Delhi High Court
Municipal Corporation Of Delhi vs N.K. Gupta on 2 July, 2008
Author: S. Muralidhar
IN THE HIGH COURT OF DELHI: NEW DELHI
LPA No. 319 of 2007
Reserved on: 19th May, 2008
Date of judgment: July 02, 2008
MUNICIPAL CORPORATION OF DELHI ..... Appellant
Through: Mr.H.S. Phoolka, Senior Advocate
Mr. Sanjeev Sabharwal and
Mr. Alok Singh, Advocates
versus
N.K. GUPTA .....Respondent
Through Mr. Sanjay Goswamy and Mr. Ajay Kumar,
Advocates for the Respondents.
Ms. Iram Majid and Ms. Zubeda Begum, Advocates
for Respondent GNCTD.
With
LPA No. 373/2007
MUNICIPAL CORPORATION OF DELHI ..... Appellant
Through: Mr.H.S. Phoolka, Senior Advocate
Mr. Sanjeev Sabharwal and
Mr. Alok Singh, Advocates
versus
VARDHMAN PROPERTIES .....Respondent
Through Mr. Sanjay Goswamy and Mr. Ajay Kumar,
Advocates for the Respondents.
Ms. Iram Majid and Ms. Zubeda Begum, Advocates
for Respondent GNCTD.
LPA No. 374/2007
MUNICIPAL CORPORATION OF DELHI ..... Appellant
Through: Mr.H.S. Phoolka, Senior Advocate
Mr. Sanjeev Sabharwal and
Mr. Alok Singh, Advocates
versus
LPA No.319/2007 Page 1 of 25
KEY POINT .....Respondent
Through Mr. Sanjay Goswamy and Mr. Ajay Kumar,
Advocates for the Respondents.
Ms. Iram Majid and Ms. Zubeda Begum, Advocates
for Respondent GNCTD.
LPA No. 376/2007
MUNICIPAL CORPORATION OF DELHI ..... Appellant
Through: Mr.H.S. Phoolka, Senior Advocate
Mr. Sanjeev Sabharwal and
Mr. Alok Singh, Advocates
versus
K.K. ENTERPRISES .....Respondent
Through Mr. Sanjay Goswamy and Mr. Ajay Kumar,
Advocates for the Respondents.
Ms. Iram Majid and Ms. Zubeda Begum, Advocates
for Respondent GNCTD.
LPA No. 377/2007
MUNICIPAL CORPORATION OF DELHI ..... Appellant
Through: Mr.H.S. Phoolka, Senior Advocate
Mr. Sanjeev Sabharwal and
Mr. Alok Singh, Advocates
versus
VARDHMAN PROPERTIES .....Respondent
Through Mr. Sanjay Goswamy and Mr. Ajay Kumar,
Advocates for the Respondents.
Ms. Iram Majid and Ms. Zubeda Begum, Advocates
for Respondent GNCTD.
LPA No. 378/2007
MUNICIPAL CORPORATION OF DELHI ..... Appellant
Through: Mr.H.S. Phoolka, Senior Advocate
Mr. Sanjeev Sabharwal and
Mr. Alok Singh, Advocates
versus
LPA No.319/2007 Page 2 of 25
K.K. ENTERPRISES .....Respondent
Through Mr. Sanjay Goswamy and Mr. Ajay Kumar,
Advocates for the Respondents.
Ms. Iram Majid and Ms. Zubeda Begum, Advocates
for Respondent GNCTD.
LPA No. 380/2007
MUNICIPAL CORPORATION OF DELHI ..... Appellant
Through: Mr.H.S. Phoolka, Senior Advocate
Mr. Sanjeev Sabharwal and
Mr. Alok Singh, Advocates
versus
GARIMA AGGRAWAL .....Respondent
Through Mr. Sanjay Goswamy and Mr. Ajay Kumar,
Advocates for the Respondents.
Ms. Iram Majid and Ms. Zubeda Begum, Advocates
for Respondent GNCTD.
LPA No. 381/2007
MUNICIPAL CORPORATION OF DELHI ..... Appellant
Through: Mr.H.S. Phoolka, Senior Advocate
Mr. Sanjeev Sabharwal and
Mr. Alok Singh, Advocates
versus
VARDHMAN PROPERTIES .....Respondent
Through Mr. Sanjay Goswamy and Mr. Ajay Kumar,
Advocates for the Respondents.
Ms. Iram Majid and Ms. Zubeda Begum, Advocates
for Respondent GNCTD.
