Bombay High Court
Larsen And Toubro Ltd & Ors vs The State Of Maharashtra & Ors on 28 September, 2012
Bench: S.C. Dharmadhikari
1
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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELLATE JURISDICTION
WRIT PETITION NO.9032 OF 2011
Larsen and Toubro Ltd & Ors .. Petitioners
versus
The State of Maharashtra & Ors .. Respondents
Mr.R.A.Dada, Sr. Advocate a/w Mr.Zal Andhyarujina, Mr.J.S.Solomon,
Mr.A.J.Solomon, Ms.Soniya Putta, Ms.Shruti Maniar, Mr.Amit Pawar and
Ms.Chetna Karande i/by Solomon and Co for the petitioners.
Mr.A.A.Kumbhakoni, Special Counsel alongwith Mr.Shardul Singh and
Mr.Abhay A. Anturkar with Ms.P.S.Cardozo, A.G.P for the respondents.
CORAM : S. C. DHARMADHIKARI, J.
RESERVED ON : 29th AUGUST 2012.
PRONOUNCED ON : 28th SEPTEMBER 2012.
JUDGMENT:
. On this writ petition on 25th November 2011, notice was issued for
final disposal of the writ petition at the stage of admission. Hence, Rule.
The respondents waive service. By consent, rule is made returnable
forthwith.
2} By this writ petition under Article 226 and Article 227 of the
Constitution of India, the petitioners are seeking a writ of certiorari or a
writ, order or direction in the nature of certiorari or any other appropriate
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writ, order or direction to quash and set aside an order dated 16 th July
2011 passed by the respondent No.2.
3} It is the case of the petitioners that petitioner No.1 is a company
registered under the Companies Act, 1956 having its registered office at L
& T House, Ballard Estate, P.O.Box No.279, Mumbai 400 001 and is
engaged in the business inter alia of construction, infrastructure
development and real estate. The petitioner No.2 is a company registered
under the provisions of the Indian Companies Act, 1956.
4} The petitioner No.2 is wholly owned subsidiary of petitioner No.1
and is a Special Purpose Vehicle established by petitioner No.1 for
implementing the Seawoods project. The petitioner No.3 is the Director of
petitioner No.1.
5} The petitioners submit that the respondent No.1 is the State of
Maharashtra. The respondent No.2 is the Chief Controlling Revenue
Authority of the Maharashtra State. The respondent No.3 is Joint District
Registrar (Class I) and Collector of Stamp of Thane City. The respondent
No.4 is Joint District Registrar (Class II) and Collector of Stamp of Thane
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City.
6} The petitioners further submit that the City and Industrial
Development Corporation of Maharashtra Limited (for short "CIDCO"), a
company incorporated under the provisions of the Companies Act, 1956
having its registered office at 2nd Floor, Nirmal Building, Nariman Point,
Mumbai 400 021, is the New Towns Development Authority in the area
designated for the New Town of Navi Mumbai by the Government of
Maharashtra in exercise of its power under sub-section (1) and (3-A) of
section 113 of Maharashtra Regional and Town Planning Act, 1966.
7} The petitioners submit that in 2007 the CIDCO had floated a
scheme No.GM (IT and SP)/1/2007-2008 and invited bidders for the
development of integrated complex at Seawoods Railway Station, Navi
Mumbai (hereinafter referred to as the "Seawoods Project"). The
petitioners being the highest bidders with Rs.1809 crores, they were
successful bidders of the Scheme No.GM(IT and SP)/1/2007-2008 for the
Seawoods Project. The CIDCO by its Letter of Allotment No.CIDCO/GM/
(IT and SP)/2008/534 dated 19th March 2008 accepted the petitioners
proposal for Seawoods Project and allotted plot to petitioners for
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development of the Seawoods Project.
8} The petitioners further submit that pursuant to the above
mentioned Letter of Allotment and in order to undertake the Seawoods
Project, the petitioners entered into a Development Agreement on 21 st
April 2008 with CIDCO. The said Development Agreement laid down the
terms and conditions for the development of the Seawoods Project.
9}
The petitioners submit that prior to the execution of the
Development Agreement, they submitted the said Development
Agreement under section 31 of the Bombay Stamp Act, 1958 (hereinafter
referred to as the said Act) for adjudication of stamp duty in the office of
respondent No.3 on 30th April 2008. The petitioners further submit that
respondent No.3 numbered the Adjudication Case as Sr.No358/2008. The
respondent No.3 determined the market value of the properties to
Rs.18,00,49,50,000/- and informed the petitioners to pay
Rs.18,53,50,000/- at the rate of 1% of determined market value of the
property under Article 5(g-a) and 5(h)(A)(iv) of the Schedule I of the said
Act.
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10} The petitioners had already paid the stamp duty of
Rs.18,44,00,000/- on the said Development Agreement on 16 th April 2008
and paid the remaining stamp duty of Rs.9,50,000/- on 15 th May 2008.
After payment of full stamp duty by the petitioners, respondent No.3
certified the payment of full stamp duty and put its
endorsement/certificate to that effect under section 32 of the said Act on
the Development Agreement on 16th May 2008.
11}
The petitioners further state that they had submitted an
undertaking on 16th April 2008 in the office of respondent No.3 for
confirmation of the payment of appropriate stamp duty at the time of
execution of the Lease Deed, if any.
12} After payment of the required stamp duty, the petitioners had
submitted the Development Agreement for registration in the office of
Sub-Registrar, Thane No.9 on 17th May 2008, who in turn registered the
said Agreement at Sr.No.1296/2008 on the same day i.e 17th May 2008.
13} The petitioners submit that subsequent to payment of stamp duty
and registration, the petitioners commenced the development activities on
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the project and have made a payment of amount of Rs.759 crores to
CIDCO and expended amounts in excess of Rs.150 crores towards the
development works being carried out at the project.
14} The petitioners further submit that the instant project contemplated
by the said Development Agreement of 2008 in a way involves great
public interest in as much as it envisages the creation of an important
public utility in the form of a railway station with ultra modern facilities.
This public utility will play an important role in the new and upcoming
town of Navi Mumbai and it will also enhance, both, the quality of life
and the value of land for the inhabitants of the town and nearby areas. It
will constitute a great improvement upon the existing transport
infrastructure. The petitioners submit that the public interest dictates that
the development of this project should go on as speedily and smoothly as
possible.
