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Chief Controlling Revenue Authority, Board of Revenue, Madras Vs. B.P. Eswaran (Died) and ors. - Court Judgment

LegalCrystal Citation
SubjectContract
CourtChennai High Court
Decided On
Case NumberR.C. No. 2 of 1968
Judge
Reported inAIR1970Mad349
ActsStamp Act, 1899 - Sections 49; Contract Act, 1872 - Sections 65
AppellantChief Controlling Revenue Authority, Board of Revenue, Madras
RespondentB.P. Eswaran (Died) and ors.
Appellant AdvocateAddl. Govt. Pleader
Respondent AdvocateK. Raju K. Lukose, Adv.
Cases ReferredHarnath Kuar v. Indar Bahadur
Excerpt:
.....found to be wanting, it will, in our opinion, fall clearly within the meaning of section 49(d). in that case, as held by the privy council in harnath kuar v. the sale deed in question while asserting that the title was with the vendor clearly set out that if any; in the case of such an instrument, notwithstanding the fact that the conveyance, which is of course the main purpose of the document, has failed, the instrument as a whole is not absolutely void from the beginning. section 65 of the contract act may well be the basis, as was the case in the privy council decision. but where the instrument provided for liquidated damages or the mode of recovery or indicated the source from which the loss could be reimbursed, those stipulations notwithstanding the failure of the conveyance for..........the source from which the loss could be reimbursed, those stipulations notwithstanding the failure of the conveyance for want of title would still be valid and would be actionable apart from the basis of section 65 of the contract act. on that view, it is not possible for us to say that the instrument in this case as a whole is void absolutely from the beginning. section 49(d) does not contemplate allowance for spoliation of; stamps, where a composite instrument embodying rights and liabilities fails only in part and is good for the remaining part.5. we are, therefore, of opinion thatsection 49(d) of the 'stamp act cannot beinvoked. we answer the question infavour of the revenue. costs rs. 250/-.
Judgment:

K. Veeraswami, C.J.

1. This Is a reference under Section 57 of the Indian Stamp Act. The question is-

'Whether on the facts and circumstances of this case the sale deed dated 7-4-1965 executed by Thirumathi Pattammal and Pushpavathi Ammal in favour of the respondent herein is absolutely void in law from the beginning and the refund Of the value of stamps affixed on the instrument in question can be allowed?'

The facts stated by the Chief Controlling Revenue Authority are that after the conveyance, it was found that the vendor had no title to the property covered by the document and, for that reason, the vendor executed another document conveying a different property. The first sale deed was valued' as a conveyance.. The point is whether because the vendor had no title, it could be regarded as one found to be absolutely void in law from the beginning within the meaning of Section 49(d) of the Stamp Act.

2. The sale deed contained, besides the operative part of the conveyance, covenants as to title and indemnity. It provides that if right in respect of the property conveyed is found vested in a third party, the vendor would, at his own expense, make good the consequent loss to the vendee. Section 3 is the charging section and it says that the instruments specified therein shall be chargeable with duty of the amount indicated in the schedule to the Act. The schedule gives the description of each instrument and the relative amount of duty payable in respect thereof. An instrument is defined by Section 2(14) to include every document by which any right or liability is proposed to be created, transferred, limited, extended, extinguished or recorded. Where the instrument is a conveyance, it is charged accordingly, but where it is a composite document, as for instance containing a conveyance by way of sale, mortgage, charge, or exchange or release, the instrument will be liable to duty on each one of those transactions. In other words, by the definition of instruments it may be a document which creates rights or liabilities and it is with reference to such rights and liabilities created by the document that the chargeability to duty will have to be decided, as to whether duty is payable as a conveyance and also as on any other basis. Section 49 contemplates allowance for spoiled stamps and Clause (d) provides for allowance if an instrument executed by a party has been afterwards found to be absolutely void in law from the beginning. Instrument has been defined in the Act in the sense of a document which creates rights and liabilities with reference to which charge to stamp duty is determined,

3. Where an instrument is a document which is a conveyance sirnpliciter without anything more and the title to the property conveyed is found to be wanting, it will, in our opinion, fall clearly within the meaning of Section 49(d). In that case, as held by the Privy Council in Harnath Kuar v. Indar Bahadur, AIR 1922 PC 403, the agreement would be manifestly void from its inception because its subject-matter was incapable of being bound in the manner stipulated. In that case the courts in India had held that the transfer was inoperative, as the vendor at the date of the execution of the document had no interest capable of transfer but merely an expectancy. The suit by the purchaser was for possession of the villages covered by the conveyance with an alternative prayer for payment of money. The Privy Council held that the plaintiff was entitled to recover under. Section 65 of the Contract Act.

4. We are, however, of the view that while the principle of the decision of the Privy Council would doubtless be applicable to a case of conveyance sirnpliciter in which title in the vendor was found to be totally wanting, it cannot be extended to the case of an instrument which is a composite document creating not merely a right by way of conveyance which fails for want of title, but also stipulating for compensation or indemnity for loss resulting from that cause. The sale deed in question while asserting that the title was with the vendor clearly set out that if any; right in respect of the property was found to inhere in a third party, the vendor would make himself liable for the loss ensuing therefrom and such a loss the purchaser could recover also from the other properties of the vendor. In the case of such an instrument, notwithstanding the fact that the conveyance, which is of course the main purpose of the document, has failed, the instrument as a whole is not absolutely void from the beginning. If it is a case of a mere conveyance without covenants for indemnity and the conveyance fails. Section 65 of the Contract Act may well be the basis, as was the case in the Privy Council decision. But where the instrument provided for liquidated damages or the mode of recovery or indicated the source from which the loss could be reimbursed, those stipulations notwithstanding the failure of the conveyance for want of title would still be valid and would be actionable apart from the basis of Section 65 of the Contract Act. On that view, it is not possible for us to say that the instrument in this case as a whole is void absolutely from the beginning. Section 49(d) does not contemplate allowance for spoliation of; stamps, where a composite instrument embodying rights and liabilities fails only in part and is good for the remaining part.

5. We are, therefore, of opinion thatSection 49(d) of the 'Stamp Act cannot beinvoked. We answer the question infavour of the Revenue. Costs Rs. 250/-.


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