CASE DETAILS v. UNION OF INDIA & Ors.

that the Plaintiff s cannot lead secondary evidence as the document sought to be produced needed to be duly stamped: Held: s.35 of the Stamp Act forbids the letting of secondary evidence in proof of its contents – The section excludes both the original instrument and secondary evidence of its contents if it needs to be stamped or suffi ciently stamped – This bar as to the admissibility of documents is absolute – Where a document cannot be received in evidence on the ground that it is not duly stamped, the secondary evidence thereof is equally inadmissible in evidence – Jupadi Kesava Rao is distinguishable on facts as the document which the Court was concerned with therein was one which was chargeable with duty, but in the present case, such is not the case as the document to be produced is not one which was chargeable with duty at the time of its execution i.e., 04.02.1988 – This being a material diff erence, the principle of law held in this case, correct as it may be, shall not apply to the instant case. [Paras 36, 40] Stamp Act, 1899 – ss.35, 2(6): Held: s.35 prohibits admission in evidence of instruments that are chargeable with duty unless they are “duly stamped – The word ‘chargeable,’ as defi ned u/s.2(6), means chargeable under the Act in force at the date of the execution of the instrument – The crucial date which determines the law in force is the date of execution of the instrument, and the stamp duty is to be charged with reference to the date of execution – For stamp duty, the relevant date is the date of execution and not the date of adjudication or the date of presentation and registration of the document. [Paras 9, 11] Interpretation of Statutes – Role of a clarifi cation/explanation to a statute and how the same is identifi ed and distinguished from a substantive amendment – Discussed.

Stamp/Stamp Duty – Question as to whether the document is liable to stamp duty and penalty, to be decided at the threshold: Held: It is a settled position of law that where the question is whether the document is liable to stamp duty and penalty, it has to be decided at the threshold even before marking a document – In the present case, the document in question was not liable to stamp duty – Deeds and Documents. [Para 41] 296 SUPREME COURT REPORTS [2023] 15 S.C.R. Evidence Act, 1872 – ss.61, 63, 65 – Principles relevant for examining the admissibility of secondary evidence, deduced. [Para 33] Words and Phrases – Primary and Secondary Evidence – Discussed – Evidence Act, 1872 – ss.61, 63, 65. [Para 31] LIST OF CITATIONS AND OTHER REFERENCES CIT v. Vatika Township (P) Ltd. [2014] 12 SCR 1037 : (2015) 1 SCC 1; Cement Corpn. of India Ltd. v. Purya (2004) 8 SCC 270 – followed. Jupadi Kesava Rao v.

Pulavarthi Venkata Subha Rao [1971] 3 SCR 590 : (1971) 1 SCC 545 – distinguished. Virtual Soft Systems Ltd. vs. Commissioner of Income Tax, Delhi, [2007] 2 SCR 289 : (2007) 9 SCC 665; Govind Das v. ITO [1976] 3 SCR 44 : (1976) 1 SCC 906; Neeraj Dutta v. State (NCT of Delhi) (2023) 4 SCC 731; Yashoda v. K. Shobha Rani [2007] 5 SCR 367 : (2007) 5 SCC 730; M. Chandra v. M. Thangamuthu [2010] 11 SCR 38 : (2010) 9 SCC 712; Surendra Krishna Roy v. Muhammad Syed Ali Matwali Mirza 1935 SCC OnLine PC 56; H. Siddiqui v. A. Ramalingam [2011] 5 SCR 587 : (2011) 4 SCC 240 – relied on. Suraj Lamp and Industries Pvt. Ltd. v. State of Haryana [2011] 11 SCR 848 : (2012) 1 SCC 656; G.T. Girish v. Y. Subba Raju [2022] 12 SCC 321 : (2022) 12 SCC 321; Ghanshyam Sarda v. J.K. Jute Mills Co. Ltd (2017) 1 SCC 599; Munishamappa v M.Rama Reddy & Ors., Civil Appeal No. 10327 of 2011; Hariom Agrawal v. Prakash Chand Malviya [2007] 10 SCR 772 : (2007) 8SCC 514 – referred to.

OTHER CASE DETAILS INCLUDING IMPUGNED ORDER AND APPEARANCES CIVIL APPELLATE JURISDICTION: Civil Appeal No. 4910 of 2023. From the Judgment and Order dated 30.11.2009 of the High Court of M.P. Principal Seat at Jabalpur in WP No.741 of 2004. Appearances: Dr. Menaka Guruswamy, Sr. Adv., Gautam Awasthi, Utkarsh Pratap, Lavkesh Bhambhani, Harshwardhan Thakur, Advs. for the Appellant. VIJAY v. UNION OF INDIA & ORS. 297 Akshay Amritanshu, Pranay Ranjan, Arkaj Kumar, Ms. Khushboo Kapur, Pratyush Srivastava, Arvind Kumar Sharma, Sunny Choudhary, Ms. Archana Sharma, Advs. for the Respondents. JUDGMENT / ORDER OF THE SUPREME COURT JUDGMENT SANJAY KAROL J.

