No Registration Or Stamp Duty Required For Compromise Decree Acquiring Property With Pre-Existing Right

1. Leave granted.

2. This appeal has been filed against the Order dated 06.12.2019 passed by

the High Court of Madhya Pradesh, Bench at Indore1 in dismissing the

Miscellaneous Petition bearing No.3317 of 2019 filed by the appellant herein. By

the said order, the High Court upheld the order dated 23.08.2016 passed by the

Collector of Stamps, determining stamp duty at Rs.6,67,500/- payable by the

appellant qua land in Survey No.2087, 2088/9/1/1 measuring an extent of 0.076

Ares situated at Village Kheda, Tehsil Badnawar, District Dhar2, acquired by him

by way of consent decree, as affirmed by the Board of Revenue by order dated

12.02.2019.

1 Hereinafter referred to as “the High Court”

2 Hereinafter referred to as “the subject land”

2

3. Originally, the appellant had filed a Civil Suit bearing No.47-A/2013

before the Court of First Civil Judge, Class-2, Badnawar, for declaration and

permanent injunction against one Abhay Kumar (Respondent No.2 herein) and

the State of Madhya Pradesh (Respondent No.1 herein) stating that he is the

owner of the subject land and is in long and continuous possession of the same

by doing cultivation. It was alleged in the said suit that in the year 2013, the

Respondent No.2 herein, who is the adjacent land owner of the appellant,

attempted to sell the subject land to third parties, thereby dispossessing the

appellant from the same. Pending the suit, both the parties entered into a

compromise, based on which, the suit came to be decreed in favour of the

appellant, on 30.11.2013 and the Respondent No.1 – State of Madhya Pradesh did

not raise any objection nor filed any appeal against the said compromise decree.

In terms of the said order dated 30.11.2013, the appellant applied for mutation of

the said land before the Tehsildar concerned, who in turn referred the case to the

Collector of Stamps, District Dhar (M.P). Upon perusal of the records, the

Collector of Stamps initiated proceedings under Section 33 of the Indian Stamp

Act, 1899, and consequently directed the appellant to pay a sum of Rs.6,67,500/-

towards stamp duty, by order dated 23.08.2016. Challenging the said order, the

appellant preferred a revision, which was dismissed by the Board of Revenue,

Gwalior, Madhya Pradesh, vide order dated 12.02.2019. Aggrieved by the same,

the appellant preferred Miscellaneous Petition No.3317 of 2019 to quash the said

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orders passed by the Collector of Stamps as well as the Board of Revenue. By the

order impugned herein, the High Court dismissed the said Miscellaneous Petition,

relying on its earlier order dated 24.07.2019 passed in M.P.No.3634 of 20193,

wherein, reference was made to (i)the decision of this Court in Bhoop Singh v.

Ram Singh Major4, in which, it was held that ‘if a compromise decree is obtained

as a device to obviate payment of stamp duty and frustrate the latter requirement

of registration, then such a decree is required to be registered under the

Registration Act and as a consequence thereof, the stamp duty is also payable’;

and (ii)the order of the High Court dated 13.02.2017 in WP No.2170 of 20155;

and ultimately, it was held that the consent decree obtained in the suit, through

which, new right was created over the property, needs registration and for this

reason, stamp duty is also required to be paid. Being dissatisfied with the same,

this appeal came to be filed by the appellant before this court.

4. According to the learned counsel for the appellant, the issue involved in

this matter is squarely covered by the judgment of this Court in Mohd. Yusuf v.

Rajkumar6, wherein, the order dated 13.02.2017 passed in W.P.No.2170/2015

relied on by the High Court in the order dated 24.07.2019 passed in M.P.No.3634

of 2019, based on which, the order impugned herein came to be passed by the

High Court, has been set aside, by holding that a compromise decree does not

3 Siddhulal Kachi v. State of Madhya Pradesh and another

4 (1995) 5 SCC 709

5 Mohd. Yusuf and others v. Rajkumar and others

6 (2020) 10 SCC 264

4

require registration. It was further clarified in the said judgment that ‘a

compromise decree comprising immovable property other than which is the

subject matter of the suit or proceeding requires registration, although any

decree or order of a court is exempted from registration by virtue of Section

17(2)(vi) of the Registration Act, 1908’.

4.1. Adding further, the learned counsel submitted that the High Court erred in

placing reliance on its earlier order dated 24.07.2019 made in M.P.No.3634/2019

(Siddhulal case), as the facts of the present case are clearly distinguishable from

the facts of that case. Siddhulal case was arising out of a suit for declaration on

the basis of adverse possession and that, by way of consent decree, new right was

created over the property, whereas the appellant herein preferred the suit for

declaration and permanent injunction on the basis of his long and continuous

ownership and possession of the subject land and he acquired pre-existing right

over the same through consent decree.

4.2. It is also submitted by the learned counsel that there was no finding of

collusion between the appellant and Respondent No.2 by any Court.

