Commercial courts Act-Time limit for FILING written statement & REPLICATION

 

CommerciAl courts Act-Time limit for FILING written statement & REPLICATION

The pivotal object of enactment of Commercial Courts Act 2015 (CCA) and its amendment in 2018 is to ensure that the commercial suits are decided expeditiously and whereas, the procedure as laid down under the Act is quite stringent, still, as the focus is also on avoiding delay in adjudication of the lis, hence the enactment is made to cater to that object. The causes of the bottlenecks in legal proceedings, as observed over the years includes, primarily, enormous delay in filing written statement and replication, thereby, at the stage of completion of pleading itself, inordinate delay used to be caused due to one or other reasons pleaded. The CCA has endeavoured to address such a situation and in a great deal the roadblocks are being cleared.

As discussed, in the ordinary suits, the main reason of delay used to be in filing written statement to the suit and though amendment in Code of Civil Procedure in the year 2002 had prescribed that for filing written statement, the maximum period of 120 days from the date of service shall only be available, however, vide several judicial pronouncements it was held that 120 days period could not be treated as mandatory and the courts had the discretion to condone the delay beyond 120 days. The situation as aforesaid; thus, remained unchanged for all practical purposes. The CCA has now stipulated that not only the maximum period for filing written statement shall be 120 days and if not filed, the right to file written statement shall be closed. The provision is made mandatory. In fact, as per CCA taking recourse to Order VIII Rule 10 of Code of Civil Procedure, the judgment and decree shall also be pronounced forthwith, in the event of non- filing of written statement within 120 days from the date of service of summons. Yet another dimension is that even for filing replication to the written statement, the maximum prescribed period is 45 days and the replication to written statement cannot be filed thereafter (Of course, the same is as per Delhi High Court rules only as applicable to the original jurisdiction of Delhi High Court). In this manner, the very reason of delay instrumental in prohibiting progress in a suit has now been addressed. It is also worth mentioning that the CCA has also provided for filing of statement of truth along with plaint and written statement, thereby, curtailing the prospect of delay in procedural logjam. In order to obviate that, the affidavit of admission and denials as per the prescribed performa is mandated to be filed along with the plaint and written statement as the case may be. Not only this, parties to the lis has to state on oath, that apart from the documents so filed along with plaint and written statement as the case may be, no other documents are in their power and possession and that the suit or written statement is based on the pleadings and documents already on record and it is envisaged in CCA that open ended procedural regime should no longer be available as that is prone to cause delay. The suit and defence can thus be furthered accordingly, as per the case and defence as respectively set out. In order to buttress it further, there has also been stipulation that after framing of issues, no documents could be filed by the parties.

The Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Act 2015 came into effect on 23.10.2015 and certain amendments in the Code of Civil Procedure were made in a wake of the Act. The amendments were made inter alia in Order V Rule 1, sub-rule (1) the following were substituted:

Provided further that where the defendant fails to file written statement within the said period of thirty days , he shall be allowed to file the written statement on such other days, as may be specified by the Court, for reasons to be recorded in writing and on payment of such costs as the court deems fit, but which shall not be later than one hundred and twenty days from the date of service of summons and on expiry of one hundred and twenty days from the date of service of summons, the defendant shall forfeit the right to file the written statement and the court shall not allow the written statement to be taken on record”.

Similarly, in Order VIII Rule 1, a new provision stands substituted as under:

Provided that where the defendant fails to file the written statement within the said period of thirty days, he shall be allowed to file the written statement on such other day, as may be specified by the court, for reasons to be recorded in writing  and on payment of such costs as the Court deems fit, but which shall not be later than one hundred and twenty days from the date of service of summons and on expiry of one hundred and twenty days from the date of service of summons the defendant shall forfeit the right to file the written statement and the Court shall not allow the record statement to be taken on record.

Pertinently, this was further reemphasized by inserting yet another proviso in Order VIII Rule 10 of Code of Civil Procedure, which reads as under:  

Procedure when party fails to present written statement called by the Court: When any party from whom a written statement is required under Rule 1 or Rule 9 fails to present the same within the time permitted or fixed by the Court, as the case may be, the Court shall pronounce judgment against him, or make such order in relation to the suit as it thinks fit and on pronouncement of such judgment a decree shall be drawn up.

Provided further that no court shall make an order to extend the time provided under Rule 1 of this Order for filing of the written statement.

Bare perusal of the aforesaid provisions shall demonstrate that ordinarily a written statement should be filed within a period of Thirty (30) days and extension up to a total period of 120 days could, only, be granted if sufficient causes are shown by the defendant and if the court records its satisfaction and that too with such terms as the Court imposes, Significantly, after a total period of 120 days from the date of service of summons the defendant shall forfeit the right to file written statement and the written statement cannot be taken on record thereafter. The provision of Order VIII Rule 10 of CPC again buttress that, while adding that, the Court has no further power to extend the time beyond the period of 120 days.  

In order to appreciate the ratio of SCG Contract India Pvt Ltd Vs KS Chamankar Infrastructure Pvt Ltd AIR 2019 Supreme Court 2691, it is imperative to cull out the facts in nutshell, in the context of filing of written statement and as per the table below:

14.07.2017	The summons of suit filed before the high court was served on the defendant
13.10.2017	Despite expiry of 120 days from the date of service of summons, no written statement filed.
13.10.2017	Within the stipulated period, it appears Application under Order VII Rule 11 of CPC was filed without filing written statement.
05.12.2017	The application under Order VII Rule 11 of CPC was dismissed. The written statement filed by the defendant was taken on record, however, subject to the costs of Rs 25,000/-The time of filing written statement was extended till 15th December 2017, failing which right to file written statement was to be forfeited.
15.12.2017	Written statement was filed.
06.08.2018	Another application was filed by the defendant on the premise, that in view of recent amendments in the Code of Civil Procedure and owing to non- adherence of those provisions, the written statement was not as yet taken on record and as 120 days had already expired and the high court had permitted time of filing it till 15.12.2017 only.
24.09.2018	It was held by another single judge of the high court that as the last date beyond 120 days was granted to the defendant i.e the written statement was permitted to be filed till 15.12.2017 and it was filed by that date, albeit without adhering to the amended provisions of CPC. The order was passed in view of earlier order dated 05.12.2017.

 

The Special Leave Petition was preferred against both the orders impugned before the Supreme Court i.e order dated 05.12.2017 and 24.09.2018. It was contended that the amendments in CPC clearly entails consequences of non- filing of written statement within stipulated time and that the provisions of Order VIII Rule 1 of CPC being mandatory, the written statement cannot be taken on record, if it is filed beyond 120 days from the date of service of summons. It was further contended that the impugned order against the statutory provision cannot be construed as res judicata. 