LPA No. 382/2007
MUNICIPAL CORPORATION OF DELHI ..... Appellant
Through: Mr.H.S. Phoolka, Senior Advocate
Mr. Sanjeev Sabharwal and
Mr. Alok Singh, Advocates
versus
VARDHMAN PROPERTIES .....Respondent
Through Mr. Sanjay Goswamy and Mr. Ajay Kumar,
LPA No.319/2007 Page 3 of 25
Advocates for the Respondents.
Ms. Iram Majid and Ms. Zubeda Begum, Advocates
for Respondent GNCTD.
LPA No. 383/2007
MUNICIPAL CORPORATION OF DELHI ..... Appellant
Through: Mr.H.S. Phoolka, Senior Advocate
Mr. Sanjeev Sabharwal and
Mr. Alok Singh, Advocates
versus
VARDHMAN PROPERTIES .....Respondent
Through Mr. Sanjay Goswamy and Mr. Ajay Kumar,
Advocates for the Respondents.
Ms. Iram Majid and Ms. Zubeda Begum, Advocates
for Respondent GNCTD.
LPA No. 384/2007
MUNICIPAL CORPORATION OF DELHI ..... Appellant
Through: Mr.H.S. Phoolka, Senior Advocate
Mr. Sanjeev Sabharwal and
Mr. Alok Singh, Advocates
versus
VARDHMAN PROPERTIES .....Respondent
Through Mr. Sanjay Goswamy and Mr. Ajay Kumar,
Advocates for the Respondents.
Ms. Iram Majid and Ms. Zubeda Begum, Advocates
for Respondent GNCTD.
LPA No. 385/2007
MUNICIPAL CORPORATION OF DELHI ..... Appellant
Through: Mr.H.S. Phoolka, Senior Advocate
Mr. Sanjeev Sabharwal and
Mr. Alok Singh, Advocates
versus
HARI SINGH BUILDER & PROMOTRS .....Respondent
Through Mr. Sanjay Goswamy and Mr. Ajay Kumar,
LPA No.319/2007 Page 4 of 25
Advocates for the Respondents.
Ms. Iram Majid and Ms. Zubeda Begum, Advocates
for Respondent GNCTD.
LPA No. 386/2007
MUNICIPAL CORPORATION OF DELHI ..... Appellant
Through: Mr.H.S. Phoolka, Senior Advocate
Mr. Sanjeev Sabharwal and
Mr. Alok Singh, Advocates
versus
KAMAL KISHORE AGGRAWAL .....Respondent
Through Mr. Sanjay Goswamy and Mr. Ajay Kumar,
Advocates for the Respondents.
Ms. Iram Majid and Ms. Zubeda Begum, Advocates
for Respondent GNCTD.
LPA No. 387/2007
MUNICIPAL CORPORATION OF DELHI ..... Appellant
Through: Mr.H.S. Phoolka, Senior Advocate
Mr. Sanjeev Sabharwal and
Mr. Alok Singh, Advocates
versus
VARDHMAN PROPERTIES .....Respondent
Through Mr. Sanjay Goswamy and Mr. Ajay Kumar,
Advocates for the Respondents.
Ms. Iram Majid and Ms. Zubeda Begum, Advocates
for Respondent GNCTD.
LPA No. 388/2007
MUNICIPAL CORPORATION OF DELHI ..... Appellant
Through: Mr.H.S. Phoolka, Senior Advocate
Mr. Sanjeev Sabharwal and
Mr. Alok Singh, Advocates
versus
BASANT PROJECTS LTD .....Respondent
Through Mr. Sanjay Goswamy and Mr. Ajay Kumar,
LPA No.319/2007 Page 5 of 25
Advocates for the Respondents.
Ms. Iram Majid and Ms. Zubeda Begum, Advocates
for Respondent GNCTD.
LPA No. 389/2007
MUNICIPAL CORPORATION OF DELHI ..... Appellant
Through: Mr.H.S. Phoolka, Senior Advocate
Mr. Sanjeev Sabharwal and
Mr. Alok Singh, Advocates
versus
VARDHMAN PROPERTIES .....Respondent
Through Mr. Sanjay Goswamy and Mr. Ajay Kumar,
Advocates for the Respondents.
Ms. Iram Majid and Ms. Zubeda Begum, Advocates
for Respondent GNCTD.
LPA No. 391/2007
MUNICIPAL CORPORATION OF DELHI ..... Appellant
Through: Mr.H.S. Phoolka, Senior Advocate
Mr. Sanjeev Sabharwal and
Mr. Alok Singh, Advocates
versus
VARDHMAN PROPERTIES .....Respondent
Through Mr. Sanjay Goswamy and Mr. Ajay Kumar,
Advocates for the Respondents.