15} The petitioners submit that thus it is evident that this Development
Agreement is subject to large number of conditions precedent, reciprocal
obligations and receipt of various approvals and provisions, which may or
may not happen to fructify this Agreement leading to demise and
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execution of lease. Therefore, until the demise and execution of lease the
Development Agreement remains a Development Agreement.
16} The petitioners further submit that on 24 th February 2011,
petitioner No.1 has received notice from respondent No.2 informing that
Adjudication Cases No.358 of 2008 and 1296 of 2008 is taken for review
under section 53-A of the said Act and it has been observed by the
respondent No.2 that the necessary stamp duty has not been paid in the
above referred Adjudication Cases i.e on the said Agreement. The Notice
stated that the said Development Agreement is found to be deficit with
stamp duty of Rs.73,94,00,000/-.
17} The petitioners submit that after initial inquiry and the documents
collected from the office of the respondent No.2, petitioner No.1 learned
that respondent No.4 has made written complaint to respondent No.2 and
claimed that the said Development Agreement dated 21 st April 2008 has
been misclassified under the said Act and due to which loss had been
caused to the government revenue. The respondent No.4 claimed that the
said Development Agreement should be classified as an "Agreement to
Lease" and not as a "Development Agreement" under the said Act. The
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respondent No.2 on receipt of complaint from the respondent No.4 and in
exercise of powers conferred on him by section 52A of the said Act, has
suo moto initiated the proceeding with a view to examine whether the
said Agreement is deficit in stamp duty or not.
18} The petitioners submit that petitioner No.1 received a letter from
office of respondent No.2 on 10th September 2011 containing the
judgment of respondent No.2 dated 16th July 2011 in matter of review of
Adjudication Case No.358 of 2008. In the said order, respondent No.2 has
treated the said Agreement dated 21 st April 2008 between petitioner No.1
and CIDCO as Agreement to Lease and not as a Development Agreement
and classified under Article 36 of Schedule I of the said Act. In the said
order, respondent No.2 has stated that they found the Development
Agreement deficit with stamp duty of Rs.64,69,25,000/- and asked the
petitioner No.1 to pay the deficit stamp duty within 30 days.
19} The petitioners further submit that petitioner No.1 on 29 th
September 2011 received the demand notice from respondent No.3 for
payment of stamp duty of Rs.64,69,25,000/- according to order dated 16 th
July 2011 of respondent No.2.
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20} It is this order and the demand notice which is subject matter of
challenge in this writ petition. Mr.Dada, learned senior counsel appearing
on the behalf of the petitioners submitted that the issue raised in the writ
petition is whether there was any power conferred in the respondent No.2
to re-assess the stamp duty payable on the document. Secondly and more
importantly, whether a document can be assessed and stamped under
Article 36 to Schedule I of the Bombay Stamp Act 1958 as a 'Agreement to
Lease' merely because it envisages execution of a Lease Deed at a future
date and does not constitute an immediate and present demise.
21} Mr.Dada submits that the petitioner has already paid significant
amount of stamp duty on the Development Agreement. The petitioner has
paid this sum of Rs.18,53,50,000/- based on the adjudication of the
instrument in question. The adjudication has been done by respondent
No.3 in accordance with the directives of the State Government as set out
in the registration manual. Merely because a different view of the
instrument is possible does not mean that the respondent No.2 should
exercise the powers under section 53A of the Bombay Stamp Act and
interfere with the adjudication by respondent No.3. If the adjudication is
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not stated to be based on any mistake of fact or law nor is it proved to be
vitiated by such illegality or irregularity resulting in serious loss and
prejudice, then, there was no occasion for the respondent No.2 to have
passed the impugned order.
22} Mr.Dada submits that the impugned order, therefore, is ex-facie
unsustainable and deserves to be quashed and set aside. Mr.Dada then
submits that when the instrument of documents was adjudicated and
registered in May 2008, Article 5(g-a) of Schedule I of the said Act has
stipulated that an Agreement with a developer by whatever name called
for construction of development of or sell or transfer in any manner
whatsoever of any immovable property shall be adjudicated as stipulated
therein. By amendment of the Act vide Maharashtra Act No.16 of 2008
with effect from 5th June 2008 and subsequent to the execution of the said
document, the Article was amended and the duty on the instrument or
agreement covered thereby is leviable in consonance with clauses (b), (c)
or (d), as the case may be, of Article 25 on the market value of the
property. Mr.Dada then invited my attention to Article 36 of Schedule I
and submitted that when the subject document was executed, adjudicated
and registered, Article 36 still would read as pointed out by the
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petitioners before the Authorities. The petitioners by pointing out the
relevant recitals of the Agreement and particularly clause 3.2(c) and
clause 3.2(d) of the Agreement submitted that the document perused as a
whole makes it evident that nature of rights granted by CIDCO to the
petitioners are limited at this stage. The petitioners are licensee of the
land for the purpose of development. The petitioners have right to use the
project site for the purpose of implementing the project but the ownership
of the project site continues to be with CIDCO. The petitioners have been
assigned right to enter into Agreement to Sell the built up area for
commercial facility till the execution of the Lease Deed in their favour.
However, execution of the Agreement to Sell has to be ratified by the
lease in favour of the petitioners and that will be only after the petitioners
fulfill all conditions in clause 5.21 of the Agreement. It is only upon
execution of the Lease Deed that the petitioners shall have the right to
further sub-let/ licence the commercial facility, except certain executed
commercial portion. Therefore, clause 5.21 itself would make it clear that
the petitioners rights are limited and would be limited even after the
further documents are executed in their favour. The Agreement is thus
subject to several conditions precedent, reciprocal obligations and receipt
of various approvals and provisions, which may or may not happen.
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Therefore, there is no present demise in favour of the petitioners. Until
the demise and execution of lease, the Agreement in question remains a
Development Agreement. The petitioners, therefore, pointed out that the
Development Agreement does not attract payment of stamp duty under
Article 36 of Schedule I of the Act.
23} Mr.Dada submits that unless there is immediate and present
demise, Article 36 of Schedule I of the Act will not be applicable. Mr.Dada
relies upon the judgment of the Hon'ble Privy Council in the case of
Hemanta Kumari Debi vs. Midnapur Zamindari Co reported in A.I.R 1919
Privy Council 79. Mr.Dada also relies upon a judgment of the learned
single Judge of this Court in Re. Indian Stamp Act, 1899 reported in A.I.R
1952 Bombay 199. Mr.Dada thereafter relies upon the following decisions
of the Hon'ble Supreme Court:
(1) (1994) 2 Supreme Court Cases 497 - State of
Maharashtra and others vs. Atur India Pvt Ltd;
(2) (1999) 5 Supreme Court Cases 708 - ICICI vs. State of
Maharashtra.