The aforesaid provisions as referred to hereinabove, if weighed with what the High Court has held, then, it appears that the same is contrary to the ratio as laid down in a matter reported as SCG Contract India Pvt Ltd (Supra). The Supreme Court has held that beyond a period of 120 days, written statement cannot be filed in a commercial suits. The following judgments were referred to and relied upon and distinguished in its context by the Supreme Court:

(i) State of Bihar & Ors Vs Bihar Rajya Bhumi Vikas Bank Samiti (2018) 9 SCC 472;

(ii) Canara Bank Vs NG Subharya Setty & Anr AIR 2018 SC 3395;

(iii) Bhanu Kumar Jain Vs Archana Kumar & Anr (2005) 1 SCC 787;

(iv) Shaikh Salim Haji Abdul Khayumsab Vs Kumar & Ors (2006) 1 SCC 46;

(v) KK Roja Vs U.S Rayudu and Anr (2016) 14 SCC 275;

(vi) Kailash vs Nankhu (2005) 4 SCC 480

(vii) Salem Advocates Bar Association Vs Union of India (2005) 6 SCC 344;

(viii) State Vs N.S Gnaneswran (2013) 3 SCC 594;

(ix) Manohar Lal Chopra Vs Rai Bahadur Rao Raja Seth Hiralal (1962) Suppl 1 SCR 450;

(x)Oku tech Private Ltd Vs Sangeet Agarwal & Ors CS (OS) 3390/2015 (Delhi High Court);

(xi) Maja Cosmetics Vs Oasis Commercial Pvt Ltd 2018 SCC Online Del 6698

In State of Bihar (Supra) & Canara Bank (Supra) it is held that the amendments in CPC clearly entails consequences of non- filing of written statement within stipulated time and that the provisions of Order VIII Rule 1 of CPC cannot be construed as directory any longer.

It is held as under by the Supreme Court in Canara Bank Vs NG Subharya Setty & Anr AIR 2018 SC 3395:

“An issue of law which arises between the same parties in a subsequent suit or proceeding is no re judicata, if, by an erroneous decision given on a statutory prohibition in the former suit or proceeding, the statutory prohibition is not given effect to. This is despite the fact that the matter in issue between the parties may be the same as that directly and substantially in issue in the previous suit or proceeding. This is for the reasons that in such cases, the right of the parties are not the only matter for consideration (as in the case of erroneous interpretation of a statute inter parties), as the public policy contained in the statutory prohibition cannot be set at naught. This is for the same reason as that contained in matters which pertain to issues of law that raises jurisdictional questions. We have seen how, in Natraj Studio AIR 1981 SC 537 (Supra), it is the public policy of the statutory prohibition contained in Section 28 of Bombay Rent Act that has to be given effect to. Likewise, the public policy contained in the statutory prohibitions, which need not necessarily go to jurisdiction of a Court, must equally be given effect to. Likewise, the public policy contained in other statutory prohibitions, which need not necessarily go to jurisdiction of a Court, must equally be given effect to, as otherwise special principles of law are fastened upon parties when special consideration relating to public policy mandate that this cannot be done”.

In Bhanu Kumar Jain (Supra) and Shaikh Salim (Supra) relied by the respondent while contending that there are vital differences between principles of res judicata in a subsequent suit and res judicata in two different stages of the same proceeding. It was contended that the order dated 05.12.2017 had attained finality and could only be challenged after pronouncement of judgment and decree and therefore, the order dated 24.09.2018 is correct. The order dated 05.12.2017 has already been acted upon and that cannot be re-opened at this stage. Reliance was placed on R.K Roja (Supra) to contend that as an application under Order VII Rule 11 of the Code of Civil Procedure has been filed and that has to be answered before proceeding for a trial and therefore written statement could not have been filed in this backdrop.

The Supreme Court has categorically distinguished the judgment rendered in Bihar Vikas Bank Samiti (Supra) in as much as a question was raised, then, as to whether section 34(5) of the Arbitration & Conciliation Act 1996, inserted by the amendment Act 3 of 2016 is mandatory or directory. In the said judgment, the Supreme Court had referred to Kailash Vs Nankhu (Supra) while also reiterating the text of Order VIII Rule 1 as it stood, during and prior to the enactment of CCA 2015. Similarly, in Salem Advocate Bar Association (Supra) it was held that the mere expression “shall” in Order VIII Rule 1would not make the provision mandatory. The Supreme Court, then also referred to N. Gnaneshwaran (Supra) in which section 154(2) of Cr.PC was held to be directory in as much as no consequence was provided if the section was breached. It was held as under:

23. It will be seen from this provision that, unlike section 34(5) and (6), if am award is made beyond the stipulated or extended period contained in the section, the consequence of the mandate of arbitrator being terminated is extremely provided. This provision is in stark contrast with section 34(5) and (6) where, as has been stated hereinabove, if the period for deciding the application under section 34 has elapsed, no consequence is provided. This is one more indicator that the same Amendment Act, when it provided time periods in different situation, did so intending different consequences.”   

Taking this further, the Supreme Court in SCG Contract India Pvt Ltd (Supra) has observed that several high courts while dealing with Order VIII Rule 1 of Code of Civil Procedure has consistently held that, as consequences of non- filing of written statement has clearly been elucidated, the filing of written statement within the outer limit of 120 days from the date of service of summons shall have to held as mandatory (Ref: Oku Tech Private Ltd (Supra) and Maja Cosmetics (Supra).  

The Supreme Court in SCG Contract India Pvt Ltd (Supra) has further held that the aforesaid views in Oku tech (Supra) and Maja Cosmetics (Supra) are correct view. It will make no difference, even if it is assumed that earlier order dated 05.12.2017 was a final order. It is held that res judicata cannot stand in the way of an erroneous interpretation of a statutory prohibition. What has thus clearly emerged is that what was not provided for in the statute and in fact when filing of written statement beyond a period of 120 days from the date of service of summons being explicitly prohibited, a wrong order passed for taking written statement in record, despite the prohibition cannot be taken as res judicata. Moreover, reliance placed on Bhanu Kumar Jain (Supra) and Shaikh Salim (Supra) relates to pre-amendment position and hence on this premise also the same shall be of no relevance. The Supreme Court, while dealing with R.K Roja (Supra) has held that it cannot be claimed that application under Order VII Rule 11 of Code of Civil Procedure shall have to be decided first and thereafter, if required, written statement could be filed. It was so, in as much as the Supreme Court in R.K Roja (Supra) itself had observed in para 6 as under:

“However, we may hasten to add that the liberty to file an application for rejection under Order 7 Rule 11 CPC cannot be made as a ruse for retrieving the lost opportunity to file the written statement.”

The respondent had also contended that nothing precludes the Court to invoke inherent powers under section 151 of the Code of Civil Procedure, and it was argued that procedural provisions as per the amendment in CCA shall not come in the way of inherent power, else, unjust consequence may follow.