4.3. The learned counsel further submitted that court orders or decrees are not

chargeable with stamp duty unless they fall under specific categories of

instruments enumerated in Schedule I read with section 3 of the Indian Stamp

Act, 1899. In the present case, the consent decree in favor of the appellant is not

chargeable with stamp duty, as it does not create any new right, but it conveys the

pre-existing title, right or interest over the subject land.

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4.4. Thus, according to the learned counsel, the order of the High Court

upholding the order of the Collector of Stamps as affirmed by the Board of

Revenue, determining stamp duty under Article 22A of Schedule 1A of the Indian

Stamp Act, 1899, and for recovery of the same from the appellant, is illegal and

contrary to law and is hence, liable to be set aside.

5. On the other hand, the learned counsel for the Respondent No.1 submitted

that during the pendency of the civil suit, the appellant and Respondent No. 2

mutually agreed to enter into a compromise and accordingly, presented an

application to refer the case to National Lok Adalat and a compromise decree was

passed on 30.11.2013 in Civil Suit No.47A/2013, by which, the Respondent No.2

was restrained from interfering with the appellant’s possession over the subject

land and the appellant was entitled to get his name recorded in the revenue records

in respect of the subject land.

5.1. It is further submitted that based on the reference made by the Tehsildar,

Badnawar District, Dhar (MP), the Collector of Stamps initiated proceedings

under section 33 of the Indian Stamp Act, 1899 and vide order dated 23.08.2016,

directed the appellant to pay a sum of Rs.6,67,500/- towards stamp duty as per

the market value of the subject land. According to the learned counsel, the

Collector of Stamps has not gone into the question of registration, but has

determined the stamp duty payable by the appellant for the subject land, which

was also rightly affirmed by the Board of Revenue, by order dated 12.02.2019 in

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the revision preferred by the appellant.

5.2. The learned counsel further submitted that admittedly, the subject land was

not recorded in the name of the appellant in the revenue records maintained by

the State and there was a dispute regarding title of the property. As such, the

protection claimed by the appellant under Section 17(2)(vi) of the Registration

Act, 1908, does not hold good.

5.3. That apart, it is contended by the learned counsel that the present case

seems to be a case of collusion between the appellant and Respondent No.2 and

the Civil Suit was instituted only with an intent to evade the payment of stamp

duty.

5.4. The learned counsel for the Respondent No.1 ultimately submitted that in

view of the settled legal position and taking note of the facts and circumstances

indicated above, the decision in Mohd. Yusuf v. Rajkumar [(2020) 10 SCC 264]

is factually distinguishable and therefore, the appellant is liable to pay stamp duty

against mutation of the subject land.

5.5. Thus, according to the learned counsel, the order passed by the High Court

is a well-considered one and the same does not require any interference in the

hands of this Court.

6. We have heard the learned counsel for the appellant and the learned

counsel for the Respondent No.1 and also perused the materials available on

record. Despite service of notice, none appeared on behalf of the Respondent

No.2.

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7. There are two issues involved herein viz., Registration of the document and

payment of stamp duty, which are separate and distinct concepts. As regards the

issue of registration, we may refer to Section 17 of the Registration Act, 19087,

which deals with the documents of which registration is compulsory and the same

reads as follows:

“17. Documents of which registration is compulsory.—(1) The following

documents shall be registered, if the property to which they relate is situate in a

district in which, and if they have been executed on or after the date on which, Act

No. XVI of 1864, or the Indian Registration Act, 1866, or the Indian Registration

Act, 1871, or the Indian Registration Act, 1877, or this Act came or comes into

force, namely:—

(a) instruments of gift of immovable property;

(b) other non-testamentary instruments which purport or operate to create,

declare, assign, limit or extinguish, whether in present or in future, any right, title

or interest, whether vested or contingent, of the value of one hundred rupees and

upwards, to or in immovable property;

(c) non-testamentary instruments which acknowledge the receipt or payment of

any consideration on account of the creation, declaration, assignment, limitation

or extinction of any such right, title or interest; and

(d) leases of immovable property from year to year, or for any term exceeding one

year, or reserving a yearly rent;

[(e) non-testamentary instruments transferring or assigning any decree or order

of a Court or any award when such decree or order or award purports or operates

to create, declare, assign, limit or extinguish, whether in present or in future, any

right, title or interest, whether vested or contingent, of the value of one hundred

rupees and upwards, to or in immovable property:]

Provided that the [State Government] may, by order published in the [Official

Gazette], exempt from the operation of this sub-section any lease executed in any

district, or part of a district, the terms granted by which do not exceed five years

and the annual rents reserved by which do not exceed fifty rupees.

[(1A) The documents containing contracts to transfer for consideration, any

immovable property for the purpose of section 53A of the Transfer of Property

Act, 1882 (4 of 1882) shall be registered if they have been executed on or after

the commencement of the Registration and Other Related laws (Amendment) Act,

2001 (48 of 2001) and if such documents are not registered on or after such

7 For short, “the Act, 1908”

8

commencement, then, they shall have no effect for the purposes of the said section

53A.]