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24} Mr.Dada, therefore, submits that just as in ICICI's case (supra), the
Hon'ble Supreme Court concluded that if the document on the face of it is
an Agreement to create a lease in future, then, it is not chargeable to
stamp duty as a lease would be. It still remains an Agreement and which
does not create a lease nor any interest in the land in favour of the parties
like the petitioners. Once this authoritative pronouncement of the Hon'ble
the Supreme Court concludes the issue, then, Mr.Dada would submit that
the petition deserves to succeed.
25} Lastly, Mr.Dada relies upon judgment of a learned single Judge of
this Court in the case of M/s.Jasubhai Business Services vs. State of
Maharashtra and Ors (Writ Petition No.6623 of 2007 alongwith companion
matters) decided on 14th December 2011. Mr.Dada submits that a similar
controversy was dealt with in that judgment and, therefore, the writ
petition be allowed in those terms.
26} Additionally and without prejudice, Mr.Dada submits that the
petitioners have furnished an undertaking on 16 th April 2008 in the office
of respondent No.3 for confirmation of the payment of appropriate stamp
duty at the time of execution of the Lease Deed, if any. Mr.Dada on
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instructions submits that an affidavit-cum-undertaking of the petitioners
in the same terms would also be filed in this Court which would reiterate
the petitioners undertaking to pay required stamp duty as may be due and
payable under the law. For all these reasons, it is submitted that the
petition be allowed.
27} On the other hand, Mr.Kumbhakoni, learned Special Counsel
appearing on behalf of the respondents submitted that what has been
overlooked in all such and even this case, is that the definition of the term
"lease" as appearing in section 2(n) of the said Act is distinct and different
from the Transfer of Property Act, 1882. If that definition is read properly
and entirely, it would be evident that the test of "present demise" is not
required to be satisfied in this case. Further, section 2(l) of the said Act is
equally important. The deletion of the explanation in the Article in
question has some meaning and significance. Therefore, both definitions
and the distinction therein, is important. If in this backdrop, the present
case is seen, it would be clear that the word "Lease Deed" is defined in the
Agreement in question. Clause 3.2 of this Agreement and sub-clauses (a)
to ( c) would show that 60% of the lease premium as stipulated in the
document has been paid. Equally, possession has been handed over. The
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balance sum is to be paid before execution of Lease Deed. In such
circumstances, the present demise is created. If that is so, then, there is no
substance in any of the contentions raised by Mr.Dada. Mr.Kumbhakoni,
therefore, submits that none of the decisions will be of any assistance to
Mr.Dada. The Authority has not committed any error in holding that the
instrument under construction creates a right in the property. Therefore,
this document is nothing but a lease. It is covered by Article 36 of the
Schedule I to the Act and requires to be assessed for the purposes of
stamp duty in terms thereof. There is no other conclusion possible and,
therefore, the writ petition be dismissed.
28} The judgments cited by Mr.Dada have no application because in
none of them including the State of Maharashtra vs. Atur India Pvt Ltd and
ICICI vs. State of Maharashtra, has the Court noted the definition of the
term "lease" as appearing in the Bombay Stamp Act, 1958. For all these
reasons, he submits that these judgments cannot assist the petitioner. The
petition, therefore, deserves to be dismissed.
29} For properly appreciating the rival contentions, it would be
necessary to refer to the notice which has been issued to the petitioner
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No.1 in this case. That notice, a copy of which is at Annexure G to the
writ petition, is issued in Adjudication Cases No.358 of 2008 and 1296 of
2008. These cases were taken under review by resorting to section 53-A
of the said Act and what has been alleged is that the petitioners have not
paid the stamp duty in accordance with law. Therefore, it is proposed to
review the adjudication and what has been then set out is the details of
the case, the instrument and the market value and the stamp duty which
has not been paid and is alleged as deficit, namely, Rs.73 crores 94 lakhs.
30} On this, what the petitioners pointed out is that they were
successful bidders of the scheme for development of integrated complex
at Seawoods Railway Station, Navi Mumbai (for short "Seawoods
Project"). The CIDCO by its letter dated 19 th March 2008 accepted the bid
of the petitioners for development of the Seawoods Project and the
petitioners are required to develop (a) railway terminal and
(b) integrated commercial complex on the project site. That is how the
Development Agreement was executed on 21 st April 2008 with CIDCO.
Pursuant to the adjudication under section 31 of the said Act by the
Stamp Office, Thane and in terms of the computation communicated, the
petitioners paid stamp duty of Rs.18,53,50,000/-. That stamp duty has
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been accepted on 16th May 2008 and on the Development Agreement.
Thereafter, the Development Agreement was registered. Thus, this is
nothing but a Development Agreement and what the instrument in
question would show is that no lease or interest is created in any manner
in favour of the petitioners.
31} As is evident and clear in law, the stamp duty is a fiscal measure
enacted to secure revenue for the State on certain classes of instruments.
It is not enacted to arm a litigant with a weapon of technicality to meet
the case of his opponents. The stringent provisions of the Act are
conceived in the interest of the revenue. [AIR 1969 Supreme Court 1238 -
Hindustan Steel Ltd vs. M/s.Dilip Construction Company - para 5 at page
1240).
32} Equally, another principle for the application of the Act is that it
does not apply to the transaction but to the document recording
transaction. What is meant is that for stamp duty, it is to be seen as to
which transaction is effected or intended, to determine the character of
the document but the stamp duty is to be paid on the document and not
on the transaction [see Life Insurance Corporation of India vs. Dinanath
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Mahadeo Tembhekar - 1976 Maharashtra Law Journal 369 and Sakharam
Shankar and others vs. Ramchandra Babu - 5 Bombay Law Reporter 28
(F.B)]. In this behalf, the observations and conclusions in the judgment of
this Court in the case of Dinanath Tembhekar (supra) are pertinent and
read as under:
"3 The principle on which the liability under fiscal statutes
like Stamp Act is cannot be disputed. The interpretation has
to be according to strict letter of the law and not only in case
of doubt but in case of beneficial interpretation favouring the
subject, the rule is to tend in favour of the subject rather than
the exchequer. There being no equity in the matters of taxing
statutes, the Court adheres and follows this path to
substantially advance the cause of the disputes. See
A.V.Fernandez v. State of Kerala (A.I.R 1957 SC 657); Ramo
Swarup v. Foti (A.I.R 1933 All. 321); Firm of Chunilal v.
