Madras High Court
The Inspector General Of Registration vs S.R.Trust on 8 August, 2024
Author: B.Pugalendhi
Bench: B.Pugalendhi
WA(MD)Nos.1155, 1395 of 2023
BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT
RESERVED ON : 05.04.2024
PRONOUNCED ON : 08.08.2024
CORAM:
THE HONOURABLE MR.JUSTICE B.PUGALENDHI
WA(MD)Nos.1155 and 1395 of 2023
and
CMP(MD)No.8852 of 2023
WA(MD)No.1155 of 2023:-
1.The Inspector General of Registration,
No.100, Santhome High Road,
Chennai – 600 028.
2.The District Registrar (Admin),
Deputy Inspector General of Registration,
Madurai North Regn. Dist,
Madurai – 625 107.
3.The Sub Registrar,
Othakadai Sub Registrar Office,
TNAU Nagar, Rajakambeeram,
Y.Othakadai, Madurai – 625 107.
.. Appellants
v.
1/21
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WA(MD)Nos.1155, 1395 of 2023
1.S.R.Trust, Rep. by its Trustee,
G.Sakthi Saravanan,
Meenakshi Mission Hospital & Research Centre,
Lake Area, Melur Road,
Madurai – 625 107.
2.Sunmed Healthcare Pvt. Ltd.,
Plot No.39, 5/103D, VIP Garden, 5th Ward,
Narasingam, Opp to High Court,
Madurai – 625 107.
.. Respondents
PRAYER: Writ Appeal filed under Clause XV of the Letters Patent against
the order passed in WP(MD)No.4658 of 2021, dated 07.06.2023.
For Appellants : Mr.Veera Kathiravan,
Additional Advocate General
Assisted by
Mrs.D.Farjana Ghoushia,
Special Government Pleader
For Respondents : Mr.K.Subramanian
Senior Counsel
for Mr.S.Venkatesh for R.1
Mr.Atul Chitale
Senior Counsel
for Mr.Niranjan S.Kumar for R.2
*****
2/21
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WA(MD)Nos.1155, 1395 of 2023
WA(MD)No.1395 of 2023:-
S.R.Trust, Rep. by its Trustee,
G.Sakthi Saravanan,
Meenakshi Mission Hospital & Research Centre,
Lake Area, Melur Road,
Madurai – 625 107. .. Appellant
v.
1.The Inspector General of Registration,
No.100, Santhome High Road,
Chennai – 600 028.
2.The District Registrar (Admin),
Deputy Inspector General of Registration,
Madurai North Regn. Dist,
Madurai – 625 107.
3.The Sub Registrar,
Othakadai Sub Registrar Office,
TNAU Nagar, Rajakambeeram,
Y.Othakadai, Madurai – 625 107.
4.Sunmed Healthcare Pvt. Ltd.,
Plot No.39, 5/103D, VIP Garden, 5th Ward,
Narasingam, Opp to High Court,
Madurai – 625 107. .. Respondents
PRAYER: Writ Appeal filed under Clause XV of the Letters Patent against
the findings recorded in para 5 of the order dated 07.06.2023 passed in
WP(MD)No.4658 of 221 and partly dismissing the said writ petition.
3/21
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WA(MD)Nos.1155, 1395 of 2023
For Appellant : Mr.K.Subramanian
Senior Counsel
for Mr.S.Venkatesh
For Respondents : Mr.Veera Kathiravan,
Additional Advocate General
Assisted by
Mrs.D.Farjana Ghoushia,
Special Government Pleader
for R.1 to R.3
Mr.Atul Chitale
Senior Counsel
for Mr.Niranjan S.Kumar for R.4
*****
JUDGMENT
M/s.SR Trust is a registered Public Trust [hereinafter referred to as
'the Trust'] and is running a Hospital. In view of the notification dated
29.07.2016 issued by the Joint Director of Health Services, it became
necessary for the Trust to obtain NABH accreditation. For obtaining the
National Accreditation Board for Hospital and for availing medical
insurance reimbursements, a New Hospital has to be constructed or an
MoU has to be entered with another Hospital. The Trust intended to open a
New Hospital. A land adjacent to their Hospital measuring an extent of
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WA(MD)Nos.1155, 1395 of 2023
1 Acre 20 Cents in S.Nos.171/2A3B, 171/2A2B, 171/8A2 [Plot 36A] was
identified and the Trust agreed to lease the lands to M/s.Sunmed
Healthcare Private Limited [hereinafter referred to as 'SUNMED'].
