Supreme Court Rules Compromise Decree Affirming Pre-Existing Property Rights Exempt from Registration and Stamp Duty: Sets Aside High Court and Revenue Authorities’ Orders, Directs Mutation in Favor of Appellant

Court’s Decision:

The Supreme Court allowed the appeal, holding that:

1. A compromise decree that merely affirms pre-existing rights over immovable property does not require registration under Section 17(2)(vi) of the Registration Act, 1908.
2. Such a decree is not chargeable with stamp duty under the Indian Stamp Act, 1899, as it does not create new rights but confirms pre-existing ones. The Court set aside the orders of the High Court, Board of Revenue, and Collector of Stamps, and directed the authorities to mutate the revenue records in favor of the appellant.

Facts:

1. The appellant filed a civil suit seeking:
   • A declaration that he was the owner of a specific parcel of land.
   • A permanent injunction to prevent the second respondent from selling or interfering with the property.
2. The appellant claimed long and continuous possession of the land through cultivation.
3. The suit was resolved via a compromise decree between the appellant and the second respondent. The decree affirmed the appellant’s ownership and possession of the land.
4. Based on this decree, the appellant applied for mutation of the land in revenue records. However, the Tehsildar referred the matter to the Collector of Stamps.
5. The Collector determined that stamp duty amounting to ₹6,67,500 was payable under Article 22 of Schedule IA of the Indian Stamp Act, 1899.
6. The appellant challenged this order before the Board of Revenue, which dismissed the appeal. The High Court upheld this decision, relying on a prior judgment that deemed such decrees registrable and subject to stamp duty.

Issues:

1. Does a compromise decree confirming pre-existing rights require registration under the Registration Act, 1908?
2. Is a compromise decree liable to stamp duty under the Indian Stamp Act, 1899?

Petitioner’s Arguments:

1. Pre-Existing Rights: The decree merely affirmed the appellant’s pre-existing rights and did not create new rights over the property.
2. Exemption from Registration: Under Section 17(2)(vi) of the Registration Act, decrees confirming pre-existing rights over suit property are exempt from registration.
3. No Stamp Duty: The decree is not chargeable with stamp duty as it does not fall within the definition of “conveyance” under the Indian Stamp Act.
4. Misapplication of Precedent: The High Court erred in relying on Siddhulal’s case, as it involved different facts and circumstances.

Respondent’s Arguments:

1. New Rights Created: The decree allegedly created new rights for the appellant over the disputed property, making it subject to both registration and stamp duty.
2. Collusion Alleged: The respondents argued that the decree was collusive and intended to evade stamp duty.
3. Title Dispute: The subject land was not recorded in the appellant’s name in revenue records, indicating a dispute regarding ownership.

Analysis of the Law:

Registration Act, 1908

1. Section 17(1): Requires registration for instruments that create, declare, assign, limit, or extinguish rights over immovable property.
2. Section 17(2)(vi): Exempts court decrees from registration unless:
   • The decree is based on a compromise.
   • It pertains to immovable property not originally part of the suit.
3. Supreme Court’s Findings:
   • The compromise decree in this case pertained solely to the suit property and affirmed the appellant’s pre-existing rights.
   • No new rights were created through the decree, making it exempt from registration.

Indian Stamp Act, 1899

1. Section 3 and Schedule IA: Prescribe stamp duty for specific instruments, including conveyances of immovable property.
2. Supreme Court’s Findings:
   • A compromise decree affirming pre-existing rights is not a conveyance and does not transfer new rights.
   • Therefore, it does not attract stamp duty under the Act.

Precedent Analysis:

1. Bhoop Singh v. Ram Singh: Held that a decree creating new rights requires registration and stamp duty.
2. Mohd. Yusuf v. Rajkumar: Clarified that decrees affirming pre-existing rights do not require registration.
3. Ravinder Kaur Grewal v. Manjit Kaur: Established that continuous adverse possession can confer ownership rights, usable as both a shield and a sword in legal proceedings.

Court’s Reasoning:

1. The appellant demonstrated long possession of the land, reinforcing his pre-existing rights.
2. The compromise decree did not transfer new rights but confirmed ownership already held by the appellant.
3. Allegations of collusion were unsupported by evidence.
4. The High Court’s reliance on prior judgments was misplaced, as subsequent Supreme Court rulings had clarified the law on registration and stamp duty requirements for such decrees.

Conclusion:

The Supreme Court overturned the High Court’s order and directed the mutation of revenue records in favor of the appellant. It held that:

1. The compromise decree did not require registration as it pertained to the suit property and affirmed pre-existing rights.
2. The decree was not chargeable with stamp duty as it did not fall within the instruments defined in the Indian Stamp Act.

Implications:

1. The judgment emphasizes the legal distinction between decrees creating new rights and those affirming pre-existing rights.
2. It reduces procedural burdens for litigants, particularly in cases involving compromise decrees that do not involve fresh property rights.
3. The ruling strengthens clarity and consistency in the application of the Registration Act and Stamp Act to court decrees.

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