Supreme Court: No Registration or Stamp Duty Required for Compromise Decree with Pre-Existing Property Rights

In a significant ruling, the Supreme Court has clarified that a compromise decree affirming pre-existing rights over a property does not require registration or stamp duty. The judgment was delivered by a bench comprising Justice JB Pardiwala and Justice R Mahadevan, overturning a Madhya Pradesh High Court decision that upheld the Collector of Stamps’ determination of ₹6.67 lakh stamp duty for such a decree.

The case pertained to land in Dhar district, Madhya Pradesh, acquired through a compromise decree in a civil suit filed in 2013. The decree was issued by the National Lok Adalat. The Tehsildar referred the case for mutation, leading the Collector to impose stamp duty, treating the decree as a conveyance under Article 22 of the Indian Stamp Act, 1899. This decision was upheld by the Board of Revenue and the High Court.

The Supreme Court ruled that such a decree merely reaffirms pre-existing rights and does not create new ones, thereby not qualifying as a conveyance. The Court outlined three conditions under Section 17(2)(vi) of the Registration Act, 1908, for a compromise decree to avoid registration:

1. It must be based on a genuine, non-collusive compromise.


2. It must pertain to the property in the suit.


3. It must affirm pre-existing rights without creating new ones.



The Court noted that since these conditions were met, neither registration nor stamp duty was applicable. It emphasized that the decree did not fall under the documents listed in Schedule I or I-A of the Indian Stamp Act, 1899.

Setting aside the High Court’s decision, the Supreme Court directed the authorities to update the revenue records in favor of the appellant without imposing stamp duty. The Court concluded that the consent decree does not operate as a conveyance since it does not transfer any rights.