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IN THE HIGH COURT OF ANDHRA PRADESH AT AMARAVATI

HONOURABLE SRI JUSTICE RAVI CHEEMALAPATI

CIVIL REVISION PETITION No.209 of 2023

Between:

Mogali Satyanarayana Reddy … PETITIONER

AND

M/s. Srinilayam,

Rep. by its Managing Partner A. Raghavendra

And two others

... RESPONDENTS

DATE OF JUDGMENT PRONOUNCED: 04.07.2023

SUBMITTED FOR APPROVAL:

HONOURABLE SRI JUSTICE RAVI CHEEMALAPATI

1. Whether Reporters of Local Newspapers

May be allowed to see the order? Yes/No

2. Whether the copy of order may be

Marked to Law Reporters/Journals? Yes/No

3. Whether His Lordship wish to

See the fair copy of the order? Yes/No

_____________________

RAVI CHEEMALAPATI,J

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*IN THE HIGH COURT OF ANDHRA PRADESH AT AMARAVATI

* HONOURABLE SRI JUSTICE RAVI CHEEMALAPATI

+ CIVIL REVISION PETITION No.209 of 2023

% DATED: 04.07.2023

Between:

# Mogali Satyanarayana Reddy

… PETITIONER

AND

$ M/s. Srinilayam,

Rep. by its Managing Partner A. Raghavendra

and two others

... RESPONDENTS

! Counsel for petitioner : Sri Virupaksha Dattatreya Gouda,

Representing Sri Vivekananda Virupaksha

^Counsel for Respondents : Sri M.Santhosh Reddy

<GIST :

>HEAD NOTE:

? Cases referred:

1. 2004 ) supreme (SC) 13

2. 1994 0 Supreme (Mad) 869

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HON’BLE SRI JUSTICE RAVI CHEEMALAPATI

CIVIL REVISION PETITION No. 209 of 2023

ORDER:

This Civil Revision Petition is filed aggrieved by the docket orders

dated 28.12.2022 passed in I.A.No.621 of 2022 in O.S.No.124 of 2022 by

the learned Principal Senior Civil Judge, Ananthapuram.

2. The petitioner is the defendant and the respondents are the

plaintiffs in O.S.No.124 of 2022 filed for permanent injunction.

3. The respondents filed I.A.No.621 of 2022 under Order-39, Rules 1

and 2 of the Code of Civil Procedure for grant of ad interim injunction

pending disposal of the injunction suit filed by them. In the said

application, when the respondents sought to mark the lease/rent

agreement dated 10.07.2019, the petitioner objected the same on the

ground that since the said document purports lease of the property for a

period of 10 years, the same cannot be marked as an exhibit, being

unregistered and insufficiently stamped. Consequently, the trial Court,

upon hearing both the parties and upon considering the decisions relied on

by them in support of their respective contentions, overruled the objection

raised by the petitioner holding that the document sought to be marked is

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only an executory agreement but not a lease or agreement for lease and

thus the same is admissible in evidence and the same can be marked.

4. Aggrieved thereby, the petitioner filed this Civil Revision Petition

invoking the jurisdiction of this Court under Article 227 of the Constitution

of India.

5. Heard Sri Virupaksha Dattathreya Gouda, learned counsel, for Sri

Vivekananda Virupaksha, learned counsel for the petitioner, and Sri

Medapati Santosh Reddy, learned counsel for the respondents.

6. Sri Virupaksha Dattathreya Gouda, learned cousnel, in elaboration

would submit that the subject document since stipulates all the terms and

conditions a valid lease deed ought to contain, such as-tenure of lease and

its extension after completion of the initial tenure of lease of 10 years,

quantum of rent and its periodical enhancement and all the other rights

and liabilities of the parties thereto, thus the said document is a Lease

Deed. Even if the said document is treated as an agreement to lease, it

comes within the sweep of ‘lease’ as per section 2(7) of the Registration

Act and thus the document requires registration and the same is to be

sufficiently stamped as per Section 29(c) and Article 21 of the Schedule 1A

of the Indian Stamp Act, 1899.

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The learned counsel would further submit that, nomenclature of the

document is immaterial, but its terms and conditions would determine the

nature and character of the document and the Court must gather the

intention of the parties from embodiment of the document. The subject

document clearly spells out the intention of the parties thereto is to treat

the document as a lease deed but not as a proposed agreement to lease.