Firm Mukalal (A.I.R 1968 All. 164); R.D.Sethna v. Mirza
Mohamed (9 B.L.R 1934) and Santdas Moolchand v.
Sheodayal (1970 Maharashtra Law Journal 419). Turning
with these principles to apply to the provisions of section 2(n)
which defines lease for the purpose of Stamp Act, the ground
may be clear by referring to the purposes of the Act itself. It is
under Entry 63, List II, i.e the State List of Seventh Schedule
of the Constitution, that the State Legislature has enacted the
provisions of the Stamp Act with a view to collect stamp duty
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in respect of documents. Reference to the preamble itself
shows that the nature of duty is payable on documents or
instruments and not on mere transaction. Provisions of
section 3 in Chapter II makes the instruments chargeable
with duty as contained in the schedules appended to the Act
and reference to other provisions like sections 4 to 6
emphasizes that it cannot be the intention of the Legislature
to collect duty on transactions. There is a clear distinction in
the legal affairs of men which can be taken note of in that
transactions may be effected having legal effects without
resort to formal inscribing of them in the shape of documents
or instruments. Sometimes by the instruments the legal rights
may stand conveyed and sometimes without it. Instruments
may be inscribed and executed just to witness the completed
transactions and similarly instruments or documents may
come in existence with a view to create rights and obligations
in future. There may be executed, executory as well executable
instruments which may take the formal shape of agreements
or which may be spelt out by the documents that pass
between the parties. Question in each case while applying the
provisions of fiscal statutes like the Stamp Act is a question of
fact to be determined taking into account all the relevant
circumstances, the nature of transaction and its legal effect,
leaning always in case of doubt to favour the subject from the
tax law.
4 Section 2(n) of the Bombay Stamp Act which has to be
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applied to the present case is peculiarly worded and it defines
"lease" as meaning "a lease of immovable property" and then
proceeds to include certain other instruments like (i) a patta,
(ii) a Kabulayat, or other undertaking in writing not being a
counter-part of the lease to cultivate, occupy or pay or deliver
rent for immovable property; (iii) any instrument by which
tolls of any description are let; and (iv) any writing on an
application for a lease intended to signify that the application
is granted. Resort to such an inclusive definition clearly shows
that but for the inclusions the instruments mentioned in
clauses (i) to (iv) would not be within the meaning of the
term "lease" as contemplated by the definition itself. Being the
provision in Stamp Act which deals with instruments, the
primary definition of the word "lease" would mean that it
must be an instrument creating a lease of immovable
property. If there is no instrument or document the question
of application of the definition does not arise. The lease of
immovable property by itself postulates a transfer of a right
to enjoy such property made for a certain time or in
perpetuity in consideration of a price paid or promised or in
consideration of money, share of crops, service or any other
thing of value to be rendered periodically or on specified
occasions by the lessor to the lessee. The legal concept of lease
is contemplated by section 105 of the Transfer of Property Act
and that shows that there are three basic requirements to
make any transfer a lease. Firstly it is a right of enjoyment of
immovable property which is the subject matter of transfer.
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Secondly it is in consideration, either paid or promised, or to
be rendered periodically by the lessee to the lessor. Thirdly it
is a transfer either for certain time or in perpetuity. If these
three incidents are available in a transaction between the
parties, i.e between transferor or lessor and transferee or
lessee and they effect the demise of the immovable property
there comes into existence the lease of immovable property.
Under the provisions of the Transfer of Property Act there are
several types of lease contemplated and several of them do not
require any instrument to validly create rights to enjoy the
property. It is only when the lease of immovable property is
from year to year or for any term exceeding one year or
reserving a yearly rent, the law requires that the lease has to
be made by a registered instrument (see section 107 of the
Transfer of Property Act). It follows excepting in the cases of
section 107 of Transfer of Property Act there can be a lease
for shorter durations or reserving rent for shorter periods of
the immovable property under which the right to enjoy such
property is transferred by the lessor to the lessee.
5 Therefore, the question is whether the demise is created
by the document in question or in other words whether it is a
lease transferring right of enjoyment in favour of the lessee."
33} In the instant case, what has been executed in favour of the
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petitioners, is a Agreement dated 21 st April 2008 by the CIDCO. That
Agreement records that the Corporation is declared as the New Town
Development Authority in the area designated as New Town of Navi
Mumbai. With a objective to leverage the commercial potential of the
project site, the Corporation intends to develop an integrated complex
offering commercial, retail and office space and hospitality services, and a
modern Seawoods Railway Station. The Corporation carried out a
competitive bidding process and had received proposals from eligible
bidders including the developer (the petitioners). The petitioners
requested by its proposal to grant development rights and a lease for the
parcel of land around the Seawoods Railway Station in Nerul Node of
Navi Mumbai, which is more particularly described in Schedule I to the
Development Agreement. After examining this proposal, the petitioners
were issued a letter of allotment. The Corporation has consented to grant
to the petitioners, development rights on the project site for purpose of
construction and maintenance of the commercial facilities and for the
construction and handover of the railway facilities. The railway facilities
shall be constructed on the specified railway facilities land and the
commercial facilities shall be constructed on the project site excluding the
railway facilities land. The Corporation granted to the petitioners, the
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right to construct and maintain commercial facilities in the air space
above the railway facilities. The petitioners-developer has also been
granted a conditional right to enter into an Agreement to Sell the built up
area over the project site in proportion to the lease premium payments
made by the petitioners in accordance with the terms and conditions of
this Agreement. The lease rights shall be granted to the developer through
the Lease Deed for the entire project site except the railway facilities land.
However, the petitioner shall be granted selling rights for the commercial
facilities constructed in the air space above the railway facilities. Such
lease rights as well as selling rights shall be granted to the petitioners-
developer only on the execution of the Lease Deed (see recital "E" at page
40). Thereafter, the Agreement sets out certain definitions, including the
term "Lease Deed". It is defined to mean the Lease Deed to be executed
between the parties for the entire project site except the railway facilities
land and the air space as provided in Schedule 9 of the Agreement.
