Compromise Decree Affirming Pre-Existing Property Rights Requires No Registration or Stamp Duty: Supreme Court
The Supreme Court in Mukesh v. State of Madhya Pradesh & Anr ruled that a compromise decree affirming pre-existing property rights does not require registration under the Registration Act, 1908, nor is it subject to stamp duty under the Indian Stamp Act, 1899. Such decrees do not qualify as 'conveyances' as they create no new rights.
A bench comprising Justices JB Pardiwala and R Mahadevan overturned the Madhya Pradesh High Court's decision, which had upheld the Collector of Stamps' imposition of ₹6,67,500 stamp duty on Mukesh for land acquired in Village Kheda, District Dhar, through a compromise decree. The decree, issued by the National Lok Adalat in 2013, resolved a civil suit filed by Mukesh and affirmed his pre-existing rights to the land.
The Court clarified that under Section 17(2)(vi) of the Registration Act, a compromise decree does not require registration if:
1. It is based on a non-collusive compromise.
2. It pertains to property involved in the suit.
3. It merely affirms pre-existing rights without creating new ones.
The Court held that the Collector of Stamps erred in treating the decree as a conveyance under Article 22 of the Indian Stamp Act. It set aside the High Court's decision and directed revenue authorities to update records in Mukesh's favor without imposing stamp duty.