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Synopsis

The Supreme Court has said that a compromise decree of a subject land entered into without any collusion and creating any fresh right would fall under the exception of Section 17(2)(vi) of the Registration Act.

A bench of Justices J B Pardiwala and R Mahadevan also said the stamp duty is not chargeable on an order/decree of the court as the same does not fall within the documents mentioned in Schedule I or I-A read with Section 3 of the Indian Stamp Act, 1899.

Court allowed an appeal filed by one Mukesh against the Madhya Pradesh High Court's judgment which upheld a 2016 order by the Collector of Stamps determining stamp duty at Rs 6,67,500 payable by the appellant qua land, measuring an extent of 0.076 Ares situated at Village Kheda, Tehsil Badnawar, District Dhar, acquired by him by way of a consent decree.

The appellant contended that he had preferred the suit for declaration and permanent injunction on the basis of his long and continuous ownership and possession of the subject land and he acquired pre-existing right over the same through a consent decree. His counsel said that there was no finding of collusion between the appellant and respondent.

The counsel further said the consent decree in favour of the appellant was not chargeable with stamp duty, as it did not create any new right, but it conveyed the pre-existing title, right or interest over the subject land.

The state counsel, on the other hand, submitted that the subject land was not recorded in the name of the appellant in the revenue records maintained by the State and there was a dispute regarding the title of the property. As such, the protection claimed by the appellant under Section 17(2)(vi) of the Registration Act, 1908, did not hold good. That apart, the counsel contended that the present case seemed to be a case of collusion between the appellant and respondent no 2 and the Civil Suit was instituted only with an intent to evade the payment of stamp duty.

The court noted that the issues involved here were registration of the document and payment of stamp duty, which were separate and distinct concepts. It recorded that Section 17(1) of the Act, 1908 specifies the documents for which Registration is compulsory, while Sub-section (2) of Section 17 carves out the exceptions.

"The compromise arrived at before the Lok Adalat and the award passed by the Lok Adalat thereto assume the character of a decree passed under Order XXIII Rule 3 and would also come within the ambit and purview of sub-section (2) of section 17 of the Act, 1908," it said.

In the present case, on the strength of the compromise decree passed by the civil court, the appellant approached the Tehsildar for mutation of the subject land in his favour. However, the Tehsildar referred the case to the Collector of Stamps, who after examination, determined the stamp duty under Article 22 of Schedule IA of the Indian Stamp Act, 1899 and directed the appellant to pay a sum of Rs 6,67,500 in the Government Treasury.

The bench pointed out that it is settled law that revenue records are not documents of title. Any entry therein will not ipso facto confer ownership.

In the present case, the possession is continuously with the appellant. As per the judgement of this court in Ravinder Kaur Grewal and Others Vs Manjit Kaur and Others (2019), continuous and uninterrupted adverse possession would confer right, title and interest and the same can be used as a sword, the court noted.

In the case, through the said compromise decree, the appellant did not obtain any new right, but he has asserted his pre-existing right/ title/ interest over the subject land, the bench pointed out.

Though the State counsel alleged that the suit was filed by the appellant in collusion with the respondent no 2 and within a short time from the date of initiation of the suit, the parties compromised the matter in order to evade payment of stamp duty, no concrete evidence was placed before this court to substantiate that the same, the bench highlighted.

That apart, the bench pointed out, it was not the case of the State that the suit itself was collusive as the property was not in possession of the appellant and that it belonged to any other third party. Such rival claim by any other person other than the defendant has not been brought to this court's knowledge, the bench said.

"Under the circumstances, we have no option but to hold that the compromise decree is by way of collusion, cannot be accepted. The compromise decree reached finality. There is no finding of collusion between the parties in entering into the compromise by any Court as on date. Indisputably, the property is the subject matter of the suit. Thus, the appellant has satisfied the conditions enumerated in section 17(2)(vi) of the Act, 1908 and hence, the subject land acquired by him by way of compromise decree, requires no registration," the bench said.

Referring to Section 3 of the Indian Stamp Act, 1899, the bench noted that stamp duty is not chargeable on an order/decree of the court as the same does not fall within the documents mentioned in Schedule I or I-A read with Section 3 of the Indian Stamp Act, 1899.

"Though the Collector of Stamps determined the stamp duty for the subject land as per Article 22 of Schedule IA of the Indian Stamp Act, 1899, which states about conveyance, in this case, we have already held that the compromise decree does not fall under the instruments mentioned in the Schedule and that it only asserts the pre-existing rights," observed the court.

Therefore, in the facts of the case, the consent decree will not operate as conveyance as no right is transferred and the same does not require any payment of stamp duty. Since the appellant has only asserted the pre-existing right and no new right was created through the consent decree, the document pertaining to mutation of the subject land is not liable for stamp duty, the bench added.

The court set aside the impugned order, holding it had no legs to stand. Accordingly, allowing the appeal, court directed the authority concerned to make mutation of the revenue records in respect of the subject land in favour of the appellant.

Case Title: Mukesh Vs The State of Madhya Pradesh & Anr