Karnataka High Court
Sri B V Srinivasulu vs Sri B V Prabhakar on 3 August, 2022
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IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 3RD DAY OF AUGUST, 2022
BEFORE
THE HON'BLE MR. JUSTICE R. NATARAJ
WRIT PETITION NO.42589 OF 2015 (GM-CPC)
BETWEEN:
SRI B V SRINIVASULU,
S/O B.R. VARADHARAJU NAIDU,
AGED ABOUT 45 YEARS,
R/AT NO.1676, 10TH MAIN,
B.S.K. 1ST STAGE,
BENGALURU-560050. ...PETITIONER
(BY SRI M.R.RAJAGOPAL, SR.ADVOCATE FOR
SRI H.N.BASAVARAJU, ADVOCATE)
AND:
1. SRI B V PRABHAKAR,
S/O G.V. VENKATESH,
AGED ABOUT 39 YEARS,
R/AT NO.295/296, 6TH "A" CROSS,
SRINIVASA NAGAR,
2ND BLOCK,
BANASHANKARI 1ST STAGE,
BENGLAURU-560050.
2. SMT. K.G. UMA,
D/O LATE K.G. GANGARAJU,
AGED ABOUT 41 YEARS,
3. SRI. K.G. GIRISH,
S/O LATE K.G. GANGARAJU,
AGED ABOUT 37 YEARS,
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4. SMT. K.G. MANGALA,
S/O LATE K.G. GANGARAJU,
AGED ABOUT 34 YEARS,
5. SMT. K.G. YASHODHA,
D/O LATE K.G. GANGARAJU,
AGED ABOUT 31 YEARS,
ALL ARE RESIDING AT NO.1202,
BLOCK-II, BANASHANKARI 1ST STAGE,
BENGALURU-560050. ...RESPONDENTS
(BY SRI AMIT DESHPANDE, ADV. FOR R1,
V/O/DTD: 30.09.2015 NOTICE TO R2-R5 ARE D/W,
V/O/DTD: 09.03.2021 A RAVISHANKAR, ADV.
APPOINTED AS AMICUS CURAIE )
THIS WRIT PETITION IS FILED UNDER ARTICLE 227 OF
THE CONSTITUTION OF INDIA, PRAYING TO ISSUE A WRIT IN
EXERCISE OF SUPERVISORY JURISDICTION OF THIS HON'BLE
COURT ENABLE TO CORRECT THE IMPUGNED ORDER DATED
21.9.2015 PASSED BY THE LEARNED 4TH ADDL. CITY CIVIL
AND SESSIONS JUDGE, BANGALORE IN O.S. NO. 25741/2015
ON THE QUESTION OF PAYMENT OF DEFICIT STAMP DUTY AND
PENALTY AS PER ANN-N.
THIS PETITION COMING ON FOR DICTATING ORDERS,
THIS DAY, THE COURT MADE THE FOLLOWING:
ORDER
The defendant No.5 in O.S.No.25741/2015 on the file of the IV Additional City Civil and Sessions Judge, Bengaluru (hereinafter referred to as 'trial Court' for short) has filed this writ petition challenging the correctness of the order dated 21.09.2015 passed therein, by which, it directed the plaintiff to pay ten times the deficit stamp duty as penalty.
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2. For the sake of convenience and easy understanding, the parties shall henceforth be referred to as they were arrayed before the trial Court.
3. The suit in O.S.No.25741/2015 was filed for specific performance of an agreement of sale dated 13.12.2012 and for declaration that the sale deed executed by the defendant Nos.1 to 4 in favour of defendant No.5 did not bind the plaintiff. The suit was contested by the defendant No.5. During the course of the proceedings, the defendant No.5 pointed out that proper stamp duty was not paid on the agreement of sale dated 13.12.2012 and therefore, the Court was bound to impound the document and collect duty and applicable penalty. Based on this, the trial Court in terms of its order dated 21.09.2015, impounded the agreement of sale dated 13.12.2012 and directed the plaintiff to pay deficit stamp duty of Rs.4,800/- and penalty amounting to ten times the deficit stamp duty.
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4. The defendant No.5 being aggrieved by the insufficient amount of stamp duty imposed by the trial Court has filed this writ petition.
5. Learned Senior Counsel representing the defendant No.4 submitted that the agreement of sale contained a recital that a power of attorney dated 03.08.2011 was executed. He pointed that a power of attorney executed on 03.08.2011 contained a recital namely, "to execute any deeds of ratification, rectifications, confirmation with regard to the schedule property and to present such deeds of ratification, rectification and confirmation and any other deeds and to admit execution thereon and to sign such forms, applications, statements, ratification and rectification etc. with regards thereto". He therefore contended that the possession of the property in question was deemed to have been delivered and by virtue of Article 5(e) of the Karnataka Stamp Act, 1957 (hereinafter referred to as 'the Act, 1957' for short), the stamp duty was payable on the 5 power of attorney as well, which was not considered by the trial Court.
6. Learned counsel for the defendant No.5 relied upon a budget speech of the Finance Minister while presenting the budget for the year 2011-12, which contained a reference to imposition of stamp duty at 6%, wherever a reference was made to a power of attorney in an agreement of sale. He therefore contended that the plaintiff was liable to pay duty at 6%. He invited the attention of the Court to a judgment of the Co-ordinate Bench of this Court in the case of SAKAMMA AND PAVADI GOWDA AND OTHERS reported in ILR 1998 KAR 3842 and contended that the provisions of the Act, 1957 are meant to sub-serve the interest of the revenue. Therefore, the Courts are bound to interpret documents that favours the revenue.