The issues that arise for consideration of this Court in the present appeal are:

1.1 Whether the bar of admissibility created by Section 35 of the Indian Stamp Act 18991 applies to the agreement(s) to sell dated 04.02.1988 executed by the parties?

1.2 Can a copy of a document be adduced as secondary evidence when the original instrument is not in possession of the party?

1.3 Whether, in the facts of the present case, would the decision of this Court in Jupadi Kesava Rao v. Pulavarthi Venkata Subha Rao2 be binding as held by both the Courts below? FACTUAL MATRIX

Plaintiff and Defendant entered into an agreement to sell on 04.02.1998, and pursuant to that, Plaintiff was allegedly put in possession by Defendant. When Defendant denied the existence of such an agreement, Plaintiff fi led a suit for specifi c performance of contract. In the said suit, Plaintiff moved an application to fi le a copy of the agreement to sell, among other documents, as secondary evidence.

Initially, the said application was allowed by the 4th Additional District Judge vide order dated 17.07.2001. But when Defendant sought review of this order, the Court vide its order dated 16.12.2003 reviewed it and held that secondary evidence of an agreement to sell could not be allowed as it was not executed on a proper stamp, thus barred under section 1 Hereinafter referred to as ‘Stamp Act’ (1971) 1 SCC 545 (2-Judge Bench) 2 298 SUPREME COURT REPORTS [2023] 15 S.C.R. 35 of the Stamp Act. While holding so, it relied on the decision of this Court in Jupadi Kesava Rao (supra).

Subsequently, the Plaintiff fi led a writ petition before the High Court of Madhya Pradesh challenging the review order and the constitutional validity of Section 35 of the Stamp Act. The High Court, vide the impugned order dated 30.11.2009 in W.P. No. 741/2004, upheld the validity of the said section and the order of the Review Court.

The present appeal is preferred against this order of the High Court.

Learned Senior Counsel Dr. Menaka Guruswamy, for the Appellant- Plaintiff , submits that the prohibition of Section 35 of the Stamp Act is not applicable as there was no requirement for either party to have paid stamp duty at the time of execution (before the 1989 Amendment) of the agreement to sell. Thus, the Plaintiff ought to have been permitted to lead a copy of the agreement to sell as secondary evidence under Section 65 of the Evidence Act.

Respondent no.2/Defendant, in its counter affi davit, has stated that a copy of an original document that is unstamped or defi ciently stamped can neither be impounded nor validated or admitted as secondary evidence. Once the original document is inadmissible under the Stamp Act, the photocopy or any other copy cannot be allowed as secondary evidence. ISSUE 1

To adjudicate this issue, it is pertinent to reproduce Section 35 of the Stamp Act:

Section 35- Instruments not duly stamped inadmissible in evidence, etc.- No instrument chargeable with duty shall be admitted in evidence for any purpose by any person having by law or consent of parties authority to receive evidence, or shall be acted upon, registered or authenticated by any such person or by any public offi cer, unless such instruments are duly stamped: Provided that- (a) any such instrument (shall] be admitted in evidenceon payment of the duty with which the same is chargeable or, in the case of an instrument insuffi ciently stamped, of the amount required to make up such duty, together with a penalty of fi ve rupees, or, when ten times VIJAY v. UNION OF INDIA & ORS. [SANJAY KAROL, J.] 299 the amount of the proper duty or defi cient portion thereof exceeds fi ve rupees, of a sum equal to ten times such duty or portion; ××××

It is evident from a bare perusal of the section that it prohibits admission in evidence of instruments that are chargeable with duty unless they are “duly stamped.” Duly stamped as defi ned under Section 2(11) of the Stamp Act means that the instrument bears a stamp and that such stamp has been affi xed or used in accordance with law for the time being in force in India.

Further, it is required to consider when the document becomes chargeable with duty—during its execution or when it is produced before the Court.

The word ‘chargeable,’ as defi ned under Section 2(6), means chargeable under the Act in force at the date of the execution of the instrument. The crucial date which determines the law in force is the date of execution of the instrument, and the stamp duty is to be charged with reference to the date of execution. For stamp duty, the relevant date is the date of execution and not the date of adjudication or the date of presentation and registration of the document.

Entry 44 of List III of the Constitution of India is Stamp duties other than duties or fees collected by means of judicial stamps, but not including rates of stamp duty. Under Entry 44 of List III, the power to levy stamp duty on all documents is concurrent. But the power to prescribe “the rate” of such levy is with the Parliament and subjected to the same with the State Legislature. The State Legislature is competent to levy the stamp duty under Entry 44 of List III and prescribe rates of duty under Entry 63 of List II.

However, if the instrument falls under the categories mentioned in Entry 91 of List I, the power to prescribe the rate would be only with the Parliament, and for all other instruments or documents, such power would be with the State legislature under Entry 63 of List II.

