Allahabad High Court
M/S Connaught Plaza Restaurant ... vs State Of U.P. And Others on 9 April, 2012
Bench: Pankaj Mithal
HIGH COURT OF JUDICATURE AT ALLAHABAD
Court No. - 10
Case :- WRIT - C No. - 16433 of 2012
Petitioner :- M/S Connaught Plaza Restaurant Pvt. Ltd.
Respondent :- State Of U.P. And Others
Petitioner Counsel :- V.P. Rai
Respondent Counsel :- C.S.C.
Hon'ble Pankaj Mithal,J.
Heard Sri V.P. Rai, learned counsel for the petitioner.
The petitioner has invoked the writ jurisdiction of this Court for challenging the order dated 13.7.2007 passed by Up Zila Adhikari (Vitta and Rajashav) in proceedings under Indian Stamp Act, 1899 and the appellate order thereto dated 31.1.2012 passed by the Chief Controlling Revenue Authority.
Under an instrument dated 12.4.2000 (annexure-1 to the writ petition), the petitioner agreed with M/S Bharat Petroleum Corporation Limited for running a restaurant on petrol pump for a period of 20 years on payment of Rs. 1,25,000/- as consideration plus commission which was liable to be increased every 5 years @ 20%.
The said agreement has been described as a license but the authorities below held it to be a lease deed subject to payment of stamp duty under Article 35 (a) (iv) of Schedule 1-B of the Indian Stamp Act, 1899 (hereinafter 'Act' for short).
In challenging the above orders, the submission of the learned counsel for the petitioner is that the authorities below have erred in law in treating the instrument to be a lease deed.
In the above background, the only question which arises for consideration is whether the above instrument is a lease deed or a license for the purposes of charging stamp duty?
Lease has been defined under Section 105 of the Transfer of Property Act, 1882 and also under Section 2 (16) of the Act.
The definition of 'Lease' contained in Section 2(16) of the Act is reproduced herein below:-
"2...........
(1)..........
..........
(16) "Lease" means a lease of immovable property, and includes also---
(a) a patta;
(b) a Kabuliat or other undertaking in writing not being a counterpart of a lease, to cultivate, occupy, or pay or deliver rent for,immovable property;
(c) any any instrument by which tolls of any description are let;
(d) any writing on an application for a lease intended to signify that the application is granted;
The legal position with regard to a document being lease or not within the meaning of Section 2(16) of the Indian Stamp Act viz-a-viz the provision of Section 105 of the Transfer of Property Act, 1882 was a subject matter of consideration in a recent judgment of the Supreme Court in the case of State of Uttarakhand and Others v. Harpal Singh Rawat; JT 2011(2) SC 481. The Supreme Court, after noticing the definition of 'lease' as contained in Section 2(16) of the Act observed the definition of lease contained in Section 2(16) of the Act is very wide and even if the transaction does not amount to a lease under Section 105 of the Transfer of property Act, 1882 the same may nonetheless be a lease for the purpose of the Act.
In view of the said judgment of the Supreme Court a particular document which may not answer the description of lease strictly in terms of Section 105 of the Transfer of Property Act, 1882 could still be a 'lease' under Section 2(16) of the Act and therefore chargeable with stamp duty under Article 35 Schedule 1-B of the Indian Stamp Act.
'License' has been defined under Section 52 of the Indian Easements Act, 1882 to mean a grant by one person to another or to a definite number of other persons, a right to do, or to continue to do, in or upon immovable property of the granter, something which would in the absence of such right be unlawful and such right does not amount to easement or an interest in the property.
In the case of Associated Hotel Vs. R.N. Kapoor AIR 1959 SC 1262 which still holds the field, the Supreme Court held that the use of particular words like "license" or "lease" will not be conclusive of the nature of the transaction and it laid down the following tests for distinguishing a 'lease' from a 'license';
(a) substance of the document must be preferred to the form;
(b) the real test is the intention of the parties-whether they intended to create a lease or a license;
(c) if the document creates an interest in the property, it is a lease; but, if it only permits another to make use of the property, of which the legal possession continues with the owner, it is a license; and
(d) if under the document a party gets exclusive possession of the property, prima facie, he is considered to be a tenant; but circumstances may be established which negative the intention to create a lease.
