Bombay High Court
M/S. Jasubhai Business Services vs Raigad on 14 December, 2011
Bench: G. S. Godbole
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srj
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELLATE JURISDICTION
WRIT PETITION NO.6623 OF 2007
M/s. Jasubhai Business Services ]
Pvt. Ltd. (Formerly Excel Realtors Limited) ]
a private limited company incorporated ]
under the Companies Act, 1956 having its ]
registered office at 26, Maker Chambers VI, ]
2nd floor, Nariman Point, Mumbai 400 021. ] .. Petitioner
V/s.
1 State of Maharashtra ]
Mantralaya, Mumbai.
2 The Chief Controlling Revenue
]
]
Authority, Maharashtra State, Pune. ]
3 The Collector of Stamps ]
Raigad, Alibaug. ]
4 City and Industrial Development ]
Corporation of Maharashtra Limited ]
(CIDCO), a company incorporated ]
under the provisions of Companies ]
Act, 1956 and having its registered ]
nd
office at Nirmal, 2 Floor, Nariman ]
Point, Mumbai 400 021. ] .. Respondents.
WITH
WRIT PETITION NO.4866 OF 2002
WITH
CIVIL APPLICATION NO.78 OF 2008
AND
CIVIL APPLICATION NO.472 OF 2008
IN
WRIT PETITION NO.4866 OF 2002
1 Balmer Lawrie & Company Limited ]
a public limited company incorporated ]
and registered under the Companies ]
Act, 1913 and having its Registered ]
Office at 21, Netaji Subhash Road, ]
Calcutta-700 001 and having their ]
Corporate Office at 5, J. N. Heredia ]
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Marg, Ballard Estate, Mumbai 400 038. ]
2 Mr. Naveen Prasad Singh ]
Director, Age: 54, Occ: Service, ]
a Shareholder of Petitioner No.1 ]
Company, having his office at No.5, ]
J. N. Heredia Marg, Ballard Estate, ]
Mumbai 400 038. ] .. Petitioners.
V/s.
1 The Chief Controlling Revenue ]
Authority, an Officer of the State of ]
Maharashtra having his office at New ]
Administrative Building, Ground Floor, ]
Opp: Council Hall, Pune - 1. ]
2 The Joint District Registrar & Collector ]
of Stamps, Raigad, Alibag.
ig ]
3 The State of Maharashtra ]
through its Revenue & Forest ]
Department and having its office at ]
Mantralaya, Mumbai 400 032. ] .. Respondents.
WITH
WRIT PETITION NO.7643 OF 2007
M/s. Jasubhai Business Services ]
Pvt. Ltd. (Formerly Excel Realtors Limited) ]
a private limited company incorporated ]
under the Companies Act, 1956 having its ]
registered office at 26, Maker Chambers VI, ]
2nd floor, Nariman Point, Mumbai 400 021. ] .. Petitioner
V/s.
1 State of Maharashtra ]
Mantralaya, Mumbai. ]
2 The Chief Controlling Revenue ]
Authority, Maharashtra State, Pune. ]
3 The Collector of Stamps ]
Raigad, Alibaug. ]
4 City and Industrial Development ]
Corporation of Maharashtra Limited ]
(CIDCO), a company incorporated ]
under the provisions of Companies ]
Act, 1956 and having its registered ]
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office at Nirmal, 2nd Floor, Nariman ]
Point, Mumbai 400 021. ] .. Respondents.
Mr. Chirag Balsara with Mr. Ranjit Shetty, Mr. Luckyraj Indorkar, Mr.
Shailesh Poria and Mr. Amit Iyer i/b. M/s. Hariani & Co., for the Petitioner
in Writ Petition Nos.6623 of 2007 and 7643 of 2007.
Dr. Biren Saraf with Mr. Shilpan Gaonkar, Mr. Amol Bavare, Mr. Zoeb
Cutlerywala i/b. M/s. Udeshi Udwadia & Berjis, for Petitioner in Writ
Petition No.4866 of 2002.
Mr. V. G. Sonpal, AGP for Respondent Nos.1 to 3 in all the matters.
Mr. G. S. Hegde i/b. M/s. G. S. Hegde & Associates for Respondent No.4
in Writ Petition Nos.6623 of 2007 and 7643 of 2007.
CORAM : G.S.GODBOLE,J.
DATED : 14th DECEMBER, 2011.
JUDGMENT:-
1 Heard Mr. Chirag Balsara, for the Petitioners in Writ Petition
No.6623 of 2007 and Writ Petition No.7643 of 2007, Dr. Biren Saraf, for
the Petitioner in Writ Petition No.4866 of 2002 and Mr. Vinal Sonpal "A"
Panel, Counsel for the Respondent-State and its Officers, and Mr. Hegde
for CIDCO.
2 Since the facts involved in all these Writ Petitions and the
question of law which is raised in all these Writ Petitions is common and
since all these Writ Petitions have been argued together, they are being
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disposed off together by this common Judgment.
Facts in Writ Petition No.6623 of 2007
3 In this case, City and Industrial Development Corporation
(herein after referred to as "CIDCO") has issued an invitation for tenders
for lease of plots of land for Residential-cum -Commercial uses situated at
Kharghar, Navi Mumbai. The Petitioner submitted its bid and emerged
as the highest bidder having agreed to pay a lease premium of
Rs.4,29,83,500/-. The Agreement To Lease was executed between CIDCO
and M/s. Excel Ltd. (the earlier name of the Petitioner) on 2nd November,
1995 in which the full ad valorem stamp duty payable for a lease was not
paid. Possession of the land was handed over to the Petitioner by
executing the receipt dated 2nd November, 1995. Draft of the Lease Deed
to be executed in future, was annexed to the Agreement. Thereafter, the
Collector of Stamps, Raigad issued a notice for deficit payment of stamp
duty. Ultimately, after adjudication and after hearing the Petitioner, the
order was passed by the Collector on 6th October, 1998 in which it was
held that stamp duty of Rs.30,08,935/- was payable and the deficit stamp
duty was Rs.30,08,915/-. Aggrieved by this order, the Petitioner filed an
appeal before the Inspector General of Registration and Controller of
Stamps being the Chief Controlling Revenue Authority being Appeal
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No.149 of 1998. By the impugned Judgment and Order dated 9th March,
2007, the Appellate Authority dismissed the said Appeal by holding that
the instrument in question was covered by Article No.36 of Schedule I of
the Bombay Stamps Act, 1958. Aggrieved by this Order, this Writ Petition
has been filed.
Facts in Writ Petition No.7643 of 2007
After following a due process for inviting bids for tenders, the
Agreement To Lease Deed dated 2nd November, 1995 was executed after
payment of the agreed lease premium of Rs.7,95,34,090/-. Possession of
the land was handed over by the possession receipt of the same date. The
Collector of Stamps issued a show cause notice and passed an order which
is order dated 16th October, 1009 (it is in fact common order for this
Petition and Writ Petition No.6623 of 2007). The Collector of Stamps held
that the total stamp duty payable was Rs.55,67,505/- and the deficit
stamp duty was Rs.55,67,485/-. Aggrieved by this order, the Petitioner
filed Appeal No.150 of 1998 under Section 53 (1)(A) of the Bombay
Stamps Act, 1958 and by order dated 9th March, 2007, the Chief
Controller Revenue Authority, Maharashtra State, Pune dismissed the said
Appeal by passing the impugned order holding that the Agreement in
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question falls under Article 36 of Schedule-I of the Bombay Stamp Act,
1958.
Facts in Writ Petition No.4866 of 2002
5 This Writ Petition is filed by Balmer Lawrie & Company Ltd.
Even in this case, after inviting the bids, Agreement To Lease was
executed on 7th May, 1997. Premium of Rs.12,98,91,027.50 was paid.
Possession was handed over on 6th May, 1997. The Collector of Stamps
and Joint District Registrar, Raigad passed an order dated 14th May, 1998
and came to a conclusion that there is a deficit payment of stamp duty to
the tune of Rs.90,92,445/-. Aggrieved by this order, an Appeal was filed
before the Chief Controlling Revenue Authority, Maharashtra State, Pune
under Section 53 of the Act and that Appeal is dismissed by Judgment and
Order dated 25th February, 1999. Thereafter, the Writ Petition has been
filed on 5th December, 2000.
6 It is not disputed that prior to these Agreements and as on 1st
September, 1995, Article 3 had 3 explanations. However, by amendment
which came into force on 1st September, 1995, said Explanation III was
deleted. Relevant portion of Article 36 of Schedule-I of the Bombay
Stamp Act, 1958 read thus:-
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36. LEASE, including an under-lease or sub-lease and any Agreement To
Let or sub-let or any renewal of lease-
(a) where by such lease, the rent is fixed and no premium is
paid or delivered-
----------------------------
(i) where the lease purports to be for a term [not more than]
one year;
Explanation III - An Agreement of lease shall not be chargeable as
a lease unless there is an immediate and present demise.
