Karnataka High Court: The Single Judge Bench of Tara Vitasta Ganju, J., dealing with a writ petition under Article 227 of the Constitution, set aside the impugned order directing the plaintiff to pay a sum of ₹25,900 as deficit stamp duty and penalty of 10 times.
Background
The issue arose when an agreement to sell was executed by the deceased vendor on 5 February 1997 for sale of the suit property. The present respondents-defendants raised an objection that the provision of Article 5(e)(i) of the Schedule to the Karnataka Stamp Act, 1957 (Act, 1957) was applicable for the execution of conveyance in agreement to sell the suit property, which was not followed, because the possession was already handed over.
The aggrieved petitioners-plaintiffs filed a petition challenging the order dated 25 November 2019 passed by the Ist Additional Senior Civil Judge and JMFC at Chickmagaluru, which directed the petitioners-plaintiffs to pay a sum of ₹25,900 as deficit stamp duty and penalty of 10 times. The impugned order arose out of an order dated 4 October 2019 passed by the District Registrar, Chickmagaluru District, to whom the matter had been referred by the trial court, where the Registrar had reached a conclusion that the stamp duty was payable under Article 5(e)(i) Act, 1957.
The petitioners-plaintiffs submitted that it was an undisputed fact that the possession of the suit schedule property was not delivered to them under the terms of the Agreement to Sell. Thus, it is contended that Article 5(e)(i) Act, 1957 would not be applicable. The petitioners-plaintiffs sought to rely upon Clause 3 of the agreement to sell dated 5 February 1997 to show that possession was delivered previous to signing the agreement to sell.
The petitioners-plaintiffs also stated his reliance upon the 2 judgments of the coordinate Benches, wherein it is set out that, where possession has been delivered prior to the agreement to sell, the conveyance is considered executed. Therefore, the stamp duty was not to be paid in terms of Article 5(e)(i), Act, 1957. The petitioners-plaintiffs contended that the statute does not have a residual clause for Article 5(e) nor provides for a scenario where the property was previously handed over to the purchasee prior to the agreement to sell was to be entered into.
Decision and Analysis
The Court noted that on a plain reading of the statute provides only for two options:
1. that the possession of the property in issue is delivered or agreed to be delivered before executing the conveyance, or
2. that the possession of the property is not delivered.
The Court observed that the plaintiffs, although acknowledged the original ownership of the processors-in-interest of Defendants 1 to 7, also sets out that during the lifetime of the vendor, the petitioners and their family members were in possession of the entire property and that the possession continues even today. It further sets out that during his lifetime, an agreement to sell was executed by the deceased vendor on 5 February 1997 for sale of the suit property.
The Court highlighted that on perusal of the agreement to sell it was clarified that the possession of the suit property was already with the purchasers, i.e. the petitioners-plaintiffs. The Court held that given the undisputed facts for the trial court to impose stamp duty as well as penalty under Article 5(e)(i) Act, 1957 which clearly provides that the possession is delivered or agreed to be delivered before executing the conveyance, was not in order.
The Court set aside the impugned order dated 25 November 2019 passed by the Ist Additional Senior Civil Judge and Judicial Magistrate First Class, Chickmagaluru. The Court directed the parties to appear before the trial court on the date already fixed.
[Tulasamma v. M.S. Seethalakshmi, 2026 SCC OnLine Kar 3008, decided on 22-1-2026]
*Judgment authored by: Justice Tara Vitasta Ganju
Advocates who appeared in this case:
For the Petitioners: Yashwanth Nethaji, K. V. Narasimhan, Advocates
For the Respondent: N. Shankar Narayana Bhat, Advocate
