Stamp Duty To Be Levied On Original Agreement Value When Sale Deed Executed In Compliance With Decree For Specific Performance | Karnataka High Court
Sanchayita Lahkar
The High Court of Karnataka Single Bench of Justice Suraj Govindaraj allowed a writ petition challenging an order demanding stamp duty and registration fees based on the current market value rather than the sale consideration agreed upon in a decree for specific performance. The Court quashed the order passed by the authority concerned and directed the registration of the sale deed with reference to the value of the property as per the original agreement of sale. The Court further directed the respondents to register the document and furnish the registered sale deed to the petitioners within a specified period.
The petitioners approached the High Court seeking relief against an order of the Deputy Commissioner and District Registrar, Shivajinagar Registration District, passed on 30 July 2016. The petitioners requested the issuance of a writ of certiorari to quash the said order and prayed for the registration of their sale deed as per the agreed sale consideration.
The matter originated from an agreement of sale executed on 3 April 1994 between Sri. Munikrishnappa, husband of petitioner no. 1 and father of petitioners no. 2 and 3, and one Sri. Khader Mohiddin. The agreement pertained to land in Survey No.110/5 measuring 2 acres 20 guntas situated in Vartur village, Vartur Hobli. The agreed sale consideration was Rs. 4,00,000. At the time of execution of the agreement, a sum of Rs. 3,50,000 was paid by Sri. Munikrishnappa, and the balance of Rs. 50,000 was agreed to be paid at the time of execution of the absolute sale deed.
Sri. Khader Mohiddin, however, did not perform his obligations under the agreement. Consequently, Sri. Munikrishnappa instituted a suit for specific performance in OS No.759 of 1995. During the pendency of the suit, Sri. Munikrishnappa expired, and his legal heirs, the present petitioners, were brought on record. The suit for specific performance was decreed on 12 September 2005. The decree directed the plaintiffs to deposit the balance consideration of Rs. 50,000 in court, and upon such deposit, Sri. Khader Mohiddin was directed to execute and register the sale deed within one month. The decree also permitted execution of the sale deed through the process of court in the event of default by the defendant.
Aggrieved by the decree, Sri. Khader Mohiddin filed RFA No.1721 of 2005, which was dismissed on 1 August 2007. Thereafter, Sri. Khader Mohiddin voluntarily came forward to execute the sale deed in favour of the petitioners. The sale deed was presented for registration before the Senior Sub-Registrar, Vartur, with stamp duty and registration fees paid on the basis of the agreed value of Rs. 4,00,000.
However, the Senior Sub-Registrar refused registration, stating that the valuation for stamp duty had to be determined as per the market value prevailing on the date of presentation of the document. Accordingly, the matter was referred to the Deputy Commissioner and District Registrar. The petitioners did not receive notice of the proceedings and were absent. The authority determined the market value of the property at Rs. 1,25,00,000 per acre, assessing the total value at Rs. 3,12,50,000. The authority then determined the differential market value at Rs. 3,08,50,000 and calculated the stamp duty at 8.48%, amounting to Rs. 26,16,080, with an additional registration fee of Rs. 3,08,500, totalling Rs. 29,24,580. The petitioners were called upon to make the payment.
Challenging the same, the petitioners had earlier filed WP No.18473 of 2012. The Court, by order dated 27 June 2012, remanded the matter to the Deputy Commissioner and District Registrar for fresh consideration, holding that no opportunity had been provided to the petitioners. Upon reconsideration, the authority again passed the same order, reiterating the earlier determination and calling upon the petitioners to make payment of the same amounts. The petitioners, therefore, approached the High Court again in the present writ petition.
The learned counsel for the petitioners submitted that the agreed consideration between Sri. Munikrishnappa and Sri. Khader Mohiddin was Rs. 4,00,000 and that if the sale deed had been executed in 1994 as contemplated, stamp duty would have been payable on that amount. It was argued that the delay was solely attributable to the vendor, and the purchasers had no role in it. Since Rs. 3,50,000 had already been paid at the time of agreement and the decree directed payment of the balance Rs. 50,000, the sale consideration continued to remain Rs. 4,00,000. It was submitted that the valuation by the Sub-Registrar as per the present market value was illegal and nonest, as the decree in OS No.759 of 1995 mandated execution of the sale deed for the same consideration agreed upon in 1994. The counsel argued that stamp duty and registration fee were payable on the value shown in the decree and agreement.
