Chhattisgarh HC: State Must Refund Stamp Duty on Mining Leases Rendered Void by Judicial Orders

In a decisive victory for government undertakings, the Chhattisgarh High Court has ruled that stamp duty and cess paid on instruments subsequently found to be void ab initio due to judicial declarations must be refunded, preventing the State from retaining benefits through unjust enrichment.

Justice Sanjay K. Agrawal, sitting as a single bench, held that where the very foundation of a mining lease is struck down by the Supreme Court, the instruments executed pursuant to such allocations are rendered 'spoiled' under the Indian Stamp Act, 1899, entitling the party to a full restoration of the duty paid.

Mining Lease Voided by Supreme Court Declaration

The High Court examined the aftermath of the landmark rulings in Manohar Lal Sharma v. Principal Secretary and others ( "(2014) 9 SCC 516": 2014 CaseBase(SC) 488) and Manohar Lal Sharma v. Principal Secretary and others, where the Supreme Court de-allocated numerous coal blocks across the country. The petitioner, a Rajasthan government undertaking, had paid over ₹23 crores in stamp duty and cess for a mining lease that was eventually nullified by these judicial orders. The Court noted that even though the Supreme Court allowed a six-month grace period for transition, the cancellation operated on the legality of the original allocation itself.

The Court, in its reasoning, observed: "Therefore, it cannot be held that coal block/mining lease was not cancelled in law from the beginning, though it was given effect from 31-3-2015. The period of operation of mining lease has no relevance for refund of stamp duty... As such, by virtue of Section 41(d) of the Act of 1899, the petitioner is entitled for refund of stamp duty along with cess on stamp duty."

Restitution under the Contract Act and the Doctrine of Unjust Enrichment

Beyond the specific provisions of the Indian Stamp Act, 1899, the Court invoked Section 65 of the Indian Contract Act, 1872 to ensure equity. Drawing from Loop Telecom and Trading Limited v. Union of India and another ( "(2022) 6 SCC 762": 2022 CaseBase(SC) 102) and Kuju Collieries Ltd. v. Jharkhand Mines Ltd. and others, the Bench emphasized that the State cannot retain advantages gained from a contract discovered to be void, especially when the party seeking restitution is not in pari delicto.

While the State argued that the petitioner should have sought compensation under the Coal Mines (Special Provisions) Act, 2015 before a nominated authority, the Court rejected this, clarifying that the specialized compensation provisions of the 2015 Act did not oust the statutory right to refund for spoiled stamps.

The Court has following directions:

"The order impugned dated 25-11-2019 (Annexure P-46) passed by the Collector of Stamps to the extent of refusing stamp duty and cess on stamp duty is hereby set aside and the petitioner is entitled for an amount of ₹ 23,23,44,000/- without interest, however, refusing registration fee is hereby upheld. Accordingly, a writ of mandamus be issued in favour of the petitioner and against respondents No.1 to 6 to make payment of the said amount within a period of four weeks from today."

Key Takeaways:

Judicial Nullification Triggers Refund

Instruments rendered void by retroactive judicial declarations qualify as 'spoiled' under stamp law, regardless of whether the court provided a future date for the cessation of operations.

Doctrine of Restitution Overrides Technicalities

Section 65 of the Indian Contract Act, 1872 remains a potent tool against the State’s unjust enrichment, ensuring that benefits received under void agreements are restored to the blameless party.

Limitations on Statutory Interest

In the absence of express provisions in the Indian Stamp Act, 1899, and following the principle in Committee-GFIL v. Libra Buildtech Private Limited and others, interest on refunded stamp duty may not be granted if the cancellation resulted from an act of the Court.

Ratio Decidendi:

When a contract or instrument is discovered to be void due to a judicial declaration, the party who paid stamp duty is entitled to an allowance for spoiled stamps under Section 49(d)(1) of the Indian Stamp Act, 1899. The principle of restitution under Section 65 of the Indian Contract Act, 1872 obligates the State to refund such amounts to prevent unjust enrichment, provided the party is not responsible for the illegality that led to the voidness.

Background:

The dispute arose after the Collector of Stamps rejected the petitioner's application for a refund of ₹34.88 crores paid towards a mining lease for the PEKB Coal Blocks. The lease was originally executed in 2012 but was effectively nullified by the Supreme Court’s 2014 decisions on coal block allocations. The State had contended that since the petitioner operated the mine for a few years and later entered into a fresh lease under the Coal Mines (Special Provisions) Act, 2015, the stamps were 'used' and not 'spoiled'. The High Court disagreed, noting that the legality of the first lease was entirely contingent on the de-allocated block, making it void from inception. While the Court allowed the refund of stamp duty and cess, it refused the refund of registration fees, citing a lack of statutory provision in the Registration Act for such relief.

Case Details:
Case No.: WPC No. 2530 of 2020
NeutralCitation: 2026:CGHC:29357
Case Title: Rajasthan Rajya Vidyut Utpadan Nigam Limited versus State of Chhattisgarh and others
Appearances:
For the Petitioner(s): Mr. Abhishek Sinha, Senior Advocate with Mr. Anshuman Shrivastava, Mr. Abhijeet Shrivastava, Ms. Krati Dubey, Ms. Selina Raj Mevati, Ms. Ananya Sahu, Ms. Amisha Sinha, Ms. Jasleen Kaur Gulati, Advocates.
For the Respondent(s): Mr. Rahul Tamaskar, Government Advocate; Mr. Ramakant Mishra, Deputy Solicitor General of India and Mr. Rishabh Dev Singh, Advocate.

Source: 2026 CaseBase(CTH) 17