Partly allowed

P Shankara Bhat v. the State of Karnataka

Karnataka HC23 Jul 2024WP/4895/2017

Case brief

AI extract

What is this about?

A writ petition challenged an order under the Karnataka Stamp Act levying stamp duty and a threefold penalty on a sale agreement whose possession recital was disputed in a pending specific performance suit. The Court upheld the duty demand but set aside the penalty, holding factual disputes on possession precluded any finding of evasion, and allowed restoration of the suit.

What the court decided

AI extract

P Shankara Bhat Vs the State of Karnataka — Property and Title | Karnataka HC (2024)

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1 - NC: 2024:KHC:29542 WP No. 4895 of 2017

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU

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DATED THIS THE 23^RD DAY OF JULY, 2024

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BEFORE

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THE HON'BLE MR. JUSTICE K. V. ARAVIND

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WRIT PETITION No. 4895 OF 2017 (GM-ST/RN)

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BETWEEN:

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P. SHANKARA BHAT, S/O LATE SHANKARA NARAYANA BHAT, AGED ABOUT 57 YEARS, RES/AT SHRI NILAYA HOUSE, NARIMOGARU VILLAGE, PUTTUR TALUK, D.K.DISTRICT-574201.

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…PETITIONER

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(BY SRI KRISHNAMOORTHY D., ADVOCATE)

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AND:

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Digitally signed by VALLI MARIMUTHU Location: High Court of Karnataka

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THE STATE OF KARNATAKA, DEPARTMENT OF REVENUE (REGISTRATION & STAMPS), REPRESENTED BY ITS SECRETARY, M.S.BUILDING, BANGALORE-560 001.

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THE DEPUTY COMMISSIONER OF STAMPS & ADDITIONAL DISTRICT REGISTRAR, MANGALORE, D.K. DISTRICT-575001.

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JANARDHANA BHAT, S/O NARAYANA BHAT, AGED ABOUT 71 YEARS, RES/AT NERALAKATTE, KUVETTU VILLAGE,

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NC: 2024:KHC:29542 WP No. 4895 of 2017

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BELTHANGADY TALUK, D.K.DISTRICT-574214.

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…RESPONDENTS

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(BY SRI S.H. RAGHAVENDRA, AGA FOR R1 & R2; SRI SACHIN B.S., ADVOCATE FOR R3)

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THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO SET ASIDE/QUASH THE IMPUGNED ORDER PASSED BY THE R-2 DATED 1.6.2016 AS PER ANNEXURE-D.

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THIS WRIT PETITION COMING ON FOR PRELIMINARY HEARING IN 'B' GROUP THIS DAY, ORDER WAS MADE THEREIN AS UNDER:

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CORAM: HON'BLE MR. JUSTICE K. V. ARAVIND

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ORAL ORDER

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The petitioner entered into an agreement of sale dated 21.11.2005 with Janardhana Bhat/Respondent No.3 for consideration of Rs.4,00,000/- to purchase the land bearing No.89/2 measuring 1.75 Acres of Kuvettu Village, Belthangady Taluk, D.K. District (for short Schedule Property).

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It is stated that the agreement of sale recited handing over of possession of the schedule property to the petitioner. However, the physical possession of the schedule property was not handed over. It is stated that the petitioner filed original suit in O.S.No.49/2006 on the file of the Civil Judge (Sr. Dn.)

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3 - NC: 2024:KHC:29542 WP No. 4895 of 2017

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and Additional CJM, Puttur, D.K., for specific performance. The Court fee was paid without considering possession of the schedule property. The Civil court directed payment of Deficit Court Fee. The said order was not complied. The suit came to be dismissed on 28.05.2011.

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On the basis of the Deficit Court Fee raised by the Civil Court, respondent No.2 initiated proceedings by impounding the document under Section 33 of the Karnataka Stamp Act, 1957.

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The petitioner contended that though the sale agreement recited handing over of possession, no physical possession was handed over. The petitioner is facing financial crises. In the absence of physical possession, the stamp duty is not required to be paid, merely on the basis of the recitals. The said contention was rejected. Respondent No.2 quantified the stamp duty at Rs.31,800/- and imposed penalty of three times of the stamp duty at Rs.95,400/-. The total demand is Rs.1,27,200/-.

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Learned counsel appearing for the petitioner submits that the petitioner has entered into an agreement of sale dated

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NC: 2024:KHC:29542 WP No. 4895 of 2017

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21.11.2005 by paying consideration of Rs.4,00,000/- for purchase of the schedule property. Respondent No.3 failed to handover possession as agreed in the sale agreement. Further submits that as respondent No.3 failed to perform the contract by executing the sale deed. The petitioner preferred suit for specific performance. Additional Court Fee was raised on the basis of the recitals in the agreement regarding possession. As physical possession of the property was not handed over to the petitioner and the petitioner was facing financial crises, the Court Fee as demanded could not be paid.

