In a significant development, the Telangana High Court has issued interim orders suspending a Government Order (G.O.Ms.No.84 dated 26.07.2023) that sought to regularize notarized documents pertaining to non-agricultural urban property transactions. The court deemed the directive as prima facie falling outside the purview of Section 9 of the Indian Stamp Act, 1899.
The Division Bench, comprising Chief Justice Alok Aradhe and Justice N.V. Shravan Kumar, highlighted concerns regarding Clause 10 of the Government Order, asserting it seemingly violated the Transfer of Property Act, 1882, and Registration Act, 1908. This clause proposed that once notarized documents were regularized, they would serve as future link documents.
The petitioner’s counsel argued that the Government Order aimed to regulate sales of urban properties, executed on the basis of unregistered notarized documents. They contended that Section 54 of the Transfer of Property Act mandates property sales through registered documents, and Section 17 applies to properties exceeding the value of INR 100.
The petitioner further emphasized that the Government Order provided full exemption from stamp duty for properties measuring 125 square yards or less, while imposing a nominal fine of five rupees. This, according to the counsel, contravened Articles 14 of the Indian Constitution due to a lack of discernible differentiation between beneficiaries under the G.O. and holders of registered deeds.
The petitioner’s counsel underscored that although the State asserted they did not intend to formally register these notarized documents, their regularization would be tantamount to de facto registration.
The Special Government Pleader, representing the State, contended that the State’s objective was to collect stamp duty for already notarized documents in compliance with Section 9 of the Stamps Act. They clarified that neither the Transfer of Property Act nor the Registration Act fell under the purview of the Government Order.
The State argued that if a document, after paying stamp duty, entered the regular stream, Section 17 of the Registration Act would automatically apply, deeming it a link document.
The State also brought to the court’s attention the prevalence of sales conducted under Section 22 of the Registration Act (which prohibits registration) through notarized documents, on which stamp duty was never imposed. The Government Order aimed to rectify this, ensuring the exchequer was not disadvantaged.
Furthermore, the State asserted that the Government Order was implemented to provide relief to individuals below the poverty line. By invoking Section 9 of the Stamps Act, the State had reduced the payable stamp duty and levied a fine instead.
Conclusively, the Bench determined that the Government Order, prima facie, did not align with Section 9. Therefore, the operation and impact of the contested G.O.Ms.No.84 dated 26.07.2023 would remain suspended pending further orders.
