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2012 DIGILAW 954 (AP)

E. Padma Rao @ vadla Padma Rao v. Vijay Kumar

2012-10-04

L.NARASIMHA REDDY

body2012
Judgment The petitioners executed an agreement of sale on 28-01-2001 in favour of the respondents for sale of an extent of Acs.4.00 Guntas of land in survey No.79 & 80 of Qutbhullapur Village and Mandal, Ranga Reddy District. The parties agreed to divide the land into plots and the petitioners have undertaken to execute sale deeds in respect of the plots in the lay out in favour of the persons that may be nominated by the respondents. It is stated that the substantial extent of property was sold as contemplated under the agreement. However, disputes have arisen as regards the execution of sale deeds in respect of above plots. 2. The respondents filed O.S. No.545 of 2006 in the Court of the Special Judge for trial of SC & ST (POA) Act – Cum – Additional District & Sessions Judge, Ranga Reddy District at L.B. Nagar, for the relief of specific performance of the agreement of sale, as regards the balance 10 plots. The petitioners filed written statement opposing the suit. The trial of the suit commenced. The respondents, on their part, intended to make the agreement of sale, dated 28-01-2001, as part of their documentary evidence. The petitioners, however, raised an objection as to its admissibility, on the ground that it was not properly stamped. It was pleaded that there is a recital in the agreement to the effect that possession of the property was delivered and that according to Article -47A of Schedule – IA of the Indian Stamp Act, 1899 (for short ‘the Act’), the stamp duty ought to have been paid as though it was a sale deed itself. The trial Court passed docket order, dated 28-11-2011, overruling the objection. The same is challenged in this civil revision petition. 3. Sri D. Prakash Reddy, learned senior counsel appearing for the petitioners, submits that there is a clear recital in the agreement to the effect that possession of the land was delivered and in that view of the matter, the stamp duty ought to have been paid as though it is a sale deed. He submits that the view taken by the trial Court that the delivery of possession was for the limited purpose of dividing the land into plots, cannot be countenanced and no distinction as such, exists between the delivery of possession for dividing the land into plots and, possession for other purposes. He submits that the view taken by the trial Court that the delivery of possession was for the limited purpose of dividing the land into plots, cannot be countenanced and no distinction as such, exists between the delivery of possession for dividing the land into plots and, possession for other purposes. He has placed reliance upon a judgment of this Court in V.L. Narasimha Rao v. K.T. Pentaiah ( 2002 (3) ALD 321 ), Tirumala Housing v. G.P.R. Housing Pvt. Ltd. ( AIR 2006 AP 392 ) and other decisions. 4. Sri M.V.S. Suresh Kumar, learned counsel for the respondents, on the other hand, submits that the effective possession of the land remained with the petitioners and the agreement provided for division of the land into plots, under a layout and for that limited purpose, the possession was delivered. He contends that the petitioners themselves executed quite large number of sale deeds in respect of the plots, carved out of the land covered by the agreement and that in all the sale deeds, there is a clear recital to the effect that the possession of the concerned plot is delivered by the petitioners, to the respective purchasers. He contends that unless the delivery of possession is absolute in nature, Article 47-A of the Act does not get attracted. He relied upon a judgment of this Court in Cherayala Srinivas v. Moola Sujatha and others ( 2010 (1) ALD 246 ). 5. In the course of trial of the suit filed by the respondents for the relief of specific performance of an agreement of sale, question arose as to the very admissibility of the agreement. The petitioners did not dispute the fact that there exists an agreement of sale, dated 28-01-2001, between them and the respondents. Their objection was on the ground that the document was not stamped as required under law. It is referable to Explanation-I to Article 47A of Schedule -IA to the Act. The petitioners did not dispute the fact that there exists an agreement of sale, dated 28-01-2001, between them and the respondents. Their objection was on the ground that the document was not stamped as required under law. It is referable to Explanation-I to Article 47A of Schedule -IA to the Act. It reads: “Explanation I :-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: Provided that, where sub-sequently a sale deed is executed in pursuance of an agreement of sale as aforesaid or in pursuance of an agreement referred to in clause (B) of article 6, the stamp duty, if any, already paid or recovered on the agreement of sale shall be adjusted towards the total duty leviable on the sale deed.” 6. What becomes important and pivotal in this regard is the factum of delivery of possession, whether at the time of execution of agreement, or subsequent thereto. Clause – 2 of the agreement of sale, dated 28-01-2001 reads: “Possession of the said land is delivered to the Vendees in order to divide the land into residential plots in a layout”. 