Karnataka High Court
K V Venkatasubbaiah vs Rajappa, Since Deceased on 9 October, 2020
Author: N S Sanjay Gowda
Bench: N.S.Sanjay Gowda
1
WP.17460/2015
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
®
DATED THIS THE 9TH DAY OF OCTOBER 2020
BEFORE
THE HON'BLE MR.JUSTICE N.S.SANJAY GOWDA
W.P.No.17460/2015(GM-CPC)
BETWEEN:
K.V.VENKATASUBBAIAH,
S/o LATE KENCHAIAH,
AGE 70 YEARS,
OCC:AGRICULTURE,
R/O BOMMENAHALLI VILLAGE,
BHADRAVATHI TALUK,
SHIMOGA DISTRICT - 577 303.
(SENIOR CITIZEN BENEFIT NOT CLAIMED)
... PETITIONER
(BY SRI. S.V.PRAKASH, ADVOCATE)
AND:
RAJAPPA, SINCE DECEASED,
BY HIS LRs.
1. VASANTHAKUMAR.T., S/O THIMMAIAH,
AGE 36 YEARS, OCC:AGRICULTURE,
2. THIMMAMMA, S/O LATE THIMMAIAH,
AGE 54 YEARS, OCC:AGRICULTURE,
BOTH ARE RESIDENT OF
BOMMENAHALLI POST BARANDOOR,
BHADRAVATHI TALUK - 577 301.
SHIMOGA DISTRICT. ... RESPONDENTS
(BY SRI. B.S.PRASAD, ADVOCATE)
WP.17460/2015
2
THIS PETITION IS FILED UNDER ARTICLES 226 AND
227 OF CONSTITUTION OF INDIA, PRAYING TO QUASH THE
ORDER PASSED BY THE COURT OF PRINCIPAL SENIOR CIVIL
JUDGE AND JMFC, BHADRAVATHI, DATED:12.03.2015 IN
REGARD TO THE DUTY AND PENALTY PAYABLE ON THE
AGREEMENT FOR SALE DATED:30.03.1996 AND 30.03.1996
IN O.S.No.17/1999 VIDE ANNEXURE-C TO THE WRIT
PETITION.
THIS PETITION HAVING BEEN HEARD AND RESERVED
FOR ORDERS, COMING ON FOR PRONOUNCEMENT THIS DAY,
THE COURT MADE THE FOLLOWING:
ORDER
1. In a suit filed for declaration that the two Sale Agreements dated 30.03.1996 (or any other date), executed in favour of first defendant or any other defendants were concocted documents, the defendants filed a memo stating that the said Agreements were insufficiently stamped and offered to pay deficit stamp duty of Rs.25/- and 35/- along with ten times penalty of Rs.250/- and Rs.350/- respectively.
2. To the said memo, the plaintiff filed objections contending that the Agreements of Sale indicated that possession has been handed over and therefore, stamp duty was required to be calculated on the market value WP.17460/2015 3 of the property and the calculation of stamp duty sought to be made by the defendants on the premise that possession was not delivered under the agreements of sale, was wholly incorrect.
3. The Trial Court, by the impugned order, came to the conclusion that under the Agreement of Sale dated 30.03.1996 which had been executed in favour of the first defendant and Rajappa, 30 guntas of land in Sy.No.23/19 and 20 guntas of land in Sy.No.8/5 were agreed to be sold for valuable consideration of Rs.45,000/- and Rs.35,000/- respectively. The Trial Court noticed that under the Agreements of Sale, the entire sale consideration was paid and possession was also stated to be delivered under the Agreements and therefore, the assertion of the defendants that only Rs.25/- and Rs.35/- was the deficit stamp duty could not be accepted. The Trial Court came to the conclusion that the proper stamp duty payable on the Agreement of Sale was Rs.2,700/- and Rs.2,100/- respectively. The Trial WP.17460/2015 4 Court also came to the conclusion that ten times of the said amount i.e., Rs.29,700/- and Rs.23,100/- was required to be paid as penalty. In all, the Trial Court directed the defendants to pay stamp duty and penalty of Rs.52,800/-.
