- 1 - HC-KAR NC: 2026:KHC:34688 W.P. No.23808/2021 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 9TH DAY OF JULY, 2026 BEFORE THE HON'BLE MR. JUSTICE VIJAYKUMAR A. PATIL WRIT PETITION NO.23808/2021 (GM-CPC) BETWEEN: C. SUBRAMANYAM NAIDU S/O LATE KUPPAIAH NAIDU AGED ABOUT 72 YEARS RESIDING AT SF-3, 2ND FLOOR MATHAPRAMODHINI APARTMENT 4TH CROSS, VAJPAYEE NAGAR CHIKKALLASANDRA BENGALURU-560 061. …PETITIONER (BY SRI. KUSHAL GOWDA, ADV., FOR SRI. ABHINAY Y.T. ADV.,) AND: 1. STATE OF KARNATAKA REPRESENTED BY PRINCIPAL SECRETARY DEPARTMENT OF REVENUE VIDHANA SOUDHA BENGALURU-560 001. 2. NARAYANAPPA S/O LATE CHIKKAVENKATARAMANAPPA AGED ABOUT 90 YEARS. 3. HANUMAPPA S/O NARAYANAPPA AGED ABOUT 60 YEARS. Digitally signed by RUPA V Location: HIGH COURT OF KARNATAKA - 2 - HC-KAR NC: 2026:KHC:34688 W.P. No.23808/2021 4. VENKATASWAMY S/O NARAYANAPPA AGED ABOUT 54 YEARS. 5. RAMESH S/O NARAYANAPPA AGED ABOUT 54 YEARS. 6. SMT. NAGARATHNAMMA W/O NARASIMHAMURTHY AGED ABOUT 52 YEARS. RESPONDENT NOS.2 TO 6 ARE REP. BY THEIR POWER OF ATTORNEY HOLDER V.R. RAJASHEKAR S/O V.S. RANGAIAH AGED ABOUT 54 YEARS AND RESIDING AT FLAT NO.6 B MAIN ROAD, TATA SILK FARM BENGALURU-560 028. …RESPONDENTS (BY SMT. K.P. YASHODHA, AGA FOR R1 V/O/DTD: 05.01.2022, NOTICE TO R2 TO R6 ARE D/W) THIS W.P. IS FILED UNDER ARTICLE 226 AND 227 OF THE CONSTITUTION OF INDIA, PRAYING TO QUASH THE ORDER DATED 31.12.2019 ANNEXURE-D AND CONSEQUENTIAL ORDER DATED 18.1.2021 ANNEXURE-E IN O.S.NO.2986 OF 2019 PENDING ON THE FILE OF VII ADDITIONAL CITY CIVIL AND SESSIONS JUDGE CCH-19 BENGALURU & ETC. THIS PETITION, COMING ON FOR PRELIMINARY HEARING IN ‘B’ GROUP, THIS DAY, ORDER WAS MADE THEREIN AS UNDER: CORAM: HON'BLE MR. JUSTICE VIJAYKUMAR A. PATIL - 3 - HC-KAR NC: 2026:KHC:34688 W.P. No.23808/2021 ORAL ORDER This petition is filed challenging the order dated 03.12.2019 and order dated 18.01.2021 passed in OS.No.2986/2019 by the VII Additional City Civil and Sessions Judge, Bengaluru (CCH-19) (for short ‘the trial Court’). 2. Heard Sri.Kushal Gowda, learned counsel appearing for Sri.Abhinay Y.T., learned counsel for the petitioner, Smt.K.P.Yashodha, learned AGA appearing for respondent No.1 and meticulously perused the material available on record. 3. The petitioner filed a suit in OS.No.2986/2019 against respondent Nos.2 to 6 seeking a judgment and decree for specific performance of the agreement of sale dated 05.01.2015. In the said suit, the trial Court vide order dated 03.12.2019, at the time of examination of PW1, observed that the suit agreement was an unregistered document and directed the office to calculate duty and penalty on the agreement dated 05.01.2015 - 4 - HC-KAR NC: 2026:KHC:34688 W.P. No.23808/2021 along with letter of possession. As per the order of the trial Court, the office on 18.01.2021 calculated duty and penalty at Rs.99,30,800/- duty and levied a penalty at ten times the deficient stamp duty, which is assailed in the present petition. The unregistered agreement of sale dated 05.01.2015 is produced at Annexure-A to the writ petition, clause 8 of the agreement reads as under: “8. POSSESSION: The VENDORS shall put the PURCHASER in vacant and peaceful physical possession of the schedule property as on the date of sale.” 4. The aforesaid clause as well as other clauses of the agreement indicate that the defendants had not delivered possession of the suit schedule property to the plaintiff and they agreed to deliver physical possession of the schedule property as on the date of sale. The records indicate that the defendants, under the letter of possession dated 14.05.2016, which was nearly 17 months from the date of agreement of sale, received certain amount and delivered the possession. Considering the said aspect, the trial Court held that both the - 5 - HC-KAR NC: 2026:KHC:34688 W.P. No.23808/2021 agreement of sale and the letter of possession were unregistered and are deficiently stamped and directed the office to calculate the duty and penalty. The trial Court calculated the duty and imposed a penalty of ten times the deficient duty under Article 5(e)(i) of the Karnataka Stamp Act, 1957 (for short ‘the Act’) at Rs.99,30,800/-. 5. This Court in the case of Smt.Anitha Shanti Vaz v. Smt.Noothan Shetty and Others1 held as under: “8. The relevant article of the Act reads as under: Article 5 - Agreement or memorandum of agreement [(e) If relating to sale of immovable property wherein part performance of the contract 1 WP.No.2065/2024 dated 11.03.2026 (i) Possession of property is delivered or is agreed to be delivered [before] executing the conveyance. Same duty as a conveyance (No.20) on the market value of the property: [Provided that, where a deed of cancellation of earlier agreement is executed by and between the same parties in respect of the same property and if proper stamp duty has been paid - 6 - HC-KAR NC: 2026:KHC:34688 W.P. No.23808/2021 9. The plain language employed in Article 5(e)(i) does not create any ambiguity with regard to the stamp duty payable, when possession is delivered. If the agreement of sale of immovable property is in part performance of the contract and the possession of the property is delivered or is agreed to be delivered before executing the conveyance, then the stamp duty payable on such an instrument would be the same as conveyance under Article 20 of the Act. The aforesaid Article deals with two situations, firstly, the possession of the property is delivered under the agreement and secondly, the possession is agreed to be delivered before the actual conveyance i.e. before the execution of the absolute sale deed. The contention of the petitioner that prior delivery of possession, which is recognised under the agreement is also covered under Article 5(e)(i), is fallacious. 