Bombay HC Orders Refund Of Stamp Duty On Failed Transactions, Raps State For Unjust Enrichment
Court Rules That Affidavits Can Substitute Cancellation Deed; Orders ₹60 Lakh Refund With 4% Interest
In a significant ruling with wide implications for property transactions, the Bombay High Court has directed the Revenue Authority to refund stamp duty worth nearly ₹60 lakh to a petitioner company, holding that the State cannot unjustly enrich itself at the cost of its citizens.
The case revolved around two property transfer deals that never materialised, yet attracted hefty stamp duty payments. Justice Milind N. Jadhav, in his order dated September 5, 2025, held that affidavits and indemnity bonds filed by the purchaser were valid substitutes for a formal cancellation deed, which the transferors had refused to execute.
The Background
The petitioner company had proposed to buy:
- A 2,000 sq.ft. flat in Ashok Nagar Co-operative Housing Society Ltd., Mumbai for ₹3.5 crore, and
- A plot in the same society for ₹8.5 crore.
Both deeds of transfer were executed but remained undated and unregistered. The purchaser duly paid stamp duty of ₹17.5 lakh and ₹42.5 lakh on October 14, 2010. However, due to disputes between parties, the transfers collapsed.
No consideration money was paid, nor was possession handed over. The company then applied for a refund of the stamp duty and submitted affidavits from its directors along with an indemnity bond.
The Collector rejected the refund applications, insisting on a Deed of Cancellation. Appeals before the Revenue Authority were also dismissed, citing a bar under Section 52A(3) of the Maharashtra Stamp Act, 1958.
The Court’s Observations
The High Court came down strongly on the Revenue Authority, stating that it had taken a “hyper-technical view” that defeated the very purpose of Section 47(c)(5) of the Stamp Act, which was enacted to prevent the State from unjust enrichment in failed transactions.
The Court ruled that:
- Affidavits of directors and indemnity bonds are sufficient substitutes when the transferor refuses to execute a cancellation deed.
- Insisting on an appeal before the same authority that passed the rejection order violates the principle of “Nemo judex in causa sua” (no one should be a judge in their own cause).
- The petitioner, having paid the duty in good faith, could not be penalised for a deal that collapsed.
The Verdic
The Court directed the Revenue Authority to refund ₹17.5 lakh and ₹42.5 lakh with simple interest at 4% from the date of application, to be paid within four weeks.
Justice Jadhav concluded:
“The State cannot unjustly enrich itself at the cost of its citizens. Once a transaction fails at inception, the stamp duty collected must be refunded.
