Jharkhand High Court

Balaji Enterprises (A Registered ... vs The State Of Jharkhand on 2 February, 2024

Author: Anil Kumar Choudhary

Bench: Anil Kumar Choudhary

                                                                                  W.P.(C) No.797 of 2018




           IN THE HIGH COURT OF JHARKHAND AT RANCHI
                                W.P.(C) No.797 of 2018
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Balaji Enterprises (a registered Partnership firm), having its Office at 3/271, Vishwas Khand, Gomti Nagar, Lucknow, P.O. and P.S. Gomti Nagar, District Lucknow, Uttar Pradesh; through its Partner Navneet Kumar Pandey, aged about 32 years, son of Shri Vinay Kumar Pandey, resident of 3/271, Vishwas Khand, Gomti Nagar, Lucknow, P.O. and P.S. Gomti Nagar, District Lucknow, Uttar Pradesh ... Petitioner Versus

1. The State of Jharkhand, Through its Secretary, Road Construction Department, having its office at Project Building, Dhurwa, P.O. and P.S. Dhurwa, Ranchi 834004, District Ranchi.

2. Engineer-in-Chief, Road Construction Department, having its office at Project Building, Dhurwa, P.O. and P.S. Dhurwa, Ranchi 834004, District Ranchi.

3. Executive Engineer (Road Division) Road Construction Department having its office at Saraikella-Kharsawan, P.O. and P.S. Saraikella, District Saraikella- Kharsawan ... Respondents

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             For the Petitioner                : Mr. Sumeet Gadodia, Advocate
                                                 Mrs. Shilpi Shandil Gadodia, Advocate
                                                 Ms. Shruti Shekhar, Advocate
             For the Respondents               : Mr. Ravi Kerketta, SC VI
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                                           PRESENT
                 HON'BLE MR. JUSTICE ANIL KUMAR CHOUDHARY


By the Court:-      Heard the parties.

2. This Writ Petition has been filed under Article 226 of the Constitution of

India inter alia with a prayer for issuance of an appropriate

writ/order/direction including Writ of Declaration declaring that the

agreement executed by and between the petitioner and the respondent No.3

dated 13.02.2016 pertaining to collection of User Fee in State Highways No.5 at

Kandra Junction Toll Plaza at Adityapur-Kandra Section is not a 'Lease' within

the meaning of Section 2 (16) (c) of the Indian Stamp Act, 1899 especially

because the petitioner has only been appointed as an agent of the Respondent-

State of Jharkhand in the matter of collection of User Fee and Jharkhand

Highways Fee (Determination of Rates and Collection) Rules, 2011. It is the

executing authority which is entitled to collect user fee for use of any State

Highway and the petitioner is merely appointed as an agent of the said

executing authority for assisting the said executing authority in collection of

User Fee and other consequential reliefs and further for quashing/setting aside

the Letter dated 14.12.2017 issued by the Respondent No.3 which is Annexure-

11 of this writ petition; whereby and where under the petitioner has been

directed to get its agreement dated 13.02.2016 registered in the office of the

District Sub-Registrar, Saraikella after payment of stamp duty and registration

fee and directed the respondent to release the bank guarantee dated 12.09.2017

submitted by the petitioner as security towards the amount of alleged stamp

duty and registration fee allegedly required for registration of agreement dated

13.02.2016.

3. The brief facts of the case is that the petitioner entered into an agreement

with the respondent No.3 on 13.02.2016 whereby and where under the

petitioner has been appointed as an agent of the respondent- State of Jharkhand

for collection of User Fee in respect of State Highways No.5 in the State of

Jharkhand at Kandra Junction Toll Plaza in Adityapur-Kandra Section. The

petitioner contends that the same is not a 'lease' within the meaning of Section

2 (16) (c) of the Indian Stamp Act, 1899 and thus, is not required to be

compulsorily registered on payment of Stamp Duty and Registration Fee in

terms of Article 35 Schedule (I) of the Indian Stamp Act, 1899. It is contended

by the petitioner that consequent upon amendment of the Indian Tolls Act,

1851 by virtue of the Indian Tolls (Jharkhand Amendment) Act, 2002, the

respondent- State of Jharkhand has incorporated provision enabling itself to

levy Fee for the use of State Highways. It is contended by the petitioner that

Section 2A of the said act was introduced which enabled the State of Jharkhand

to authorize any person to undertake development of roads and/or bridges

pertaining to State Highways and to realize User Fee in respect thereof in lieu

of such development activity undertaken by such person. The State of

Jharkhand has formulated rules (Jharkhand Highway Fee Determination of

Rates and Collection) laying down the procedure for collection of User Fee for

use of any Section of Highways which define Executing Authority under Rule 2

(f) meaning thereby; an officer or authority subordinate to the Government

notified by the State Government under Section 2 of the Indian Tolls

(Jharkhand Amendment) Act, 2002. Rule 2 (r) defines User Fee meaning

collection of prescribed fee from any person of various categories of mechanical

vehicles for the use of State Highway, Major District Road, Other District Road

Bridge, Interchange, Flyover, ROB/RUB, bypass and tunnel and the User Fee is

also termed as fee/Toll/Toll fee. Rule 6 thereof provides for collection of User

Fee is to be made either by the Government or the Executing Authority or an

agent so appointed by the Executing Authority. Rule 6 (7) provides for

collection of User Fee through Executing Authority either by its own official or

through appointment of an agent.

