Bidyut Sarkar & Anr. vs. Kanchilal Pal (Dead) Through LRs. & Anr.
Background
A property owner allegedly agreed in 1999 to sell land to the plaintiff for development, but before the sale was completed the owner sold the same land to two other buyers (the present appellants). The plaintiff sued for specific performance of his earlier agreement to sell. The Trial Court dismissed the suit because the agreement to sell was insufficiently stamped and therefore inadmissible in evidence. The Calcutta High Court reversed this and decreed specific performance in the plaintiff's favour, reasoning that the plaintiff's willingness to pay the deficient stamp duty was enough.
Decision Breakdown
The Supreme Court restored the Trial Court's dismissal of the suit. Under Sections 35, 36, 40 and 42 of the Indian Stamp Act, an insufficiently stamped document can only become admissible in evidence after the deficient duty and any penalty are actually assessed by the Collector and paid: merely offering or agreeing to pay is not enough. Since the plaintiff never pursued the matter before the Collector to get the deficiency determined and paid, the agreement to sell remained legally inadmissible, and the suit founded on it could not succeed. The Court, however, directed the appellants (who had purchased the property from the original owner) to refund a rounded-up sum of Rs. 5,00,000 to the plaintiff in place of the original Rs. 10,000 advance he had paid 25 years earlier.
Lesson Learnt
A property agreement that is not properly stamped cannot be used to enforce a sale in court: merely agreeing to pay the stamp duty later is not sufficient; the deficiency and penalty must actually be assessed and paid to the Collector before the document can be admitted as evidence.