Supreme Court Exempts Wife from Paying Stamp Duty for Flat Acquired Through Divorce Settlement

In a recent judgment, the Supreme Court of India addressed a significant issue concerning the applicability of stamp duty on property transfers resulting from compromise agreements in matrimonial disputes. The case involved a husband and wife who, during mediation proceedings related to their divorce, reached a settlement regarding a flat in Mumbai. Both parties had contributed to the purchase of this property and claimed ownership. As part of the settlement, the husband agreed to relinquish his rights to the flat in favor of the wife, who, in return, waived any claims to alimony.

The central question before the Court was whether the wife was required to pay stamp duty to have the flat exclusively registered in her name, given that the transfer resulted from a court-mediated compromise. The Court examined the provisions of the Registration Act, 1908, particularly Section 17(2)(vi), which exempts certain documents from compulsory registration. This section specifies that any decree or order of a court, insofar as it pertains to immovable property that is the subject matter of the suit or proceeding, does not require registration.

Drawing parallels to the case of Mukesh v. The State of Madhya Pradesh & Anr. (2024), the Court noted that when a compromise decree acknowledges pre-existing rights over a property and does not create new rights, such a decree is exempt from both registration and stamp duty. In the Mukesh case, the Court had held that a compromise decree that merely affirms pre-existing rights over immovable property does not require registration under Section 17(2)(vi) of the Registration Act, 1908, and is not chargeable with stamp duty under the Indian Stamp Act, 1899, as it does not create new rights but confirms pre-existing ones.

Applying this rationale, the Supreme Court observed that the flat in question was integral to the compromise between the husband and wife and formed part of the proceedings before the Court. Therefore, the transfer of the husband's rights over the flat to the wife, as per the compromise agreement, did not necessitate the payment of stamp duty. The Court concluded that the registration of the flat exclusively in the wife's name would be exempt from stamp duty under the aforementioned legal provisions.

Consequently, the Court directed the concerned Sub-Registrar to register the flat exclusively in the wife's name without requiring the payment of stamp duty. Additionally, the Court dissolved the marriage by mutual consent, as per the terms agreed upon during the mediation.

This judgment underscores the legal principle that property transfers effectuated through court-approved compromise agreements, which acknowledge pre-existing rights and do not create new ones, are exempt from both registration and stamp duty. It highlights the judiciary's recognition of mediated settlements in matrimonial disputes and provides clarity on the financial implications of such property transfers, offering relief to parties by reducing the procedural and financial burdens associated with formal property registration.