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REPORTABLE

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.9032 OF 2013  @SPECIAL LEAVE PETITION (C) NO. 20721 OF 2008)

OMPRAKASH     … APPELLANT

VERSUS

LAXMINARAYAN & ORS.      …RESPONDENTS

J U D G M E N T  

CHANDRAMAULI KR. PRASAD, J.

Plaintiffs  filed  a  suit  for  specific  

performance of contract, possession and permanent  

injunction in respect of un-irrigated land having  

an area of 0.506 hectares bearing Survey No. 16012  

in Village Arniapitha situated within Tahsil Jaora  

in District Ratlam in the State of Madhya Pradesh.  

It is founded on an agreement to sell dated 27th  

December, 2000.  It is the case of the plaintiffs  

that the properties in question were delivered to  

them on payment of the part consideration money in  

pursuance  of  the  agreement  to  sell  and  such  a

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recital  finds  place  in  the  said  agreement.  

Paragraph  1  of  the  agreement  to  sell  reads  as  

under:

“1.That  while  selling  the  aforesaid  land I the seller, have received Rs.  1,15,000/-  (Rupees  one  lac  fifteen  thousand)  cash  as  a  token  amount  before the witnesses and, by remaining  present at the spot, actual physical  possession has been handed over to the  purchaser,  and  after  receiving  remaining  sale  consideration  amount  Rs.  25,000/-  (Rupees  twenty  five  thousand) from the purchaser within a  year I, the  purchaser,  will  get  the  sale deed of the said land registered  in the name of the purchaser.”

The  defendants  in  the  written  statement,  

however, denied the assertion of the plaintiffs and  

stated that no agreement to sell was ever executed  

and possession given.  On the basis of the pleading  

and the written statement, the trial court framed  

several issues.  During the course of the trial the  

agreement  to  sell  was  sought  to  be  proved  and  

admitted  in  evidence  by  the  plaintiffs’  witness  

Shankarlal.  This was objected to by defendant no.  

1.  Its admissibility was questioned on the ground  

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that the agreement to sell in question contains a  

recital that possession has been handed over to the  

purchaser and, therefore, it is a conveyance over  

which the stamp duty as indicated in Schedule 1A of  

the Indian Stamp Act, 1899 as substituted by M.P.  

Act 22 of 1990 is required to be affixed.  It is  

pointed out that the agreement to sell in question  

is on a stamp paper of Rs. 50 only.  The submission  

made by defendant no. 1 found favour with the trial  

court  and  it  held  the  agreement  to  sell  to  be  

inadmissible  in  evidence  as  it  has  not  been  

sufficiently stamped.  It further observed that if  

the plaintiffs want to produce the said document in  

evidence then they can make proper application as  

envisaged under Section 35 of the Indian Stamp Act,  

hereinafter referred to as ‘the Act’.  While doing  

so, the trial court observed as follows:

“………Therefore, it is found that sale  agreement  dated  27.12.2000  due  to  mention  of  possession  being  handed  over,  should  be  stamped  like  a  conveyance.  In the sale agreement the  cost  of  the  land  is  mentioned  as  Rs.1,40,000  and  its  7  ½   per  cent  comes to Rs. 10,500/-.  Therefore, it  

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is concluded that the sale agreement  can be admissible in evidence only on  being  on  stamp  of  Rs.  10,500/-.  Therefore,  it  is  concluded  that  the  sale  agreement  is  not  properly  stamped, therefore, not admissible in  evidence.   Thus,  objection  of  defendant  No.  1  is  allowed  sale  agreement dated 27.12.2000 is refused  to be admitted in evidence.  If the  plaintiff  wants  to  produce  the  said  documents in evidence then he may make  proper application under Section 35 of  the Stamp Act on the next date.”