2.A Memorandum of Understanding [hereinafter referred to as
'MoU'] dated 27.04.2019 was entered into between the Trust and SUNMED,
as per which, SUNMED has to construct the New Hospital in the land
identified. For the purpose of forming a pathway to the proposed New
Hospital, an extent of 22.79 Cents in S.No.161/1 and 5.23 Cents in S.No.
171/2A1, totally measuring 28.02 Cents, was earmarked. This MoU was
presented for registration before the Sub Registrar, Othakadai. After
presenting the document for registration, the parties felt that the MoU did
not require registration. Therefore, they asked for returning the MoU.
However, the Sub Registrar, by relying upon the terms of the MoU, held
that the stamp duty was undervalued and as such, demanded the Trust to
pay a sum of Rs.44,26,29,836/- as deficit stamp duty. The District Registrar,
Madurai, has issued a show cause notice dated 09.12.2019 and has passed a
final order on 21.02.2020 u/s.40(1)(b) of the Indian Stamp Act, demanding
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WA(MD)Nos.1155, 1395 of 2023
the deficit stamp duty of Rs.44,26,29,836/-, together with deficit
registration charges and penalty. Challenging the same, the Trust made a
representation dated 04.03.2020 to the Inspector General of Registration for
returning the document without registration. The Inspector General, by
order dated 01.12.2020, rejected the representation for return of MoU.
3.Challenging the orders dated 21.02.2020 and 01.12.2020, the Trust
filed WP(MD)No.4658 of 2021. Learned Single Judge of this Court, by order
dated 07.06.2023, partly allowed the writ petition by holding as follows:-
(A) An interest in the 28.02 Cents of property, which was agreed to be
used as a common pathway, has been created in favour of SUNMED. A
Hospital is to be constructed by SUNMED on the adjacent land and this
pathway, to be laid by SUNMED, is to access the same. The Trust and
SUNMED will have joint possession. Therefore, the authority is justified in
treating the transaction as one of lease and levying stamp duty under
Article 35(b) of Schedule I of the Stamp Act. However, levying of stamp
duty by treating the lease period as fifty years is not correct, inasmuch as
the lease is only for ten years as on date. Therefore, it has to be modified.
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(B) Sharing of space in the New Hospital, ie., 30% of the shared space
in the New Hospital, is only a license and not a lease, inasmuch as no
interest has been created in favour of the Trust in the New Hospital.
Therefore, levying of stamp duty under the head of utilization of shared
space is set aside.
(C) Levying of stamp duty on security deposit is not correct and the
same is set aside.
4.Aggrieved over the confirmation of deficit stamp duty (Issue A), the
Trust filed WA(MD)No.1395 of 2023. Similarly, aggrieved over the reversal
of stamp duty (Issues B, C), the Department filed WA(MD)No.1155 of 2023.
5.A Division Bench of this Court, by judgment dated 24.01.2024,
concurred with the learned Single Judge on Issues B & C. However, on
Issue A, there was a divergent view. Therefore, in accordance with Clause
36 of the Letters Patent, the matter was placed before The Hon'ble The
Chief Justice and on the directions of The Hon'ble The Chief Justice, the
writ appeals are listed before this Court.