However, the lower court swayed away by the nomenclature of the

document and also upon misconception of the facts of the case as well as

the pronouncements relied on by the respective parties committed a grave

error in coming to the fallible conclusion that the subject document is only

an executory agreement but not lease/agreement to lease and thus

admissible in evidence. The learned counsel would further submit that, the

Court below has shirked away the duty cast upon it to ensure collection of

deficit stamp duty as envisaged in section 33 of the Stamp Act. The order

impugned is unsustainable, irrational, suffers from patent irregularity and

perverse. Hence, sought interference of this Court and prayed to allow the

Civil Revision Petition.

7. Per contra, Sri Medapati Santosh Reddy, learned counsel for the

respondents, would submit that, the duties of the first part to fourth part

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(lessors) to the subject document clarifies that they are not even owners of

the building property and that construction of the tenanted building was

not completed in all aspects as on the date of the execution of the

document. This, coupled with the nomenclature of the document, speaks

volumes of the intention of the parties that it is only an arrangement of

agreed terms arrived at between the parties for execution of the lease

agreement in future. Thus, the subject document, since a proposed

lease/rent agreement, requires neither registration nor stamp duty penalty.

The Court below has scanned the material on record in right perspective

and overruled the objection raised by the petitioner. There are no grounds

either raised or urged in this Civil Revision Petition warranting interference

of this Court with well reasoned and impeccable order of the trial Court.

Hence, prayed to dismiss the Civil Revision Petition.

8. Perusal of the material placed on record would indicate that the

respondents filed a suit against the petitioner for permanent injunction.

During enquiry in the petition filed for grant of ad interim injunction vide

I.A.No.621 of 2022, the subject document was sought to be marked by

the respondents, which was objected to by the petitioner and consequently

the impugned orders came to be passed.

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9. Before the trial Court, the respondents herein relied on a decision

in Food Corporation vs. Babulal Agarwal

1

. In the said decision, a suit

was filed by the landlord for recovery of damages and other amounts on

the ground that the FCI having entered into a contract with him for

construction of plinths, resiled from its promise. When the contract entered

into between plaintiff and FCI was sought to be marked, it was objected to

on the grounds that it was unregistered and insufficiently stamped. A

Division Bench of Madhya Pradesh High Court by analyzing clause Nos.8 &

9 of the contract held that by the date of entering into the contract, the

construction of the plinths had yet to start and that the construction of the

plinths was to be strictly in accordance with the specifications of FCI. Thus

possession or right or title having not been passed in praesenti on the date

of the contract and as there were many prior conditions attached thereto,

the said contract is only an executory agreement and not an agreement

creating rights in the immovable property.

10. In another decision relied on by the respondents before trial

Court in S.Raman vs. Nithyakalyani Flush Doors Company Private

1

. 2004 ) supreme (SC) 13

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Limited, by its Director, S. Ramanujam and another

2

. In the said

decision, in a suit filed for specific performance of an agreement for lease,

marking of the said agreement of lease was objected to by the adverse

party on the ground that since the document creates present rights in the

property the said document is a compulsorily registerable document,

whereas the plaintiff therein contended that the document is only an

agreement and there is no present demise and no lease is created by

virtue of the document. The High Court of Madras by relying on T.N.Habib

Khan v. Arogya Mary Shanthi Lucien, (1981)2 M.L.J. 298: (1981)94 L.W.

539: A.I.R. 1982 Mad. 156 held that, since the document does not create a

present demise, it is only an executory contract. The parties bind

themselves as to conditions of a lease when the lease comes into force. It

is not disputed that there was an obligation on the part of the lessor to

complete the constructions suggested by the proposed lessee, and the rent

is fixed inclusive of the buildings to be constructed. The entire subject

matter of the lease was not in existence, when the document was

executed. The rent is also payable only when possession is handed over.

Possession is retained by the lessor, promising to construct the building.

2

. 1994 0 Supreme (Mad) 869

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11. Relying on the above two decisions, and upon perusal of the

subject document, having observed that since the lessors themselves were

not even owners of the property and they have to get registered

conveyance deed in their favour and that the document did not create a

present demise, as the subject building was not made ready for occupation

as on the date of execution of the document and that no interest or right is

created in prasaenti, came to conclusion that the subject document is only

an executory agreement executed by the parties to bind themselves of the

terms arrived at, but not an executed agreement and thus it neither

requires registration nor any additional stamp duty and the same can be

admitted in evidence.

12. The nomenclature of the subject document is “LEASE/RENT

AGREEMENT PROPOSED”. The title given to this document suggests that

this document is executed narrating the proposed terms and conditions of

an agreement to lease to be executed in future. However, in view of the

axiomatic principle of law that nomenclature of the document is not

decisive and the real intention of the parties in executing the document

has to be gathered from the contents adumbrated therein, it is necessary

to conduct a close examination of the contents of the document.

