Release deed vs conveyance classification turns on the true nature of the transaction, not the label used by parties.

The governing test is the true character of the transaction and the rights created, not the label used by the parties. A relinquishment deed is chargeable as a release deed only where a co-owner renounces an undivided interest in favour of another co-owner with a pre-existing share, so that the latter's interest is enlarged; if the recitals show a transfer of title or a unilateral benefit in favour of one co-owner, the instrument may fall within gift/conveyance treatment instead. On the first set of facts, the Delhi HC treated the deed as a valid release under Article 55. On the second, the deeds were treated as gift/conveyance instruments, but the penalty was set aside because no reasons were recorded and there was no clear intent to evade stamp duty.

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Issues: Whether the relinquishment deeds executed by co-owners in favour of another co-owner were chargeable as release deeds under Article 55 of Schedule I-A of the Indian Stamp Act, 1899, or as gift/conveyance instruments under Article 33, and whether the penalty imposed for alleged deficient stamping was sustainable.

Analysis: The decisive test is the actual character of the transaction and the nature of the rights created by the instrument, not the nomenclature used by the parties. A release deed operates where a co-owner renounces his or her undivided interest in favour of another person already having a pre-existing right in the property, so that the other's share stands enlarged. A document will not be treated as a release if it operates only in favour of a particular co-owner in a manner inconsistent with the settled incidents of relinquishment, or if the recitals show a transfer of title rather than mere renunciation. On the facts of the first petition, the relinquishment deed was executed by one co-owner in favour of the only other co-owner and therefore answered the description of a release. On the facts of the second petition, the sister co-owners relinquished their shares only in favour of the petitioner alone, and the recitals used language of conveyance and transfer, so the instruments were not release deeds but were properly treated as gift/conveyance instruments. The penalty was unsustainable because no reason was recorded for its imposition and there was no clear indication of intent to evade stamp duty.

Conclusion: The first petition succeeded and the impugned order was set aside as the instrument was a release deed chargeable under Article 55. The second petition failed on the stamp duty issue, but the penalty of Rs. 1 lakh was set aside.

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