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6.Clause 36 of the Letters Patent is as follows:-
“Single Judges and Division Courts. - And we do hereby declare
that any function which is hereby directed to be performed by the said
High Court of Judicature at Madras, in the exercise of its original or
appellate jurisdiction, may be performed by any Judge, or by any
Division Court thereof, appointed or constituted for such purpose [in
pursuance of Section 108 of the Government of India Act, 1915], and if
such Division Court is composed of two or more Judges, and the Judges
are divided in opinion as to the decision to be given on any point, such
point shall be decided according to the opinion of the majority of the
Judges, if there shall be a majority, but if the Judges should be equally
divided [they shall state the point upon which they differ and the case
shall then be heard upon that point by one or more of the other Judges
and the point shall be decided according to the opinion of the majority of
the Judges who have heard the case included who those first heard it.”
7.Therefore, the matter has to be heard on the points, which were the
crux of difference between the two learned Judges. As per this Clause, the
Judges should frame the points of difference. However, in the instant case,
it has not been done.
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WA(MD)Nos.1155, 1395 of 2023
8.In Re All India Anna Dravida Munnertra Kazhagam v. State
Election Commissioner [(2007) 2 MLJ 129], this Court has held as follows:-
“182. Even though Clause 36 of the Letters Patent requires that if
the opinion of the Judges should be equally divided, “they shall state the
point upon which they differ and the case shall then be heard upon that
point by one or more of the other Judges and the point shall be decided
according to the opinion of the majority of the Judges who have heard the
case including who those first heard it”, no specific point on which
difference has arisen has been specified. When the matter was placed
before me, at the threshold this aspect was highlighted by me and the
learned counsels appearing for all the parties have stated that even
though points of difference have not been specifically pointed out
by the Division Bench, the difference as apparent from various
discussions and conclusions of the two learned Judges should be
culled out and should be decided on that basis without returning
the matter for spelling out the difference.”
9.As stated supra, there was a divergent view in the Division Bench
on Issue A, which relates to levying of stamp duty by treating the
document as lease, insofar as the common pathway in the 28.02 Cents of
land is concerned. Therefore, the matter has to be heard on this line.
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WA(MD)Nos.1155, 1395 of 2023
10.Learned Additional Advocate General submitted that the
Department's case is that it is a lease for fifty years. However, the Writ
Court has negatived it as that of a lease for 10 years. Therefore, the
Department preferred appeal. In the Division Bench, one Judge has held
that it is not a lease at all and the other Judge has confirmed the stand taken
of the Writ Court that it is a lease for 10 years. In either case, the
Department's stand has been nullified.
11.Therefore, this Court proceeded to hear the respective Counsel on
Issue (A) alone.
Issue (A):-
12.The Trust entered into an MoU with SUNMED with certain
objectives. As per the terms of the MoU, SUNMED is to construct a New
Building in the land identified, which is agreed to be leased out to them by
Dr.S.Gurushankar. That apart, the Trust shall lease its property of about
28.02 Cents to SUNMED for the purpose of forming a road / pathway. For
better appreciation, the relevant portions from Clause 3.4 of the MoU is
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WA(MD)Nos.1155, 1395 of 2023
extracted as under:-
“3.4 The Parties agree and acknowledge the following in respect of
lease of certain land parcels by the Trust to Sunmed:-
(a) The Trust shall lease its property situated at Survey No.161/1
(admeasuring 22.79 cents or 9927.32 square feet) and Survey No.
171/2A1 (admeasuring 5.23 cents or 2278.18 square feet) in Madurai
(“Lease Premises”) to Sunmed for the purpose of forming a road or
pathway to exit, for a period of 10 (ten) years at a time, which shall
stand automatically renewed (five) times, up till a total time period of 50
(fifty) years.
(b) In consideration for lease of the Lease Premises, Sunmed shall
be required to pay the Trust, an amount of INR 1,05,075 (Indian Rupees
One Lakh Five Thousand and Seventy Five only) per month as rent,
which rent amount shall increase by 30% (thirty per cent) at the end of
every 10 (ten) year period of such lease. This rent can be paid by bank
transfer OR can be deducted from the receivables of the Sunmed from
the Trust.
