Bhupendra Kumar Sood & Anr. vs Government Of Nct Of Delhi & Ors.

The petitioners have filed the present writ petition impugning the Order dated 02.09.2025 passed by the respondent no. 2, i.e., the Collector of Stamps.

The background of the matter is thar the petitioners are the lawful owners of property bearing No. E-76, Anand Niketan, New Delhi, which stands duly mutated in their names pursuant to a memorandum of family settlement dated 19.06.2000.

The said property originally belonged to Late Shri P.K. Sood, father of the petitioners, who, during his lifetime, settled various properties among his children. Under the aforementioned memorandum of family settlement, other siblings of the petitioners, i.e., Mr. Shekhar Sood and Mrs. Neeru Duggal, were allotted separate properties, whereas the subject property came to be exclusively allotted to the petitioners in equal shares.

It is submitted by the petitioners that in terms of the family settlement, it was agreed that the existing structure on the said property would be demolished and the property redeveloped, with each petitioner being entitled to an equal share in the reconstructed property. Accordingly, the property was demolished by the end of 2022, and construction commenced in January 2023 pursuant to the sanction of the building plans. However, during the course of construction, disputes arose between the petitioners with respect to the manner of enjoyment and demarcation of their respective shares in the redeveloped property.

In order to amicably resolve the disputes, petitioner no. 1 invoked pre-litigation mediation under Section 61 of the Arbitration and Conciliation Act, 1996, by approaching the Delhi High Court Mediation and Conciliation Centre on 07.08.2023. Pursuant thereto, a Conciliator was appointed. Consequently, the disputes between the parties were amicably resolved, culminating in a Conciliated Settlement Agreement dated 03.10.2023.

It is submitted by the petitioners that the said settlement agreement had the same status and effect as an arbitral award under Section 74 of the Arbitration and Conciliation Act, 1996.

Accordingly, the Conciliated Settlement, treated as a deemed arbitral award, was presented for registration before the office of the Sub-Registrar-VIIA on 16.10.2023.

It is pointed that initially deficiency was pointed out regarding non-submission of Form A, the same was duly rectified by the petitioners. It is submitted that the petitioners also paid stamp duty treating the document as an award under Article 12 of the Indian Stamp Act, at the applicable rate of 0.1% of the value of the land, amounting to Rs. 1,30,000/-, and re-presented the document for registration.

Subsequently, it is submitted that the Sub-Registrar, referred the instrument to the Collector of Stamps under Section 38 of the Indian Stamp Act for determination of proper stamp duty. Thereafter, the petitioners received a notice dated 19.01.2024 from the office of the Collector of Stamps calling upon them to explain as to why deficient stamp duty and penalty should not be imposed under Section 40 of the Act. The petitioner no. 1 appeared before the authority. Subsequently, the petitioners filed written submissions along with relevant judicial precedents in support of their case.

Thereafter, the Office of the Tehsildar issued notice to the petitioners vide communication dated 24.04.2024 calling upon them to furnish various documents. It is submitted that the petitioners vide a reply dated 29.04.2024 furnished requisite documents including valuation reports.

However, no order was passed by the Collector of Stamps for a considerable period. The petitioners submitted repeated representations in September and December 2024 requesting expeditious disposal of the matter, but no action was taken.

Aggrieved by the inordinate delay and inaction on the part of the authorities, the petitioners approached this Court by way of W.P.(C) No. 12617 of 2024. This Court, vide order dated 25.08.2025, directed the respondent no. 2 to decide the matter within a specified timeframe.

Pursuant to the aforesaid directions, respondent no. 2 passed the impugned order dated 02.09.2025, whereby the Conciliated Settlement Agreement was treated as a partition deed rather than an arbitral award. On this basis, the respondent raised a demand of Rs. 14,75,035/- towards alleged deficient stamp duty and penalty, and further directed payment of registration charges at the rate of 1%, within 15 days, failing which recovery proceedings were threatened under Section 48 of the Indian Stamp Act, 1899 as arrears of land revenue. The impugned order dated 02.09.2025 is reproduced as under –

Being aggrieved of the same the petitioners have now approached this Court seeking quashing of the impugned order.

