Builder, land owner pact not deed: HC

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LUCKNOW: In a judgment that should bring additional revenue to the state exchequer, the Lucknow bench of the Allahabad high court has ruled that the agreement between a land owner and a builder to construct a multi-storied building will call for a builder’s agreement instead of a partnership deed.

In execution of a partnership deed, the parties have to pay a nominal amount as stamp duty whereas in a builder’s agreement the stamp duty charged is heavy. The verdict came from Justice SS Chauhan while dismissing a writ petition filed by a land owner Krishna Bihari Vaish and builder Rama Shankar Awasthi. The court directed them to pay Rs 40 lakh stamp duty along with 1.5% interest per month on the deed besides adjudicating it to be a builder’s agreement.

The court noticed that large scale construction activity was going on in the state capital under the garb of partnership agreement where the land is transferred to the builder and construction activity is undertaken by him and thereafter plots or commercial apartments are sold to individuals. “Earlier, such deeds escaped notice and no stamp duty was being levied on them as there was a loophole in the law and agreement of that particular nature was not covered in the category of conveyance deed,” observed the court.

The petitioners Krishna Bihari Vaish and Rama Shankar Awasthi had entered into an agreement that the former would give his land worth Rs 30 lakh to the latter who would invest Rs 30 lakh or as required later and would construct a multi-storied building to be sold for profit which would be shared by them. They presented the deed for registration before the sub registrar as partnership deed but the registrar objected that it was in fact a builder’s agreement and directed them to pay the stamp duty amounting Rs 40 lakh along with additional charges.

The sub-register’s decision was affirmed by deputy commissioner (stamp) which was challenged by the petitioners before the high court. The court dismissed the petition and upheld the deputy commissioner’s order.


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