Ms. Iram Majid and Ms. Zubeda Begum, Advocates
for Respondent GNCTD.
LPA No. 394/2007
MUNICIPAL CORPORATION OF DELHI ..... Appellant
Through: Mr.H.S. Phoolka, Senior Advocate
Mr. Sanjeev Sabharwal and
Mr. Alok Singh, Advocates
versus
LPA No.319/2007 Page 6 of 25
VARDHMAN PROPERTIES .....Respondent
Through Mr. Sanjay Goswamy and Mr. Ajay Kumar,
Advocates for the Respondents.
Ms. Iram Majid and Ms. Zubeda Begum, Advocates
for Respondent GNCTD.
LPA No. 395/2007
MUNICIPAL CORPORATION OF DELHI ..... Appellant
Through: Mr.H.S. Phoolka, Senior Advocate
Mr. Sanjeev Sabharwal and
Mr. Alok Singh, Advocates
versus
VARDHMAN PROPERTIES .....Respondent
Through Mr. Sanjay Goswamy and Mr. Ajay Kumar,
Advocates for the Respondents.
Ms. Iram Majid and Ms. Zubeda Begum, Advocates
for Respondent GNCTD.
LPA No. 396/2007
MUNICIPAL CORPORATION OF DELHI ..... Appellant
Through: Mr.H.S. Phoolka, Senior Advocate
Mr. Sanjeev Sabharwal and
Mr. Alok Singh, Advocates
versus
MANISH AGGRAWAL .....Respondent
Through Mr. Sanjay Goswamy and Mr. Ajay Kumar,
Advocates for the Respondents.
Ms. Iram Majid and Ms. Zubeda Begum, Advocates
for Respondent GNCTD.
LPA No. 400/2007
MUNICIPAL CORPORATION OF DELHI ..... Appellant
Through: Mr.H.S. Phoolka, Senior Advocate
Mr. Sanjeev Sabharwal and
Mr. Alok Singh, Advocates
versus
LPA No.319/2007 Page 7 of 25
VARDHMAN PROPERTIES .....Respondent
Through Mr. Sanjay Goswamy and Mr. Ajay Kumar,
Advocates for the Respondents.
Ms. Iram Majid and Ms. Zubeda Begum, Advocates
for Respondent GNCTD.
LPA No. 401/2007
MUNICIPAL CORPORATION OF DELHI ..... Appellant
Through: Mr.H.S. Phoolka, Senior Advocate
Mr. Sanjeev Sabharwal and
Mr. Alok Singh, Advocates
versus
VARDHMAN PROPERTIES .....Respondent
Through Mr. Sanjay Goswamy and Mr. Ajay Kumar,
Advocates for the Respondents.
Ms. Iram Majid and Ms. Zubeda Begum, Advocates
for Respondent GNCTD.
LPA No. 402/2007
MUNICIPAL CORPORATION OF DELHI ..... Appellant
Through: Mr.H.S. Phoolka, Senior Advocate
Mr. Sanjeev Sabharwal and
Mr. Alok Singh, Advocates
versus
VARDHMAN PROPERTIES .....Respondent
Through Mr. Sanjay Goswamy and Mr. Ajay Kumar,
Advocates for the Respondents.
Ms. Iram Majid and Ms. Zubeda Begum, Advocates
for Respondent GNCTD.
LPA No. 403/2007
MUNICIPAL CORPORATION OF DELHI ..... Appellant
Through: Mr.H.S. Phoolka, Senior Advocate
Mr. Sanjeev Sabharwal and
Mr. Alok Singh, Advocates
LPA No.319/2007 Page 8 of 25
versus
VARDHMAN PROPERTIES .....Respondent
Through Mr. Sanjay Goswamy and Mr. Ajay Kumar,
Advocates for the Respondents.
Ms. Iram Majid and Ms. Zubeda Begum, Advocates
for Respondent GNCTD.
LPA No. 405/2007
MUNICIPAL CORPORATION OF DELHI ..... Appellant
Through: Mr.H.S. Phoolka, Senior Advocate
Mr. Sanjeev Sabharwal and
Mr. Alok Singh, Advocates
versus
UNITY PROJECTS LIMITED .....Respondent
Through Mr. Sanjay Goswamy and Mr. Ajay Kumar,
Advocates for the Respondents.
Ms. Iram Majid and Ms. Zubeda Begum, Advocates
for Respondent GNCTD.
