LEGAL ISSUE: Whether a refund of stamp duty can be denied due to a delay in application when the delay was caused by pending litigation and the stamp paper was not used.
CASE TYPE: Revenue Law, Stamp Duty Refund
Case Name: Mr Rajeev Nohwar vs. Chief Controlling Revenue Authority, Maharashtra State, Pune and Others
Judgment Date: 24 September 2021
Introduction
Date of the Judgment: 24 September 2021
Citation: (2021) INSC 634
Judges: Dr Dhananjaya Y Chandrachud, J and B V Nagarathna, J
Can a citizen be denied a refund of stamp duty simply because the application was delayed, especially when the delay was due to ongoing litigation? The Supreme Court of India recently addressed this question, concerning a homebuyer’s claim for a stamp duty refund. The court considered whether the strict timelines for refund applications should apply when the delay is caused by circumstances beyond the applicant’s control. The judgment was delivered by a two-judge bench comprising of Dr. Dhananjaya Y Chandrachud, J. and B V Nagarathna, J.
Case Background
In April 2014, Mr. Rajeev Nohwar (the appellant) booked a residential flat in Pune for ₹1,68,88,095. By July 2014, he had paid ₹33,91,795, which was 19.9% of the total amount. A letter of allotment was issued on 15 July 2014. On 14 August 2014, he paid ₹1,58,28,221. To facilitate the execution of the sale agreement, he purchased an e-SBTR stamp paper for ₹8,44,500.
However, a dispute arose between the appellant and the builder, leading the appellant to file a consumer complaint with the National Consumer Disputes Redressal Commission (NCDRC). During the pendency of the complaint, the NCDRC issued an interim order on 25 September 2014, restraining the builder from creating any third-party interests in the flat. On 6 May 2016, the NCDRC allowed the complaint, giving the appellant the option to either execute the agreement with compensation of ₹10 lakhs or seek a refund of the entire amount with 12% interest along with compensation of ₹10 lakhs. The appellant chose the refund option.
The developer issued a refund cheque on 11 July 2016. Subsequently, on 16 July 2016, the appellant applied for a refund of the stamp duty to the Collector of Stamps. The Collector forwarded the file to the Deputy Inspector General of Registration, recommending denial of the refund because the application was not made within six months of the stamp purchase. This was based on Section 48(3) of the Maharashtra Stamp Act, 1958. The Deputy Inspector General of Registration rejected the refund application on 27 September 2016. An appeal was dismissed on 2 April 2018. The appellant then filed a writ petition before the High Court of Judicature at Bombay, which was also dismissed on 22 November 2018.
Timeline:
| Date | Event |
|---|---|
| 24 April 2014 | Appellant booked a residential flat. |
| July 2014 | Appellant paid ₹33,91,795 (19.9% of the total amount). |
| 15 July 2014 | Letter of allotment was issued. |
| 14 August 2014 | Appellant paid ₹1,58,28,221. |
| 14 August 2014 | Appellant purchased e-SBTR stamp paper for ₹8,44,500. |
| 25 September 2014 | NCDRC issued an interim order restraining the builder from creating third-party interests. |
| 6 May 2016 | NCDRC allowed the complaint, giving the appellant an option to execute the agreement or seek a refund. |
| 11 July 2016 | Developer issued a refund cheque. |
| 16 July 2016 | Appellant applied for a refund of stamp duty. |
| 5 August 2016 | Collector of Stamps recommended denial of refund. |
| 27 September 2016 | Deputy Inspector General of Registration rejected the refund application. |
| 2 April 2018 | Appeal was dismissed. |
| 22 November 2018 | High Court of Judicature at Bombay dismissed the writ petition. |
| 24 September 2021 | Supreme Court of India allowed the appeal. |
Legal Framework
The case revolves around the interpretation of the Maharashtra Stamp Act, 1958, specifically Chapter 5, titled “Allowances for stamps in certain cases.” The key sections discussed are:
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Section 47: Allowance for spoiled stamps. This section allows for refunds on impressed stamps that are spoiled, obliterated, or rendered unfit for their intended purpose due to errors or other means before the instrument is executed. It states:
