In a significant ruling, the Bombay High Court held that revenue sharing under a Joint Venture Agreement constitutes "consideration" for determining market value and stamp duty under the Maharashtra Stamp Act, 1958.
The Bombay High Court, in a judgment dated August 28, 2026, upheld the orders passed by the authorities under the Maharashtra Stamp Act, 1958, confirming that revenue sharing arrangements in Joint Venture Agreements are valid considerations for determining market value and stamp duty. The case, involving M/s Star Developers and the State of Maharashtra, revolved around a Joint Venture Agreement executed on April 29, 2013, for the development of a property in Pune.
Justice Amit Borkar, presiding over the matter, examined whether the revenue sharing clause in the agreement could be treated as "consideration" under Section 2(na) and Article 5(g-a) of Schedule I of the Maharashtra Stamp Act. The court found that the agreement's revenue sharing arrangement, wherein the owner received a 42% share of the sale proceeds, was indeed a form of consideration for the development rights granted under the agreement.
The court dismissed the petition filed by M/s Star Developers, which challenged the orders of the lower authorities demanding additional stamp duty based on the revenue sharing consideration. The petitioner argued that the agreement should not fall under Article 5(g-a) as it was a Joint Venture Agreement, not a Development Agreement. However, the court held that the substance of the agreement, rather than its title, determines its applicability under the relevant statutory provisions.
The judgment emphasized that the development potential of the property and the agreed revenue sharing were integral to the valuation process. The court also clarified that future uncertainties in revenue sharing do not invalidate the calculation of consideration under the Act.
This ruling is expected to have significant implications for similar Joint Venture Agreements, reinforcing the principle that revenue sharing arrangements connected with development rights can be considered as valid consideration for the purpose of stamp duty.
Bottom Line :
Maharashtra Stamp Act, 1958 - Revenue sharing under Joint Venture Agreement constitutes "consideration" for determining market value and stamp duty under Section 2(na) and Article 5(g-a) of Schedule I of the Act.
Statutory provision(s): Maharashtra Stamp Act, 1958 - Section 2(na), Section 32A(5), Article 5(g-a), Article 5(h)(b).
M/s. Star Developers v. State of Maharashtra, (Bombay) : Law Finder Doc id # 2969003
