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Yogendra Verma v. Dharmendra And Others

Madhya Pradesh High Court

Jul 28, 2004

Judgment

Subsequent
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Structured Summary of the Opinion (Order by Rajendra Menon, J.)

Factual and Procedural Background

The petitioner instituted a suit for specific performance of a registered agreement for sale dated 9-8-2000 (Exhibit/Annexure P-2), seeking a direction to the respondents to execute the sale deed and hand over possession of the specified property. The defendants filed a written statement denying transfer of possession and disputing the agreement. After issues were framed and chief examination under Order XVIII Rule 4 CPC was submitted, the agreement (P-2) was exhibited.

On 24-1-2004 defendants filed an application (Annexure P-4) objecting to the admission of the agreement in evidence on the ground of non-payment of proper stamp duty. The trial Court (Twelfth Additional District Judge (Fast Track Court), Gwalior) by order dated 12-2-2004 (Annexure P-6) directed the petitioner to pay stamp duty on the agreement as per Article 23 of Schedule I (Schedule I-A is also discussed in the opinion) of the Indian Stamp Act, 1899, holding that possession had been handed over to the vendee. The petitioner challenged that order by filing this petition under Article 227 of the Constitution.

Legal Issues Presented

Whether the agreement for sale dated 9-8-2000 is to be treated as a conveyance liable to stamp duty under Article 23 of Schedule I-A of the Indian Stamp Act, 1899, because possession (actual or constructive) was transferred to the purchaser.
Whether the amendment(s) to the Indian Stamp Act (including amendments effective in 1990 and 2002) affect the applicability of Article 23 to the agreement in question.
Whether the trial Court's direction to require payment of stamp duty can be interfered with in exercise of this Court's powers under Article 227 of the Constitution.

Arguments of the Parties

Petitioner's Arguments (Shri A.M. Naik, Senior Counsel)

Reliance on the explanation to Article 23 of Schedule I-A of the Indian Stamp Act: an agreement is deemed a conveyance for Article 23 only if possession was transferred to the purchaser before execution of the conveyance; thus, mere execution of the agreement does not automatically trigger Article 23 unless possession had already been transferred.
The plaint specifically sought handing over of possession (actual or symbolic) and the written statement asserted defendants' possession; therefore, possession had not in fact been transferred and the trial Court's direction was unsustainable.
The agreement was executed on 9-8-2000 and the petitioner relied on the argument that the amendment to the Act coming into force with effect from 12-8-2002 should not apply retrospectively to render the agreement liable to Article 23 stamp duty.
In sum, because the petitioner continued to claim handing over of possession as relief, Article 23 stamp duty could not be recovered on the agreement.

Respondents' Arguments (Shri R.D. Jain, Senior Counsel)

Possession is not to be decided merely by assertions in pleadings; the proper approach is to read the instrument itself. If the instrument shows transfer of possession (actual or constructive) concomitant with the agreement, the agreement should be treated as a conveyance and stamp duty under Article 23 applies.
Reference to specific clauses (3, 4 and 6) of the agreement: these clauses indicate transfer of rights (for example, right to receive rent) and obligations relating to evicting tenants, demonstrating that rights akin to possession were transferred to the purchaser.
The amendment enforced with effect from 13-8-2002 relates to a memorandum of agreement in Article 5 of Schedule I-A and does not pertain to the present document; the original Article had been introduced in 1990, so the petitioner's second contention about the 2002 amendment is misconceived.
Relied on precedents (including a Division Bench judgment in Gyan Singh Yadav and Supreme Court decisions) to submit that a clear and unambiguous document that transfers possession must be treated as a conveyance for stamp duty purposes and the trial Court's order should be upheld.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Gyan Singh Yadav and Ors. v. Smt. Kunwardevi and Ors., 1999 RN 118	Held (Paragraph 17) that provisions contained in Article 23 of Schedule I-A were made applicable in Madhya Pradesh with effect from 15-10-1990 (date corrected in the opinion to reflect the M.P. Amendment Act No.22 of 1990 dated 18-10-1990); explained that when possession is transferred before or after execution of an agreement (without executing conveyance) the agreement is deemed a conveyance for purposes of Article 23.	The Court relied on this authority to confirm that Article 23 was applicable in the State and that the reasoning in that case (where the agreement was held to be deficiently stamped) supports treating the present agreement as chargeable to stamp duty if possession (actual or constructive) has been transferred.
Dev Raj Dogra and Ors. v. Gyan Chand Jain and Ors., AIR 1981 SC 981	Authority cited for principles about construction and effect of instruments where the document is clear and unambiguous regarding transfer of rights/possession.	The Court relied on the principle that a clear and unambiguous document showing transfer of possession or rights should be construed to give effect to that transfer, supporting the view that the agreement here operates as a conveyance for stamp duty purposes.
Raj Kumar-Rajindra Singh v. State of Himachal Pradesh and Ors., AIR 1990 SC 1833	Authority cited for the proposition that when a document is clear and unambiguous with regard to handing over possession, it should be construed accordingly.	The Court invoked this precedent alongside others to support its construction of the agreement as transferring possession/rights to the purchaser, thereby validating the trial Court's direction for payment of stamp duty.
Subbegowda (Dead) By Lr. v. Thimmegowda (Dead) By Lrs., JT 2004 (5) SC 274	Holds that construction of a document requires finding the executant's intention from a comprehensive reading of the document and surrounding circumstances; when the intention is clear the document must be construed to give effect to that intention.	The Court applied this principle to the present agreement: by reading its terms (especially clauses about tenants, rent and eviction) and surrounding facts, the Court concluded the document manifests an intention to transfer rights akin to possession, and thus operates as a conveyance for stamp duty purposes under Article 23.