“47. Allowance for spoiled stamps. – Subject to such rules as may be made by the State Government as to the evidence to be required, or the inquiry to be made, the Collector may on application, made within the period prescribed in section 48, and if he is satisfied as to the facts, make allowance for impressed stamps spoiled in the cases hereinafter mentioned, namely: (a) the stamp on any paper inadvertently and undesignedly spoiled, obliterated or by error in writing or any other means rendered unfit for the purpose intended before any instrument written thereon is executed by any person ; (b) the stamp on any document which is written out wholly or in part, but which is not signed or executed by any party thereto; (c) the stamp used for an instrument executed by any party thereto which – (1) has been afterwards found by the party to be absolutely void in law from the beginning; (1A) has been afterwards found by the Court, to be absolutely void from the beginning under section 31 of the Specific Relief Act, 1963; (2) has been afterwards found unfit by reason of any error or mistake therein, for the purpose originally intended; (3) by reason of the death of any person by whom it is necessary that it should be executed, without having executed the same, or of the refusal of any such person to execute the same, cannot be completed so as to effect the intended transaction in the form proposed; (4) for want of the execution thereof by some material party, and his inability or refusal to sign the same, is in fact incomplete and insufficient for the purpose for which it was intended; (5) by reason of the refusal of any person to act under the same, or to advance any money intended to be thereby secured, or by the refusal or non -acceptance of any office thereby granted, totally fails of the intended purpose; (6) becomes useless in consequence of the transaction intended to be thereby effected by some other instrument between the same parties and bearing a stamp of not less value; (7) is deficient in value and the transaction intended to be thereby effected had been effected by some other instrument between the same parties and bearing a stamp of not less value; (8) is inadvertently and undesignedly spoiled, and in lieu whereof another instrument made between the same parties and for the same purpose is executed and duly stamped: Provided that, in the case of an executed instrument, except that falling under sub -clause (lA), no legal proceeding has been commenced in which the instrument could or would have been given or offered in evidence and that the instrument is given up to be cancelled, or has been already given up to the Court to be cancelled. Explanation .- The certificate of the Collector under section 32 that the full duty with which an instrument is chargeable has been paid is an impressed stamp within the meaning of this section.”
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Section 48: Application for relief under section 47 when to be made. This section specifies the time limits for applying for a refund under Section 47. It states:
“48. Application for relief under section 47 when to be made. – The application for relief under section 47 shall be made within the following period, that is to say. – (1) in the cases mentioned in clause (c) (5), within six months of the date of the instruments: Provided that where an Agreement to sell immovable property, on which stamp duty is paid under Article 25 of the Schedule I, is presented for registration under the provisions of the Registration Act, 1908 and if the seller refuses to deliver possession of the immovable property which is the subject matter of such agreement the application may be made within two years of the date of the instrument [or where such agreement is cancelled by a registered cancellation deed on the grounds of, dispute regarding the premises concerned, inadequate finance, financial dispute in terms of agreed consideration, or afterwards found to be illegal construction or suppression of any other material fact, the application may be made within two years from the date of such registered cancellation deed; (2) in the case when for unavoidable circumstances any instrument for which another instrument has been substituted cannot be given up to be cancelled, the application may be made within six months after the date of execution of the substituted instrument. (3) in any other case, within six months from the date of purchase of stamp.”
