Jagmohan Singh vs Chief Revenue Controlling ...
2023 Latest Caselaw 2528 UK

  HIGH COURT OF UTTARAKHAND
         AT NAINITAL

   Writ-Petition (M/S) No.1630 of 2010
Jagmohan Singh                                  ... Petitioner

                               Vs.

Chief Revenue Controlling Authority/ Commissioner,
Kumaon Divison, Nainital and Others

                                                ... Respondents


Advocate:   Mr. Alok Mehra, learned counsel for the petitioner.
            Mr. Yogesh Chandra Tiwari, learned Standing Counsel for
            the State of Uttarakhand/ respondents.



Hon'ble Sharad Kumar Sharma, J.

The brief facts of the case are that, a lease deed dated 05.06.1997 was executed in favour of one Smt. Mahendra Kaur, in relation to the property, which has been described in the lease deed itself, to be governed under the provisions of the Government Grants Act. The said lease deed itself included a clause that the property thus transferred, by virtue of the lease deed, could be leased out by the lessee to the subsequent lessee, and thus, in the instant case, the present petitioner is said to have got the right of user which was claimed to be transferred in his favour, by virtue of registration of lease deed of plot no.27, lying in the mini-industrial estate, Kichha, District Udham Singh Nagar, upon its sanction being granted by the

General Manager, District Industries Centre, Haldwani (Nainital).

2. As a consequence of the said transfer of land under lease, on an annual premium of Rs.36,704/- the stamp duty, which was payable on the transfer agreement, was determined to be made payable in accordance with Article 63 of the Indian Stamp Act.

3. The present petitioner was issued with the notice under Section 47A to be read with Section 33, resulting into registration of Stamp Case No.52/2018 of 2006-07, "State Vs. Jagmohan Singh", whereby the Court of Additional District Magistrate, Finance and Revenue, on the basis of the report which was submitted by the Sub- Registrar vide its letter dated 29.09.2006, and had considered the permission, which has been granted for transfer of the land under the lease deed in favour of the present petitioner. But the only question, which was left open to be decided was in relation to the stamp duty, which was paid by the present petitioner on transfer of the lease in his favour, which would be that what stamp duty would be charged and at what rate?

4. The Additional District Magistrate, Finance and Revenue, had come to the conclusion, that on the transfer agreement by virtue of which, the land which was leased out under the Government Grant

Act to the principal lessee has been transferred, the stamp duty would be payable in accordance with Article 23 of the Indian Stamp Act, whereas the case of the petitioner was that, since it was a transfer of a lease and it was not a conveyance, the stamp duty, which will be payable on the same, would be on the basis of Article 63 of the Indian Stamp Act.

5. The case in question stood decided by the Court of the Additional District Magistrate, Finance and Revenue, by the judgment which was rendered on 20.05.2010, wherein it was observed that with respect to the deed which was executed by the erstwhile lessee, the stamp duty which will be payable on the same was treated to be under Article 23 by treating the same as to be a deed of conveyance, where complete rights were transferred, and the Court of Additional District Magistrate, declined to accept the argument extended by the applicant that the stamp duty, which will be payable on the same, would be in accordance with Appendix-1(Kha) and Article 63 of the Indian Stamp Act.

6. As a consequence thereto, the Court has determined, that while valuing the property as per the report as to be Rs.34,02,000/-, the stamp duty which would be payable on the same would be Rs.3,40,200/- and as such, since the present petitioner has paid only Rs.7,700/-. Thus, the

deficiency which was assessed to be made by the Additional District Magistrate, Finance and Revenue, was Rs.3,32,500/-. Besides that, he has also imposed payment of Rs.2% interest per acre per month on the above deficiency of Rs.3,32,500/- i.e. for 42 per months, and had determined the interest payable upon it as to be Rs.2,79,300/-. Consequently, the total deficiency which was directed to be made payable by the present petitioner was assessed to be Rs.6,11,800/-.

7. The said judgment of the Additional District Magistrate, Finance and Revenue, was put to challenge by the petitioner in a revision under Section 56 of the Indian Stamp Act. The revision too has been decided by the Revisional Court by the judgment dated 03.09.2010. The Revisional Court while exercising its power under Section 56 of the Indian Stamp Act has observed that though the interest, which has been levied by way of penalty by the Court of the Additional District Magistrate, Finance and Revenue, would not be payable in the absence of there being any statutory provision supporting the levying of interest, as such to pay interest on the deficient amount on the stamp duty, but the Revisional Court has treated the document as to be a deed of conveyance to be falling under Article 33 of Appendix 1(B) of the Indian Stamp Act, as there was complete transfer of interest, title and right of user.

8. Accordingly, based upon the said assessment, as bringing the document as to be under Article 23 of the Indian Stamp Act, treating it as to be a conveyance as defined under Section 2(10) of the Indian Stamp Act, has imposed the deficiency of stamp of Rs.3,40,000/- which was assessed to be made payable by the present petitioner.

9. It is argued by the learned counsel for the petitioner, that the determination of deficiency of stamp as made by both the Courts concurrently, by bringing the case within the ambit of Article 23 of the Indian Stamp Act, by treating the transfer of lease to the present petitioner; as to be a deed of conveyance, is not sustainable because the transfer, which was made in favour of the present petitioner, was transfer of the land granted to the predecessor of present petitioner, the lessee, under the Government Grants Act, the lease which only confers rights of user of the property and, hence, it will not be a conveyance on which the stamp duty is required as per Schedule-23 of the Indian Stamp Act could have been imposed.

