RAMESH MISHRIMAL JAINversusAVINASH VISHWANATH PATNE & ANR.

                 [2025] 2 S.C.R. 670 : 2025 INSC 213

                      Ramesh Mishrimal Jain
                                v.
                  Avinash Vishwanath Patne & Anr.
                      (Civil Appeal No. 2549 of 2025)
                              14 February 2025
              [J.B. Pardiwala and R. Mahadevan,* JJ.]


                           Issue for Consideration
       Whether the appellant is liable to pay stamp duty and penalty on
       the agreement to sell dated 03.09.2003 allegedly executed between
       the appellant and the mother of respondent no.1 in respect of the
       suit property.

                                  Headnotes†
       Bombay Stamp Act, 1958 – Explanation I to Article 25 –
       Appellant filed suit for specific performance of the agreement
       to sell dated 03.09.2003 – Respondents filed an application
       u/s.34 of the 1958 Act for impounding the document – Trial
       Court allowed the said application, impounded the sale
       agreement dated 03.09.2003 and directed the document to
       be sent to the Registrar of Stamps for recovery of the stamp
       duty and penalty on it as per law – Appellant challenged the
       same by filing writ petition, which was dismissed by the High
       Court – Correctness:
       Held: In the instant case, the agreement to sell executed between
       the appellant and mother of the respondent no.1, stated that the
       suit property was occupied by the appellant on a rental basis and
       it would not be a part of the sale transaction – Further, there was
       a clause, by which, timeline was given for execution of sale deed –
       Since the possession was admittedly given to the appellant even
       before the date of agreement, implying acquisition of possessory
       rights protected u/s.53A of the Transfer of Property Act, the same
       requires payment of proper stamp duty – The agreement to sell
       includes a clause stating that physical possession had already
       been handed over to the appellant, regardless of the basis of such



* Author
[2025] 2 S.C.R.                                                             671

      Ramesh Mishrimal Jain v. Avinash Vishwanath Patne & Anr.


     possession – This satisfies the requirement to treat the instrument
     as a ‘conveyance’ within the meaning of Explanation I to Article
     25 of Schedule I of Bombay Stamp Act, with only the formality of
     executing the sale deed remaining – Pertinently, it is to be pointed
     out that the appellant filed a suit for specific performance of the
     agreement to sell against the respondents; respondent no.1 filed a
     suit seeking eviction of the appellant from the subject property; and
     both the suits are pending, which clearly establish the possession
     of the property by the appellant – Therefore, the said document is
     liable for payment of stamp duty at the hands of the appellant –
     The Courts below rightly impounded the document and directed
     the same to be sent to the Registrar of Stamps for recovery of
     deficit stamp duty and penalty as per law, by the orders impugned
     herein. [Paras 11, 12]

                              Case Law Cited
     Veena Hasmukh Jain and Another v. State of Maharashtra and
     Others [1999] 1 SCR 302 : (1999) 5 SCC 725; Shyamsundar
     Radheshyam Agrawal v. Pushpabai Nilkanth Patil [2024] 9 SCR
     881 : (2024) 10 SCC 324 – relied on.
     Veena Hasmukh Jain v. State of Maharashtra [1999] 1 SCR 302 :
     (1999) 5 SCC 725 : 1999 SCC Online SC 78 – referred to.
     B. Ratnamala v. G. Rudramma, 1999 SCC OnLine AP 438 –
     referred to.

                                List of Acts
     Bombay Stamp Act, 1958; Transfer of Property Act, 1882.

                             List of Keywords
     Agreement to sell; Conveyance; Explanation I to Article 25 of
     Schedule I of Bombay Stamp Act, 1958; Section 53A of Transfer
     of Property Act; Recovery of Deficit stamp duty; Penalty.

