Monday 19 January 2015

Whether admissibility of agreement of sale depends on recital in said document

       As stated earlier, the plaintiffs  filed  a  suit  for  specific
   performance of contract and their case is founded  on  the  agreement  to
   sell executed on 27th December, 2000.  The agreement to sell acknowledges
   payment of the part of consideration  money  and  further  giving  actual
   physical  possession  to  the  purchaser  by  the  seller.   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. 
  REPORTABLE

                        IN THE SUPREME COURT OF INDIA
                        CIVIL APPELLATE JURISDICTION

                        CIVIL APPEAL NO.9032 OF 2013
               @SPECIAL LEAVE PETITION (C) NO. 20721 OF 2008)

OMPRAKASH                                    … APPELLANT

                                   VERSUS

LAXMINARAYAN & ORS.                          …RESPONDENTS

Citation; 2014 SAR(CIVIL)79




CHANDRAMAULI KR. PRASAD, J.

           Plaintiffs filed a suit for specific  performance  of  contract,
   possession and permanent  injunction  in  respect  of  un-irrigated  land
   having an area of 0.506 hectares bearing  Survey  No.  16012  in  Village
   Arniapitha situated within Tahsil Jaora in District Ratlam in  the  State
   of Madhya Pradesh.  It is founded on an  agreement  to  sell  dated  27th
   December, 2000.  It is the case of the plaintiffs that the properties  in
   question were delivered to them on  payment  of  the  part  consideration
   money in pursuance of the agreement to sell  and  such  a  recital  finds
   place in the said agreement.  Paragraph 1 of the agreement to sell  reads
   as under:


           “1.That while selling the aforesaid  land  I  the  seller,  have
           received Rs. 1,15,000/- (Rupees one lac fifteen  thousand)  cash
           as a token amount before the witnesses and, by remaining present
           at the spot, actual physical possession has been handed over  to
           the purchaser, and after receiving remaining sale  consideration
           amount Rs. 25,000/-  (Rupees  twenty  five  thousand)  from  the
           purchaser within a year I, the purchaser, will get the sale deed
           of the said land registered in the name of the purchaser.”




           The defendants in the written  statement,  however,  denied  the
   assertion of the plaintiffs and stated that no agreement to sell was ever
   executed and possession given.  On the basis  of  the  pleading  and  the
   written statement, the trial court framed  several  issues.   During  the
   course of the trial the agreement to sell was sought  to  be  proved  and
   admitted in evidence by the plaintiffs’  witness  Shankarlal.   This  was
   objected to by defendant no. 1.  Its admissibility was questioned on  the
   ground that the agreement to sell in question  contains  a  recital  that
   possession has been handed over to the purchaser and, therefore, it is  a
   conveyance over which the stamp duty as indicated in Schedule 1A  of  the
   Indian Stamp Act, 1899 as substituted by M.P. Act 22 of 1990 is  required
   to be affixed.  It is pointed out that the agreement to sell in  question
   is on a stamp paper of Rs. 50 only.  The submission made by defendant no.
   1 found favour with the trial court and it held the agreement to sell  to
   be inadmissible in evidence as it has not been sufficiently stamped.   It
   further observed that if the plaintiffs want to produce the said document
   in evidence then they can make  proper  application  as  envisaged  under
   Section 35 of the Indian Stamp Act, hereinafter referred to as ‘the Act’.
    While doing so, the trial court observed as follows:




           “………Therefore, it is found that sale agreement dated  27.12.2000
           due to mention  of  possession  being  handed  over,  should  be
           stamped like a conveyance.  In the sale agreement  the  cost  of
           the land is mentioned as Rs.1,40,000 and its 7 ½  per cent comes
           to Rs. 10,500/-.  Therefore,  it  is  concluded  that  the  sale
           agreement can be admissible in evidence only on being  on  stamp
           of Rs. 10,500/-.  Therefore,  it  is  concluded  that  the  sale
           agreement is not properly stamped, therefore, not admissible  in
           evidence.  Thus, objection of defendant No. 1  is  allowed  sale
           agreement  dated  27.12.2000  is  refused  to  be  admitted   in
           evidence.  If the plaintiff wants to produce the said  documents
           in evidence then he may make proper application under Section 35
           of the Stamp Act on the next date.”




