Article 23A Of Schedule I-A Of Stamp Act Applies To Agreements To Sell Under Section 53A Of Transfer Of Property Act: Delhi High Court

The Delhi High Court bench of Justice C.Hari Shankar has held that Article 23A of Schedule I-A of the Stamp Act applicable in Delhi covers Agreement to Sell to which Section 53A of the Transfer of Property Act (TPA) applies. Section 53A of the TPA is designed to protect a transferee who has part performed a contract for the transfer of immovable property. To avail of this protection, the transferee must demonstrate that the contract was in writing, signed by or on behalf of the transferor, that possession of the property was taken by the transferee, that some act was done in furtherance of the contract, and that the transferee has either performed or is willing to perform their part of the contract. The High Court noted that Article 23A of Schedule I-A of the Stamp Act, which pertains to the stamp duty on documents related to the transfer of property, specifically covers agreements to sell. This provision mandates that an ATS, which falls under Section 53A of the TPA, must be properly stamped in accordance with the applicable Stamp Act provisions. The High Court noted that the Article 23A of Schedule I-A to the Stamp Act applies to contracts for the transfer of immovable property under Section 53A of the TPA. Unlike the provisions in Andhra Pradesh and Punjab & Haryana which consider agreements to sell followed by or evidencing delivery of possession as chargeable sales, the High Court noted that Article 23A in Delhi does not incorporate these provisions by reference. Therefore, it specifically pertains to Section 53A of the TPA. The High Court referred to its decision in Vinod Kumar v. Ajit Singh where it was held that Article 23A does not apply to ATS. However, this view was disagreed by the Division Bench of the High Court in Ajit Singh v. Vinod Kumar. The Division Bench noted that a plain reading of Article 23A shows its applicability to contracts for the transfer of immovable property under Section 53A of the TPA. Therefore, the High Court held that Article 23A of Schedule I-A of the Stamp Act applicable in Delhi clearly covers ATS to which Section 53A of the TPA applies. It held that Section 53A of the TPA serves as a shield, not a sword, intended to protect a transferee in possession of immovable property from being dispossessed by the transferor. Further, the bench held that every contract for the transfer of immovable property in the nature of part performance under Section 53A must bear stamp duty as prescribed by Article 23A regardless of its purpose.Section 53A requires several conditions to be met: a contract to transfer immovable property for consideration, clear terms of the transfer, the transferee taking possession of the property, this act being in part performance of the contract, and the transferee performing or willing to perform their part of the contract. It held that possession need not be simultaneous with or immediately follow the ATS's execution. The phrase "in part performance of the contract" signifies a nexus between the taking of possession and the contract. Thus, the bench held that if the transferee acquires possession consequent upon the ATS's execution, Section 53A applies, even if possession is not immediate. The High Court referred to the Supreme Court in Sardar Govindrao Mahadik v. Devi Sahai where it was held that part performance must be evidenced by a written contract and acts unequivocally referable to the contract. The High Court of Madras in Chinnaraj v. Shekh Davood Nachair reiterated that possession taken pursuant to a contract strongly evidences the contract. In Nanjegowda v. Gangamma, the Supreme Court identified the essential elements of Section 53A. Firstly, the contract must be in writing and signed by or on behalf of the transferor. Secondly, the transferee must have obtained possession of the immovable property covered by the contract. Thirdly, the transferee must have performed some act in furtherance of the contract. Finally, the transferee must have either performed or be willing to perform their part of the contract. The Supreme Court held that obtaining possession of the property after the agreement and not referable to it does not constitute part performance. However, if the subsequent possession is clearly referable to the agreement Section 53A would apply. This principle was established in Fgp Ltd v. Saleh Hooseini Doctor where the Supreme Court stated that the act in question must be referable to the contract as alleged to have been partly performed. Brief Facts: Respondent No. 2 entered into a Collaboration Agreement with (Mukesh Aggarwal) Respondent No. 1 for the demolition and reconstruction of the property. The reconstructed property was to include a basement, ground floor, first floor, second floor, and third floor with a terrace. The agreement granted Respondent 1 the right to sell the second floor of the reconstructed property. Respondent 1...

Article 23A Of Schedule I-A Of Stamp Act Applies To Agreements To Sell Under Section 53A Of Transfer Of Property Act: Delhi High Court

Rajesh Kumar

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