Plaintiffs  challenged  the  aforesaid  order  

before  the  High  Court  in  a  writ  petition  filed  

under  Article  227  of  the  Constitution  of  India,  

inter  alia,  contending  that  when  defendants  

themselves  have  asserted  that  possession  of  the  

property  was  not  delivered,  the  recital  in  

agreement  is  of  no  consequence.   It  was  also  

pointed out that plaintiffs themselves have claimed  

relief of  possession,  which  obviously means that  

they are not in possession and when this fact is  

taken  into  consideration,  the  view  taken  by  the  

trial  court  appears  to  be  erroneous.   The  High  

Court by its order dated 27th February, 2008 passed  

in Writ Petition No. 7237 of 2007 accepted this  

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contention and held the agreement to sell to be  

admissible in evidence.  The High Court, in this  

connection, has observed as follows:

“Although  there  is  no  dispute  with  regard  to  the  fact  that  in  the  document  in  question,  which  is  an  agreement  alleged  to  have  been  executed by the defendants in favour  of the plaintiffs, and which is basis  of  the  suit,  it  is  recited  that  possession of the property in question  had been delivered to the plaintiffs,  but the fact cannot be ignored that a  specific plea has been raised by the  defendants in their written statement  denying  the  execution  of  the  said  agreement  and  also  specifically  denying  that  the  possession  of  the  property  had  ever  been  delivered  to  the  plaintiff-petitioners.   In  these  circumstances,  once,  the  defendants  themselves  have  claimed  that  possession  of  the  property  had  not  been  delivered,  then  the  recital  in  agreement looses all significance.  In  such a situation, the document cannot  be held to be insufficiently stamped  merely because it was not stamped in  accordance  with  Article  23  of  Stamp Act.”

Defendant no. 1 assails this order in the  

present special leave petition.

Leave granted.

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We have heard Mr. Niraj Sharma on behalf of  

the appellant and Mr. Fakhruddin, Senior Counsel on  

behalf of the respondents.

Mr. Sharma contends that for admissibility of  

the  document  what  is  relevant  is  the  recital  

therein.   He  submits  that  agreement  to  sell  is  

“conveyance” as defined under Section 2(10) of the  

Act  and  shall  be  chargeable  with  duty  as  

contemplated under Section 3 of the Act.  According  

to him, as the agreement in question is not duly  

stamped, it shall be inadmissible in evidence under  

Section 35 of the Act.  Mr. Fakhruddin, however,  

submits that the defendants having joined the issue  

with regard to the possession of the plaintiffs in  

terms of the agreement to sell, the document in  

question  shall  not  come  within  the  expression  

“conveyance” as defined under the Act and, hence,  

it cannot be said that it is not duly stamped.   

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In view of the rival submission, the question  

which falls for our determination is as to whether  

the  admissibility  of  a  document  produced  by  the  

party would depend upon the recital in the document  

or  the  plea  of  the  adversary  in  the  suit  and  

whether the document in question is “conveyance” as  

defined under the Act and is duly stamped.   

As  stated  earlier,  the  plaintiffs  filed  a  

suit for specific performance of contract and their  

case is founded on the agreement to sell executed  

on  27th December,  2000.   The  agreement  to  sell  

acknowledges payment of the part of consideration  

money and further giving actual physical possession  

to  the  purchaser  by  the  seller.   Though  the  

defendants dispute that, but in our opinion, for  

determination of the question of admissibility of a  

document, it is the recital therein which shall be  

decisive.  Whether the possession in fact was given  

or  not  in  terms  of  the  agreement  to  sell  is  a  

question of fact which requires adjudication.  But,  

at  the  time  of  considering  the  question  of  

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admissibility  of  document,  it  is  the  recital  

therein which shall govern the issue.  It does not  

mean  that  the  recital  in  the  document  shall  be  

conclusive but for the purpose of admissibility it  

is the terms and conditions  incorporated  therein  

which shall hold the field.  Having said that, we  

proceed to consider as to whether the document in  

question  is  “conveyance”  within  the  meaning  of  

Section 2(10) of the Act.  Section 2(10) of the Act  

reads as follows:

2. Definitions. -In this Act, unless  there  is  something  repugnant  in  the  subject or context, -

 xxx xxx xxx

(10)“Conveyance”  includes  a  conveyance  on  sale  and  every  instrument  by  which  property,  whether movable or immovable, is  transferred  inter vivos and which  is  not  otherwise  specifically  provided for by Schedule I;  

 xxx xxx xxx”

From  a  plain  reading  of  the  aforesaid  

provision,  it  is  evident  that  an  instrument  by  

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which movable or immovable property is transferred,  

comes within the expression “conveyance”.  In the  

present case, an immovable property is transferred  

on payment of part of the consideration and handing  

over  the  possession  of  the  property.   It  is  

relevant here to state that by the Indian Stamp  

(Madhya  Pradesh  Second Amendment)  Act,  1990 (Act  

No.22 of 1990) few Articles including Article 23 of  

Schedule 1-A has been substituted and Explanation  

has  been  added  to  Article  23.  The  Explanation  

appended to Article 23 of Schedule 1-A of the Stamp  

Act as substituted by Section (6) of Act 22 of 1990  

reads as follows:

“Explanation.—For the purpose of this  article,  where  in  the  case  of  agreement to sell immovable property,  the  possession  of  any  immovable  property  is  transferred  to  the  purchaser  before  execution  or  after  execution  of,  such  agreement  without  executing  the  conveyance  in  respect  thereof  then  such  agreement  to  sell  shall be deemed to be a conveyance and  stamp duty thereon shall be leviable  accordingly:

Provided that, the provisions of  Section  47-A  shall  apply  mutatis  mutandis  to  such  agreement  which  is  

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deemed  to  be  a  conveyance  as  aforesaid,  as  they  apply  to  a  conveyance under that section:

Provided  further  that  where  subsequently a conveyance is effected  in pursuance of such agreement of sale  the stamp duty, if any, already paid  and recovered on the agreement of sale  which  is  deemed  to  be  a  conveyance  shall  be  adjusted  towards  the  total  duty  leviable  on  the  conveyance,  subject to a minimum of Rs. 10.”

The  aforesaid  Explanation  has  come  into  

effect with effect from 26th September, 1990.  The  

Explanation,  therefore,  creates  a  legal  fiction.  

The  agreement  to  sell  shall  be  deemed  to  be  a  

conveyance  and  stamp  duty  is  leviable  on  an  

instrument whereby possession has been transferred.  

Thus  the  agreement  to  sell  in  question  is  a  

conveyance within the meaning of Section 2(10) of  

the Act and is to be duly stamped.  Section 35 of  

the  Act  makes  instruments  not  duly  stamped  

inadmissible  in  evidence,  the  relevant  portion  

whereof reads as follows:

“35.  Instruments  not  duly  stamped  inadmissible  in  evidence,  etc.-No  

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instrument chargeable with duty shall  be  admitted  in  evidence  for  any  purpose by any person having by law or  consent  of  parties  authority  to  receive  evidence,  or  shall  be  acted  upon,  registered  or  authenticated  by  any  such  person  or  by  any  public  officer,  unless  such  instrument  is  duly stamped:

Provided that-

(a)any  such  instrument  shall  be  admitted in evidence on payment of  the duty with which the same is  chargeable or, in the case of an  instrument insufficiently stamped,  of the amount required to make up  such duty, together with a penalty  of five rupees, or, when ten times  the amount of the proper duty or  deficient portion thereof exceeds  five rupees, of a sum equal to ten  times such duty or portion;

xxx xxx xxx.”