However, the Supreme Court had rejected the contentions by referring to its own judgment reported as Manohar Lal Chopra (Supra). The relevant portion of the said judgment is as under:

“The suit at Indore which has been instituted later, could be stayed in view of Section 10 of the Code. The provisions of that section are clear, definite and mandatory. A court in which a subsequent suit has been filed is prohibited from proceeding with the trial of the suit in certain specified circumstances. When there is a special provision in the Code of Civil Procedure for dealing with the contingencies of two such suits being instituted, recourse to the inherent power under Section 151 is not justified”.

Therefore, it was held that clear, definite and mandatory provisions of Order V read with Order VII Rule 1 and 10 cannot be circumvented by recourse to the inherent power under Section 151 to do the opposite of what is stated therein.

The aforesaid discussion, clearly reflects that beyond 120 days period from the date of receiving summons of the suit, the written statement cannot be filed and the judgment and decree could be pronounced forthwith. Yet another aspect is required to be further deliberated i.e even the replication to the written statement cannot be filed beyond 45 days of receiving written statement as per original side rules of Delhi High Court. That said, however, the discussion based on judicial precedents shall have to be dealt with and the same is being done hereinafter.  

       REPLICATION BEYOND 45 days: not permittEd

In Ram Sarup Lugani Vs Nirmal Lugani & Ors (2021) 276 DLT 681(DB) clearly stipulates that in a comemrcail suit , replication to the written statement cannot be field beyond 30 days from the date of se4rvcie of written statement and at the most Fifteen (15) days extension can be granted, but not thereafter. Special Leave Petition (C) No.15142/2020 field against the Ram Sarup Lugani (Supra) appears to have been dismissed by the Supreme Court on 28^th June 2021.

The Delhi High Court (Original Side) Rules, 2018, which are set out below in the context shall further reinforce the situation:

Rule 4. Extension of time for filing written statement.--If the Court is satisfied that the defendant was prevented by sufficient cause for exceptional and unavoidable reasons in filing the written statement within 30 days, it may extend the time for filing the same by a further period not exceeding 90 days, but not thereafter. For such extension of time, the party in delay shall be burdened with costs as deemed appropriate. The written statement shall not be taken on record unless such costs have been paid/ deposited. In case the defendant fails to file the affidavit of admission/ denial of documents filed by the plaintiff, the documents filed by the plaintiff shall be deemed to be admitted. In case, no written statement is filed within the extended time also, the Registrar may pass orders for closing the right to file the written statement.

Rule 5. Replication.- The replication, if any, shall be filed within 30 days of receipt of the written statement. If the Court is satisfied that the plaintiff was prevented by sufficient cause for exceptional and unavoidable reasons in filing the replication within 30 days, it may extend the time for filing the same by a further period not exceeding 15 days but not thereafter. For such extension, the plaintiff shall be burdened with costs, as deemed appropriate. The replication shall not be taken on record, unless such costs have been paid/ deposited. In case no replication is filed within the extended time also, the Registrar shall forthwith place the matter for appropriate orders before the Court. An advance copy of the replication together with legible copies of all documents in possession and power of plaintiff, that it seeks to file along with the replication, shall be served on the defendant and the replication together with the said documents shall not be accepted unless it contains an endorsement of service signed by the defendant/his Advocate.

Rule 6. Affidavit of admission/denial of documents with replication.-Alongwith the replication, the plaintiff shall also file an affidavit of admission/ denial of documents filed by the defendant, without which the replication shall not be taken on record.

Rule 7.  Affidavit of admission/ denial of documents, even if `replication not filed.- Irrespective of whether the plaintiff files the replication or not, the plaintiff shall be bound to file affidavit of admission/ denial of documents filed by the defendant alongwith the written statement within the time permissible for filing replication. In case the plaintiff fails to file the said affidavit, the documents filed by the defendant shall be deemed to be admitted. The Court or the Registrar, as the case be, shall exhibit documents admitted by the parties."

In Louis Dreyfus Company India Pvt Ltd vs Nutrilite Agro Products Pvt Ltd, CS(COMM) 538/2020 decided on 10^th  January, 2024, it s held as under:

7. In terms of the Delhi High Court (Original Side) Rules, 2018, specific timelines have been fixed for filing of written statements and replication as contained in Rules 4 & 5 respectively. The decision in Ram Sarup Lugani (supra) leaves no manner of doubt that the maximum time limit available for filing of replication is 45 days. The relevant portion of the said judgment is set out below:

"21. A conspectus of the decisions referred to above leaves no manner of doubt that where ever the phrase "but not thereafter" has been used in a provision for setting a deadline, the intention of the legislature is to treat the same as a pre-emptory provision. Thus, if Rule 15 of the DHC Rules mandates filing of a replication within a period of 30 days reckoned from the date of receipt of the written statement, with an additional period of 15 days provided and that too only if the court is satisfied that the plaintiff has been able to demonstrate that it was prevented to do so by sufficient cause or for exceptional and unavoidable reasons, can the time for filing the replication be extended for a further period not exceeding 15 days in any event, with costs imposed on the plaintiff. The critical phrase "but not thereafter used in Rule 15 must be understood to mean that even the court cannot extend the period for filing the replication beyond the outer limit of 45 days provided in the DHC Rules. Upon expiry of the said period, the plaintiff's right to file the replication would stand extinguished. Any other meaning sought to be bestowed on the above provision, would make the words "but not thereafter", inconsequential.

22. The next contention of Mr. Mehta that the words "the Registrar shall forthwith place the matter for appropriate orders before the court" used in Rule 5 of the DHC Rules indicates that the court would still have the power to accept a replication filed beyond a period of 45 days, is also untenable. The Supreme Court has emphasized that the answer to the problem as to whether a statutory provision is mandatory or is directory in nature, lies in the intention of the law maker, as expressed in the law itself. The words "replication, if any, shall be filed within 30 days of the receipt of the written statement and further, the words "further period not exceeding 15 days, but not thereafter used in Rule 5 will lose its entire meaning if we accept the submission made on behalf of the appellants that even if the timeline for filing the replication cannot be extended by the Registrar, there is no such embargo placed on the court.

23. The court must start with the assumption that every word used in a statute, has been well thought out and inserted with a specific purpose and ordinarily, the court must not deviate from what is expressly stated therein. The period granted for filing the replication under Rule 15 of the DHC Rules is only 30 days and on expiry of 30 days, the court can only condone a delay which does not exceed 15 days over and above 30 days and that too on the condition that the plaintiff is able to offer adequate and sufficient reasons explaining as to why the replication could not be filed within 30 days. As observed earlier, since the terms 'Court' and 'Registrar' have been defined in the DHC Rules, Rule 5 requires that the court alone can extend the time to file the replication beyond the period of 30 days from the date of receipt of the written statement. Even the discretion vested in the court for granting extension of time is hedged with conditions and the outer limit prescribed is 15 days. If the replication is not filed within the extended time granted, the Registrar is required to place the matter back before the court for closing the right of the plaintiff to file the replication."