Thereafter, the Agreement has several clauses. Article 2 deals with Grant
of Development Rights. Article 3 deals with Project Site in which Article
3.2 is entitled "Rights, Title and Use of the Project Site". That reads as
under:
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"3.2 Rights, Title and Use of the Project Site
a. The Developer shall have the right to the use the project
site for the purpose of implementing the project in accordance
with the provisions of this Agreement and for this purpose, it
may regulate the entry into and use of the same by third
parties. Provided that the developer shall not disturb the
operations of railway station and present entry and exit of
the railway commuters to the Seawoods railway station.
b. The ownership of the project site shall be and continue
to be of the Corporation.
c. The Developer has been assigned a conditional right to
enter into an agreement to sell for the built up area for the
commercial facilities till the execution of the Lease Deed. This
conditional right shall be granted in proportion to the
payment of the Lease Premium Payments made by the
developer. Any agreement entered by the developer, to effect
such an Agreement to Sell, shall be in consonance with this
Agreement.
d. The Agreement to Sell as above shall be ratified by
executing the Lease Deed, which shall be entered into between
the Corporation and the developer, after the developer fulfills
the conditions mentioned under this Agreement in Article
5.21.
e. Subsequent to the execution of the Lease Deed, the
developer shall have the right to further sub-
lease/concession/license the commercial facilities except the
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commercial facilities developed in the air space or any part
thereof to such person/s as it may deem fit and to collect
from such persons lease rent, concession fees, license fees,
maintenance charges and other amounts.
f. With respect to the commercial facilities developed or to
be developed in the air space, the developer shall get selling
rights, on executing the Lease Deed with the Corporation."
34} Then comes Article 4, which provides for Project Management
Consultant. Article 5 provides for Developer's Obligations and then what
is material is Article 5.21 entitled "Request for Lease". Article 6 provides
for Corporation's Obligations. Article 7 provides for Lease Premium
Payments. Article 8 provides for Indemnity. Article 9 deals with Force
Majeure and Article 10 provides for Events of Default and Termination
and Consequences upon Termination. Article 11 is dealing with Handback
of Railway Facilities. Article 12 deals with Dispute Resolution and Article
13 with Representations and Warranties. Article 14 is entitled
"Miscellaneous".
35} Now, what the Authorities seem to hold is that if by the subject
document CIDCO has conferred certain right, title and interest in the
property in favour of the petitioners with regard to entering an
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Agreement to Sell with prospective purchasers, then, clause 3.2 with sub-
clauses ( c) and (d), would make it clear that the right to enter into
Agreement to Sell with the purchasers/assignors has been created in
favour of the petitioners even before execution of a Deed of Lease. This
clearly proves that the current Agreement envisages that execution of the
Deed of Lease after completion of structures is, nothing but a formality.
Therefore, reliance is placed on Articles 1, 5 and Article 7. Further, if the
consideration is lease premium, then, that itself means that it is paid in
furtherance of a lease and not a mere Development Agreement.
Therefore, this is not a case where the right in the property will be
created in future. The rights under the instrument in relation to the
property have been already created. It is not, therefore, a Development
Agreement but an Agreement to Lease. It is, therefore, needed to be
charged with stamp duty as under Article 36 of Schedule I of the said Act.
The argument of the petitioners that they have been permitted to enter
upon the land/site without creating any present demise in their favour,
has been rejected by referring to the terms and conditions. It is held that
the terms and conditions of the Agreement are partly in the form of lease
and partly in the form of Development Agreement. If the document is
taken as a whole and considering its recitals, operative part, future
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compliance from both parties, set of obligations, it is clear that the
document in question is Agreement to Lease and required to be assessed
with stamp duty as is chargeable to lease under Article 36 to Schedule I of
the said Act.
36} Therefore, what Article 36 contemplates is lease. This Article in
Schedule I reads as under:
Description of Instrument Proper Stamp Duty
36 Lease, including under lease
or sub-lease and any agreement to
let or sub-let or any renewal of
lease,-
where such lease purports to
be -
(i) for a period not exceeding The same duty as is leviable on a
five years. conveyance under clauses (a), (b),
*["or(c)"], as the case may be, of
article 25, on 10 per centum of the
market value of the property.
(ii) for a period exceeding five The same duty as is leviable on a
years but not exceeding ten years, conveyance under clauses (a), (b),
with a renewal clause contingent *["or (c)"], as the case may be, of
or otherwise. article 25, on 25 per centum of the
market value of the property.
(iii) for a period exceeding ten The same duty as is leviable on a
years but not exceeding twenty- conveyance under clauses (a), (b),
nine years, with a renewal clause *["or (c)"], as the case may be of
contingent or otherwise. article 25, on 50 per centum of the
market value of the property.
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(iv) for a period exceeding The same duty as is leviable on a
twenty-nine years or in perpetuity, conveyance under clauses (a), (b),
or does not purport for any definite *["or (c)"], as the case may be, of
period, or for lease for a period article 25, on 90 per centum the
exceeding twenty-nine years, with market value of the property.
a renewal clause contingent or
otherwise.
Explanation I.- Any consideration
in the form of premium or money
advanced or to be advanced or
security deposit by whatever name
called shall, for the purpose of
market value, be treated as
consideration passed on.
Explanation II.- The renewal
period, if specifically mentioned,
shall be treated as part of the
present lease.
Explanation III.- For the purpose
of this article, the market value,
for the instrument falling under
section 2(n)(iii) (Toll Agreements)
and article 5(g-e) (Hire Purchase
Agreement), shall be the total
contract value and they shall be
chargeable to duty same as under
clause (a) of article 25].
37} A bare perusal of Article 36 would make it clear that it covers
instrument or document styled as lease and includes under lease or sub-
lease and any agreement to let or sub-let or any renewal of lease. The
term "lease" as defined in section 2(n) of the Bombay Stamp Act, 1958
and which definition has been relied upon by Mr.Kumbhakoni reads as
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under:
"2(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) igany instruments 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 be adjusted towards the total duty
leviable on such instrument;]"
38} A bare perusal of the same would make it clear that "lease" means a
lease of immovable or movable or both property and includes the
instruments in clauses (i) to (v). The definition, to my mind, is not
distinct than the concept as understood by the Transfer of Property Act,
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1882. Section 105 of the Transfer of Property Act, 1882 defines "lease" as
under:
"105 Lease defined.- A lease of immovable property is a
transfer of a right to enjoy such property, made for a certain
time, express or implied, or in perpetuity, in consideration of
a price paid or promised, or of money, a share of crops,
service or any other thing of value, to be rendered periodically
or on specified occasions to the transferor by the transferee,
who accepts the transfer on such terms."