7 Section 2(n) of the Bombay Stamps Act, 1958 defined the
term lease as under:-
"(n) "lease" means a lease of immovable [or movable(or both)]
property, and includes also,-
(i) a Patta;
(ii) a Kabulayat, or other undertaking in writing not
being a counterpart of a lease to cultivate, occupy or pay or
deliver rent for immovable property;
(iii) any instrument by which tolls of any description are
let;
(iv) any writing on an application for a lease intended to
signify that the application is granted;
[(v) a decree or final order of any Civil Court in respect
of a lease:-
Provided that, where subsequently an instrument of lease is
executed in pursuance of such decree or order, the stamp duty,
if any, already paid and recovered on such decree or order shall
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be adjusted towards the total duty leviable on such
instrument;]
8 The statement of objects and reasons dated 4th October, 1995
indicates the reasons as to why these explanation was amended. The
relevant portion of the said Act read thus:-
"2 Some of the important provisions which are
proposed to be made are explained as follows:-
Bombay Stamp Act, 1958.
(ii) to provide for levy of appropriate stamp duty on
instruments relating to lease of land and its timely collection."
9 Mr. Chirag Balsara advanced the following submissions:-
(i) It was submitted that since the Act is a Taxing statute, it must
be strictly interpreted and if there is an ambiguity, then the benefits is to
be given to the assessee. It was submitted that Agreement To Lease and
Agreement of Lease stand on a different footing. It was also submitted
that Agreement To Let and Agreement To Lease also stand on a different
footing. It was submitted that Explanation III was to ensure that an
Agreement To Lease is excluded and merely because the explanation is
deleted, there is no legal consequence. According to him, explanation was
inserted by way of abundant caution and, hence, there is no legal effect of
the amendment. Mr. Chirag Balsara drew my attention to the recital in
the invitation for tenders (Exhibit A) and it was contended that under
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clause 4 it was provided that only after the lease premium has been paid
in full and after all other requirements are satisfied, the Applicants will be
entitled to sign the Agreement To Lease which enables the Applicants to
enter upon the land, submit building plan and commence construction on
the land but Lease Deed was to be executed only after completing the
entire construction and obtaining Occupancy Certificate. Reliance was
placed on clause 5 of this Invitation to Submit Tenders containing that the
benefit could not be transferred. By relying upon various clauses of the
letter of acceptance from CIDCO dated 11th August, 1995, it was
submitted that the rights were not allowed to be transferred and that only
upon payment of entire lease premium, Agreement was to be executed. It
was submitted that only a license has been created.
(ii) Referring to the Agreement dated 2nd November, 1995, it was
submitted that the nomenclature of the Agreement as "Agreement To
Lease" is wrong and in fact, Agreement is an Agreement granting license.
Relying on sub-clauses (c), (d) and (e) of the recital of the Agreement, it
was submitted that what was created was only a license, that there was
no present demise and, therefore, the impugned orders were erroneous.
Relying on clauses 2 and 3(d), 5(a) and 5(b), it was submitted that there
was a time limit of twelve months to commence construction and four
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years to complete the construction. The CIDCO had retained rights of
entering the land which clearly shows that the instrument is actually one
of license. It was submitted that since there was a power to resume land,
only the license had been created. Relying on clauses 7 and 8 of the
Agreement, it was submitted that grant of lease was contemplated only in
future and even the format of the lease had been finalized. Relying on the
possession receipt, it was submitted that the possession was not exclusive
possession. Relying on the form of lease annexed to the Agreement, it
was submitted that only after completion of the entire construction, a
lease will be created and, hence, there was no present demise and all that
was done was to create a license.
(iii) Criticizing the Judgments of the Collector and the Chief
Controlling Revenue Authority, it was submitted that the authorities were
required to read the entire instrument as whole and were thereafter
require to ascertain whether the instrument is an Agreement To Lease. It
was submitted that the Supreme Court had an occasion to consider an
identical Agreement in the case of ICICI v/s. State of Maharashtraa, in
and identical Agreement has been construed to be an Agreement merely
creating a license and not creating a lease or making a present demise. It
was submitted that since the Supreme Court has already held that Article
a 2000(1) BCR page 35
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36 is not attracted to the same Agreement, the authority has no
jurisdiction to take a contrary view. It was further submitted that the
Appellate Authority has wrongly distinguished the Judgment of the
Supreme Court in the case of ICICI v/s. State of Maharashtra as also
earlier Judgment in the case of The State of Maharashtra and Others
v/s. Atur India Pvt. Ltd b. It was submitted that the definition of lease is
inclusive definition and in view of the binding precedents of the Supreme
Court, it could not have been held by the authorities that the instruments
in question are chargeable with ad valorem stamp duty. It was ultimately
submitted that Explanation III of Article 36 had nothing to do with the
Agreement To Lease but referred to the term "Agreement of Lease" and
once the Supreme Court held that the document is either a license or
Agreement To Lease, the Explanation III will have to be considered only as
a clarificatory explanation. It was, therefore, submitted by deleting the
Explanation III of Article 36, the legislature had never interpreted that a
document of a mere Agreement to Lease shall be stamped as lease.
According to Mr. Balsara, the Judgments in the case of State of
Maharashtra v/s. Atur India Ltd. and ICICI Ltd. v/s. State of
Maharashtra, were a complete answer to the impugned orders.
10 Dr. Biren Saraf, learned counsel appearing for the Petitioner
b 1995 (2) BCR page 31 (SC)
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in Writ Petition No.4866 of 2002 has taken me through the letter of
allotment dated 30th January, 1997, Agreement To Lease dated 7th May,
1997, possession receipt of even date, the order of Collector dated 14th
May, 1998 and the Appellate order under Section 53 passed on 25th
February, 1999. Apart from relying on the aforesaid two Judgments, in
the case of ICICI Ltd. v/s. State of Maharashtra and State of
Maharashtra v/s. Atur India Pvt., Ltd., relied upon by Mr. Chirag
Balsara, Dr. Saraf relied upon the Judgment of Privy Council in Hemanta
Kumari Debi v/s. Midnapur Zamindari Co.c and it was contended that
unless there is an actual and present demise, a document of Agreement of
Lease also does not require registration and, consequently, does not
require payment of stamp duty. Dr. Saraf relied upon the Judgment of
Division Bench of this Court in the case of Re Maneklal Manilald and it
was contended that the Privy Council Judgment in the case of Hemanta
Kumari Debi (supra) and the principle laid down therein was also
applicable to the provisions of Indian Stamp Act. He invited my attention
to Article 35 of the Indian Stamp Act which is para-materia Article 36 of
the Bombay Stamp Act, 1958 save and except the explanation. Dr. Saraf
relied upon the Judgment of the learned Single Judge (Coram: D. R.
Dhanuka J.) in the case of Makers Development Services Pvt. Ltd. v/s. V.
c AIR 1919 page 79
d AIR 1928, BCR-553
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P. Deshpande, Superintendent of Stamps & Otherse. It was contended
that unless a document created present demise and an immediate interest
in the land, it cannot be termed as "Agreement of Lease" so as to attract
the ad valorem stamp duty. In respect of deletion of Explanation III, Dr.
Saraf relied upon the Judgment of the Supreme Court in the case of Raja
Bhanu Pratap Singh v/s. The Assistant Custodianf and more particularly
referred to the observations made in paragraphs 6, 7 and 8 of the said
Judgment. It was submitted that merely because the Explanation III is
deleted, that does not have any consequence since Explanation III dealt
with Agreement of Lease and not with Agreement To Lease. He submitted
that an Agreement To Lease is even otherwise not chargeable for stamp
duty. Dr. Saraf also relied upon the Judgment of the Supreme Court in the
case of Madanlal Fakirchand Dudhediya v/s. Shree Changdeo Sugar
Mills Ltd. and Othersg in support of his submission and referred to the
observations made on page 1552 to the effect that provisos are often
inserted "to allay fears" or to remove mis-apprehensions. According to Dr.
Saraf, therefore, the insertion or deletion of Explanation III will have no
legal consequence. It was lastly urged that since an identical Agreement
has been interpreted by the Supreme Court in the case of ICICI Ltd. v/s.
State of Maharashtra(supra), this Court should not and can not take a
e 1994 Mah. L. J. 1356
f AIR 1966, SC-245
g AIR 1962, SC-1543
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contrary view about the interpretation of a similar document and since the
document is already held to be an Agreement merely creating license, the
impugned Judgments and Orders are liable to be quashed and set aside.
