Court holds that a supplementary deed altering balance consideration from money to constructed premises does not amount to a fresh conveyance liable for additional stamp duty and penalty under Maharashtra Stamp Act, 1958.
In a significant judgment dated October 6, 2026, the Bombay High Court, presided over by Mr. Amit Borkar, J., delivered a detailed verdict in the case of Om Shivam Builders Private Limited vs. Joint District Registrar & Collector of Stamps, Raigad. The Court quashed the demand for deficit stamp duty and penalty on a Supplementary Deed of Assignment executed in 2013, which changed the mode of payment of the unpaid balance consideration from money to constructed premises comprising six shops and twenty flats.
Background:
The dispute arose from a real estate transaction involving leasehold rights of plots situated at Sector 17, Kamothe, under the Government's GES Scheme. Originally, Ram Hiraji Govari and others were leaseholders who entered into a tripartite agreement with CIDCO and Om Shivam Builders in 2009, effectuating substitution of the original licensees with the developer. The total consideration was fixed at Rs. 3 crores, with Rs. 60 lakhs paid upfront and the balance Rs. 2.40 crores agreed to be paid later.
In 2013, a Supplementary Deed of Assignment was executed to modify the mode of payment of the unpaid balance from cash to constructed premises. The Sub-Registrar and subsequent authorities treated this supplementary deed as a fresh conveyance under Article 25(b) of Schedule I of the Maharashtra Stamp Act, 1958, thus demanding additional stamp duty of Rs.17,57,094 and a penalty exceeding Rs.51 lakhs. The petitioner challenged these orders through a writ petition before the Bombay High Court.
Key Legal Findings:
The Court meticulously analyzed the nature and legal effect of the Supplementary Deed and the earlier agreements. It emphasized that:
1. The Supplementary Deed did not constitute a fresh transfer or conveyance of the original leasehold rights but merely altered the mode of satisfying the balance consideration agreed in 2009.
2. The tripartite agreement and the original Deed of Assignment executed in 2009 had already effectuated the substitution of the licensees and fixed the total consideration, which was duly stamped and registered.
3. The supplementary deed's mention of six shops and twenty flats was part of fulfilling the existing obligation, not a separate conveyance transaction.
4. The authorities erred in treating the supplementary deed as a distinct chargeable instrument under Article 25(b), without establishing that the deed independently conveyed immovable property rights.
5. Valuation provisions under Section 5 of the Maharashtra Stamp Act could not create stamp duty liability unless the instrument was chargeable under a relevant article.
6. Section 4 of the Act, which deals with several instruments used in a single transaction, did not apply to assignment deeds and supplementary deeds as ancillary documents in this context.
7. Section 14A concerning material alteration did not apply as the supplementary deed was a separate document, not a material alteration of the original deed.
8. The Circular dated June 24, 2016, recognizing the tripartite agreement as the operative document for assignment, supported the petitioner's position that the supplementary deed did not attract fresh stamp duty.
Order and Relief:
The Court allowed the petition, setting aside the impugned orders demanding additional stamp duty and penalty. It directed refund of any amounts recovered pursuant to those orders within eight weeks. The judgment clarified that a supplementary deed changing the mode of payment of previously agreed consideration does not amount to a fresh conveyance attracting stamp duty under Article 25(b).
Significance:
This ruling provides clarity on stamp duty liability concerning supplementary deeds in property development transactions, particularly when the mode of consideration is altered without a fresh transfer of rights. It safeguards developers and parties from unjustified demands of additional stamp duty and penalties arising from ancillary documents that do not create independent property rights.
Bottom Line:
Maharashtra Stamp Act, 1958 - Supplementary Deed of Assignment changing only the mode of payment of balance consideration from money to constructed premises does not by itself become a fresh conveyance or independent transfer of original leasehold rights - Demand of deficit stamp duty and penalty treating such supplementary deed as conveyance under Article 25(b) held unsustainable.
Statutory provision(s): Maharashtra Stamp Act, 1958 Sections 4, 5, 14A, 32A, 32B, 53A; Schedule I Articles 25(b), 36, 60
