Andhra Pradesh HC: Unregistered Agreement of Sale-Cum-Possession Cannot Be Marked as Exhibit Without Stamp Duty, Regardless of Party Pleadings

The Andhra Pradesh High Court dismissed a civil revision against rejection of an unregistered possessory sale agreement as exhibit, holding stamp duty liability depends on document recitals, not on what parties plead in court.

The High Court of Andhra Pradesh at Amaravati has dismissed a civil revision petition challenging a trial court order that refused to admit an unregistered agreement of sale-cum-possession as an exhibit. Justice Venkateswarlu Nimmagadda, sitting singly, held that the levy of stamp duty and penalty on such a document is governed entirely by the recitals within the document itself, and cannot be altered by the pleadings of the parties — even where the defendant disputes possession in a written statement. The judgment, pronounced on 24 June 2026, draws a clear line between S. Kaladevi v. V.R. Somasundaram, which permits unregistered sale deeds without possession recitals to be received as evidence of an oral agreement, and documents that expressly recite delivery of possession.

The Suit and the Disputed Document

The petitioner, Devathi Ravi Kumar of Darsi Town, Prakasam District, filed O.S. No.26 of 2023 before the Civil Judge (Senior Division), Darsi, seeking specific performance of an agreement of sale dated 14 November 2019. The respondent, Smt Botla Rama Devi, owned the suit schedule properties under a registered settlement deed bearing document No.596/2018, which her husband had acquired from prior owners under registered sale deeds.

According to the plaint, Devathi Ravi Kumar paid Rs.25 lakhs as contract consideration on 14 November 2019. The respondent then executed what the document itself describes as an “agreement of sale-cum-possession” and, as the petitioner stated in both his plaint and chief evidence affidavit, delivered physical possession of the property along with original title documents and revenue records including pattadar pass books.

The petitioner issued a legal notice dated 8 September 2023 asserting readiness to perform his contractual obligations. When the respondent failed to comply, the suit was filed. The petitioner says that after the suit was instituted, the respondent and her husband forcibly re-entered the property and dispossessed him, prompting a police complaint and the registration of an FIR. Consequent on this change in possession, the plaint was amended on 12 December 2024 to add a prayer for recovery of possession.

The Trial Court Order and the Revision

During trial, the petitioner sought to mark the unregistered agreement of sale-cum-possession dated 14 November 2019 as an exhibit on his behalf. The Civil Judge rejected this by a docket order dated 10 February 2026, holding that because the document contained a recital of delivery of possession, it attracted stamp duty under the Indian Stamp Act, 1899, and could not be exhibited without payment of the requisite stamp duty and penalty.

The petitioner challenged this order before the High Court under Article 227 of the Constitution of India in C.R.P. No.957 of 2026, also filing I.A. No.1 of 2026 seeking a stay of further proceedings in the suit pending disposal of the revision.

Competing Arguments on the Proviso to Section 49

Counsel for the petitioner, Sri Anjaneya Sarma M, argued that the trial court had misread the proviso to Section 49 of the Registration Act, 1908. That proviso, he submitted, permits an unregistered document affecting immovable property to be received as evidence of a contract in a suit for specific performance. He pressed that the document should have been received with an endorsement that it was being admitted only as evidence of an oral agreement of sale, and not as proof of a completed transaction with possession.

His further argument turned on the respondent's own written statement. Since the respondent had specifically denied that the petitioner was ever in possession — claiming she and her husband had themselves re-entered and dispossessed him after the suit was filed — the petitioner contended that the possession recital in the document should be treated as inoperative. In that circumstance, the agreement should be read as nothing more than a plain agreement of sale, and the basis for levying stamp duty as though it were a conveyance would disappear. He relied on S. Kaladevi v. V.R. Somasundaram, (2010) 5 Supreme Court Cases 401, and Cheryala Srinivas v. Moola Sujatha, C.R.P. Nos.3135 and 3137 of 2009 of the erstwhile High Court of Andhra Pradesh.