LPA No. 406/2007
MUNICIPAL CORPORATION OF DELHI ..... Appellant
Through: Mr.H.S. Phoolka, Senior Advocate
Mr. Sanjeev Sabharwal and
Mr. Alok Singh, Advocates
versus
KEY POINT .....Respondent
Through Mr. Sanjay Goswamy and Mr. Ajay Kumar,
Advocates for the Respondents.
Ms. Iram Majid and Ms. Zubeda Begum, Advocates
for Respondent GNCTD.
LPA No. 407/2007
MUNICIPAL CORPORATION OF DELHI ..... Appellant
Through: Mr.H.S. Phoolka, Senior Advocate
Mr. Sanjeev Sabharwal and
Mr. Alok Singh, Advocates
LPA No.319/2007 Page 9 of 25
versus
VARDHMAN PROPERTIES .....Respondent
Through Mr. Sanjay Goswamy and Mr. Ajay Kumar,
Advocates for the Respondents.
Ms. Iram Majid and Ms. Zubeda Begum, Advocates
for Respondent GNCTD.
LPA No. 408/2007
MUNICIPAL CORPORATION OF DELHI ..... Appellant
Through: Mr.H.S. Phoolka, Senior Advocate
Mr. Sanjeev Sabharwal and
Mr. Alok Singh, Advocates
versus
M.M. DEVELOPERS .....Respondent
Through Mr. Sanjay Goswamy and Mr. Ajay Kumar,
Advocates for the Respondents.
Ms. Iram Majid and Ms. Zubeda Begum, Advocates
for Respondent GNCTD.
LPA No. 1051/2007
MUNICIPAL CORPORATION OF DELHI ..... Appellant
Through: Mr.H.S. Phoolka, Senior Advocate
Mr. Sanjeev Sabharwal and
Mr. Alok Singh, Advocates
versus
VARDHMAN PROPERTIES .....Respondent
Through Mr. Sanjay Goswamy and Mr. Ajay Kumar,
Advocates for the Respondents.
Ms. Iram Majid and Ms. Zubeda Begum, Advocates
for Respondent GNCTD.
LPA No. 1057/2007
MUNICIPAL CORPORATION OF DELHI ..... Appellant
Through: Mr.H.S. Phoolka, Senior Advocate
Mr. Sanjeev Sabharwal and
Mr. Alok Singh, Advocates
LPA No.319/2007 Page 10 of 25
versus
VARDHMAN PROPERTIES .....Respondent
Through Mr. Sanjay Goswamy and Mr. Ajay Kumar,
Advocates for the Respondents.
Ms. Iram Majid and Ms. Zubeda Begum, Advocates
for Respondent GNCTD.
LPA No. 1058/2007
MUNICIPAL CORPORATION OF DELHI ..... Appellant
Through: Mr.H.S. Phoolka, Senior Advocate
Mr. Sanjeev Sabharwal and
Mr. Alok Singh, Advocates
versus
VARDHMAN PROPERTIES .....Respondent
Through Mr. Sanjay Goswamy and Mr. Ajay Kumar,
Advocates for the Respondents.
Ms. Iram Majid and Ms. Zubeda Begum, Advocates
for Respondent GNCTD.
LPA No. 1059/2007
MUNICIPAL CORPORATION OF DELHI ..... Appellant
Through: Mr.H.S. Phoolka, Senior Advocate
Mr. Sanjeev Sabharwal and
Mr. Alok Singh, Advocates
versus
SUNDER CONSTRUCTION CO. .....Respondent
Through Mr. Sanjay Goswamy and Mr. Ajay Kumar,
Advocates for the Respondents.
Ms. Iram Majid and Ms. Zubeda Begum, Advocates
for Respondent GNCTD.
LPA No. 1060/2007
MUNICIPAL CORPORATION OF DELHI ..... Appellant
Through: Mr.H.S. Phoolka, Senior Advocate
Mr. Sanjeev Sabharwal and
LPA No.319/2007 Page 11 of 25
Mr. Alok Singh, Advocates
versus
VARDHMAN PROPERTIES .....Respondent
Through Mr. Sanjay Goswamy and Mr. Ajay Kumar,
Advocates for the Respondents.
Ms. Iram Majid and Ms. Zubeda Begum, Advocates
for Respondent GNCTD.
LPA No. 1061/2007
MUNICIPAL CORPORATION OF DELHI ..... Appellant
Through: Mr.H.S. Phoolka, Senior Advocate
Mr. Sanjeev Sabharwal and
Mr. Alok Singh, Advocates
versus
VARDHMAN PROPERTIES .....Respondent
Through Mr. Sanjay Goswamy and Mr. Ajay Kumar,
Advocates for the Respondents.