4. The said order directing payment of deficit stamp duty and penalty is impugned in this writ petition.
5. Sri S.V. Prakash, learned counsel for the petitioner
- defendant No.1 basically contended that the defendants were already in possession of the properties, which were the subject matter of the two Agreements of Sale and therefore, there was no question of possession being handed over to the defendants under the Agreements. He, therefore, contended that the memo filed by the defendants stating only a sum of Rs.385/- and Rs.495/- along with ten times penalty, ought to have been accepted by the Trial Court. He contended that the Trial Court had seriously erred in coming to the conclusion that possession was delivered under the WP.17460/2015 5 Agreements and therefore, stamp duty was required to be paid on the sale consideration mentioned in the sale agreement. In support of his arguments, learned counsel relied upon the judgment rendered by this Court in the case of MR.N.SRINIVASA Vs. SRI MURULESH & OTHERS - 2014(3) KCCR 2125.
6. Sri B.S.Prasad, learned counsel for the respondents
- plaintiffs, on the other hand, supported the impugned order and contended that a mere reading of the Agreements of Sale would itself clearly indicate that possession was delivered in part performance of the Agreements of Sale and therefore, under Article 5(e) (i) of the Schedule to the Karnataka Stamp Act, 1957 (for short, hereinafter referred as 'the Act'), stamp duty was required to be paid as if it was a deed of conveyance on the market value of the property and the Trial Court was therefore absolutely right in computing the actual stamp duty and also the penalty that was payable by the defendants.
