Telangana High Court
Suram Bapu Reddy vs Janagam Lakshmi And Two Others on 20 December, 2018
Author: V.Ramasubramanian
Bench: V.Ramasubramanian
*IN THE HIGH COURT OF JUDICATURE AT HYDERABAD
FOR THE STATE OF TELANGANA AND THE STATE OF
ANDHRA PRADESH
* HONOURABLE SRI JUSTICE V.RAMASUBRAMANIAN
AND
* HONOURABLE Ms. JUSTICE J.UMA DEVI
+ Civil Revision Petition No.5658 of 2017
% 20-12-2018
# Suram Bapu Reddy, S/o late Linga Reddy,
Aged 58 years, Occ: Employee, R/o H.No.5-7-636/2,
1st Floor, Sai Nilayam, Premnagar Colony, Naimnagar,
Hanamkonda, Warangal District
... Petitioner/Defendant No.1
Vs.
$ 1. Janagam Laxmi, W/o Narasimha Reddy,
Aged 61 years, Occ: Household,
R/o H.No.1-49/1/B-2, Street No.3,
Venkateswara Colony, Uppal, Ranga Reddy District
... Respondent/Plaintiff
2. Bollu Bharathi W/o Ganapathi Reddy, Aged 60 years,
Occ: Household, R/o H.No.2-7-604, Excise Colony,
Subedari, Hanamkonda, Warangal District
3. Suram Buchamma W/o Late Linga Reddy, Aged 78 years,
Occ: Household, R/o C/o Bollu Ganapathi Reddy,
H.No.2-7-604, Excise Colony, Subedari,
Hanamkonda, Warangal District
... Respondents/Defendants 2&3
! Counsel for the Petitioner : Mr. Ravulapati Srinivasa Rao
^ Counsel for Respondent No.1: Mr. Bankatlal Mandhani
Counsel for Respondents 2&3: ---
<GIST:
> HEAD NOTE:
? Cases referred:
1. (1994) 1 SCC 531
2. (2010) 14 SCC 334
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HONOURABLE SRI JUSTICE V.RAMASUBRAMANIAN
AND
HONOURABLE Ms. JUSTICE J.UMA DEVI
Civil Revision Petition No.5658 of 2017
Order: (per V.Ramasubramanian, J.)
Unable to agree with the opinion of a learned Judge
made in Ayitham Venkaiah v. Ayitham Surya Bhaskara
Rao (2006 (4) ALT 305) on the question of admissibility of an
unstamped and unregistered copy of the award of the Legal
Services Authority, a learned Judge has referred the matter
on hand to the Division Bench for an authoritative
pronouncement.
2. Heard Mr. Srinivasa Rao Ravulapati, learned counsel
for the petitioner and Mr. Bankathlal Mandhani, learned
counsel for the respondent.
Brief facts
3. The 1st respondent herein filed a suit in O.S.No.50 of
2011 for partition and separate possession of her 1/4th share
in the suit schedule property, which is described
an agricultural land of an extent of Ac.9.26 guntas in Survey
Nos.130/A of Munipally village, H/o Chinthagattu,
Hasanparthy Mandal, Warangal District.
4. In the suit, the 1st defendant filed a written statement
claiming that the suit schedule property belonged to one
Suram Linga Reddy, the father of the plaintiff and defendants
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1 to 3 and that the property was delivered in favour of the
1st defendant, by virtue of an award passed by the Lok Adalat
in a suit in O.S.No.1679 of 2004 instituted by one of the sons
of the paternal uncle.
5. After the evidence on the side of the plaintiff was
over, the 1st defendant filed his affidavit in lieu of chief-
examination. Thereafter, the 1st defendant attempted to mark
as Ex.A.1, a copy of the award passed on 09-03-2005 by the
Lok Adalat in O.S.No.1679 of 2004. The marking of the
document was objected to on the ground that the same was
not duly stamped and registered under the Indian Stamp Act
and the Indian Registration Act, despite the document
containing recitals about the relinquishment of rights over
an immovable property. The objection was upheld by the trial
Court and the 1st defendant was given time to make payment
of stamp duty and penalty, with a rider that the document
could be marked only for collateral purpose, as the
non-registration was an incurable defect. Aggrieved by the
said order, the 1st defendant came up with the above revision.