11 Mr. Sonpal the learned Advocate appearing for the
Respondent very ably advanced his submissions. He brought to my notice
the definition of lease in Section 2(7) of the Indian Registration Act, 1908,
the definition of lease under Section 105 of the Transfer of Property Act,
1882 and the definition of the lease under Section 2(16) of the Indian
Stamp Act. He also drew my attention to the definition of the word "lease"
in Section 2(n) of the Bombay Stamp Act, 1958 and submitted that all the
definitions were different and, therefore, for considering the controversy
regarding chargeability or otherwise of any instrument which according
to the State Government is chargeable as a lease and according to the
Petitioners not chargeable as a lease, only the definition of lease under
Section 2(n) has to be considered. He submitted that merely because
similar facts might exist in the reported Judgments, the facts cannot be
treated as precedent and Judgment cannot be read as statute. He
submitted that the intention of the parties and nature of the instrument is
to be examined in each and every cases independently from the
instrument. He submitted that the Registration Act has been enacted for
the purpose of ensuring that transfer of property takes place in accordance
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with the sections provided in the Registration Act and, hence, the
definition of lease under the Registration Act can not be relied upon for
the purpose of deciding the present controversy. He submitted that the
Bombay Stamp Act, 1958 was a statute with the basic aim of collecting
the revenue and, hence, the statute is to be considered independently. He
submitted that the object of the Registration Act and Transfer of Property
Act was to ensure that general public had notice of Transfer of Property
and to ensure that relation between lessee and lessor are properly
governed whereas the object of the Bombay Stamp Act is to ensure that
instrument which are chargeable with duty are property charged. He
pointed out that the definition of lease under Section 2(n) of the Bombay
Stamp Act, 1958 was very wide and it includes even movable property.
He submitted that under sub-clause (iv) of Section 2(n), in fact writing of
an application for a lease and an order intended to signify that the
application is granted, will also constitute a lease. He relied upon recital
clauses (c) and (d) of the Agreement in Writ Petition No.7643 of 2007 and
submitted that from the said Agreement itself, it can be seen that the
instrument contained recitals to the effect that their was an application for
grant of lease and sanctioning of that application by the owner CIDCO
and these recitals themselves were sufficient to hold that the document in
question was lease. He submitted that every statute has its own purpose
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and any other statue can not be looked into for interpreting the other
statute. Mr. Sonpal has took me through the commentary of Mulla on
Transfer of Property Act. He pointed out that if all terms and conditions
which are essential for creation of lease are available in a document, that
instrument become a lease even though the actual demise may have been
postponed. He submitted that if possession is either given or agreed to be
given, then there is immediate demise. He pointed out that undoubtedly
the possession of the land had been given to the Petitioners and merely
because CIDCO has reserved only its right to enter the property, that did
not dilute the fact that possession was handed over to the Petitioner. In
support of this submission, he relied upon sub-clauses (b), (c) and (d) of
the recitals in the Agreement. He submitted that there is also a transfer of
right in the said land. Mr. Sonpal submitted that even though the
Agreement was titled as Agreement To Lease, in clause (c) of the recitals,
there was a clear reference of application filed by the Petitioner to the
Corporation and in clause (d), there was a recital that Corporation has
decided to grant a lease of the land in the schedule. Replying to the
arguments of the Petitioner that the Agreement in the case of ICICI v/s.
State of Maharashtra(supra) was identical as the Agreements in
question, Mr. Sonpal submitted that from the Judgment of ICICI, it is not
clearly discernible as to whether all the clauses of the Agreement are same
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or not. He submitted that merely because some clauses might be similar
or identical, the interpretation of the terms of the Agreement in the
present case cannot be covered by or controlled by the interpretation done
by the Supreme Court in the case of ICICI. He submitted that there is an
immediate demise under the Agreement, possession has been handed over
with an intention to create a relationship of lessee and lessor and
permission is also granted to the Petitioners to construct a building on the
land in question. He submitted that the entire agreed lease premium has
been paid in advance and that a determined and fixed amount has to be
paid as a lease rent. He, therefore, submitted that all the ingredients
essential for creation of lease were fulfilled by the said Agreements in
question.
12 In support of his submission, Mr. Sonpal relied upon the
following Judgments:-
(a) Ratan Kumar Tondon & Others v/s. State of Uttar Pradeshh.
This Judgment was relied upon in support of the submission that even in
that case exclusive possession of the land was granted subject to
construction of building within the specific period. However, that was the
case where the party had admittedly been granted lease government land
for 50 years under the Crown Grants Act with a right of renewal. Hence
that Judgment may not be applicable.
h (1997) 2-SCC-161
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(b) C. M. Beena and Another v/s. P. N. Ramchandra Raoi This
Judgment was relied upon in support of the submission that user of the
words lessee or licensee, lessor or licensor, the rent or license fee are not
by decisive of the nature of the right created by the document. The
difference between the Lease and License is to be determined by finding
the real intention of the parties.
(c) Associated Hotels of India v/s. R.N.Kapoorj, in support of the
submission that if the legal possession of a property is handed over to the
other party, then, it can be treated as lease.
(d) Trivenibai and another v/s. Lilabaik , in support of the submission
that Agreement would operate as a present demise although its terms may
commence at a future date.
(e) Mrs. M. N. Clubwala and Another v/s. Fida Hussain Saheb and
Othersl, in support of his submission that that intention of the parties is to
be ascertained on the consideration of all the relevant provisions in the
Agreement.
(f) Qudrat Ullah v/s. Municipal Board, Bareillym which held that it is
simple to distinguish the lease and license based on the character of the
transaction, terms and the operative intention of the parties. If an interest
in immovable property is created entitling the transferee to enjoy his
i (2004)3 SCC 595
j AIR 1959-SC-1262
k AIR-1959-SC-620
l (1964)6 SCR-642
m (1974)1 SCC-202
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possession, it is a lease.
(g) Board of Revenue and Others v/s. A. M. Ansari and Others n,
holding that as to whether a particular transaction creates a lease or
license is always a question of intention of the parties which is to be
inferred from the circumstances of each case and it is necessary to look to
the substance and essence of the Agreement and not to its form.
(h) Smt. Rajbir Kaur and another v/s. M/s. S. Chokosiri and
Companyo, holding that one of the twin principal tests by which a lease is
distinguishable from the relationship created under a license is the
element of the right to exclusive possession involving the transfer of an
interest in the property; the other being the 'rent' stipulated for the grant.
(i) Captain B. V.. D'Souza v/s. Antonio Fausto Fernandesp, holding
that for ascertaining whether document creates a license or lease, the
substance of the document must be preferred to the form.
(j) Delta International Ltd. v/s. Shyam Sunder Ganeriwalla and
anotherq, holding that the crucial test in each case is whether the
instrument is intended to create or not to create an interest in the
property which is the subject matter of the Agreement. If a document is a
camouflage for the real transaction which is something different, the veil
is required to be removed for determining the true intention and purpose
n (1976)3-SCC-512
o AIR-1988-SC-1845
p (1989)3-SCC-574
q (1994) 4 SCC-545
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of the document.
(k) Peter Alex D'Souza v/s. Prithi Paul Singhr, holding that in
determining whether the Agreement creates lease or license, exclusive
possession is of significance.
(l) M/s. Permanand Gulabchand and Co., v/s. Mooligi Visanjis ,
holding that it is necessary to consider one or more document for the
purpose of deciding whether a tenancy has been created, consider the
surrounding circumstances including the relationship between the
occupants, the course of negotiations and the nature and extent of the
accommodation and the intended and actual mode of occupation of the
accommodation.
13 Shri Sonpal, therefore, submits that the Agreements in
question not only fulfilled the definition of "lease" under Section 2(n) of
the Act but there was a transfer coupled with payment of the entire rent
and premium coupled with right of constructing the building on the
property coupled with an application for Agreement of lease and an order
which shows that the principal accepted such application and, therefore,
the ingredients of a lease were fully satisfied.
14 The Judgments of the Supreme Court in the case of State of
Maharashtra v/s. Atur India (supra) and ICICI Ltd., v/s. State of
Maharashtra (supra) were sought to be distinguished by Mr. Sonpal by
r AIR-2002 Bombay 471
s AIR-1990 Kerala-190
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pointing out that both the Judgments were delivered when Explanation III
to Article 36 of the Schedule I of the Bombay Stamps Act was on the
statute book. He submitted that in the year 1995, by Amending Act No.16
of 1995 with effect from 1st September, 1995, Explanation III has been
deleted. He submits that prior to its deletion, Explanation III reads thus:-
" Agreement of lease shall not be chargeable as a lease
unless there is immediate and present demise."
Mr. Sonpal relied upon the statement of Objects and Reasons of the
Amending Act and particularly on sub-clause 2 (ii) of the S.O.R. which
reads thus:-
" To provide for levy of appropriate stamp duty on
instruments relating to lease of land and its timely collection."
(emphasis supplied)
He submitted that as the explanation was having an effect of
postponing the collection of stamp duty on instruments relating to lease of
land, legislature in its wisdom thought it fit to delete the explanation. He
submitted that the words used being "instrument relating to lease of
land", the legislature intended to make an instrument chargeable for
stamp duty whether there was a present demise or not. According to Mr.