4. The petitioner is a successful bidder in an E-tender voted by the

Executive Authority to constitute in terms of the said Rule 2011. The letter of

acceptance was issued to the petitioner identifying as an agent for collection of

User Fee by the Road Construction Department. The petitioner further

contended that the Clause 38 of the said agreement entered into between the

petitioner and the respondent No.3 is general in nature but it has not contained

any mandatory requirement for engrossing the agreement for the purpose of

payment of stamp duty. The agreement of the petitioner came to an end on

12.06.2017. The petitioner filed a request letter dated 17.06.2017 for release of

the performance security deposit by the petitioner in form of bank guarantee of

Rs.83,34,000/-. After the contract period was over, the petitioner received a

letter dated 11.07.2017 written by the respondent No.3 intimating therein that

an audit objection has been raised by the office of the Principal Accountant

General to the effect that the agreement executed by and between the petitioner

and the respondent No.3 amounts to a lease of immovable property in terms of

provisions of Section 2 (16) (c) of the Indian Stamp Act, 1899 and the said

agreement was required to be duly registered after payment of stamp duty and

registration fee and because of non-registration of the said agreement, a loss of

Rs.30,00,000/- has been suffered by the State Exchequer. By another letter, the

respondent No.3 directed the petitioner to get the said agreement executed by

the petitioner and the respondent No.3 registered or else it was stated that the

Bank Guarantee submitted by the petitioner would be encashed towards

performance security. The respondent- State has released the performance

security of the petitioner of Rs.83,34,000/- but the petitioner was directed to

execute a separate Bank Guarantee for an amount of Rs.30,00,000/- in lieu of its

alleged liability towards stamp duty and registration fee and the petitioner

having left with no option, executed Bank Guarantee in favour of respondent

No.3- Executive Engineer for an amount of Rs.30,00,000/-. The petitioner next

contended that in respect of public funded projects as provided for in Rules

2011, user fee is to be calculated by the Government or executing agency either

through its own official or through its agent so appointed by it and the present

agreement of the petitioner falls under that category. The petitioner agency is

entitled to collect user fee, is neither given any charge and/or interest in the

immovable property nor any right, title or interest over the immovable

property even for a temporary period is vested upon the agent. The agent is

only required to collect user fee on behalf of the State Government or the

executing agency and has to remit the said user fee to the exchequer of the State

Government. Hence, the said agreement does not come under the definition of

lease under Section 2 (16) (c) of the Indian Stamp Act, 1899 unlike the case of

private funded projects where concessionaire is granted the right of

development, construction, reconstruction, repair, operation and maintenance

of roads etc., and collection of user fee by the said concessionaire. The

instrument concerned is to be duly stamped and registered. The petitioner next

contends that the agreement entered into by and between the petitioner and the

respondent No.3 is merely an agreement in the nature of a collection agency

agreement wherein the relationship between the petitioner and the respondent-

State of Jharkhand is that of Principal and Agent and no right, title or interest

over the property in question is vested upon the petitioner. Hence, the

agreement cannot be termed to be a lease.

5. Learned counsel for the petitioner relies upon the judgment of the

Hon'ble Supreme Court of India in the case of New Bus-Stand Shop Owners

Association v. Corporation of Kozhikode & Another reported in (2009) 10

SCC 455 paragraphs-21 and 22 of which read as under:-

"21. Relying on those two decisions of the Court of Appeal, this Court in Associated Hotels of India Ltd. v. R.N. Kapoor [AIR 1959 SC 1262 : (1960) 1 SCR 368] discussed this issue in very lucid terms. K. Subba Rao, J. who was in minority, discussed this question with a clarity which is often associated with His Lordship's opinion. The learned Judge referred to Section 105 of the Transfer of Property Act and then compared it with Section 52 of the Easements Act, 1882. After referring to those two sections and also after referring to the decision in Errington [(1952) 1 KB 290 :

(1952) 1 All ER 149 (CA)] the learned Judge pointed out the distinction between the lease and the licence by expressly approving the tests laid down by Lord Denning and which may better be quoted: (Kapoor case [AIR 1959 SC 1262 : (1960) 1 SCR 368] , AIR pp. 1269-70, para 27) "27. ... The following propositions may, therefore, be taken as well established: (1) to ascertain whether a document creates a licence or lease, the substance of the document must be preferred to the form; (2) the real test is the intention of the parties--whether they intended to create a lease or a licence; (3) if the document creates an interest in the property, it is a lease; but, if it only permits another to make use of the property, of which the legal possession continues with the owner, it is a licence; and (4) if under the document a party gets exclusive possession of the property, 'prima facie', he is considered to be a tenant; but circumstances may be established which negative the intention to create a lease."