Court's Reasoning and Analysis

The Court proceeded by reference to statutory provision(s) and authoritative precedents, and by a close textual analysis of the agreement (Annexure P-2). The key steps in the Court's reasoning are:

Applicability of Article 23: The Court observed that a Bench of this Court in Gyan Singh Yadav held Article 23 of Schedule I-A applicable in Madhya Pradesh from 1990 (noting a clerical date discrepancy and the correct insertion by M.P. Amendment Act No. 22 of 1990). The explanation to Article 23 treats an agreement as a conveyance where possession (whether before or after execution of the agreement) has been transferred without executing a conveyance.
Construction of the instrument: Following the Supreme Court's direction in Subbegowda, the Court emphasized that the instrument must be read comprehensively to ascertain the executant's intention, having regard to its terms and the circumstances of execution. The Court noted that when intention is clear, construction must effectuate that intention.
Examination of clauses: The Court analyzed clauses 3, 4 and 6 of the agreement. Those clauses indicate that tenants were residing on the property, responsibility for eviction rested with the purchaser, expenses of eviction would be borne by the purchaser, the seller would cooperate in eviction, tenants were informed about the agreement, and from the date of the agreement the right to receive rent passed to the purchaser. Tenants might purchase from the purchaser on terms set by the purchaser.
Nature of possession: The Court rejected the narrow contention that "possession" must mean physical possession. It explained (using conventional definitions) that possession may be actual (physical) or possession in law (constructive)—possession includes the detention or enjoyment of property, either directly or through another, and includes the legal capacity to reap benefits of the property.
Application to facts: Although physical possession could not be obtained on account of tenants occupying the premises, the Court found that the purchaser (petitioner) obtained the rights of an owner vis-à-vis the tenants (right to receive rent, to evict, to deal with tenants), thereby constituting constructive possession and control over the property from the date of the agreement.
Conclusion on stamp duty: Given that the agreement, on its true construction, transferred possession (in law/constructively) and the settled principles in the cited authorities, the Court found no error in the trial Court's direction that stamp duty under Article 23 was payable on the agreement. The contention regarding the inapplicability of amendments (2002) was addressed by noting the earlier applicability of Article 23 in 1990 and that the 2002 amendment related to a different memorandum provision.

Holding and Implications

Holding: The petition under Article 227 of the Constitution is dismissed. The Court found no ground to interfere with the trial Court's order directing payment of stamp duty under Article 23 of Schedule I-A of the Indian Stamp Act, 1899. The petition was dismissed without any order as to costs.

Implications:

Direct effect on the parties: The petitioner remains liable to pay the stamp duty on the agreement for sale (Annexure P-2) as directed by the trial Court, because the agreement, on its terms, transferred constructive possession and the right to benefit from the property to the purchaser.
Broader precedent: The Court did not announce a new legal principle; it applied existing statutory interpretation and precedents (including the Division Bench decision and Supreme Court authorities) to the facts. The decision upholds the principle that an agreement transferring possession (actual or constructive) may be treated as a conveyance for stamp duty purposes under Article 23.

Note: This summary is limited strictly to the content and reasoning present in the provided opinion and does not introduce facts or interpretations beyond the opinion's text.

Show all summary ...

ORDER Rajendra Menon, J.

