Rejection of application for refund of stamp duty would violate equity & justice, where applicant is made to suffer brunt of judicial delay: SC

Read Judgment: Mr Rajeev Nohwar & Anr vs. Chief Controlling Revenue Authority Maharashtra State, Pune and Others

Pankaj Bajpai

New Delhi, October 14, 2021: The Supreme Court has recently held that a reference of a wrong statutory provision cannot oust the citizen of an entitlement to refund which otherwise follows in terms of a statutory provision.

A Division Bench of Justice D.Y. Chandrachud and Justice B.V. Nagarathna therefore observed that since the delay in filling the application for refund in the instant case was due to the prolonged proceedings before the NCDRC, the application cannot be rejected on the ground of delay. 

A litigant has no control over judicial delays. A rejection of the application for refund would violate equity, justice and fairness where the applicant is made to suffer the brunt of judicial delay. Therefore, this is a fit case for the exercise of the power under Article 142 of the Constitution, added the Bench.  

The background of the case was that the appellant had booked a residential apartment, however there soon arose a dispute with the builder leading to a consumer complaint. By an order dated May 6, 2016, the NCDRC allowed the complaint. 

The appellant was given the option to either execute the agreement with the developer, in which event the developer would pay compensation in the amount of Rs. 10 lakhs, or in the alternative, if the appellant was not willing to execute an agreement, the developer was directed to refund the entire consideration together with interest at the rate of 12% per annum from the date of receipt of each installment until the date of refund along with compensation of Rs.10,00,000. 

The appellant exercised the option of seeking a refund of consideration together with interest. The developer issued a cheque on July 11, 2016 for the refund of the consideration in terms of the order of the NCDRC. The appellant thereupon applied on July 16, 2016 for refund of the stamp duty of Rs. 8,44,500 to the Collector of Stamps. 

By a communication dated August 5, 2016, the Collector of Stamps forwarded the file to the Deputy Inspector General of Registration with a recommendation that the refund should be denied on the ground that the appellant had not applied for refund within six months. 

Then, by an Order dated September 27, 2016, the Deputy Inspector General of Registration rejected the application for refund of stamp duty on the ground that the application for refund was not made within six months as mandated by Section 48(3) of the Maharashtra Stamp Act, 1958.

This was challenged before the Bombay High Court, which agreed with the view of the Revenue Authorities that application for refund was barred by limitation for not having preferred within a period of six months since the date of the purchase of the e-stamp.

After considering the arguments, the Top Court found that in the present case, the stamp paper was purchased bona fide in view of the agreement to sell which was to be executed by the appellant with the developer. 

Since there was a dispute with the developer, the same led to the institution of the proceedings before the NCDRC and there was nothing untoward in the conduct of the appellant and certainly no unreasonable delay on the part of the appellant in awaiting the outcome of the proceedings, added the Court. 

“The NCDRC allowed the complaint, giving the option to the appellant of either going ahead with the agreement along with an award of compensation or, in the alternative, to seek a refund with interest. The appellant having exercised the latter option applied within two months from the order of the NCDRC for the grant of refund”, observed the Division Bench.

Therefore, the Top Court concluded that the conduct of the appellant cannot be held to be unreasonable nor was there any intentional or wanton delay on the part of the appellant in applying for a refund of stamp duty. 

Speaking for the Bench, Justice Chandrachud observed that if a statute prescribes a limitation period, this Court must be slow to interfere with the delay under Article 142. 

However, in the case of an eventuality such as the instant case where the facts of the case are not covered by the statute, this Court under Article 142 will have the power to do complete justice by condoning the delay, clarified Justice Chandrachud.