The dispute in question arose in Regular Civil Suit No. 105 of 2014, which was pending before the Civil Judge Senior Division at Gadhinglaj, Kolhapur. The respondents (Plaintiffs) sought a partition and declaration regarding a sale deed executed in February 2003, which they claimed was not binding. The land in dispute included agricultural land and several R.C.C. shops.

The petitioner (Defendant No. 1) countered the allegations by asserting that a partition of the disputed property had already taken place under an unregistered document dated January 18, 2013. This document, titled "Noting of Partition by way of Family Arrangement," purportedly formalized the division of the family property, assigning two plots of land to the petitioner. However, the plaintiffs contested the validity of this document through an amendment to the suit.

During the trial, the question of insufficient stamping was raised when the partition deed was presented as evidence. The trial court, upon examining the deed, ruled that the document needed to be impounded for payment of the requisite stamp duty and penalty. The document had been executed on stamp paper worth only Rs. 100, which was deemed insufficient for a partition deed under the provisions of the Maharashtra Stamp Act.

The trial court further ordered that the impounded document be sent to the Collector of Stamps for assessment of the deficit stamp duty and penalty. The Collector later communicated that a substantial amount of Rs. 2,75,100 was due as stamp duty, along with a penalty of Rs. 6,60,300. These findings were contested by the petitioner in a writ petition before the High Court.

The petitioner challenged the trial court’s decision, arguing that the order to impound the unregistered partition deed and the subsequent action by the Collector were not justified. The primary objection raised by the respondents was that the document, although unregistered, should have been treated as a "Release Deed" rather than a partition deed. The respondents claimed that the deed only recorded the relinquishment of shares by certain co-sharers in favor of others, and therefore, it did not fall under the category of partition deeds.

The High Court reviewed the arguments presented by both parties and critically examined the nature of the document in question. It found that the document recorded a family arrangement whereby certain co-sharers relinquished their rights to the property, and as such, it constituted a "Recording of Partition" rather than a "Release Deed."

The Court observed that the trial court had erred in treating the issue of registration and insufficient stamping as one and the same. The trial court incorrectly held that registration was mandatory for the document, even though partition deeds in joint Hindu families do not require registration under the Indian Registration Act, 1908, as long as they do not involve a transfer of property. This principle was reinforced in previous judgments, including the case of Arvind Yeshwantrao Deshpande v. State of Maharashtra (2004), which clarified that partition within a Hindu family does not require registration.

The Court also noted that the issue of stamp duty and its assessment fell solely under the jurisdiction of the Collector of Stamps, and not the trial court. The trial court, by impounding the document, had incorrectly assumed the responsibility of determining the stamp duty, which was the prerogative of the Collector.

In light of the above, the High Court set aside the trial court’s order impounding the document and the subsequent communication by the Collector of Stamps. The Court ruled that the partition deed should be admitted as evidence in the trial, subject to its proof in the usual course. The High Court also directed that any stamp duty and penalty already paid to the Collector should be refunded to the petitioner.

The decision emphasized the distinction between the requirements for registration and stamping of partition deeds, particularly in the context of family arrangements. It was clarified that while the deed of partition did not require registration, the correct stamp duty must still be assessed and paid as per the relevant provisions of the Maharashtra Stamp Act.

This case reinforces the need for clarity in the application of the Maharashtra Stamp Act to family partition deeds. It also highlights the importance of distinguishing between legal concepts such as "partition" and "release," which can have significant implications for the assessment of stamp duty. The ruling provides guidance on the procedural aspects of handling family partition documents in court and emphasizes the role of the Collector of Stamps in determining the appropriate stamp duty.

In conclusion, the judgment ensures that the legal process surrounding partition deeds is correctly followed, avoiding unnecessary delays and complications due to misinterpretation of statutory requirements. This case will serve as a reference point for future disputes involving partition deeds and the determination of stamp duty in family arrangements.