Sonpal, after the amendment of article 36 by deleting Explanation III,
even in a case where there was no present demise and even in a case
where the demise was postponed to the future date, the instrument was
chargeable as a lease. In respect of the amendment, Mr. Sonpal relied
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upon the observations in paragraph no.22 of the Judgment of the
Supreme Court in the case of Bengal Company Ltd. v/s. State of Bihar
and otherst. He submitted that it is a sound rule of interpretation of
statues fairly established in England in Heydon's case namely -
(a) what was the common law before making of law;
(b) what was the mischief and for which common law did not provide;
(c) what remedy the Petitioner and the hath relying and ..
(d) the true reason of the remedy.
He submitted that the Amending Act made all the difference and on
account of the Amending Act, the Judgments of the Supreme Court in the
case of Atur India & ICICI Ltd were clearly distinguishable. Mr. Sonpal
further submits that the Judgment of the Supreme Court did not consider
the case of a Agreement To Let and have not considered the case of
making an application for lease and, therefore, he stated that the decision
of the authorities to hold the instrument with ad valorem stamp duty
deserves to be upheld.
15 Mr. Sonpal submitted that Clause 2 of the agreement was
apparently against the Government/ Revenue and that is the reason why
the deletion of the explanation must be considered to be having effect of
making the instrument chargeable. He submitted that explanation III was
the source of exclusion from the levy of stamp duty and there was no
t AIR 1955 SC-661
- 23 - 3-wp-4866-2002-group
other source for exclusion. Therefore, the Legislature intended to charge
Agreement To Let which does not create an immediate or present demise.
With this intention explanation III was deleted. He submitted that
explanation III was removed with the intention of rectifying the earlier
mischief where in many cases the parties would enter in to only an
Agreement To Lease and will not ultimately enter in a concluded lease-
deed. He submitted that with a view to fill up the gaps and loopholes in
the earlier article explanation III was deleted. He submitted that deletion
of explanation III is not an empty and futile exercise and logical effect of
such deletion is to be given. He submitted that when Legislation has
stepped in, the Court must give logical effect to such Legislation.
16 Mr. Sonpal further submitted that any colourable device to
take advantage by a crafty drafting of the agreement must be ignored and
defeated by the Court. To sum up his submissions he submitted that the
salient features of the instrument was the title, which showed that it was
an Agreement To Lease; it is synonymous with Agreement To Let; the
entire lease premium is paid, there is application for grant of lease and
acceptance of the application for the lease, which makes it lease under
Section 2(n)(iv) of the Act. That there is contemplation in para 1 to put
the lessee in the possession, it is coupled with actual delivery of
possession, the lease rent is to start from the date of execution, so also the
- 24 - 3-wp-4866-2002-group
lease tenure is to start on the date of execution of the lease, the term of
lease is fixed for 60 years, the premium is fixed and the rent is also fixed
and, therefore, all terms and conditions of the concluded lease has been
reduced in to writing and no terms and conditions are pending either to
be executed or to be performed and possession is given on the same day.
He, therefore, submitted that all the essential ingredients of lease were
actually present in the agreements in question.
17 Referring to para 29 of the judgment of the Hon'ble Supreme
Court in the case of Atur India Pvt. Ltd., (supra) he submitted that in that
case there was no actual execution of the Agreement To Lease, but only
letters had been exchanged and in that context the Hon'ble Supreme
Court had held that there is no present demise. He submitted that in Atur
India's case there was no agreement actually executed by the parties.
Referring to para 25 of the said judgment, he submitted that intention of
the parties was to enter in to a transaction in future and there was no
immediate creation of lease.
18 Dealing with the judgment of ICICI Vs. State of
Maharashtra (supra) he relied upon paragraph 1 of the Judgment and
submitted that Court was conscious of the fact that explanation III was
present on the Statute Book on the relevant date when the agreement in
ICICI case was executed. He, therefore, submitted that said judgment
- 25 - 3-wp-4866-2002-group
does not lay down any ratio which can be treated as a binding precedent
after deletion of the explanation. He alternatively submitted that the
judgment of ICICI (supra) does not really consider various aspects namely
the definition of the word 'lease' as given in Section 2, inclusion of the
term 'Agreement To Let' in Article 36. Therefore, according to Mr. Sonpal,
the judgment of ICICI (supra) is subsilentio. He submitted that CIDCO
could not have removed the petitioners from the land without any just
and valid reason which shows that a substantive right had been created.
He submitted that specific performance of the agreement was available
which indicated that a demise had been created. He submitted that under
clause 2 of the agreement there is prohibition against sub-letting, under-
letting, which itself shows that, the document created lease, but only the
formality of execution of lease-deed is postponed. He submitted that even
a draft of lease-deed which was to be executed in future had been
annexed to the agreement which indicated that all the formalities of lease
were complete. He submitted that recitals in the agreement, handing over
of possession on the date of the agreement, payment of full premium on
the date of the agreement, liability to pay rent from the date of the
agreement, are all factors which support that there was a present demise.
He submitted that since Bombay Stamp Act, 1958 was fiscal statute; the
endeavor of the Court should be to ensure that if a particular instrument
- 26 - 3-wp-4866-2002-group
is covered by the definition, a person claiming rights under the said
instrument must be made liable to pay stamp.
19 He submitted that while drafting a fiscal statute, the
Legislature is given wide discretion to tax a particular category of
persons/ instruments and not to tax a particular category of persons/
instruments and a very wide discretion is conferred on the Legislature. He
submitted that, therefore, even if it is shown that the instrument in
question fulfill one part of the definition of lease U/s 2(n), the balance
must tilt in favour of the Revenue.
20 Mr. G.S. Hegde, learned advocate appearing for CIDCO
submitted that CIDCO was following the procedure of inviting tenders
which contemplated submission of bids for becoming lessee. It
contemplated applications for being appointed as lessee and order
accepting such applications. He submitted that though CIDCO accepts the
successful bidders as lessee, the execution of the lease-deed is always
postponed and the intention of CIDCO is equally to create a limited right
as licensee to enter upon the land, commence and complete the
construction thereon. He submitted that there is no immediate or present
demise and the demise takes place only if the licensee fulfills condition
precedent namely construction of the building in accordance with the
sanctioned plan within the stipulated time. He, therefore, submitted that
- 27 - 3-wp-4866-2002-group
the creation of demise or lease was always contingent upon fulfilling all
the conditions of the license agreement. Relying on the clauses of the
agreement he submitted that there is no parting of possession and in case
the licensee who is given license to enter the land and construct the
building does not do so the CIDCO has power to resume the land which
itself indicated that there was no present demise. He submitted that the
instruments is Agreement To Lease coupled with the license without any
present demise. He submitted that CIDCO was instrumentality of the
State being a Government Company of the Government of Maharashtra
and, therefore, there was no intention to execute any instrument as
camouflage or as a device to escape from liability of paying revenue.
21 In re-joinder Mr. Chirag Balsara submitted that the deletion of
the explanation is of no consequence. He drew my attention to the
definition of the term " Conveyance" under Section 2(g) and pointed out
that explanation III was included in article 25 w.e.f. 15.5.1997 and
addition of this explanation was challenged in this Court. He submitted
that Division Bench of this Court deciding Li-taka Pharma Ltd. Vs. State
of Maharashtrau repelled the challenge holding that explanation was
added by abundant caution. Mr. Balsara therefore submitted that
explanation to Article 36 had merely been added by abundant caution and
therefore deletion of the explanation was in-consequential. He submitted
u 1996(2)Mh.L.J.156
- 28 - 3-wp-4866-2002-group
that prior to its deletion, explanation to Article 36 was only clarificatory in
nature. He submitted that Article 36 makes lease chargeable with duty
and the explanation only sought to clarify that an Agreement of Lease
which did not create a present demise cannot be charged as lease.
Therefore, deletion of the said explanation is immaterial.
22 Dr. Birendra Saraf, learned advocate for the petitioners in
Writ Petition 4866/2002 has made following submissions in re-joinder:-.
(a) That the judgment in case of ICICI (supra) is final and binding in so
far as it determines the construction of document and charge-ability of the
document. Relying on paragraph 6 of the said judgment, he submitted
that the Honourable Supreme Court had noticed that the status of ICICI
was merely of licensee. Relying on para 8 of the said judgment he
submitted that possession was handed over only for the purpose of
constructing the building. He submitted that the recitals in the agreement
in the present case are absolutely the same as recitals of the instrument
considered by the Honourable Supreme Court in the case of ICICI (supra).
He drew my attention to the conclusion in para 9 of the judgment and
submitted that despite these recitals, Honurable Supreme Court held that
there was no present demise and Article 36 was not applicable. He
submitted that entire Article 36 is considered by the Honourable Supreme
Court.
- 29 - 3-wp-4866-2002-group
(b) He submitted that intention of the parties is relevant only in
two circumstances namely (1) when there is an inter-party dispute like
dispute between the landlord and tenant, lessor or lessee, where one party
contends that the particular instrument is lease, whereas the other party
contends that such an agreement is license. (2) When the document is to
be held as camouflage to defeat any law. He submitted that in the present
case the instrument in question is an instrument in the form prepared by
CIDCO which is instrumentality of the State; therefore, there is no
question of the document being camouflage. He submitted that document
in fact reflects what is actually written in it.