The case of the petitioners is that the Collector proceeded on two misconceptions.

Firstly, it is submitted that the Collector erroneously concluded that the instrument in question is, in substance, a “partition deed” within the meaning of Section 2(15) of the Indian Stamp Act, 1899. This finding proceeds on a misconception/ misunderstanding of the essential ingredients of a partition. The sine qua non of an “instrument of partition” is the division of property held jointly or in common by co-owners into separate and exclusive ownership in severalty. In the present case, however, such an essential element is absent. The petitioners were already owners in severalty of defined portions of the property pursuant to the Memorandum of Family Settlement. The Conciliated Settlement does not effect any division of jointly held property; rather, it merely records a demarcation of pre-existing ownership rights.

Specific reliance has been placed by the petitioners on Jinesh Jain v. Amit Jain & Ors. AIR 2025 (Del) 136.

Secondly, it is submitted that the Collector has erred in holding that the document cannot be treated as an arbitral award on the ground that no arbitral tribunal was constituted. This finding overlooks the express statutory mandate of Section 74 of the Arbitration and Conciliation Act, 1996, which provides that a settlement agreement arrived at in the course of conciliation proceedings shall have the same status and effect as an arbitral award on agreed terms under Section 30.

It is submitted that the legal position remains unaffected by the enactment of the Mediation Act, 2023. Although the said Act contemplates eventual deletion of certain provisions of the Arbitration and Conciliation Act, including Sections 61 to 81, the relevant provisions have not yet been brought into force. As on date, Section 74 continues to operate with full force, and the statutory fiction contained therein remains binding.

Thus the case of the petitioners is that the instrument in question is liable to be stamped as an arbitral award under Article 12 of the Indian Stamp Act.

While adverting to the contentions advanced by the petitioners, the respondents have submitted as follows:

a. It is submitted that Section 2 (15) of Stamp Act, 1899 defines an instrument of partition to mean any instrument whereby co-owners of any property divide or agree to divide such property in severalty, and includes also a final order for effecting partition passed by any revenue authority or any civil court and an award directing a partition. The liability to pay stamp in terms of Article 45 of Schedule I to the Indian Stamp Act, 1899 arises when the instrument in question fell within the definition of “instrument of partition” as given in Section 2 (15) of the said Act. It is urged that any instrument whereby co-owners of any property divide or agree to divide such property in severalty would be an instrument of partition. It is submitted that it is not merely the instrument whereby the property is in fact divided by co-owners, but also an instrument whereby the said co-owners agree to divide the property in severalty.

b. It is further submitted that Article 45 of Schedule I to the Stamp Act prescribes the appropriate stamp duty for an instrument of partition as defined in Section 2 (15). The said Article, as applicable to Delhi, also provides that where a final order for effecting a partition passed by any revenue authority or any civil court, or an award by an arbitrator directing a partition, is stamped with the stamp required for an instrument of partition, and an instrument of partition in pursuance of such order or award is subsequently executed, the duty on such instrument shall not exceed ten rupees. It is submitted that this is also indicative of the fact that an instrument which by itself does not affect a partition is also liable to be stamped in accordance with Article 45 and in such an eventuality, a subsequent instrument which brings about the partition would not be required to be stamped twice over with the same amount of stamp duty but the stamp duty on the second instrument would be limited to ten rupees. It is emphasised that the scheme of the provisions appears to be that where an instrument records an agreement to divide property, the same has to be stamped in the first instance in accordance with Section 2 (15) read with Article 45 to Schedule I of the Stamp Act, 1899. Since such an instrument is required to be followed up by another instrument where the property is actually divided in severalty, the legislature has made it clear that on the second instrument, the stamp duty would be limited to only Rs 10/-.

c. It is contended that a plain reading of the provisions of the Stamp Act do indicate that when there are two instruments, one which records an agreement to divide property followed by the other which actually brings about the division of such property, both such instruments would fall within the definition of Section 2 (15) of the said Act. Reliance has been placed on Jitender Mohan Malik v Ravi Bhushan Malik, ILR (2009) I DELHI 282.

