Agreement to sell is not a conveyance; later stamp duty deeming provision cannot apply retrospectively.

A contract for sale of immovable property does not by itself transfer title, create an interest in the property, or amount to a conveyance for stamp duty purposes merely because possession or consideration may have passed. The document dated 16 October 1984 was treated as an agreement to sell because it contemplated a future conveyance after title verification and other formalities. The 1985 Explanation to Item 25 of Schedule I to the Bombay Stamp Act, which deems certain possession-backed agreements to be conveyances, was held to operate only prospectively from 9 December 1985 and could not apply to an earlier transaction.

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Issues: (i) Whether the document dated 16 October 1984 was an agreement to sell immovable property or a conveyance of immovable property for stamp duty purposes; (ii) whether the Explanation inserted in 1985 to Item 25 of Schedule I to the Bombay Stamp Act, 1958 applied retrospectively to the transaction.

Issue (i): Whether the document dated 16 October 1984 was an agreement to sell immovable property or a conveyance of immovable property for stamp duty purposes.

Analysis: The document described itself as an agreement for sale and its recitals showed that a future sale deed was still contemplated. The clauses provided for execution of a conveyance later, after title verification and other formalities, and the agreement did not by itself transfer ownership or create an interest in the property. Under the law of registration and transfer of property, a contract for sale only confers a right to obtain a conveyance and does not amount to a completed sale merely because possession or consideration has been handed over.

Conclusion: The document was an agreement to sell and not a conveyance; the demand of stamp duty on the footing of a completed sale was unjustified.

Issue (ii): Whether the Explanation inserted in 1985 to Item 25 of Schedule I to the Bombay Stamp Act, 1958 applied retrospectively to the transaction.

Analysis: The Explanation created a limited legal fiction only for agreements to sell where possession was transferred without executing a conveyance, deeming such agreements to be conveyances for stamp duty purposes. The text of the amendment and the provisos themselves preserved the distinction between an agreement to sell and a conveyance, and the amendment was stated to operate only from 9 December 1985. Since the transaction in question pre-dated the amendment, the deeming provision could not be applied to it.

Conclusion: The Explanation had no retrospective application and could not be used to sustain the impugned demand.

Final Conclusion: The impugned order and demand notices were quashed, and the petitioner was held liable only on the basis of an agreement to sell, not as if a conveyance had been executed.

Ratio Decidendi: A contract for sale of immovable property does not transfer title or create an interest in the property, and a later deeming provision treating certain agreements as conveyances cannot be applied retrospectively to transactions completed before its commencement.

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