Once Sale Deed Is Executed And Stamped, Sale Agreement Can No Longer Be Independently Subjected To Stamp Duty: Karnataka High Court

The Karnataka High Court has held that once a sale deed has been duly executed and stamped, the agreement of sale can no longer be independently subject to stamp duty as it has merged into the sale deed.

A single judge bench of Justice Sachin Shankar Magadum allowed a petition filed by Nagamma and others and set aside the order of the trial court which in a partition suit, had impounded the agreement of sale dated 11.12.2002, produced by them and directed to pay the deficit stamp duty along with penalty.

It said “Entire stamp duty is paid on the sale deed and sale deed is registered. Therefore, though the sale agreement still remains valid, the sale deed will supersede the terms and conditions mentioned in the sale agreement and therefore, the sale deed has to be treated as a final ownership document.”

The petitioners argued that since the agreement of sale is coupled with possession, the document should not independently attract stamp duty given that a sale deed was executed subsequently. The sale deed supersedes the earlier agreement of sale.

Findings:

Bench referred to Article 5(i) of the Karnataka Stamp Act, 1957 which specifies that if possession of the property is delivered or agreed to be delivered before executing a conveyance, such a document is liable for stamp duty as a conveyance. It said that once a sale deed is executed, it absorbs the terms and conditions of the earlier agreement of sale, making the sale deed the governing document of the transaction.

Then it held “The agreement of sale dated 11.12.2002 was followed by the execution of sale deed on 29.08.2005. The sale deed, which was duly stamped and registered, effectively supersedes the agreement of sale. Since the sale deed has been properly executed and bears the appropriate stamp duty, it becomes the operative document governing the transfer of title.”

It added, “Therefore, the imposition of stamp duty under Article 5(e)(i) of the Act, on the agreement of sale in this context is not applicable, as the sale deed is the primary legal instrument reflecting the property transaction.”

Accordingly, it allowed the petition and set aside the impugned order.

Appearance: Advocate N P Vivekmehta for Petitioner.

Advocate A B Patil FOR R2-R4.

Citation No: 2024 LiveLaw (Kar) 350

Case Title: Nagamma & Others AND Rudrayya & Others

Case No: WRIT PETITION NO. 105278 OF 2018

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