In the said case it was also observed:-
".... if a document gives only a right to use the property in a particular way or under certain terms while it remains in possession and control of the owner thereof, it will be a license. The legal possession, therefore, continues to be with the owner of the property, but the licensee is permitted to make use of the premises for a particular purpose. But for the permission, his occupation would be unlawful."
The principles laid down in Associate Hotels India Limited (Supra) were followed and reiterated by the Supreme Court in C.M. Beena and another Vs. P.N. Ramchandra Rao (2004) 3 SCC 595.
In the case of Qudrat Ullah Vs. Municipal Board, Bareilly (1974) 1 SCC 202: AIR 1974 SC 396 it was observed thus:
"... If an interest in immovable property, entitling the transferors to enjoyment is created, it is a lease; if permission to use land without right to exclusive possession is alone granted, a license is the legal result."
In the case of Khalil Ahmad Bashir Ahmad Vs. Tufelhussein Samasbhai Sarangpurwala (1988) 1 SCC 155: AIR 1988 SC 184, as Sabyasachi Mukherji, J..as he then was, observed thus:
"To put it precisely.....if permission to use land without exclusive possession was alone granted, a licence was the legal result."
In The law of Landlord and Tenant (4th Edition) Evans and Smith states as under:-
"A lease, whether fixed-term or periodic, confers a right in property, enabling the tenant to exclude all third parties, including the landlord, from possession, for the duration of the lease, in return for which a rent or periodical payment is reserved out of the land. A contractual licence confers no more than a permission on the occupier to do some act on the owner's land which would otherwise constitute a trespass."
It is in the light of the above decisions that I have to examine the instrument in question to ascertain whether it is a 'lease' or a 'license'.
The petitioner has been put in exclusive possession of the property in question for the purposes of running a restaurant, though certain common area remain in joint possession but that would not mean that the petitioner is not in exclusive possession of the demised premises. The common areas are in addition to the demise premises for the beneficial enjoyment of the same.
The owner neither can nor does interfere therein.
In view of the above, the instrument in question not only puts the petitioner in exclusive possession of the premises but also creates an interest of the petitioner in the property. It would thus can not be recognized as a mere license as contemplated by Section 52 of the Easement Act but would conform to a lease within the meaning of Section 2(16) of the Act.
A similar controversy had come before this Court in the case of Vodafone Essar Mobile Services Limited Vs. State of U.P. and another 2011 (8) ADJ 703 wherein His Lordship of this Court after considering the entire gumat of the case law on the subject held that the right to occupy immovable property on payment of consideration by an instrument in writing would satisfy the requirements of lease under Section 2(16) of the Act.
One of the elements of a lease under Section 2 (16) is an undertaking in writing to occupy or deliver rent for immovable property. A right to occupy immovable property on payment of consideration in writing will be within four corners of the definition of lease. The instrument in question confers such a right. Therefore, also it is clearly a 'lease' under Section 2(16) of the Act chargeable to stamp duty under Article 35 of Schedule 1-B of the Act.
The writ petition accordingly has no merit and is liable to be dismissed.
Learned Standing counsel in the end submitted that the aforesaid decision Vodafone Essar Mobile Services Limited (Supra) is not correctly decided. The submission can not be accepted for the reason that the same has attained finality and is binding unless distinguished and I do not find any distinguishable feature.
In the end learned counsel for the petitioner prays that the petitioner may be allowed reasonable time to make good the deficiency in stamp duty.
Accordingly, he is allowed two months time for the purpose.
Let deficiency be made good within two months.
The writ petition is dismissed with the above observations/ directions but without costs.
9.4.2012
SKS
