Bar Against Admissibility Of Unstamped Instrument Absolute, Even For Collateral Purpose: Bombay High Court
The Bombay High Court held that the bar against admissibility of instrument which was chargeable with stamp duty and not stamped is absolute, irrespective of the nature of purpose, be it for main or collateral purpose.
The Trial Court had granted a temporary injunction in favour of the Respondent on the basis of admission of execution of an unstamped agreement by the parties.
The Bench of Justice S.G. Chapalgaonkar observed, “In this background, if unstamped instrument is admitted even for collateral purpose, it would amount to receiving such document in evidence for a purpose which is prohibited under Section 35 of Stamp Act. The bar against admissibility of instrument which is chargeable with stamp duty and is not stamped is of course absolute whatever be the nature of purpose, be it for main or collateral purpose, unless requirements of proviso (A) to Section 35 are complied with.”
Advocate J. M. Murkute represented the Petitioner, while Advocate Es Potdar represented the Respondent.
Case Brief
Petitioner was the owner of property in question and agreed to sell the same to the Respondent. Accordingly, they executed a Notarised Agreement. The sum and substance of agreement was that the Respondent was permitted to develop land and create saleable plots over the suit property and after selling them, to pay consideration to Petitioner in instalments.
While the Petitioner had to execute documents in favour of prospective purchasers of plots, clear-off encumbrances upon suit plots and finally execute sale deed of balance land after receiving total consideration.
It was the contention of the Respondent that he was ready to pay the balance, however, the Petitioner failed to clear off loans and execute the sale deed.
Accordingly, the Respondent filed a suit for temporary injunction against the Petitioner from alienating suit property by any mode or disturbing possession of Respondent till disposal of that suit. The Trial Court granted such injunction in favour of the Respondent.
It was the contention of the Petitioner that a notarised agreement cannot be termed as agreement to sell in a strict sense. The said agreement was neither registered or stamped but simply notarized on bond paper of Rs.100/-.
While the Respondent contended that the issue as to registration and requisite stamp duty cannot be looked into at the preliminary stage when application for temporary injunction has to be considered.
Court’s Analysis
At the outset, the Bombay High Court observed that agreement to sell in question was neither registered nor sufficiently stamped.
The Court referred to Section 35 of Indian Stamp Act and opined that if unstamped instrument was admitted even for collateral purpose, it would amount to receiving such document in evidence for a purpose which is prohibited under Section 35 of the Stamp Act.
“The bar against admissibility of instrument which is chargeable with stamp duty and is not stamped is of course absolute whatever be the nature of purpose, be it for main or collateral purpose, unless requirements of proviso (A) to Section 35 are complied with”, the Court added.
Resultantly, the document of agreement to sell could not have been considered for any purpose for accepting the Respondent’s case.
However, it was the admitted case of parties that the agreement was executed. It was the delivery of possession to the Respondent that was denied by the Petitioner.
“If contents of agreement to sell are ignored for want of its admissibility, there is nothing on record to depict that plaintiff has received possession of suit property and even exact nature of transaction cannot be ascertained at this stage…The Courts have erroneously observed that prima facie value of document could be adjusted at the time of granting interim injunction; however, such observations are not in tune with legal position”, the Court said.
The Court temporarily restrained the Petitioner from alienating the suit property by any mode of transaction. While the order of temporary injunction passed against Petitioner to not to disturb the possession of Respondent over the suit property was quashed.
Accordingly, the petition was partly allowed.
Cause Title: Salim Baig V. Sayyad Nawid (Neutral Citation:2025:BHC-AUG:19926)