D.Dis No.7039/P1/2021, Review Petition on Settlement Deed
The Chief Controlling Revenue Authority and Inspector General of Registration, Chennai, issued D.Dis No.7039/P1/2021 dated 9 June 2022, dismissing a review petition concerning settlement deed P2/2020 at the Mylapore Sub Registrar Office. The decision treats the partnership firm's property settlement to the petitioner's wife and daughters as a settlement in favour of non-family members and upholds the deficit stamp duty of Rs.1,66,70,462 and penalty of Rs.2,000 determined by the District Registrar, Chennai (Central).
What the decision covers
D.Dis No.7039/P1/2021 dated 9 June 2022 was issued by the Chief Controlling Revenue Authority and Inspector General of Registration, Chennai, under section 56(1) of the Indian Stamp Act, 1899. It concerns settlement deed P2/2020, executed on 7 January 2020 and presented at the Mylapore Sub Registrar Office.
The deed was executed by Mr. M.M. Sika, also named as Manmohan Sikka, in favour of his wife and three daughters. It stated a value of Rs.7,50,00,000 and bore stamp duty of Rs.25,000.
Why the deed was classified as a non-family settlement
The property had originally been purchased in the name of the partnership firm International Packers and Movers. The petitioner claimed that the firm was dissolved and that he became the absolute owner under an unregistered dissolution deed dated 1 January 1980.
The Chief Controlling Revenue Authority rejected that claim for the following reasons:
- The dissolution deed appeared to have been written on stamp paper worth Rs.2, although the stated stamp duty for a partnership dissolution deed on that date was Rs.35.
- The dissolution deed also purported to allot firm properties to partners, which the decision found would attract additional stamp duty.
- Because the dissolution deed was not duly stamped, it could not be taken in evidence under section 35 of the Indian Stamp Act, 1899.
- Section 48 of the Indian Partnership Act, 1932 was read as continuing to treat the property as an asset of the firm while accounts and residual property were being settled.
- The decision relied on the High Court ruling in S.A. Kovil Nadar versus Inspector General of Registration, which required settled property to be the absolute property of the settler for family settlement classification.
Outcome and practical effect
D.Dis No.7039/P1/2021 classifies the deed as a settlement by the firm in favour of individuals, falling under settlement in favour of non-family members under Article 58(a)(ii) of the Indian Stamp Act, 1899.
The review petition was dismissed. The District Registrar, Chennai (Central), decision requiring deficit stamp duty of Rs.1,66,70,462 and a penalty of Rs.2,000 was upheld.
The reasoning is relevant where a partner attempts to settle partnership property personally, particularly when ownership is based on an unstamped or insufficiently stamped dissolution document.
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Common questions
Why were the wife and daughters treated as non-family members?
The authority found that the property belonged to the partnership firm, not absolutely to the individual settler. It therefore treated the transaction as a settlement by the firm in favour of individuals.
Did the review petition reduce the stamp duty or penalty?
No. The review petition was dismissed, and the deficit stamp duty of Rs.1,66,70,462 and penalty of Rs.2,000 were upheld.
Why was the 1980 partnership dissolution deed rejected as proof of ownership?
The authority found that the dissolution deed was not duly stamped and also purported to allot firm properties. It therefore held that the document could not be taken in evidence under section 35 of the Indian Stamp Act, 1899.
Does the decision concern every settlement deed in Tamil Nadu?
The decision specifically concerns document P2/2020 at the Mylapore Sub Registrar Office. Its reasoning addresses a settlement of property originally belonging to a partnership firm.