7. This Court in terms of the order dated 09.03.2021, appointed Sri.A.Ravishankar, learned counsel as the Amicus Curiae to assist this Court. Learned Amicus Curiae pointed out that the power of attorney dated 6 03.08.2011 was executed primarily for the purpose of "obtaining the possession certificate and the absolute sale deed in the name of the Principal". He pointed out that unless the Bengaluru Development Authority handed over possession of the property in question, the vendors of the plaintiff could not deliver possession or authorize the plaintiff to execute any deeds to convey the property. Therefore, he contended that the document should not be construed as a general power of attorney conferring all rights in respect of the property in question, but should be construed as a special power of attorney for a specific purpose. He submitted that this power of attorney does not correspond to the one mentioned in Article 5(e) the Act, 1957. He also pointed out from the agreement of sale dated 13.12.2012 that the possession of the property was agreed to be handed over at the time of registration of the sale deed. Therefore, he contends that the power of attorney was not liable to stamp duty under Article 5(e) of the Act, 1957 and therefore, the order passed by the trial Court collecting duty and penalty on the sale agreement is just and proper.
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8. Article 5(e) of the Act, 1957 was introduced by Act No.8 of 1995 with effect from 01.04.1995 and reads as follows:
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[(e) If relating to sale. of immovable property wherein part performance of the contract
(i) possession of the property is Same duty as a conveyance (No.20) on delivered or is agreed to be the market value of the property.
delivered 3[before] executing the 4
[provided that, where a deed of
conveyance cancellation of earlier agreement is
executed by and between the same parties in respect of the same property and if property stamp duty has been paid on such agreement then the duty on such "deed of cancellation" shall not be exceed rupees five hundred.] 1 [(ii) Possession of the property is not Ten paise for every one hundred rupees or delivered part thereof on the market value equal to the amount of consideration subject to a maximum of rupees twenty thousand but not less than rupees five hundred:
2[ Explanation-I.- When a reference, of a Provided that the duty paid on power of Power of Attorney granted separately attorney under Article 41(e) or 41(eb) as by the seller to the purchaser in respect the case may be, is adjustable towards the of the property which is the subject duty payable on agreement for sale under matter of such agreement, is made in Article 5(e) of instrument of sale or the agreement, then the possession of transfer, as the case may be, executed the property is deemed to have been between the same parties and in respect of delivered for the purpose of this clause. the same property.] Explanation-II.- For the purpose of clause (e) and clause (h) where subsequently conveyance or mortgage as the case may be, is executed between the same parties in pursuance of such agreement or its records or memorandum the stamp duty, if any, already paid and recovered on the agreement or its record or memorandum shall be adjusted towards the total duty leviable on the conveyance or mortgage, as the case may be.8
9. Article 5(e)(ii) of the Act, 1957deals with a situation where possession of the property is not delivered under an agreement of sale and the stamp duty payable is 1% of the total consideration subject to a maximum of Rs.20,000/-, but not less than Rs.500/-. The explanation No.I to Article 5(e) of the Act, 1957 deals with the present situation, where along with an agreement of sale, a power of attorney is granted separately by the seller to the purchaser in respect of the subject matter of the agreement. In that case, the possession the property is deemed to have been delivered for the purpose of Article 5(e) of the Act, 1957. In such an event, the duty payable on an agreement of sale under Article 5(e) of the Act, 1957 is the duty payable on an instrument of sale or transfer. Therefore, the seminal question is whether the power of attorney which is the subject matter of the suit corresponded to a power of attorney under Explanation-I to Article 5(e)(ii) of the Act, 1957.
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10. A perusal of the power of attorney clearly discloses that the property in question was earlier granted to the defendant Nos.1 to 4 by the Bengaluru Development Authority but the possession of the property and a deed of conveyance was yet to be executed by the Bengaluru Development Authority in favour of defendant Nos.1 to 4. It was in this context that the defendant Nos.1 to 4 executed a power of attorney on 03.08.2011 authorizing the plaintiff to "obtain possession certificate and sale deed in the name of defendant Nos.1 to 4 from the Bengaluru Development Authority. It may be that several covenants that are generally contained in a power of attorney were mentioned therein, which gave an impression that all powers of the defendant Nos.1 to 4 were granted to their attorney, though they had none. Following this power of attorney, an agreement of sale was executed on 13.12.2012, which contained a reference to the power of attorney dated 03.08.2011 and also carried a specific reference that the possession of the property would be delivered at the time of registration of the sale deed. 10 Therefore, it cannot be said that the power of attorney which is the subject matter of the suit was akin to a power of attorney found in Article 5(e)(ii) of the Act, 1957. The power of attorney dated 03.08.2011 could at the most be construed as an authorisation to carryout specific directions of the defendant Nos.1 to 4 i.e., to obtain a sale deed in their names and nothing else.
11. In that view of the matter, the trial Court was justified in directing collection of duty and penalty only on the agreement of sale dated 13.12.2012 as if possession was not delivered under it. There is no merit in this writ petition and the same is rejected.
The assistance provided by the learned Amicus Curiae is appreciated and is placed on record.
Sd/-
JUDGE NR/-