(SCR pp. 384-85 of the Report)

22. If we apply the aforesaid principles in the facts of the case in hand, we are bound to hold that the agreement between the parties merely falls under the category of licence as the licensee is never given the exclusive possession. The Corporation retained the exclusive possession of the shops and this is clear from the conditions of the licence discussed above."

and submits that therein the Hon'ble Supreme Court of India has laid

down the principles regarding the difference between the lease and license and

in the absence of any exclusive possession being given to the petitioner, at best

the agreement can fall under the definition of license but the same cannot be

termed as lease. Hence, it is submitted that the prayer, as prayed for in this

Writ Petition be allowed.

6. Learned counsel for the respondent- State vehemently opposes to the

prayer made by the petitioner in this Writ Petition. Learned counsel for the

respondent State further draws the attention of this Court towards the counter-

affidavit filed by it and submits that the agreement has all the ingredients of a

lease as defined under Section 2 (16) (c) of the Indian Stamp Act. It is next

submitted that the petitioner even does not dispute that the user fee comes

within the ambit of the word 'toll'. The agreement entered into by and between

the between the parties is an instrument. It is next submitted that the very fact

that the executing authority allowed the petitioner to collect the toll amounts to

the word 'let' used in section 2 (16) (c) of the Stamp Act, hence, as all the

ingredients of the said Section 2 (16) (c) is present in the agreement entered into

by and between the parties, hence, stamp duty is receivable which is to be paid

by the petitioner in terms of Clause 38 of the said agreement entered into by

and between the petitioner and the respondent No.3. Hence, it is submitted

that this Writ Petition, being without any merit, be dismissed.

7. Having heard the rival submissions made at the Bar and after carefully

going through the materials available in the record, it is pertinent to refer to

Section 2 (16) (c) of the Indian Stamp Act, 1899 which reads as under:-

(16) "Lease". -- "lease" means a lease of immovable property, and includes also--

(a) xxxx;

(b) xxxx;

(c) any instrument by which tolls of any description are let;

(d) xxx

8. The word 'let' has been defined in Black's Law Dictionary, 8th Edition as

'to allow or permit'. In Oxford English Dictionary, the word 'let' has been

defined as 'to allow somebody to do something. The word 'toll' has been

defined in Oxford Advance Dictionary as the 'money that you pay to use a

road or bridge'.

9. Now, coming to the facts of the case, to constitute a lease as defined

under Section 2 (16) (c) of the Indian Stamp Act, 1899, the essential ingredients

are

(i) there must be an instrument;

(ii) the instrument must be in respect of toll; and

(iii) such instruments must be for letting the tolls.

If we use the meaning of the word 'let' as to allow somebody to do something,

an instrument becomes lease "if by an instrument an entity is allowed to collect

toll. Such an arrangement will be termed as lease in terms of Section 2 (16) (c)

of the Indian Stamp Act, 1899.

10. Now, coming to the facts of the case, the undisputed fact remains that

there is an agreement. There is no quarrel that the agreement is an instrument.

The definition of user fee has been defined in the Jharkhand Highways Fee

(Determination of Rates and Collection) Rules, 2011 which reads as under:-

(r) "user fee" means collection of prescribed fee from any person of various categories of mechanical vehicles for the use of State highway, Major District Road, Other District Road bridge, Interchange, Flyover, ROB/RUB, bypass and tunnel. The user fee is also termed as fee/Toll/Toll fee.

(Emphasis supplied)

And the same in no uncertain manner lays down that the user fee is also

termed inter alia as toll. So, if an agreement entered into by allowing somebody

to collect toll, this Court has no hesitation in holding that the same will amount

to a lease in terms of Section 2 (16) (c) of the Indian Stamp Act, 1899 and the

agreement involved in this case being dated 13.02.2016 by and between the

petitioner and the respondent No.3, has all the trappings of the Section 2 (16)

11. So far as the judgment relied upon by the learned counsel for the

petitioner in the case of New Bus-Stand Shop Owners Association v.

Corporation of Kozhikode & Another (supra) is concerned, in which the

distinction between the lease and license has been discussed by the Hon'ble

Supreme Court of India, the same has no relevance to the facts of this case