Unstamped Agreement Cannot Be Basis For Granting Temporary Injunction Even If Its Execution Is Accepted By Defendant: Bombay High Court

The Bombay High Court has held that an agreement which is unstamped and unregistered cannot be relied upon to grant interim injunctions, even if its execution is admitted by the defendant, as such a document is inadmissible in law until duly stamped and impounded under the provisions of the Indian Stamp Act.

Justice S.G. Chapalgaonkar was hearing a writ petition challenging the concurrent orders passed by the trial court and appellate court granting a temporary injunction against the petitioner, thereby restraining him from disturbing the respondent's alleged possession over the suit property. The dispute arose from a tabe-isar-pavti/Notarised Agreement under which the petitioner had agreed to sell the suit land to the respondent for ₹92.5 lakhs, out of which ₹22 lakhs were paid in instalments. The agreement was not registered and was also unstamped.

The respondent sought to enforce the agreement and claimed to be in possession, alleging that the petitioner had failed to execute the sale deed despite readiness and willingness on the respondent's part. The trial court granted a temporary injunction restraining the petitioner from creating third-party rights or interfering with the respondent's possession, which was upheld on appeal.

The High Court noted that the agreement was neither registered nor duly stamped, and as such, could not be acted upon by the courts below even for collateral purposes.

“… if [an] unstamped instrument is admitted even for [a] collateral purpose, it would amount to receiving such document in evidence for a purpose which is prohibited under Section 35 of [the] Stamp Act. The bar against admissibility of instrument which is chargeable with stamp duty and is not stamped is of course absolute whatever be the nature of purpose, be it for main or collateral purpose, unless requirements of proviso (A) to Section 35 are complied with,” the Court observed.

The Court further noted that the defendant has not denied the execution of the document or receipt of part of the consideration amount, and so the fact of the existence of an agreement to sell between the parties can be accepted. However, the court further said that the defendant has emphatically denied delivery of possession of the suit property to the plaintiff.

“If contents of agreement to sell are ignored for want of its admissibility, there is nothing on record to depict that plaintiff has received possession of suit property, and even the exact nature of the transaction cannot be ascertained at this stage,” the court observed.

The Court held that the lower courts have erroneously observed that the prima facie value of a document could be adjusted at the time of granting an interim injunction, and hence, the order deserves to be modified.

Accordingly, the Court allowed the writ petition in part and modified the injunction by vacating the restraint on interference with possession.

Case Title: Salim Baig v. Sayyad Nawid [Writ Petition No. 13409 of 2023]

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