                            Case Arising From
     CIVIL APPELLATE JURISDICTION: Civil Appeal No. 2549 of 2025
     From the Judgment and Order dated 29.08.2019 of the High Court
     of Judicature at Bombay in WP No. 3246 of 2016
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                                     Appearances for Parties
       Advs. for the Appellant:
       Abhimanyu Bhandari, Sr. Adv., Ms. Rooh-e-hina Dua, Harshit
       Khanduja, Ankit Khera.
       Advs. for the Respondents:
       Ms. Awantika Manohar, Dhawesh Pahuja, Nilesh Sharma,
       Ms. Parul Dhurvey, P Mohit Krishna.

                        Judgment / Order of the Supreme Court

                                                Judgment

       R. Mahadevan, J.

       Leave granted.
2.     The challenge made in this appeal is to the order dated 29.08.2019,
       by which the High Court of Judicature at Bombay1 dismissed Writ
       Petition No.3246 of 2016. As a consequence thereof, the order dated
       03.08.2015 passed by the Court of Civil Judge (Senior Division),
       Ratnagiri,2 was upheld. The trial Court in its order dated 03.08.2015
       had allowed the application filed by the respondents and impounded
       the document (Exhibit 30) i.e., agreement to sell dated 03.09.2003
       in respect of the property comprising House No.78/B/8 (18 x 9 feet)
       and an adjoining room (9 x 3 feet) situated at Paiki Village Kasaba
       Khed, Khed Taluk, and directed the same to be sent to the Registrar
       of Stamps for recovery of deficit stamp duty and penalty on it, as
       per law.
3.     The appellant, originally, preferred a suit being Special Civil Suit No.65
       of 2012 before the Court of Civil Judge, Senior Division, Ratnagiri, for
       specific performance of the agreement to sell deed dated 03.09.2003
       and other reliefs. Repudiating the same, the Respondent Nos.1 and
       2 filed their written statement. Pending the suit, the respondents filed
       an application under section 34 of the Bombay Stamp Act, 1958,
       for impounding the document stating that the agreement in question
       was executed on a stamp paper of Rs.50 /- and the suit property


1    Hereinafter referred to as “the High Court”
2    Hereinafter referred to as “the trial Court”
[2025] 2 S.C.R.                                                         673

      Ramesh Mishrimal Jain v. Avinash Vishwanath Patne & Anr.