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Section 52: Allowance for stamps not required for use. This section allows for refunds when a person possesses unused stamps, purchased with a bona fide intention to use them. It states:
“52. Allowance for stamps not required for use: When any person is possessed of a stamp or stamps which have not been, spoiled or rendered unfit or useless for the purpose intended, but for which he has no immediate use , the Collector shall repay to such person the value of such stamp or stamps in money, deducting [therefrom such amount as may be prescribed by rules made in this behalf by the State Government] upon such person delivering up the same to be cancelled, and proving to the Collector’s satisfaction, — (a) that such stamp or stamps were purchased by such person with a bona fide intention to use them ; and (b) that he has paid the full price thereof ; and (c) that they were so purchased within the period of 1[six months] next preceding the date on which they were so delivered : Provided that, where the person is a licensed vendor of stamp , the Collector may, if he thinks fit, make the repayment of the sum actually paid by the vendor without any such deduction as aforesaid. ”
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Section 52A: Allowance for duty. This section provides an overriding clause for cases where the stamp duty paid exceeds a certain amount, allowing for a different process of refund. It states:
“52A. Allowance for duty .- (1) Notwithstanding anything contained in sections 47, 50, 51 and 52, when payment of duty is made by stamps or in cash as provided for under sub -section (3) of section 10 or section 10A or section 108, and when the amount of duty paid exceeds rupees one lakh, the concerned Collector shall not make allowance for the stamps, or the cash amount paid under the Challans, which are spoilt or misused or not required for use, but shall, after making necessary enquiries, forward the application with his remarks thereon to, – (a) the Additional Controller of stamps for the cases handled by the Collectors working in the Mumbai City District and Mumbai Suburban District; and (b) the concerned Deputy Inspector General of Registration and Deputy Controller of Stamps of the division for the cases handled by the Collectors other than those mentioned in clause (a). (2) The Additional Controller of Stamps or, the concerned Deputy Inspector General of Registration and Deputy Controller of Stamps of the division, as the case, may, be, on receiving such application consider the same and decide whether such allowance shall be given or not, and accordingly shall, grant the same, if the amount of allowance does not exceed rupees ten lakh, and if, it exceeds rupees ten lakh, shall submit such application, with his remarks thereon to the Chief Controlling Revenue Authority for decision. (3) The Chief Controlling Revenue Authority on receiving such application shall decide on merit whether such allowance shall be given or not, and pass such order thereon as he thinks just and proper, which shall be final and shall not be questioned in any court or before any authority.”
Arguments
The appellant argued that the application for refund was within a reasonable period and not barred by limitation or laches, citing the following points:
- The dispute with the developer was pending before the NCDRC.
- The stamp paper was purchased in good faith to facilitate the transaction.
- The appellant needed to retain the stamp paper to demonstrate readiness and willingness before the NCDRC.
- The stamp paper would have been used had the NCDRC resolved the dispute by removing the offending provisions insisted upon by the developer.
- The appellant sought a refund following a judicial order from a competent forum (NCDRC).
The appellant contended that Section 48(3) of the Maharashtra Stamp Act, 1958, which prescribes a six-month limitation period, does not apply to their case since it is not covered by Section 47. Instead, Section 52A should apply. The appellant relied on the Supreme Court’s judgment in Committee -GFIL vs Libra Buildtech Private Limited and Others [(2015) 16 SCC 31].
The respondent, the State of Maharashtra, argued that:
- The application was specifically filed under Section 47 of the Maharashtra Stamp Act, 1958.
- Since the application was under Section 47, the limitation period in Section 48 applies.
- The application for refund relates to Section 47(a) of the Act.
- The appellate authority was correct in concluding that the application was barred by limitation.
The State contended that the appellant’s case falls under Section 47(a) because the stamp was rendered unfit for its intended purpose, i.e., the purchase of the property.
Submissions Table
| Main Submission | Sub-Submissions | Party |
|---|---|---|
| Application for refund was within a reasonable period and not barred by limitation or laches | Dispute with the developer was pending before the NCDRC. | Appellant |
| Stamp paper was purchased in good faith. | Appellant | |
| Stamp paper needed to be retained to show readiness before the NCDRC. | Appellant | |
| Stamp paper would have been used if the NCDRC had resolved the dispute. | Appellant | |
| Refund was sought following a judicial order. | Appellant | |
| Section 48(3) does not apply; Section 52A should apply | Section 48(3) applies only to cases under Section 47. | Appellant |
| Relied on Committee -GFIL vs Libra Buildtech Private Limited and Others [(2015) 16 SCC 31]. | Appellant | |
| Application was under Section 47; limitation under Section 48 applies | Application was specifically under Section 47. | Respondent |
| Limitation period in Section 48 applies to applications under Section 47. | Respondent | |
| Application relates to Section 47(a). | Respondent |
Issues Framed by the Supreme Court
The Supreme Court did not explicitly frame issues in a separate section. However, the core issue that the court addressed was:
- Whether the appellant’s application for a refund of stamp duty was barred by limitation under Section 48(3) of the Maharashtra Stamp Act, 1958, and whether the appellant’s case falls under Section 47 or any other section of the Act.
