“Editor’s Note: The paper deals with the meaning of the phrase “executing a proper conveyance” as used in Section 55(1)(d) of the Transfer of Property Act. The phrase denotes the liability of the Seller to execute the documents, pay stamp duty, get the deed duly registered and signed; and all other procedural requirements to duly transfer the property in favour of whomsoever and for which purpose the documents have been executed.”
This project research work shall throw light upon the phrase “execute a proper conveyance” in section 55 (1) (d) of T.P.A which is not properly discussed or is not tacit in common legal fraternity. It might be the case that the issue of terminology used in the said section for the phrase is central to all the perplexity which has driven the researcher to ponder and led him to elucidate on the terminology with the help of relevant case laws. Section 55 (1) (d) of the T.P.A places before us the liability of the seller i.e. it clearly elucidates what the legislature intended by specifying the steps a seller should follow in case the transfer is subject to contrary and save the innocent junta from fraud, misleading, mischief after they have performed their part of contract like when they pay the said amount decided to the seller and the seller refuses to take any steps in the performance of his part of contract. On the contrary, the legislature has put on a revenue veil and served us with a gaudy piece of legislation that appears to be for the sole benefit of buyers but in fact serves the legislature’s intent.
The clause (1) (d) of section 55 of T.P.A requires the seller to execute a Proper Conveyance of the property but only when the buyer tenders it to him for execution.
The phrase “execute a proper conveyance” in section 55 (1) (d) of T.P.A means that the seller is bound by the law to follow relevant legal steps in order to complete the contract for sale. This simply illustrates that the seller is bound to get the said Property entitlement transferred in the name of the buyer and perform the legal financial procedures involved. Likewise, getting it duly registered, signing the sale deed, paying of stamp duty, getting all the relevant documents required in the transfer properly executed in favour of the buyer or the nominee whom the buyer nominates. The Act makes no provision as to the cost of conveyance. It may be made a subject of contract. In the absence of an express term, the buyer has to pay the cost of the stamps.
In an auction sale, the seller under Section 55 (1) (d) of T.P.A is statutorily obliged to execute Proper Conveyance of property. It is the duty of the buyer not only in the first instance to pay or tender the price but also to propose conveyance and tender it to the seller for execution.
The transfer of property and registration of documents falls under the Entry 6 of List II of the Seventh Schedule of the Constitution of India, Rates of stamp duty payable in respect of the documents. Therefore, revenue also forms a cardinal part of conveyance which seems to be shadowed by the words like registration.
To prevent evasion of stamp duty many states levy stamp duty on deemed conveyance. Deemed conveyance include any contract for conveyance where possession is transferred.
- Indian Stamp Act, 1899
Section 29. Duties by whom payable
In the absence of any agreement to the contrary, the expense of providing the proper stamp shall be borne-
(c) In the case of a conveyance (including a reconveyance of mortgaged property) by the grantee: in the case of a lease or agreement to lease- by the lessee or intended lessee:
Thus, this section supports my hypothesis as in the light of conveyance the legislature is indirectly imposing revenues without explicit mention of the same.
- Section 28(3) in The Specific Relief Act, 1963
(3) If the purchaser or lessee pays the purchase money or other sum which he is ordered to pay under the decree within the period referred to in sub- section (1), the court may, on application made in the same suit, award the purchaser or lessee such further relief as he may be entitled to, including in appropriate cases all or any of the following reliefs, namely:-
(a) the execution of a Proper Conveyance or lease by the vendor or lessor;
(b) the delivery of possession, or partition and separate possession, of the property on the execution of such conveyance or lease.
Thus, this section supports my hypothesis as it is again culverting the legislatures revenual intention behind the rights of the buyer.
- Indian Stamp Act, 1899
- Direction as to duty in case of certain conveyances
(1) When any property has been contracted to be sold for one consideration for the whole, and is conveyed to the purchaser in separate parts by different instruments, the consideration shall be apportioned in such manner as the parties think fit, provided that a distinct consideration for each separate part is set forth in the conveyance relating thereto, and such conveyance shall be chargeable with ad valorem duty in respect of such distinct consideration.
(2) Where property contracted to be purchased for one consideration for the whole, by two or more persons jointly, or by any person for himself and others, or wholly for others, is conveyed in parts by separate instruments to the persons by or for whom the same was purchased, for distinct parts of the consideration, the conveyance of each separate part shall be chargeable with ad valorem duty in respect of the distinct part of the consideration therein specified.