6. When the above Civil Revision Petition came up
before a learned Judge of this Court, the petitioner placed
reliance upon the decision of a learned Judge of this Court in
Ayitham Venkaiah v. Ayitham Surya Bhaskara Rao (2006
(4) ALT 305). In the said decision, the learned Judge held that
the amended Section 2 (10) of the Stamp Act, would apply
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only to decrees obtained from Civil Courts, which include
a direction to effect mutation in the revenue records and that
the decrees obtained in the normal course are not amenable
to stamp duty under the Stamp Act as a 'conveyance'.
7. But the learned Judge before whom the above
revision petition came up for hearing, was unable to agree
with the interpretation given in Ayitham Venkaiah to the
definition of the word "conveyance" appearing in Section 2(10)
of the Stamp Act. The learned Judge felt that the legislative
intent was to make every compromise decree or award
amenable to stamp duty and registration, whenever there was
transfer of interest in immovable property. Therefore, the
learned Judge referred the matter to the Division Bench and
hence, the revision petition had been placed before us.
Contentions
8. Placing strong reliance upon the decisions of the
Supreme Court in (1) Ruby Sales and Services (P) Ltd., v.
State of Maharashtra1 and (2) State of Uttranchal (now
State of Uttarakhand) v. Khurana Brothers2, the learned
counsel for the respondent contended that the law laid down
in Ayitham Venkaiah may not be correct and that once the
Legislature has specifically included every decree of a court by
which any property is transferred, within the definition of the
1 (1994) 1 SCC 531
2 (2010) 14 SCC 334
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expression "conveyance", there is no scope for a different
conclusion.
9. We have carefully considered the above submissions.
Reasoning in Ayitham Venkaiah
10. In Ayitham Venkaiah, a copy of the award passed
by the Lok Adalat was sought to be marked in evidence,
in a suit for perpetual injunction. It was objected to on the
ground that the document was not duly stamped and
registered. The Trial Court upheld the objection and directed
payment of stamp duty and penalty, as a condition precedent
to receive the same in evidence. When the matter was brought
to the High court, the learned Judge took note of
Section 2(10) of the Stamp Act after its amendment under
A.P. Act 8/1998 and Article 20 of Schedule I-A.
In interpreting in Section 2(10) of the Stamp Act, as amended
by such enactment, the learned Judge took note of the
intention of the Legislature as spelt out in the statement of
objects and reasons and then came to the conclusion that the
object of the amendment was not to bring within its fold,
all decrees or final orders of Civil Courts transferring any
interest in property in the normal course. Accordingly, the
learned Judge held that the award of the Lok Adalat was
admissible in evidence even though not stamped and
registered.
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Reasons for disagreement
11. But in the order under reference, the learned Judge
took note of Section 17(1)(f) of the Registration Act, 1908 and
the amendment made to Section 17(2)(vi) of the Act under the
A.P. Amendment Act No.4/1999 and came to the conclusion
that after the amendment to the Registration Act, even
a compromise decree required compulsory registration and
that the documents on which appropriate stamp duty is not
paid and which are not registered, are not admissible in
evidence under Section 35 of the Stamp Act and Section 49 of
the Registration Act respectively. The interpretation given in
Ayitham Venkaiah to the expression "conveyance" was
found by the learned Judge not to be in tune with the object
of the amendment. Therefore, the learned Judge referred the
matter to the Division Bench.
Discussion and Analysis
12. Before proceeding to consider the relevant
provisions of the Stamp Act and the Registration Act, let us
take a look at the 2 decisions cited by the learned counsel for
the respondent. In Ruby Sales and Services (P) Ltd., the
first decision cited by the learned counsel for the respondent,
the question that fell for the consideration of the Supreme
Court was whether a consent decree under which title to
immoveable property is conveyed, would fall within the
definition of the word "conveyance" under Section 2(g) and
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within the definition of the word "instrument" under
Section 2(l) of the Bombay Stamp Act, 1958. After taking note
of the definition of the expressions aforesaid, the Supreme
Court concluded that a consent decree would fall within the
definition of the expressions "conveyance" and "instrument".
In the second decision relied upon by the learned counsel for
the respondent, namely, State of Uttaranchal v. Khurana
Brothers, the Supreme Court drew a distinction between
a contract of sale and agreement to sell and indicated that the
essence of sale is a transfer of property in a thing from one
person to another for a price and that therefore a document
by which property is transferred will be conveyance within the
meaning of Section 2(10).
