MP High Court Rules No Stamp Duty On Contested Property Decrees Recognising Existing Rights, Quashes ₹32 Lakh Demand

In a landmark decision safeguarding litigants from unjust financial demands, the Indore bench of Madhya Pradesh High Court has ruled that a contested judicial decree granting property rights through adverse possession is exempt from compulsory registration and payment of deficit stamp duty. The ruling, delivered by Justice Vinay Saraf, overturns lower court decisions that had upheld a tehsildar's order to impound a civil decree for non-payment of stamp duty.

The dispute arose in Tanda village, Kukshi tehsil, Dhar district, over 1.933 hectares of land. The plaintiff had secured a trial court judgment declaring his ownership based on continuous adverse possession in 2008. Despite an appeal, the parties reached an out-of-court agreement to exclude specific land used for a girls' hostel.

When the plaintiff sought mutation for the remaining land, the tehsildar mistakenly treated the original trial court judgment as a compromise decree, impounded it, and referred the matter to the stamp office, demanding a hefty stamp duty exceeding Rs 32 lakhs. After multiple dismissals, the matter reached the High Court, which clarified that such court decrees recognising pre-existing rights are exempt from stamp duty under Section 17(2)(vi) of the Registration Act, 1908.

The High Court dismissed the tehsildar's classification, quashed lower court decisions, and set aside orders by the tehsildar and sub-divisional officer. It also restrained the Collector of Stamps from recovering any deficit stamp duty, directing local authorities to execute the mutation of the land in favour of the appellant.