39} When section 2(n) of the Bombay Stamp Act, 1958 defines "lease"
to mean lease of immovable property, it only re-enforces that very concept
by which lease is termed as a mode of transfer of property by the Transfer
of Property Act, 1882. However, for the purposes of stamp duty in the
Bombay Stamp Act, 1958, a lease will also include a patta, a kabulayat or
other undertaking in writing not being a counter part of a lease to
cultivate, occupy or pay or deliver rent for immovable property, any
instruments by which tolls of any description are let, any writing on an
application for a lease intended to signify that the application is granted
and a decree or final order of any Civil Court in respect of a lease.
Therefore, various types of writings and instruments which are in the
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nature of lease but without being named as such have been brought
within the purview of section 2(n) the Bombay Stamp Act, 1958.
40} The other Article which is relied upon in this case is Article 5(g-a)
that reads as under:
Description of Instrument Proper Stamp Duty
5 Agreement or its Records or
Memorandum of an Agreement -
......
(g-a) [(i) If relating to giving [The same duty as is leviable on a
authority or power to a promoter or Conveyance under clauses (b), ["or
a developer, by whatever name (c)"], as the case may be, of Article
called, for construction on, 25, on the market value of the
development of or, sale or transfer property]:
(in any manner whatsoever) of,
any immovable property. Provided that, the provisions of
section 32A shall, mutatis
mutandis, apply to such agreement,
records thereof or memorandum, as
they apply to an instrument under
that section:
Provided further that, if the proper
stamp duty is paid under clause (g)
of article 48 on a power of attorney
executed between the same parties
in respect of the same property
then, the stamp duty under this
article shall be one hundred
rupees.]
[(ii) if relating to the purchase of Same duty as is leviable on
one or more units in any scheme or conveyance under clauses (a), (b),
project by an investor from a ["or (c)"], as the case may be, of
developer: Article 25 on the market value of
Provided that, on conveyance the unit.]
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of property by the person, under an
agreement under this sub-clause, to
the subsequent purchaser, the duty
chargeable for each unit under this
sub-clause shall be adjusted
against the duty chargeable under
Article 25 (conveyance) after
keeping the balance of one
hundred rupees, if such transfer or
assignment is made [within a
period of one year] from the date
of the agreement. If on adjustment,
no duty is required to be paid, then
the minimum duty for the
conveyance shall be [rupees one
thousand].
Explanation.- For the purposes of
this sub-clause, the unit shall
include a flat, apartment, tenement,
block or any other unit by
whatever name called, as approved
by the Competent Authority in the
building plan.
41} To my mind, the Agreement which has been executed between the
parties, in this case, envisages development by the petitioners of the
facilities and if the recitals are read together and in their entirety, it is
evident that so as to have development of the railway station and the
commercial facilities, that the petitioners have been granted a conditional
right to enter into Agreement to Sell the built up area over the project
site. However, there is no lease created in favour of the project site and
that would be created only on the execution of the Lease Deed. Thus,
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recitals under part "E" in the Agreement, would make it clear that the
petitioners shall be granted selling rights for the commercial facilities
constructed in the air space above the railway facilities but such lease
rights for the entire project site except the railway facilities land and
selling rights, shall be granted to the petitioners only on the execution of
the Lease Deed. The term "Agreement" has been defined to mean the
Development Agreement with its recitals and schedules. The "Air Space" is
a term which is defined to mean the space over the railway facilities that
is permissible to the developer for the development of commercial
facilities as per the Agreement. The Agreement, therefore, envisages
commercial facilities which are also defined to mean construction of
integrated complex in the air space and at the project site excluding the
railway facilities land and includes but is not limited to facilities, services
and assets comprised therein which the developer may build, provide,
refurbish, modify, demolish, alter or procure for better commercial
utilisation of the project site.
42} If the clauses of the parties are understood in this manner, what the
Agreement envisages is grant of development rights and parties have
taken care to clarify vide Article 2.4 is that "nothing in these presents
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contained shall be construed as a demise in law of the project site hereby
agreed to be demised or any part thereof so as to confer upon the
developer any legal interest therein until the lease hereby provided shall
be executed and registered but the developer shall only have
authorisation to enter upon the project site for the purpose of performing
his obligation in this Agreement." Article 3 entitled as "Project Site" itself
envisages handing over of project site and that is to carry out the
development work envisaged in the Agreement. Article 3.2, therefore, as
reproduced above, cannot be read in isolation as it is only to use the
project site for the purpose of implementing the project in accordance
with the provisions of the Agreement and for this purpose to enable the
petitioners to regulate entry into and use of the same by third parties. The
parties have taken care to state and reiterate that no parting of ownership
rights in relation to the project site, can take place.
43} The petitioners have been assigned a conditional right to enter into
Agreement to Sell of the built up area for the commercial facilities till the
execution of the Lease Deed and this right is conditional in proportion to
the payment of lease premium payments. The Agreement entered by the
developer has to be in consonance with the Development Agreement
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executed by the CIDCO in its favour. Equally, such an Agreement has to be
ratified by the parties by executing Lease Deed which Lease Deed shall be
entered into after the petitioner fulfills the condition mentioned under
Article 5.21. The right to create sub-lease/concession/licence of the
commercial facilities developed in the air space or any part thereof, can
only be upon execution of the Lease Deed. The right to sell the
commercial facilities can only accrue on executing the Lease Deed with
the Corporation. Therefore, this Agreement cannot be seen as anything
but a Development Agreement and the clauses therein enable and
facilitate the petitioners-developer to develop the facilities and hand them
over as agreed. With a view to develop the railway facilities land that the
petitioners are permitted to enter into Agreement to Sell the commercial
facilities in air space above the railway facilities land but even that is
conditional as stipulated above. In such circumstances, to hold that this
Agreement itself creates a lease and must be styled as a Lease Agreement,
is difficult to accept. Really speaking, by interpreting the clauses of the
Agreement and construing the document itself, the authorities under the
Bombay Stamp Act, 1958 have traversed much beyond the powers
conferred in them. They have gone ahead and imposed a duty on the
transaction. That was clearly impermissible in this case.