     was situated within the limits of Khed Municipal Council and hence,
     stamp duty of Rs.44,000/- was required to be paid, besides penalty
     of Rs.1,31,850/-. The said application was resisted by the appellant
     by stating that the agreement of sale was not an agreement of
     conveyance and hence, no stamp duty was payable on the same.
     However, by order dated 03.08.2015, the trial Court allowed the
     said application, impounded the sale agreement dated 03.09.2003
     and directed the document to be sent to the Registrar of Stamps for
     recovery of the stamp duty and penalty on it as per law. Challenging
     the same, the appellant preferred W.P.No.3246 of 2016, which was
     dismissed by the High Court, by the order impugned in this appeal.
4.   According to the learned counsel for the appellant, Explanation I to
     Article 25 of the Bombay Stamp Act, 1958, applies only in cases,
     where there is either an actual transfer of possession or an agreement
     to transfer possession pursuant to the agreement to sell; and it does
     not apply to cases where the transfer of possession is explicitly
     contingent upon the execution of a subsequent document, such as,
     sale deed or conveyance deed. Further, Explanation I presupposes
     an immediate or agreed transfer of possession under the agreement
     to sell itself. When the transfer of possession is linked to a future
     event, such as the execution of a sale deed, the agreement cannot
     be deemed to be a conveyance for the purposes of stamp duty under
     Explanation I; and in cases, where possession remains with the
     seller until the sale deed is executed, the agreement to sell cannot
     be equated with a conveyance, and no stamp duty can be levied
     as such. Therefore, Explanation I does not apply to agreements
     where the transfer of possession is to occur subsequently on the
     execution of a sale deed or conveyance deed and such agreements
     remain liable for stamp duty only at the stage of execution of the
     final conveyance.
     4.1. Continuing further, the learned counsel submitted that in the
          present case, the agreement to sell dated 03.09.2003 explicitly
          states that the suit property is in the possession of the appellant
          in the capacity as tenant, and this possession is independent
          of the sale transaction. The agreement further clarifies that
          possession on ownership basis will only be handed over to the
          appellant, after the execution of the sale deed. The extension
          agreement dated 28.07.2004 entered into between the parties,
          also reiterates the same position and it expressly states that the
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            appellant’s possession will continue to be on a monthly tenancy
            basis until the execution of the sale deed. On the basis of the
            specific clauses contained in the said agreements, the appellant
            sought the relief of specific performance in the following terms:
                 “The suit of the Plaintiff is, to be allowed with costs and
                 the Defendant No. 1 be directed to register the Sale
                 Deed in respect of the suit property in the name of
                 the Plaintiff after receiving the balance consideration
                 amount as mentioned in the Agreement for Sale and
                 to pass an order to give the possession of the suit
                 property on the ownership basis to the Plaintiff. The
                 Court Commissioner will be appointed to register the
                 Sale Deed in the name of the Plaintiff if the Defendant
                 No. 1 failed to do so.”
            Thus, according to the learned counsel, Explanation I to Article
            25 of Schedule I of the Bombay Stamp Act, 1958, does not
            apply to the facts of the present case, wherein, the conditions
            necessary for its application are not satisfied viz., (i)no possession
            was transferred under the agreement to sell; (ii)no agreement
            to transfer possession exists until the sale deed is executed;
            and (iii)the possession of the appellant remains that of a tenant,
            which is legally distinct and independent; and hence, no stamp
            duty can be levied on the agreement to sell dated 03.09.2003.
            However, the trial Court erred in holding that Explanation I
            applies to the present case and directed the document to be
            sent to the Registrar of Stamps for recovery of stamp duty and
            penalty from the appellant; and the same was also affirmed by
            the High Court by the order impugned herein. Therefore, the
            learned counsel prayed to allow this appeal by setting aside the
            order of the High Court.
5.     On the contrary, the learned counsel appearing for the respondents
       submitted that the subject property was jointly owned by the
       Respondent No.1 and his mother and after her demise, the
       Respondent No.1 became the absolute owner of the same. The
       Respondent No.1 stoutly denied the execution of the agreement
       to sell dated 03.09.2003 between the appellant (tenant) and his
       mother (landlord) for a consideration of Rs.11,00,000/- out of which,
       an advance payment of Rs.1,00,000/- was made by the appellant,
[2025] 2 S.C.R.                                                          675

      Ramesh Mishrimal Jain v. Avinash Vishwanath Patne & Anr.


     and the timeline provided in the agreement for execution of the sale
     deed and also handing over the possession. However, the appellant
     filed a suit for specific performance of the alleged agreement to sell
     and the same is at the stage of recording of evidence.
     5.1. It is further submitted that in terms of Article 25 of Schedule I of
          the Bombay Stamp Act, agreement to sell is to be treated as a
          “conveyance” if possession is (i) handed over immediately; or (ii)
          agreed to be transferred without mentioning any particular time.
          In the present case, the appellant was already in possession
          as a tenant and in terms of agreement to sell, it was agreed to
          transfer possession within 11 months thereto or extended time,
          and therefore the said agreement to sell will be a ‘deemed’
          conveyance within the meaning of explanation I to Article 25 of
          Schedule I of Bombay Stamp Act and stamp duty as provided
          thereunder is leviable. In support of his contention, the learned
          counsel placed reliance on the decisions of this court in Veena
          Hasmukh Jain and another v. State of Maharashtra and Others3
          and Shyamsundar Radheshyam Agrawal v. Pushpabai Nilkanth
          Patil,4 wherein, it was categorically held that stamp duty is levied
          only on the document and not on the transaction.
     5.2. The learned counsel also submitted that though the appellant
          stated that no possession was given to him under agreement
          to sell, he retained possession as a tenant, and till date, he is
          continuing in possession of the suit property. Taking note of the
          same, the Courts below opined that there was a need to pay
          stamp duty on the consideration amount of the agreement to
          sell as per the Bombay Stamp Act, and accordingly, directed
          impounding of the document and send it to the Registrar of
          Stamps for recovery of stamp duty and penalty, as per law,
          from the appellant.
     5.3. It is also submitted that in 2013, Respondent No. 1 filed a civil
          suit titled ‘Avinash Vishwas Patne v. Ramesh Mishrilal Jain’
          seeking eviction and possession of the suit premises, which
          is now pending before the Jt. Civil Judge Junior Division and
          JMFC Khed.


