Consent Decree Must Not Be Used For Avoiding Registration Of Sale Deeds, Paying Stamp Duty: J&K&L High Court

The Jammu and Kashmir and Ladakh High Court recently cautioned the civil courts that while exercising their jurisdiction utmost care should be taken to ensure that a consent decree is not sought to achieve sinister purposes like avoiding registration of sale deeds or paying stamp duty.

"A collusive decree cannot be used as a cloak for the sale deed. There could be numerous occasions where parties in collusion with each other may approach the civil Courts for passing the decrees in contravention of law and for achieving the unlawful objects," Justice Sanjeev Kumar in a judgement dated September 22.

Stressing on the need to ensure that the consent decrees do not contravene any law, the court asked the Registrar General to ensure circulation of the judgement among judges of the subordinate courts. The bench said it deems it appropriate to sound a note of caution about "this growing tendency" in the litigants.

The court made the the observations in its judgement on a plea challenging the orders passed by the Additional Deputy Commissioner (Commissioner Agrarian Reforms), Anantnag on June, 17, 2022 in an appeal against a decision dated July 16, 2005 of Collector Agrarian Reforms. Before the Collector Agrarian Reforms, the suit in June 2005 had sought a declaration with regard to ownership of a piece of land. The private respondent instead of contesting the claim entered into an amicable settlement with the plaintiff, and accordingly a decree was passed in favour of the petitioner.

However, the Collector Agrarian Reforms later suo motu summoned the parties and reversed its decision on the ground that the compromise was sham and attempted to defeat the provisions of Agrarian Reforms Act and to achieve transfer of immovable property in disguise of sale deed. The decision dated September 1, 2005 was later set aside by the Financial Commissioner Revenue, in the appeal moved by petitioner, on technical grounds.

In a twist, the Respondent - who had earlier entered into a compromise on the dispute, belatedly filed an appeal against the July 16, 2005 decision of Collector Agrarian Reforms before the Commissioner Agrarian Reforms who accepted the appeal against the settlement.

The petitioner through Sr Counsel M A Makhdoomi with Adv Abdul Manan Dar challenged the orders before High Court on the ground that no appeal was maintainable against the order passed on the basis of a compromise entered into between the parties.

It was contended that respondent, who had voluntarily executed a compromise deed acknowledging the petitioner to be absolute owner in possession of the subject land, "could not have been permitted to resile from his solemn affirmation made before the Collector, Agrarian Reforms, Anantnag. "

The counsel further argued that Agrarian Commissioner "without going into this important aspect of the matter" accepted the appeal of the respondent on the ground that the compromise entered into between the parties was only a device to defeat the provisions of the Agrarian Reforms Act and to pass on the property without execution of proper sale deed and payment of stamp duty.

It was also submitted that respondent, who was party to this "alleged machination and manipulation" could not have been permitted to take benefit of his own wrong and hence the appeal was not maintainable.

Court Order :

Noting that the respondent had initially entered into an agreement with the petitioner for sale of the subject land and also handed over possession to the latter, the court observed the parties in collusion had decided to get the consent decree and present a suit for declaration. It added the parties played a fraud on the court.

"The intention of the parties in filing the suit was obvious and the sole purpose was to transfer the agrarian land from respondent No.3 to the petitioner without executing a proper sale deed, without paying the stamp duty and without getting it registered as also to defeat the provisions of the Act," said the court.

On respondent's appeal against the consent decree, the court said he was himself a party to the collusion and cannot be permitted to take the benefit of his own wrong. Dismissing the petition, the court said:

"The competent revenue authority shall take note of the contravention of the provisions of the Act made by the petitioner and the respondent No.3 in respect of the subject land and shall take appropriate action as envisaged under the Act, which may include vesting of the subject land in the State."

Case Title : Mushtaq Ahmad Pandit Vs Addl Deputy Commissioner & Ors.

Citation : 2022 LiveLaw (JKL) 168

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