Ms. Iram Majid and Ms. Zubeda Begum, Advocates
for Respondent GNCTD.
AND
LPA No. 1285/2007
MUNICIPAL CORPORATION OF DELHI ..... Appellant
Through: Mr.H.S. Phoolka, Senior Advocate
Mr. Sanjeev Sabharwal and
Mr. Alok Singh, Advocates
versus
SURYA BUILDWELL LIMITED .....Respondent
Through Mr. Sanjay Goswamy and Mr. Ajay Kumar,
Advocates for the Respondents.
Ms. Iram Majid and Ms. Zubeda Begum, Advocates
for Respondent GNCTD.
Coram:
HON'BLE THE CHIEF JUSTICE
LPA No.319/2007 Page 12 of 25
HON'BLE DR. JUSTICE S. MURALIDHAR
1. Whether Reporters of local papers may be
allowed to see the judgment? Yes
2. To be referred to the Reporter or not? Yes
3. Whether the judgment should be reported Yes
in Digest?
JUDGMENT
Dr. S. Muralidhar, J.
1. These appeals are directed against the common judgment dated
13th March, 2007 passed by the learned Single Judge of this Court in
Writ Petition (Civil) No. 8161 of 2005 and Batch. The writ petitions
challenged the validity of the notices issued by the Collector of Stamps
under Section 40 of the Indian Stamp Act, 1899 („Stamp Act‟)
demanding transfer duty as well as deficient stamp duty and penalty
equal to ten times of the deficient duty.
2. The demand for transfer duty was made in respect of the
conveyance of plots of land in favour of the appellants who successfully
bid for them in auctions held by the Delhi Development Authority
(„DDA‟)/ Municipal Corporation of Delhi („MCD‟). Consequently,
perpetual lease deeds were executed and registered in their favour. The
writ petitioners had also paid the appropriate stamp duty and transfer
duty in terms of the certificate issued by the Collector of Stamps in each
of the cases.
3. On 29th August 2004 a general order was issued by the Divisional
Commissioner, Delhi stating that the Collectors of Stamp of different
districts had adopted varying methods of calculation of duty in respect of
perpetual leases which had resulted in the duty being short levied and
collected. This conclusion was reached on an interpretation of Article 35
of Schedule 1 (A) to the Stamp Act as applicable to Delhi and Section
147 to the Delhi Municipal Corporation Act, 1957 („DMC Act‟).
Consequently, the impugned notices were issued in February 2005 to
each of the appellants calling upon them to pay the deficient duty as well
as the penalty equaling ten times of the deficient duty. In respect of
Vardhman Properties, for instance, the auction purchaser had paid
Rs.12,42,215 as stamp duty. This was now recomputed as Rs.13,30,604
being the aggregate of Rs.10,79,772 as stamp duty and Rs.2,00,832 as
transfer duty. In re-working the duty, the total consideration for the
perpetual lease was taken as the aggregate of the premium amount of
Rs.1,91,11,000 and the annual rent calculated as a percentage of the
premium amount. In addition a penalty of Rs.8,88,389 (being ten times
of the deficient duty) was also demanded.
4. Before the learned Single Judge the respondents contended that
they were not challenging the re-working of the stamp duty since the
question of interpretation of Article 35 of Schedule 1(A) of the Stamp
Act was debatable. Their challenge was, therefore, confined to the
penalty imposed under the Stamp Act as well as the DMC Act with
regard to the stamp duty and transfer duty respectively as well as the
dues in the transfer duty as demanded in the impugned notices.
5. On the question of penalty, the learned Single Judge came to the
conclusion that in terms of Section 40 of the Stamp Act, the power to
impose a penalty was consequential upon the Collector of Stamps
impounding an instrument. Since no instrument had yet been impounded
by the Collector, the question of imposition of any penalty did not arise.
To the extent, therefore, that the impugned notices sought to levy
penalty, they were held to be unsustainable in law.
6. The next question before the learned Single Judge concerned the
interpretation of the relevant entry in Section 147 (2) (b) (v) DMC Act.
After referring to the decision of the learned Single Judge of this Court
in Niagara Hotels & Builders (P) Ltd. v. Union of India 65 (1997) DLT
826, the learned Single Judge concluded that the words „amount‟ and
„value‟ in Section 147 (2) (b) (v) DMC Act did not refer to the premium
collected for the grant of the lease. The learned Single Judge rejected the
contention of the MCD that the word „amount‟ referred to premium and
the word „value‟ referred to the rent. It was held that they referred to the
quantum of the rent for the first fifty years of the lease. Consequently,
transfer duty would be leviable on one-sixth of the rent for the first fifty
years of the lease. Although the lease referred to only the first thirty
years, the learned Single Judge held that "the transfer duty has to be
computed on the basis of 1/6th of the rent payable at present for the first
30 year period but computed for the first fifty years".