3   (1999) 5 SCC 725
4   (2024) 10 SCC 324
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       5.4. Stating so, the learned counsel submitted that the order impugned
            herein does not call for any interference at the hands of this court.
6.     We have considered the rival submissions and also perused the
       documents placed before us.
7.     The short question that arises for our consideration is, whether the
       appellant is liable to pay stamp duty and penalty on the agreement
       to sell dated 03.09.2003 allegedly executed between the appellant
       and the mother of Respondent No.1 in respect of the suit property.
8.     It is the specific case of the appellant that the agreement to sell
       clearly states that the possession of the appellant is on a rental
       basis and the same will not form part of the sale transaction; that,
       possession on ownership will be given only upon completion of the
       sale transaction and execution of the sale deed; and therefore, the
       question of treating the agreement as a deemed conveyance does
       not arise. It is also stated that the decisions referred to on the side
       of the respondents are not applicable to the present case as they
       are factually different and distinct.
9.     However, the legal position is very clear that the stamp duty is on the
       instrument and not on the transaction. Furthermore, it is immaterial,
       whether the possession of the property has been handed over at the
       time of execution of the agreement to sell or whether it has been
       agreed to transfer the possession. In this regard, it will be useful
       to refer to Explanation 1 to Article 25 of Schedule I of the Bombay
       Stamp Act, which reads as under:
            “Explanation I.—For the purposes of this article, where
            in the case of agreement to sell an immovable property,
            the possession of any immovable property is transferred
            or agreed to be transferred to the purchaser before the
            execution, or at the time of execution, or after the 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 leviable accordingly:
            Provided that, the provisions of Section 32-A shall apply
            mutatis mutandis to such agreement which is deemed to be
            a conveyance as aforesaid, as they apply to a conveyance
            under that Section:
[2025] 2 S.C.R.                                                                677

      Ramesh Mishrimal Jain v. Avinash Vishwanath Patne & Anr.


            Provided further that, where subsequently a conveyance
            is executed in pursuance of such agreement of sale, the
            stamp duty, if any, already paid and recovered on the
            agreement of sale which is deemed to be a conveyance,
            shall be adjusted towards the total duty leviable on the
            conveyance.”
10. Additionally, the following decisions are also relevant and they are
    reiterating the above stated legal position:
     (i)    In Veena Hasmukh Jain v. State of Maharashtra,5 while dealing
            with the question as to whether the agreement to sell can be
            treated as a document of conveyance, liable for levy of stamp
            duty, this Court held as follows:
                   “8. The duty in respect of an agreement covered by
                   the Explanation is leviable as if it is a conveyance.
                   The conditions to be fulfilled are that if there is an
                   agreement to sell immovable property and possession
                   of such property is transferred to the purchaser
                   before the execution or at the time of execution or
                   subsequently without executing any conveyance in
                   respect thereof, such an agreement to sell is deemed
                   to be a “conveyance”. In the event a conveyance
                   is executed in pursuance of such agreement
                   subsequently, the stamp duty already paid and
                   recovered on the agreement of sale which is deemed
                   to be a conveyance shall be adjusted towards the
                   total duty leviable on the conveyance. Now, in the
                   present case, the agreement entered into clearly
                   provides for sale of an immovable property and there
                   is also a specific time within which possession has
                   to be delivered. Therefore, the document in question
                   clearly falls within the scope of Explanation I. It is
                   open to the legislature to levy duty on different kinds
                   of agreements at different rates. If the legislature
                   thought that it would be appropriate to collect duty
                   at the stage of the agreement itself if it fulfils certain
                   conditions instead of postponing the collection of such