The learned Additional Government Advocate appearing for the respondents submitted that the sale deed was executed voluntarily between the parties and not through the process of court. Therefore, it was contended that the market value on the date of execution, i.e., 12 March 2008, had to be considered for calculating stamp duty and registration fee.
Justice Suraj Govindaraj framed the question for consideration: “Whether on a Sale Deed executed in furtherance of a Decree for Specific Performance after contest the stamp duty liable to be paid would be as per the valuation of the property on the date on which the document was presented for registration or would it be on the agreement value?”
The Court recorded: “It is not in dispute that insofar as sale deeds executed through the process of Court in an Execution Proceedings, the value of the property that is required to be taken is the value shown in the agreement of sale as regard which specific performance has been granted.”
It was further observed: “In the present case though the suit in OS No.759 of 1995 was filed in the year 1995 the same came to be decreed on 12.09.2005 and there is no particular observation made in the said decree requiring the purchaser to make payment of any enhanced value in respect of the property.”
Justice Govindaraj stated: “If, instead of the said document being voluntarily presented for registration the petitioner were to file an Execution Proceedings and in the Execution Proceedings Sri. Khader Mohiddin would have executed a sale deed in furtherance of the directions issued by the Court or in the alternative, if Sri. Khader Mohiddin failing to comply with the directions of the Court and failing to execute such a sale deed, an officer of the Court could be appointed to execute and register the sale deed.”
The Court noted the contention of the respondents that in such execution proceedings, the benefit of stamp duty as on the date of agreement would be extended, but in a voluntary execution, such benefit would not be available. The Court held: “In my considered opinion, the distinction sought to be made out by the respondent is without a difference in as much as by virtue of execution of sale deed, what is sought to be done is to give effect to the decree dated 12.09.2005 in OS No.759 of 1995 and RFA No.1721 of 2005.”
Justice Govindaraj further observed: “Thus, whether a sale deed has been executed in favour of the petitioners in the Execution Proceedings or voluntarily, the net result being to give effect to the decree dated 12.09.2005 in OS No.759 of 1995, I am of the considered opinion that this distinction without difference cannot enure to the benefit of the State.”
The Court noted that the purchaser had paid Rs. 3,50,000 in 1994, which was 87.5% of the total sale consideration, and the delay in execution was solely due to the default of the vendor. The Court remarked: “If at all such a sale deed had been executed earlier the petitioners would have made payment of the stamp duty as on the date of execution of sale deed.”
The Court also held: “Looked at from any angle, the vendor having acted malafide the petitioner being entitled to the enforcement of the judgment decree dated 12.09.2005 as confirmed in RFA No.1721 of 2005, I am of the considered opinion that merely because Sri. Khader Mohiddin came forward to execute a sale deed in favour of the petitioners would not require the petitioner to make payment of the stamp duty and registration fee as per the market value on the date of presentation of the said sale deed.”
Finally, Justice Govindaraj observed: “The benefit which would be available as regards sale deed executed and registered in the course of Execution Proceedings would equally apply to a sale deed voluntarily executed by judgment debtor in favour of the decree holder.”
The High Court, having considered the submissions and the facts of the case, passed the following order:
“The writ petition is allowed.”
“A certiorari is issued, order bearing No. DUS/VR/04/2007-08/488 dated 30.07.2016 passed by respondent No.2 at Annexure-F is quashed.”
“The respondents are directed to register the sale deed presented by the petitioner with reference to the value of the property as per the agreement of sale within a period of 15 days from the date of receipt of the copy of this order and furnish the original registered sale deed to the petitioners within such time.”
Advocates Representing the Parties
For the Petitioners: Sri. L.M. Ramaiah Gowda, Advocate for P2 and P3
For the Respondents: Sri. Mahantesh Shettar, Additional Government Advocate for R1 to R3
Case Title: Smt. Munisanjeevamma (deceased) by LRs V.K. Babu and V.K. Srinivas vs The State of Karnataka and Others
Neutral Citation: 2025: KHC:30157
Case Number: WP No. 49527 of 2016
Bench: Justice Suraj Govindaraj