(c) He submitted that the Court will be loathe in accepting the
interpretation of the Revenue Officers which would have the result of
conferring additional or increased rights in favour of the private party
over Land owned by the Government. In other words, he submitted that
when the petitioners are not contending that a higher right of lease is
created in their favour, if the submission of the Revenue is accepted, that
would result in a situation where against the expressed intention and
desire of CIDCO and the petitioner, petitioner would be held to be having
higher right than the one what is given by the document. He relied upon
the judgment of the Honourable Supreme Court in Delta International
Ltd. Vs. Shyam Sumdar Ganeriwalla and anotherv and on the
v (1994)4 SCC-545
- 30 - 3-wp-4866-2002-group
observations in paragraph 16 of the said judgment to the effect that "a
contract between the parties is to be interpreted or construed on the well
laid principles for construction of contractual terms and the intention of
the parties is the meaning of the words they have used and there can be
no intention independent of that meaning". He submitted that
construction must be to be on the instrument which must be perfectly
consistent with the doing of only that act which party had right to do.
(d) He submitted that there was absolutely no pleading that a
sham and bogus document had been executed as camouflage to evade the
provisions of The Bombay Stamp Act, 1958. Relying on paragraph 19 of
the Judgment, he submitted that it would be impermissible to conjuncture
or infer that the relationship of lessor and lessee has been created. He
submitted that the intention of the parties is the meaning of the words,
they have used and there can be no intention independent of that
meaning. Relying on the observations in paragraph 20 and 21, he
submitted that the parties were educated, both the parties were
companies and they were conscious of the nature of the instrument which
was being executed. He submitted that exclusive possession is not the
sole fact or to establish the relationship of landlord and tenant between
the parties, and the word demise is to be construed by finding out what is
sought to be conveyed or transferred in the context of all the terms of the
- 31 - 3-wp-4866-2002-group
document. He submitted that if the privilege of keeping the premises
exclusively is granted on certain terms and conditions specifically as
license or what is agreed to be an exclusive possession on certain terms
and conditions as licensee, then there is no question of holding to the
contrary.
(e) He relied upon the judgment of Honourable Supreme Court
in Suganthi Suresh Kumar Vs. Jagdeeshanw and submitted that "High
Court was bound by the decisions in the case of Atur India (supra) and
ICICI (supra) and merely on account of deletion of the explanation III,
High Court cannot ignore binding precedent of the Honourable Supreme
Court and over-rule the decision of the Honourable Supreme Court on the
ground that Supreme Court had laid down the legal position without
considering any other point." He submitted that Honourable Supreme
Court had in fact and must be deemed to have taken in to consideration
Clause (iv) of Section 2(n) of The Bombay Stamp Act, 1958 has also the
fact that the word 'Agreement To Let' was always present in Article 36. He
therefore, submitted that it was not permissible to take any contrary view.
(f) In respect of deletion of explanation III by the amending Act
No.16 of 1995, he submitted that even if the Legislature has used different
expressions, like Agreement To Let and agreement of lease, explanation III
was really limited only to "agreement of lease" and therefore, deletion of
w (2002)2 SCC-420
- 32 - 3-wp-4866-2002-group
explanation is inconsequential. He submitted that explanation is not
applicable to Agreement To Lease. In the alternative he submitted that
assuming that explanation III was applicable even to Agreement To Lease,
explanation only included in The Bombay Stamp Act,1958 the law which
was always accepted as correct by The Privy Council in the judgment of
Hemanta Kumari Debi Vs. Midnapur Zamindari Co. He submitted that
the explanation was incorporated only to clarify the existing position of
law and hence the deletion was inconsequential. Relying on the judgment
of Privy Council in Hemanta Kumari Debi (supra) as also the Division
Bench judgment of the Bombay High Court in re Maneklal Manilal
(supra), he submitted that if explanation was added by way of abundant
caution, then merely on account of its deletion, explanation cannot be
held to be creating a liability for the citizens. He drew my attention to
para 21 of the Judgment in Atur India (supra).
(g) On the question of interpretation of statutes he relied on
judgment of Honourable Supreme Court in Tata Tea Ltd. v/s. State of
West Bengal & Othersx which is case relating to the imposition of the
agricultural income tax made in the State of West Bengal and Kerala. He
drew my attention to the observations in paragraph 35, 38 and 41 of the
said judgment. He pointed out that in Kerala Agricultural Income Tax Act
1950, the defining section by explanation stated that agricultural income
x 1988 (supp) SCC-316
- 33 - 3-wp-4866-2002-group
derived from land used for agricultural purpose by the cultivation of tea
leaves means that portion of the income derived from the cultivation,
manufacture and sale of tea as is defined to be agricultural income for the
purpose of and under the Indian Income Tax Act. By amendment act of
1980 this explanation was deleted and it was argued that this deletion
was made with a view to make entire income earned, subject to the levy
of the agricultural income tax. The speech of the Finance Minister at the
time introducing the bill and the stand of the Government in affidavit was
relied upon. He pointed out that these amendments in Kerala Act and
West Bengal Act were challenged. He pointed out that Honourable
Supreme Court ultimately held that though the explanation was earlier
noted by the Supreme Court in the earlier case, the said explanation was
in line with the provisions of the Income Tax Act and the Rules but that by
itself does not make any difference and even without explanation the
position of law would have been the same.
(h) He relied upon the judgment of Privy Council in Union
Steamships Company of New Zealand Ltd. Vs. Mary Robiny and
pointed out that a mere omission in a later statute of a negative provision
contained in an earlier one cannot by itself have the result of effecting a
substantive affirmation and it is necessary to see how the law would have
stood without the original proviso, and the terms in which the repeated
y AIR1920 Privy Council 140
- 34 - 3-wp-4866-2002-group
sections are subsequently re-enacted. The real question is whether, with
the statute as it now stands, the limitation imposed on the servant is
extended to his dependents and successors. He relied upon the judgment
of Honourable Supreme Court in the case of State of West Bengal Vs.
Kesoram Industriesz . By relying on paragraph 104, 107, he submitted
that there is nothing like inherent power to tax, that the power which
does not specifically speak of taxation cannot be so interpreted by
expanding its width as to include therein the power to tax by implication
or by necessary inference. He submitted that in interpreting taxing statute
equitable considerations are entirely out of place and taxation statute
cannot be considered by any presumption or assumption. Before taxing
any person it must be shown that he must be taxed by following clear
words used in Section and if the words and ambit are open to two
interpretations, benefit of interpretation is given to the Assessee and there
is nothing unjust in the tax payer taking advantage if the letter of law fails
to catch him on account of Legislatures failure to express itself clearly.
23 I have carefully considered the rival submissions. All the
advocates who have appeared have given their assistance and have
pointed out not only the provisions of Bombay Stamp Act, 1958 as they
presently stand, but also the provisions of that Act which stood prior to its
amendment, the provisions of Indian Stamp Act and the relevant
z (2004) 10 SCC-201
- 35 - 3-wp-4866-2002-group
precedents.
24 At the first blush, it may appear that reading of Article 36
which includes the Agreement To Let, would conclusively tilt the balance
of the case in favour of the Revenue / State. There are three sub-divisions
namely (1) Agreement To Lease (2) agreement for lease and (3)
Agreement To Let. In absence of the judgment in the case of Atur India
( supra ), ICICI (supra), one could have been persuaded to take view that
irrespective of the fact as to whether there is any present demise or not,
the instrument must become chargeable with stamp duty.
25 It is necessary to note the relevant portion of the Judgment of
the Supreme Court in the case of State of Maharashtra v/s. Atur India
Pvt. Ltd. (supra) namely paragraphs 24, 27 and 29 reads thus:-
"Paragraph 24:- The facts mentioned above are clearly
indicative of an Agreement To Lease and not on agreement of
lease. The distinction between the two may be seen first with
reference to English law. "Woodfall in Law of Landlord and
Tenant, Vol I., 28th Edn., 1978 at page 127 states as under:-
" A contract for a lease is an agreement aforesaid in
law whereby one party agrees to grant and another to take
lease. The expressions 'contract for lease' and 'agreement
for lease' is to be preferred as being more details,
agreement frequently means one of many stipulations in a
contract. A contract for a lease is to be distinguished from
a lease, because a lease is actually a conveyance of an
estate in land, whereas a contract for a lease is merely on
agreement that such a conveyance shall be entered into at
a future date"
- 36 - 3-wp-4866-2002-group
"Paragraph 27:- We will now turn to Indian Law. Mulla in
The Transfer of Property Act (7th Edn.) at page 847 dealing
with Agreement To Lease states as under:
" An agreement is lease may effect as actual demise in
which case it is a lease. On the other hand, the Agreement
To Lease may be a merely executory instrument binding
the parties, the one, to grant, and the other, to accept a
lease in the future. As to such an executory agreement the
law in England differs from that in India. An Agreement
To Lease not creating a present demise is not a lease and
requires neither writing nor registration.