d. It is submitted that the petitioner no. 1 by way of Application dated 07.08.2023 invoked Mediation with respect to, “division of the shares in the property inherited by both”. It is submitted that there existed no deed of partition in past and instead as averred by the petitioners, there existed a ‘Memorandum of Family Settlement’ dated 19.06.2000. The Conciliation Agreement divides the share of petitioners in E-78, Anand Niketan, New Delhi-110021. Clause 4 of the conciliation agreement describes floor allocation, whereby the Basement and Terrace has to be divided equally among petitioners, while the Second Floor and Third Floor vests exclusively with petitioner no. 1 and Upper Ground Floor and First Floor exclusively vests in petitioner No. 2.

e. The petitioners become the exclusive owners with equal undivided share in the land beneath. Further, Clause 6 of the Agreement dated 03.10.2023 gives superintendence to the conciliation Agreement dated 03.10.2023 over the ‘Memorandum of Family Settlement’ dated 19.06.2000 in case of any conflict and inconsistency between any term of Family Settlement and Conciliation Agreement. It emphasised that the Conciliation Agreement reads down the ‘Memorandum of Family Settlement’ dated 19.06.2000 in so far as property in question is concerned.

f. Thus, the case of the respondents is that the Agreement though bears a title as ‘Conciliation Agreement’, the same is an Instrument of Partition clothed as Conciliation Agreement.

g. As regards the second issue, whether the Conciliation Agreement can be treated as an arbitral award under Sections 73 and 74 of the Arbitration and Conciliation Act, 1996, it is submitted that under Section 74 of the Arbitration and Conciliation Act, a settlement agreement reached during conciliation proceedings attains the same status and effect as an arbitral award by virtue of legal fiction. However, it is submitted that this statutory recognition does not transform the settlement agreement into an arbitral award; it continues to remain a contractual agreement, merely imbued with the status and enforceability of an award under the Act. Consequently, since the document in the present case constitutes an instrument of partition, it is liable to stamp duty under Article 45 of Schedule 1A of the Indian Stamp Act, 1899, along with the applicable penalty under Section 40 of the said Act.

h. Reliance has been placed on Anuradha SA Investments LLC v. Parsvnath Developers Limited, 2017 SCC OnLine Del 7970.

The principal questions that arise for consideration in the present matter are –

a. whether the Conciliation Agreement dated 03.10.2023 constitutes an “instrument of partition” within the meaning of Section 2(15) of the Indian Stamp Act, 1899; and if not

b. whether the said agreement can be treated as an arbitral award by virtue of Sections 73 and 74 of the Arbitration and Conciliation Act, 1996 so as to attract stamp duty applicable to an award.

The controversy, therefore, centres on the true nature and legal character of the instrument for the purposes of stamp duty.

In the impugned order, the respondent no. 2 has concluded that the contents of the instrument are in the nature of a partition deed under Article 45 of Schedule IA of the Stamp Act and has, on that basis, directed payment of deficient stamp duty along with penalty under Section 40.

The correctness of this conclusion necessarily depends upon whether the document satisfies the statutory definition of an “instrument of partition” under Section 2(15) of the Indian Stamp Act, 1899, or whether it merely records and adjusts pre-existing rights.

At this stage, it is apposite to examine the definition contained in Section 2(15), which provides as under –

A plain reading of the provision makes it clear that the essence of partition lies in the division of property held jointly or in common into separate and exclusive ownership in severalty. From this definition, certain essential ingredients emerge: first, there must exist co-ownership in respect of the property, i.e., the parties must hold a joint or undivided interest; second, the property must constitute a common or undivided estate capable of division; third, the instrument must effect or record an agreement to effect such division in severalty, resulting in the creation of exclusive rights; and fourth, the instrument itself must be the operative source of such division, and not merely a record of a pre-existing arrangement.

In Shub Karan Bubna v. Sita Saran Bubna And Others, (2009) 9 SCC 689, the Supreme Court has observed as under –

In Indu Singh and Anr. v. Prem Chaudhary and Ors. 2018 SCC OnLine Del 8951, a three judge bench of this Court has observed as under -

Applying the aforesaid principles to the facts of the present case, it is evident that the essential requirement of co-ownership of an undivided estate is absent.