(2) Nothing in clauses (b) and (c) of sub-section (1) applies to—

(i) any composition deed; or

(ii) any instrument relating to shares in a joint stock Company, notwithstanding

that the assets of such Company consist in whole or in part of immovable

property; or

(iii) any debenture issued by any such Company and not creating, declaring,

assigning, limiting or extinguishing any right, title or interest, to or in immovable

property except in so far as it entitles the holder to the security afforded by a

registered instrument whereby the Company has mortgaged, conveyed or

otherwise transferred the whole or part of its immovable property or any interest

therein to trustees upon trust for the benefit of the holders of such debentures; or

(iv) any endorsement upon or transfer of any debenture issued by any such

Company; or

(v) [any document other than the documents specified in sub-section (1A)] not

itself creating, declaring, assigning, limiting or extinguishing any right, title or

interest of the value of one hundred rupees and upwards to or in immovable

property, but merely creating a right to obtain another document which will, when

executed, create, declare, assign, limit or extinguish any such right, title or

interest; or

(vi) any decree or order of a Court [except a decree or order expressed to be made

on a compromise and comprising immovable property other than that which is the

subject-matter of the suit or proceeding]; or

(vii) any grant of immovable property by [Government]; or

(viii) any instrument of partition made by a Revenue-Officer; or

(ix) any order granting a loan or instrument of collateral security granted under

the Land Improvement Act, 1871, or the Land Improvement Loans Act, 1883; or

(x) any order granting a loan under the Agriculturists, Loans Act, 1884, or

instrument for securing the repayment of a loan made under that Act; or

[(xa) any order made under the Charitable Endowments Act, 1890 (6 of 1890),

vesting any property in a Treasurer of Charitable Endowments or divesting any

such Treasurer of any property; or]

(xi) any endorsement on a mortgage-deed acknowledging the payment of the

whole or any part of the mortgage-money, and any other receipt for payment of

money due under a mortgage when the receipt does not purport to extinguish the

mortgage; or

(xii) any certificate of sale granted to the purchaser of any property sold by public

auction by a Civil or Revenue-Officer.

[Explanation.—A document purporting or operating to effect a contract for the

sale of immovable property shall not be deemed to require or ever to have

required registration by reason only of the fact that such document contains a

recital of the payment of any earnest money or of the whole or any part of the

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purchase money.]

(3) Authorities to adopt a son, executed after the 1st day of January, 1872, and

not conferred by a will, shall also be registered.”

It is thus, clear from the above that Section 17(1) of the Act, 1908 specifies the

documents for which Registration is compulsory. Sub-section (2) of Section 17

carves out the exceptions. The documents/instruments enumerated in sub-section

(2) of section 17 are not compulsorily registerable. The exemption for decree or

order of the Court is covered under section 17(2)(vi) of the Act, 1908 with a rider.

Under the said provision, any decree or order of a Court (except the decree or

order expressed to be made on compromise and comprising immovable property

other than that which is the subject-matter of the suit or proceedings) would not

require compulsory registration. Section 17(2)(vi) carves out the distinction

between the property which forms subject-matter of the suit and the property that

was not the subject-matter of the suit, but for which a compromise has been

arrived at. It would be relevant to point out that the provision permitting the

compromise between the parties to include in the compromise decree, the subject

matter not forming part of the suit property was introduced with effect from

01.02.1977. Prior to that, the compromise decree can be passed only with respect

to properties or subject matter of suit. If a compromise decree involves

immovable property other than the property for which a decree is prayed for, such

a property would not be exempted and would require registration. This condition

or the exclusion clause was introduced in the Registration Act, 1908 by Act 21 of

1929 by substituting for “and any award”. To avail the exemption from the

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mandate of compulsory registration of documents conveying immovable property

of a value of more that Rs 100/-, the compromise decree arrived must be only in

respect of the property that is the subject-matter of the suit. The compromise

arrived at before the Lok Adalat and the award passed by the Lok Adalat thereto

assume the character of a decree passed under Order XXIII Rule 3 and would also

come within the ambit and purview of sub-section (2) of section 17 of the Act,

1908.

8. In the present case, seemingly, the appellant preferred Civil Suit No.

47-A/2013 against the respondents for declaration and permanent injunction

claiming ownership and continuous possession over the subject land, and the

same came to be decreed in favour of him, in view of the compromise arrived at

between the appellant and the Respondent No.2 on 30.11.2013. For better

appreciation, the order passed in the said suit is extracted below:

Order Dt. 30.11.13

Both parties having presented an application have requested to take up the case in

National Lok Adalat for disposal.

On the request of both parties this case was taken up today in National Lok Adalat.

Sh. M.P. Sharma Advocate is present with the plaintiff.

Defendant is present in person.

Compromise application presented on behalf of both parties was taken into

consideration.

Both parties were identified by Sh.M.P. Sharma Advocate.

