Thursday, 21 March 2019

Whether tenant is bound to pay stamp duty on copy of lease agreement if it is insufficiently stamped?

 Countering the said submissions, Mr. Asan Ali Khan, learned Counsel for the respondent submitted that when admittedly Exs.R1 to R8 are copies of the originals of the lease deeds executed between the petitioner and the respondent and they are for a period not exceeding 11 months, they are not compulsorily registrable and as such they can be looked into for collateral purposes. According to the learned Counsel, the copy available with the respondent need not be stamped and the original available with the petitioner alone are liable to be stamped in accordance with Indian Stamp Act; even if it is insufficiently stamped, it can be looked into for collateral purpose, namely, to ascertain the address of the premises, which is leased out and the question of insufficiency of stamp duty can be gone into only at the time of final disposal of RCOP. 
At the outset it has to be pointed out that when an agreement of lease is executed between the landlord and tenant, normally, lease agreement is prepared in duplicate i.e., both are originals, signed by both the landlord and tenant. If that being so, it cannot be contended by the respondent that the agreement available with the tenant is only a copy and not the original and therefore it need not be sufficiently stamped. Therefore, the contention of the learned Counsel for the respondent that Exs.R1 to R8 need not be stamped as contemplated in the Indian Stamp Act but the original agreement available with the petitioner alone has to be stamped in accordance with Indian Stamp Act cannot be countenanced.
IN THE HIGH COURT OF MADRAS

C.R.P. (PD) No. 853 of 2010 and M.P. No. 1 of 2010

Decided On: 07.07.2010

V. Jayaraman Vs. K.A. Ubaidur Rahman

Hon'ble Judges/Coram:
K. Mohan Ram, J.



1. The petitioner in the above Civil Revision Petition is the petitioner in RCOP. No. 179 of 2008. The petitioner has filed RCOP. No. 179 of 2008 before XVI Small Causes Judge (Rent Controller), Chennai, seeking fixation of fair rent to the premises rented out to the respondent, namely, shop portion in No. 12/2, Block No. 1, Tamil Nadu Housing Board, Muthamizh Nagar, Kodungaiyur, Chennai - 118. The respondent is contesting the same by filing counter affidavit.

2. The petitioner herein has filed M.P. No. 456 of 2009 to impound Exs.R1 to 8 for non-payment of sufficient stamp duty on them contending that Exs.R1 to 8 are rental agreements for various periods between the petitioner and the respondent and they are executed on a stamp paper of value of Rs. 20/- and the same were not sufficiently stamped. The contention of the petitioner was that as far as rental agreement is concerned for every Rs. 100/- or part thereof of the amount of the rent, fine, premium or advance, stamp duty should be payable at Rs. 1 per Rs. 100/-. The said petition was opposed by the respondent herein contending that Exs.R1 to 8 are original copies of the agreements which were executed by the petitioner in favour of the respondent and they have been duly stamped and these documents have been exhibited for collateral purpose for ascertaining the address of the petition premises. He has further contended that there is no necessity to pay any stamp duty or registration is necessary since the period of lease is for eleven months.

3. The court below on the consideration of the rival contentions dismissed the petition holding that the period of lease being 11 months, it is not compulsorily registrable and hence the same is admissible in evidence. Being aggrieved by that, the petitioner is before this Court.

4. Heard both.

5. Learned Counsel for the petitioner submits that the documents Exs.R1 to R8 are original lease deeds and though the period of lease is for 11 months and it is not compulsorily registrable yet they should be properly stamped as per the provisions of the Indian Stamp Act; the contention put forth by the petitioner before the Rent Controller have not been properly considered; the Rent Controller has considered only the question of non-registration of document, but has not considered the question of insufficient stamping of the document. Learned Counsel for the petitioner further submits that if a document is not sufficiently stamped, it cannot be looked into even for collateral purpose, since the stamp duty and penalty is deficit, placing reliance on the following decision of the Hon'ble Apex Court in MANU/SC/8502/2008 : (2009) 2 SCC 532 (Avinash Kumar Chauhan v. Vijay Krishna Mishra). The Hon'ble Apex Court in paragraphs 22 and 23 has laid down as under:

22. We have noticed hereto before 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.

23. The contention of learned Counsel for the appellant that the document was admissible for collateral purpose, in our opinion is not correct. In Bondar Singh, this Court was not concerned with the provisions of the Act. Only interpretation of the provisions of the Registration Act, 1908 was in question. It was opined: (SCC p. 163, para 5)