7. An agreement of sale, which in the ordinary course can be executed on a stamp of Rs.10/-or Rs.100/-depending on the value under Article 6 of the Schedule – 1A of the Act. In case, the agreement contemplates delivery of possession, it is equated to a sale deed in the context of payment of stamp duty. Stamp duty is required to be paid accordingly. When such a huge financial burden is placed upon the parties, the factor that justifies it must be unequivocal and effective. If one of the parties to an agreement of sale in respect of an item of immovable property is conferred with the rights, almost of an outright purchaser and is made to pay the stamp duty, payable on a sale deed, he must be in absolute and effective possession of the property. There must not exist any restriction as to the enjoyment over it. 8. In the recent past, the business in real estate has recorded a manifold increase. In case, the land is sold either in the existing form or by dividing it into plots by the owner thereof, there may not be complications and the sale transactions would take place as usual. 8. In the recent past, the business in real estate has recorded a manifold increase. In case, the land is sold either in the existing form or by dividing it into plots by the owner thereof, there may not be complications and the sale transactions would take place as usual. Where, however, a 3rd party is entrusted with the task of dividing the land into plots and of procuring prospective purchasers, an agreement in this regard becomes necessary. Actual delivery of possession, may be of bits of land, would take place as and when the sale deeds are executed as per the terms of the agreement. However, for the purpose of obtaining a lay out and dividing the land into plots, the agency must have a semblance of right to enter it, lest it be branded as trespasser, because the title remains with the original owner. It is almost in the form of a permission to enter the land, that possession for the limited purpose of dividing the same into plots, is delivered. By no stretch of imagination, this can be treated as an absolute or unconditional possession. If that were to be so, there was no necessity for the parties, in particular, the petitioners, to add the words ‘in order to divide the lands into residential plots in the lay out’ in Clause-2 of the agreement. 9. Dealing with identical situation, this Court held in Cheryala Srinivas (supra 3) as follows: “8.The possession mentioned in Explanation-I must be effective, actual, and the one, recognized in law. Unless the party under the agreement has the benefit of possession of the property, without any dispute, or challenge, from a party to the agreement, he cannot be mulcted with the liability to pay the stamp duty, as though it is a sale deed. There is background, on account of which, explanation came to be added. Instances were noticed, wherein the parties were enjoying the properties, almost as owners, just on the basis of agreements of sale. In fairly large number of transactions, parties were not inclined to get the sale deeds executed, may be due to enormous expenses involved. They were enjoying the effective possession of the property, just on the strength of agreements of sale. The vendors also did not have any grievance, once they received the entire consideration. In fairly large number of transactions, parties were not inclined to get the sale deeds executed, may be due to enormous expenses involved. They were enjoying the effective possession of the property, just on the strength of agreements of sale. The vendors also did not have any grievance, once they received the entire consideration. The net result is that the State was deprived of the stamp duty, payable on the transaction, which is akin to a sale. Therefore, the very basis for equating an agreement of sale to a sale deed, for the purpose of stamp duty, is the effective, interrupted and legal possession of the purchaser. If that is lacking, or seriously doubted, the equation gets a bit disturbed. 9. In the instant case, it is no doubt true that the last sentence of the agreements mentions that the possession of the land is handed over to the 1st respondent. If that sentence or phrase is independent land absolute, the objection raised by the petitioner is certainly valid and deserves to be accepted. However, the phrase, that connotes delivery of possession, is preceded by several conditions.” Support was derived from the principles enunciated in Text Books on Jurisprudence. 