In a ruling that cuts through years of confusion over stamp duty on sale agreements, the Supreme Court on Wednesday held that a tenant’s long possession of a property does not automatically turn an agreement to sell into a “deemed conveyance.” The verdict came in a civil appeal between Vayyaeti Srinivasarao and landlady Gaineedi Jagajyothi, ending a prolonged tussle over whether extra stamp duty and penalty were payable before a sale agreement could even be read in court.
Background of the Case
Srinivasarao had been a tenant of the disputed property in Dowlaiswaram, Andhra Pradesh, for nearly five decades. In 2009, the landlady agreed to sell the premises to him for ₹9 lakh, taking ₹6.5 lakh as advance. Years later, when relations soured, eviction proceedings followed under the state rent law, and the tenant, in turn, sued for specific performance of the sale agreement.
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When the case reached the trial court, the landlady objected to marking the agreement as evidence. She argued that since the tenant was already in possession, the document should be treated as a sale deed for stamp duty purposes. The trial court agreed and directed payment of duty and penalty. The High Court upheld that view.
The dispute turned on Explanation I to Article 47A of the Andhra Pradesh Stamp Act, which treats an agreement to sell as a “sale” if it is followed by or evidences delivery of possession. The key question before the Supreme Court was simple but crucial:
Did the tenant’s possession have anything to do with the 2009 agreement?
Court’s Observations
A Bench of Justice B.V. Nagarathna and Justice R. Mahadevan answered that question firmly in the negative.
Reading out the facts, the Bench noted that Srinivasarao was not put in possession because of the sale agreement. He had already been there for almost fifty years as a tenant. Even after signing the agreement, the tenancy continued, proved by the later eviction order passed against him.
“The possession of the property was not relatable to the agreement to sell,” the court observed, adding that for stamp law to treat an agreement as a sale, there must be a clear link between the contract and the handing over of possession.
The judges also explained the difference between two legal relationships. A tenant remains a tenant unless there is a clear surrender-express or implied-of that status. Merely agreeing to buy the property does not end a tenancy. In this case, there was no such surrender. The relationship of landlord and tenant stayed intact.
The Bench distinguished earlier rulings where agreements were treated as conveyances because possession was given under the contract itself. Here, that essential ingredient was missing.
Why This Matters
Stamp duty disputes often decide whether a document can even be used in court. In this case, the tenant’s entire suit for specific performance was stalled because the agreement was kept out of evidence. The Supreme Court made it clear that stamp duty follows the nature of the document, not assumptions about possession.
As the Bench put it, “An agreement to sell does not create ownership. It only gives a right to seek a sale deed.” Unless possession changes hands because of that agreement, it cannot be dressed up as a sale for stamp purposes.
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The Decision
Setting aside both the High Court and trial court orders, the Supreme Court held that the 2009 agreement was only an agreement to sell, not a deemed conveyance. No additional stamp duty or penalty was payable.
The trial court has now been directed to mark the agreement as evidence and proceed with the specific performance suit, preferably within six months.
With that, the long-running procedural roadblock in this Andhra Pradesh property dispute finally comes to an end.
Case Title: Vayyaeti Srinivasarao vs Gaineedi Jagajyothi
Case No.: Civil Appeals arising from SLP (C) Nos. 21976–21977 of 2023
Decision Date: January 15, 2026