5   (1999) 5 SCC 725 : 1999 SCC Online SC 78
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       duty till the completion of the transaction by execution
       of a conveyance deed inasmuch as all substantial
       conditions of a conveyance have already been fulfilled
       such as by passing of a consideration and delivery of
       possession of the property and what remained to be
       done is a mere formality of execution of a sale deed,
       it would be necessary to collect duty at a later (sic
       agreement) stage itself though right, title and interest
       may not have passed as such. Still, by reason of the
       fact that under the terms of the agreement, there is
       an intention of sale and possession of the property
       has also been delivered, it is certainly open to the
       State to charge such instruments at a particular rate
       which is akin to a conveyance and that is exactly
       what has been done in the present case. Therefore,
       it cannot be said that levy of duty is not upon the
       instrument but on the transaction. Therefore, we reject
       the contention raised on behalf of the appellants in
       that regard.
       9. The learned counsel for the appellants urged that
       the character of an instrument cannot be determined
       by reason of a subsequent event to take place such as
       handing over of possession. But a close examination
       of the provisions of the Explanation will make it clear
       that in the case of an agreement to sell immovable
       property possession is transferred at any time without
       executing the conveyance in respect thereof and such
       an instrument is deemed to be a “conveyance”. The
       object of the Explanation is clear that if an agreement
       is entered into and that agreement itself contemplates
       the delivery of possession of the property within the
       stipulated time, then such an agreement should be
       deemed to be a conveyance for the purpose of duty
       leviable under the Bombay Stamp Act.
       10. It is clear that the object of the Stamp Act is to
       levy stamp duty on different kinds of instruments. The
       legislature, in the present case, has chosen to levy a
       rate of duty equivalent to conveyance in respect of an
       agreement though the transaction may not have been
[2025] 2 S.C.R.                                                            679

      Ramesh Mishrimal Jain v. Avinash Vishwanath Patne & Anr.


                   completed because of certain instruments arising out
                   of such agreement being executed and possession
                   thereof being taken prior to or simultaneous with the
                   document or subsequently. But in the Explanation,
                   it is not clear that if the document provides that
                   possession has to be taken without execution of the
                   conveyance, certainly it would attract the appropriate
                   duty. If the agreement provides that possession will
                   be handed over on the execution of a conveyance
                   as contemplated under Section 11 of the MOF Act,
                   then the Explanation shall not be attracted at all.
                   In the present case, it is clear that in the terms of
                   the agreement, there is no provision made at all for
                   execution of the conveyance. On the other hand, what
                   is submitted is that the provisions of the MOF Act
                   could be applied to the agreement and, therefore, a
                   conveyance could be executed subsequently when
                   it is not clear as to when the conveyance is to be
                   executed and the stipulated time within which the
                   possession has to be handed over. If that is so, it is
                   clear that the document would attract duty as if it is
                   a conveyance as provided in the Explanation. Thus
                   we find no error in the view taken by the High Court.
                   It is not necessary to examine in these appeals as
                   to whether the instrument in question itself conveys
                   a title or not. Therefore, we uphold the decision of
                   the High Court made in this regard. The appeals are
                   dismissed.”
     (ii)   Referring to the aforesaid judgment, this Court in Shyamsundar
            Radheshyam Agrawal v. Pushpabai Nilkanth Patil,6 held that
            the object of the Explanation is clear that if an agreement is
            entered into and that agreement itself contemplates the delivery
            of possession of the property within the stipulated time, then,
            such an agreement should be deemed to be a conveyance for
            the purpose of duty leviable under the Bombay Stamp Act. The
            relevant paragraphs of the same read as under:



6   (2024) 10 SCC 324
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                  “16. In the instant case, in the documents, though
                  there was a clause for conveyance between the
                  vendors and purchasers in relation to the respective
                  properties, the value of the properties were above
                  Rs 100 and there was also a clause by which
                  possession was admittedly handed over on the date
                  of the agreement, implying acquisition of possessory
                  rights protected under Section 53-A of the Transfer of
                  Property Act, which requires payment of proper stamp
                  duty and registration as mandated under Section 17
                  of the Registration Act. Further, as per Section 4(2) of
                  the Maharashtra Stamp Act, the parties are at liberty
                  to determine as to which of the document shall be
                  principal document.
                  17. As noted above, the agreement for sale consists
                  of a clause whereby the possession was handed over
                  to the purchaser satisfying the requirement to treat
                  the instrument as conveyance and what remained
                  was only the formality of execution of the sale
                  deed. Therefore, it can be safely concluded that the
                  agreement for sale was the principal document on
                  which stamp duty was to be paid as per Article 25.
                  18. Even considering the contention of the appellant,
                  that the sale agreements ultimately concluded in the
                  sale deed on which stamp duty was paid, would not
                  ipso facto absolve the primary liability of paying the
                  appropriate stamp duty at the time of execution of
                  the sale agreement as it was the principal document.
                  Therefore, we are of the opinion that Section 4 of
                  the Act cannot come to the aid of the appellants.
                  Therefore, all these six documents ought to have
                  been necessarily stamped and registered.”
       (iii) In similar circumstances, the Andhra Pradesh High Court in
             B. Ratnamala v. G. Rudramma,7 after interpreting the relevant
             expressions, observed as follows:



7   1999 SCC OnLine AP 438
[2025] 2 S.C.R.                                                          681

      Ramesh Mishrimal Jain v. Avinash Vishwanath Patne & Anr.