(3) Where a person, having contracted for the purchase of any property but not having obtained a conveyance thereof, contracts to sell the same to any other person and the property is in consequence conveyed immediately to the sub-purchaser, the conveyance shall be chargeable with ad valorem duty in respect of the consideration for the sale by the original purchaser to the sub-purchaser.
(4) Where a person, having contracted for the purchase of any property but not having obtained a conveyance thereof, contracts to sell the whole, or any part thereof, to any other person or persons and the property is in consequence conveyed by the original seller to different persons in parts, the conveyance of each part sold to a sub-purchaser shall be chargeable with ad valorem duty in respect only of the consideration paid by such sub-purchaser, without regard to the amount or value of the original consideration, and the conveyance of the residue (if any) of such property to the original purchaser shall be chargeable with ad valorem duty in respect only of the excess of the original consideration over the aggregate of the considerations paid by the sub-purchasers:
PROVIDED that the duty on such last-mentioned conveyance shall in no case be less than one rupee.
(5) Where a sub-purchaser takes an actual conveyance of the interest of the person immediately selling to him, which is chargeable with ad valorem duty in respect of the consideration paid by him and is duly stamped accordingly, any conveyance to be afterwards made to him of the same property by the original seller shall be chargeable with a duty equal to that which would be chargeable on a conveyance for the consideration obtained by such original seller, or, where such duty would exceed five rupees, with a duty of five rupees.
This section also establishes my hypothesis as it is evident with this provision that the sole reason behind this Conveyance is only stamp duty.
Meaning of “execute a proper conveyance” in section 55 (1) (d) of T.P.A
Let’s take a simple English dictionary meaning the phrase by fragmenting it into sub parts.
- Execute means Put (a plan, order, or course of action) into effect.
- Proper means required or correct type or form.
- Conveyance means Transfer of ownership. This can be done by executing various necessary legal procedures in the manner prescribed by law.
Also, the legal meaning of Conveyance as described in a case law is also as follows: If there exists an agreement to transfer immovable property and possession has already been delivered to transferee then it would be ‘conveyance’ within meaning of Section 23 of Indian Stamp Act, 1899.
According to section 2 (10) of The Indian Stamp Act, 1957
“Conveyance” includes a conveyance on sale and every instrument by which property, whether movable or immovable, is transferred inter vivos and which is not otherwise specifically provided for by Schedule I;
The author supports his hypothesis through the judgements of Indian courts. Which are mentioned below:
- Nazeer V. State of Madhya Pradesh and Ors. AIR 2007 MP 6
Facts- A entered into an agreement with B for sale of land. A paid sale consideration of Rs. 15,000/- and the sale deed was to be executed on any date when he desired. Later, B avoided executing the sale deed as agreed upon. A, therefore, filed suit against him wherein he pleaded that the possession of suit land was delivered to him at the time of agreement. A in his statement recorded in the trial Court, reiterated his claim that possession of the suit land was delivered to him on the execution of the agreement for sale. B stated that the possession of the suit land was delivered to him at the time of agreement and that he is in possession of the same, the instrument of agreement for sale is conveyance within the meaning of Article 23 of the Indian Stamp Act, 1899.
Held: The explanation in Article 23 of Schedule 1-A to the Indian Stamp Act, 1899 as amended in Madhya Pradesh of the Act which widens the definition of conveyance does not require for its application that the agreement itself must recite that possession has been delivered or will be delivered later. As the A not only in the plaint but also in his statement recorded in the trial Court has clearly admitted that possession of the suit land was delivered to him at the time of execution of the agreement for sale, It has to be held that the instrument satisfies the requirement of the explanation in Article 23 of the Act land is deemed to be a conveyance for the purpose of stamp duty.
- Veena Hasmukh Jain & Anr. Vs State of Maharashtra & Ors
Facts- A entered into an agreement for purchase of a flat with B. The agreement for sale was executed in accordance with law. It was lodged for registration under Section 4 of the MOF (Maharashtra Ownership of Flats) Act read with Section 17(1) of the Indian Registration Act, 1908. True market value of the property had not been truly and fully set out as the agreement was registered in accordance with the registration act and the provisions of the Stamp act would not be applicable. It was contended by the A that the document in question is only an agreement for sale and no right, title or interest passed on to the appellants so as to attract duty as a conveyance. That Section 32A of the Bombay Stamp Act had no application; that the appellant was not liable for duty under Entry 25 of Schedule I of the Bombay Stamp Act; that the agreement for sale had been executed under Section 4 of the MOF Act and in terms of the said provision it was mandatory to register the same under Section 17(1) of the Indian Registration Act; that the provisions of the Bombay Stamp Act were not applicable and consequently proceedings under Section 32A of the Bombay Stamp Act could not have been initiated
Held: That the agreement in question could be construed to be a conveyance and provisions of the Stamp Act would also be applicable as much as of registration act. The High Court also examined the scope of Explanation I to Article 25 of Schedule I of the Bombay Stamp Act and held that the same was attracted to the case. Under the agreement there is an obligation to hand over the possession even before execution of a conveyance and, therefore, it was a “conveyance” for the purpose of duty payable under the Bombay Stamp Act and there was no obligation in the agreement to enter into a conveyance at a later stage and clearly it was a case which attracted said Explanation.