WP.17460/20156
7. The question that arises for consideration in this writ petition is:
"Whether a recital in an Agreement of Sale that the defendants were already in possession could be a factor to be considered in determining the stamp duty payable and ignoring the term that possession was being delivered under the Agreement in part performance of the contract?"
8. The relevant portion of the two Agreements of Sale which were the subject matter of the impugned order by the Trial court reads as follows:
First Agreement "F jÃw ZÀPÀÄ̧A¢UÀ¼À ªÀÄzsåÉ EgÀĪÀ d«ÄãÀ£ÀÄß £À£Àß zÀgÀzÀÄÝ ¤«ÄvÀå CAzÀgÉ ¤ÃªÀÅ d«ÄãÀ£ÀÄß ¸ÀĪÀiÁgÀÄ 10 ªÀµÀð¢AzÀ®Æ ¸ÁUÀĪÀ½ ªÀiÁqÀÄvÁÛ §A¢zÀÄÝ, ¤ÃªÀÅ ¸ÀzÀjà d«ÄãÀÄ PÀæAiÀÄPÉÌ ¥ÀqÉAiÀÄ®Ä EaѹzÀ ªÉÄÃgÉUÉ ºÁUÀÆ ¤ÃªÀÅ PÀæAiÀÄPÉÌ ¥ÀqÉAiÀÄ®Ä M¦àzÀ ªÉÄÃgÉUÉ ¸ÀzÀjà d«ÄãÀ£ÀÄß ¤ªÀÄUÉ MlÄÖ £À®ªÀvÉÛöÊzÀÄ ¸Á«gÀ gÀÆ¥Á¬ÄUÉ ±ÀÄzÀÞ PÀæAiÀÄPÉÌ PÉÆqÀ®Ä M¦à PÀæAiÀÄzÀ ºÀt ¥ÀÆgÁ ¤«ÄäAzÀ ¸ÁQëzÁgÀgÀ ªÉÆPÀÛ £ÀUÀzÁV WP.17460/2015 7 ¨ÁQ E®èzÀAvÉ ¥ÀqÉ¢gÀÄvÉÛãÉ. DzÀÝjAzÀ d«Ää£À°è £ÀªÀÄUÀÆ ªÀÄvÀÄÛ £ÀªÀÄä GvÀÛgÀ ªÁgÀ¸ÀÄzÁgÀjUÀÆ EzÀÝAvÀ ºÀPÀÌ£ÀÄß ¥ÀjvÁåUÀ ªÀiÁr ¤ªÀÄä ªÀ±ÀPÉÌ ªÀ»¹gÀÄvÉÛãÉ. ¸ÀzÀjà d«ÄãÀÄ ¤ªÀÄä ºÉ¸ÀjUÉ £ÉÆÃAzÁªÀuÉ §UÉÎ ¤ÃªÀÅ AiÀiÁªÁUÉÎ PÀgÉAiÀÄÄwÛgÉÆà DUÉÎ AiÀiÁªÀ vÀPÀgÁgÀÄ ªÀiÁqÀzÉ ¤ªÀÄUÉ PÀæAiÀÄ £ÉÆÃAzÁªÀuÉ ªÀiÁrPÉÆqÀÄvÉÛÃ£É CxÀªÁ ¤ÃªÀÅ ºÉýzÀªÀgÀ ºÉ¸ÀjUÀÆ £ÉÆÃAzÁªÀuÉ ªÀiÁrPÉÆqÀÄvÉÛÃ£É ¤ÃªÀÅ PÀgÉzÁUÀ £Á£ÀÄ ¤gÁPÀj¹ ¸À§Æ§Ä AiÀiÁ ¸ÀvÁªÀuÉ ªÀiÁrzÀ°è DUÉÎ ¤ÃªÀÅ PÁ£ÀÆ£ÀÄ jÃvÁå£ÀĸÁgÀ ªÀÄÄAzÀĪÀgÉzÀÄ ¸ÀéwÛ£À ºÀPÀÌ£ÀÄß ¹ÜÃgÀ ºÉÆAzÀĪÀ ºÀPÀÄ̼ÀîªÀgÁVgÀÄwÛÃj D §UÉÎ ¤ªÀÄUÀÄAmÁUÀĪÀ ®ÄPÁì¤UÉ £Á£Éà dªÁ¨ÁÝgÀ¼ÁVgÀÄvÉÛÃ£É JAzÀÄ M¦à §gɹPÉÆlÖ PÀæAiÀÄ PÀgÁgÀÄ ¸À» ¸ÀévÀÛ£ÀÄß ¤ªÀÄUÉ PÀæAiÀÄ £ÉÆÃAzÁªÀuÉ ªÀiÁrPÉÆqÀ¯Éà ºÉÆgÀvÀÄ ªÀÄvÁåjUÀÆ ¥ÀgÁ¢Ã£À ªÀiÁqÀĪÀ ºÀPÀÄÌ £À£ÀVgÀĪÀÅ¢®è."
