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Ramesh Mishrimal Jain v. Avinash Vishwanath Patne

Civil Appeal · 2025 INSC 213Decided 14 Feb 2025
C.A. No.-002549-002549 - 2025 (arising out of SLP(C) No. 13822 of 2020)
Justice J.B. Pardiwala · Justice R. Mahadevan

Background

The appellant, who had been living in a property as a tenant, entered into an agreement to sell that property with his landlord in 2003, under which ownership possession was to be handed over only after the sale deed was executed. When the landlord's heir refused to complete the sale, the appellant filed a suit for specific performance, and the other side sought to have the sale agreement "impounded" (treated as improperly stamped) for non-payment of the higher stamp duty applicable to a full conveyance, not just an agreement. Both the trial court and the Bombay High Court agreed the document should be impounded and treated as a deemed conveyance, and the appellant approached the Supreme Court.

Decision Breakdown

The Supreme Court held that under Explanation I to Article 25 of the Bombay Stamp Act, an agreement to sell is treated as a "deemed conveyance", and taxed at the higher conveyance rate of stamp duty, whenever possession of the property has been transferred or is agreed to be transferred to the buyer, even without a separate deed. Because the appellant was already in possession of the property (as a tenant) at the time of the agreement, and the agreement recorded this possession while linking future ownership possession to completion of the sale, the Court found the document fell squarely within this deeming provision. The Court clarified that stamp duty attaches to the paper (the instrument) and not the underlying transaction, and any duty already paid on the agreement would be adjusted against the duty due when the final sale deed is executed. The appeal was dismissed, and the impounding order upheld.

Lesson Learnt

If you are already occupying a property (even as a tenant) when you sign an agreement to buy it, that agreement can be legally treated as if it were a full sale deed for stamp duty purposes, so it is worth paying the correct, higher stamp duty upfront rather than risking penalties later.

Official source (sci.gov.in)View Judgment (PDF)

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