Explanation. Explanation I to Article 25 of Schedule I to the Bombay Stamp Act reads as follows:
Explanation I. For the purposes of this article, where in the case of agreement to sell an immovable property, the possession of any immovable property is transferred to the purchaser before the execution, or at the time of execution, or after the execution of such agreement without executing the conveyance in respect thereof, then such agreement to sell shall be deemed to be a conveyance and stamp duty thereon shall be leviable accordingly:
Provided that, the provision of section 32A shall apply mutatis mutandis to such agreement which is deemed to be a conveyance as aforesaid, as they apply to a conveyance under the section:
Provided further that, where subsequently a conveyance is executed in pursuance of such agreement of sale, the stamp duty, if any, already paid and recovered on the agreement of sale which is deemed to be a conveyance, shall be adjusted towards the total duty leviable on the conveyance.
- Somaiya Organics (India) Ltd. v Board of Revenue, U.P.
Facts: A took an equitable mortgage by depositing title deeds of his sister company from the bank for deferred payment guarantee. A sold the property to its parent company. Stamp duty was to be payable for two distinct deeds executed. One for the sale deeds another for the purchase deed. But the stamp duty paid was undervalued and paid only for a single deed. Hence the matter was put up before the high court as to ascertainment of the stamp value and upon which deed.
Section 24 of the Stamp act was in question.
- Where any property is transferred to any person in consideration, wholly or in part, of any debt due to him, or subject either certainly or contingently to the payment or transfer of any money or stock, whether being or constituting a charge or Incumbrance upon the property or not, such debt, money or stock is to be deemed the whole or part, as the case may be, of the consideration in respect whereof the transfer is chargeable with ad valorem duty:
Provided that nothing in this Section shall apply to any such certificate of sale as is mentioned in Article No. 18 of Schedule I.
Explanation.- In the case of a sale of property subject to a mortgage or other incumbrance, any unpaid mortgage money or money charged, together with the interest (if any) due on the same, shall be deemed to be part of the consideration for the sale:
Provided that, where property subject to a mortgage is transferred to the mortgagee, he shall be entitled to deduct from the duty payable on the transfer the amount of any duty already paid in respect of the mortgage.
Held: The equitable mortgage had been created on the property transferred under the sale was to be treated as part of the consideration for the conveyance in question under Section 24 of the Act. The meaning of Section 24 in short is that where property is conveyed to a person for consideration, wholly or in part, of any debt due to him, subject either certainly or contingently to the payment or transfer of any money or stock whether or not charged on the property then debt money or stock is to be deemed the whole or part as the case may be of the consideration in respect of which the conveyance is charged with ad valorem stamp duty. The Explanation to section 24 of the Act provides that in the case of a sale of property subject to a mortgage or other incumbrance any unpaid mortgage money or money charged together with the interest (if any) due on the same shall be deemed to be part of the consideration for the sale. A contingent liability to the payment of any debt means such outstanding debt or possible adverse verdict which has to be complied with but which is not ascertained on the relevant date. A security for any contingent future payments also falls within the meaning of Section 24 of the Act.
Hence the sale of the mortgaged property was also deemed a part of the consideration for the sale and that stamp duty was leviable under Section 24 of the Act.
- G. Kulkarni V. State Of Karnataka
Facts- A purchased a property and executed a conveyance in favour of B. Stamp duty was also paid. However, it was contended by the district collector under section 45A of the Karnataka stamp act that the said property was undervalued in favour of B in order to evade with the stamp duty. Moreover, the contention of A was that proper stamp duty is paid in accordance with the circle rate as provided from the district collectors office and no undervaluation of the property is done no intention to evade the stamp duty exists.
Held: A was held liable for undervaluation of the property. Under THE KARNATAKA STAMP ACT, 1957 section 45 A the district collector is empowered to order assessment of the property if it is undervalued for the purposes of evasion of the revenue of the state. A had to pay the difference in the stamp duty and penalty imposed.