13. It may be seen from the aforesaid decisions that one
of them related to a consent decree passed by a Civil Court
and the other related to an auction sale. Both the judgments
did not deal with an award of the Lok Adalat. Therefore,
it may be necessary to look at the interplay between the
provisions of the Legal Services Authorities Act, 1987, the
Indian Stamp Act, 1899, the Registration Act, 1908 and the
Transfer of Property Act, 1882 for a better understanding of
the question raised.
14. Section 2(10) of the Indian Stamp Act, 1899, defines
a conveyance to include a conveyance on sale as well as every
instrument and every decree or final order of any Civil Court,
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by which property, whether moveable or immoveable, or any
estate or interest in any property is transferred to or vested in
or declared to be of any other person inter vivos and which is
not otherwise specifically provided for by Schedule I or
Schedule I-A as the case may be. Section 2(10) reads as
follows:
"(10) "Conveyance". - "conveyance" includes a conveyance
on sale every instrument by which property, whether
moveable or immovable, is transferred inter vivos and which
is not otherwise specifically provided for by Schedule I:"
15. Section 3 of the Indian Stamp Act, 1899, gives a list
of instruments which shall be chargeable with duty of
an amount indicated in Schedule I. But Section 3 was
amended by A.P. Act XIX/1959 and a proviso was
incorporated therein. As per this proviso, the stamp duty
payable on the instruments indicated in Section 3, shall be as
provided in Schedule I-A. Therefore, insofar as the State of
Andhra Pradesh is concerned, we have to make a reference to
Schedule I-A.
16. Entry 20 of Schedule I-A prescribes the rates of duty
payable on instruments of conveyance of different nature.
Entry 20 reads as follows:
Description of Instrument Proper stamp duty
20. Conveyance as defined by Section
2(10) not being a sale, charged under
(No.47-A) or a transfer charged or exempted
under (No.53).
(a) where the amount or value of the Two rupees fifty paise
consideration for such conveyance as
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set forth therein or the market value
of the property which is the subject-
matter of the conveyance whichever is
higher does not exceed Rs.50;
(b) where it exceeds Rs.50, but does not Five rupees for every one
exceed Rs.1,000; hundred rupees or part
thereof.
(c) where it exceeds Rs.1,000. The same duty as under
Clause (b) for the first
Rs.1,000 and for every
Rs.500 or part thereof in
excess of Rs.1,000
twenty-five rupees.
(d) Conveyance, so far as it relates to Two rupees for every one
amalgamation or merger of companies hundred rupees or part
under the order of High Court under thereof of the market
Section 394 of the Companies Act, value of the property,
1956. (Central Act 1 of 1956). which is the subject
matter of such
conveyance.
Explanation :--For the purpose of the Clause (d) the
market value of the property shall be deemed to be the
amount of total value of the shares issued or allotted by the
transferee company, either in exchange or otherwise, and
the amount of consideration, if any, paid for such
amalgamation or merger.
Provided that where an agreement to sell in
immovable property is stamped with the ad valorem stamp
required for a conveyance on sale under Article 47-A 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 than
duty already paid under Article 47A subject to a minimum
of five rupees."
17. Therefore, there cannot be any doubt about the
applicability of the above provisions to the decrees of civil
court, of the nature indicated therein. But the case on hand
arises out of an award of the Lok Adalat. Therefore, it may be
necessary to see the provisions of the relevant statute.
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18. Section 21(1) of the Legal Services Authorities Act,
1987, declares that every award of the Lok Adalat shall be
deemed to be a decree of a Civil Court. It also provides that
where a compromise or settlement is arrived at by a Lok
Adalat, in a case referred to it under Section 20(1), the Court
Fee paid in such cases shall be refunded in the manner
provided under the Court Fees Act, 1870.
18. Court Fee and stamp duty stand on completely
different footing. The object of charging Court Fee is partly to
compensate the establishment for the expenditure involved in
the administration of justice and partly to ensure that there is
a check on frivolous litigation. 'Fee' has always been held to
be a charge for the special services rendered by Government
or Government agencies. But the object of charging stamp
duty is to secure revenue for the State on transactions, the
consideration in respect of which, are determined by market
forces created by the activities of the State. To put it simply,
the activities undertaken by the State in any locality
determines both the rate and the marketability of properties
and hence the Indian Stamp Act, 1899 is actually a fiscal
enactment charging transactions to tax.