Instruments chargeable with duty is defi ned under Section 3of the Act, which denotes that every instrument mentioned in the Schedule, subject to exceptions or exemptions, shall be chargeable with duty of the amount 300 SUPREME COURT REPORTS [2023] 15 S.C.R. which is indicated in that Schedule as the proper duty thereof. From time to time, amendments have been carried out in the Stamp Act, and Schedule I-A, as applicable to the State of Madhya Pradesh, was inserted.3 This Schedule specifi es the stamp duty that must be paid on specifi c instruments. Importantly, instruments not mentioned in the Schedule are not subject to duty.

Article 23 of Schedule 1A of the Stamp Act deals with conveyances. The defi nition of “conveyance” is contained in Section 2(10) of the Stamp Act which reads as under:

(10) ‘Conveyance.’—’Conveyance’ includes a conveyance on sale and every instrument by which property, whether movable or immovable, is transferred inter vivos and which is not otherwise specifi cally provided for by Schedule I;

At the time of execution of an agreement to sell (1988), the conveyance was subjected to stamp duty and Article 23 stood as:

23. Conveyance, not being a transfer charges or exempted under Article No.62: Where market of the property which is the subject matter of conveyance- does not exceed Rs. 50 Four percent of such market value subject to a minimum of One Rupee Seven percent of such market value Seven and half percent of such market value. does not exceed Rs. 10,000 exceed Rs. 10,000 Provided that if the total amount of the duty payable is not a multiple of fi fty paisa it shall be rounded off to the nearest rupee half of a rupee or over being counted as one rupee and less than half a rupee being disregarded.

3 The Central Provinces and Berar Indian Stamp (Amendment) Act, 1939 VIJAY v. UNION OF INDIA & ORS. [SANJAY KAROL, J.] 301

Article 23 was substituted vide M.P. Amendment Act No. 19 of 19894 and stood as:

Art icle 23. Conveya nce, not being a transfer charged or exempte d under No.62 irrespective of the market value of the property which is the subject matter of conveyance Seven and half percent of such market value: Provided that if the total amount of the duty payable is not a multiple of fi fty paise, nearest rupee half of a rupee or over being counted as one rupee and less than half of a rupee being disregarded. Exemptions ×××

Further, an Explanation was inserted into this Article vide M.P. Amendment Act No. 22 of 19905,

Explanation.-For the purpose of this Article, where in the case of agreement to sell immovable property, the possession of any immovable property is transferred to the purchaser before execution or after execution of such agreement without executing the conveyance in respect thereof, then such agreement to sell shall be deemed to be a conveyance and stamp duty thereon shall be levied accordingly: xxx

The sub-issue that the Court is confronting is whether an agreement to sell, handing over possession prior to the amendment brought in the year 1989 or 1990, is a conveyance so as to be covered under Article 23 as existing on the date of execution of the agreement(s). On this aspect we may only observe that the causal amendment was brought in only in 1990, i.e., prior to the transaction in question. And a three-judge Bench of this Court in Suraj Lamp and Industries Pvt. Ltd. v. State of Haryana6 in considering the scope of an agreement to sell observed thus: 4 The Indian Stamp (Madhya Pradesh Amendment) Act, 1989 5 The Indian Stamp (Madhya Pradesh Second Amendment) Act, 1990 6 (2012) 1 SCC 656 302 SUPREME COURT REPORTS [2023] 15 S.C.R. “18. It is thus clear that a transfer of immovable property by way of sale can only be by a deed of conveyance (sale deed). In the absence of a deed of conveyance (duly stamped and registered as required by law), no right, title, or interest in an immovable property can be transferred.

Any contract of sale (agreement to sell) which is not a registered deed of conveyance (deed of sale) would fall short of the requirements of Sections 54 and 55 of the T.P. Act and will not confer any title nor transfer any interest in an immovable property (except to the limited right granted under Section 53-A of the T.P. Act). According to the T.P. Act, an agreement of sale, whether with possession or without possession, is not a conveyance. Section 54 of the T.P. Act enacts that sale of immovable property can be made only by a registered instrument and an agreement of sale does not create any interest or charge on its subject-matter.” (Emphasis supplied)

19. The decision stand considered in G.T. Girish v. Y. Subba Raju7, and relied upon in Ghanshyam Sarda v. J.K. Jute Mills Co. Ltd.8, without any change. This principle was recently restated in Munishamappa v M.Rama Reddy & Ors.9

It be observed that now, in many states, amendments were brought in whereby agreements of sale acknowledging delivery of possession are charged with the same duty as leviable on conveyance.

Now the question arises if we can retrospectively read the Explanation added vide M.P. Act 22 of 1990 so as to apply to an agreement to sell executed on 04.02.1988.

A Two-Judge bench of this Court10 while culling out the principles on the role of a clarifi cation/explanation to a statute and how the same is identifi ed and distinguished from a substantive amendment, observed that