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44} It is difficult to accept Mr.Kumbhakoni's submission that the test of
"present demise" is not to be satisfied in this case as the definition of the
term "lease" appearing in section 2(n) of the Bombay Stamp Act, 1958 is
distinct from that in the Transfer of Property Act, 1882. For the reasons
that are already indicated above and finding that there is no difference
between the definitions and rather the Bombay Stamp Act, 1958 does not
define the term but adopts the same meaning assigned to it as in the
Transfer of Property Act, 1882 and includes writings and instruments
styled as lease, this submission is rejected. Therefore, to hold that the
definition of the term "lease" as appearing in section 2(n) of the Bombay
Stamp Act, 1958 having not been brought to the notice of this Court or
the Hon'ble the Supreme Court in the decisions relied upon by Mr.Dada, I
cannot be persuaded to take a different view.
45} What Mr.Kumbhakoni has emphasised is that if section 2(l) defines
the term "instrument" to include every document by which any right or
liability is, or purports to be, created, transferred, limited, extended,
extinguished or recorded, but does not include a bill of exchange, cheque,
promissory note, bill of lading, letter of credit, policy of insurance,
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transfer of share, debenture, proxy and receipt, then, that is indicative of
the legislative intent. Therefore, the argument is that with the assistance
of the definition of the word "instrument" and "lease", the test of "present
demise" is not required to be satisfied in this case. Once again, this
argument is difficult to accept. The definition of this term may be a key to
understand whole of the Bombay Stamp Act, 1958 as held by the Hon'ble
Delhi High Court in the case of Chief Controlling Revenue Authority vs.
Smt.Satyawati Sood and others reported in A.I.R. 1972 Delhi 171 but when
the specific categories of instruments have been enumerated in the
Schedule and some of which are also defined independently, then, it is not
possible to ignore the provisions in relation thereto. These provisions are
to be found in the Bombay Stamp Act itself. Thus, the Bombay Stamp Act
when it defines the term "lease" and imposes stamp duty by specifying the
rate in Schedule I to the same, then, by considering only the meaning of
the term "instrument" as defined in section 2(l), it will not be possible to
ignore the other provisions which are equally substantive in nature. Thus,
if specific classes of instruments have been set out with a reference and
nomenclature and some of them have been also defined or their common
or general meaning has been adopted, then, the definition of the term
"instrument" alone cannot be of any assistance and will not be decisive. In
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this behalf, the following observations of the Hon'ble Delhi High Court in
the above judgment are extremely relevant:
"5 Next, we come to the scheme of the Stamp Act in this
respect. Under section 3 of the Stamp Act only the
instruments mentioned therein are chargeable with the stamp
duties indicated in the Schedule to the Act. The definition of
"instrument" in section 2(14) is the most fundamental. It
includes two distinct types of documents, namely:- (a) a
document by which any right or liability is or purports to be
created, transferred, limited, extended, extinguished, and (b)
a document by which any such right or liability is only
recorded even though the document itself does not create such
a right or liability. This definition is a key to the
understanding of the whole of the Stamp Act. It shows the
legislative intention to make a distinction between an
instrument which itself forms a legal transaction creating a
right or liability and an instrument which does not itself form
such a legal act but is only a subsequent record of an act-in-
law. It is well known that while the Transfer of Property Act
concerns itself primarily with the transactions or acts-in-law,
the Registration Act and the Stamp Act are concerned with
the documents or instruments only. Unless there is a
document or an instrument, these two statutes do not arise
for consideration. How does the distinction made in section
2(14) enable us to construe the provisions of the Stamp Act?
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One way to use section 2(14) in the construction of the Act
would be to regard every instrument included in the Schedule
to the Act as being chargeable to duty whether it creates a
right or liability or whether it merely records subsequently
the creation of such right or liability. Such an approach is not
permissible for the following reasons: Firstly, in respect of
leases it would run contrary to the scheme of the relevant
provisions of the Transfer of Property Act and Registration
Act explained above. If the intention of the legislation under
those Acts was to regard an oral lease accompanied by
delivery of possession as valid, it would follow that those two
statutes would not regard the subsequent record of the terms
of an oral lease as in any way superseding the previous oral
lease. Such a subsequent record would not, therefore, amount
to the making of a lease under those statutes. It could not be
the intention of the legislature, therefore, that such a
subsequent record of a legal transaction of lease should
nevertheless be chargeable with stamp duty. Secondly, this is
why a subsequent record of a previous legal transaction is
specifically made chargeable by the Stamp Act only in a
couple of specified instances but not otherwise. The first
instance is the definition of "settlement" in section 2(24)
which expressly applies not only to an agreement in writing
by which such a settlement is made but also to an instrument
which merely records the previous making of such settlement.
The second instance is Article 5 of the Schedule which
expressly applies to agreement or memorandum of an
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agreement. This shows that it would apply not only to the
written agreement which is contemporaneous with the act-in-
law embodied therein but also to a mere subsequent
memorandum of an oral agreement constituting an act-in-
law which has already taken place in the past. It is to be
noted that under Article 5 it is expressly mentioned that
"Agreement to Lease" would be governed not by Article 5 but
by Article 35. This would mean that the scheme of Article 5
which makes chargeable not only a contemporaneous
agreement but also a subsequent record of it to stamp duty is
not applicable to an agreement to lease. We cannot, therefore,
construe the entries in the Schedule to the Stamp Act to apply
not only to the deeds which created a right or liability
contemporaneously but also to the subsequent record of the
oral creations of such rights or liabilities except when this is
specifically stated in the Act such as in section 2(24) and in
Article 5 of the Schedule thereof.
6 The correct approach to the construction of the entries
in the Schedule to the Stamp Act would, therefore, be to read
those entries as they are or in the light of the definitions
given in the Stamp Act. So read, those entries would apply
only to the deeds which are contemporaneous with the
creation of and intended to create the rights and liabilities
but not to the deeds which merely record the previous
creation of such rights and liabilities unless otherwise stated
in the Act, e.g in section 2(24) and in Article 5 of the
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Schedule I."
