Andhra HC (Pre-Telangana)
Mekapathula Lingareddy vs Durgempudi Gangireddy And Others on 13 April, 1995
Equivalent citations: AIR1995AP329, 1995(1)ALT828, AIR 1995 ANDHRA PRADESH 329, (1995) 1 LS 379 (1995) 1 ANDH LT 828, (1995) 1 ANDH LT 828
ORDER
1. The interesting question that arises in this civil revision petition is whether an agreement of sale stipulating delivery of possession on payment of certain amount is exigible to stamp duty as conveyance under Explanation to Art. 47A of Schedule IA to the Indian Stamp Act (for short 'the Act') as applicable in Andhra Pradesh, when subsequently as per the stipulation possession was delivered.
2. The petitioner entered into agreement on 22-4-1990 with the 2nd respondent who agreed to sell four acres of land for Rupees 20,000/-. As per the agreement, Rs.8,000/-was paid by the buyer and the balance Rs. 12,000/- was agreed to be paid within two months. The 2nd respondent has undertaken to deliver possession of the property and execute the sale deed as and when desired by the buyer, if the balance of Rs. 12,000/- is paid. The agreement was executed on Rs.20/- stamp paper. Subsequently, on 30-5-1990, the petitioner paid balance sale consideration of Rs. 12,000/- and the second respondent delivered possession of the property to the petitioner. This endoresment was made on the back of the agreement duly signed by second respondent. In E.A. No. 157 of 1993 in O.S. No. 335 of 1978, the petitioner sought to mark this agreement in support of his plea that the property belongs to him and cannot be attached in execution of the decree against first respondent. The learned counsel for the decree holder objected to it stating that under Art. 47 A of Schedule IA to the Act, the document is insufficiently stamped and cannot be admitted. The lower Court upheld the objection. Hence, this revision petition.
3. Shri P.S. Narayana, learned counsel for the petitioner, contends that Explanation to Art. 47A of the Act applies only if possession follows immediately on execution of the agreement of sale or if possession was already delivered pursuant to execution of the agreement or at least at the time of the agreement and as in the instant case, possession was delivered after one month and 8 days, Explanation to Art. 47A does not apply. To appreciate this contention, it is necessary to note the background of introduction of Explanation to Article 47A of the Act which together with proviso to Art. 20 was inserted by A.P. Amendment Act 17 of 1986. Article 20 of Schedule IA reads as follows:
"20. 'conveyance as defined by Section 2(10), not being a sale, charged under (No. 47A) or a transfer charged or exempted under (No. 53)'.
Provided that where an agreement to sell an immovable property is stamped with the ad valorem stamp required for a conveyance on sale under Art. 47A and a conveyance on sale in pursuance of such agreement is subsequently executed, the duty on such conveyance on sale shall be the duty payable under the article less the duty already paid under Art. 47A subject to a minimum of five rupees."
Article 47A of Schedule IA to the Act reads as follows:
"47A. Sale is defined in Section 54 of the Transfer of Property Act, 1882- Explanation:-- An agreement to sell followed by or evidencing delivery of possession of the property agreed to be sold shall be chargeable as a 'sale' under this article and the instrument of sale in pursuance of such agreement subsequently executed shall be chargeable with a duty of rupees five."
In the Statement of Objects and Reasons of the Bill, it is stated "In Article 20 it has been decided to provide for paymeni of stamp duly on agreements to sell at conveyance rate when they are accompanied by delivery of possession of the property as the parties are not getting the sale deeds registered by paying legitimate stamp duty". This evidently applies to Explanation to Article 47A also. The buyers who obtain possession of the property pursuant to the agreement of sale are entitled to rely on the principle of part performance stated in Section 53A of the Transfer of Property Act which reads as follows:
"Where any person contracts to transfer for consideration any immovable property by writing signed by him or on his behalf from which the terms necessary to constitute the transfer can be ascertained with reasonable certainty:
and the transferee has, in part performance of the contract, taken possession of the property or any part thereof, or the transferee, being already in possession, continues in possession in part performance of the coniract and has done some act in furtherance of the contract, and the transferee has performed or is willing to perform his part of the contract, then, notwithstanding that the contract, though required to be registered, has not been registered, or, where there is an instrument of transfer, that the transfer has not been completed in the manner prescribed therefor by the law for the time being in force, the transferor or any person claiming under him shall be debarred from enforcing against the transferee and persons claiming under him any right in respect of the property of which the transferee has taken or continued in possession, other than a right expressly provided by the terms of the contract:
Provided that nothing in this section shall affect the rights of a transferee for consideration who has no notice of the contract or of the part performance thereof."