(c) The Leased Premises shall be used as a common pathway by
each of the Trust and Sunmed, including as an additional fire exit for
the Trust Hospital.
(d) The trust shall apply a no objection certificate from HDFC
bank and AXIS bank regarding the lease for land at Survey No.161/1
(admeasuring 22.79 cents or 9927.32 square feet) because that land is
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WA(MD)Nos.1155, 1395 of 2023
hypothecated to them as on today.”
13.The Writ Court held this as a lease. In the Division Bench, the
learned Senior Judge held that it is neither a lease nor a license, but a mere
document of understanding. The learned Dissenting Judge agreed with the
finding rendered by the Writ Court.
14.Though the Writ Court has admitted that exclusive possession has
not been given in favour of SUNMED, the Writ Court has held that an
interest in the property has been created in favour of SUNMED, inasmuch
as SUNMED will be forming the road / pathway and that it is not a mere
permission which can be revoked at will. Therefore, the Writ Court has
held it as a lease.
15.The learned Senior Judge in the Division Bench has held that the
land, in which the pathway was proposed to be constructed, was never
leased out by the Trust to SUNMED, but rather an understanding had been
arrived at between the parties for future leasing of the property. The Trust
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WA(MD)Nos.1155, 1395 of 2023
has agreed to lease its property to SUNMED for forming a road / pathway
and the Trust has granted permission to SUNMED for entering into the
land, after a lease is created, for the purpose of forming a road / pathway.
Therefore, the learned Senior Judge has held that it is neither a lease nor a
license, but a mere document of understanding between the parties.
16.The dissenting Judge in the Division Bench has held that the
road / pathway is not in existence as on date and that the formation of road
/ pathway is to be carried out by SUNMED. The Dissenting Judge further
held that a license is given for usage of any facility already available, but, in
this case, the facility is to be created by SUNMED and as such, an interest is
created in the property towards SUNMED, which is to be construed as a
lease.
17.I am of the opinion that the instrument is not a mere document of
understanding between the parties and that it has to be decided as to
whether it is a 'lease' or a 'license'. It is a settled position that there is no
simple litmus test to distinguish a ‘lease’ as defined in Section 105 of
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Transfer of Property Act from a ‘license’ as defined in Section 52 of the
Easements Act, but the character of the transaction turns on the operative
intent of the parties.
18.In Re Cobb v. Lane [(1952) I All ER 1199], the Court of appeal has
held that the intention of the parties was the real test for ascertaining the
character of a document. Following the same, the Hon’ble Supreme Court
in Associated Hotels of India Ltd. V. R.N.Kapoor [(1960) 1 SCR 368] has
summarized the following propositions:-
(1) To ascertain whether a document creates a license 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 license;
(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 license;
and
(4) If under the document a party gets exclusive possession of the
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property, prima facie, he is considered to be a tenant; but
circumstances may be established which negative the intention to
create a lease.
19.It is also a settled position of law that the nomenclature of a
document would not govern the decision when an issue is put to test, as to
whether a document is a ‘lease’ or ‘license’. [In Re MadhuBehal v. Rishi
Kumar (2009 SCC OnLine P&H 141)]
20.The intention of the parties, as regards the subject issue, ie., road /
common pathway, can be culled out from the instrument / MoU.
21.In Clause 3.4 of the MoU, it is recorded that the Trust shall lease its
property situated at S.No.161/1 (22.79 cents) and S.No.171/2A1 (5.23 cents)
to SUNMED for the purpose of forming a road / pathway to exit, for
which, a consideration is to be paid by SUNMED to the Trust. This road /
pathway is to be used as a common pathway by both the parties.
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22.In Clause 1.1 (definitions) of the Agreement, the same land is
referred as an extra pathway and the same is extracted as under:-
‘Extra pathway’ – means the pathway in land in S.No.161/2A1
(42.5 cents), S.No.161/1 (22.79 cents), S.No.171/2A1 (5.23 cents) and
S.No.146/1B1 (16.89 cents), which shall be used as an exit in addition to
the existing exit for the new hospital.