Delay in filing admission/denial affidavit by the defendaNt

The CCA is in code in itself and therefore it contains certain modalities for strict compliance and failure in adhering to such prescription leads to stern measure. The judicial precedents are also evolving in the context. An interesting situation emerged in a matter captioned as Mayank Gupta Vs M/s Aditya Birla Fashion and Retail Ltd in CM (M) 178/2023 wherein the issue before the Delhi High Court was as under:

The application u/s 5 of Limitation Act seeking condonation of delay in filing affidavit of admission/ denial was dismissed by the District Commercial Court was dismissed and hence petition under article 227 of the Constitution of India was preferred before the hon’ble Dehi High Court.

The facts leading to the petition in brief are summarised as under:

(i) Summons of the suit was served on the petitioner/defendant on 01.12.2021.

(ii) The written statement along with statement of truth was filed on 21.02.2022.

(iii) Application under Order XIII A CPC was also filed by the respondent/plaintiff seeking summary judgment on a premise that in the absence of affidavit of admission/denial on behalf of defendant, the plaintiff shall be entitled to judgment and decree, since, the plaint and documents shall be deemed to have been admitted and the process of trial shall not be necessary.

(iii) The admission/denial affidavit was filed on 31.08.2021.

(iv) As per the petitioner, after filing of application under Order XIII A of CPC, the mistake of not filing admission/denial affidavit along with the written statement was realised by the petitioner/defendant and hence it was filed.

(v) According to the petitioner being a procedural aspect, mere non filing of admission/denial affidavit should not be construed against the petitioner/defendant.

RELIANCE by the Petitioner

To buttress its contentions the petitioner had placed reliance on a matter Cosco International Pvt Ltd Vs Jagat Singh Dagar CS (Comm) 1052/2018- rendered by Delhi High Court on 16.04.2022 wherein registry of the High Court was directed the registry of the High Court to take affidavit of admission/denial on record. Therefore, the impugned order should be set aside and the trial court ought to be directed to take on record affidavit of admission/denial filed by the petitioner while allowing the application for condonation of delay in filing the aforesaid application.

                    Contention of the RespondeNt

(i) The admission /denial affidavit was filed belatedly and there is no prescription in law to file it beyond the statutory period of 120 days when the written statement should mandatorily be accompanied by affidavit of admission/denial.

(ii) The petitioner had already preferred application under Order XIII A of CPC for seeking summary judgment.

(iii) The lacuna of non- filing of admission/denial affidavit in time cannot be filled subsequently and that too when the petitioner/defendant comes to know of filing of the application by the plaintiff for seeking summary judgment. Realising.

(iv) The alleged realization of mistake of non- filing of admission/denial affidavit shall not aid the petitioner/defendant in as much as the rule entailing filing of written statement also include the obligation of filing admission/denial affidavit.

(v) Ignorance of procedure of law is no excuse.

(vi) The order of trial court whereby the application for seeking condonation of delay in filing admission/denial affidavit was rightly dismissed.

                             RELAINCE BY THE RESPONDENT

(i) M/s Ok Play Pvt India Ltd Vs M/s A.P Distributors and Anr- CM (M) No. 346/2020-Delhi High Court

(ii M/s Unileen Beheer Vs Balaji Action Buildwell 2019 SCC OnLine Del 8498 -Delhi High Court

It was held that no doubt written statement and statement of truth was filed by the petitioner/respondent within stipulated time as prescribed under law. However, admission/denial affidavit was not field along with written statement which is ex facie contrary to the mandate of Order 11 Rule 1 of CCA 2015 as it is categorially contained therein that the timelines prescribed by the amended provisions of Code of Civil Procedure as also the CCA 2015 are strict and mandatory and hence no leverage can be accorded to any defaulting party.

In Mayank Gupta (Supra) the Delhi High Court has differed from the judgment in Cosco (Supra) of the co-ordinate bench of Delhi High Court, because, the judgment in Cosco (Supra) was rendered in the context of the “original side” jurisdiction of Delhi High Court and the process of filing of documents in the registry of Delhi high court in original side is not available to the District Courts. In the district courts it is pertinent to mention that the time period provided under the rules of 30 days  from the date of being made aware of the defects of filing of the pleadings that the party has entitlement to file within the said time. Thus, only when it was found that the affidavit of admission/denial having been filed within the extended period of 30 days, that the co-ordinate bench of Delhi High Court had permitted/directed that the affidavit of admission/denial documents accompanying the written statement. Therefore, judgment in Cosco (Supra) was found to be not applicable in Mayank Gupta (Supra). In fact, in Mayank Gupta (Supra) also, there is no such entitlement, since, the petitioner/defendant waited from 21.02.2022 when he became aware about requirement of filing admission/denial affidavit along with written statement, still waited till 06.07.2022. Admittedly, application for condonation of delay was filed on 31.08.2022, though, in any case, knowledge of the said requirement was gained on 06.07.2022, when the respondent/plaintiff had filed its application under Order XIII A of CPC for seeking summary judgment. The ld trial court while rejecting the application for seeking condonation of delay had placed reliance on M/s Okay Play (Supra) and Unilin Beher B.V (Supra). Since, admission/denial affidavit was not filed within the outer limit of 120 days, hence, the delay could not have been condoned, rules being mandatory and does not admit of any exception.

The petition is Mayank Gupta (supra) was accordingly dismissed by Delhi High Court.

The discussion based on the aforesaid judgments based on the Commercial Courts Amendment of 2018, leading to a categorical conclusion as regards the filing of written statement, admission denial affidavit and replication within the stipulation time does not admit of any exception as the words couched about in the respective rules as set out above leaves no room of doubt that the specific time line in commercial suit has to be adhered to, without iota of doubt.

                                      --------

                             Anil K Khaware

                             Founder & Senior Associate

                             Societylawandjustice.com        

  

 

 

CRITERIA OF Relinquishment or Release Deed- stamp duty or impounding

 

CRITERIA OF Relinquishment or Release Deed- stamp duty or impounding

 

Whether a Relinquishment deed can be impounded on account of deficient stamp duty and can that be treated as a gift deed? If, so, what are the circumstances? The moot point is whether the relinquishment deed can be treated as gift and hence, for want of payment of stamp duty, whether the instrument could be impounded? What are the pre-requisites of a relinquishment deed so as to pass muster as such? In other words, whether Relinquishment deed in all cases shall be treated as gift deed or there are certain criteria laid down in this regard shall need deliberation. In order to find the answer and without detaining us further on the aspect, judgments/precedents laid down shall have to be analaysed and at the very onset and straightway a recent judgment of the hon’ble Division bench of Dehi High Court captioned as Ramesh Sharma Vs Government of NCT of Delhi & Ors bearing no. LPA 346/2020 (decided on 08.10.2025) shall be worthy of reference and prior thereto, in addition thereto, a matter reported as Anita Kumar Vs Ajay Kumar since deceased Through LRs & Ors FAO (OS) 130/2024 shall also be very pertinent in this context.

