Telangana High Court
M/S Sri Harsha Constructions vs The State Of Telangana on 21 December, 2023
THE HONOURABLE SRI JUSTICE J.SREENIVAS RAO
WRIT PETITION No.26611 of 2023
O R D E R:
This Writ Petition is filed seeking following relief:
"...to pass an order or orders or direction more particularly one in the nature of a writ of Mandamus declaring Notice No. 5961/E/IMP/2023 dt.19.09.2023 issued by the 2nd Respondent levying stamp duty of Rs.1,09,50,327/- contrary to the directions of the Hon'ble High Court for the State of Telangana in WP 23056 of 2023 dt.08.09.2023 whereby it was directed to collect stamp duty in terms of award passed by District Legal Services Authority, Medchal-Malkajgiri District in PLC No.26 of 2023 dt.22.07.2023 i.e. to collect necessary stamp duty and registration charges on settlement amount of Rs.1,80,00,000/- in terms of Lok Adalat award dt.24.07.2023 passed by the I Additional District and Sessions Judge, Medchal-Malkajgiri District as wholly illegal, arbitrary, unjust and contrary to the provisions of Indian Stamp Act, 1899 and consequently to set aside Notice No.5961/E/IMP/2023 dt.19.09.2023 issued by the 2nd Respondent levying stamp duty of Rs.1,09,50,327/- and further direct the 2nd Respondent to collect necessary stamp duty and registration charges on settlement amount of Rs.1,80,00,000/- in terms of Lok Adalat award dt.24.07.2023 passed by I Additional District and Sessions Judge, Medchal-Malkajgiri District."
2. Heard Sri Challa Gunaranjan, learned counsel for the petitioners, and learned Government Pleader for Revenue (Stamps and Registration) for the respondents.
3. Learned counsel for the petitioners submits that Mr.M.A.Raju, Mr.K.Uma Maheswara Reddy and petitioner No.2 have entered into partnership vide Deed dated 24.06.2010 under the name of petitioner No.1 firm and after several changes to the constitution of the firm, petitioner Nos.2 and 3 and Mr.M.A.Raju became the continuing JSR, J W.P.No.26611 of 2023 2 partners of petitioner No.1 firm through partnership deed dated 18.07.2003. Petitioner No.1 firm, purchased different properties including the property i.e., to an extent of Ac.12.00 gts. through registered sale deed vide document No.5969 of 2005 dated 29.08.2005, Ac.24.30 gts. and Ac.3.35 gts. through registered sale deed vide document Nos.6096 of 2005 and 13696 of 2006 dated 01.09.2005 and 27.06.2006 respectively, in the name of the above three partners with the amounts of petitioner No.1 firm. Subsequently, the agricultural land to an extent of Ac.40.25 gts. was converted into non-agriculture land admeasuring 1,96,625 sq. yards through proceedings dated 18.09.2006 issued by the HUDA.
3.1. He further submits that petitioner No.1 partnership firm also purchased the lands to an extent of Ac.3.00 gts. in Sy.Nos.739 and 740 through registered sale deed vide document No.22393 of 2006 dated 18.12.2006 and an extent of Ac.4.00 gts. in Sy.Nos.739 and 740 through registered sale deed vide document No.3479 of 2007 dated 15.03.2007. He submits that petitioner No.1 firm, incurred heavy loss, as such, it could not repay the amounts and proceedings before the Debt Recovery Tribunal (DRT) were initiated by the authorized officer of DHFLC, who took the possession of the schedule property mentioned therein. Subsequently, the parties have entered into compromise on 04.04.2013 for repayment of loans by the petitioners and compromise was recorded on 05.04.2013 and the Securitization Application before JSR, J W.P.No.26611 of 2023 3 the DRT was closed. Thereafter, petitioner Nos.2 and 3 have deposited the title deeds of their personal assets in addition to the properties of petitioner No.1 firm for securing the outstanding loan amount. 