### Prior Possession Not Delivered in Part Performance of Sale Agreement Attracted Lower Stamp Duty under Article 5(e)(ii)

The Petitioner (Defendant No. 4) challenged a Trial Court order dated 06.12.2023.

Respondent No. 1 (Plaintiff) filed a suit for specific performance of an agreement of sale dated 23.06.2018.

During evidence, the Petitioner objected to the marking of the agreement, alleging it was is insufficiently stamped and unregistered because it recited delivery of possession.

The agreement contained a clause stating the Plaintiff was already in possession and residing in the house for approximately two years prior to the agreement's execution.

The Plaintiff paid deficit stamp duty and penalty under Article 5(e)(ii) of the Karnataka Stamp Act, but the Petitioner contended it must be taxed as a conveyance under Article 5(e)(i).

Whether an agreement of sale that recognizes possession delivered *prior* to the contract (and not in part performance of said contract) attracts stamp duty as a conveyance under Article 5(e)(i) of the Karnataka Stamp Act, 1957.

The Court applied Article 5(e) of the Karnataka Stamp Act, 1957.

Article 5(e)(i) mandates stamp duty equivalent to a conveyance (Article 20) if possession is delivered or agreed to be delivered "in part performance of the contract".

Conversely, Article 5(e)(ii) applies if possession is not delivered under the instrument.

The Court relied on *Danappagouda Fakkiragouda Patil v. Kamalawwa* and the Supreme Court decision in *Vijay Kumar Goyal v. Neena Rani*, establishing that for Article 5(e)(i) to apply, the delivery of possession must be a result of the agreement itself in part performance, rather than a mere recital of pre-existing possession.

The Court examined the specific language of the agreement, which stated that the first party "gave possession to the second party about 2 years ago" and the second party "is already residing" there.

The Court reasoned that Article 5(e)(i) requires two specific conditions: (a) delivery of possession under the agreement or (b) an agreement to deliver possession before the final conveyance, both specifically in "part performance" of the contract.

In this case, since the Plaintiff was already in physical possession years before the agreement was drafted, the possession was not transferred *by* or *in part performance of* the 2018 agreement.

The Court distinguished cases cited by the Petitioner by noting that those agreements explicitly stated possession was being handed over "in part performance," whereas the present instrument merely acknowledged a historical fact of pre-existing possession.

Therefore, the instrument did not fall under the higher tax bracket of Article 5(e)(i).

The High Court upheld the Trial Court's order, confirming that the stamp duty and penalty paid under Article 5(e)(ii) were appropriate.

The Writ Petition was rejected.