Sale deed for alternate land given as acquisition compensation exempt from stamp duty and registration fee, Karnataka HC rules

The petitioner’s property at Congress Road, Tilakwadi, Belagavi, was acquired by the Belagavi City Corporation in 1994 for road widening. Instead of monetary compensation, the Corporation agreed to allot him an alternative site bearing CTS No. 229 at Ranade Road and initially granted it on lease.

As the Corporation failed to execute an absolute conveyance, the petitioner filed W.P. No. 101438 of 2021, which was allowed with a direction to execute an appropriate conveyance. The order was affirmed in W.A. No. 100639 of 2023, and the Supreme Court dismissed the Corporation’s SLP No. 47376 of 2024.

During contempt proceedings, the Corporation executed a registered sale deed dated 8 May 2025 in favour of the petitioner. Since the document was presented as a sale deed, the petitioner paid stamp duty of ₹5,04,784 and registration fee of ₹90,140.

The petitioner thereafter sought a refund, contending that the conveyance represented compensation in the form of alternate land for property acquired under the Land Acquisition Act, 1894, and was exempt under Section 51. The request was rejected by communication dated 27 May 2025, leading to the present writ petition.

Whether the conveyance executed by the Belagavi City Corporation in favour of the petitioner, in lieu of acquisition of his original property, was covered by Section 51 of the Land Acquisition Act, 1894?

Whether the expression “award or agreement” in Section 51 of the Land Acquisition Act, 1894 should be interpreted broadly to include a conveyance or sale deed executed to implement an agreement providing alternate land in lieu of acquisition?

The Court applied Section 177 of the Karnataka Municipal Corporations Act, 1976, which permits municipal authorities to acquire immovable property under the Land Acquisition Act, 1894.

Section 51 of the Land Acquisition Act exempts an “award or agreement” made under the Act from stamp duty and protects persons claiming under such award or agreement from specified fees.

The Court adopted the principle that beneficial statutory provisions must receive a liberal and purposive interpretation, with substance prevailing over the nomenclature of an instrument.

It also relied on Section 96 of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013, as evidence of the continuing legislative policy of insulating compensation for compulsory acquisition from stamp duty and registration charges.

Article 300A of the Constitution was invoked to hold that a person cannot be financially burdened when an authority belatedly restores or provides compensation for property taken without lawful procedure.

The Court additionally referred to Arun Rameshchand Arya v. Parul Singh, Transfer Petition (Civil) No. 875 of 2024, for the principle that technical stamp-duty requirements should not defeat substantive rights crystallised through judicially recognised settlements.

The Court examined the recitals in the sale deed, which expressly recorded that the petitioner’s original property had been acquired for road widening, that alternate land had been allotted in lieu of compensation, and that the conveyance was executed pursuant to the Corporation’s resolution and the Court’s directions.

It held that the transaction was not an independent commercial sale but the final instrument implementing the earlier rehabilitation and compensation arrangement. Since Section 177 of the Karnataka Municipal Corporations Act incorporated the Land Acquisition Act mechanism into municipal acquisition, the arrangement for alternate land derived its legal character from the acquisition proceedings.

The Court rejected the respondents’ argument that Section 51 applied only where the document was formally titled an “award” or “agreement.” It held that the nomenclature “sale deed” could not defeat the exemption where the instrument’s substance was the implementation of an agreement to provide alternate land in lieu of compensation.

A contrary interpretation would permit an acquiring authority to avoid the statutory exemption merely by using a sale deed instead of an agreement.

The Court further held that the sale deed was only the ministerial culmination of the petitioner’s entitlement, which arose from the acquisition and the promise of alternate allotment—not from the later judicial orders or the deed itself.

Independently, the Court reasoned that the Corporation had taken possession of the petitioner’s property in 1994 without following the statutory acquisition procedure, thereby infringing Article 300A. Since the sale deed was executed only after prolonged litigation and contempt proceedings, the petitioner could not equitably be required to bear the fiscal burden of obtaining restitution of his entitlement.

The writ petition was allowed; the rejection communication dated 27 May 2025 was quashed; and Respondent Nos. 1 to 5 were directed to refund ₹5,04,784 towards stamp duty and ₹90,140 towards registration fee within eight weeks of receiving the certified order.

In case of delay, the petitioner was awarded interest at 6% per annum from the day following expiry of the eight-week period until payment. No order as to costs was made.