AP Stamp Act | Stamp Responsibility Leviable On Settlement To Promote Solely When Possession Follows It : Supreme Courtroom

The Supreme Courtroom on Thursday (January 15) dominated {that a} stamp obligation, as per the Andhra Pradesh Stamp Act, isn’t payable on an ‘settlement to promote’ which does not stipulates supply of possession.

A bench of Justices BV Nagarathna and R Mahadevan delivered a ruling within the context of the Andhra Pradesh Stamp Act (“Act”), whereas setting apart the Excessive Courtroom’s determination, which held that an settlement to promote amounted to a conveyance and required fee of stamp obligation and penalty below Rationalization I to Article 47A of Schedule I-A of the Act.

The case arose from a long-standing landlord-tenant relationship. The appellant had been a tenant within the swimsuit property for over fifty years. In 2009, the respondent-landlady entered into an settlement to promote the property to him for ₹9 lakhs, of which ₹6.5 lakhs was paid as an advance. When disputes arose and the landlady denied the settlement, the tenant filed a swimsuit for particular efficiency.

In the course of the trial, the landlady objected to the marking of the settlement to promote in proof, arguing that it amounted to a conveyance and required fee of stamp obligation and penalty below Rationalization I to Article 47A of Schedule I-A of the Andhra Pradesh Stamp Act. The Trial Courtroom and subsequently the Andhra Pradesh Excessive Courtroom accepted this objection and directed that stamp obligation and penalty be paid earlier than the doc may very well be exhibited, prompting the tenant to attraction to the Supreme Courtroom.

Disagreeing with the Excessive Courtroom’s determination, the judgment authored by Justice Nagarathna held that the settlement to promote within the current case couldn’t be handled as a “deemed sale”.

The Courtroom defined that an settlement to promote is chargeable as a sale solely whether it is “adopted by” or “evidences” supply of possession of the property agreed to be bought. Because of this the possession should have a direct and intimate nexus with the settlement to promote. Possession that already exists independently of the settlement, corresponding to possession as a tenant, doesn’t fulfill this requirement.

For the reason that appellant’s possession of the property was not in pursuance of the settlement to promote however was rooted in his tenancy of almost 5 a long time, the Courtroom held that the Appellant needn’t pay the stamp obligation and penalty.

“…the possession of the schedule property by the appellant herein was not following the settlement to promote nor was supply of possession pursuant to the execution of settlement to promote as stipulated below the A.P. Stamp Act. It is just when the possession is acquired in relation to the execution of the settlement to promote, that it will be a deemed conveyance and stamp obligation must be levied as conveyance.”, the courtroom noticed.

“The Excessive Courtroom in reality misdirected itself in assuming that there was in reality a deemed conveyance between the respondent and the appellant herein. The appellant herein isn’t liable to pay any further obligation and penalty on the mentioned instrument and neither is the mentioned instrument liable to be impounded for the aim of fee of obligation and penalty. Therefore, we discover that the Excessive Courtroom was not proper in sustaining the order of the Trial Courtroom. Consequently, each the impugned orders of the Excessive Courtroom in addition to the order of the Trial Courtroom are put aside. The appeals are allowed within the aforesaid phrases.”, the courtroom held.

Trigger Title: VAYYAETI SRINIVASARAO VERSUS GAINEEDI JAGAJYOTHI

Quotation : 2026 LiveLaw (SC) 49

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Look:

For Petitioner(s) Mr. M Srinivas R Rao, Adv. Mr. Abid Ali Beeran P, AOR Mr. Saswat Adhyapak, Adv. Ms. Namita Kumari, Adv.

For Respondent(s) Mr. Anuj Kapoor, AOR Mr. Nandeesh Nanda, Adv. Mr. Shivom Sethi, Adv.