                “9. While considering the provisions of the Indian
                Stamp Act, it has to be borne in mind that the said Act
                being a fiscal statute, plain language of the section
                as per its natural meaning is the true guide. No
                inferences, analogies or any presumptions can have
                any place. As the incidence of duty is on the execution
                of the deed, regard must, therefore, be had only to
                the terms of the document. Thus the main question
                that falls for consideration is the interpretation of
                the expressions “followed by or evidencing delivery
                of possession”. These expressions cannot be read
                in isolation and one has to find the true meaning
                by reading the entire Explanation and more so
                in conjunction with the earlier expression i.e.,
                “agreement”. Even if these two expressions are
                looked independently, it means an agreement to sell
                followed by delivery of possession and an agreement
                to sell evidencing delivery of possession. In the first
                case, i.e., “followed by delivery”, possession cannot
                be disjuncted from the basic source i.e., agreement
                to sell. Therefore, the expression followed by delivery
                of possession should have a direct nexus to the
                agreement and should be read in juxtaposition to
                the word ‘agreement’ and it cannot be independent
                or outside the agreement. Therefore, the delivery of
                possession should follow the agreement i.e., through
                the agreement. It takes in its sweep the recital in the
                agreement itself that delivery of possession is being
                handed over. It will also cover cases of delivery of
                possession contemporaneous with the execution of
                agreement, even if there is no specific recital in the
                agreement. In other words, the delivery of possession
                should be intimately and inextricably connected
                with the agreement. And in the second type, i.e.,
                agreements evidencing delivery of possession, if the
                document contains evidence of delivery of possession
                by a recital in that behalf, that is sufficient. Such
                delivery of possession can be prior to the date of
                agreement and need not be under the agreement. If
                the agreement records the fact that the possession
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       was delivered earlier and such recital serves as
       evidence of delivery of possession, though prior to the
       Agreement, it falls under the second limb. Therefore,
       on a proper interpretation of the said expressions, it
       would follow that an agreement containing specific
       recital of delivery of possession or indicating delivery
       of possession even in the past is liable for stamp duty
       as a ‘sale’ under the said Explanation.
       11. Mohd. Gafoor (supra) is a case where an
       agreement was executed with the tenant in possession
       wherein it was contemplated that the purchaser
       (the tenant) can retain the possession and further
       authorised to collect the rents for himself and sublet
       the premises. In that context, the learned Judge held
       that there is no delivery of possession of property
       under the agreement. To put it differently, possession
       has not followed the agreement and it does not
       evidence delivery of possession. Before the learned
       single Judge, neither of the decisions in Mekapothula
       Linga Reddy (supra) and D. Ramachandra Rao
       (supra) were cited. No doubt, the twin situations
       contemplated under the Explanation I were kept in
       view but however, on the facts, the learned Judge
       came to the conclusion that there is no delivery of
       possession as the person in possession continued
       to remain therein. Basically, the learned Judge
       has not taken into consideration the incidence of
       agreement and the change in the jural relationship
       between the parties. Earlier, the parties were having
       the relationship of landlord and tenant and under
       the agreement, the relationship has transformed
       into that of a vendor and purchaser. Thus, there is
       a total novation of not only the situation, but also the
       relationship and the respective right and obligations.
       Even though the parties remain in the same position,
       the nature of their relationship can be altered. In Mohd.
       Gafoor (supra), certainly the tenant has catapulted
       into a purchaser. Even though there may not be
       a redelivery of possession as a tenant and again
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                delivery back to the same person as a purchaser,
                but the factum of change of relationship certainly
                leads to the inference of a change in the nature of
                possession, even if it were to be taken as a symbolic
                delivery. Therefore, it cannot be said that simply
                because one continued to remain in possession,
                though in different capacities, there is non-delivery
                of possession. A symbolic delivery may also amount
                to actual delivery in given circumstances. Thus in the
                case in Mohd. Gafoor (supra), there was delivery of
                possession and the said explanation gets attracted.
                12. The Apex Court had an occasion to consider the
                provisions under the Bombay Stamp Act, 1958 in
                Veena Hasmukh Jain v. State of Maharastra, JT 1999
                (1) SC 186. Explanation I to Article 25 of Schedule I
                to the Bombay Stamp Act reads as follows:
                Explanation I:— For the purpose of this Article,
                where in the case of agreement to sell an immovable
                property, the possession of any immovable property
                is transferred to the purchaser before the execution,
                or at the time of execution, or after the 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 leviable accordingly”.
                Interpreting the said explanation, it was held:
                “The duty in respect of an agreement covered by the
                Explanation is leviable as if it is a conveyance. The
                conditions to be fulfilled are if there is an agreement
                to sell immovable property and possession of such
                property is transferred to the purchaser before the
                execution or at the time of execution or subsequently
                without executing any conveyance in respect thereof,
                such an agreement to sell is deemed to be a
                “conveyance”. In the event a conveyance is executed
                in pursuance of such agreement subsequently,
                the stamp duty already paid and recovered on the
                agreement of sale which is deemed to a conveyance
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       shall be adjusted towards the total duty leviable on the
       conveyance. Now, in the present case, the agreement
       entered into clearly provides for sale of an immovable
       property and there is also a specific time within
       which possession has to be delivered. Therefor, the
       document in question clearly falls within the scope of
       the Explanation I. It is open for the Legislature to levy
       duty on different kinds of agreement in different rates.
       If the Legislature thought that it would be appropriate
       to collect duty at the stage of agreement itself if it fulfills
       certain conditions instead of postponing the collection
       of such duty till the completion of the transaction
       by execution of conveyance deed inasmuch as all
       substantial conditions of a conveyance have already
       been fulfilled such as by passing of a consideration
       and delivery of possession of the property and what
       remained to be done is a mere formality of execution
       of a sale deed, it would be necessary to collect duty
       at a later stage itself though right, title and interest
       may not have passed as such. Still by reason of the
       fact that under the terms of the agreement there is an
       intention of sale and possession of the property has
       also been delivered, it is certainly open to the State
       to charge such instruments at a particular rate which
       is akin to a conveyance and that it exactly what has
       been done in the present case. Therefore, it cannot
       be said that levy of duty is not upon the instrument
       but on the transaction”.
       13. Thus, it was a specific case where in so many
       words the Explanation takes in all the situations
       i.e., delivery of possession before the execution or
       at the time of execution or after the execution of an
       agreement and such agreements are deemed to be
       conveyances for the purpose of imposing stamp duty.
       Thus the Apex Court had approved the intention of
       the Legislature in equalising an Agreement on par
       with a conveyance in the circumstances contemplated
       thereunder, apparently, the object being to realise the
       revenue at the earliest point of time on the Agreement
       akin to sale deeds. Though in different words, in
[2025] 2 S.C.R.                                                         685

