The Allahabad High Court, in a reference, held that an agreement to sell qualifies as an “instrument securing property” under Section 7(iv-A) of the Court Fees Act, mandating payment of ad valorem court fees in suits for its cancellation.
The original case in the matter was filed under Article 227 of the Constitution of India, wherein a Single Judge Bench had referred two questions for determination by a larger bench:
- Whether a duly registered agreement to sell would amount to an “instrument securing the money or other property” as used in Section 7(iv-A) of the Court Fees Act as applicable in the State of Uttar Pradesh?
- Whether the court fees paid on a suit for cancellation of an agreement to sell would be governed by Section 7(iv-A) of the Court Fees Act or under Article 17(iii) of the Second Schedule of the Court Fees Act?
The Bench comprising Chief Justice Arun Bhansali and Justice Jaspreet Singh elaborately discussed definitions of words “instruments”, “securing”, and “property” in their natural sense as well as under the Transfer of Property Act, the Indian Stamp Act, the Contract Act. In the course of its analysis, the Court also examined the statutory scheme of the Court Fees Act, being a fiscal statute, and judicial precedents including, Altaf Husain vs VIth Additional District Judge, Saharanpur[1], Suman Lata Agrawal vs Uttar Pradesh State Industrial Development Corporation[2], and Smt. Bibbi vs Sugan Chand[3].
The Court observed that an agreement to sell creates binding contractual rights and obligations between parties, securing both property and money by detailing terms of sale, consideration, and remedies in case of breach. While it does not transfer ownership per Section 54 of the Transfer of Property Act, it creates enforceable rights and a jural relationship. Therefore, such agreements constitute “instruments securing property,” justifying application of Section 7(iv-A) and ad valorem court fees based on market value. The Court emphasized that Article 17(iii), being a residuary provision, applies only where no other specific provision governs court fees, which was not the case here.
The decision overruled the earlier judgements of the Allahabad High Court in Altaf Husain (supra) and Suman Lata Agrawal (supra). The Court parted with directions for the matter to be placed before the Court concerned for deciding the petition on its own merits.
[1] 2013 SCC OnLine All 13493
[2] 2020 SCC OnLine All 2785
[3] AIR 1968 All 216 FB
Appearances:
Petitioner: Diwakar Pratap Pandey, Uday Kumar
Respondent: Anand Kumar Singh, C.S.C.