3.2. He further submits that Mr.M.A.Raju, voluntarily retired from the partnership firm, and in that regard a Deed of Retirement-cum- Reconstitution was executed. By virtue of the same, petitioner Nos.2 and 3 have became the continuing the partners w.e.f. 28.04.2013. They have agreed to pay an amount Rs.1,80,00,000/- towards repayment of amount due by the firm to Mr.M.A.Raju as on the date of retirement accordingly paid the same through cheque dated 27.06.2023 for an amount of Rs.1,00,00,000/- and three post dated cheques for Rs.80,00,000/- and the same was mentioned in the Deed of Retirement-cum-Reconstitution and subsequent to payment of the entire loan amount by petitioner Nos.2 and 3, petitioner No.1 partnership firm became a profit making concern. Petitioner Nos.2 and 3 have requested Mr.M.A.Raju to execute declarations duly indicating the factum of his retirement and also receipt of the said amounts. However, some disputes were arose between the parties. At that stage, petitioners filed P.L.C.No.26 of 2023 before the District Legal Services Authority, Medchal-Malgajgiri District (herein after called 'DLSA') against Mr. M.A. Raju. During pendency of the said case, the parties entered into compromise and filed memorandum of compromise and the same was referred to DLSA and the Lok Adalat was pleased to pass JSR, J W.P.No.26611 of 2023 4 Award on 22.07.2023 and the same was forwarded to respondent No.2 for collection of necessary stamp duty and registration charges in terms of Section 27 of the Indian Stamp Act, 1899 (for short, 'the Act'). 3.3. He further submits that respondent No.2 without properly verifying the documents passed order vide No.5961/E/IMP/2023 dated 03.08.2023, applying Article 41B(a) of Schedule I-A of the Act directing the petitioners to pay the stamp duty of an amount of Rs.1,09,50,327/- Questioning the said order, petitioners filed W.P.No.23056 of 2023 and the same was allowed and set aside the said order and directed respondent No.2 to collect stamp duty in terms of the Award dated 22.07.2023 under the provisions of the Act, however, without application of Article 41 B(a) of the Schedule I-A of the Act. 3.4. He vehemently contended that respondent No.2 without properly considering the orders passed by this Court in W.P.No.23056 of 2023 dated 08.09.2023 passed the impugned order dated 19.09.2023 directing the petitioners to pay the very same stamp duty of an amount of Rs.1,09,50,327/- under Article 46 of Schedule I-A of the Act and the same is contrary to the provisions of the Act, as well as the orders passed by this Court in W.P.No.23056 of 2023.
3.5. Learned counsel further contended that this Court while allowing W.P.No.23056 of 2023 on 08.09.2023, observed that the property belongs to petitioner No.1 firm only, and the partners of the said firm JSR, J W.P.No.26611 of 2023 5 have not brought any immovable property to the firm either at the time of joining in the firm or at any point of time thereafter. Thus, when they have not contributed the share, provisions of Article 46 of Schedule I-A of the Stamp Act, are not applicable. He further contended that petitioner Nos.2 and 3 have not contributed any share and petitioner No.1 firm only invested the amount and purchased the properties in the names of petitioner Nos.2 and 3. In those circumstances, Article 46 of Schedule I-B of the Act is alone applicable, but not Article 46 of Schedule I-A of the Act. In support of his contention, he relied upon the judgment of this Court in the Collector under Section 47A of Indian Stamp Act, 1899 and District Registrar (R&S) Department, Hyderabad and another v. M/s.Asrani Inns & Resorts (P) Limited, rep. by its Director Sachin J.Joshi, Secunderabad 1. Hence, the impugned order passed by respondent No.2 is contrary to the provisions of the Act as well as law.
4. Per contra, learned Government Pleader submits that pursuant to the orders dated 08.09.2023 of this Court in W.P.No.23056 of 2023, respondent No.2, after due verification of the instrument and also provisions of the Act, rightly issued the impugned show cause notice stating that the Award/instrument falls under the category of "release" as defined under the provisions of Article 46 of Schedule I-A of the Act and there is no illegality or irregularity in the said order. He further 1 (2013) 1 ALD 304 JSR, J W.P.No.26611 of 2023 6 submits that the petitioners without submitting objections/reply to the impugned show cause notice, straight away approached this Court and filed the present writ petition and the same is not maintainable under law.
