The appellants initiated a suit (Special Civil Suit No. 200 of 2008) seeking declaration and injunction regarding certain real estate transactions. During the proceedings, one of the defendants (Defendant No. 46) applied for impounding six agreements for sale, arguing they were not duly stamped. The trial court agreed, noting that these agreements contained clauses indicating the transfer of physical possession, thus requiring appropriate stamp duty and registration.

The appellants contended that since a subsequent sale deed had been duly registered and the requisite stamp duty paid, the earlier agreements should not require separate registration or stamping. They pointed to Section 4 of the Maharashtra Stamp Act, which allows for multiple instruments in a single transaction, arguing that their case fell under this provision.

   

The pivotal legal issue revolves around whether the appellants were liable to pay stamp duty and penalties on the prior agreements to sell, given that these agreements were part of a single transaction culminating in a registered sale deed. The relevant sections of the Maharashtra Stamp Act suggest that if multiple instruments are involved in a single transaction, only the principal instrument requires full duty, while others incur a nominal fee.

Interpretation of Section 4:

Section 4 of the Maharashtra Stamp Act states that when several instruments are used to complete a transaction, the principal document is chargeable with the full duty, while others are subject to a nominal fee. However, to qualify as part of the same transaction, the documents must be interrelated and executed among the same parties.

In this case, the court observed that the six impounded documents were not executed as part of a single transaction involving the same parties. Each document represented separate agreements with different vendors and purchasers, thereby failing to meet the criteria set out in Section 4.

Furthermore, the agreements contained clauses stipulating that possession was transferred to the purchasers, which under Article 25 of the Stamp Act, deems these agreements as "conveyances." This necessitated the payment of appropriate stamp duty at the time of execution. The High Court emphasized that the legislative intent behind the Stamp Act is to levy duty on the instruments themselves, not merely on the transactions.

The court's reasoning was supported by a precedent (Veena Hasmukh Jain vs. State of Maharashtra), which established that agreements to sell are considered conveyances when they involve the transfer of possession.

In light of the evidence and legal provisions, both the trial court and the High Court concluded that the agreements were indeed liable for stamp duty and penalties. The impounding of these documents was affirmed, reinforcing the necessity for compliance with stamp duty regulations at the time of executing agreements.

The ruling serves as a reminder to parties involved in real estate transactions about the importance of adhering to stamping and registration requirements. Until compliance is achieved, the impounded documents cannot be utilized in legal proceedings, underscoring the need for meticulous attention to detail in property transactions.