Indian Stamp Act | “Family” Does Not Include Grandparents, Settlement By Grandchildren To Grandparent Chargeable: Madras High Court

Answering a reference made to it, the full bench of Justice SM Subramaniam, Justice Bharatha Chakravarthy and Justice C Kumarappan held that the Act, being a fiscal and revenue generation law, had to be taken in its literal meaning and could not be given a restrictive or expansive meaning.

“In the instant case, the Indian Stamp Act, 1899, being the fiscal and revenue generation law, gives its own definition for the term 'Family'. It is a legal fiction that is created by law. When fiscal statutes create legal fiction for their purposes, there is no scope for adverting to, or importing the common meaning or logical interpretation or extension of the meaning assigned in other statutes. Thus, what is defined as a 'family' is, and alone, the family, and the meaning of the same can neither be restricted nor expanded,” the court said.

Section 3 of the Act states that duty is charged in respect of every instrument mentioned in Schedule I and the amount is indicated subject to conditions and exemptions mentioned. Article 59 of the Schedule talks about Settlements. This Article was also amended by way of a state amendment, the Indian Stamp (Tamil Nadu Amendment) Act 1981.

As per the provisions, an instrument of settlement is favour of a member or members of a family, is charged at one rupee for every Rs 100 of market value of the property which is under settlement. As per the explanation provided, family means father, mother, husband, wife, son, daughter, grandchild, brother, or sister. Whenever personal law permits adoption, father would also include adoptive father, mother would include adoptive mother, son would include adopted son and daughter would include adopted daughter.

The reference in question was whether the definition of family would include grandparents.

Answering in the negative, the court observed that the explanation is a definition clause for the term family. The court added that when a definition clause uses “means”, the definition is exhaustive and is a hard-and-fast definition to which no other meaning could be assigned.

The court also noted that since the Act was a fiscal statute, and the provision was intended to charge a particular rate of duty to a particular category and when the words were unambiguous, only a literal interpretation should be given.

The court further explained that the provision was brought in to charge lesser duty for settlements made out of love and affection. The court noted that when a grandfather settles property in favour of grandchild, it is out of love and affection and the scope for any other interpretation is very limited.

The court further noted that when the settlement was by a grandchild in favour of grandparent, there was a possibility that it would be further covered to distant relatives and such settlement was only to avoid paying higher duty. The court noted that in such cases, the grandparent was not the beneficiary but only a medium to effect further transfer avoiding duty.

The court thus concluded that no exception could be taken for leaving out grandparents from the definition of family and the same was neither illegal nor illogical. The court thus held that any settlement by a grandchild in favour of the grandparent would be chargeable as per the appropriate provision and not as per Article 58(a)(i).

Counsel for Petitioners: Mr. N. Kumar Rajan, Mr. Ralph V. Manohar

Counsel for Respondents: Mr. Haja Nazirudeen, AAG assisted by Mr. U. Baranidharan, Spl.GP, Mr. P. Harish, GA Mr. P. Haribabu, GA

Case Title: V Shiva v. The Inspector General of Registration and Others

Citation: 2026 LiveLaw (Mad) 82

Case No: Writ Petition Nos.24173 of 2019 and 3480 of 2021