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13. The document was entered into between the proposed building

owners comprising First to Fourth part and the tenant styled as fifth part.

It was executed on 10.07.2019. It delineates the duties of the proposed

buyers as well as the proposed tenant. The proposed owners (first to

fourth part) are burdened with the obligation of getting the building

property registered in their names as per the sale agreement entered into

by them with their seller and further to make ready the building for

occupation in all aspects by 31.08.2019. Coming to the duties imposed on

the proposed tenant (fifth part), they enumerate the period of lease being

for 10 years, monthly rental being Rs.4,00,000/- with a condition for 15%

enhancement for every three years, payment of two months’ rent in

advance refundable after the period of agreement upon due adjustment of

arrears, if any, and mode of payment of rent separately to the proposed

owners in proportion to their specified shares. The document further

specifies that six (06) months advance notice is required to be given by the

tenant to the owners of the building, if he wishes to vacate the premises.

Besides, the document states that there can be extension of lease after

completion of period of 10 years.

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14. Thus the subject document did contain all the necessary

trappings of a lease deed and further, as the said document does not

contain any stipulation requiring execution of any other document for

effectuation of the terms and conditions embodied therein.

15. However, the subject document was executed on 10.07.2019,

whereas the lease was to commence from 01.09.2019 and the rent

amount was payable from 01.09.2019 onwards. Meaning thereby, the

lease would commence not on the date of execution of the document but

on a specified date in future. The contents of the subject document no

doubt impose obligations on the lessors for completion of construction of

the building and to get valid registered conveyance deed for the said

property. Thus, by the date of execution of the subject document, the

proposed lessors are not even owners of the property. Further, enjoyment

of the property by the lessee is from a future date and the rent is payable

from the date of occupation of the property.

16. As rightly held by the Court below that possession of the

property was not delivered as on the date of execution of the document

and moreover the lessors were not even the owners of the property as on

that date. In view of the same, the subject document does not create a

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present demise and hence, it is only an executory contract as on the date

of its execution, for the reason that some conditions stipulated in the

document are yet to be accomplished. If the things end there itself, there

would have been nothing for this Court to interfere with the decision

arrived at by the trial Court.

17. At this juncture, it is apt to peruse the contents of the plaint.

The suit was filed by three plaintiffs. The Fifth part/tenant under the

subject document is the 2

nd

plaintiff, whereas second and fourth part/

proposed Building owners were arrayed as 1

st

and 3

rd

plaintiffs

respectively. The first part/ proposed Building owner is the sole defendant

to the suit. The Managing partner of the 2

nd

plaintiff is one of the proposed

Building owners as well as tenant under the subject document. Thus, three

out of the four Building owners and tenant are the plaintiffs and the other

Building owner is the defendant. The contents of the plaint explicitely show

that subsequent to execution of the subject document, the property

mentioned therein was purchased by the 2

nd

plaintiff firm under registered

sale deed dated 19.02.2020 and the 1

st

plaintiff firm was inducted into

possession of the said property as tenant thereof and the 2

nd

plaintiff has

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been paying rents to the 1

st

plaintiff. Thus, there was accomplishment of

all the obligations imposed by the said document.

18. In view of the events occurred subsequent to the execution of

the subject document and since the tenant (2

nd

plaintiff) claims to have

gained over possession of the property by virtue of the subject document,

nothing remains to be performed. Therefore, soon after the tenant got

himself inducted into possession of the property, de hors a stipulation for

execution of any registered deed or document, the nature of the

document, which was till then an executory agreement, thenceforth

transforms into an executed agreement. Thus, the Courts must also see

not only the intention of the parties in executing the document but also the

result it had yielded by the date when it was sought to be introduced in

evidence. It is also to be borne in mind that this is not a suit filed for

specific performance of the agreement to lease. This is a suit filed for

permanent injunction claiming possession over the property by virtue of

the subject document. However, the trial Court failed to take into

consideration the events that occurred subsequent to execution of the

subject document and though the 2

nd

plaintiff in the suit claims possession

of the property under the subject document, unmindful of the same, held

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that the document does not create a present demise. Thus, the subject

document is a lease deed executed in relation to an immovable property in

respect of a lease for ten (10) years tenure.

19. According to section 107 of the Transfer of Property Act, a lease

of immovable property exceeding one year or reserving a yearly rent, can

be made only by a registered instrument.

