New Delhi : The Supreme Court has held that stamp duty under the Andhra Pradesh Stamp Act is not payable on an agreement to sell where the purchaser was already in possession of the property as a tenant and continued in such possession without any express or implied surrender of tenancy. The Court ruled that such an agreement cannot be treated as a “deemed conveyance”.
A Bench of Justice B.V. Nagarathna and Justice R. Mahadevan delivered the judgment on January 15, 2026, in Vayyaeti Srinivasarao v. Gaineedi Jagajyothi, setting aside the orders of the Trial Court and the Andhra Pradesh High Court that had directed payment of stamp duty and penalty on the agreement to sell.
The appellant had been a tenant of the respondent for over five decades. On October 14, 2009, the parties entered into an agreement to sell the property for ₹9 lakh, of which ₹6.5 lakh was paid as advance. When the appellant later filed a suit for specific performance and sought to mark the agreement to sell as evidence, the respondent objected, contending that the document was insufficiently stamped and ought to be treated as a conveyance under Explanation I to Article 47A of the Andhra Pradesh Stamp Act.
The Trial Court accepted the objection and directed payment of stamp duty and penalty. This view was upheld by the High Court, which relied on B. Ratnamala v. G. Rudramma, holding that delivery of possession may even precede the agreement if it is intimately connected to it.
Allowing the appeal, the Supreme Court closely examined the concepts of express and implied surrender of tenancy under Section 111 of the Transfer of Property Act, 1882. The Court explained that express surrender requires a clear mutual agreement by which the tenant yields his interest to the landlord, while implied surrender arises by operation of law through creation of a new relationship or relinquishment of possession.
Justice Nagarathna emphasised that a mere agreement to sell does not create any interest in immovable property. Relying on Suraj Lamp and Industries Private Limited v. State of Haryana, the Bench reiterated that only a conveyance transferring title requires registration and attracts stamp duty as a sale.
The Court interpreted Explanation I to Article 47A of the Andhra Pradesh Stamp Act, clarifying that an agreement to sell can be treated as a sale only if it is followed by, or evidences, delivery of possession that is referable to the agreement itself. In the present case, the appellant’s possession was not pursuant to the agreement to sell but flowed from a long-standing tenancy, a fact expressly recorded in the agreement.
A crucial factor noted by the Bench was that even after the agreement to sell, the tenancy continued. An eviction order was passed against the appellant as a tenant on January 3, 2017, under the Andhra Pradesh Buildings (Lease, Rent and Eviction) Control Act, 1960. This, the Court said, conclusively established that there was no express or implied surrender of tenancy.
The Court distinguished its recent decision in Ramesh Mishrimal Jain v. Avinash Vishwanath Patne, noting that the Bombay Stamp Act considered there uses materially different language and that Section 53A of the Transfer of Property Act relating to part performance had been applied in that case. In contrast, Section 53A had no application here since possession was never handed over under the agreement to sell.
Holding that there was no deemed conveyance within the meaning of Explanation I to Article 47A, the Supreme Court set aside the orders directing payment of stamp duty and penalty. It directed the Trial Court to mark the agreement to sell dated October 14, 2009, as an exhibit and to dispose of the suit for specific performance expeditiously, preferably within six months.
Case Title: Vayyaeti Srinivasarao v. Gaineedi Jagajyothi