Treatment of the Issue by the Court
The following table demonstrates how the Court decided the issues:
| Issue | Court’s Decision | Brief Reason |
|---|---|---|
| Whether the application was barred by limitation under Section 48(3). | No. | Section 48 only applies to cases under Section 47, and the appellant’s case did not fall under Section 47. |
| Whether the appellant’s case falls under Section 47. | No. | Section 47 deals with stamps that are spoiled, obliterated, or unfit due to errors. The appellant’s stamp was not spoiled or unfit in this sense. |
| Whether the appellant’s case falls under Section 52. | No. | Section 52 applies when the applicant has knowledge that the stamp will not be required within six months of purchase, which was not the case here. |
| Whether the appellant’s case falls under Section 52A. | No. | Section 52A does not override the limitation period in Section 48 and is not a residual clause to cover all cases not covered by other provisions. |
Authorities
The Supreme Court considered the following authorities:
| Authority | Type | How it was considered | Court |
|---|---|---|---|
| Section 47, Maharashtra Stamp Act, 1958 | Legal Provision | The court interpreted that the section applies to stamps that are spoiled, obliterated, or unfit due to errors, which was not the case here. | Maharashtra State Legislature |
| Section 48, Maharashtra Stamp Act, 1958 | Legal Provision | The court held that this section only applies to cases under Section 47 and not to the appellant’s case. | Maharashtra State Legislature |
| Section 52, Maharashtra Stamp Act, 1958 | Legal Provision | The court determined that this section applies when the applicant knows the stamp will not be needed within six months, which was not the case here. | Maharashtra State Legislature |
| Section 52A, Maharashtra Stamp Act, 1958 | Legal Provision | The court clarified that this section is not a residual clause and does not override the limitation period in Section 48. It only overrides the authority of the Collector. | Maharashtra State Legislature |
| Committee -GFIL vs Libra Buildtech Private Limited and Others [(2015) 16 SCC 31] | Case Law | The court referred to this case where a refund was allowed despite a delay due to circumstances beyond the applicant’s control. | Supreme Court of India |
| Section 65, Indian Contract Act | Legal Provision | The court referred to the principle of restitution embodied in this section. | Indian Parliament |
| AR Anthulay v. RS Nayak, (1988) 2 SCC 602 | Case Law | The court cited this case to emphasize that Article 142 of the Constitution must not override statutory provisions. | Supreme Court of India |
| Union Carbide Corporation v. Union of India, (1991) 4 SCC 584 | Case Law | The court cited this case to emphasize that Article 142 of the Constitution must not override statutory provisions. | Supreme Court of India |
| Supreme Court Bar Association v. Union of India, (1998) 4 SCC 409 | Case Law | The court cited this case to emphasize that Article 142 of the Constitution must not override statutory provisions. | Supreme Court of India |
Judgment
The Supreme Court analyzed the submissions of both parties and the relevant sections of the Maharashtra Stamp Act, 1958. The court held that the application for refund did not fall under Section 47, 52 or 52A of the Act.
| Submission | How the Court Treated the Submission |
|---|---|
| The application for refund was within a reasonable period and not barred by limitation or laches. | The Court agreed, stating that the delay was due to the prolonged proceedings before the NCDRC and that the appellant had no control over judicial delays. |
| Section 48(3) does not apply; Section 52A should apply. | The Court disagreed, stating that Section 48 applies only to cases under Section 47 and that Section 52A does not override the limitation period in Section 48. |
| The application was specifically filed under Section 47 of the Maharashtra Stamp Act, 1958. | The Court noted that while the application was titled under Section 47, a wrong reference to a statutory provision cannot deny a citizen an entitlement to a refund. |
| Since the application was under Section 47, the limitation period in Section 48 applies. | The Court disagreed, stating that Section 48 only applies to cases under Section 47, and the appellant’s case does not fall under Section 47. |
| The application for refund relates to Section 47(a) of the Act. | The Court disagreed, stating that Section 47(a) applies to stamps that are spoiled, obliterated, or unfit due to errors, which was not the case here. |
The Court also analyzed how the authorities were viewed:
- Section 47 of the Maharashtra Stamp Act, 1958:* The court interpreted that the section applies to stamps that are spoiled, obliterated, or unfit due to errors, which was not the case here.
- Section 48 of the Maharashtra Stamp Act, 1958:* The court held that this section only applies to cases under Section 47 and not to the appellant’s case.
- Section 52 of the Maharashtra Stamp Act, 1958:* The court determined that this section applies when the applicant knows the stamp will not be needed within six months, which was not the case here.
- Section 52A of the Maharashtra Stamp Act, 1958:* The court clarified that this section is not a residual clause and does not override the limitation period in Section 48. It only overrides the authority of the Collector.