7. The petitions were accordingly partly allowed holding that no
penalty could be imposed in respect of the transfer duty under the DMC
Act since that was a debatable issue. A direction was issued to re-work
the transfer duty in terms of the judgment of the learned Single Judge. It
was further held that no further stamp duty in addition to the amounts
already paid was payable nor was any penalty chargeable.
8. Aggrieved by the judgment of the learned Single Judge, the MCD
has filed the present appeals.
9. It is contended by Mr. H.S. Phoolka, the learned senior counsel
appearing for the MCD that in the sense and in the context in which the
word „rent‟ is used in Section 147 (2) (b) (v) DMC Act, it had to connote
the total consideration payable under the lease deed. His submission
was that unless the total consideration as shown on the lease deed was
paid by the lessee, the execution of the perpetual lease deed could not
have taken place. Therefore, the word „rent‟ would include the premium
paid by the auction purchaser for obtaining the lease. In other words, the
expression „rent‟ meant „rent + premium‟ and not the rent alone.
Reference was made to the definition of the word „premium‟ in Black‟s
Law Dictionary, 6th Edition (page 1181). Mr. Phoolka then submitted
that every word occurring in Section 147 (2) (b) (v) DMC Act had to be
given full effect to keeping in view the context in which the word
occurs. Therefore the disjunctive „or‟ had to be read as a conjunctive
„and‟. Since the lease could not have been executed without the premium
being paid, the legislative intent was to levy transfer duty on the amount
equal to one-sixth of the entire consideration payable in respect of the
lease which, in any event, has been set forth in the instrument.
Mr.Phoolka contended that since the annual rent payable is calculated as
a percentage of the premium paid, it is a measure of the premium itself.
Consequently, there it was logical to include the premium amount as part
of the rent for the purposes of computing the transfer duty.
10. In support of his contention that all words in the statute have to be
given full effect Mr.Phoolka referred to the judgments of the Supreme
Court in Shin-Etsu Chemical Co. Ltd. v. Aksh Optifibre Ltd. (2005) 7
SCC 234, Manohar Lal v/ Vinesh Anand (2001) 5 SCC 407, Noorie
Manure Mill v. Commissioner Trade Tax (2007) 10 SCC 478,
Associated Cement Co. Ltd. v. State of MP (2004) 9 SCC 727 and
Indcon Structurals (P) Ltd. v. Commissioner of Central Excise (2006)
6 SCC 786.
11. Mr.Sanjay Goswamy, learned counsel appearing on behalf of the
respondents submitted that a taxing statute admits of only strict
interpretation. If the intention of the legislature was to tax the premium
paid for the obtaining of a perpetual lease, then certainly the wording of
the provision should expressly indicate it. Reliance is placed on Section
105 of the Transfer of Property Act, 1882 („TP Act‟) where the words
„premium‟ and „rent‟ have been separately defined. Relying on the
judgment of the Supreme Court in Commissioner of Income Tax v.
Panbari Tea Company AIR 1965 SC 1871, it is submitted that the
expression „premium‟ and „rent‟ have to be separately understood and
one cannot include the other in the context in which it is used in the deed
of perpetual lease in the instant case. The word „rent‟ can only refer to
the actual rent indicated in the lease deed and not the premium.
Reference is also made to the decisions in Govind Ram v. Rajphul
Singh AIR 1973, Punjab & Haryana 94 and S. Venkataraman Swami
v. S. Abdul Wahab AIR 1969 Madras 473.
12. In order to appreciate the respective contentions, a reference may
be made first to Section 147 (2) (b) (v) of the DMC Act which reads:
"147. Duty on transfer of property and method of assessment
thereto.- (1) Save as otherwise provided in this Act, the Corporation
shall levy a duty on transfers of immovable property situated within
the limits of Delhi in accordance with the provisions hereafter in this
section contained.
(2) The said duty shall be levied -
(a) in the form of a surcharge on the duty imposed by the Indian
Stamp Act, 1899 (2 of 1899) as in force for the time being in the
Union Territory of Delhi, on every instrument of the description
specified below, and
(b) at such rate as may be determined by the Corporation not
exceeding five per cent, on the amount specified below against such
instruments -
Description of instrument Amount on which duty should be
levied
(i) Sale of immovable property The amount or value of the
consideration
for the sale, as set forth in the
instrument.