10. It would be useful to refer to the following decisions of this Court. a. In the case of DANAPPAGOUDA FAKKIRAGOUDA referred supra, this Court held as follows: on such agreement, then the duty on such "deed of cancellation" shall not exceed rupees five hundred. (ii) Possession of the property is not delivered [Fifty paise] for every one hundred rupees or part thereof on the market value equal to the amount of consideration [but not less than rupees Five hundred] - 7 - HC-KAR NC: 2026:KHC:34688 W.P. No.23808/2021 "5. Having heard the Learned Counsel for the parties the only point to be considered by this Court in this writ petition is that if the plaintiff was in possession of the property much earlier to the execution of the second agreement and when no possession was delivered to the plaintiff under the second agreement, whether, the plaintiff is required to pay the duty and penalty. 6. The facts if this case are not in dispute. The only point to be considered by this Court is interpretation of the two documents. If the plaintiff has put in possession of the property under the second document, the impugned order has to be sustained, failing which, the impugned order is to be quashed. 7. Under the agreement dated 11.5.91, the defendant has agreed to sell the suit schedule properties for a total sale consideration of Rs. 36,000/-. The entire amount of Rs. 36,000/- has been paid by the plaintiff before the attestor to the document its also recited that possession was with the plaintiff much earlier to the agreement dated 11.5.91 and it is also stated that the plaintiff is cultivating the suit lands. The circumstances it is to be held that even under the first agreement, the possession is no delivered to the plaintiff and that the plaintiff was in possession earlier to the first agreement. The reading of second agreement reveals that except enhancing the sale consideration from Rs. 36,000/- to Rs. 41,000/- and payment of further sum of Rs. 2,000/- out of the enhanced sale consideration of Rs.5,000/- nothing is stated. Therefore, it is clear no possession was delivered to the plaintiff under the second agreement dated 18.7.96. When the possession is not delivered to him under the second agreement dated 18.7.96, it is difficult to hold - 8 - HC-KAR NC: 2026:KHC:34688 W.P. No.23808/2021 that the plaintiff has to pay the duty and penalty contending that he has to pay the duty and penalty on the ground that the possession is delivered to him. The circumstances it has to be held the trial Court has committed an error in directing the plaintiff to pay the duty and penalty.” b. In the case of VIJAY KUMAR referred supra, it was held as follows: "10.2. A document is required to be stamped on the basis of what the document contains and conveys. The said document having been executed on 03.06.1995 ought to be considered on the date on which it is executed W.P.NO.52902/2016 i.e. 03.06.1995. The future covenant may happen or may not happen. Such an event cannot be taken into consideration for the purpose of determining the stamping a document executed on 03.06.1995. 10.3. A perusal of the covenants in the agreement of sale deed dated 03.06.1995 would indicate that it is only upon certain permission being issued and the compound wall being constructed, the said possession would be handed over. If the permission had not been received and the compound wall had not been constructed, the possession could not have been handed over. 10.4. The interpretation now sought to be given is that by virtue of the agreement of sale, the possession was agreed to be handed over on the contingent event occurring in future and therefore, the possession was handed over on 18.07.1995, hence, the document executed on 03.06.1995 is required to be stamped as if possession was handed over on such document W.P.NO.52902/2016 in - 9 - HC-KAR NC: 2026:KHC:34688 W.P. No.23808/2021 terms of Article 5(e)(i) of the Act by invoking Article 20 of the Act cannot be sustained. 