1. Challenge in this petition under Article 227 of the Constitution is made to an order, Annexure P-6, dated 12-2-2004 passed by the Court of Twelfth Additional District Judge (Fast Track Court), Gwalior by which petitioner has been directed to pay the proper stamp duty on the document (Annexure P-2), an agreement for sale in accordance with provisions of Article 23 to Schedule I of the Indian Stamp Act, 1899. It is the case of the petitioner that the aforesaid direction given for affixing the stamp duty on the document is clearly unsustainable.

2. Petitioner had instituted a suit for specific performance of a registered agreement for sale dated 9-8-2000 (Annexure P-2). Relief claimed by the petitioner in the suit is to direct the respondents to execute the sale deed in pursuance to the aforesaid agreement and to hand over possession of the property in question. It is the case of the petitioner that written statement was filed and in the written statement (Annexure P-3), defendants/respondents asserted their own possession, so also disputed the agreement to sale. After framing of issues, chief examination under Order XVIII Rule 4, CPC, was submitted and the agreement dated 9-8-2000 was exhibited as P-2. Defendants submitted an application on 24-1-2004 objecting to take on record the aforesaid agreement on the ground that it is inadmissible in evidence for want of payment of proper stamp duty. Copy of the aforesaid objection is filed as Annexure P-4. Petitioner opposed the same on the ground that as physical possession of the suit property was not delivered to the petitioner at the time of the agreement is admissible in evidence. It was also asserted that the amendment to the Indian Stamp Act, 1899 came into force with effect from 12-8-2002, therefore, it will not apply as the agreement was executed on 9-8-2000.

3. Rejecting the aforesaid plea, by the impugned order dated 12-2-2004 (Annexure P-6), the learned Court has directed that the stamp duty on the document (Exhibit P-2) is payable as per Article 23 of Schedule I as possession has been handed over to the vendee. The aforesaid order is assailed in this petition.

4. It was asserted by Shri A.M. Naik, learned Senior Counsel that explanation to Article 23 of Schedule I-A of the Act clearly stipulates that in an agreement for sale of a immovable property, if possession is transferred to the purchaser before execution of the agreement, without executing the conveyance then only such an agreement shall be deemed to be a conveyance liable for payment of stamp duty in accordance with said Article. It was emphasised by Shri Naik that in the present case prayer made by the petitioner in the plaint, Annexure P-1 vide Paragraph 12-B is to hand over possession actual or symbolic and in Annexure P-3, respondents in Paragraph 2 have clearly indicated that they are in possession. It was, therefore, argued by learned Senior Counsel that in the aforesaid circumstances, direction to pay the stamp duty is unsustainable. It was also submitted by Shri Naik that the agreement was executed on 9-6-2000 and the amendment in the Act was introduced with effect from 12-8-2002 which does not have retrospective effect. In sum and substance, the argument of Shri Naik is that as no possession is transferred in pursuance to the agreement, as the petitioner is claiming relief of handing over possession in pursuance to the agreement, the stamp duty as per Article 23 to Schedule I can not be recovered.

5. Refuting the aforesaid, Shri R.D. Jain, learned Senior Counsel submitted that the assertion made in the plaint or the reply submitted by the defendants in the written statement does not decide the question of possession. Question of possession in such cases has to be decided by a plain reading of the instrument in question and if reading of instrument shows that the possession has been handed over simultaneously in pursuance to the agreement for sale then the agreement for sale has to be treated as a conveyance for transfer of the property and stamp duty in accordance with Article 23 has to be paid. Referring to Clauses 3, 4 and 6 of the agreement, Annexure P-2, so also a judgment rendered by a Division Bench of this Court in the case of Gyan Singh Yadav and Ors. v. Smt. Kunwardevi and Ors., 1999 RN 118, it was argued by Shri Jain that when the order passed by the learned Court below is proper and no interference into the same is called for.

6. It was also submitted by Shri Jain that the amendment in the Act enforced with effect from 13-8-2002 is only with regard to memorandum of agreement referred to in article 5 of schedule i-a and does not pertains to the present document. It was argued by him that the original Article 1 was introduced in the year 1990 with effect from 18-10-1990, and therefore, the second submission of Shri Naik is misconceived. Placing reliance on a judgment of the Supreme Court in the case of Dev Raj Dogra and Ors. v. Gyan Chand Jain and Ors., AIR 1981 SC 981 and Raj Kumar-Rajindra Singh v. State of Himachal Pradesh and Ors., AIR 1990 SC 1833, it was submitted by Shri Jain that the document being clear and unambiguous with regard to handing over possession to the petitioner, the order passed by the learned Court below does not call for any interference in exercise of the under Article 227 of the Constitution.