It is significant to note that after the Family Settlement Agreement of 2000, the Anand Niketan property was never held as a single undivided asset by the parties. Each petitioner held exclusive rights in specified portions of the property. The relevant portion of the Family Settlement Agreement of 2000 is reproduced as under –

The petitioner no. 1 became absolute owner of first and second floors of the property along with half undivided share in the plot. While the parents of the petitioners held only a life interest in ground floor and third floor of the property along with half undivided share in the plot, with remainder rights already vested in the petitioner no. 2. Upon the demise of the parents, those remainder rights matured into full ownership. Therefore, there was no subsisting joint estate requiring division at the time of execution of the Conciliation Agreement in 2023.

Even the Conciliation Agreement itself records that pursuant to the Family Settlement dated 19.06.2000, the petitioners had already acquired defined and exclusive rights in respect of the Anand Niketan property. The relevant portion of the Conciliated Agreement is reproduced as under –

Thus, the partition of the property, insofar as division of ownership is concerned, stood effectuated as early as in the year 2000.

The Conciliation Agreement dated 03.10.2023 does not effect any division of jointly held property. It merely records a re-adjustment and mutual exchange of certain portions between parties who were already absolute owners of their respective shares. Such an exchange or adjustment between independent owners cannot be equated with a partition of joint property. The document, therefore, does not operate to sever joint ownership, but rather gives effect to pre-existing rights and arrangements. The relevant portion of the Conciliation Agreement dated 03.10.2023 is reproduced as under –

Thus the Conciliation Agreement does not create such rights for the first time.

Arrangements which define or adjust pre-existing rights without effecting a fresh division of joint property do not fall within the scope of Section 2(15).

In the present case, the Family Settlement of 19.06.2000 was itself a comprehensive arrangement that effected partition of all family properties, including the Anand Niketan property, and vested exclusive ownership rights in the respective parties. That document alone could be regarded as the instrument effecting partition, if at all.

The Conciliation Agreement of 2023, on the other hand, neither creates a fresh partition nor alters the fundamental nature of ownership; it merely records a consensual adjustment arising out of redevelopment and resolves disputes relating to enjoyment of the property.

To treat the 2023 document as a fresh instrument of partition would, in effect, amount to recognizing a second partition of property that had already been partitioned more than two decades earlier. Such an approach is legally untenable, as partition can only operate upon property held jointly and not upon property already held in severalty.

In view of the foregoing, it is clear that as on the date of execution of the Conciliation Agreement, there existed no joint or undivided estate between the parties which could be the subject matter of partition. The essential precondition for the application of Section 2(15) is thus not satisfied. The document in question cannot be construed as an “instrument of partition.”

Accordingly, the classification of the instrument by the Collector under Article 45 of Schedule IA of the Indian Stamp Act is fundamentally erroneous and unsustainable in law.

The second question that arises is whether the said agreement can be treated as an arbitral award by virtue of Sections 73 and 74 of the Arbitration and Conciliation Act, 1996 so as to attract stamp duty applicable to an award.

In Anuradha SA Investments LLC & Anr v. Parsvnath Developers Limited & Ors^. (supra) a Coordinate bench of this Court has observed as under –

Applying the aforesaid principles, it is evident that although the Conciliation Agreement in the present case may be enforceable as if it were an arbitral award, it does not thereby lose its character as an agreement voluntarily entered into between the parties. The deeming provision contained in Section 74 cannot be extended to the provisions of the Indian Stamp Act so as to require the document to be stamped as an arbitral award.

Accordingly, the Conciliation Agreement must be stamped as an agreement and not as an award. It equally cannot be treated as a partition deed for the reasons already discussed. The applicable provision, therefore, is Article 5 of Schedule IA to the Indian Stamp Act, and the instrument squarely falls within clause (c) thereof. The same reads as under –

In view of the above, the impugned order is unsustainable and is hereby set aside in totality. The competent authority is directed to expeditiously reassess the stamp duty payable on the instrument by treating it as an agreement under Article 5(c) of Schedule IA, and not as a partition deed or an arbitral award.