10. Learned Senior Counsel for the petitioners sought to distinguish that judgment, stating that the defendant in that suit denied the plea as to delivery of possession. In the instant case, the facts are more supportive to the respondents. Firstly, the petitioners do not state that they have parted the possession of the land completely in favour of the respondents. Secondly, as provided for under the agreement, the petitioners executed about 60 sale deeds in respect of individual plots in favour of the persons nominated by the respondents. In every sale deed executed by them, there is a recital to the effect that possession of the plot, covered by the sale deed, is delivered by them to the purchaser. Had the possession of the entire land remained with the petitioners, there would not have been any justification to incorporate a recital to the effect that the petitioners delivered the possession of the plots. 11. Heavy reliance is placed upon the judgment in V.L. Narasimha Rao’s case (Supra 1). That was also a revision, which arose out of a suit for specific performance. Objection was raised for marking of agreement of sale on the ground that it was not properly stamped. 11. Heavy reliance is placed upon the judgment in V.L. Narasimha Rao’s case (Supra 1). That was also a revision, which arose out of a suit for specific performance. Objection was raised for marking of agreement of sale on the ground that it was not properly stamped. The trial Court overruled the objection. Delivery of possession mentioned in the agreement of sale as in the instant case, was for the limited purpose of dividing land into plots. Dealing with the contention, this Court held: “10. Regarding the crucial aspect relating to possession, the recital is to the effect that from the date of the document, the plaintiff is entitled to develop the land, lay roads and plots in the land purchased for the purpose of house plots and absolute right was given to the plaintiff to sell the property to whomsoever the plaintiff wants to sell the plots. The defendant agreed to execute sale deeds in favour of the persons to whom the plaintiff had sold the plots. 11. According to the learned counsel for the revision petitioner, the said recital indicates that possession was delivered to the plaintiff on the date of the document. On the other hand, it is contended on behalf of the respondents that the said possession was delivered to the plaintiff only for the purpose of divining the purchased property into plots, to lay roads and develop the land. On reading the document as a whole, I agree with the contention advanced on behalf of the revision petitioner. The defendant did not retain any sort of or partial possession of the property sold with him after executing the document. He did not retain the power with him to sell house plots to the persons of his choice. He did not also retain the power to divide the property sold into plots of his choice and develop it to his likes or dislikes. The powers to develop the land and also divide it into different house plots and also to lay roads, etc., are absolutely given to the plaintiff. Therefore, when the plaintiff is given the said power or authority to enter the land purchased and develop it, lay the roads and also divide it into different plots, that possession is to be treated as possession given to the vendee under the document. That possession can never be treated as the possession of the vendor. Therefore, when the plaintiff is given the said power or authority to enter the land purchased and develop it, lay the roads and also divide it into different plots, that possession is to be treated as possession given to the vendee under the document. That possession can never be treated as the possession of the vendor. In the impugned order, the learned Senior Civil Judge stated that absolute possession was not given to the vendee, and therefore, the document cannot be treated as a sale deed for the purpose of stamp duty and penalty. I fail to understand what the lower Court means by saying that absolute possession was not given. In the explanation to Article 20 as well as Article 47-A of the Stamp Act, it is nowhere stated that unless and until absolute possession is given to the vendee, the sale agreement cannot be treated as sale deed for the purpose of levy of stamp duty and penalty. The interpretation given by the learned Senior Civil Judge is wrong and it cannot be accepted.” 