Case record was perused.

It appears from the perusal of case records that according to compromise

application, this suit is admitted by Def. No.1. Plaintiff is in possession over Land

Survey No.2087/2088/9/1/1/ measuring 0.076 Ares situated at Village Kheda.

Defendant shall not interfere with the possession of plaintiff over aforesaid lands.

Plaintiff shall be entitled to get his name recorded in revenue records over aforesaid

lands in place of defendant.

Both parties have expressed to have voluntarily entered into this compromise.

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Therefore, this compromise is hereby allowed as per Ex.P-1. In context of

compromise, both parties have got their statements recorded. Decree be prepared

in accordance with compromise. Compromise shall be an integral part of this

decree.…”

In view of the above, the appellant is entitled to possession of the subject land

and the Respondent No.2 shall not interfere with the same; and the appellant is

entitled to get his name recorded in the revenue records in respect of the subject

land in the place of the Respondent No.2. Pertinently, it is to be pointed out that

the said compromise decree has not been challenged by the Respondent No.1

before any Court of law and hence, the same attained finality and is binding on

the parties.

9. It is further seen that on the strength of the compromise decree passed by

the civil court, the appellant approached the Tehsildar for mutation of the subject

land in his favour. However, the Tehsildar referred the case to the Collector of

Stamps, who after examination, determined the stamp duty under Article 22 of

Schedule IA of the Indian Stamp Act, 1899 and directed the appellant to pay a

sum of Rs.6,67,500/- in the Government Treasury. The said order of the Collector

of Stamps was affirmed by the Board of Revenue, in the revision filed by the

appellant. The High Court has also upheld the orders so passed by the authorities

below, by order dated 06.12.2019, which is impugned in this appeal.

10. Evidently, the High Court passed the impugned order by observing that the

compromise decree needs registration and stamp duty is also required to be paid

for mutation of the subject land. While so, reliance was made on its earlier order

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dated 24.07.2019 in M.P.No.3634 of 2019 (Siddhulal case), in which, two

decisions were referred to, viz., (i)the order of this Court in Bhoop Singh (supra)

and (ii)the order passed by the High Court dated 13.02.2017 in W.P.No.2170 of

2015 in Mohd. Yusuf (supra). It is worth mentioning at this juncture that the said

order of the High Court dated 13.02.2017 in W.P.No.2170 of 2015 was

subsequently, challenged by filing Civil Appeal No.800 of 20208 and this Court

vide judgment dated 05.02.20109, after having found that pre-existing right

through adverse possession existed, has categorically held that a compromise

decree does not require registration and accordingly, set aside the said order of

the High Court. While so, the decision of this Court in Bhoop Singh (supra) was

also elaborately discussed. The relevant portions of the said judgment are

reproduced below for ready reference:

“6. Under Section 17(1)(b), non-testamentary instruments which purport or

operate to create, declare, assign, limit or extinguish, whether in present or in

future, any right, title or interest, whether vested or contingent, of the value of

one hundred rupees and upwards, to or in immovable property requires

registration. The word “instrument” is not defined in the Registration Act, but

is defined in the Stamp Act, 1899 by Section 2(14).

7. A compromise decree passed by a court would ordinarily be covered by

Section 17(1)(b) but sub-section (2) of Section 17 provides for an exception for

any decree or order of a court except a decree or order expressed to be made on

a compromise and comprising immovable property other than that which is the

subject-matter of the suit or proceeding. Thus, by virtue of sub-section (2)(vi) of

Section 17 any decree or order of a court does not require registration. In subclause

(vi) of sub-section (2), one category is excepted from sub-clause (vi) i.e.

a decree or order expressed to be made on a compromise and comprising

immovable property other than that which is the subject-matter of the suit or

8 Arising out of SLP (C) No.32799 of 2019)

9 Mohammade Yusuf & others v. Rajkumar & others (2020) 10 SCC 264

13

proceeding. Thus, by conjointly reading Section 17(1)(b) and Section 17(2)(vi),

it is clear that a compromise decree comprising immovable property other than

which is the subject-matter of the suit or proceeding requires registration,

although any decree or order of a court is exempted from registration by virtue

of Section 17(2)(vi). A copy of the decree passed in Suit No. 250-A of 1984 has

been brought on record as Annexure P-2, which indicates that decree dated 4-

10-1985 was passed by the Court for the property, which was subject-matter of

the suit. Thus, the exclusionary clause in Section 17(2)(vi) is not applicable and

the compromise decree dated 4-10-1985 was not required to be registered on

plain reading of Section 17(2)(vi). The High Court referred to judgment of this

Court in Bhoop Singh Vs. Ram Singh Major and Others, (1995) 5 SCC 709, in

which case, the provision of Section 17(2)(vi) of Registration Act came for

consideration. This Court in the above case while considering clause (vi) laid

down following in paragraphs 16, 17 and 18:-

“16. We have to view the reach of clause (vi), which is an exception to subsection

(1), bearing all the aforesaid in mind. We would think that the exception

engrafted is meant to cover that decree or order of a court, including a decree

or order expressed to be made on a compromise, which declares the pre-existing

right and does not by itself create new right, title or interest in praesenti in

immovable property of the value of Rs 100 or upwards. Any other view would

find the mischief of avoidance of registration, which requires payment of stamp

duty, embedded in the decree or order.

