Introduction:

The Supreme Court of India, in a significant ruling, exempted a wife from paying stamp duty on a flat that was transferred to her as part of a matrimonial settlement. The case, Arun Rameshchand Arya v. Parul Singh, was heard by a bench comprising Justice Vikram Nath and Justice Sandeep Mehta. The dispute arose during mediation proceedings in a divorce case where both the husband and wife laid claim to a flat in Bombay, asserting that they had contributed to its purchase. As part of the settlement, the husband agreed to relinquish his rights over the property, and the wife, in turn, gave up her claim for alimony. The legal issue before the Court was whether the transfer of the flat to the wife, under the terms of the compromise, required the payment of stamp duty under the Registration Act, 1908. Relying on its recent ruling in Mukesh v. The State of Madhya Pradesh & Anr. (2024), the Supreme Court held that since the flat was part of the compromise in ongoing legal proceedings, its transfer fell under the exemption provided in Section 17(2)(vi) of the Registration Act. The Court, therefore, directed the Sub-Registrar to register the flat exclusively in the wife’s name without requiring stamp duty payment, and also dissolved the marriage under Article 142 of the Constitution.

Arguments of Both Sides:

The petitioner-husband, represented by Senior Advocate Rajiv K. Garg, argued that both parties had contributed financially to the purchase of the flat and that his relinquishment of rights was a crucial part of the settlement. He contended that property transfers ordinarily attract stamp duty and that the wife should bear this obligation upon receiving full ownership. The husband further submitted that exempting her from the duty would set an unfair precedent, allowing parties in matrimonial settlements to circumvent statutory obligations. On the other hand, the respondent-wife, represented by Advocate Himanshu Shekhar, countered that the flat’s transfer was not a typical sale or conveyance but a consequence of a court-mediated compromise in matrimonial proceedings. She relied on Mukesh v. State of MP, asserting that when a property forms part of a court-approved settlement, its transfer is exempt from stamp duty under Section 17(2)(vi) of the Registration Act. The wife also emphasized that she had agreed to forgo alimony as a consideration for the transfer, making it a part of the overall equitable resolution of the dispute.

Court’s Judgment:

The Supreme Court analyzed the legal provisions and precedents to determine whether the transfer of the flat, under the terms of the compromise, warranted stamp duty. The bench observed that Section 17(2)(vi) of the Registration Act exempts certain documents from mandatory registration, particularly when they are part of court proceedings. The Court noted that since the property’s ownership was disputed during the mediation and its resolution was incorporated into a formal settlement, the exemption applied. Citing its decision in Mukesh v. State of MP, the Court reinforced that transfers forming part of judicial proceedings do not attract stamp duty. The Court also dismissed concerns about setting an unfair precedent, clarifying that exemptions under Section 17(2)(vi) apply strictly to cases where property transfers arise directly from court-mediated settlements. As a result, the Court ruled in favor of the wife and directed the Sub-Registrar to register the flat in her name without requiring stamp duty payment. Additionally, invoking its plenary powers under Article 142 of the Constitution, the Court formally dissolved the marriage by mutual consent, thereby concluding the litigation between the parties.