7. Having heard learned Counsel for the parties and on perusal of the record, it is seen that a Bench of this Court in the case of Gyan Singh Yadav (supra) in Paragraph 17 has clearly laid down that the provisions contained in Article 23 of Schedule I-A has been made applicable in the State of Madhya Pradesh with effect from 15-10-1990, the date seems to be incorrectly mentioned in the said judgment. The M.P. Amendment Act No. 22 of 1990 was inserted on 18-10-1990 and not on 15-10-1990. However, it is observed by the learned Judge that the explanation added clarified that for the purpose of Article 23, in cases of agreement for sale of immovable property, the possession of any immovable property is transferred to the purchaser before execution or after execution of such agreement without executing the conveyance in respect thereof, the agreement for sale is deemed to be a conveyance and stamp duty thereon shall be leviable accordingly. Thereafter, in Paragraph 18, the facts of that particular case were considered and after considering the recital as contained in the agreement, it was held that the instrument was deficiently stamped. In the said case, the agreement was to carry out certain development work.

8. Recently, the Supreme Court in the case of Subbegowda (Dead) By Lr. v. Thimmegowda (Dead) By Lrs.., JT 2004 (5) SC 274, has held that the question of considering construction of a document is to be decided by finding out the intention of the executant, firstly from a comprehensive reading of the terms of the document itself, and the other circumstances on the basis of which the document is executed. It has been held by the Supreme Court that when the intention is clear then the construction of the document has to be done in such a manner that the intention of the parties are given effect to. If the document in hand is considered in the light of the aforesaid, it has to be held that it is a conveyance transferring right of the property and possession to the petitioner.

9. If the agreement in question is scanned in the back drop of the aforesaid legal principle enunciated in the aforesaid cases, it is seen that in Paragraphs 3 and 4 of the agreement, it is clearly stipulated that in the property in question tenants are residing. The responsibility of evicting the tenants from the property in question will be in the purchaser, i.e., the plaintiff. The expenses incurred for evicting the tenants shall be borne by the party No. 2, i.e., the petitioner. The seller, party No. 1 shall only extend his cooperation in getting the tenants evicted from the property in question. All the tenants are being informed about this agreement.

10. Further stipulation in the agreement is that from the date of agreement, the right to receive the rent from the tenants passes on to the purchaser, i.e., the petitioner. All the tenants were informed that after execution of this agreement for sale, they are required to pay the rent to plaintiff. It is further stipulated in the agreement that after execution of this agreement, if any of the tenants wants to purchase the property or portion in which they are residing then they have to approach the plaintiff and enter into an agreement with the plaintiff.

11. From the aforesaid, it is clear that in the tenanted premises physical possession on the date of the agreement was not possible as tenants were residing in the premises. However, the right to recover the rent and dealing with tenants was transferred to the plaintiff from the date of the agreement. It is in the aforesaid factual aspect of the matter that the question as to whether possession was handed over on the date of the agreement has to be decided in this case.

12. Even though, referring to the explanation to Article 23, Shri Naik argued that possession referred to therein means physical possession of the property in question. The aforesaid argument seems to be misconceived. Possession is in fact a detention or enjoyment of a thing which a man holds or exercises by himself or by another, who keeps or exercises it in his name. Possession may be the actual possession or possession in law. Actual possession is when a person enters the land by descending on the same or otherwise and possession in law is that in which in the eye of law, he is deemed to be in possession inasmuch as he reaps benefit of the property.

13. In the present case, petitioner is in full control of the property in question even though physically he may not have been handed over the possession. The petitioner is in constructive possession of the property as all right of the owner, i.e., landlord in relation to the tenants who are in actual possession is transferred to the petitioner.

14. In that view of the matter, it is to be held that the explanation to Article 23 which speaks about possession being transferred to the purchaser has to be considered on the basis of the document in question and if the agreement in the present case and the stipulation contained therein is analysed in the back drop of the legal principle as is evident from the judgments referred to herein-above, it can not be said that the learned Court has committed any error in directing for payment of stamp duty by the petitioner. Merely because petitioner is not in actual possession, it can not be said that the order is unsustainable.

15. Considering the totality of the facts and circumstances of the case, I find no ground to interfere in the matter.

16. Accordingly, petition stands dismissed without any order as to cost.