17. It would, therefore, be the duty of the court to examine in each case whether

the parties have pre-existing right to the immovable property, or whether under

the order or decree of the court one party having right, title or interest therein

agreed or suffered to extinguish the same and created right, title or interest in

praesenti in immovable property of the value of Rs 100 or upwards in favour of

other party for the first time, either by compromise or pretended consent. If latter

be the position, the document is compulsorily registrable.

18. The legal position qua clause (vi) can, on the basis of the aforesaid

discussion, be summarised as below:

(1) Compromise decree if bona fide, in the sense that the compromise is not a

device to obviate payment of stamp duty and frustrate the law relating to

registration, would not require registration. In a converse situation, it would

require registration.

(2) If the compromise decree were to create for the first time right, title or

interest in immovable property of the value of Rs 100 or upwards in favour of

any party to the suit the decree or order would require registration.

(3) If the decree were not to attract any of the clauses of sub-section (1) of

Section 17, as was the position in the aforesaid Privy Council and this Court’s

cases, it is apparent that the decree would not require registration.

(4) If the decree were not to embody the terms of compromise, as was the position

in Lahore case, benefit from the terms of compromise cannot be derived, even if

a suit were to be disposed of because of the compromise in question.

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(5) If the property dealt with by the decree be not the “subject-matter of the suit

or proceeding”, clause (vi) of sub-section (2) would not operate, because of the

amendment of this clause by Act 21 of 1929, which has its origin in the aforesaid

decision of the Privy Council, according to which the original clause would have

been attracted, even if it were to encompass property not litigated.”

8. In the facts of that case, this Court held that the first suit cannot really be said

to have been decreed on the basis of compromise, as the suit was decreed “in

view of the written statement filed by the defendant admitting the claim of the

plaintiff to be correct”. Further, the earlier decree was held to be collusive. Two

reasons for holding that the earlier decree in the above said case required

registration have been mentioned in paragraph 19 of the judgment, which is to

the following effect:-

“19. Now, let us see whether on the strength of the decree passed in Suit No. 215

of 1973, the petitioner could sustain his case as put up in his written statement

in the present suit, despite the decree not having been registered. According to

us, it cannot for two reasons:

(1) The decree having purported to create right or title in the plaintiff for the

first time that is not being a declaration of pre-existing right, did require

registration. It may also be pointed out that the first suit cannot really be said to

have been decreed on the basis of compromise, as the suit was decreed “in view

of the written statement filed by the defendant admitting the claim of the plaintiff

to be correct”. Decreeing of suit in such a situation is covered by Order 12 Rule

6, and not by Order 23 Rule 3, which deals with compromise of suit, whereas the

former is on the subject of judgment on admissions.

(2) A perusal of the impugned judgment shows that the first appellate court held

the decree in question as ‘collusive’ as it was with a view to defeat the right of

others who had bona fide claim over the property of Ganpat. Learned Judge of

the High Court also took the same view.”

9. Following the above judgment of Bhoop S Singh (supra), the High Court held

that since the compromise decree dated 04.10.1985 did not declare any preexisting

right of the plaintiff, hence it requires registration. The High Court

relied on the judgment of Gurdwara Sahib Vs. Gram Panchayat Village Sirthala

and Another (supra) and made following observations in paragraphs 10, 11 and

12: –

“10. In the present case, in the earlier suit CS No.250-A/1984 the petitioner had

claimed declaration of title on the plea of adverse possession and the

compromise decree was passed in the suit. The very fact that the suit was based

upon the plea of adverse possession reflects that the petitioner had no preexisting

title in the suit property. Till the suit was decreed, the petitioner was a

mere encroacher, at the most denying the title of lawful owner.

11. The Supreme Court in the matter of Gurudwara Sahib Vs. Gram Panchayat

Village Sirthala reported in 2014(3) MPLJ 36 has settled that declaratory decree

15

based on plea of adverse possession cannot be claimed and adverse possession

can be used only as shield in defence by the defendant. It has been held that:-

(SCC p.673, paras 7-8)

“7. In the Second Appeal, the relief of ownership by adverse possession is again

denied holding that such a suit is not maintainable.

8. There cannot be any quarrel to this extent the judgments of the courts below

are correct and without any blemish. Even if the plaintiff is found to be in adverse

possession, it cannot seek a declaration to the effect that such adverse possession

has matured into ownership. Only if proceedings filed against the appellant and

appellant is arrayed as defendant that it can use this adverse possession as a

shield/defence.”