In Ramesh Sharma (Supra), broad contour of the case being same, in order to appreciate the matter, it may be pertinent to refer to the facts of the case in that case.

(i) The dispute related to a property of Greater Kailash, New Delhi (suit property) and parents of the appellant jointly owned the suit property in 50:50 ratio.

(ii) The father of appellant however had executed a registered Will and he bequeathed his entire share in the suit property in favour of the appellant son.

(iii) The father of appellant died on 31.10.2003 leaving behind his widow, appellant son and Five (5) daughters.

(iv) The suit property was thus jointly owned by the appellant and his Mother with half share each. As on 20.03.2013, the Mother also died, thereby leaving behind the appellant son and Five (5) daughters as class 1 legal heirs.

(v) On 03.07.2012 itself (When Mother was alive), three daughters had executed three separate Relinquishment deeds in favour of the appellant and presented the same before the Sub-Registrar V-A, Mehrauli, New Delhi on 06.07.2012. Similarly, the remaining two daughters also had executed Relinquishment deed in favour of the appellant on 17.07.2012 and it was presented before the Sub Registrar on the said date.

(vi) The Sub-Registrar on 17.07.2012 had informed the Collector of Stamps, Hauz Khas, Mehrauli, New Delhi about impounding of the instruments i.e Relinquishment deeds (RDs) and the appellant had thus come to know about this.

(vii) Subsequently, the SDM, Kalkaji on 01.03.2013 after perusing the written explanations from the appellant had concluded that all Five RDs shall be subject to payment of stamp duty in accordance with Section 23 of the Schedule I of Indian Stamp Act 1899.

(viii) Pursuant thereto, acting on the valuation report submitted by the Tehsildar, Kalkaji vide order dated 15.05.2013 imposed the stamp duty of approximately Rs 6,50,000/- along with a penalty of Rs 1,00,000/- imposed on the appellant.

(ix) The appellant had deposited the said sum with a view to avoid immediate attachment of the property under protest vide challan dated 29.05.2013.

(x) RTI application was also filed before the SDM, Hauz Khas, whereby details of RDs impounded between 01.01.2012 and 30.04.2012 on the premise that the instrument of RDs shall tantamount to a gift and were not sufficiently stamped. No satisfactory reply was allegedly received and even the appeal before the RTI appellate authority was filed, but the Sub-Registrar had failed to provide the information.

(xi) In the above backdrop, the appellant had preferred a writ petition bearing no. W.P (C) 3560/2018 before the ld Single Judge of Delhi High Court impugning therein, orders dated 01.03.2013 & 15.05.2013 passed by SDM Kalkaji and unsatisfactory response to various RTI applications.

                             The findings of ld Single Judge

The ld Single judge had dismissed the writ petition on the following premise:

(i) All the Five (5) RDs formed part of a single transaction and merely because the Five RDs were filed on different dates, that in itself shall not be a determinative factor.

(ii) The rights were relinquished only in favour of brother, leaving behind the Mother (As she was alive then) and hence, the RDs shall have to be treated as Gift Deeds and not Release Deeds.

(iii) The RDs cannot be treated a family settlement as no reference to the Will executed by the Father of the appellant, nor any purported family settlement existed.

(iv) The perusal of recitals of RDs and covenants contained therein clearly reflected that RDS are documents of conveyance and thus it cannot be treated as Release Simplicter.

In a similar writ petition being W.P( C) 9193/2013 captioned as Tripta Kaushik Vs Sub Registrar VI-A Delhi & Anr was clubbed together and heard by ld Single Judge as common question of law arose in both the judgments. It is pertinent to point out that the ld Single Judge was pleased to allow WP (C) 9193/2019 on account of peculiar facts of the case. In the said writ, the RD was executed by a co-owner in favour of only existing other co-owner and hence, it was held to be a Release Deed and falling within the ambit of Article 55 of Schedule I-A (for Delhi) of the Stamp Act 1899.

The issues and decision by the Division BeNCH

The moot point is whether the RDs can be treated as a Gift Deed and that too in all circumstances? It this follows that whether for the purpose of the Indian Stamp Act 1899, the relinquishment of rights in a property by the sisters/co-owners in favour of their brother/co-owner can be treated as Gifts?

The appellant has contended that RDs cannot be treated as gift deed, based on the following reliance:

(i) Smt G. Subbalakshmi Visweswara Rao Vs Secretary to Government, Revenue Department & Ors 2011 SCC OnLine AP 1093;

(ii) Maddula Girish Kuma & Anr Vs The Commissioner of Survey, Settlement of Land Records and Anr 1992 SCC OnLine AP 125;

(iii) The Board of Revenue, Hyderabad Vs Valivety Rama Krishnnaiah 1972 SCC OnLine AP 155

The respondent however relied upon the following judgments in support of their contentions that RDs herein shall have to be treated as gift deed.

(i) The Board of Revenue, ( The Chief Controlling Revenue Authority) Vs V,M Murugesa Mudaliar of Gudiyatham AIR 1955 Mad 641;

(ii)Narinder Kaur & Anr Vs Amarjeet Singh Sethi & Anr (2000) 54 DRJ 53;

(iii)Javer Chand & Ors Vs Pukhraj Surana AIR 1961 SCC 1655;

(iv) Tripta Kaushik Vs Sub Registrar VI-A & Anr 2020 SCC OnLine Del 2748;

(v) Neeraj Arya Vs Rakesh Arya & Anr 2023 SCC OnLine Del 7816.

It is worth mentioning that the term “relinquishment deed” does not find mention in Indian Stamp Act 1899 and has not been referred to in Schedule I-A (for Delhi) of the Stamp Act 1899. Although, the reference of Release deed existed in Article 55 and the stamp duty payable in the release deed has been duly mentioned therein.  

The hon’ble Division bench of Delhi High Court in Ramesh Sharma (Supra) placed reliance on a full bench judgment of Madras High Court in a matter reported as Chella Subbanna & Anr Vs Chella balasubbareddi & Ors 1945(1)MLJ 140 wherein it was held:

“The relinquishment by one coparcener of his interest in the family estate in favour of the member of coparcenary does not amount to an alienation, it merely amounts to an extinction of his interest in favour of the others”.  

Yet again, the reliance was placed on another full bench judgment of Madras High Court in Reference under Stamp Act 46 ILR 18, Madras 233 wherein it is held that:

“ we can see no difference in principle between such a document as between members of a coparcenary and the document in question, which is a document between co-owners”.