Second Agreement "¸À£ï ¸Á«gÀzÀ MA¨sÉÊ£ÀÆgÀ vÉÆA§vÁÛgÀ£Éà E¹é ªÀiÁZïð ªÀiÁºÉà ¢£ÁAPÀ: ªÀÄĪÀvÀÛgÀAzÀÄ ¨sÀzÁæªÀw vÁ®ÆèPÀÄ PÀ¸À¨Á ºÉÆç½ ¨ÉƪÉÄäãÀºÀ½î UÁæªÀÄzÀ ªÁ¹AiÀiÁzÀ ªÉAPÀl¸ÀħâAiÀÄå ©£ï PÉAZÀAiÀÄå DzÀ EªÀjUÉ ¸ÀzÀjà UÁæªÀÄzÀ ªÀ¹ gÁd¥Àà ©£ï wªÀÄäAiÀÄå DzÀ £Á£ÀÄ §gɹPÉÆlÖ ¥ÀÆgÁ ºÀt ¸ÀAzÁAiÀĪÁzÀ §UÉÎ ¸ÀévÀÄÛ ¸Áé¢üãÀªÀ»¹zÀ §UÉÎ §gɹPÉÆlÖ PÀæAiÀÄ PÀgÁgÀÄ K£ÉAzÀgÉ £À£Àß ¨Á§ÄÛ £À£Àß SÁvÉ WP.17460/2015 8 ¥ÀºÀt ¸Áé¢üãÀzÀ°è EgÀĪÀ ºÁUÀÆ ¨sÀzÁæªÀw vÁ®ÆèPÀÄ vÀºÀ²¯ÁÝgï gÀªÀgÀ PÀbÉÃj gÉ«£ÀÆå E¯ÁSÉAiÀÄ°è JA Dgï £ÀA.8:82-83 gÀAvÉ SÁvÉ ¥ÀºÀt ¸ÀºÀ zsÀÈrüÃPÀj¸À®àlÄÖ EªÀwÛ£ÀªÀgÉUÀÆ £À£Àß ºÀQÌ£À ¸Áé¢üãÀzÀ°è EgÀĪÀ ¨sÀzÁæªÀw vÁ®ÆèPÀÄ PÀ¸À¨Á ºÉÆç½ PÁgÉúÀ½î UÁæªÀÄzÀ ¸À.£ÀA.8:5 gÀ°è E¥ÀàvÀÄÛ UÀĪÀÄmÉ vÀj d«ÄãÀÄ EzÀgÀ ZÀPÀÄ̧A¢ ¥ÀƪÀðPÉÌ ¨Á®ZÀAzÀæ gÀªÀgÀ d«ÄãÀÄ ¥À²ÑªÀÄPÉÌ wªÀÄäªÀÄä£ÀªÀgÀ d«ÄãÀÄ GvÀÛgÀPÉÌ: gÁªÀÄPÀȵÀÚ¥Àà£ÀªÀgÀ d«ÄãÀÄ zÀQëtPÉÌ ©zÀgÉ ºÀ¼Àî F ZÀPÀÄ̧A¢UÀ¼À ªÀÄzsÉå EgÀĪÀ d«ÄãÀ£ÀÄß £À£Àß zÀgÀzÀÄÝ ¤ªÀÄvÀå CAzÀgÉ ¸ÀzÀjà d«ÄãÀÄ ¤ÃªÀÅ JgÀqÀÄ ªÀµÀðUÀ½AzÀ ¸ÁUÀĪÀ½ ªÀiÁqÀÄvÁÛ §A¢zÀÄÝ ¸ÀzÀjà d«ÄãÀ£ÀÄß ¤ÃªÀÅ PÀæAiÀÄPÉÌ ¥ÀqÉAiÀÄ®Ä EaѹzÀÄÝ £Á£ÀÄ ¸ÀºÀ PÀæAiÀÄPÉÌ PÉÆqÀ®Ä EaѹzÀÄÝ ¸ÀzÀjà d«ÄãÀ£ÀÄß ¤ªÀÄUÉ ªÀÄĪÀvÉÛöÊzÀÄ ¸Á«gÀ gÀÆ¥Á¬ÄUÉ ±ÀÄzÀÞ (35,000-00) PÀæAiÀÄPÉÌ PÉÆqÀ®Ä M¦à PÀæAiÀÄzÀ ºÀt ¥ÀÆgÁ ¤«ÄäAzÀ ¸ÁQëzÁgÀgÀ ªÉÆPÀÛ ¥ÀqÉ¢gÀÄvÉÛãÉ. D«ÄãÀÄ £ÉÆÃAzÁªÀuÉ §UÉÎ ¤ÃªÀÅ AiÀiÁªÁUÉÎ PÀgÉAiÀÄÄwÛgÉÆà DUÉÎ AiÀiÁO vÀPÀgÁgÀÄ ªÀiÁqÀzÉà AiÀiÁªÀ ¥Àæw¥sÀ® ¥ÀqÉAiÀÄzÉ ¤ªÀÄUÉ DUÀ° ¤ÃªÀÅ ºÉýzÀªÀgÀ ºÉ¸ÀjUÉ DUÀ° PÀæAiÀÄ £ÉÆÃAzÁªÀuÉ ªÀiÁrPÉÆqÀÄvÉÛãÉ. D«ÄãÀÄ £ÉÆÃAzÁªÀuÉ §UÉÎ ¤ÃªÀÅ PÀgÉzÁUÀ £Á£ÀÄ ¤gÁPÀj¹zÀ°è DUÉÎ ¤ÃªÀÅ PÁ£ÀÆ£ÀÄ jÃvÁå£ÀĸÁgÀ ªÀÄÄAzÀĪÀgÉzÀ ¸ÀéwÛ£À ºÀPÀÌ£ÀÄß ¹ÜgÀ ºÉÆAzÀĪÀ ºÀPÀÄ̼ÀîªÀgÁVgÀÄwÛÃj. D §UÉÎ ¤ªÀÄUÀÄAmÁUÀĪÀ ®ÄPÁì¤UÉ £Á£Éà WP.17460/2015 9 dªÁ¨ÁÝgÀ JAzÀÄ M¦à §gɹPÉÆlÖ ±ÀÄzÀÞ PÀæAiÀÄzÀ ªÁUÁÝ£À PÀgÁgÀÄ ¸À»."
