility of the document would then be a part of the final judgment and the validity of the final judgment is tested in an appeal.
14. However, in the present case, we find that the objection as to the admissibility of the document on account of insufficiency of the stamp was raised and was decided by the trial Court when the document was tendered in evidence. Once it was decided that decision became final and cannot be reopened in this appeal in view of the judgment of the Apex Court in Javerchand's case supra. We would therefore, have to hold that the agreement of sale (Exhibit A), though in our opinion is improperly stamped, would be admissible in evidence and at any rate, we cannot go behind the order of the trial Court holding that the document was admissible in evidence. We are also fortified in this view by Section 35 of the Bombay Stamp Act which reads as under :--
"Where an instrument has been admitted in evidence, such admission shall not, except as provided in Section 58, be called in question at any stage of the same suit or proceeding on the ground that the instrument has not been duly stamped".
15. When the instrument is admitted in evidence, such admission cannot be called in question at any stage of the same suit or proceedings (which includes an appeal) on the ground that instrument has not been duly stamped except as provided in Section 58 of the Bombay Stamp Act. Sub-section (2) of Section 58 contemplates that if the Appellate Court is of the opinion that the instrument should not have been admitted in evidence on the ground that it was not properly stamped, it may record a declaration to that effect and determine the amount duty with which such instrument is chargeable and may require the party or person concerned to make the payment of the proper duty of the amount required to make up the same together with the penalty. We are of the opinion that the instrument is not properly stamped and therefore, direct the recovery of the deficit stamp duty with penalty. Sub-section (2) of Section 33 of the Bombay Stamp Act permits in case of the Judge of a High Court, the duty of examining and impounding of the instrument may be delegated and need not be exercised by the Judge. We accordingly direct the Collector of Stamps to compute proper stamp duty on the said agreement at Exhibit-A in accordance with the observations in this judgment and to recover deficit stamp duty as well as penalty as is leviable under law. We direct the plaintiffs - respondent herein to deposit tentatively a sum of Rs. 4,00,000/- in this Court within a period of four weeks for meeting the liability of stamp duty and the penalty, the amount shall be deposited within a period of four weeks. After the amount of stamp duty and penalty is determined by the Collector, the said stamp of Rs. 4,00,000/- or so much of it as is sufficient to meet the stamp duty and the penalty shall be remitted to the Collector. In the event, the amount of stamp duty and penalty exceeds Rs. 4,00,000/-, the plaintiffs, through their learned counsel, undertake to this Court to deposit the balance with the Collector within a week of the receipt of the order of the Collector. The Collector shall thereupon make a proper endorsement as proper under amended Sub-section (3A) of Section 58 of the Bombay Stamp Act and return the instrument to this Court. The office of this Court to sent the original document Exhibit-A to the Collector for determination of the stamp duty and penalty as above.
16. Regarding the registration :
Section 17 of the Registration Act provides which documents are compulsorily registrable. Clause (b) of Sub-section (1) of Section 17 of the Registration Act, 1908 on which reliance is placed by Mr. Seervai reads as under:
"(b) other non-testamentary instruments which purport or operate to create, declare, assign, limit or extinguish, whether in present or in future, any right, title or interest, whether vested or contingent, of the value of one hundred rupees and upwards, to or in immovable property;"
17. Mr. Seervai submitted that this agreement for sale created interest in the property in favour of the plaintiffs and therefore, required registration. Section 54 of the Transfer of Property Act specifically provides that an agreement for sale by itself does not create any interest in or charge on the property agreed to be sold. In the present case, possession admittedly has not been delivered. There has been no transfer of any interest in the property. The fiction created by Explanation 1 to Article 25 of the Bombay Stamp Act by which the agreement for sale is to be treated conveyance is limited only for the purposes of the Stamp Act and for no other purpose. The agreement for sale cannot be treated as a conveyance for the purpose of Indian Registration Act 1908. We are of the opinion that there is no force in the contention of Mr. Seervai that the agreement for sale Exhibit-A was compulsorily registrable under Clause (b) to Sub-section (1) of Section 17 of the Registration Act 1908.
18. Mr. Seervai did not argue on the merits of granting a decree for specific performance. No other point was urged.
19. In the circumstances, appeal is dismissed with no order as to costs. At the request of the learned counsel for the appellant, the decree for specific performance shall not be executed for a period of 12 weeks. We make it clear that decree shall not be executed until the respondents deposit Rs. 4,00,000/- in this Court.
All concerned to act on an ordinary copy duly authenticated by the Associate.
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