Supreme Court Rules in Favor of Terai Tea Company in Stamp Duty Dispute
The case of M/S Terai Tea Company Limited v. Kumkum Mittal & Ors. centered on a legal dispute regarding the impounding of a property sale agreement under the Indian Stamp Act, 1899. The Supreme Court overturned the Calcutta High Court’s decision, ruling in favor of Terai Tea Company and holding that the agreement to sell was improperly impounded.
Background of the Case
In 1990, Terai Tea Company entered into an agreement to purchase a tea estate from Dhirendra Nath Bhowmick for Rs. 10,11,000, with an advance payment of Rs. 2,11,000. However, the seller failed to execute the sale deed. As a result, Terai Tea Company filed a suit for specific performance.
During litigation, both parties entered into a compromise, leading to a consent decree from the High Court in 1991, which increased the sale price to Rs. 12,11,000. Following the decree, the deed of conveyance was executed, and stamp duty of Rs. 1,85,000 was paid.
However, the decree was challenged by a third party, M/s. New Red Bank Tea Company, leading to its cancellation by the Supreme Court in 1991. Consequently, the sale deed also became null and void. The present case arose when the High Court ordered the agreement to be impounded under the Stamp Act.
Arguments by the Appellant
Terai Tea Company argued that:
- It had already paid full stamp duty on the now-nullified sale deed.
- The agreement to sell was being used only for litigation purposes, not for property transfer.
- The High Court erred in ordering impounding at this late stage.
Arguments by the Respondents
The respondents contended that:
- The agreement to sell was unstamped and, therefore, inadmissible in court.
- The impounding order was necessary under Section 35 of the Indian Stamp Act.
- Terai Tea Company should have obtained proper stamping before relying on the document in court.
Supreme Court’s Observations
The Supreme Court, led by Justices Mohan M. Shantanagoudar and Ajay Rastogi, ruled:
“Since full stamp duty had already been paid on the deed of conveyance, which was later nullified, there was no need to impound the agreement to sell. The High Court’s direction for impounding the document was unjustified in the peculiar facts of this case.”
The Court held that:
- The appellant was entitled to seek a refund of the previously paid stamp duty.
- Impounding the agreement to sell at this stage would be legally untenable.
- The High Court’s order was an incorrect application of the Stamp Act.
Final Judgment
The Supreme Court allowed the appeal, setting aside the High Court’s impounding order and confirming Terai Tea Company’s right to a stamp duty refund.
Conclusion
This ruling clarifies the application of the Stamp Act in cases where stamp duty has already been paid on a subsequent deed. It ensures that parties are not unfairly penalized due to procedural technicalities.
Petitioner Name: M/S Terai Tea Company Limited.Respondent Name: Kumkum Mittal & Ors..Judgment By: Justice Mohan M. Shantanagoudar, Justice Ajay Rastogi.Place Of Incident: West Bengal.Judgment Date: 22-10-2019.
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