10.5. The document as stated above would have to be regarded in the context and at the time at which the said document was executed. There being no possession which has been handed over under the agreement of sale dated 03.06.1995, it cannot be said that article 5(e)(i) of the Act would be applicable, let alone invoke Article 20 of the Act." c. In the case of SRI. N.N.MANJAPPA referred supra, it was held as under: "8. A reading of the agreement for sale dated 15.04.2010 would go to show that, the petitioner was already in possession of item no.2 of the suit schedule property which is also item no.2 in the schedule to the agreement for sale dated 15.04.2010 and he was running a business in the said property in the name of 'N.M.Timber'. Therefore, it is apparent that the petitioner was not put in possession of item no.2 of the suit schedule property in part performance of the agreement for sale dated 15.04.2010 nor it is agreed under the said agreement that in part performance of the said agreement the petitioner will be put in possession of the property. This aspect of the matter has not been properly appreciated by the Trial Court and it had erred in holding vide its order dated 14.12.2021 that the petitioner / plaintiff was liable to pay stamp duty on the aforesaid agreement for sale as provided under Article 5(e)(i) of the Act. 11. In my considered opinion since the possession of item no.2 of the suit schedule property was handed over to the petitioner much prior to the date of execution of the agreement for sale and since the possession of property was not delivered under the - 10 - HC-KAR NC: 2026:KHC:34688 W.P. No.23808/2021 agreement nor it was agreed to be delivered before executing the agreement in part performance of the contract, the Trial Court was not justified in holding vide the orders impugned in this petition that the petitioner is liable to pay stamp duty on the instrument as provided under Article 5(e)(i) of the Act. Since possession of the property is not delivered in part performance of the contract nor is not agreed to be delivered before executing conveyance in part performance of the contract, the petitioner is liable to pay stamp duty only as provided under Article 5(e)(ii) of the Act." d. In the case of K.V.VENKATASUBBAIAH referred supra it was held as under: "25. Viewed from this angle, it becomes clear that the possession of the purchaser prior to the execution of the Agreement of Sale would be of no relevance at all for the purposes of applying Article 5(e)(i) of the Schedule to the Act. All that would be required for attracting Article 5 (e)(i) of the Schedule to the Act is that the Agreement contains a recital that, in part performance of the agreement of sale, the prospective purchaser is either WP.17460/2015 being put in possession or is agreed to be put in possession. 26. Thus, in this case, as a necessary consequence of the above discussion, it would emerge that the prior possession of the defendants over the lands as recited in the agreement would be of no relevance for the purpose of determining the stamp duty payable on the execution of the agreement of sale and the singularly key ingredient to be considered is the recital that possession was being delivered under the agreement in part performance of the contract." - 11 - HC-KAR NC: 2026:KHC:34688 W.P. No.23808/2021 e. In the case of MR.N.SRINIVASA V SRI.MURULESH referred supra, it was held as follows: "5. To attract the said provision there should be a recital in the agreement of sale to the effect that under the agreement the possession is delivered. Whether possession is actually delivered under the agreement or not is immaterial. Similarly, if possession is delivered earlier to the agreement or subsequent to the agreement is also immaterial. The recital that the possession would be delivered after five months would not amount to delivering possession under the agreement. Similarly, the recital that the possession is agreed to be delivered is not sufficient to attract the liability to pay stamp duty. There should be express recital that “without executing the conveyance”, the possession is agreed to be delivered. Admittedly, there is no recital in the agreement of sale to the effect that possession is delivered in part performance of the agreement. Nor is there any recital that such possession is agreed to be delivered without executing the conveyance. On the other hand, the recital in the agreement is to the effect that ‘the possession is being delivered after five months’ and that ‘on payment of the consideration, the seller shall execute the registered sale deed’. Therefore, Article 5(e)(i) of the Schedule to the Act is not attracted. There is no merit in this writ petition. Accordingly, it is dismissed." f. In the case of Vijay Kumar Goyal (Dead) represented by LRs, referred supra the Hon'ble Supreme Court has held as under: "6. Having gone through the said agreements, it can be seen that the possession has not been delivered under the said - 12 - HC-KAR NC: 2026:KHC:34688 W.P. No.23808/2021 agreements. In these agreements, it is specifically mentioned that the possession of the disputed land in question was already with the appellant - Vijay Kumar. In the Memorandum of Agreement dated 24.02.1996, it is mentioned that “the above said land is already with my brother Vijay Kumar and after today, my brother, Vijay Kumar has become the owner in possession of the above