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Learned counsel further submits that in the written statement filed by respondent No.3, there is categorical dispute regarding possession. The petitioner is not liable to pay Court Fee when the disputed fact regarding possession is to be adjudicated by the Civil Court. It is further submitted that in the absence of any intention to avoid payment of stamp duty, imposing of penalty of three times of the stamp duty on the petitioner is arbitrary. Learned counsel fairly submits that the petitioner would pay the stamp duty as quantified, if an opportunity is granted to seek revival of the suit.

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NC: 2024:KHC:29542 WP No. 4895 of 2017

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Per contra, Sri B.S. Sachin, learned counsel appearing for respondent No.3 submits that the sale agreement is the subject matter of suit for specific performance. Respondent No.2 authorities were justified in quantifying the stamp duty on the basis of the recitals in the agreement. Whatever the stamp duty paid in terms of the agreement of sale deed would be adjusted in the event sale deed is to be executed subject to outcome of the suit. It is further submitted that respondent No.2 authorities have no jurisdiction to adjudicate the dispute regarding possession.

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Sri S H Raghavendra, learned Additional Government Advocate submits that the sale agreement was impounded by the Civil Court and was referred to the respondent-authorities to quantify the stamp duty. The respondent authorities on the basis of the recitals agreed between the parties have quantified the stamp duty. The Stamp Act mandates payment of stamp duty as per the recitals in the agreement. The disputed issued on possession cannot be adjudicated by the respondent authorities. The petitioner as attempted to avoid stamp duty. In such circumstances, respondent authorities were justified in

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NC: 2024:KHC:29542 WP No. 4895 of 2017

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imposing penalty at three times of stamp duty which is mandatory.

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Heard learned counsel for the parties and perused the writ papers.

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The petitioner entered into an agreement of sale dated 21.11.2005 with one Janardhana Bhat to purchase the schedule property. The agreement to sell recited handing over of possession of the schedule property. Respondent No.3 failed to execute the sale deed. The petitioner was constrained to prefer suit for specific performance. The suit is filed in O.S.No.49/2006 before the Civil Judge and Additional CJM, Puttur, D.K. The petitioner paid the Court fee without considering possession of the property. The Trial Court directed petitioner to pay the Deficit Stamp duty. As the Deficit Stamp duty was not paid, the suit was dismissed. The agreement to sell was impounded and referred to respondent No.2. Respondent No.2 determined the Stamp Duty at Rs.31,800/- and imposed penalty at three times of stamp duty of Rs.95,400/and demanded total stamp duty at Rs.1,27,200/-.

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NC: 2024:KHC:29542 WP No. 4895 of 2017

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Respondent No.3 has disputed the agreement to sell as well as possession of the schedule property. In view of the dispute regarding execution of the agreement and possession by respondent No.3 (defendant in the suit) one of the issues to be considered by the Civil Court is concerning the possession.

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The authority of respondent No.2 to demand stamp duty on the basis of the recitals without examining or going into the dispute among the parties cannot be held to be incorrect. The order of respondent No.2 quantifying the stamp duty at Rs.31,800/- needs no interference of this Court. The correctness of levy of penalty at Rs.95,400/needs consideration by this Court. In view of factual disputes on possession, it cannot be held that the petitioner attempted to evade stamp duty. In view of the factual disputes raised by the parties, the same can be resolved only on recording of evidence by the Civil Court. In view of the dispute between the petitioner and respondent No.3, considering the peculiar facts involved in the case, the penalty levied at Rs.95,400/- is to be set aside.

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In view of the reasons stated above, the following;

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8 - NC: 2024:KHC:29542 WP No. 4895 of 2017

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order

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i) Writ Petition is allowed in part.

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ii) The penalty of Rs.95,400/- levied by respondent No.2 as per Annexure-D, dated 01.06.2016, is hereby set aside.

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iii) The petitioner is directed to pay stamp duty of Rs.31,800/-.

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iv) The petitioner is granted liberty to seek restoration of O.S. No.49/2006 before the Civil Judge (Sr.Dn.) and Additional CJM, Puttur, D.K.

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v) It is made clear that the findings recorded in the course of this order would not influence outcome in

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O.S.No.49/2006.

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Sd/(K. V. ARAVIND) JUDGE

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List No.: 1 Sl No.: 1

P Shankara Bhat v. the State of Karnataka

Case brief

What is this about?

What the court decided

P Shankara Bhat v. the State of Karnataka

Case brief

What is this about?

What the court decided

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