2024 (9) TMI 303 - SC - Indian Laws

Levy of penalty - Specific performance of the agreement for sale - appellant claims possession of suit schedule property as part performance under the agreement of sale - appellant argued that the deficit stamp duty should alone be collected at the time of the passing of the judgment and decree and the levy of penalty is illegal and erroneous - HELD THAT - In the present case the appellant wanted the suit agreement to be admitted in evidence at the interlocutory stage. The suit was filed on 12.08.2015. On 14.08.2015 the case was posted before the court and the counsel for the appellant in the trial court agreed to pay proper/sufficient stamp duty and penalty on the certified copy of the agreement to sale. In other words the appellant invited the court to decide under Section 34(1) of the Act - when the trial court imposed ten times penalty on the deficit stamp duty the appellant argued in the High Court that he would pay the stamp duty when the decree of specific performance was granted. In our considered view the case of appellant is covered by Section 34 of the Act and rightly ten-times penalty is imposed. Further the appellant having invited the court cannot now express the willingness to exercise the option under Section 37(2) of the Act. On the contrary Section 37(1) of the Act would apply in the present case. The High Court through the impugned order while relying on the ratio in GANGAPPA AND ORS. VERSUS FAKKIRAPPA 2018 (12) TMI 2000 - SUPREME COURT and Digambar Warty and others v. District Registrar Bangalore Urban District and another 2012 (12) TMI 1245 - KARNATAKA HIGH COURT has rightly rejected the prayer of the appellant. There are no ground warranting interference in the order impugned - appeal dismissed.

Summary

Issues:
1. Specific performance of an agreement for sale dated 04.11.1996.
2. Setting aside a sale deed executed in favor of a third party.
3. Payment of stamp duty and penalty on an unregistered agreement of sale.
4. Jurisdiction of the court to collect deficit stamp duty and penalty.
5. Applicability of Sections 34 and 37 of the Stamp Act.

Analysis:

1. The appellant filed a suit for specific performance of an agreement for sale dated 04.11.1996 and sought to set aside a subsequent sale deed executed by the respondents. The appellant claimed possession of the property as part performance under the agreement. The court noted that an agreement of sale coupled with possession requires payment of ad valorem stamp duty, and the appellant had not produced the original agreement. The trial court directed the appellant to pay deficit stamp duty and penalty totaling Rs. 15,81,800 on the unregistered agreement.

2. The appellant challenged the trial court's order through a writ petition, arguing that only deficit stamp duty should be collected at the time of judgment, and the penalty imposition was illegal. The High Court rejected this argument, leading to the present appeal before the Supreme Court.

3. The Supreme Court examined the provisions of the Stamp Act, specifically Sections 34 and 37, and compared the circumstances of the present case with other civil appeals. The court emphasized that the appellant had invited the court to decide under Section 34(1) by agreeing to pay stamp duty and penalty. Therefore, the imposition of ten times penalty on deficit stamp duty was deemed appropriate.

4. In a related judgment delivered in other civil appeals, the court outlined the steps under Chapter IV of the Stamp Act. It highlighted the options available to parties regarding payment of deficit stamp duty and penalty, either through Section 34 or Section 39 of the Act. The court clarified that once the deficit duty and penalty are paid, objections under the Act are no longer valid, and the document can be admitted in evidence.

5. The Supreme Court ultimately upheld the trial court's decision to impose ten times penalty on the deficit stamp duty, citing the appellant's prior agreement to pay the duty and penalty. The court rejected the appellant's argument to delay payment until the decree of specific performance, as it fell within the purview of Section 34. Relying on established case law, the court dismissed the appeal, finding no grounds for interference with the impugned order.

In conclusion, the Supreme Court affirmed the trial court's order directing the appellant to pay deficit stamp duty and penalty, emphasizing the applicability of Sections 34 and 37 of the Stamp Act in determining the admissibility of the agreement in evidence.