46} Mr.Kumbhakoni's argument, therefore, that the test of "present
demise" is not required to be satisfied, cannot be accepted because there
is a clear distinction in law between a lease and Agreement to Lease. It is
not necessary to multiply decisions but to refer to this broad concept as
has been understood in the Bombay Stamp Act, 1958 itself. In the case of
State of Maharashtra and others vs. Atur India Pvt Ltd reported in (1994) 2
Supreme Court Cases 497, the Hon'ble Supreme Court referred to this vital
distinction in law and Mr.Dada's reliance on this decision is apposite and
appropriate. After referring to the distinction between lease and
Agreement to Sell, in paragraphs 24 to 28, including the famous decision
in the case of Tiruvenibai vs. Lilabai reported in A.I.R 1959 Supreme Court
620, what the Supreme Court has held is that if the relationship of lessor
and lessee between parties has not came to be established and when there
was no actual demise on the date of the Agreement, then, it will fall in the
category of Agreement to Lease. Mr.Kumbhakoni submitted very
vehemently that the definition of the term "lease" as appearing in section
2(n) was not noticed by the Hon'ble Supreme Court and, therefore, this
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decision is not applicable to this case. However, his argument overlooks
the contents of paragraph 29 of this decision wherein the Supreme Court
makes specific reference to section 2(n) which is nothing but the
definition of term "lease". Once the Hon'ble Supreme Court's judgment in
its Atur India's case has been consistently followed, then,
Mr.Kumbhakoni's argument cannot be accepted.
47} Mr.Kumbhakoni submits that judgment in the case of Atur India
(supra) and ICICI (supra) have been rendered by the Hon'ble Supreme
Court because of Explanation III below Article 36 of Schedule I, which
was in force at the material time. That made it clear that Agreement to
Lease shall not be chargeable as a lease unless there is an immediate and
present demise. Mr.Kumbhakoni submits that this explanation has now
been deleted and that has great significance. The deletion of this
explanation has some definite meaning. If as in this case 60% of the lease
premium is paid, possession is handed over and all that remains to be
done is to pay balance sum before execution of Lease Deed, then, there is
a present demise even otherwise, is the submission of Mr.Kumbhakoni.
48} Both are difficult to accept because what the explanation clarified
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was that an Agreement of Lease shall not be chargeable as a lease unless
there is immediate and present demise. Its deletion does not mean that
even if there is no immediate and present demise, the Agreement of Lease
straightaway can be termed and construed as a lease. What the
explanation clarified was if the Agreement does not create an immediate
and present demise, then, it will not fall under Article 36 of Schedule I of
the Bombay Stamp Act, 1958. The Supreme Court was considering a
similar argument in ICICI case. It was argued that the document before
the Supreme Court though styled as Agreement for Lease, it, in substance
itself creates a lease. It demises immediately and presents an interest in
the land in favour of the ICICI. Repelling this argument and relying on the
judgment in the case of State of Maharashtra and others vs. Atur India Pvt
Ltd reported in (1994) 2 Supreme Court Cases 497, what the Supreme
Court has held is as under:
"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
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document of lease.
7 Our attention has been drawn to a decision of this Court
in Associated Hotels of India Ltd v. R.N.Kapoor SCR at p.383
where this Court has made a distinction between a lease and
a licence. 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 lessee gets that right to
the exclusion of the lessor. Whereas Section 52 of the Indian
Easements Act defines a licence thus:
"52. Where one person grants to another, or to a
definite number of other persons, a right to do, or continue 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 licence."
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 licence. In the present case, the licensee has been put in
possession only for the purpose of constructing a building or
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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.
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."
49} This judgment also supports all the arguments of Mr.Dada and to
my mind, the deletion of the explanation will not mean that even if there
is no present and immediate demise, the Court can proceed to hold that
the document or instrument is a lease by itself. In every such case, the
document or instrument will have to be read as a whole so as to find out
as to whether though styled as an Agreement for Lease, whether it creates
a present and immediate demise or interest so as to hold that it is lease by
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itself. In the present case, the parties do not use the term "Agreement to
Lease" or "Agreement for Lease". They have executed a Development
Agreement with creation of lease in future and until that lease is created
and further a document executed in that behalf, a conditional right to
enter into or execute an Agreement to Sell the commercial portion or
property has been granted in favour of the petitioner. It has been clarified
that this does not amount to lease of the railway facilities land and
equally the commercial facilities or the air space above it. The parties
have taken care to clarify that the limited right granted by Article 3.2(c) is
subject to ratification by them by executing a Lease Deed. Until then, such
Agreement by itself will not create any rights in favour of the transferee
claiming through the petitioners. If that is how the parties have
understood their arrangement, then, permitting the Authorities under the
Bombay Stamp Act, 1958 to style it differently or distinctly so as to
impose stamp duty thereon, cannot be permitted as that is travelling
beyond and exceeding their powers under the subject enactment. A
conditional right to enter into Agreement to Sell will not be complete, as
such Agreement will have to be ratified by parties by executing the Lease
Deed between them and that is also on fulfilling all conditions stipulated
by Article 5.21. Until then, it is an arrangement so as to facilitate
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development of the site and generate funds for said development. Beyond
that, the parties have not intended to create any other arrangement, leave
alone conferring any rights. In such circumstances, accepting
Mr.Kumbhakoni's argument would be amounting to brushing aside and
ignoring a binding precedent. That is not permissible in law and by rule of
precedents.
50} As a result of the above discussion and finding that the petitioners
are right in their contentions that the Agreement is an Agreement for
Development of the properties subject to a future arrangement of lease,
then, the order under challenge cannot be sustained. It will have to be
quashed and set aside. By merely paying the lease premium to the extent
of 60% and handing over possession, no rights are created much less of a
lease. Therefore, the petitioners are right in contending that under the
Agreement, no interest in land is transferred. It does not create a lease
nor is intended to create any interest in the land or demise it in their
favour. It is only for the limited purpose of construction and development
of the land that the same has been entered into. That stand of the
petitioners find support from the recitals and clauses of the Agreement
which have been completely ignored by the Authorities. Based on certain
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assumptions and presumptions, they have arrived at a conclusion which is
beyond the intentment of the parties under the Agreement in question. All
the more, therefore, the order passed cannot be sustained. The impugned
order dated 16th July 2011 is, therefore, quashed and set aside. Rule is
made absolute in terms of prayer clause (a) but by clarifying that the
petitioners shall be bound by their undertaking given to this Court and
which has been taken on record.
(S. C. DHARMADHIKARI, J)