23.The other relevant Clauses pertaining to this pathway are as
under:-
“3.Role and Responsibility of the parties
3.1(f) … Subject to approvals clearances from governmental
authority, the land in S.No.161/2A1 (42.5 cents), S.No.161/1 (22.79
cents), 171/2A1 (5.23 cents), 146/1B1 (16.89 cents) shall be used as an
extra pathway.
3.1 (g) Though sincere efforts will be taken by both parties to form
the extra pathway, it is agreed that the extra pathway (in S.Nos.
161/2A1, 161/1, 146/1B1, 171/2A1) is only an optional work and
SUNMED is not obligated to do it. It is agreed that failure to have the
extra pathway (in S.Nos.161/2A1, 161/1, 146/1B1, 171/2A1) will not be
construed as a violation of this agreement.”
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24.Though in Clause 3.4 of the MoU, the parties have recorded that
SUNMED has to form a road / pathway to exit in S.No.161/1 (22.79 cents)
and S.No.171/2A1 (5.23 cents), it can easily be inferred from Clause 1.1 and
Clause 3.1(f) & (g) of the MoU, that the pathway in S.Nos.161/2A1 (42.5
cents), 161/1(22.79 cents), 146/1B1 (16.89 cents), 171/2A1 (5.23 cents) is an
extra pathway, in addition to the existing exit for the new hospital and that
it is also an optional work. It is further recorded that in the event of any
failure to have the extra pathway (optional work), it will not be construed
as a violation of the agreement.
25.Therefore, from the instrument / MoU, the intention of the parties
is very clear. The formation of road / pathway in S.No.161/1 & 171/2A1 is
only optional. In the counter affidavit filed on behalf of SUNMED, it is
stated that SUNMED is not going to form the road / pathway and that they
are already having a regular road to access the new hospital.
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26.The Writ Court as well as the Dissenting Judge has held that
though exclusive possession is not given, a right has been created in favour
of SUNMED since they are forming the common road / pathway in S.Nos.
161/1, 171/2A1. From the instrument and from the materials placed before
this Court, it is clear that the formation of road is an optional work. In fact,
SUNMED is not going to form this extra road, since they are having a
separate entry & exit to access the new hospital. Therefore, I am of the view
that no interest has been created in favour of SUNMED in respect of this
piece of land and only an enter upon permission has been given to
SUNMED. The exclusive possession / legal possession vests only with the
Trust. As such, I am of the view that this arrangement is only a license and
not a lease.
27.It is also to be noted that the land in S.No.161/1 is hypothecated to
HDFC Bank and AXIS Bank, as on date. In Clause 3.4(d) of the MoU, it is
recorded that the Trust has to obtain No Objection Certificate from the
Banks. The rights over the property vest only with the Banks till the
hypothecation is redeemed by the Trust. Therefore, SUNMED cannot be
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given any right over this property by the Trust, inasmuch as the Banks/
Financial Institutions are, admittedly, having the first right over a
hypothecated property and as such, there cannot be any lease rights over
the property in favour of SUNMED.
Resultantly, I am not aligning with either of the view expressed in the
Division Bench, however I sail with the final result recorded by the learned
Senior Judge of the Division Bench in paragraph No.46(ii) in this issue.
Index : Yes / No 08.08.2024
NCC : Yes / No
Internet : Yes
gk
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WA(MD)Nos.1155, 1395 of 2023
To
1.The Inspector General of Registration,
No.100, Santhome High Road,
Chennai – 600 028.
2.The District Registrar (Admin),
Deputy Inspector General of Registration,
Madurai North Regn. Dist,
Madurai – 625 107.
3.The Sub Registrar,
Othakadai Sub Registrar Office,
TNAU Nagar, Rajakambeeram,
Y.Othakadai, Madurai – 625 107.
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WA(MD)Nos.1155, 1395 of 2023
B.PUGALENDHI, J.
gk
WA(MD)Nos.1155 and 1395 of 2023
08.08.2024
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