(ii) Exchange of immovable The value of the property of the greater
property value, as set forth in the instrument.
(iii) Gift of immovable property The value of the property, as set forth in
the instrument.
(iv) Mortgage with possession or The amount secured by the mortgage as
immovable property set forth in the instrument.
(v) Lease in perpetuity of The amount equal to one-sixth of the
immovable property whole amount or value of the rent
which would be paid or delivered in
respect of the first fifty years of the lease
as set forth in the instrument.
(emphasis supplied)
(v) Contract for transfer of Ninety per cent of the value of the
immovable property consideration for the transfer as set
out in the contract."
13. In Niagara Hotels & Builders (P) Limited a learned Single Judge
of this Court held that the word „or‟ in Section 147 (2) (b) (v) DMC Act
could not be read in a manner so as to enable MCD to levy the transfer
duty on an aggregate both the premium amount as well as the rent. In
the impugned order in the instant cases, the learned Single Judge has
held that the expression "amount‟ or „value‟ both qualified "rent and rent
alone" and, therefore, the rent (and not the premium) could alone form
the basis for calculating the transfer duty.
14. Depending on the context, the word „premium‟ can have both a
broad as well as a narrow meaning. The definition of premium in the
Law Lexicon by P. Ramanatha Aiyar, Second Edition reads as under:
"Premium means a sum of money paid as
consideration for grant of lease. It represents
capitalized rent which in fact is the
difference between the actual rent and the
rent which might otherwise be obtained by
the lessor.
"Premium Or other Like Sums", "are sums
paid in excess of the agreed rent in
consideration of grant, continuance or
renewal of the tenancy"
In Black's Law Dictionary, Sixth Edition, premium is defined as
capitalized rent "paid in lump sum at the time of lease is granted."
15. The question whether the „rent‟ payable under the deeds of
perpetual lease in the instant cases includes the „premium‟ paid will
depend on the context in which the word is used. This distinction is
acknowledged in the definitions of the terms „premium‟ and „rent‟ in
Section 105 of the TP Act as well.
16. The decision of the Supreme Court in Panbari Tea Company
supports the contention of the respondent that, given the context, the
word „rent‟ in Section 147 (2) (b) (v) DMC Act has to have a narrow
meaning. The question that arose in the said case was "whether the
premium collected as a lump sum (although payable in instalments)
could also be considered to be a revenue receipt in the same manner as
the rent collected"? In the said case a registered lease deed had been
executed by the Assessee Company by which two tea estates were leased
out to a firm. The consideration for the lease was a combination of
premium in the sum of Rs.2,25,000 of the annual rent of Rs.54,000. The
premium was to be paid in the following manner: Rs.45,000 as lump
sum at the time of execution of the lease deed and the balance of
Rs.1,18,000 in sixteen half yearly instalments of Rs.11,250 before the
31st January and 31st July of each year. The annual rent of Rs.54,000
was payable in the following manner:Rs.1,000 per month to be paid on
or before last date of each month, thus, making in all Rs.12,000 per year
and the balance of Rs.42,000 to be paid on or before 31st December of
each year. In the assessment year for 1952-53, the income tax officer
treated the instalment of Rs. 11,250 paid towards premium as a revenue
receipt. This assessment was upheld by the Appellant Assistant
Commissioner as well as the Tribunal. The High Court reversed the
Tribunal and held that the sum of Rs.11,250 was a capital receipt and not
a revenue receipt. The Department then appealed the Supreme Court.
The Supreme Court referred to the decisions in Kamakshya Narain
Singh v. Commissioner of Income Tax (1943) II ITR 513, Member for
the Board of Agriculture v. Commissioner of Income Tax (1957) 32
ITR 169 and Chintamani Saran Nath Sah v. Commissioner of Income
Tax AIR 1961 SC 732 to underscore the distinction between the
premium and rent. It pointed out that a one-time payment of premium
for the grant of a lease was known as „salami‟ which is in the nature of a
capital receipt in the hands of the lessor. The Supreme Court then
referred to Section 105 TP Act and observed as under:
"The section, therefore, brings out the distinction
between a price paid for a transfer of a right to enjoy the
property and the rent to be paid periodically to the lessor.