The Division bench therefore held in Ramesh Sharma (Supra) as under:

“19. Therefore, upon perusal of the above mentioned judgments, it is reiterated that Relinquishment does not tantamount to an alienation of rights, and RD between the co-owners holds equal force as an RD between the coparceners”.

The Division bench had also referred to Smt G.Subbalakshmi (Supra) with approval, whereby the Andhra Pradesh High Court has held as under:

“10. Therefore, the principle that emerges is that by executing a release deed, one of the coparceners is merely separating himself from the joint family, while the others continue as members of the 14 1945 (1) MLJ 140. 15 I.L.R. 18 Madras 233. same undivided family. The estate of the coparceners, in law, is liable to be treated as held in entirety without recognition of identifiable shares. By executing a release deed, one or more coparceners are merely renouncing or extinguishing his or their interests in the estate without, in any manner, affecting the status of the remaining members of the joint family. Therefore, a release deed is not required to be executed by all the coparceners joining the same deed or the release deed is required to be executed in favour of the remaining coparceners either. The principle is, to the extent the coparceners have relinquished their respective rights, the release of the document derives a corresponding benefit of increased proportion in the estate. Therefore, I have no hesitation to hold that the view taken by the Collector as well as the Chief Controlling Revenue Authority in the instant case, is unsustainable in law and the two documents bearing Nos. 80/2002 and 713/2002, are rightly treated by the Sub Registrar concerned as release deeds and they have not suffered any deficit stamp duty.”

The reliance was also placed on the judgment rendered by the Special Bench of Andhra Pradesh High Court in Madula Girish Kumar (supra), whereby a reference was made under Section 57 of the Stamp Act, by the Chief Controlling Revenue Authority and Commissioner of Survey, Settlements and Land Records, Hyderabad, regarding stamp duty payable on the two documents executed by the mother, on behalf of her two minor sons, relinquishing their respective shares in the joint family movable and immovable properties in favour of their father. The Joint Registrar of Machilipatnam impounded those two documents, treating them as documents of conveyance on sale. While relying on the judgments in Chella Subbanna (supra) and V. M. Murugesa Mudaliar (supra), it was held that the two documents are deeds of release.

Similarly, reliance was placed upon the judgment rendered by the Full bench of the Andhra Pradesh High Court in Valivety Rama Krishnaiah (supra), whereby, the Court relied on the judgments rendered in Chief Controlling Revenue Authority v. Patel AIR 1968 Mad 159 and Kuppuswami Chettiar v. Arumuga Chettiar AIR 1967 SC 1395 and Reference under Stamp Act Section 46 (supra), which is reproduced below:

“10. The question that fell for determination before the Full Bench was whether the instrument in question fell within the definition of a conveyance under Article 19 of the Schedule I-A of the Madras Stamp Act. Their Lordships were of opinion that it was not a conveyance. It was observed that the property in question was owned by the parties to the instrument as co-owners, the executants being entitled to a 3/5th share and the other two being entitled to the other 2/5th share. They laid stress on the fact that there was no division of the property by metes and bounds at any time anterior in accordance with their respective shares. In such circumstances, the document in question was a release within the meaning of Article 44 of the Madras Stamp Act.

“11. Reference was made by the Full Bench to a decision in “Reference under Stamp Act Section 46‟ (1895) 18 Mad 233 (FB). The said Full Bench in a reference under Section 46 of the then Stamp Act had to consider the question of a document executed by a Hindu son in favour of his father representing the other members of the family relinquishing his rights in the property of the family in consideration of certain lands being allotted to him for life and also certain debts incurred by him being paid. The learned Judges observed that it was a deed by which one co-owner renounced his claim for partition against the family property in consideration of a certain income to be enjoyed by him for his life out of certain lands over which he had no power of alienation. It was held that the instrument in question was a release and should be stamped as such. The principle enunciated therein was in relation to a Hindu joint family and a relinquishment by one coparcener in favour of the others in consideration of some benefit conferred on the relinquishing coparcener. Such an instrument was held to be a release deed. The principle decided in “Reference under Stamp Act, Section 46” (1895) 18 Mad 233 (FB), was applied by the later Full Bench to the case of Co-owners and a release by one or more of them in favour of the others for a stated consideration. The Full Bench held that the document in question was a release deed and that it was neither a deed of dissolution of partnership nor a conveyance”.

12. In another Full Bench decision of the Madras High Court in Chief Controlling Revenue Authority v. Patel, AIR 1968 Mad 159, a somewhat similar question had arisen. That again was a reference under Section 57 of the Stamp Act and the question was whether the instrument in the case before the Full Bench was a release of conveyance amounting to a transfer of property for value. The Full Bench considered the essential ingredients of a release. They quoted with approval the observations from the Full Bench decision in AIR 1955 Mad 641 (FB) and held that the instrument before them was a release. In support of their conclusion, they referred to a decision of their Lordships of the Supreme Court in Kuppuswami Chettiar v. Arumuga Chettiar, AIR 1967 SC 1395. The Supreme Court was concerned with a document of release. It was observed by the Supreme Court that a release deed could only feed title, but could not transfer title and that renouncement must be in favour of a person who had already title to an estate, the effect of which was only to enlarge the right”.

13. Now adverting to the document in the present case before us we have no manner of doubt that it is a release deed. We, therefore, unhesitatingly hold that the document has been correctly stamped as a release deed.”

After placing reliance on the aforesaid judgments and discussion as entailed thereunder in Ramesh Sharma (Supra), the Division bench has held as under:

“23. From the abovementioned discussion, it is observed that the release deed can only feed title but cannot transfer title. In this case, the Appellant, his mother, and the five sisters all became co-sharers in the suit property on the death of the father. The transaction was between the family members, wherein the chances of economic consideration are remote. Hence, in the present matter, the RDs have only added a title to the already existing title of the Appellant. Therefore, an error was committed in the Impugned Order by treating the RDs as deeds of gift for the purposes of the Stamp Act and upholding its impounding”.

The Division bench has categorically held that the order passed by the single judge in Ramesh Sharma (Supra) while upholding the impounding of relinquishment deed have relied upon the judgment in V.M Murugesa Mudaliar ( Supra) passed by the full bench of Madras High Court, but, that was, while, considering a document, whereby, three persons had renounced all their interest in the property of the partnership firm in favour of two remaining partners for some consideration. In that context the document was held to be a release deed within the meaning of Article 44 (B) of Schedule-I A (For Andhra Pradesh) of the Stamp Act 1899. It was categorically observed therein as under:

“In the case of co-owners, there need be no conveyance as such by one of the co-owners in favour of the other co-owners as each co owner in theory is entitled to enjoy the entire property in part and in whole and it is not necessary for one of them to convey his interest to another. It is sufficient if he releases his interest, the result of which would be the enlargement of the share of another. There can however, be no release by one person in favour of another, who is not already entitled to the property as a co-owner.”