9. In the first agreement, it is stated that the properties were being cultivated for the past ten years by the defendants and the defendants had expressed their desire to purchase the same by offering sale consideration of Rs.45,000/- and the plaintiffs had agreed to the said offer and relinquished their right over the properties and handed over possession of the properties.
10. In the second Agreement, it is stated that the possession was being handed over under the Agreements which had been granted to the plaintiffs and which was in their possession. It is also stated therein that the purchasers were cultivating the lands for the past two years.
WP.17460/201510
11. It is, therefore, clear that in both the Agreements of Sale, there are clear recitals that possession of the properties in question were handed over.
12. Incidentally in both the cases, there is also a recital that the defendants were cultivating the lands even earlier to the agreement of sale, thereby, indicating that they were already in possession.
13. Article 5 (e) of the Schedule to the Act reads as follows:
(e) if relating to sale of immovable property wherein part performance of the contract
(i) possession of the property is delivered or is agreed to be Same duty as a conveyance delivered before executing the (No.20) on the market value of conveyance. the property:
Provided tat, where a deed of cancellation of earlier agreement is executed by and between the same parties in respect of the same property and if proper stamp duty has been paid on such agreement, then the duty on such "deed of cancellation" shall not exceed rupees five hundred.WP.17460/2015 11
14. A plain reading of the said Article would indicate that if the Agreement relates to the sale of an immovable property and if in part performance of the contract, possession is delivered or is agreed to be delivered without executing the conveyance, then stamp duty on the agreement of sale would have to be paid as would be payable for a conveyance under Article 20 on the market value of the property. Therefore, for attracting Article 5 (e) (i) of the Schedule to the Act, essentially, the instrument (document) should be a document under which an immovable property is agreed to be sold and more importantly, in part performance of the Agreement, possession has been delivered or has been agreed to be delivered.
15. In other words, whenever, in part performance of an agreement of sale, the agreement indicates that possession is being handed over to the prospective purchaser, then, stamp duty as prescribed for a WP.17460/2015 12 Conveyance will have to be paid on the market value of the property.
16. In order to better appreciate the intent behind this Article, the concept of part performance of a Contract to transfer an immovable property would have to be examined.
17. Section 53A of the Transfer of property reads as under:
53A. Part performance. - Where any person contracts to transfer for consideration any immoveable 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 contract 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 [***] where there is an instrument of transfer, that the transfer has not been WP.17460/2015 13 completed in the manner prescribed therefore 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.]
18. As could be seen from the above, if a person contracts to transfer any immovable property for a consideration in writing, and in part performance of the said contract the purchaser takes possession or if being in possession already continues in possession and he does some act in furtherance of the contract and is willing to perform his part of the contract, then, even if the transfer is not completed as required in law, the seller is debarred from enforcing any right in respect of the property, save those expressly provided in the terms of the contract.
WP.17460/201514
19. In other words, a purchaser by entering into a Contract of Sale and securing possession in furtherance of the said contract would be protected against any claim by the seller in respect of any right in respect of the property, except, of course those rights which are expressly provided in the contract of sale. Thus, a purchaser, by drafting of an appropriate contract, can protect his possession over the immovable property against the seller, without completing the conveyance.
20. If such a course is adopted, it would lead to not only to a situation whereby the conveyance is not concluded but it would also inevitably result in evasion of stamp duty which would otherwise have to be paid on the Deed of conclusion of conveyance. This would thereby impact the revenue that the State would receive as Stamp Duty, which is undoubtedly, an essential source of revenue to the State.