           Plaintiffs challenged the aforesaid order before the High  Court
   in a writ petition filed under Article 227 of the Constitution of  India,
   inter alia, contending that when defendants themselves have asserted that
   possession of the property was not delivered, the recital in agreement is
   of no consequence.  It was also pointed out  that  plaintiffs  themselves
   have claimed relief of possession, which obviously means  that  they  are
   not in possession and when this fact is  taken  into  consideration,  the
   view taken by the trial court appears to be erroneous.  The High Court by
   its order dated 27th February, 2008 passed in Writ Petition No.  7237  of
   2007 accepted this contention and  held  the  agreement  to  sell  to  be
   admissible in evidence.  The High Court, in this connection, has observed
   as follows:


           “Although there is no dispute with regard to the  fact  that  in
           the document in question, which is an agreement alleged to  have
           been executed by the defendants in favour of the plaintiffs, and
           which is basis of the suit, it is recited that possession of the
           property in question had been delivered to the  plaintiffs,  but
           the fact cannot be ignored that a specific plea has been  raised
           by  the  defendants  in  their  written  statement  denying  the
           execution of the said agreement and  also  specifically  denying
           that the possession of the property had ever been  delivered  to
           the plaintiff-petitioners.  In these  circumstances,  once,  the
           defendants  themselves  have  claimed  that  possession  of  the
           property had not been delivered, then the recital  in  agreement
           looses all significance.  In  such  a  situation,  the  document
           cannot be held to be insufficiently stamped  merely  because  it
           was not stamped in accordance with Article 23 of     Stamp Act.”




            Defendant no. 1 assails this order in the present special  leave
   petition.


            Leave granted.


            We have heard Mr. Niraj Sharma on behalf of  the  appellant  and
   Mr. Fakhruddin, Senior Counsel on behalf of the respondents.


            Mr. Sharma contends that for admissibility of the document  what
   is relevant is the recital therein.  He submits that agreement to sell is
   “conveyance” as defined under Section 2(10)  of  the  Act  and  shall  be
   chargeable with  duty  as  contemplated  under  Section  3  of  the  Act.
   According to him, as the agreement in question is not  duly  stamped,  it
   shall be inadmissible in evidence under  Section  35  of  the  Act.   Mr.
   Fakhruddin, however, submits that the defendants having joined the  issue
   with regard to the possession of the plaintiffs in terms of the agreement
   to sell, the document in question shall not come  within  the  expression
   “conveyance” as defined under the Act and, hence, it cannot be said  that
   it is not duly stamped.


           In view of the rival submission, the question  which  falls  for
   our determination is as  to  whether  the  admissibility  of  a  document
   produced by the party would depend upon the recital in  the  document  or
   the plea of the adversary  in  the  suit  and  whether  the  document  in
   question is “conveyance” as defined under the Act and is duly stamped.


           As stated earlier, the plaintiffs  filed  a  suit  for  specific
   performance of contract and their case is founded  on  the  agreement  to
   sell executed on 27th December, 2000.  The agreement to sell acknowledges
   payment of the part of consideration  money  and  further  giving  actual
   physical  possession  to  the  purchaser  by  the  seller.   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.   Section
   2(10) of the Act reads as follows:


           2.  Definitions.  -In  this  Act,  unless  there  is   something
           repugnant in the subject or context, -


                   xxx            xxx              xxx


                 (10)“Conveyance” includes a conveyance on  sale  and  every
                 instrument by which property, whether movable or immovable,
                 is transferred inter  vivos  and  which  is  not  otherwise
                 specifically provided for by Schedule I;


                   xxx            xxx              xxx”




           From a plain reading of the aforesaid provision, it  is  evident
   that an instrument by which movable or immovable property is transferred,
   comes within the  expression  “conveyance”.   In  the  present  case,  an
   immovable property is transferred on payment of part of the consideration
   and handing over the possession of the property.  It is relevant here  to
   state that by the Indian Stamp (Madhya  Pradesh  Second  Amendment)  Act,
   1990 (Act No.22 of 1990) few Articles including Article 23 of Schedule 1-
   A has been substituted and Explanation has been added to Article 23.  The
   Explanation appended to Article 23 of Schedule 1-A of the  Stamp  Act  as
   substituted by Section (6) of Act 22 of 1990 reads as follows:


           “Explanation.—For the purpose of this article, where in the case
           of agreement to sell immovable property, the possession  of  any
           immovable  property  is  transferred  to  the  purchaser  before
           execution  or  after  execution  of,  such   agreement   without
           executing the conveyance in respect thereof 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 47-A  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
           effected 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, subject to a  minimum  of
           Rs. 10.”




            The aforesaid Explanation has come into effect with effect  from
   26th September,  1990.   The  Explanation,  therefore,  creates  a  legal
   fiction.  The agreement to sell shall be deemed to be  a  conveyance  and
   stamp duty is leviable on  an  instrument  whereby  possession  has  been
   transferred.  Thus the agreement to sell  in  question  is  a  conveyance
   within the meaning of Section 2(10) of the Act and is to be duly stamped.
    Section 35 of the Act makes instruments not duly stamped inadmissible in
   evidence, the relevant portion whereof reads as follows:



           “35. Instruments not duly stamped inadmissible in evidence, etc.-
           No instrument chargeable with duty shall be admitted in evidence
           for any purpose by any  person  having  by  law  or  consent  of
           parties authority to receive evidence, or shall be  acted  upon,
           registered or authenticated by any such person or by any  public
           officer, unless such instrument is duly stamped:





           Provided that-




             (a)any such instrument shall be admitted in evidence on payment
                 of the duty with which the same is chargeable  or,  in  the
                 case of an instrument insufficiently stamped, of the amount
                 required to make up such duty, together with a  penalty  of
                 five rupees, or, when ten times the amount  of  the  proper
                 duty or deficient portion thereof exceeds five rupees, of a
                 sum equal to ten times such duty or portion;




                       xxx         xxx        xxx.”