12. With great respect to the Honourable Judge, who rendered the judgment, the possession which is delivered for the limited purpose of dividing the land into plots, cannot be treated as the one that enables the party to enjoy the property without any fetters. As observed earlier, when the factum of delivery of possession has the effect of elevating agreement of sale covered by Article – 6 of the Schedule IA of the Act, to the level or status of a sale deed, covered by Article 47-A of the Act, it cannot be a mere permission to enter the land to divide it into plots. To treat the possession over an item of immovable property as absolute, irrespective of the nature of recitals, would amount to over simplification of one of the most complicated concepts of civil law. 13. Further, a serious incongruity would arise, if the contention of the petitioners is to be accepted. If the agreement, dated 28-01-2001, is to be treated as the one covered by Article 47-A of the Act, the stamp duty on the entire property covered by it, must be paid as though it is a sale deed. The total consideration mentioned in the agreement was Rs.72,00,000/-. If the agreement, dated 28-01-2001, is to be treated as the one covered by Article 47-A of the Act, the stamp duty on the entire property covered by it, must be paid as though it is a sale deed. The total consideration mentioned in the agreement was Rs.72,00,000/-. It is not in dispute that 3/4th of the extent of the property, covered by the agreement, was already sold through various sale deeds. Stamp duty and registration charges were paid on the extent covered by the documents. If today, the agreement is to be levied stamp duty, as though it is a sale deed, a situation would emerge, wherein, double the stamp duty and registration cheques would be paid, to the extent of the land, that already sold. Collection of deficit stamp duty, on an agreement for sale land, does not arise, once sale deed was executed in pursuance of the agreement. The fail that the sale deed is not in respect of the entire land, covered by the agreement, does not make any difference. Proviso to Explanation -I deals with a reverse situation, viz., credit being given to the stamp duty paid on an agreement of sale when sale deed is executed. It does not contemplate the situation where the stamp duty paid on a sale deed must be taken into account when the agreement of sale in respect of the very property is found to be not adequately stamped. 14. The situation in fail, triggers a discussion about certain basic aspects. Though logic and morality, as such, do not constitute the basis for claiming any relief, there is no taboo as regards their application in the process of adjudication. This very case provides an occasion to address the issue. 15. The petitioners do not dispute the existence of an agreement between them and the respondents. As a matter of fact, they have respected it to the extent of 3/4th of the property covered by it. Till the matter reached the Court, they did not doubt the veracity of the agreement or its enforceability. It is only when a suit is filed as regards the balance, they plead that the agreement is such a prohibited substance, that it cannot have entry into the Court at all. Till the matter reached the Court, they did not doubt the veracity of the agreement or its enforceability. It is only when a suit is filed as regards the balance, they plead that the agreement is such a prohibited substance, that it cannot have entry into the Court at all. It is on account of such a stance, that people are gaining courage to say or do something in a Court, which they do not feel it appropriate, to do outside. This is how an idiom, that a person who is otherwise truthful outside, would gain courage to speak falsehood, once he enters the witness box in a Court. 16. The procedures in law are formulated only to help the parties and the Court, to get the root and truth of the matter and the Courts cannot remain mute spectators to braze in attempts to subvert the truth. If proper attention is not paid in this regard, a situation may develop where Courts would become places where acts of immorality are committed with impunity. 17. Logic is not a prohibited phenomenon, in law. Benjamin Cardozo, in his treatise “Judicial Process” has observed (Page 32): “Logical consistency does not cease to be a good because it is not the supreme good. Holmes has told us in a sentence which is now classic that “the life of the law has not been logic; it has been experience.” But Holmes did not tell us that logic is to be ignored when experience is silent. I am not to mar the symmetry of the legal structure by the introduction of inconsistencies and irrelevancies and artificial exceptions unless for some sufficient reason, which will commonly be some consideration of history or custom or policy or justice. Lacking such a reason, I must be logical, just as I must be impartial, and upon like grounds.” 18. The observation made by the learned Jurist becomes relevant in cases of this nature. A person, who acts under an agreement, and derives benefit under it, cannot turn around and treat it as untouchable, as regards the balance. 19. Hence, the Civil Revision Petition is dismissed. The miscellaneous petitions filed in the revision petition shall also stand disposed of. There shall be no order as to costs.