land like me”. In the agreement to sell dated 14.05.2011, in paragraph 2, it is stated that “that the possession of the above land is already with party No. 2 and the party No. 2 is having possession of the same today also”. Thus, it cannot be said that the possession of the land in question was delivered through under the said agreements of which the specific performance is sought. In that view of the matter, Entry No. 5 of Schedule 1-A of the Indian Stamp Act as amended by the State of Punjab shall not be applicable. As per Entry No. 5 (cc) of Schedule 1-A applicable under the State of Punjab, “in the case of agreement to sell followed by or evidencing delivery of possession of the immovable property agreed to be sold”, the stamp duty is leviable under Column No. 2 of Entry No. 23 of Schedule 1-A. As observed hereinabove, the plaintiff was already in possession prior to the execution of the aforesaid agreements as per the recitals in the aforesaid two agreements. It is to be noted that even the plaintiff has also not sought the possession in the suit filed by him and has in fact sought the permanent injunction restraining the defendants from interfering in the peaceful possession of the plaintiff and from dispossessing or causing to dispossess the plaintiff from the suit property. 7. In view of the above and for the reasons stated above, the order passed by the High Court and that of the Trial Court directing - 13 - HC-KAR NC: 2026:KHC:34688 W.P. No.23808/2021 the appellant - original plaintiff to pay the deficient stamp duty with penalty applying Sub- column No. 2 of Column No. 2 of Entry No. 23 of Schedule 1-A as amended by the State of Punjab is unsustainable and the same deserves to be quashed and set aside." 11. The aforesaid enunciation of law laid down by this Court and the Hon'ble Supreme Court clarify the legislative intent of Article 5 of the Act. The delivery of possession ought to be determined upon the recital of the agreement to satisfy the condition that the said delivery of possession is being undertaken in the agreement or being agreed to be delivered before the deed of conveyance in part performance of a contract. The actual possession of the property before the agreement is immaterial, as long as, the said possession isn’t being delivered under the agreement itself in part performance. In the case on hand, the agreement does not indicate the 'delivery of possession' or 'agreement to deliver possession before conveyance' in part performance of the contract, but only refers to the existing physical possession of the plaintiff over the suit schedule property. Hence, the duty and penalty paid by the plaintiff under Article 5(e)(ii) is appropriate.”” 6. Similarly, the Co-ordinate Bench of this Court in the case of Gulzar Khan v. Mohammed Mukthiar Ahmed2 at paragraph No.12.5 held as under: “12.5 In the present case as on the date the agreement in question was executed i.e., on 26.11.2005 neither was possession handed over nor was agreed to be handed over prior to the date of conveyance in terms of the agreement. 2 WP.No.42556/2016 dated 11.08.2021 - 14 - HC-KAR NC: 2026:KHC:34688 W.P. No.23808/2021 The said possession was to be handed over at the time of execution of the sale deed. Therefore, in my considered opinion, the same would not come within the purview of the Article 5(e)(i) of the Act and would come within the purview of Article 5(e)(ii) which deals with a situation where possession was not handed over under the agreement in terms of the Karnataka Stamp Act as prevailing on 26.11.2005, the stamp duty payable on an agreement of sale was Rs.200/- which has been paid on the agreement of sale. In view thereof, I answer Point NO.1 holding that the stamp duty paid is proper and correct and there is no reason to call upon the petitioner to make payment of any stamp duty or penalty.” 7. In view of the aforesaid decisions and considering the facts of the instant case, I am of the considered view that the possession was neither delivered in favour of the petitioner/plaintiff under the agreement of sale dated 05.01.2015 nor was it agreed to be delivered without that a deed of conveyance. Hence, directing the plaintiff to pay the duty and penalty under Article 5(e)(i) would not arise. The agreement of sale produced at Annexure-A dated 05.01.2015 appears to be of Rs.200/-. The trial Court shall consider the same and calculate the duty and penalty under Article 5(e)(ii) of the Act and - 15 - HC-KAR NC: 2026:KHC:34688 W.P. No.23808/2021 direct the plaintiff to pay the said amount. For the aforementioned reasons, I proceed to pass the following: ORDER i. The writ Petition is allowed. ii. The impugned orders dated 03.12.2019 and 08.01.2021 passed in OS.No.2986/2019 by the VII Additional City Civil and Sessions Judge, Bengaluru (CCH-19) is hereby set aside. iii. The Office of the trial Court shall calculate duty and penalty on agreement of sale dated 05.01.2015 as per Article 5(e)(ii) of the Act. No order as to costs. Sd/- (VIJAYKUMAR A. PATIL) JUDGE ABK List No.: 1 Sl No.: 29