MP High Court Rules No Stamp Duty On Contested Property Decrees Recognising Existing Rights, Quashes ₹32 Lakh Demand

Indore (Madhya Pradesh): In a significant ruling safeguarding litigants from arbitrary financial burdens, Indore bench of Madhya Pradesh High Court has held that a contested judicial decree declaring property rights based on adverse possession does not require compulsory registration or payment of deficit stamp duty.

Justice Vinay Saraf allowed a second appeal filed by appellant Jagdish Prasad, setting aside lower court rulings that had upheld a tehsildar's order to impound a civil decree.

The legal battle stems from a property dispute in Tanda village, tehsil Kukshi, District Dhar, concerning 1.933 hectares of land.

The plaintiff originally secured a formal trial court judgment and decree on March 28, 2008, which declared him the landowner on the merits of his continuous adverse possession.

Although an appeal was subsequently filed, the parties agreed out of court to exclude a portion of the land utilised for a local girls’ hostel, leaving the plaintiff to seek mutation for the remaining portion of land.

When the plaintiff applied for mutation, the tehsildar erroneously treated the original trial court judgment as a "compromise decree," impounded it, and referred the matter to the collector of Stamps.

The collector demanded a steep stamp duty exceeding Rs 32 lakhs, categorizing the decree under conveyance rules. After the sub-divisional officer and lower civil courts dismissed the plaintiff's challenges, the matter reached the High Court.

Reviewing Section 17 of the Registration Act, 1908, and the Indian Stamp Act, 1899, the HC clarified key legal boundaries. The 2008 trial court decision was a contested decree decided on merits, not a compromise decree, making the tehsildar's classification entirely perverse.

Under Section 17(2)(vi) of the Registration Act, court decrees about the subject matter of a suit that declare pre-existing rights rather than creating fresh rights are explicitly exempt from compulsory registration.

Drawing upon Supreme Court precedents, including the ruling in Mukesh vs State of M.P., the HC reiterated that court orders and decrees do not fall under the schedule of instruments chargeable with stamp duty when they merely recognise established, pre-existing rights like adverse possession.

The High Court allowed the second appeal, quashed the lower court decisions, and set aside the orders passed by the tehsildar and the sub-divisional officer. The Court formally restrained the Collector of Stamps from recovering any deficit stamp duty and directed the local revenue authorities to immediately execute the mutation of the subject land in favour of the appellant.