12. The plea of the petitioner based upon Sec.27 of the Limitation Act is found

to be devoid of any merit since it relates to the extinction of the right of the lawful

owner after expiry of the Limitation Act, but in view of the judgment of the

supreme court in the matter of Gurudwara Sahib (supra), the petitioner cannot

claim himself to be the owner automatically after the expiry of the said

limitation.”

10. The judgment of Gurdwara Sahib Vs. Gram Panchayat Village Sirthala and

Another (supra) has now been expressly overruled by a Three Judge Bench

judgment in Ravinder Kaur Grewal and Others Vs. Manjit Kaur and Others,

(2019) 8 SCC 729. This Court held in the above case in paragraph 62 that once

12 years’ period of adverse possession is over, even owner’s right to eject him is

lost and the possessory owner acquires right, title and interest possessed by the

outgoing person/owner.

11. In para 62, following has been laid down: (Ravinder Kaur Grewal case, SCC pp.778-78)

“62. We hold that a person in possession cannot be ousted by another person

except by due procedure of law and once 12 years’ period of adverse possession

is over, even owner’s right to eject him is lost and the possessory owner acquires

right, title and interest possessed by the outgoing person/owner as the case may

be against whom he has prescribed. In our opinion, consequence is that once the

right, title or interest is acquired it can be used as a sword by the plaintiff as

well as a shield by the defendant within ken of Article 65 of the Act and any

person who has perfected title by way of adverse possession, can file a suit for

restoration of possession in case of dispossession. In case of dispossession by

another person by taking law in his hand a possessory suit can be maintained

under Article 64, even before the ripening of title by way of adverse possession.

By perfection of title on extinguishment of the owner’s title, a person cannot be

remediless. In case he has been dispossessed by the owner after having lost the

right by adverse possession, he can be evicted by the plaintiff by taking the plea

of adverse possession. Similarly, any other person who might have dispossessed

the plaintiff having perfected title by way of adverse possession can also be

evicted until and unless such other person has perfected title against such a

plaintiff by adverse possession. Similarly, under other articles also in case of

infringement of any of his rights, a plaintiff who has perfected the title by adverse

possession, can sue and maintain a suit.”

12. In para 61, this Court has expressly overruled the Gurdwara Sahib Vs. Gram

Panchayat Village Sirthala and Another (supra).

13. In view of the pronouncement of this Court by the three-Judge Bench

judgment in Ravinder Kaur Grewal v. Manjit Kaur [(2019) 8 SCC 729: (2019)

4 SCC (Civ) 453], the very basis of the High Court for holding that compromise

deed dated 4-10-1985 requires registration is knocked out. The present is not

a case where there is any allegation that the decree dated 4-10-1985 is a

collusive decree. The decree dated 4-10-1985 was in favour of the plaintiff of 7

biswa land, Survey No. 203 and for remaining land of Survey No. 203, it was

held that it belonged to the defendants.

14. In Bhoop Singh (supra), this Court held that the earlier decree required

registration for the reasons as mentioned in paragraph 19. The reasons given in

paragraph 19 of the above case has no application in the facts of the present

case.

15. This Court in Som Dev v. Rati Ram [(2006) 10 SCC 788] while explaining

Section 17(2)(vi) and Sections 17(1)(b) and (c) held that all decrees and orders

of the Court including compromise decree subject to the exception as referred

that the properties that are outside the subject-matter of the suit do not require

registration. In para 18, this Court laid down the following: (SCC p. 800)

“18. … But with respect, it must be pointed out that a decree or order of a court

does not require registration if it is not based on a compromise on the ground

that clauses (b) and (c) of Section 17 of the Registration Act are attracted. Even

a decree on a compromise does not require registration if it does not take in

property that is not the subject-matter of the suit.”

16. In the facts of the present case, the decree dated 4-10-1985 was with regard

to the property, which was the subject-matter of the suit, hence not covered by

exclusionary clause of Section 17(2)(vi) and the present case is covered by the

main exception crafted in Section 17(2)(vi) i.e. “any decree or order of a court”.

When registration of an instrument as required by Section 17(1)(b) is specifically

excluded by Section 17(2)(vi) by providing that nothing in clauses (b) and (c) of

sub-section (1) applies to any decree or order of the court, we are of the view

that the compromise decree dated 4-10-1985 did not require registration and the

learned Civil Judge as well as the High Court erred in holding otherwise. We,

thus, set aside the order of the Civil Judge dated 7-1-2015 as well as the

judgment of the High Court dated 13-2-2017 [Mohd. Yusuf v. Rajkumar, 2017

17

SCC OnLine MP 2056]. The compromise decree dated 4-10-1985 is directed to

be exhibited by the trial court. The appeal is allowed accordingly.”

