2025 (1) TMI 301 - SC - Indian Laws

Requirement of registration of the document - Determination of stamp duty under Article 22A of Schedule 1A of the Indian Stamp Act, 1899 - collusion between the appellant and Respondent No.2 and the Civil Suit was instituted only with an intent to evade the payment of stamp duty. Requirement of registration of the document - Section 17 of the Registration Act, 1908 - HELD THAT - Section 17(1) of the Act, 1908 specifies the documents for which Registration is compulsory. Sub-section (2) of Section 17 carves out the exceptions. The documents/instruments enumerated in sub-section (2) of section 17 are not compulsorily registerable. The exemption for decree or order of the Court is covered under section 17(2)(vi) of the Act, 1908 with a rider. Under the said provision, any decree or order of a Court (except the decree or order expressed to be made on compromise and comprising immovable property other than that which is the subject-matter of the suit or proceedings) would not require compulsory registration - To avail the exemption from the mandate of compulsory registration of documents conveying immovable property of a value of more that Rs 100/-, the compromise decree arrived must be only in respect of the property that is the subject-matter of the suit. The compromise arrived at before the Lok Adalat and the award passed by the Lok Adalat thereto assume the character of a decree passed under Order XXIII Rule 3 and would also come within the ambit and purview of sub-section (2) of section 17 of the Act, 1908. The appellant is entitled to possession of the subject land and the Respondent No.2 shall not interfere with the same; and the appellant is entitled to get his name recorded in the revenue records in respect of the subject land in the place of the Respondent No.2. Pertinently, it is to be pointed out that the said compromise decree has not been challenged by the Respondent No.1 before any Court of law and hence, the same attained finality and is binding on the parties. Though the Respondent No.1 alleged that the suit was filed by the appellant in collusion with the Respondent No.2 and within a short time from the date of initiation of the suit, the parties compromised the matter in order to evade payment of stamp duty, no concrete evidence was placed before this court to substantiate that the same. That apart, it is not the case of the Respondent No.1 - State that the suit itself was collusive as the property was not in possession of the appellant and that it belongs to any other third party - There is no finding of collusion between the parties in entering into the compromise by any Court as on date. Indisputably, the property is the subject matter of the suit. Thus, the appellant has satisfied the conditions enumerated in section 17(2)(vi) of the Act, 1908 and hence, the subject land acquired by him by way of compromise decree, requires no registration. Payment of stamp duty for mutation of the subject land - it is the specific plea of the appellant that consent decrees / decrees are not chargeable with stamp duty under the Indian Stamp Act, 1899 as applicable to the State of Madhya Pradesh - HELD THAT - The stamp duty is not chargeable on an order/decree of the Court as the same do not fall within the documents mentioned in Schedule I or I-A read with Section 3 of the Indian Stamp Act, 1899. Though the Collector of Stamps determined the stamp duty for the subject land as per Article 22 of Schedule IA of the Indian Stamp Act, 1899, which states about conveyance, in this case, we have already held that the compromise decree does not fall under the instruments mentioned in the Schedule and that it only asserts the pre-existing rights. Therefore, in the facts of the case, the consent decree will not operate as conveyance as no right is transferred and the same does not require any payment of stamp duty. Since the appellant has only asserted the pre-existing right and no new right was created through the consent decree, the document pertaining to mutation of the subject land is not liable for stamp duty. Conclusion - i) The appellant has satisfied the conditions enumerated in section 17(2)(vi) of the Act, 1908 and hence, the subject land acquired by him by way of compromise decree, requires no registration. ii) Since the appellant has only asserted the pre-existing right and no new right was created through the consent decree, the document pertaining to mutation of the subject land is not liable for stamp duty. Appeal allowed.

1. ISSUES PRESENTED and CONSIDERED

The core legal questions considered in this judgment are:

Whether the compromise decree obtained by the appellant requires registration under the Registration Act, 1908.
Whether the compromise decree is chargeable with stamp duty under the Indian Stamp Act, 1899.
Whether the High Court erred in upholding the orders of the Collector of Stamps and the Board of Revenue, which determined the stamp duty payable by the appellant.
Whether the compromise decree created a new right or merely affirmed a pre-existing right of the appellant over the subject land.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Registration of the Compromise Decree

Relevant Legal Framework and Precedents: Section 17 of the Registration Act, 1908 outlines documents requiring compulsory registration. Section 17(2)(vi) provides an exemption for court decrees unless they create new rights over immovable property not subject to the original suit.
Court's Interpretation and Reasoning: The court analyzed whether the compromise decree involved new rights or affirmed pre-existing rights. It referenced the Supreme Court's decision in Mohd. Yusuf v. Rajkumar, which clarified that a compromise decree does not require registration if it pertains to the subject matter of the suit and does not create new rights.
Key Evidence and Findings: The appellant claimed long-term possession and ownership of the land, which was not contested by the State. The compromise decree did not create new rights but affirmed the appellant's pre-existing rights.
Application of Law to Facts: The court found that the compromise decree pertained to the subject matter of the suit and did not create new rights, thus not requiring registration.
Treatment of Competing Arguments: The respondent argued that the decree was collusive and intended to evade stamp duty. The court found no evidence of collusion or new rights being created.
Conclusions: The compromise decree did not require registration as it did not create new rights and pertained to the subject matter of the suit.

Issue 2: Stamp Duty on the Compromise Decree

Relevant Legal Framework and Precedents: Section 3 of the Indian Stamp Act, 1899, lists instruments chargeable with duty. Court decrees are not listed unless they fall under specific categories.
Court's Interpretation and Reasoning: The court determined that the compromise decree did not fall under the chargeable instruments as it did not create new rights but affirmed pre-existing rights.
Key Evidence and Findings: The Collector of Stamps had assessed stamp duty based on the market value of the land, treating the decree as a conveyance. However, the decree did not transfer new rights.
Application of Law to Facts: The court applied the legal framework to conclude that the decree was not a conveyance and thus not chargeable with stamp duty.
Treatment of Competing Arguments: The respondent's argument that the decree was a device to evade stamp duty was not supported by evidence.
Conclusions: The compromise decree was not chargeable with stamp duty as it did not create new rights.

3. SIGNIFICANT HOLDINGS

Preserve verbatim quotes of crucial legal reasoning: "A compromise decree comprising immovable property other than which is the subject-matter of the suit or proceeding requires registration, although any decree or order of a court is exempted from registration by virtue of Section 17(2)(vi)."
Core Principles Established: A compromise decree does not require registration or stamp duty if it pertains to the subject matter of the suit and does not create new rights.
Final Determinations on Each Issue: The court set aside the High Court's order, ruling that the compromise decree did not require registration or stamp duty, and directed the mutation of the revenue records in favor of the appellant.

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