             From a plain reading of the aforesaid provision, it is  evident
   that an authority to receive evidence  shall  not  admit  any  instrument
   unless it is duly stamped.  An  instrument  not  duly  stamped  shall  be
   admitted in evidence on payment of  the  duty  with  which  the  same  is
   chargeable or in the case of an instrument insufficiently stamped, of the
   amount required to make up such duty together with penalty.  As  we  have
   observed earlier,  the  deed  of  agreement  having  been  insufficiently
   stamped, the same was inadmissible  in  evidence.   The  court  being  an
   authority to receive a document in evidence to give effect  thereto,  the
   agreement to sell with possession is an instrument which requires payment
   of the stamp duty applicable to a deed of conveyance.  Duty as  required,
   has not been paid and, hence, the trial court rightly held the same to be
   inadmissible in evidence.  The view which we  have  taken  finds  support
   from a decision of this Court in the case of  Avinash  Kumar  Chauhan  v.
   Vijay Krishna Mishra, (2009) 2  SCC  532,  in  which  it  has  been  held
   as follows:


           “21. It is not in dispute that the possession  of  the  property
           had been delivered in favour of the  appellant.  He  has,  thus,
           been exercising some right in or over the land in  question.  We
           are not concerned with the enforcement of  the  said  agreement.
           Although the same was not registered, but  registration  of  the
           document has nothing to do with the validity thereof as provided
           for under the provisions of the Registration Act, 1908.


           22. We have noticed heretobefore that  Section  33  of  the  Act
           casts a statutory obligation on all the authorities to impound a
           document. The court being an authority to receive a document  in
           evidence is bound to give effect thereto. The unregistered  deed
           of sale was an instrument which required payment  of  the  stamp
           duty applicable to a deed of  conveyance.  Adequate  stamp  duty
           admittedly was not paid. The court, therefore, was empowered  to
           pass an order in terms of Section 35 of the Act.”



      To put the record straight, the correctness of the  impugned  judgment
   (Laxminarayan & Ors. v. Omprakash & Ors., 2008 (2) MPLJ 416) came up  for
   consideration before a Division Bench of the High Court  itself  in  Writ
   Petition  No.  6464  of  2008  (Man  Singh   (deceased)   through   Legal
   Representatives Smt. Sumranbai & Ors. v. Rameshwar)  and  same  has  been
   overruled by judgment dated January 22, 2010.  The High Court observed as
   follows:




           “8. A document would be admissible on basis of the recitals made
           in the document and not on basis of the pleadings raised by  the
           parties.  In the matter of  Laxminarayan  (supra),  the  learned
           Single Judge with due respect to his authority  we  don’t  think
           that he did look into the legal position but it appears that  he
           was simply swayed away by the argument that as the defendant was
           denying the delivery of possession, the  endorsement/recital  in
           the document lost all its effect and efficacy.




           9.  It would be trite to say  that  if  in  a  document  certain
           recitals are made then the Court would decide the  admissibility
           of the document  on  the  strength  of  such  recitals  and  not
           otherwise.   In  a  given  case,  if  there   is   an   absolute
           unregistered sale deed and the parties say that the same is  not
           required to be registered then we don’t  think  that  the  Court
           would be entitled to  admit  the  document  because  simply  the
           parties say so.   The  jurisdiction  of  the  Court  flows  from
           Sections 33, 35 and 38 of the Indian Stamp Act and the Court has
           to decide the question of admissibility.  With all  humility  at
           our  command  we  over-rule  the  judgment  in  the  matter   of
           Laxminarayan (supra).”






           We respectfully agree with the conclusion of the High  Court  in
   this regard.


           In view of what we have observed above, the order  of  the  High
   Court is unsustainable and cannot be allowed to stand.


           In the result, the appeal is allowed, the impugned order of  the
   High Court is set aside and that of  the  trial  court  is  restored  but
   without any order as to costs.


                                                 ……………………..………………………………..J.


                          (CHANDRAMAULI KR. PRASAD)






                                    …….….……….………………………………..J.
                                        (KURIAN JOSEPH)


NEW DELHI,
OCTOBER 7, 2013



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