- Dattaprasad v State Of Karnataka
Facts- A is the owner of housing societies. A contended that un amended provision of Section 38 of the Karnataka Co-operative Societies Act has exempted the Co-operative Societies from the application of provisions of Section 17(1)(b) and (c) of the Indian Registration Act, 1908 for compulsory registration of the documents and payment of stamp duty and registration fee as provided under the provisions of the Karnataka Stamp Act, 1957 and Registration Rules. Provisions of the Registration Act and Stamp Act are exempted in all the States throughout the Country with regard to the registration and payment of stamp duty and registration fee upon the deeds to be executed by either Societies or on their behalf. Further, Section 17 (2) (iii) of the Registration Act itself gives such exemption to joint stock companies registered under the Indian Companies Act, 1956 from registering and payment of the stamp duty and registration fee to the conveyance deeds.
A proviso to Section 38 of the KCS Act, by way of amendment to the Act is inserted which has separated housing co-operative societies from their family of co-operative societies hence, this case.
Held: A had to pay the stamp duty and other legal expenses annexed with the transfer of property. The proviso to Section 38 by way of an amendment is not creating any repugnancy insofar as the payment of the stamp duty and registration fee upon the instruments which are compulsorily register able under the provisions of Section 17(1)(b) and (c) of the Registration Act and Article 20(1) and (2) of the Stamp Act.
In Veena Hasmukh Jain & Anr. Vs State of Maharashtra & Ors.. It was stated in Para 4 what conveyance means it was held that even an agreement to sell could be a conveyance for the purposes of collecting stamp duty.
The conditions to be fulfilled are in order to qualify whether conveyance exists in any situation.
- If there is an agreement to sell Immovable property
- Possession of such property is transferred to the purchaser before the execution or at the time of execution or subsequently without executing any conveyance in respect thereof such, an agreement to sell is deemed to be a “conveyance”.
It is observed in Halsbury’s Laws of England, Vol. 29, Hailsham Edn., 1938, at p. 411 –
Para 558. As a rule the conveyance is made to the purchaser, but, provided the vendor is not prejudiced, the purchaser can direct it to be made to a nominee, for such estate and interest, not exceeding the interest purchased, as he pleases. Where the grantee is to enter into covenants with the vendor, the purchaser cannot substitute a new covenanter for himself without the vendor’s consent, and in such a case the nominee must not be a person under disability.
Para 559. When the purchaser has disposed of the land before the completion of the contract, it is usual, for the purpose of saving the expense of the second conveyance and double stamp duty, to take the assurance direct to the second purchaser. The disposition may be either by assignment of the contract or resale of the land. Upon an assignment of the contract the original purchaser is not usually a necessary party to the conveyance, nor is he a necessary party where there is a resale without increase of price.
In Suraj Lamp and Industries Pvt. Ltd. Vs. State of Haryana and Anr it was discussed at length the ill effects of under valuation of property for the purposes of stamp duty. In the state of Haryana stamp duty was reduced in order to save the evasion of stamp duty by the people by misusing power of attorney. This clearly elucidates that the word Conveyance is only to generate revenue.
Finally, it is concluded that the said legislation is a kind of mirage drawn to please the buyers by masquerading the legislative revenue motives.
Factual situation- A enters into an agreement to sell property with B. When this document is to be treated for execution of conveyance it is undervalued and the heavy stamp duty is evaded.
Held: If there exists a hunch that true and fully fair market value of property is not stated then the District Collector may audit the documents within 2 years from the date of execution of the conveyance. Ten times the amount of stamp duty and revenue not paid will be penalised.
Edited By Amoolya Khurana
 Kapadauanj Municipality v. Ochhavlal, AIR 1928 Bom 328 : 30 Bom LR 920
 Rahimullah v Official Assignee, AIR 1935 Bom 340
 Section 29 (e), Stamp Act.
 Megha Enterprises Pvt. Ltd. v. Official Liquidator, AIR 2008 Raj 138 (142)
 Jamshed v Burjorji, AIR 1934 Bom 1.
 Mohd. Nazeer V. State of Madhya Pradesh and Ors. AIR 2007 MP 6
 Veena Hasmukh Jain & Anr. Vs State of Maharashtra & Ors AIR 1999 SC 807
 ILR 1985 KAR 2152
 ILR 2004 KAR 1892
 AIR 1999 SC 807
 Veena Hasmukh Jain & Anr. Vs State of Maharashtra & Ors AIR 1999 SC 807; Para 8
 AIR 2012 SC 206