Ranjit Singh vs Karnail Singh & Ors.

HARKESH MANUJA, J. (Oral)

By way of present revision petition, challenge has been laid to the order dated 01.10.2026 passed by the learned Civil Judge (Senior Division) Malerkotla, whereby the petitioner has been directed to make good the deficiency in stamp duty along with amount of penalty equivalent to the stamp duty.

In the present case, based upon an agreement to sell dated 15.10.2019, the petitioner/plaintiff filed a suit for possession by way of specific performance of said agreement to sell and writing dated 26.05.2020 qua 10 Bighas 07 Biswas of land, situated in village Gowwara, Tehsil and District Malerkotla.

While the proceedings in the suit being at the stage of petitioner/plaintiff’s evidence, an application came to be filed at the instance of the respondents/defendants with a prayer for impounding the alleged agreement to sell dated 15.10.2019 along with writing dated 26.05.2020, which was though opposed at the instance the of petitioner/plaintiff, however was allowed by the learned Trial Court vide the impugned order dated 01.10.2026 with the following observations:-

I have heard learned counsel for the petitioner and gone through the paper book.

I am unable to find substance in the submissions made on behalf of learned counsel for the petitioner to the effect that the petitioner/plaintiff was in possession of the subject property even prior to the date of entering into the agreement to sell dated 15.10.2019, as there is no such specific averment made in the plaint. As such, in the given facts and circumstances, wherein the plaint itself records that physical possession was handed over to the petitioner/plaintiff on 26.05.2020 and the writing of even date, made on the reverse of the agreement, evidences such delivery, the learned Trial Court was justified in holding that the instrument falls within Entry 5(cc) of Schedule 1-A of the Indian Stamp Act, 1899, as applicable in the State of Punjab, i.e. an agreement to sell followed by or evidencing delivery of possession. The plea that possession was taken only for cultivation and not as owner, cannot override the recital of delivery of possession in the writing and the averments in the plaint. Reliance on Vijay Kumar Goyal (Dead) through LRs v. Neena Rani, Civil Appeal No.6538 of 2022, decided on 16.09.2022, is misplaced, as that was a case where possession was already with the purchaser and was not delivered under the agreements, whereas there is no such averment in the present case.

So far as the penalty is concerned, Section 35 of the Indian Stamp Act, 1899 bars admission in evidence of an insufficiently stamped instrument, which may be admitted on payment of the deficient duty together with penalty under proviso (a) thereto. The law on the quantum of penalty stands settled by this Court in Gurinder Singh Dhaliwal v. Pargat Singh and others, CR-1734-2019 (O&M), decided on 20.07.2022, wherein, relying upon Trustees of H.C. Dhanda Trust v. State of Madhya Pradesh and others, 2020 AIR (SC) 4349, it was held that imposition of penalty of ten times is not mandatory. The penalty is not to be imposed as a matter of course or mechanically; the discretion has to be exercised on rational basis, having regard to the conduct and intent of the party, and the extreme penalty is warranted only in very extreme situations involving fraud, deceit or deliberate evasion of duty.

In the present case, the learned Trial Court directed payment of penalty equivalent to the amount of the deficient stamp duty only, and not ten times thereof. There is nothing on record to show that the petitioner was aware of the Punjab amendment and deliberately evaded payment of duty. The penalty so imposed is in consonance with the principles laid down in Gurinder Singh Dhaliwal (supra), where also penalty equal to the deficient duty was held appropriate. The petitioner, therefore, has no cause for grievance on this score.

The deficient duty shall, however, be computed in accordance with Entry 5(cc) read with Sub-column 2 of Column 2 of Entry 23 of Schedule 1-A, as applicable in Punjab, as explained in Narinder Kapoor and others v. Inderjit (since deceased) through his legal heir and others, CR-1931-2017 and CR-3172-2018, decided on 12.02.2020, i.e. on the amount paid/payable under the agreement and not on the entire sale consideration, subject to adjustment at the time of execution of the sale deed. The present revision petition is, therefore, disposed of in the above terms. The petitioner shall make good the deficiency in stamp duty along with penalty before the learned Trial Court within four weeks from today.

All pending misc. applications, if any, are also disposed of.