10. Learned counsel for the petitioner argues that the aforesaid principle, as to in what manner the stamp duty would be made payable on the transfer of lease deed, was considered by the Hon'ble Apex Court in the judgment as reported in JT 2009 (6) SC 448, M/s Residents Welfare

Association, Noida Vs. State of U.P. & Ors., wherein in the judgment rendered by the Hon'ble Apex Court on 15.04.2009, the Hon'ble Apex Court in paragraph no.24 has observed that while dealing with the question about the implication of Article 63 of Schedule 1(B) of the Indian Stamp Act, as it is applicable in the State of U.P., the transfer of the lease deed would be falling under Article 63 of the Indian Stamp Act and will not be treated as to be a conveyance to attract Article 23 of the Indian Stamp Act.

11. Since in the instant case apparently, the predecessor lessee of the present petitioner was holder of a lease deed under the provisions of the Government Grants Act, and as the transfer made in favour of the present petitioner was that of the rights of lease itself, it will not be treated as to be a conveyance to bring the document within Article 23 of the Indian Stamp Act, to impose the deficiency of stamp based upon Article 23 of the Indian Stamp Act.

12. The relevant paragraph no.24 is extracted hereunder:-

"24. Keeping the above position in mind, we, therefore, would deal with the question as to whether Article 63 of Schedule 1B of the Stamp Act, as applicable to the State of UP will apply to the document in question, or whether Article 23 of the Stamp Act will be applicable in the present case. Article 63 deals with transfer of lease by way of assignment and provides that in such a case, the duty that would be payable is the same duty that would be payable in case of

conveyance (Article No.23) for a consideration equal to the amount of consideration for the transfer. A plain reading of Article 63 of the Schedule 1-B to the Stamp Act would, however, show that the stamp duty chargeable to a document is not on the market value of the property but on consideration indicated in the same. It is only the rate of duty, which is to be taken from Article 23. Therefore, if Article 63 of the Stamp Act is to be applied, duty shall be paid on the consideration of the amount of consideration shown in the deed itself and not on the market value of the land or the construction thereon. Therefore, it is clear from a reading of Article 63 that it would apply in case of a transfer of lease by way of an assignment and Article 23 applies in case of a conveyance by way of sale. Article 63 in clear terms mentions that in case of an assignment, the duty that would be payable is the same duty as conveyance for a consideration equal to the amount of the consideration for the transfer. Thus it is clear that the duty is not calculated on the market value but on the amount of consideration mentioned in the deed itself. It is expedient to have a look at the Stamp Acts as applicable to the State of Tamil Nadu and Union Territory of Pondicherry for elaborating our point made above. From the Stamp Act of Tamil Nadu and Pondicherry, we find that Article 63 as applicable to the same provides that in case of assignment by way of lease, the duty that would be payable is the duty as a conveyance for a market value equal to the amount of the consideration for the transfer. Therefore, it is clear that in these areas, a clear intention has been expressed that duty should be payable for a market value equal to the amount of the consideration for the transfer whereas if we refer Article 63 as applicable to the State of UP, it mentions that duty would be payable for a consideration equal to the amount of the consideration for the transfer. The legislature expressly has specified therefore that the stamp duty payable in case of an assignment would not be calculated on the market value of the property but on the consideration set forth in the deed itself."

13. This contention raised by the learned counsel for the petitioner that the transfer of leases under the Government Grant Act, would be covered by Article 63 of the Indian Stamp Act, is a fact, has not been suitably answered by the respondent in the counter affidavit, as to in what manner the assessment of the stamp duty on transfer of the

lease deed would be made by the State i.e., whether it would be under Article 23 or under Article 63 of the Schedule 1 of the Indian Stamp Act. But, owing to the aforesaid principle laid down by the Hon'ble Apex Court in the matter of M/s Residents Welfare Association, Noida(supra), since Article 63 of the Indian Stamp Act has been made applicable for the purposes of consideration of an amount of stamp duty, which would be paid on the market value of the land or the construction thereon, which is existing on the lease property, it has been observed that on a clear reading of Article 63 of Appendix 1 of the Indian Stamp Act makes it clear that it will apply to the case of transfer of leases, by way of an assignment under Article 23, will be not applicable because it only applies to the conveyances made by way of sale. Since the transfer of an assignment, or right of enjoyment under the leases granted under the Government Grants Act is not a sale, as per the provisions of the Indian Stamp Act, the deficiency of the stamp duty, as pointed out by the authority, in pursuance to the impugned order, would be in an apparent violation of the parameters prescribed under the Act, as provided under Schedule 1(B) of the Indian Stamp Act.

14. Because the eventualities and the circumstances under which the lease was transferred in favour of the present petitioner, by

virtue of a document executed in his favour on 18.09.2006, would be only an assignment of a lease and not a conveyance and, hence, it will be only covered by Article 63 of the Stamp Act. Thus, the stamp duty, as pointed out to be deficient by the impugned orders, on the basis of implication of Article 23 of the Indian Stamp Act, is contrary to the law prescribed under the Act as well as the ratio of the Hon'ble Apex Court as extracted above.

15. Thus, the determination of deficiency, as pointed out by the impugned order, cannot be sustained, as a deed, which was required to be stamped in accordance with Article 63 of the Indian Stamp Act and in that eventuality, Article 23 of the Indian Stamp Act, as has been held to be not applicable, the writ-petition would stand allowed.

16. Accordingly, the impugned orders, as rendered by respondent no.1 and 3, which are under challenge in the writ-petition, would hereby stand quashed. The stamp duty, which has been paid by the petitioner on the principal assignment of lease, would be treated to be an appropriate stamp duty paid by him, in accordance with Article 63 Appendix 1(B) of the Indian Stamp Act. Hence, there is no deficiency, as such, as pointed out by the impugned orders.

(Sharad Kumar Sharma, J.) 28.08.2023 Sukhbant/