10.1. The judgments in Mohd Yusuf case (supra)10 and Bhoop Singh (supra) were

followed by this court in the following subsequent decisions:

(i) Khushi Ram v. Nawal Singh11:

“30. This Court in Rajkumar case [Mohd. Yusuf v. Rajkumar, (2020) 10 SCC

264 : (2021) 1 SCC (Civ) 45] held that since the decree which was sought to be

exhibited was with regard to the property which was subject-matter of suit,

hence, was not covered by exclusionary clause of Section 17(2)(vi) and decree

did not require registration. The issue in the present case is squarely covered by

the above judgment. We, thus, conclude that in view of the fact that the consent

decree dated 19-8-1991 relates to the subject-matter of the suit, hence it was not

required to be registered under Section 17(2)(vi) and was covered by

exclusionary clause. Thus, we, answer Question 1 that the consent decree dated

19-8-1991 was not registrable and the courts below have rightly held that the

decree did not require registration.”

(ii) Ripudaman Singh v. Tikka Maheshwar Chand12

16. The judgments of this Court in Bhoop Singh [Bhoop Singh v. Ram Singh,

(1995) 5 SCC 709] and K. Raghunandan [K. Raghunandan v. Ali Hussain Sabir,

(2008) 13 SCC 102] were found to be inconsistent in an order reported in Phool

Patti v. Ram Singh [Phool Patti v. Ram Singh, (2009) 13 SCC 22] and the matter

was thus referred to a larger Bench. The larger Bench in the judgment reported

as Phool Patti v. Ram Singh [Phool Patti v. Ram Singh, (2015) 3 SCC 465:

(2015) 2 SCC (Civ) 312] did not find inconsistencies between the two judgments.

17. Bhoop Singh [Bhoop Singh v. Ram Singh, (1995) 5 SCC 709] was a case

dealing with both the situations, decree between the parties where the decreeholder

does not have any pre-existing right in the property and also the situation

where decree-holder has a pre-existing right. It was the second situation where

the decree-holder has a pre-existing right in the property, it was found that

decree does not require registration. In K. Raghunandan case [K.

Raghunandan v. Ali Hussain Sabir, (2008) 13 SCC 102], the dispute was not

10 (2020) 10 SCC 264

11 (2021) 16 SCC 279

12 (2021) 7 SCC 446

18

amongst the family members but between neighbours regarding right over

passage. Obviously, none of them had any pre-existing right over the immovable

property in question.

18. In view of enunciation of law in Bhoop Singh case [Bhoop Singh v. Ram

Singh, (1995) 5 SCC 709], we find that the judgment [Tikka Maheshwar

Chand v. Ripudaman Singh, 2016 SCC OnLine HP 3808] and decree of the High

Court holding that the decree requires compulsory registration is erroneous in

law. The compromise was between the two brothers consequent to death of their

father and no right was being created in praesenti for the first time, thus not

requiring compulsory registration. Consequently, the appeal is allowed and the

suit is decreed.”

Thus, it could be discernible that in order to fall under the exception of Section

17(2)(vi) of the Act, 1908, the following conditions must be satisfied:

(i)There must be a compromise decree as per the terms of the compromise without

any collusion;

(ii)The compromise decree must pertain to the subject property in the suit; and

(iii)There must be a pre-existing right over the subject property, and the

compromise decree should not create a right afresh.

11. There cannot be any doubt that in the civil suit filed by him, the appellant

categorically stated that he is the owner of the subject land and is in long and

continuous possession by doing cultivation for several years. When the

Respondent No.2 sought to disturb the possession of the appellant by selling the

subject land to third parties, taking advantage of his name standing in the revenue

records, the appellant prayed for declaration and permanent injunction. It is

settled law that revenue records are not documents of title. Any entry therein will

not ipso facto confer ownership. In the present case, the possession is

continuously with the appellant. As per the judgement of this Court in Ravinder

Kaur Grewal and Others v. Manjit Kaur and Others13, continuous and

uninterrupted adverse possession would confer right, title and interest and the

same can be used as a sword. Admittedly, the suit has been filed by the appellant

seeking a declaration asserting his pre-existing right, title and interest and for

permanent injunction. Thereafter, in terms of the compromise entered into

between the parties, the suit was decreed in favour of the appellant. Hence, it is

clear that through the said compromise decree, the appellant did not obtain any

new right, but he has asserted his pre-existing right/ title/ interest over the subject

land. The Judgment in Ravinder Kaur Grewal’s case (supra) was delivered on

06.08.2019, whereas the order in Siddhulal case was passed by the High Court on

24.07.2019 relying on the judgment of the High Court in Mohd. Yusuf and others

v. Rajkumar’s case rendered on 13.12.2017. The said judgement was reversed by

this Court in the Judgment reported in (2020) 10 SCC 264. In view of the change

in law with regard to the right accrued to a holder in adverse to be treated as a

pre-existing right and since the order in Mohammed Yusuf’s case was

subsequently reversed, the judgment of the High Court is not sustainable.

12. Though the Respondent No.1 alleged that the suit was filed by the appellant

in collusion with the Respondent No.2 and within a short time from the date of

initiation of the suit, the parties compromised the matter in order to evade

13 (2019) 8 SCC 729

20

payment of stamp duty, no concrete evidence was placed before this court to

substantiate that the same. That apart, it is not the case of the Respondent No.1 –

State that the suit itself was collusive as the property was not in possession of the

appellant and that it belongs to any other third party. Such rival claim by any

other person other than the defendant has not been brought to our knowledge.