The Division bench in Ramesh Sharma (Supra) had also referred to a judgment rendered by the division bench itself, earlier in a matter reported as Anita Kumar Vs Ajay Kumar since deceased Through LRs & Ors FAO(OS) 130/2024 and in the said case it was held as under:

“25. It is noted that the purpose of the Stamp Act is to collect revenue. The nomenclature of a document is not decisive for the purpose of adjudicating the liability to pay stamp. This Bench has made a sincere attempt to trace the source of the extracted observations, however failed to find one. In any case, the ratio of the judgment passed by the Court is binding. However, before the Full Bench of the Andhra Pradesh High Court, a different question was referred for decision, and hence, the aforementioned observations are not the ratio of the judgment.

26. Therefore, laying down, as an abstract proposition of law, all the relinquishment deeds executed by a particular co-sharer(s) in favour of another co-sharer or some of the co-sharers, while excluding the remaining co-sharers are not relinquishment deeds, but gift deeds, would not be appropriate.”

What clearly emerges, therefore, according to the Division bench in Ramesh Sharma (Supra) that reliance in V.M Murugesa Mudaliar (Supra) to buttress the point in the context of the Stamp Act 1899 and to the effect that RD executed in favour of one or more co-owners and not in favour of all the co-owners cannot be said to be a release, clearly lacks substance, since, in the present case (Ramesh Sharma), all the sisters had executed RDs in favour of their brother.

The hon’ble Division bench thereafter in Ramesh Sharma (Supra) had dealt with the reliance placed by the respondents in support of their case in a manner as reproduced under:

“21. Further, the learned counsel representing the Appellant has relied upon a celebrated judgment passed by a four-Judge Bench in Javer Chand (supra). In this judgment, the Supreme Court decided as to whether or not two hundies sued upon were admissible in evidence. Since this judgment is not with regard to a relinquishment deed or a release deed, the ratio of the same does not apply to the present case”.

23. Further, in Narinder Kaur (supra), which appears to be the first judgment from this Court, the release deed was executed by the son in favour of his father, who had no subsisting share in the property. The Court was examining an application filed under Order XXXIX, Rules 1 and 2 of the CPC, to grant an injunction or not. Multiple relinquishment deeds were executed between the family members. In para 3, the Court has observed as under:

“Para 3.…At this stage I would only mention the basic legal fallacy in the document is that a Relinquishment perforce cannot be in favour of any particular co sharer; if it is to operate in favour of a particular party it amounts to a transfer and must be effected either by Sale Deed or by a Gift Deed, depending entirely on whether there was any consideration for such a transfer.”

24. The source of such observations appears to be the full bench judgment of the Andhra Pradesh High Court in The Board of Revenue (The Chief Controlling Revenue Authority) (supra)….

25.…….However, before the Full Bench of the Andhra Pradesh High Court, a different question was referred for decision, and hence, the aforementioned observations are not the ratio of the judgment.”

The division bench in Ramesh Sharma (Supra) has thus held as under:

“28. Therefore, the answer to the issue before us is in negative. Thus, the relinquishment of rights in a property by the sisters (co-owners) in favour of their brother (another co-owner) cannot be said to be a Gift for the purposes of the Stamp Act”.

“29. Further, it is emphasised here that the procedure contemplated by the Stamp Act, facilitates the collection of revenue for the State. The nomenclature of a document is not decisive for the purpose of adjudicating the liability to pay stamp”.

If the RDs are read even cursorily, it may appear that there is no economic consideration in executing RDs by the sisters and the sisters had plainly released their shares in favour of their brother. What may be noted further that even as per the Will executed by the deceased father, Ramesh Sharma had already become owner to the extent of 50% of the suit property and by way of RDs basically, the said fact was acknowledged. Moreover, as recitals of all RDs were identical and styled as release deeds in as much as the sisters through separate RDs had agreed to relinquish their respective rights in the suit property in favour of their brother and there was hardly time gap in executing all RDs. It was thus held as the RDs form part of a single transaction, and hence cannot be a single determinative factor for the RDs to be considered as Gift Deeds.

The appeal in Ramesh Sharma (Supra) was therefore allowed and order of ld Single Judge impugned before the Division bench in Ramesh Sharma (Supra) was thus, set aside.

In Anita Kumar (Supra) also, the FAO (OS) 130/2024 the correctness of order passed by the ld single judge, whereby, the relinquishment deed executed by the Mother in favour of her son on account of deficient stamp duty by treating that as a gift deed  was assailed before the Division bench. The main premise of the impugned order was to the effect that if a co-owner releases his or her share in favour of one of the co-owners, in the eventuality where there is more than one co-owner, then such a release can only be done through a gift deed.

In order to appreciate the whole gamut of the case vis a vis law it is deemed appropriate to narrate facts of the Anita Kumar (Supra) in nutshell.    

(1) The historical perspective of the suit property is as under:

(i) Shri V.K Gupta and Smt Saroj Gupta were the joint owner of the suit property;

(ii) On account of demise of shri V.K Gupta his share in the suit property was mutated in favour of the following Legal Heirs:

                    (a) Smt Saroj Gupta (wife)

(b) Shri Uday K Gupta (Son)

(c) Shri Sanjay Kumar (Son)-Husband of Ms Anita Kumar

(d) Shri Ajay Kumar (Son)

(2) Smt Saroj Gupta, vide a registered relinquishment deed had relinquished her 12.5% in favour of her son Sanjay Kumar and as such Sanjay Gupta after relinquishment held 25% share in suit property.

(3) Sanjay Kumar had breathed his last on 25.08.2013, but before that he had executed a registered Will dated 23.08.2013 in favour of his wife Smt Anita Kumar (Appellant/plaintiff)

(4) On account of dispute and efforts of co-owner in seeking to evict Smt Anita Kumar and her children from the possession of the suit property, thus, a suit for partition and injunction bearing CS (OS) No. 2104/2013 before Delhi High Court and a restraint order was passed. The aforesaid persons were the defendants in the said suit.

(5) The defendants in the suit after 10 years of pendency of suit had filed application u/s 33,35 and 38 of Indian Stamp Act, 1899 read with section 151 of Code of Civil Procedure seeking examination and impounding of the relinquishment deed as the same was allegedly in the nature of a gift deed and hence insufficiently stamped.

(6) According to the plaintiff, since, the defendants had raised objection after 10 years of filing of suit and after the said relinquishment deed was admitted into evidence and after admission/denial of documents and that the defendants cannot renege from their stated position.

The ld single judge had allowed the application, directing impounding of the document inter alia on the following grounds:

(i) The evidence in the case was yet to be recorded and hence, the defendants cannot be precluded from raising admissibility of document;

(ii) If a co-owner releases her share in favour of one co-owner, excluding other co-owner/s, then, such a release can only be done through a gift deed.