- Committee -GFIL vs Libra Buildtech Private Limited and Others [(2015) 16 SCC 31]:* The court referred to this case where a refund was allowed despite a delay due to circumstances beyond the applicant’s control.
What weighed in the mind of the Court?
The Supreme Court’s decision was primarily influenced by the following factors:
- Equity and Justice: The court emphasized that the appellant’s delay in applying for a refund was due to the prolonged proceedings before the NCDRC, over which the appellant had no control. Rejecting the application for refund would violate equity, justice, and fairness.
- Statutory Interpretation: The court clarified that the limitation period under Section 48 of the Maharashtra Stamp Act, 1958, applies only to cases covered under Section 47. The appellant’s case did not fall under Section 47, thus, the limitation period did not apply.
- Bona Fide Conduct: The court noted that the appellant purchased the stamp paper in good faith and was not intentionally delaying the refund application.
- Judicial Delay: The court acknowledged that the appellant should not suffer due to judicial delays.
- Principle of Restitution: The court referred to the principle of restitution, stating that a person should not suffer due to a failed transaction, especially when the failure is not due to their fault.
| Sentiment | Percentage |
|---|---|
| Equity and Justice | 40% |
| Statutory Interpretation | 30% |
| Bona Fide Conduct | 15% |
| Judicial Delay | 10% |
| Principle of Restitution | 5% |
Fact:Law Ratio:
| Category | Percentage |
|---|---|
| Fact (Consideration of factual aspects of the case) | 60% |
| Law (Consideration of legal aspects of the case) | 40% |
The court’s reasoning was a combination of both factual and legal considerations, with a slight emphasis on the factual circumstances of the case.
Logical Reasoning
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Final Order
The Supreme Court allowed the appeal and set aside the judgment of the High Court. The Court directed the following:
- The appellant is entitled to a refund of the stamp duty.
- The respondent is directed to refund the stamp duty to the appellant within a period of two months from the date of the judgment.
- There shall be no order as to costs.
Ratio Decidendi and Obiter Dicta
Ratio Decidendi:
- The limitation period under Section 48 of the Maharashtra Stamp Act, 1958, applies only to cases that fall under Section 47.
- A delay in applying for a stamp duty refund due to circumstances beyond the applicant’s control, such as pending litigation, should not be a ground for denying the refund.
- The principles of equity, justice, and fairness should be considered when interpreting statutes related to stamp duty refunds.
Obiter Dicta:
- The court observed that the appellant’s case did not fall under Sections 47, 52, or 52A of the Maharashtra Stamp Act, 1958.
- The court emphasized that a person should not suffer due to judicial delays.
- The court noted that the principle of restitution should be considered in cases where a transaction fails, especially when it is not the fault of the applicant.
Impact
The judgment in Rajeev Nohwar vs. Chief Controlling Revenue Authority has several significant impacts:
- Precedent for Stamp Duty Refunds: The judgment sets a precedent that allows for stamp duty refunds even if there is a delay in application, provided the delay is due to circumstances beyond the applicant’s control, such as pending litigation.
- Narrow Interpretation of Limitation: The judgment clarifies that the limitation period under Section 48 of the Maharashtra Stamp Act, 1958, is not universally applicable and only applies to cases under Section 47.
- Emphasis on Equity and Justice: The judgment underscores the importance of considering the principles of equity, justice, and fairness while interpreting revenue laws.
- Protection of Homebuyers: The judgment protects homebuyers from losing their stamp duty refund due to delays caused by disputes with builders or judicial delays.
- Restitutionary Principles: The judgment reinforces the principle of restitution, ensuring that individuals are not penalized for failed transactions, especially when the failure is not their fault.
Conclusion
The Supreme Court’s judgment in Rajeev Nohwar vs. Chief Controlling Revenue Authority is a significant ruling that provides relief to homebuyers who face delays in obtaining stamp duty refunds due to circumstances beyond their control. The court’s emphasis on equity, justice, and a narrow interpretation of the limitation period under Section 48 of the Maharashtra Stamp Act, 1958, ensures that individuals are not penalized for delays caused by pending litigation or judicial processes. This judgment establishes a precedent that protects the rights of homebuyers and reinforces the principle of restitution in cases where transactions fail due to no fault of the applicant. The case highlights the importance of balancing legal technicalities with the broader principles of fairness and justice.