Obviously, the case before us is not a title dispute, but rather one relating to

registration and payment of stamp duty and therefore, we leave the issue there.

Under the above circumstances, we have no option but to hold that the

compromise decree is by way of collusion, cannot be accepted. As already

indicated above, the compromise decree reached finality, as the Respondent No.1

has not challenged the same. There is no finding of collusion between the parties

in entering into the compromise by any Court as on date. Indisputably, the

property is the subject matter of the suit. Thus, the appellant has satisfied the

conditions enumerated in section 17(2)(vi) of the Act, 1908 and hence, the subject

land acquired by him by way of compromise decree, requires no registration.

13. In respect of the issue relating to payment of stamp duty for mutation of

the subject land, it is the specific plea of the appellant that “consent decrees” /

“decrees” are not chargeable with “stamp duty” under the Indian Stamp Act, 1899

as applicable to the State of Madhya Pradesh. Section 3 of the Indian Stamp Act,

1899 provides the instruments which are chargeable with duty and the same reads

as under:

“3. Instrument chargeable with duty— Subject to the provision of this Act and

21

the exemptions contained is Schedule I, the following instrument shall be

chargeable with duty of the amount indicated in the schedule as the proper duty

therefore, respectively, that is to say-

(a) Every instrument mentioned in that schedule which, not having been

previously executed by any person, is executed in India on or after the first day of

July 1899;

(b) Every bill of exchange payable otherwise than on demand or promissory note

drawn or made out of on or after that day and accepted or paid, or presented for

acceptance or payment, or endorsed, transferred or otherwise negotiable in India;

and

(c) every instrument (other than a bill of exchange or promissory note) mentioned

in that schedule, which not having been previously executed by any property

situate, or to any matter or thing done, or to be done, in India and is received in

India:

Provided that, except as otherwise expressly provided in this Act, and

notwithstanding anything contained in clause (a), clause (b), or clause (c) of this

section or in Schedule I, the amount indicated in schedule I-A to this Act shall,

subject to the exemptions contained in that Schedule, be the duty chargeable on

the instruments mentioned in clauses (aa) and (bb) of this proviso, as the proper

duty thereof, respectively, –

(aa) every instrument, mentioned in schedule I-A as chargeable with duty under

that schedule, which not having been previously executed by any person, is

executed in Madhya Pradesh on or after the commencement of the Central

Provinces and Berar Indian stamp (Amendment) Act, 1939; and

(bb) every instrument mentioned in Schedule I-A as chargeable with duty under

that schedule, which not having been previously executed by any person, is

executed out of Madhya Pradesh on or after the commencement of the Central

Provinces and Berar Indian Stamp (Amendment) Act, 1939 and relates to any

property situated or to any matter or thing done or to be done, in Madhya Pradesh

and is received in Madhya Pradesh:

Provided further that no duty shall be chargeable in respect of- (1) any instrument

executed by, or on behalf of, or in favour of, the Government in cases where, but

for this exemption, the Government would be liable to pay the duty chargeable in

respect of such instrument; (2) any instrument for the sale, transfer or other

disposition, either absolutely, or by way of mortgage or otherwise, of any ship or

vessel, or any part, interest, share or property of or in any ship or vessel registered

under the Merchant Shipping Act, 1894 or under Act 19 of 1838, or the Indian

Registration of Ships Act, 1841 as amended by subsequent Acts.”

From the above, it is apparent that stamp duty is not chargeable on an order/decree

of the Court as the same do not fall within the documents mentioned in Schedule

22

I or I-A read with Section 3 of the Indian Stamp Act, 1899. Though the Collector

of Stamps determined the stamp duty for the subject land as per Article 22 of

Schedule IA of the Indian Stamp Act, 1899, which states about conveyance, in

this case, we have already held that the compromise decree does not fall under

the instruments mentioned in the Schedule and that it only asserts the pre-existing

rights. Therefore, in the facts of the case, the consent decree will not operate as

conveyance as no right is transferred and the same does not require any payment

of stamp duty. Since the appellant has only asserted the pre-existing right and no

new right was created through the consent decree, the document pertaining to

mutation of the subject land is not liable for stamp duty.

14. In the ultimate analysis, we find that the impugned order passed by the

High Court, upholding the orders of the authorities below, has no legs to stand

and is hence, set aside. Accordingly, this appeal stands allowed and the authority

concerned shall make mutation of the revenue records in respect of the subject

land in favour of the appellant. There is no order as to costs.

15. Consequently, connected Miscellaneous Petition(s), if any, shall stand

disposed of.

………………..………J.

[J.B. Pardiwala]

………………..………J.

[R. Mahadevan]

NEW DELHI

DECEMBER 20, 2024.