5. Having considered the rival submissions made by the respective parties and a perusal of the material available on record, it reveals that the petitioners have filed P.L.C.No.26 of 2023 against Mr.M.A.Raju before DLSA and in the said case, both parties have filed compromise petition on 01.07.2023 and basing upon the same, the Lok Adalat Bench passed Award on 22.07.2023, and the said Award was forwarded to respondent No.2 for collection of stamp duty under the provisions of the Act. Respondent No.2 passed order on 03.08.2023 holding that recitals of Award, comes within the ambit of Article 41B(a) of Schedule I-A of the Act and directed the petitioners to pay an amount of Rs.1,09,50,327/- towards deficit stamp duty and penalty. Questioning the same, petitioners filed W.P.No.23056 of 2023 before this Court and the same was allowed on 08.09.2023 and set aside the order and directed respondent No.2 to collect stamp duty in terms of the Award dated 22.07.2023 under the provisions of the Stamp Act, without application of Article 41B(a) of Schedule I-A of the Stamp Act. Thereafter, respondent No.2 issued impugned proceedings dated 19.09.1923 invoking the provisions of Section 40 of the Act under the name and style "show-cause notice" stating that the Award/Instrument JSR, J W.P.No.26611 of 2023 7 dated 22.07.2023, falls under the category of "release" as defined under Article 46 of Schedule I-A of the Act and directed the petitioner to submit objections as to why the stamp duty of an amount of Rs.1,09,50,327/- should not be collected.
6. The core contention of the petitioners is that respondent No.2 without verifying the documents and all the terms of memorandum of compromise he simply relied upon the clause (c) of terms of compromise, issued the impugned notice/order holding that the instrument/Award falls under the category of "release", especially petitioner Nos.2 and 3 and Mr.M.A.Raju have specifically mentioned in the memorandum of compromise, that they have not invested any amount, while purchasing the properties and petitioner No.1 firm only invested the amounts and purchased the properties in their names and the same was reflected in the books of firm and also clause (b) of the terms of compromise, and petitioner Nos.2 and 3 have agreed to pay an amount of Rs.1,80,00,000/- towards the repayment of the amounts due by petitioner No.1 firm to the Mr.M.A.Raju and the said amounts were paid by petitioner Nos.2 and 3 to Mr.M.A.Raju and he retired from petitioner No.1 firm accordingly retirement cum reconstitution deed was also entered and the petitioners are liable to pay stamp duty on the above said amount of Rs.1,80,00,000/- only but on the market value of the properties and the said instrument/Award comes within the purview of Article 46 of Schedule I-B of the Act.
JSR, J W.P.No.26611 of 2023 8
7. That the impugned proceedings of respondent No.2 shows that he issued the same while exercising the powers conferred under Section 40 of the Act mentioning as a show-cause notice directing the petitioners to submit objections as to why the stamp duty of Rs.1,09,50,327/- should to be collected. Though respondent No.2 has termed it as show-cause notice, he has already taken a decision determining the nature of the document i.e., instrument/Award, comes within the purview of "release" and Article 46 of Schedule I-A of the Act is applicable, even without giving any notice and opportunity to the petitioners and calculated the stamp duty and penalty and the same is clear violation of principles of natural justice.
8. It is very much relevant to place on record that whether the nature of instrument/Award falls under purview of "release" or release of Benami rights and whether the provisions of Article 46 Schedule I-A or Article 46 Schedule I-B of the Act applicable has to be adjudicated and to be decided by respondent No.2 after due verification of the records especially after giving opportunity to the parties. In the case on hand, respondent No.2 without giving any opportunity to the petitioners straight away passed the impugned order dated 19.09.2023 holding that the instrument/Award falls under Article 46 of the Schedule I-A of the Act; and the same is contrary to law.
9. In view of the foregoing reasons, the impugned order passed by respondent No.2 is treated as a show-cause notice and the petitioners JSR, J W.P.No.26611 of 2023 9 are granted liberty to submit explanation/objections, by raising all the grounds which are available in law along with documents, within a period of one (1) week from the date of receipt of a copy of this order. On receipt of such explanation/objections, respondent No.2, is directed to pass appropriate orders in accordance with law after giving opportunity to the petitioners including personal hearing uninfluenced by any of the observations made in the impugned order/show cause notice, within a period of two (2) weeks.
10. With the above directions, the writ petition is disposed of, accordingly. No order as to costs.
In view of disposal of main writ petition, interlocutory applications pending, if any, in this writ petition shall stand closed.
______________________ J.SREENIVAS RAO, J Date:21.12.2023 Note:
Issue C.C. in three days.
(b/o) mar