5. The main question, as we have already noted, is the question of continuous possession of the plaintiffs over the suit lands. The sale deed dated 09.05.1931 by Fakir Chand, father of the defendants in favour of Tola Singh, the predecessor-in-interest of the plaintiffs, is an admitted document in the sense its execution is not in dispute. The only defence set up against the said document is that it is unstamped and unregistered and therefore it cannot convey title to the land in favour of the plaintiffs. Under the law, a sale deed is required to be properly stamped and registered before it can convey title to the vendee. However, legal position is clear law that a document like the sale deed in the present case, even though not admissible in evidence, can be looked into for collateral purposes. In the present case the collateral purpose to be seen is the nature of possession of the plaintiffs over the suit land. The sale deed in question at least shows that initial possession of the plaintiffs over the suit land was not illegal or unauthorised.
In paragraph 25, it has been laid down as under:

25. Section 35 of the Act, however, rules out applicability of such provision as it is categorically provided therein that a document of this nature shall not be admitted for any purpose whatsoever. If all purposes for which the document is sought to be brought in evidence are excluded, we fail to see any reason as to how the document would be admissible for collateral purposes.
In 2001 (4) CTC 597 (V.R. Devaraj v. G. Narayanasamy and 4 Ors.), learned single Judge of this Court placing reliance of the decision of the Hon'ble Apex Court in MANU/SC/1529/2001 : 2001 (3) SCC 1 (Bipin Shantilal Panchal v. State of Gujarat and Anr.) has held that if the objection relates to deficiency of stamp duty of a document, the court has to decide the objection before proceeding further and for all other objections, the procedure suggested in the said decision of the Hon'ble Apex Court can be followed. In 2008 (2) CTC 11 (Thailammai and Ors. v. Karuppanan and Ors.), learned single Judge of this Court has laid down that it is a trite proposition of law that any immovable property worth more than Rs. 100/- should be stamped properly and registered; even for relying on collateral purposes, it should be a properly stamped one. As otherwise, the stamp duty and penal duty should be collected and then only, it could be marked and relied on for collateral purpose.

6. Countering the said submissions, Mr. Asan Ali Khan, learned Counsel for the respondent submitted that when admittedly Exs.R1 to R8 are copies of the originals of the lease deeds executed between the petitioner and the respondent and they are for a period not exceeding 11 months, they are not compulsorily registrable and as such they can be looked into for collateral purposes. According to the learned Counsel, the copy available with the respondent need not be stamped and the original available with the petitioner alone are liable to be stamped in accordance with Indian Stamp Act; even if it is insufficiently stamped, it can be looked into for collateral purpose, namely, to ascertain the address of the premises, which is leased out and the question of insufficiency of stamp duty can be gone into only at the time of final disposal of RCOP. In support of the said contention, the learned Counsel relied upon a decision reported in MANU/SC/1121/1997 : 1997 (1) L.W.763 (Satish Kumar v. Zarif Ahmed and Ors.). In the said decision, in paragraph 8 it has been laid down as follows:

8. Section 49 of the Registration Act prohibits receiving in evidence certain types of documents. It reads as under:

No document required by Section 17 or by any provision of the Transfer of Property Act, 1882 to be registered shall

(a) affect any immovable property comprised therein, or

(c) be received as evidence of any transaction affecting such property or conferring such power;

unless it has been registered:

The proviso is not applicable to the facts in this case and, therefore, it is not necessary to look into the exceptions engrafted vis-a-vis receipt of a document comprising of three circumstances mentioned therein, namely, unregistered document used for enforcement of specific performance under the Specific Relief Act or used as an evidence of part performance of the contract under Section 53A of the TP Act or using evidence for collateral transactions. The combined effect of all the provisions is that an unregistered lease deed executed from month to month, for a period not exceeding 11 months, though reduced to writing and possession is delivered thereunder to a tenant, is not a compulsorily registrable instrument and, therefore, the prohibition contained in Section 49 of the Registration Act is inapplicable. Therefore, the document is admissible in evidence to consider the effect of the immovable property contained therein or to receive as an evidence of any transaction vis-a-vis such property.
In MANU/TN/0821/1997 : 1998 (1) L.W. 208 (Kousalya Ammal v. Valliammai Ammal and Anr.), in paragraph 15, it has been laid down as under:

15. Therefore on consideration of the entire materials placed before me and of the arguments advanced by both sides, I am of the view that the document in question can certainly be looked into for collateral purpose, namely, for the purpose of proving the plaintiff's character of possession. No prejudice should be caused to the respondent by marking the document. Mere marking the document does not prove any of the recitals of the document itself. The truth of the document had to be independently proved. It is always open to the respondent to contend that he did not execute the document al all and that even for a collateral purpose, it cannot be relied on.
In MANU/TN/0194/1998 : 1998 (2) MLJ 110 (Rangaraj (a) Sakkararaj and Anr. v. Guruvammal and Ors.), in paragraph 5, it has been laid down as under:

5. ...In the present case, the document in question is only in respect of a common property and according to the petitioners/plaintiffs, they have been exercising their rights over the said property as mentioned in the said documents. Only in order to establish the same, the petitioners sought to mark the said documents. Therefore, it cannot be said that they want to enforce their rights under the said document. Moreover, as held by the Apex Court, the said document is incapable of valuation. Since the said document cannot be valued, the agreement sought to be marked is not a compulsory document to be registered under Section 17(1)(b) of the Registration Act.
7. I have considered the above said submissions made on either side and perused the materials available on record.

8. At the outset it has to be pointed out that when an agreement of lease is executed between the landlord and tenant, normally, lease agreement is prepared in duplicate i.e., both are originals, signed by both the landlord and tenant. If that being so, it cannot be contended by the respondent that the agreement available with the tenant is only a copy and not the original and therefore it need not be sufficiently stamped. Therefore, the contention of the learned Counsel for the respondent that Exs.R1 to R8 need not be stamped as contemplated in the Indian Stamp Act but the original agreement available with the petitioner alone has to be stamped in accordance with Indian Stamp Act cannot be countenanced. There is no dispute that Exs.R1 to R8 are insufficiently stamped. When that being so, whether the same can be admitted in evidence and when such documents are produced before the court what is the procedure to be followed have to be considered. In the decision reported in MANU/SC/8502/2008 : 2009 (2) SCC 532 cited supra, on consideration of the provisions contained in Section 33 of the Stamp Act, the Hon'ble Apex Court has observed that Section 33 of Act casts a statutory obligation on all the authorities to impound the 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. The contention raised in that case that the document though insufficiently stamped is admissible for collateral purpose was rejected. In the said decision, it has been further held that Section 35 of the Act provides that documents which were insufficiently stamped shall not be admitted for any purpose whatsoever, including for collateral purpose. In the decision reported in 2008 (2) CTC 11 cited supra, it has been laid down that any immovable property worth more than Rs. 100/- should be stamped properly and registered; even for relying on collateral purposes, it should be a properly stamped one. As otherwise, the stamp duty and penalty should be collected and then only, it could be marked and relied on for collateral purpose. In the decision in 2001 (4) CTC 597 cited supra, it has been laid down that whenever an objection is raised during evidence-taking stage regarding the admissibility of any material or item of 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/order. But, however, it has been clarified in the said decision that if the objection relates to deficiency of stamp duty of the document, the Court has to decide the objection before proceeding further. Therefore, since the contention of the petitioner that Exs.R1 to R8 are insufficiently stamped, the question of admissibility has to be decided at the evidence taking stage itself. When the petitioner has filed a petition to invoke the provisions contained in Section 33 of the Act to impound the document, the Rent Controller ought to have considered the question as to whether those provisions contained in Section 35 of the Act are applicable to Exs.R1 to R8. When it is not in dispute that Exs.R1 to R8 have not been sufficiently stamped automatically, the provisions under Section 33 of the Act are attracted. But, unfortunately, the learned Rent Controller has not considered the question of insufficient stamping of Exs.R1 to R8, but has only considered the non-registration of those documents and their effect and has considered the decisions in that context only.

9. The decision relied upon by the learned Counsel for the respondent relates only to the provisions of the Registration Act and the consequences of the non-registration of a document and whether the same can be looked into for collateral purposes. But all the three decisions relied upon by the learned Counsel have not considered the provisions of the Indian Stamp Act. Therefore, the said decisions are not applicable to the facts of this case. As is laid down in MANU/SC/8502/2008 : 2009 (2) SCC 532 cited supra, Section 33 of the Act casts statutory obligations on all the authorities to impound a document if it is insufficiently stamped. Therefore, the Court being the authority is bound to give effect thereto.

10. For the above said reasons, the order passed by the Rent Controller are not sustainable and the same is set aside and the Civil Revision Petition is allowed. Consequently, connected Miscellaneous Petition is closed. No costs.


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