As to an executory Agreement To Lease, it was at
one time supposed that an intending lessee, who had
taken possession under an Agreement To Lease capable of
specific performance, was in the same position as if the
lease had been executed and registered. These cases have,
however, been tendered obsolete by the decisions of the
Privy Council that the equity in Walsh v. Lonsdale does not
apply in India."
"Paragraph 29:- Examining in the light of above, we hold
that the notice of the appellant dated November 30, 1970, the
offer of the respondent dated December 15, 1970 and the
acceptance of the Collector of the tender of respondent for
lease dated January 1, 1971 would merely constitute an
Agreement To Lease. Clause 13 clearly contemplated that the
licensee will be put in possession of plot on his executing the
Agreement To Lease. Therefore, it is clear that by the
respondent accepting the offer on December 15, 1970, the
relationship of lessor and lessee between the appellant and the
respondent had not come to be established. Further as pointed
out earlier there was no Agreement To Lease. It will not fall
under Section 2(n) of the Act in which case, it is not an
instrument chargeable to duty and the question of impounding
does not arise. Much less, there could be a demand for stamp
duty."
26 In the case of ICICI Ltd. v/s. State of Maharashtra (supra),
- 37 - 3-wp-4866-2002-group
the Supreme Court has observations in paragraphs 1,2,5,6,7,8 and 9
which reads thus:-
ORDER:-- The only narrow question in this appeal is whether
in respect of an agreement of lease dated 13.6.1994 executed
by the respondents in favour of the appellants, stamp duty
under Article 36 of the Bombay Stamp Act, 1958 is payable,
Article 36 deals with "lease including an under-lease or sub-
lease and any Agreement To Let sub-let or any renewal of
lease" Explanation III of Article 36 which was in force at the
material time, makes it clear that "an agreement of lease shall
not be chargeable as a lease unless there is an immediate and
present demise."
"Paragraph 2:- In the present case, the document is on the
face of it an Agreement to create a lease in future. It is,
however, submitted by the respondents that in substance the
document itself creates a lease. The document demises
immediately and presents an interest in the land in favour of
the appellants. If we examine the agreement under Clause 1 of
the agreement of lease, there is a clear provision that during
the period of three years from the date of possession, the
licensees (as the appellants are described), shall have a license
and authority only to enter upon the land for the purpose of
erecting a building or buildings for the purpose of housing its
offices and no other purpose, and until the grant of a lease, the
licensee shall be deemed to be a bare licensee only of the said
land at the same rent and subject to the same terms including
liability for payment of rates, land revenue and taxes, as if the
lease had been actually executed."
"Paragraph 5:- Clause 8 requires that the lease, as and
when executed in terms of Clause 7, shall be prepared in
duplicate and all costs, charges and expenses in that
connection as also in connection with the execution of the
agreement and its duplicate shall be paid by the licensee
alone."
- 38 - 3-wp-4866-2002-group
"Paragraph 6:- Therefore, there is a clear intention of the
parties to execute a document of lease in future. Until such
document is executed, the status of the appellants is that of a
licensee. In fact, we are informed by the appellants that
pursuant to this agreement, a lease has, in fact, now been
executed between the parties on 8-4-1999 and stamp duty
amounting to Rs.5,45,30,600/- has been paid by the appellants
on the document of lease."
"Paragraph 7:- Our attention has been drawn to a decision
of this Court in (Associated Hotels of India Ltd. v. R. N.
Kapoor), A.I.R. 1959 S.C.1262: 1960(1) S.C.R. 368 where this
Court has made a distinction between a lease and a license.
Referring to section 105 of the Transfer of Property Act, this
Court has observed that it defines a lease of immovable
property as a transfer of a right to enjoy such property made
for a certain time in consideration for a price paid or promised.
A lease is, therefore, a transfer of an interest in land and the
interest transferred is called the leasehold interest. It follows
that the lease gets that right to the exclusion of the lessor.
Whereas section 52 of the Indian Easements Act defines a
license thus:-
"52 Where one person grants to another, or to a definite
number of other persons, a right to do, in or upon the
immovable property of the grantor, something which
would, in the absence of such right, be unlawful, and such
right does not amount to an easement or an interest in the
property, the right is called a license."
"Paragraph 8:- Therefore, 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. In the present case, the licensee
has been put in possession only for the purpose of constructing
a building or buildings. Under this document, no interest in
the land is conveyed in favour of the appellants. The
agreement does not create a lease, nor does it demise any
interest in land in favour of the appellants. In this connection,
a reference may also be made to a subsequent decision of this
- 39 - 3-wp-4866-2002-group
Court in (State of Maharashtra v. Atur India (P)Ltd.),
1995(2)Bom.C.R.31: 1994(2)S.C.C. 497 where this Court has
made a distinction between a lease and an agreement for
lease."
"Paragraph 9:- Although it has been contended by the
respondents that there is a demise of interest in the land under
the said agreement, the agreement does not demise any such
interest in the land. Clause 2 expressly sets out that this
agreement is not to be construed as a demise in law of the said
land so as to give to the licensee any legal interest in the land.
Article 36 of the Bombay Stamp Act is, therefore, not attracted
to the said document."
In the case of Hemanta Kumari Debi (supra) the Privy
Council has observed thus:-
" ..................... With regard to the first, the Registration
Act of 1908 provides that "lease" includes an Agreement To
Lease, any by Section 17 enacts that leases must be registered,
the penalty for non-registration being imposed by Section 49,
which provides that, if no registered, no document shall affect
immovable property which it compromise or be received as
evidence of any transaction affecting such property. If the
document in question can be regarded as a lease within the
meaning of this definition it could not be received in evidence.
Their Lordships are of opinion that it cannot be so regarded.
An "agreement for a lease" which a lease is by the statue
declared to include must in their Lordships' opinion, be a
document which effects an actual demise and operates as a
lease. They think that Jenkins, C. J., in the case of Panchaman
Basu v. Chandi Chavan (1) correctly stated the interpretation of
Section 17 in this respect. The present agreement is an
agreement that upon the happening of a contingent event at a
date which was indeterminate and, having regard to the slow
progress of Indian litigation, might be for distant, a lease would
be granted. Until the happening of that event it was impossible
to determine whether there would be any lease or not. Such
an agreement does not, in their Lordships' opinion, satisfy the
meaning of the phrase "agreement for a lease" which in the
- 40 - 3-wp-4866-2002-group
context where it occurs and in the statute in which it is found
must in their opinion relate to some document that creates a
present and immediate interest in the land. So far, therefore,
as this decision depends upon the need for registration of the
document as a lease, the Registration Act places no obstacle in
the respondent's way."
28 In the case of Re Maneklal Manilal (supra), it has been
observed by the Division Bench as follows:-
" It is, therefore, contended that every Agreement To Lease
must be stamped with an ad valorem stamp, and when a
subsequent lease contemplated by the parties is actually
effected, a stamp of one rupee would suffice. The question,
therefore, in this reference is whether the document, Ex. 417 is
an agreement of lease within the meaning of S.2(16) , Stamp
Act. "Lease is also defined in the Indian Registration Act,
S2(7) as including:
Both under the Indian Stamp Act and the Indian
Registration Act an Agreement To Lease is included in the
word "lease" Though the Indian Stamp Act and the Indian
Registration Act are not strictly in para materia, it has been
held in Chandrashankar v Bai Maan that the two Acts may
be read together, and that the definition in the Indian
Stamp Act with regard to a composition deed might be
accepted in considering the question under the Indian
Registration Act. According to the decision of the Privy
Council in Hemanta Kumari Debi v. Midnapur Zamindari
Co., an Agreement To Lease must be a present demise. It
must be a document which effects an actual demise or
operates as a lease in present, and not an agreement that
in certain contingencies a lease will be granted. So far as
the Indian Registration Act is concerned, there is consensus
of opinion in the different High Courts as reflected in the
decisions in Secretary of State v. Mahomed Yusuf,
Panchaman Basu v. Chandi Charan Misra and Swaminatha
Mudaliar v. Ramaswami Mudaliar, that an Agreement To
Lease must be an actual demise. If this view accepted with
regard to the Indian Registration Act can be applied in
- 41 - 3-wp-4866-2002-group
considering the question under the Indian Stamp Act, it
must follow that an Agreement To Lease must amount to
an actual demise and not an agreement that in certain
contingencies a lease will be granted. In the present
document there is no actual demise, but there is an
Agreement To Lease the land under certain contingencies
which may or may not happen."
29 In the case of Makers Development Services Pvt. Ltd.
(supra), it is held in paragraphs 9 to 11 which reads thus:-
"Paragraph 9:-.............. At the material time, Article 36 of
Schedule I stood as at present except for addition of
Explanation III thereto which was added as a matter of
abundant caution."