As can be seen from Section 53A of the Transfer of Property Act, delivery of possession need not be immediate and buyer is given the right when once possession is given pursuant to the agreement of sale. As the object of introdution of Explanation to Art. 47A and Proviso to Art. 20 is to plug loopholes in evasion of Stamp duty by persons invoking the theory of part performance under Section 53A of the Transfer of Property Act, the word 'possession' has to be interpreted as including possession pursuant to the agreement of sale and not restricted to possession that must immediately follow the execution of the agreement. Otherwise, the buyer can easily circumvent the law and evade the duty by the entering into agreement today and obtaining possession couple of days thereafter, at the same time claiming benefit of Section 53 A of Transfer of Property Act. It is obvious that such interpretation has to be avoided. The contention of Sri P. S. Narayana, learned counsel for the petiioner, that there was no fresh agreement on 30-5-1990, when possession was delivered, to attract Explanation is not correct. On 30-5-1990, when possession was delivered pursuant to the agreement' of sale, there is, in the eye of law, deemed to be a new instrument attracting Explanation to Art. 47A.
4. There is no direct authority interpreting this Explanation or Proviso to Art. 20. But it is useful to refer to a decision of-the Full Bench of Madras High Court in Board of Revenue v. Somarazu, AIR 1926 Mad 1038 interpreting Art. 33 of Schedule IA of the Act as amended by Madras Stamp Description of instrument Proper Stamp Duty MORTGAGE DEED:
(a) when possession of the property or any part of the properly comprised in such deed is given by the mortgage or agreed to be given;
The same duty as a Conveyance (No. 19) for a consideration equal to the amount secured by such deed.
(b) When possession is not given or agreed to be given as aforesaid;
The same duty as a Bottomry Bond (No. 14) for the amount secured by such deed.
Incidentally this is exactly similar to Art. 35 hedule of ScIA of the Act applicable in A.P, Interpreting this Article, the Full Bench of Madras High Court in Board of Revenue v. Somarazu (supra) held that the words 'agregd to be given' in clause (a) must not be construed as covering cases of agreement to give possession on the breach of a certain covenant, or on the happening of a future event which may or may not happen, but only cases where by the words of the document possession is directly agreed to be given. But as contrast the Amending Act 17 of 1986 uses different words in the Explanation to Art. 47A of the Act by doing away with the distinction between the two types of possession mentioned in clauses (a) and (b). Thus the intention of the legislature is to levy duty on such transactions as applicable to sale deed.
5. Mr. P.S. Narayana, learned counsel for the petitioner, relied on a decision in T. Gurappa v. Naidu Ramana Reddy, where an agreement stating that possession was handed over simultaneously by the vendor with a clause that he or his heirs will not have any right hereinafter in the property was held to be an agreement of sale and not a sale deed. I fail to see how this helps the petitioner. The agreement in the case cited was executed on 2-10-1978 whereas we are now concerned with an agreement executed after introduction of Explanation in the year 1986. There is no dispute even now that the document in question is only an agreement of sale as normally understood in the Transfer of Property Act. But by fiction introduced by the Explanation, this has to be stamped as regular sale deed. I accordingly reject the contention of Sri P.S. Narayana and held that document cannot be admitted in evidence as it is insufficiently stamped and the lower Court is correct in not permitting the petitioner to mark the document. It is obvious that the petitioner can rely on this document in the Court below after paying the deficit stamp duty as required by Section 35 of the Act.
6. The civil revision petition is accordingly dismissed. No costs.
7. Revision dismissed.