19. The Court Fees Act imposes an obligation to pay
Court Fee on litigation, but tends to promote settlement by
offering refund of Court Fees in part or in full under certain
contingencies. The Legal Services Authorities Act, 1987,
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is one more step towards promoting an environment of
settlement. This play in the joint is not available in the Indian
Stamp Act, 1899. We will have to keep this distinction in
mind before we attempt to find out whether a Lok Adalat
award whereby a property is sought to be conveyed or
declared to belong to someone, is liable to be charged with
duty or not.
20. There are various types of decrees that could be
passed by a Civil Court. There are decrees for recovery of
money, decrees for recovery of immoveable property, decrees
for possession and mesne profits, decrees for specific
performance of a contract of sale, decrees for dissolution of
partnership, decrees for accounts, decrees for partition etc.
All the decrees by themselves do not convey a property to the
holders of the decree, though some may create an interest in
immovable property. The decrees which take shape in terms
of the provisions of Order XX CPC, are executable under the
provisions of Order XXI CPC. While the payment of
appropriate Court Fee is taken care of most of the times at
the threshold when proceedings are initiated, there are
certain types of cases where the additional Court Fee becomes
payable depending upon the outcome. Say for instance, the
Court Fee payable in a suit for partition is fixed, when the
plaintiff claims to be in joint possession. But when a final
decree is granted allotting identified shares or specific items
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of properties, the Court itself ensures that the final decree is
engrossed on appropriate stamp papers. This contingency is
also taken care of by the Code of Civil Procedure itself.
21. Let us take the example of a decree for specific
performance of a contract of sale. Under Order XXI,
Rule 32(1) CPC, a decree for specific performance of
a contract may be enforced, by the detention of the judgment
debtor in Civil Prison or by the attachment of his property or
both. If a decree holder in a suit for specific performance
chooses this option available under Order XXI, Rule 32(1),
he does not pay stamp duty, though he would have paid
Court Fee on the plaint.
22. But the holder of a decree for specific performance
also has another alternative viz., that of seeking the Court
itself to do either through an officer of Court or through
someone else, what is liable to be done by the judgment
debtor. This is under Order XXI, Rule 32(5). If the holder of
a decree for specific performance takes recourse to Order XXI,
Rule 32(5), and requests the Court to do what the judgment
debtor is obliged to do, then the question of executing a deed
of sale would arise.
23. When the holder of a decree for specific performance
takes recourse to Order XXI, Rule 32(5), then the provisions
of Rule 34 of Order XXI will come into play. Under
sub-rule (1) of Rule 34 of Order XXI, the holder of a decree for
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execution of a document, may prepare a draft of the
document in accordance with the terms of the decree and
deliver the same to the Court. After inviting the objections of
the judgment debtor to the draft, the Court would approve the
draft with or without modifications. Thereafter, the decree
holder is obliged under sub-rule (4) of Rule 34 of Order XXI to
deliver to the Court a copy of the draft as approved by
the Court, engrossed upon the appropriate stamp
papers. Once the document prepared on proper stamp
papers is so delivered, the Judge or an officer appointed by
the Executing Court will execute the document. Thereupon
the Court is obliged to authorize an officer, under sub-rule (6)
of Rule 34 of Order XXI to cause the document to be
registered in accordance with law.
24. Interestingly, the provision relating to stamp duty
found in sub-rule (4) and the provision relating to registration
found in sub-rule (6) of Rule 34 of Order XXI, are
conspicuously absent in Order XXI, Rule 94. Whenever
a Court orders the sale of immoveable property in execution
of a decree and the sale becomes final, the Court is obliged to
issue a certificate specifying the property sold and the name
of the person who at the time of sale is declared to be the
purchaser. Order XXI, Rule 94 does not speak about payment
of stamp duty and registration.
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25. But when a sale certificate is issued, by a Civil
Court under Order XXI, Rule 94, such a certificate would
come within the definition of the expression "instrument"
under Section 2(14) of the Indian Stamp Act, 1899.
As a consequence, Article 16 of Schedule I-A which
specifically covers a certificate of sale issued by a Civil Court
will get attracted and stamp duty will become payable.