When the interest of the lessor is parted with for a price,
the price paid is premium or salami. But the periodical
payments made for the continuous enjoyment of the
benefits under the lease are in the nature of rent. The
former is a capital income and the latter a revenue
receipt. There may be circumstances where the parties
may camouflage the real nature of the transaction by
using clever phraseology. In some cases, the so-called
premium is in fact advance rent and in others rent is
deferred price. It is not the form but the substance of the
transaction that matters. The nomenclature used may not
be decisive or conclusive but it helps the Court, having
regard to the other circumstances, to ascertain the
intention of the parties."
On an analysis of the relevant clauses in the lease deed, it was held that
the amount paid as premium could not be construed as rent and, such
premium was a capital receipt in the hands of the lessor.
17. In Hotel Kings v. Sara Farhan Lukmani (2007) 1 SCC 202, the
Supreme Court emphasized the importance of a contextual interpretation
and held that while the permitted increase in rent can serve as a yardstick
for the landlord to increase the rents it did not make such permitted
increase "a part of the rent though it may be a consideration for the grant
of lease."
18. The lease deed in the instant cases a makes reference to the annual
rent that would be payable in future. This is not a pre-determined figure
but is to be worked out as a percentage of the premium amount. This is
set out in the lease deed. For instance in the lease deed dated 1st
December, 2003 in favour of M/s N.K. Gupta, the fourth paragraph of
the preamble reads:
"NOW THIS INDENTURE WITNESSETH
that, in consideration of the amount of Rs.
1,31,04,000/- (Rupees One Crore Thirty One
lacs and Four thousand only) paid towards
premium before the execution of these
presents (the receipt where of the Lessor
hereby acknowledges) and of the rent
hereinafter reserved and of the covenants
on the part of the lessee hereinafter
contained, the Lessor doth hereby demise
unto the Lessee, all that plot of land being
the Commercial Plot No. 09 Block No. X in
the lay out plan of New Friends Colony
District Centre"
19. In the later portion of the same paragraph of the lease deed, the
annual rent is stated as being two and a half per cent of Rs.1,31,04,000
and the first annual rent instalment is to be paid on 15 th January, 2008.
The relevant portion reads as under:
"TO HOLD the premises unto the lessee in
perpetuity from 24th day of January two
thousand and three YIELDING AND
PAYING therefore yearly rent payable in
advance of Rs. 5/- (Rupees Five only) up
to the 23rd day of January two thousand
and Eight and thereafter at the rate of
two and a half per cent of the premium
(the sums already paid and such other sum
or sums hereafter to be paid towards
premium under the covenants and conditions
hereinafter contained) or such other
enhanced rent as may hereafter be assessed
under the covenants and conditions
hereinafter contained clear of all deductions
by equal half yearly payments on the 15th
day of January and 15th day of July in each
year at the Reserve Bank of India, New
Delhi."
20. A reading of the aforementioned portions of the perpetual lease
deed brings out the distinction between „premium‟ on the one hand and
„rent‟ on the other. The word „premium‟ carries more than one
definition; it has to be understood in the context in which it is used in a
lease deed. The question whether the word „premium‟ is also subsumed
in the words "whole amount or value of the rent" occurring in Section
147 (2) (b) (v) DMC Act has to be answered with reference to the
context in which the word is used in the lease deeds in question. A
careful examination of the above clauses of the lease deed, leads to the
conclusion that the „premium‟ paid for the lease is distinct from the
„rent‟ payable thereunder. In other words, „rent‟ in Section 147 (2) (b)
(v) DMC Act cannot be said to include the premium paid for the lease.
21. It is also not possible to construe the premium paid as advance
rent since the annual rent in is not indicated as a pre-determined sum in
the lease deed. It is a percentage of the premium paid. The premium
amount serves as a yardstick for determining the rent payable. It is
therefore not possible to interpret the word „rent‟ in the lease deeds in
the instant cases as including the premium paid.
22. This Court is inclined to accept the contention of the respondent
that since what is sought to be collected is a transfer duty, which is an
involuntary exaction of revenue, the statute admits of a strict
interpretation. The principle enunciated in the decisions relied upon by
the appellants that every word in a statute must be given its full meaning
is unexceptionable. However, the meaning so given must be in the
context of the statute in general and the provision in particular. In the
context of the lease deeds in question in the instant cases, the word „rent‟
cannot possibly be interpreted to include the premium paid for the grant
of the lease. As rightly contended by the respondents, if the legislature
intended to make the premium paid for the lease as includible for the
purposes of determining transfer duty then the statute should have been
expressly worded to reflect that intention.
23. Accordingly, this Court concurs with the conclusion arrived at by
the by the learned Single Judge. The appeals are dismissed with no
orders as to costs.
S. MURALIDHAR, J.
CHIEF JUSTICE
July 02, 2008
sb