"Paragraph 10:- The learned counsel for the Petitioner
submits that even prior to insertion of Explanation III in the
said article it was always the law of the land as interpreted by
the Privy Council and this Court that only such agreement of
lease are chargeable as a lease which create an immediate and
present demise. The learned counsel for the petitioner has
relied upon the ratio of the following judgments in support of
his contention:-
(1) Judgment dated 11th February 1994, delivered by the
Hon'ble Supreme Court in Civil Appeal No.3570 of 1993;
(2) Judgment of Bombay High Court in Reference In re
Indian Stamp Act II of 1899, reported in 54 B.L.R. 230.
(3) Judgment of Bombay High Court in the case of In re
Maneklal Manilal reported in 30 B.L.R. 1396;
(4) Judgment of the Privy Council in Hemantakumari
Devi vs. Midnapur Zamindari Company reported in 16
B.L.R. 236.
The learned counsel for the Respondent made a faint attempt
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to distinguish the said judgments. To my mind the
Respondents have no answer to the case of the petitioner in
view of well settled law in the subject as pointed out by the
learned counsel for the petitioner.
"Paragraph 11:- In Civil Appeal No.3570 of 1993, The State
of Maharashtra and others vs. Atur India (P) Ltd.(now reported
in 1994(2) SCC 497), the Hon'ble Supreme Court made a neat
and clear distinction between Agreement To Lease and an
agreement of lease. After surveying large number of cases on
the subject and noticing the Privy Council judgment in
Hemantakumari Debi's case and the earlier judgment of the
Hon'ble Supreme Court in Tirvenibai and another vs. Smt.
Lilabai, 1959(2) Suppl. SCR 107, the Supreme Court held that
the expression "an agreement of lease" must be interpreted to
mean a document which created a present and immediate
interest in the land" Our High Court has made similar
observations in the abovereferred Bombay Judgment. The
Privy Council took the same view in the above referred
judgment in Hemantakumari Debi's case. Even though the
earlier Bombay Judgments were rendered while interpreting
Article 35 of Schedule I appended to Indian Stamp Act (II) of
1899, the ratio of the said judgments is clearly helpful to the
petitioners. Noting more is required to be discussed in view of
the Hon'ble Supreme Court judgment in the case of M/s. Atur
India Pvt. Ltd. referred to hereinabove."
30 In the case of Raja Bhanu Pratap Singh (supra), the
Supreme Court has considered the effect of deletion of Section 10(2)(n)
of the Administration of Evacuee Property Act, 1950 and Rule 22 of the
Rules framed under the said Act and it has been held that despite this
deletion, the custodian was authorized to exercise power to pay debts of
the evacuee person.
31 However, we are dealing with a peculiar case. The parties to
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the instrument are contending that the instrument does not create any
present demise. One of the parties to the instrument is CIDCO Ltd. which
is a company wholly owned and controlled by the Government of
Maharashtra. CIDCO is the instrumentality of the State. Normally in case
of the dispute between landlord and tenant or lessor or lessee, invariably
it is the contention of one of the party that agreement in question is
camouflage and the real intention of the parties was to create a
relationship different than other than the relationship indicated by the
agreement in question. That is not the case here. Here the parties to the
agreement are ad-idem and both contend that the instrument only creates
license, that there is no present demise, that the possession is not handed
over to the petitioners as prospective lessees, but the petitioners are only
permitted to enter the land for the limited purpose of carrying on
construction of the building. Therefore, in the facts of the present case,
where the agreement in so far as its true terms are concerned, is identical
to the Agreement which was subject matter of the decision in the case of
ICICI (supra). It is difficult to accept the contention of Mr. Sonpal that
this agreement creates present demise. It is open to Mr. Sonpal as
advocate to try to distinguish judgment of the Honourable Supreme Court
in ICICI by contending that the Honourable Supreme Court did not take in
to consideration various other clauses of the agreement and the judgment
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of the Supreme Court shows that only few clauses of the agreement had
been taken in to consideration. At this stage, it would be helpful to see
that the Honourable Supreme Court has considered the material clauses of
the agreement in para 2 to 5 of the said judgment. Honourable Supreme
Court was conscious that the document in question was Agreement to
create lease. It must be held that the Honourable Supreme Court had,
being conscious of the fact that, an Agreement To Let is also included
within the Article 36 under the captioned lease, proceeded to hold that
unless there is a present demise, it is not permissible to levy stamp duty.
Paragraph 2 of the judgment clearly shows that identical submission as
has been canvassed by the Government counsel in court before me, had
been canvassed before the Supreme Court. Paragraph (c) extracts Clause
2 of the agreement in that case which is having almost identical wording
with clause 2 of the agreement in the present case. The clauses in the
agreement in the present case are not identical, however the material
portion of the clause 2 is same as clause 2 of the agreement in the case
before the Supreme Court. Clause 7 and 8 of the agreement before
Supreme Court has also been noticed by the Supreme Court and it
appears that form of lease deed to be executed in future was also
annexed. In the agreement before Supreme Court also, lease premium had
been paid, ground rent had been fixed and the liability to pay ground rent
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commenced and parties were to execute a Lease Deed as per the deed
annexed to the agreement in question. After discussing these clauses
Supreme Court has observed thus in para 6 that:-
"Therefore, there is a clear intention of the
parties to execute a document of lease in future. Until
such document is executed, the status of the
appellants is that of a licensee. In fact, we are
informed by the appellants that pursuant to this
agreement, a lease has, in fact, now been executed
between the parties on 8/4/1999 and stamp duty
amounting to Rs.5,45,30,600 has been paid by the
appellants on the document of lease."
32 In para 7 of the judgment, Supreme Court has noted the law
laid down in the case of Associated Hotels of India Ltd. (supra) and
thereafter Supreme Court has made following observations in para 8 and
9 which read thus :
"Therefore, 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 licence. In
the present case, the licensee has been put in
possession only for the purpose of constructing a
building or buildings. Under this document, no
interest in the land is conveyed in favour of the
appellants. The agreement does not create a lease, nor
does it demise any interest in land in favour of the
appellants. In this connection, a reference may also be
made to a subsequent decision of this Court in State
of Maharashtra V. Atur India (P) Ltd. where this Court
has made a distinction between a lease and an
agreement for lease
Although it has been contended by the
respondents that there is a demise of interest in the
land under the said agreement, the agreement does
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not demise any such interest in the land. Clause 2
expressly sets out that this agreement is not to be
construed as a demise in law of the said land so as to
give to the licensee any legal interest in the land.
Article 36 of the Bombay Stamp Act is, therefore, not
attracted to the said document."
33 Though Mr. Sonpal tried to distinguish the judgment of ICICI
(supra) by contending that the judgment does not take in to consideration
all the clauses of the agreement or that the agreements in this case are
different than the one with which we are concerned; I am however afraid
that it is impermissible for me, sitting as Judge of the High Court, to hold
that the Supreme Court judgment does not lay down a binding precedent.
Mr. Saraf is justified in relying upon the judgment of Suganthi (supra)
that it is impermissible for the High Court to overrule decision of the
Honourable Apex Court on the ground that the Honourable Supreme
Court laid down the legal position without considering certain points. In
my opinion this Court cannot question the correctness of the decision of
the Honourable Supreme Court, even though the point agitated before the
High Court does not appear to have been considered by the Honourable
Supreme Court.
34 It is also not possible to accept the submissions of Mr. Sonpal
that the judgment of Honourable Supreme Court in State of
Maharashtra Vs. Atur India Pvt. Ltd. can be distinguished on the ground
that there was no agreement executed in the case of Atur India (supra).
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In fact, in the case of Atur India (supra) there was an application for
grant of lease and order / assent accepting such application and according
to consent grant lease. Mr. Sonpal submitted that Honourable Supreme
Court has not noticed sub-clause (iv) of Section 2(n) which is the
definition of the term 'lease'. According to Mr. Sonpal if that definition
had been noticed, the decision of the Honourable Supreme Court would
have been otherwise. He, therefore, requested that I should take different
view. I am afraid that I will not be able to do so. Mr. Saraf pointed out
that Honourable Supreme Court had in fact noticed Section 2(n) in para
29 of the Judgment. Merely because the said definition has not been
discussed, it would be unsafe to hold that Honourable Supreme Court had
not noticed said Section. Though in the case of Atur India (supra) there
was no written instrument of lease, the Honourable Supreme Court has
held in para 29 that:-
"Examining in the light of above, we hold that
the notice of the appellant dated November 30, 1970,
the offer of the respondent dated December 15, 1970
and the acceptance of the Collector of the tender of
respondent for lease dated January 1, 1971 would
merely constitute an Agreement To Lease. Clause 13
clearly contemplates that the licensee will be put in
possession of plot on his executing the Agreement To
Lease. Therefore, it is clear that by the respondent
accepting the offer on December 15, 1970, the
relationship of lessor and lessee between the appellant
and the respondent had not come to be established.
Further as pointed out earlier there was no actual
demise on the date of the accepting of tender.
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Therefore, it is only an Agreement To Lease. It will
not fall under Section 2(n) of the Act in which case, it
is not an instrument chargeable to duty and the
question of impounding does not arise. Much less,
there could be a demand for stamp duty."
