Delhi High Court Rules Document Lacking Required Stamp Duty Cannot Establish Party’s Right, Title Or Interest

CASE NAME:- 

M/s Celebration Hotels and Resorts (P) Ltd vs M/s Sartaj Hotels Apartments and Vilas Pvt. Ltd.

CASE DATE: 

10th June, 2024

PARTIES  NAME:-

• Plaintiff:-

1. M/s Celebration Hotels and Resorts (P) Ltd.

• Respondent:-

 
1. M/s Sartaj Hotels Apartments and Vilas Pvt. Ltd.
2. Sardar Raghbir Singh
3. Sardar Inderjit Singh
4. Sh. Hemant Kumar
5. Sh. Vinod Kumar
6. Sh. Bijender Singh
7. Punjab and Sindh Bank

BENCH/JUDGE: 

Justice Neena Bansal Krishna

IMPORTANT PROVISIONS:-

1. Section 33 of the Indian Stamp Act, 1899:- Pertains to the impounding of documents that are not duly stamped.
2. Section 35 of the Indian Stamp Act, 1899:- States that instruments not duly stamped are inadmissible in evidence for any purpose unless the duty and penalty are paid.
3. Section 36 of the Indian Stamp Act, 1899:- Provides that once an instrument is admitted in evidence, its admissibility cannot be questioned later in the same suit on the ground of being insufficiently stamped.
4. Section 17 of the Registration Act, 1908:- Requires compulsory registration of certain documents, including those that create or declare interest in immovable property worth over Rs. 100.
5. Section 53A of the Transfer of Property Act, 1882:- Relates to part performance, indicating that if a contract for transfer is not registered, it is not effective for the purpose of this section.
6. Article 23A of the Indian Stamp Act, 1899:- Mandates payment of stamp duty for contracts involving part performance of transfer of immovable property.
7. Section 2(g) of the Contract Act, 1872:- Defines an agreement that is not enforceable by law as void.

SUBJECT:-

The defendant filed an application under Section 33 of the Indian Stamp Act, 1899, to impound insufficiently stamped documents presented by the plaintiff in a suit for specific performance and injunction. The plaintiff argued the documents were not conveyances requiring stamps. The court held that documents must be duly stamped to be enforceable, directing the documents to be impounded and sent to the Collector of Stamps for proper stamping. 

OVERVIEW:-

• The plaintiff filed a suit for specific performance and permanent injunction, presenting an Agreement to Sell, a Memorandum of Understanding and other agreements. 
• The defendant argued that these documents were insufficiently stamped and should be impounded under Section 33 of the Indian Stamp Act, 1899. 
• The plaintiff countered that these documents did not require such stamps as they were not conveyances.

ISSUES  RAISED BEFORE THE COURT:-

1. Whether the documents were sufficiently stamped under the Indian Stamp Act, 1899?
2. Whether the documents required compulsory registration under the Registration Act, 1908, to be valid for creating or declaring interest in the immovable property?
3. Whether the documents could be impounded and submitted to the Collector of Stamps for determination and payment of the required stamp duty?
4. Whether the plaintiff demonstrated readiness and willingness to perform its part of the contract?

CONTENTIONS RAISED ON BEHALF OF THE PLAINTIFF:-

• The learned counsel for the petitioner argued that the documents presented by the plaintiff, including the Agreement to Sell, the MOU and other agreements, were either insufficiently stamped or unstamped, as required by Section 33 of the Indian Stamp Act, 1899. 
• They contended that these documents should be impounded and sent to the Collector of Stamps for the determination and payment of the appropriate stamp duty by the plaintiff.
• The petitioner asserted that the documents in question were not merely agreements to sell but were non-testamentary instruments that created, declared, or assigned a right, title or interest in immovable property valued over Rs. 100. Consequently, these documents required compulsory registration under Section 17 of the Registration Act, 1908. Furthermore, Section 23A of the Indian Stamp Act mandated that such contracts for the transfer of immovable property in the nature of part performance should have 90% of the stamp duty paid as on a conveyance document.
• The petitioner argued that since these documents had not been adequately stamped, they were inadmissible in evidence under Section 35 of the Indian Stamp Act. They further requested that the plaintiff’s suit be dismissed, as the plaintiff had not demonstrated sufficient means or financial capacity to perform their part of the obligations.

CONTENTIONS RAISED ON BEHALF OF THE RESPONDENT:-

• The learned counsel for the respondent opposed the petitioner’s arguments, contending that the Agreement to Sell, MOU and the other agreements were not conveyance deeds but merely agreements to sell, which required the defendants to execute sale deeds later. These sale deeds would then require compulsory registration and stamp duty payment under the provisions of the Indian Stamp Act.
• The respondent invoked Section 36 of the Indian Stamp Act, arguing that once an instrument has been admitted in evidence, its admissibility cannot be questioned at any stage of the same suit on the ground that it was not duly stamped, except as provided under Section 61. 
• They maintained that since the documents were admitted at the stage of admission/denial of documents, the defendants could not now raise the issue of insufficient stamping.
• Furthermore, the respondent argued that the petitioner’s application was without merit and should be dismissed, as the documents were correctly admitted in evidence and could not be challenged subsequently for being insufficiently stamped.

ANALYSIS BY COURT:-

• The court noted that agreement to sell, MOU and other agreements were instruments that created or declared a right, title or interest in immovable property, thus falling under the purview of Section 33 of the Indian Stamp Act, 1899. 
• The court highlighted that the Indian Stamp Act is a fiscal legislation aimed at generating revenue for the government and its provisions must be interpreted accordingly. 

JUDGMENT:-

The court allowed the application for impounding the documents presented by the plaintiff under Section 33 of the Indian Stamp Act, 1899. It directed that the original Agreement to Sell, MOU and other agreements be impounded by the Registry and sent to the Collector of Stamps for determination and payment of the deficit stamp duty and penalty. The Collector was instructed to return the documents duly stamped within two months. 

CONCLUSION:-

The court clarified that while the documents had been admitted in evidence, their enforceability and validity hinged on proper stamping. Until the requisite stamp duty was paid, the documents could not be acted upon or considered valid instruments transferring any right, title or interest in the immovable property. The question of the plaintiff’s readiness and willingness to perform their part of the agreement would be considered after the documents were duly stamped and at the appropriate stage of the proceedings.