      Ramesh Mishrimal Jain v. Avinash Vishwanath Patne & Anr.


                the instant case, the amendment brought in tries to
                achieve a similar object.
                14. In the case on hand, there is a variation in the
                expressions used viz., “followed by” and “evidencing
                delivery of possession”. As discussed above, the
                expression “followed by” should be read in conjunction
                with the earlier expression “agreement” and in the
                latter case, any agreement recording delivery of
                possession should invite the stamp duty as a sale
                deed, even though the possession had been delivered
                in the past. The expression “evidencing delivery of
                possession” applies to the situation with which we
                are concerned in the present case.”
11. In the instant case, the agreement to sell executed between the
    appellant and mother of the Respondent No.1, specifically states that
    “this property is in your occupation on rental basis and it will not be
    part of the sale transaction. After completion of sale transaction, the
    possession of the said property will be given to you on the ownership
    basis. This makes it very clear that the suit property was occupied
    by the appellant on a rental basis and it would not be a part of the
    sale transaction. Further, there was a clause, by which, timeline was
    given for execution of sale deed. Since the possession was admittedly
    given to the appellant even before the date of agreement, implying
    acquisition of possessory rights protected under Section 53A of the
    Transfer of Property Act, the same requires payment of proper stamp
    duty. As indicated above, the agreement to sell includes a clause
    stating that physical possession had already been handed over
    to the appellant, regardless of the basis of such possession. This
    satisfies the requirement to treat the instrument as a ‘conveyance’
    within the meaning of Explanation I to Article 25 of Schedule I of
    Bombay Stamp Act, with only the formality of executing the sale
    deed remaining. Pertinently, it is to be pointed out that the appellant
    filed a suit for specific performance of the agreement to sell against
    the respondents; Respondent No.1 filed a suit seeking eviction
    of the appellant from the subject property; and both the suits are
    pending, which clearly establish the possession of the property by
    the appellant. Therefore, the said document is liable for payment of
    stamp duty at the hands of the appellant.
686                                                         [2025] 2 S.C.R.

                              Supreme Court Reports


12. Considering the factual and legal aspects, the Courts below
    impounded the document and directed the same to be sent to the
    Registrar of Stamps for recovery of deficit stamp duty and penalty
    as per law, by the orders impugned herein, which according to us, is
    perfectly correct. However, we make it clear that as per the second
    proviso to Article 25, if the stamp duty is already paid or recovered
    on the agreement to sell, then, the same shall be deducted while
    computing the stamp duty payable, when the sale deed is executed;
    and the recovery shall be restricted only to the extent of difference in
    stamp duty and the entire penalty from the date of execution of the
    agreement to sell till the date of payment of stamp duty. Needless to
    state that until the defect is cured by satisfying the requirements under
    Section 34, the document impounded cannot be used in evidence.
13. In the light of the above discussion, we do not find any reason to
    interfere with the orders passed by the Courts below. Accordingly,
    this appeal stands dismissed as devoid of merits. No costs. Pending
    application(s), if any, shall stand closed.

       Result of the case: Appeal dismissed.



       †
           Headnotes prepared by: Ankit Gyan