The Bombay High Court recently delivered a significant judgment in a land sale dispute, modifying a temporary injunction order passed by lower courts. The case, Salim Baig vs. Sayyad Nawid, revolved around an unstamped and unregistered agreement to sell, raising critical questions about the admissibility of such documents in legal proceedings.
Background of the Case
The petitioner, Salim Baig, owned a piece of land and entered into an agreement with the respondent, Sayyad Nawid, to sell the property for Rs. 92,50,000. A notarized agreement, referred to as tabe-isar-pavti, was executed, and an earnest amount of Rs. 22,00,000 was paid. The agreement allowed the respondent to develop the land into saleable plots and pay the remaining amount in installments. However, disputes arose when the petitioner alleged that the respondent failed to develop the property within the stipulated time.
The respondent filed a suit seeking a temporary injunction to restrain the petitioner from alienating the property. The Trial Court and the District Court granted the injunction, relying on the agreement. The petitioner challenged these orders in the Bombay High Court, arguing that the agreement was inadmissible as it was neither stamped nor registered.
Legal Issues and Court’s Observations
The High Court examined whether an unstamped and unregistered agreement could be considered for granting interim relief. Key observations from the judgment include:
1. Admissibility of Unstamped Agreements: The court emphasized Section 35 of the Indian Stamp Act, which bars unstamped instruments from being admitted as evidence for any purpose unless the requisite duty and penalty are paid. The agreement in question was executed on a Rs. 100 bond paper and lacked proper stamping, making it inadmissible.
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"No instrument chargeable with duty shall be admitted in evidence for any purpose... unless such instrument is duly stamped."
— Section 35, Indian Stamp Act
2. Reliance on Precedents: The court cited the Supreme Court’s ruling in Avinash Kumar Chauhan vs. Vijay Krishna Mishra, which held that unstamped instruments cannot be admitted even for collateral purposes. Similarly, in Yellapu Uma Maheswari vs. Buddha Jagadheeswararao, the Supreme Court reiterated that parties must pay stamp duty and penalty to use such documents for collateral purposes.
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3. Possession Dispute: The petitioner denied delivering possession of the property to the respondent. The lower courts had relied on the agreement to assume possession, but the High Court found no evidence to support this claim. Ignoring the agreement due to its inadmissibility left no basis to conclude that the respondent was in possession.
The High Court partially allowed the writ petition. While it upheld the restraint on the petitioner from alienating the property, it set aside the injunction preventing the petitioner from disturbing the respondent’s possession. The court clarified that the lower courts erred in relying on an unstamped agreement and emphasized the need for compliance with stamp duty requirements.
Coram: Hon’ble Justice S. G. Chapalgaonkar
Case Title: Salim Baig S/o. Akhtar Baig vs. Sayyad Nawid S/o. Sayyad Nazir
Case Number: Writ Petition No. 13409 of 2023