20. Further, Section 17 (d) of the Registration Act, 1908 envisages

that documents in relation to leases of immovable property from year to

year, or for any term exceeding one year, or reserving a yearly rent; shall

be registered.

21. In view of Section 107 of the Transfer of Property Act and

Section 17(d) of the Registration Act, the subject document being a

document executed in relation to a lease of immovable property for more

than one year, it is a compulsorily registerable document. Admittedly, the

subject document is unregistered.

22. Hence, Section 49 of the Registration Act excludes such a

document from being received as evidence of any transaction affecting

such property or conferring such power, unless it has been registered.

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23. However, there is an exception to this general rule. The proviso

to Section 49 of the Registration Act would show that an unregistered

document affecting immovable property and required by this Act or the

Transfer of Property Act, 1882 (4 of 1882) to be registered may be

received as evidence of any collateral transaction not required to be

effected by registered instrument.

24. This being a suit filed for permanent injunction, the paramount

consideration would be as to who was in possession of the property as on

the date of filing of the suit. Thus the subject document though

unregistered can be received in evidence for the collateral purpose of

establishing possession over the subject property. Therefore, non-

registration of the document is not at all an impediment from admitting it

in evidence.

25. Article 31 of the Schedule 1A of the Stamp Act prescribes that in

relation of deed where the lease purported to be for 5 to 10 years, stamp

duty at 1% on AAR, if the premises is used for residential purposes and at

2% on AAR, if the premises is used for other purposes, is payable. The

copy of the subject document filed along with the Civil Revision Petition

shows that the document was written on four (04) hundred rupee

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denomination stamp papers. Thus, the document is not sufficiently

stamped as required under the Stamp Act.

26. Section 35 of the Stamp Act debars such an instrument from

being admitted in evidence for any purpose, unless the deficient stamp

duty along with and penalty levied in respect thereof has duly been paid.

Thus, the subject document shall be impounded for collection of stamp

duty and penalty treating it as a ‘lease deed’.

27. It is also relevant here to note that Section 33 of the Act casts a

statutory duty on the Courts to impound the document and collect the deficit

stamp duty & penalty as per the provisions of the Act, when the document is

admittedly not duly stamped to make good the loss caused to exchequer of the

State Government.

28. In Parchuri Sireesha and another vs. Challapalli Jalaja

3

,

this Court held as follows:

“12. In the light of the settled legal position and the duty that is cast

upon the learned Judge of the trial Court, the learned Judge is obliged

nay duty bound to impound (seize/take possession of) the document and

collect the deficit stamp duty & penalty as per the provisions of the Act,

when the document is admittedly not duly stamped, and see that no loss

of revenue is caused to the exchequer of the State Government.

Therefore, turning a blind eye to the statutory mandate and dismissing of

3

. 2019 SCC OnLine AP 268

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the petition of the defendants by the trial Court on the ground that no

purpose would be served by collection of deficit stamp duty & penalty on

the gift deed as it is unregistered, though compulsorily registerable, is

erroneous as any document brought before a Court should comply with

the requirement of Section 35 of the Indian Stamp Act and the Court is

duty bound to impound and collect deficit stamp duty & penalty, if any

such document is found to be not duly stamped. In that view of the

matter, this Court finds that the trial Court committed a grave error in

refusing the request of the defendants to pass orders to collect stamp

duty and penalty on the subject gift deed.”

29. The observations referred to above makes it clear that, the

Court is duty bound to impound and collect deficit stamp duty & penalty, if

any such document is found to be not duly stamped. Despite the clear

mandate, the trial Court did not take any step in that direction.

30. In view of the above, the impugned order suffers from patent

illegality and the same is irregular. Thus, the same requires interference of

this Court.

31. Accordingly, the Civil Revision Petition is allowed. The docket

order impugned dated 28.12.2022 passed in I.A.No.621 of 2022 in

O.S.No.124 of 2022 by the learned Principal Senior Civil Judge,

Ananthapuramu is set aside. The trial Judge shall impound the document

and take steps for collection of deficit stamp duty and penalty. The subject

document can be marked as an exhibit subject to collection of deficit

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stamp duty and penalty as required by law. There shall be no order as to

costs.

As sequel thereto, miscellaneous petition, if any, pending shall stand

closed. Interim orders, if any, shall stand vacated.

_________________________

JUSTICE RAVI CHEEMALAPATI

4

th

July, 2023

Note: LR copy to be marked

B/o

RR

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HON’BLE SRI JUSTICE RAVI CHEEMALAPATI

CIVIL REVISION PETITION No.209 of 2023

4

th

July, 2023

RR