26. The Indian Stamp Act, 1899 poses a problem when
it comes to awards. We have already seen that Section 2(10)
of the Stamp Act, 1899 defines a conveyance to include every
decree of Civil Court, by which property or any estate or
interest in any property is transferred to or vested in or
declared to be of any other person, the same being
correlatable to Article 20, in Schedule I-A. The expression
"award" is not defined in the Indian Stamp Act. But Article 12
under Schedule I-A of the Indian Stamp Act, 1899, prescribes
the stamp duty payable on awards. Article 12 of Schedule I-A
reads as follows:
Description of Instrument Proper stamp duty
12. Award, that is to say, any
decision in writing by an arbitration or
umpire, not being an award directing
a partition, on a reference made otherwise
than by an order of the Court in the course
of a suit--
(a) where the amount or value of the The same duty as
property to which the award relates, a Bottomry Bond (No.14)
as set forth in such award, does not for such amount.
exceed Rs.1,000;
(b) it it exceeds Rs.1,000 but does not Fifty rupees
exceed Rs.5,000;
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and for every additional Rs.1,000 or Two rupees subject to
part thereof in excess of Rs.5,000. a maximum of two
hundred rupees.
27. There is no clarity on whether an award by which
property is conveyed, would fall under Article 20 or under
Article 12. Article 12 covers all awards other than those for
partition.
28. Keeping these aspects in mind if we come back to
the provisions of the CPC, it could be seen that there are
various decrees, some of which are executable and some of
which need not even be executed, say for instance mere
declaratory decrees. Similarly, there are some decrees which
require the documents to be taken for registration and some
decrees, by themselves cannot be registered unless something
is done in execution thereof. Therefore, while interpreting
Section 2(10) of the Indian Stamp Act, 1899, the Court has to
exercise caution.
29. Let us take for instance a decree of declaration of
title or any declaration of an interest in any property. Such
a decree per se is not registerable, but for the A.P. State
amendment under Amendment Act 4/1999, by which
Clause (f) was inserted under Section 17(1) of the Registration
Act. Since such a decree also declares the right of a person in
any immoveable property, it may be treated as a conveyance
under Section 2(10). A decree or order of a Civil Court falling
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under Clause (f) of sub-section (1) of Section 17 is excluded
from the exclusion in Clause (vi) of sub-section (2) of
Section 17. Sections 17 (1) (f) and 17 (2) (vi) of the
Registration Act, 1908 read as follows:
"17(1)(f). Any decree or order or award or a copy
thereof passed by a Civil Court, on consent of the
defendants or on circumstantial evidence but not on the
basis of any instrument which is inadmissible in evidence
under Section 35 of the Indian Stamp Act, 1899, such as
registered title deed produced by the plaintiff, where such
decree or order or award purports or operate to create,
declare, assign, limit, extinguish whether in present or in
future any right, title or interest whether vested or
contingent of the value of one hundred rupee and upwards
to or in immovable property."
"17(2)(vi). Any decree or order of a Court, not being
a decree or order or award falling under clause (f) of
sub-section (1) except a decree or order expressed to be
made on a compromise and comprising immovable property
other than that which is the subject-matter of the suit or
proceeding;"
30. Therefore, today after the State amendments to
Section 2(10) to the Indian Stamp Act, 1899 and the State
amendment to Sections 17(1) and 17(2) of the Registration
Act, even a declaratory decree may not be admissible in
evidence except when it is duly stamped and registered.
31. The fact that a refund of Court Fee is provided
under Section 21(1) of the Legal Services Authorities Act,
1987, is no ground to extend the same benefit to the stamp
duty payable under the Indian Stamp Act, 1899.
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32. In Ayitham Venkaiah, the learned Judge
committed a mistake in trying to interpret Section 2(10) of the
Stamp Act, 1899, on the basis of the statement of objects and
reasons for the State amendment. In a fiscal Statute, one has
to go by the plain language. If a document falls within the
description, it may not be open to the Court to find out
whether such a document was intended to be covered by the
amendment, by looking at the statement of objects and
reasons.
33. Therefore, we hold that the decision of the learned
Judge in Ayitham Venkaiah does not reflect the correct
position. As a consequence, the order of the Trial Court is
liable to be upheld and the revision dismissed. Accordingly,
the revision is dismissed. Pending applications, if any, shall
stand closed. No costs.
___________________________
V.RAMASUBRAMANIAN, J.
_______________ J.UMA DEVI, J.
20th December, 2018. Ksn/Ak 18 VRS, J & JUD, J crp_5658_2017 HONOURABLE SRI JUSTICE V.RAMASUBRAMANIAN AND HONOURABLE Ms. JUSTICE J.UMA DEVI Civil Revision Petition No.5658 of 2018 (per VRS, J.) 20th December, 2018.
(Ak)