Counsel for the respondent, Sri G. Venkata Reddy, took the opposite position. He submitted that stamp duty is assessed on the nature and nomenclature of the document, not on the conduct of the parties after execution. The possession recital in the agreement of sale-cum-possession dated 14 November 2019 was, he argued, unambiguous. The fact that subsequent events — alleged forcible dispossession, plaint amendment, recovery of possession prayer — may have unsettled the factual picture did not change the character of the document itself. He relied on the Madras High Court in K. Panchapagesa Ayyar v. K. Kalyanasundaram Ayyar, AIR 1957 Madras 472, and two judgments of this High Court: Penkey Suryakantham v. Shaik Sillar, 2003 (4) ALD 61, and Kota Ganga Rao v. Kamineni Anjaneyulu, 2023 (1) ALT 676 (AP).

How the Court Reasoned

Justice Nimmagadda framed the core question as whether an agreement of sale-cum-possession can be received or marked as an exhibit without payment of stamp duty and penalty as required under the Indian Stamp Act, 1899, and without registration as compulsory under the Registration Act, 1908.

The Court accepted the principle from S. Kaladevi without qualification: an unregistered sale deed tendered not as proof of a completed sale but as proof of an oral agreement of sale can be received in evidence under the proviso to Section 49, with an endorsement to that effect. That much was common ground.

The distinction, however, lay in what the document in this case actually said. The instrument before the trial court was not a bare agreement to sell. It was expressly named “agreement of sale-cum-possession” and its recital recorded delivery of possession. Critically, the petitioner himself had asserted in both his plaint and his chief evidence affidavit that possession was delivered to him on the date of execution, 14 November 2019. The Court observed that the petitioner's later claim — that he was dispossessed after the suit was filed and that the respondent denied possession in her written statement — were subsequent events. Those subsequent events could not retroactively alter the nature of the document executed on 14 November 2019.

The Court examined the reasoning in Cheryala Srinivas v. Moola Sujatha closely. In that case, the erstwhile High Court had held that the possession mentioned in Explanation I to the relevant stamp duty entry must be effective, actual, and legally recognised, and that where possession was genuinely disputed or seriously doubted, the equation between an agreement of sale-cum-possession and a conveyance for stamp duty purposes was disturbed. But Justice Nimmagadda distinguished the present facts: here, the petitioner was not in a position where possession was merely conditional or qualified at the time of execution. The agreement expressly recited delivery of possession, and the petitioner himself affirmed possession in both his pleadings and evidence.

The Court then applied the consistent line from Kota Ganga Rao v. Kamineni Anjaneyulu, where a Division Bench of this High Court had held that delivery of possession before, at the time of, or after execution of an agreement deems it a conveyance for stamp duty purposes, and that the recitals of the document must govern the stamp duty question — not the pleadings of the parties. The division bench reasoning had been explicit: “the levy of the stamp duty and penalty is always in relation to the document which is to be marked before the Court and such levy cannot depend upon the pleadings of the parties.”

Justice Nimmagadda concluded that the petitioner's argument — that the respondent's denial of possession in the written statement should strip the document of its possessory character — could not be accepted. A party cannot use post-execution conduct or litigation-stage pleadings to recharacterise a document for stamp duty purposes. The Madras High Court's warning in K. Panchapagesa Ayyar about using the “collateral purpose” device to indirectly achieve what an unregistered document cannot directly accomplish was cited in support.

The Court also noted that S. Kaladevi, though correctly decided, applied to an unregistered sale deed without a possession recital — a materially different situation. That ruling was not applicable to the present document.

Outcome

Justice Venkateswarlu Nimmagadda dismissed C.R.P. No.957 of 2026 on 24 June 2026, finding that the trial court's docket order dated 10 February 2026 rejecting the marking of the unregistered agreement of sale-cum-possession as an exhibit was in accordance with law. The Court held that no interference was warranted under Article 227 of the Constitution of India. No costs were imposed. All pending interlocutory applications, including I.A. No.1 of 2026 for stay of proceedings in O.S. No.26 of 2023, were closed as a sequel to the dismissal.