From  a  plain  reading  of  the  aforesaid  

provision,  it  is  evident  that  an  authority  to  

receive  evidence  shall  not  admit  any  instrument  

unless it is duly stamped.  An instrument not duly  

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stamped shall be admitted in evidence on payment of  

the duty with which the same is chargeable or in  

the case of an instrument insufficiently stamped,  

of  the  amount  required  to  make  up  such  duty  

together  with  penalty.   As  we  have  observed  

earlier,  the  deed  of  agreement  having  been  

insufficiently stamped, the same was inadmissible  

in  evidence.   The  court  being  an  authority  to  

receive  a  document  in  evidence  to  give  effect  

thereto, the agreement to sell with possession is  

an instrument which requires payment of the stamp  

duty applicable to a deed of conveyance.  Duty as  

required, has not been paid and, hence, the trial  

court rightly held the same to be inadmissible in  

evidence.   The  view  which  we  have  taken  finds  

support from a decision of this Court in the case  

of  Avinash Kumar Chauhan v. Vijay Krishna Mishra,  (2009)  2  SCC  532,  in  which  it  has  been  held  as follows:

“21.  It  is  not  in  dispute  that  the  possession  of  the  property  had  been  delivered in favour of the appellant.  He  has,  thus,  been  exercising  some  

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right in or over the land in question.  We  are  not  concerned  with  the  enforcement  of  the  said  agreement.  Although the same was not registered,  but registration of the document has  nothing  to  do  with  the  validity  thereof  as  provided  for  under  the  provisions  of  the  Registration  Act,  1908.

22. We have noticed heretobefore that  Section  33  of  the  Act  casts  a  statutory  obligation  on  all  the  authorities to impound a document. The  court being an authority to receive a  document in evidence is bound to give  effect thereto. The unregistered deed  of  sale  was  an  instrument  which  required  payment  of  the  stamp  duty  applicable  to  a  deed  of  conveyance.  Adequate stamp duty admittedly was not  paid.  The  court,  therefore,  was  empowered to pass an order in terms of  Section 35 of the Act.”

To put the record straight, the correctness of  

the  impugned  judgment  (Laxminarayan  &  Ors.  v.  

Omprakash & Ors., 2008 (2) MPLJ 416) came up for  

consideration before a Division Bench of the High  

Court itself in Writ Petition No. 6464 of 2008 (Man  

Singh (deceased) through Legal Representatives Smt.  

Sumranbai & Ors. v. Rameshwar) and same has been  

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overruled by judgment dated January 22, 2010.  The  

High Court observed as follows:

“8. A document would be admissible on  basis  of  the  recitals  made  in  the  document  and  not  on  basis  of  the  pleadings raised by the parties.  In  the  matter  of  Laxminarayan (supra),  the  learned  Single  Judge  with  due  respect  to  his  authority  we  don’t  think that he did look into the legal  position but  it  appears that  he  was  simply  swayed  away  by  the  argument  that as the defendant was denying the  delivery  of  possession,  the  endorsement/recital  in  the  document  lost all its effect and efficacy.

9.  It would be trite to say that if  in  a  document  certain  recitals  are  made then the Court would decide the  admissibility of the document on the  strength  of  such  recitals  and  not  otherwise.  In a given case, if there  is an absolute unregistered sale deed  and the parties say that the same is  not required to be registered then we  don’t  think that the  Court  would be  entitled to admit the document because  simply  the  parties  say  so.   The  jurisdiction of the Court flows from  Sections 33, 35 and 38 of the Indian  Stamp Act and the Court has to decide  the question of admissibility.  With  all humility at our command we over- rule  the  judgment  in  the  matter  of  Laxminarayan (supra).”

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We respectfully agree with the conclusion of  

the High Court in this regard.

In view of what we have observed above, the  

order of the High Court is unsustainable and cannot  

be allowed to stand.

In the result, the appeal is allowed, the  

impugned order of the High Court is set aside and  

that of the trial court is restored but without any  

order as to costs.

      ……………………..………………………………..J.  (CHANDRAMAULI KR. PRASAD)

 …….….……….………………………………..J.                   (KURIAN JOSEPH)

NEW DELHI, OCTOBER 7, 2013  

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