35 It is now necessary to consider the effect of deletion of
explanation III. Privy Council in the case of Hemanta Kumari Debi
(supra) had an occasion to consider the difference between the lease and
Agreement To Lease. Honourable Supreme Court has held that 'agreement
for lease' to be construed as a lease, must be a document which effects an
actual demise and operates as a lease. Honourable Privy Council held that
if the Agreement To Lease is an agreement that upon happening of a
contingent event at a date which was indeterminate and having regard to
the slow progress of Indian litigation, might be far distant, a lease would
be granted; until the happening of that event, it was impossible to
determine whether there would be any lease or not and such agreement
does not satisfy the meaning of the phrase 'agreement for lease'. Mr.
Sonpal is justified in pointing out that the definition of the lease under
Indian Registration Act, 1908 and under Transfer of Property Act, 1882
and that in Bombay Stamp Act, 1958 are different and I must consider the
definition under the Bombay Stamp Act, 1958. It is also true that the
definition under Bombay Stamp Act, 1958 even includes the making of an
application to grant lease and order accepting such application. However,
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as stated above, in view of the judgment of Honourable Supreme Court in
the case of Atur India (supra) it is impossible for me to take view to the
contrary. It is also true that an Agreement To Let is also included within
the ambit of Article 36. However as stated above, in view of the law
already laid down by the Honourable Supreme Court, it is difficult to take
contrary view.
36 In so far as effect of deletion of the explanation III by
amending Article 36 by Maharashtra Act 16 of 1995 is concerned, it must
be held that the deletion of the explanation is of no consequence. Careful
perusal of the explanation indicated that explanation merely stated the
legal position as always existed. In a given case, if the parties entered in
to an Agreement To Let and there are sufficient indications either from the
recitals of the agreement or other surrounding circumstances that there
was immediate and present demise made under the agreement,
irrespective of the explanation, the instrument would be chargeable with
stamp duty. On the other hand, in a given case if the nomenclature of the
agreement is 'Agreement To Let' or 'Agreement To Lease' or 'agreement for
lease' but there is no present demise, the document will not be chargeable
with stamp duty.
37 Mr. Sonpal has no doubt made a very good attempt to
convince me to take a view in favour of the Revenue. However, if the
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entire law as laid down in case of Hemanta Kumari Debi (supra)
followed by the Division Bench of Bombay High Court in Maneklal
Manilal (supra) is considered, the conclusion is inevitable that the
deletion of explanation III will be of no consequence. In case of Maneklal
Manilal (supra) the High Court has noticed argument that every
Agreement To Lease must be stamped with ad-volorum stamp and when
subsequent lease contemplated by the parties is actually effected, stamp of
Rs.1/- would suffice. High Court had held that both under Indian Stamp
Act and Indian Registration Act, Agreement To Lease is included in the
word 'lease' and though the Indian Stamp Act and Indian Registration Act
are not directly in para-materia, it has been held that two acts may be
read together and that the definition under the Indian Stamp Act with
regard to composition deed might be accepted in considering the question
under the Indian Registration Act. The High Court had followed the
judgment of Privy Council in Hemanta Kumari Debi (supra) and has held
that for an Agreement To Lease to be a present demise, it must be a
document which effects an actual demise and operates as lease in present
and not an agreement that on happening of certain contingencies a lease
would be granted. High Court has further held that so far as Indian
Registration Act is concerned there was a concurrence of the opinion
between different High Courts that even for an Agreement To Lease to
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require registration, there must be an actual demise.
38 In view of the aforesaid judgment of Division Bench in a
reference following the judgment of Privy Council and interpreting Article
36 of the Indian Stamp Act which is para-materia of Article 36 of the
Bombay Stamp Act 1958, I find myself unable to agree with the
submissions of Mr. Sonpal that the judgments incorporating the provisions
of the Registration Act or the Transfer of Property Act have to be ignored.
39 In my opinion no general principle can be laid down and it is
not possible to devise straight jacket formula that every document styled
as Agreement To Lease or Agreement For Lease cannot be charged with
stamp duty. In my opinion every document in question will have to be
independently considered by the concerned authorities and only in a case
where there is a present demise, document can be charged with the stamp
duty.
40 In the facts of the present case one of the parties to the
instrument is CIDCO which is instrumentality of the State and has pointed
out that every person who desires to become lessee of CIDCO in future is
directed to make an application in the prescribed form by filling up
tenders and successful tenderer or bidder is expected to sign the
agreements in the prescribed form. Since CIDCO which is instrumentality
of the State is one of the parties to the instrument in question and since in
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the facts of this case both the parties are ad-idem that the instruments do
not create immediate / present demise, it is not possible to hold that the
agreements in question are camouflage as contended by Mr. Sonpal.
Since the instrumentality of the State of Maharashtra has prepared the
agreements in printed format, which have to be signed by every bidder, in
the facts of this case, it is not possible to hold that the agreement is a
camouflage. The agreement is titled as Agreement To Lease. However the
petitioners have been referred to as licensee in the agreements. What is
created in favour of the petitioners is merely a license with an Agreement
to create lease in future dependent upon the contingencies as indicated in
the agreement. The contingency is to properly construct a building within
stipulated time and if this is not done, option is left with CIDCO either to
pardon the default and extend time or to resume the land. Though
possession has been handed over to the petitioners, the said handing over
of the possession is not of legal possession and in law CIDCO continues to
be in exclusive possession of the property. Possession handed over to the
petitioners is merely that of licensees. In my opinion agreements in the
present case are Agreements To Lease without creation of present demise
coupled with immediate license to enter the land and carry on
construction. In the peculiar facts of this case where one of the party is
CIDCO, I am inclined to take a view that the document in question does
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not create a present demise and therefore, is not chargeable with ad-
volorum stamp duty which is required to be levied on the Lease as
contemplated by Article 36. I must not be taken to have laid down a
wider proposition that in other case if a document is styled as Agreement
To Lease or Agreement To Let or Agreement For Lease, it is not chargeable
with stamp duty. In case of instruments which are executed between two
private parties, it would be permissible for the concerned authorities
under Bombay Stamp Act, 1958 to consider as to whether the agreement
is being used as camouflage so as to avoid immediate payment of stamp
duty or with a view to evade from the liability of payment of stamp duty.
Merely on account of the fact that here both the parties to the agreement
are ad-idem that the agreements in question do not create present demise
in favour of the petitioners, I am inclined to take view that the agreements
do not in fact create a present demise in favour of the petitioners.
Petitioners do not get any enforceable right as against the respondents
and CIDCO continues to be having the legal possession. In my opinion the
agreements in the present case do not create right in favour of the
petitioners to exclude CIDCO from the legal and physical possession of the
lands in question. In my opinion CIDCO continues to have legal possession
of the lands with a right to resume the land and right to exclude the
petitioners from the possession of the property since the possession of the
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petitioners is only that of licensees. The status of the parties would change
only after the actual execution of the lease-deed or only after contingency
as contemplated in the agreements is fulfilled.
41 Obviously, for these reasons, it would have to be held that in
the present case the authorities under the Bombay Stamp Act, 1958 were
not justified in levying the ad-volorum stamp duty. It is necessary to
clarify that the moment the contingency which is incorporated in the
agreement happens or takes place namely the moment petitioners or any
of them complete the construction within the stipulated time, agreements
in question would become chargeable with the stamp duty according to
the rates specified at the relevant time when fresh lease-deed is executed.
Agreement itself contemplates that the parties will enter in to a lease-deed
in the format annexed to the agreements.
42 It is necessary to clarify that in the Writ Petition No.
6623/2007 and Writ Petition No.7643/2007 it is admitted position that
the agreements in question have been mutually canceled by the
petitioners and CIDCO by executing independent deeds of cancellation. It
is, therefore, clear that in those petitions contingency which was the event
based on which the demise was to take place in favour of the petitioners
therein has factually not taken place. In so far as Writ Petition No.
4866/2002 is concerned, it is the case of the petitioners therein that in
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fact it has complied with its obligation to construct the building on the
land in question and that in fact the petitioners are ready to execute the
lease-deed in question after the stipulated time period and after the
construction of the building. That aspect of the matter will have to be
looked in to by the authorities under the Bombay Stamp Act, 1958 and
proper stamp duty will have to be levied and recovered in accordance
with the market price on the relevant date.
43 Subject to the aforesaid clarification, rule is made absolute in
all the petitions with no order as to costs. As logical corollary of the all the
petitions being allowed, the sum of Rs.1,00,00,000/- which has been
deposited by the petitioners in Writ Petition No.4866/2002 along with
accrued interest, if any, will have to be refunded to the petitioners. Order
accordingly. Civil Application Nos.78 of 2008 and 472 of 2008 do not
survive and are disposed off.
44 At this stage, on the oral request of Mr. Sonpal, execution of
the order passed in Writ Petition No.4866/2002 is stayed for a period of
12 weeks.
(G.S.GODBOLE,J.)
