2013 (10) TMI 905 - SC - Indian Laws

Supreme Court rules on admissibility of agreement in specific performance case

The Supreme Court upheld the trial court's decision regarding the admissibility of an agreement to sell in a specific performance case. The agreement, ... Admissibility of document which was not registered or no stamp duty was paid as prescribed - scope of the term Conveyance - specific performance of contract, possession and permanent injunction - - Plaintiffs contends that the properties in question were delivered to them on payment of the part consideration money in pursuance of the agreement to sell - Held that:- 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. 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 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. 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 - Decided in favour of Appellant. Issues Involved:1. Admissibility of the agreement to sell in evidence.2. Determination of whether the agreement to sell is a 'conveyance' under the Indian Stamp Act.3. Requirement of stamp duty for the agreement to sell.Issue-wise Detailed Analysis:1. Admissibility of the Agreement to Sell in Evidence:The plaintiffs filed a suit for specific performance, possession, and permanent injunction based on an agreement to sell dated December 27, 2000. The agreement stated that part of the consideration was paid, and possession was given to the plaintiffs. The defendants denied the execution of the agreement and the delivery of possession. The trial court held the agreement inadmissible in evidence due to insufficient stamping, as it was on a Rs. 50 stamp paper instead of the required Rs. 10,500. The plaintiffs challenged this in the High Court, which ruled the agreement admissible, stating the defendants' denial of possession rendered the recital insignificant. The Supreme Court, however, emphasized that the admissibility of a document depends on its recital, not the adversary's plea, and upheld the trial court's decision.2. Determination of Whether the Agreement to Sell is a 'Conveyance' Under the Indian Stamp Act:The Supreme Court analyzed whether the agreement to sell constituted a 'conveyance' under Section 2(10) of the Indian Stamp Act, which includes instruments transferring property. The agreement transferred immovable property on part payment and possession, fitting the definition of 'conveyance.' The court referenced the Indian Stamp (Madhya Pradesh Second Amendment) Act, 1990, which deems agreements transferring possession as conveyances, requiring corresponding stamp duty. The court concluded that the agreement was indeed a conveyance and needed to be duly stamped.3. Requirement of Stamp Duty for the Agreement to Sell:Section 35 of the Indian Stamp Act states that instruments not duly stamped are inadmissible in evidence. The agreement to sell was insufficiently stamped, making it inadmissible unless the required duty and penalty were paid. The court cited the case of Avinash Kumar Chauhan v. Vijay Krishna Mishra, reinforcing that an authority must impound insufficiently stamped documents and require payment of the appropriate duty. The trial court's refusal to admit the agreement without proper stamping was thus justified.Conclusion:The Supreme Court set aside the High Court's order and restored the trial court's decision, emphasizing that the admissibility of a document is governed by its recitals and the statutory requirements for stamping. The agreement to sell, being a conveyance, required proper stamp duty, and its insufficiency rendered it inadmissible in evidence. The appeal was allowed without any order as to costs.