21. It is for this reason that whenever an Agreement of Sale contains a recital that possession is delivered or WP.17460/2015 15 agreed to be delivered in part performance of a contract of sale, the Karnataka Stamp Act, a fiscal statute, seeks to ensure that any attempt to evade stamp duty is foiled and it obligates the payment of stamp duty as if the Agreement of Sale is itself a Deed of Conveyance.
22. This requirement of payment of stamp duty on an Agreement of Sale, as required for a Deed of Conveyance would, thus, naturally discourage any such attempt to evade stamp duty. It would also at the same time ensure that conveyances are completed since the entire stamp duty for the transfer of immovable property would already have stood paid.
23. It may also be pertinent to state here that under Section 53A of the Transfer of property Act, if the purchaser is already in possession prior to the agreement of sale and after the execution of the agreement of sale, continues in possession in part performance of the contract, that would, in law, be possession in part performance of the contract and the WP.17460/2015 16 purchaser would have the benefit of the protection afforded under Section 53A of the Act.
24. It may also be pertinent to state here that this benefit that was afforded under Section 53A would not be available with effect from 24.09.2001 by virtue of the amendment made vide Central Act No.48/2001, unless the agreement has been registered under the Registration Act. This would however not apply in this case as the agreements have been executed prior to 24.09.2001.
25. Viewed from this angle, it becomes clear that the possession of the purchaser prior to the execution of the Agreement of Sale would be of no relevance at all for the purposes of applying Article 5(e)(i) of the Schedule to the Act. All that would be required for attracting Article 5 (e)(i) of the Schedule to the Act is that the Agreement contains a recital that, in part performance of the agreement of sale, the prospective purchaser is either WP.17460/2015 17 being put in possession or is agreed to be put in possession.
26. Thus, in this case, as a necessary consequence of the above discussion, it would emerge that the prior possession of the defendants over the lands as recited in the agreement would be of no relevance for the purpose of determining the stamp duty payable on the execution of the agreement of sale and the singularly key ingredient to be considered is the recital that possession was being delivered under the agreement in part performance of the contract.
27. It may also be pertinent to state here that the nature of the earlier possession of the defendants prior to the execution of the Agreements of Sale could be traceable to either permissive possession or possession as a tenant, mortgagee or may also be based on some other right. However, if a person such as the defendants who already claim to be in possession, seek to contend in the agreement of sale that they are in possession or WP.17460/2015 18 being continued in possession in part performance of the contract of sale, then, automatically Article 5 (e) (i) of the Schedule to the Act would be attracted and notwithstanding the earlier possession, the purchaser would still have to pay stamp duty as conveyance (Article 20) on the market value of the property.
28. To put it differently, the possession of the purchaser prior to the Agreement of Sale would not be of any relevance for the purpose of determining the stamp duty. It is to be stated that for the purposes of stamp duty, the only crucial question to be considered is whether possession was being delivered or agreed to be delivered in part performance of a contract.
29. In this case, from a plain reading of the agreements, it is clear that the possession of defendants pursuant to the agreement was in part performance of the contract and they would therefore by liable to pay the stamp duty in the same manner as was necessary to WP.17460/2015 19 be paid for conveyance on the market value of the property.
30. The decision relied upon by the learned counsel for the petitioner would not, in any manner, support his proposition. In fact, in the said decision, this Court has also stated that whether the possession was delivered earlier to the Agreement or subsequent to the Agreement is immaterial. In that case, the recital in the Agreement was that the possession was being delivered after five months and that indicated that possession was not delivered under that Agreement and therefore, Article 5 (e) (i) of the Schedule to the Act was not attracted. Thus, the said decision can be of no assistance to the petitioner.
31. I, therefore, find no irregularity in the impugned order and the writ petition is accordingly dismissed.
32. Since the suit is of the year 1999, I direct the Trial Court to dispose of the suit as expeditiously as possible, WP.17460/2015 20 at any rate, within a period of six months from the date of receipt of a certified copy of this order.
Sd/-
JUDGE PKS