The appellant thus, being aggrieved, preferred appeal against the order passed by the ld single judge before the division bench on the following premise:

(i) The document had already been admitted in evidence and it was duly exhibited;

(ii) In view of Section 36 of Stamp Act, 1899, the admission of document cannot be questioned;

(iii) In view of judgments rendered in Hari Kapoor  (details below) a relinquishment deed cannot be treated as gift deed.

The respondent contended that merely, because admission/denial was conducted, a bar u/s 36 of Stamp Act shall not be attracted, since, the plaintiff was yet to lead evidence. Further , marking of document as “exhibit” in itself is not sufficient and cannot be treated as admission as per GM Sahul case (details below).

It may be apt to refer to the following issues framed by the Division Bench of Delhi High Court, craving for adjudication in Anita Kumar (Supra):

i. Whether a relinquishment/release deed executed by a mother, relinquishing some part of her share in favour of one of her sons, amounts to a gift deed attracting corresponding stamp duty as prescribed in the Indian Stamp Act ,1999?

ii. If the answer to the aforementioned issue is positive, then whether such a relinquishment deed is liable to be impounded under Section 35 of the Stamp Act,1899, by treating it as gift deed?

 

 

In Anita Kumar (Supra) with a view to make reference of law , it is apt to refer to the following judgments/precedents were referred to by the parties:

Reliance by the Petitioner

(i) Hari Kapoor Vs South Delhi Municipal Corporation 2019 SCC OnLine Delhi 11153;

(ii) Srichand Badlani Vs Govt of NCT of Delhi & Ors (2013) SCC OnLine 5128

Reliance by the Respondent

(i) G.M Shahul Hameed Vs Jayanthi R. Hegde (2024) 7 SCC 719;

(i) Javer Chand & Ors Vs Pukhraj Sharma AIR 1961 SCC 1655,

(iii) Avinash Kumar Chauhan Vs Vijay Krishna Mishra (2009) 2 SCC 532

(iv) Neeraj Arya Vs Rakesh Arya & Anr 2023 SCC OnLine Delhi 7816.

 

DISCUSSION ON IMPOUNDING OF DOCUMENT

Reference may be have to para no. 15 , 18 and 19 of Anita Kumar (Supra):

15. It is to be noted that the purpose of section 33 of Stamp Act, 1899, is to ensure payment of stamp duty for collecting revenue for the State. It is a curable defect, subject to making good the deficient stamp duty along with a penalty. In the present case, the suit property was jointly purchased by the Late Shri V.K Gupta and Late Smt Saroj Gupta. On the death of Late Shri V.K Gupta, his 50% share was inherited by his four class I heirs, including his widow and his three sons. Late Smt Saroj Gupta became the owner of 62.5% share as she was already a co-owner to the extent of 50% , whereas each son had acquired a share of 12.5.% % in the suit property. Late Smt Saroj Gupta relinquished 12.5% share in favour of Sanjay Kumar, one of her son vide a relinquishment deed dated 07.10.2009. After the unfortunate demise of Late Sanjay Kumar, his widow Smt Anita Kumar filed a suit for partition apart from other reliefs in the year 2013. The defendant in the year 2023, filed an application for impounding the Relinquishment Deed by treating it as gift deed. The ld single judge accepted the prayer and directed the plaintiff to produce the original relinquishment deed, which has been impounded during the pendency of the appeal.   

18. On a plain reading of the Relinquishment Deed, it becomes evident that the mother executed the Relinquishment Deed to release1/8 share in favour of her son, Late Sh Sanjay Kumar, and there was no economic consideration/transaction exchanged at the time of execution. Thus, Late Smt Saroj Gupta has, out of love and affection, relinquished her 1/8^th share in the suit property in favour of Late Sh Sanjay Kumar.

19. In the present case, the transaction in question does not fall within the definition of Article 23 A. If a person renounces a claim upon another person or against any specified property , the stamp duty of rs 100/- is payable, if the amount exceeds Rs 1000/- The release deed has been executed on a non judicial stamp paper of Rs 100/- which was registered on 07.10.2009 without any objection as a Relinquishment Deed by the Registering Authority.”

The Division bench in Anita Kumar (Supra has also distinguished Tripta Kaushik (Supra) in the following words:

.           20. For impounding the document, the ld Single Judge has relied upon Tripta Kaushik (Supra). In this case, a writ petition was filed under Article 226 of the Constitution of India, challenging the order passed by the Registering Authority on 05.03.2019, while impounding the relinquishment deed executed on 01.03.2019 by the son of the petitioner, shri Kapil Kaushik, in her favour. After discussing various judgments passed, the Court came to the conclusion that where the relinquishment of right by the co-owner is only in favour of one or more co-owners and not in favour of all, then, the document would be one of the gift/conveyance and not of release. The ld single judge further relied on Narinder Kaur (Supra), wherein the Court held that unless the relinquishment deed is properly stamped as a gift deed, it cannot be read in evidence.   

On the basis of discussion in Anita Kumar (Supra) it is held as under:

26.Therefore, laying down, as an abstract proposition of law, all the relinquishment deeds executed by a particular co-sharer(s) in favour of another co-sharer or some of the co-sharers, while excluding the remaining co-sharers are not relinquishment deeds, but gift deed, would not be appropriate.

28. From the abovementioned discussion, it is observed that the release deed can only feed title but cannot transfer title. In this case, late Sh. Sanjay Kumar became a co-sharer in the property on the death of his father, late Sh V.K Gupta in the year 2001.Hence, he had a title in the property. Similarly, his mother, Late Smt Saroj Gupta was also a co-owner. The transaction was between mother and son. Since, it was between the family members, the chances of economic consideration are remote. Hence, in this case, the Relinquishment Deed has only added a title to the already existing title of late Sanjay Kumar, Therefore, an error was committed in the impugned order by treating the Relinquishment Deed to be a deed of gift and directing it to be impounded.

It was also held in Anita Kumar (Supra) that declaring Relinquishment Deed as a Gift Deed for the purpose of payment of stamp duty without permitting the parties to lead evidence would not be appropriate.

The appeal was thus allowed by setting aside the order of ld Single Judge and reliance of Anita Kumar (Supra) was placed on a subsequent judgment of the hon’ble Division bench of Delhi High Court in Ramesh Sharma (Supra) with the similar result. What therefore emerges, clearly, is that the notion as emanated from the earlier judgments rendered by the single judge of Delhi High Court that relinquishment deed by one of the co-owner of a property to other co-owner or co-owners, while excluding some other co-owner or co-owners shall not be a relinquishment deed but shall be a Gift Deed necessitating payment of stamp duty is not correct. However, a caveat was added by the Division bench in Anita Kumar (Supra) that concluding a relinquishment deed as a gift deed prior to leading of evidence shall not be correct, thus, the element of leading evidence and thereafter coming to a proper conclusion has also been the essence of the division bench judgment.  

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                                      Anil K Khaware

Founder & Senior Associate

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