Karnataka High Court
Canara Bank vs M/S Shankaranarayana Industries on 6 June, 2019
Author: Krishna S.Dixit
Bench: Krishna S.Dixit
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IN THE HIGH COURT OF KARNATAKA, BENGALURU R
DATED THIS THE 6TH DAY OF JUNE, 2019
BEFORE
THE HON'BLE MR. JUSTICE KRISHNA S.DIXIT
WRIT PETITION NO. 14248 OF 2017 (GM-CPC)
BETWEEN:
1. CANARA BANK,
A BANKING COMPANY HAVING
ITS REGISTERED AND HEAD OFFICE,
AT J C ROAD,
BANGALORE - 560 002.
REP. BY ITS MANAGER.
2. CANARA BANK,
TRINITY CIRCLE BRANCH,
NO.25, SHANKARANARAYANA BUILDING-I,
MAHATMA GANDHI ROAD,
BANGALORE - 560 001.
REP. BY ITS MANAGER.
... PETITIONERS
(BY SRI. A RAVISHANKAR, ADVOCATE)
AND:
M/S SHANKARANARAYANA INDUSTRIES
AND PLANTATIONS PVT.LTD.,
A PRIVATE LIMITED COMPANY INCORPORATED
UNDER THE COMPANIES ACT,1956,
HAVING ITS REGISTERED OFFCIE AT NO.25,
M G ROAD, BANGALORE - 560 025.
REP BY ITS DIRECTOR,
SMT. SUMITRA SHETTY.
... RESPONDENT
(BY SRI. T P VIVEKANANDA, ADVOCATE)
THIS WRIT PETITION IS FILED UNDER ARTICLE 227 OF
THE CONSTITUTION OF INDIA PRAYING TO QUASH THE
ORDER DATED 17.02.2017 PASSED ON ADMISSIBLY OF
LEASE AGREEMENT DATED 22.06.1988 IN EVIDENCE IN
O.S.NO. 3445/2012 BY THE X ADDL. CITY CIVIL AND
SESSIONS JUDGE, BANGALORE CITY VIDE ANNEX-A.
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THIS PETITION COMING ON FOR PRELIMINARY
HEARING IN 'B' GROUP THIS DAY, THE COURT MADE THE
FOLLOWING:-
ORDER
The petitioners being the defendants in respondent's Eviction/Ejectment Suit in O.S.No.3445/2012 is invoking the writ jurisdiction of this Court for assailing the order dated 17.02.2017, whereby, the trial Court after refusing to admit the subject document dated 22.06.1988, has ordered its impounding on the ground that it is unduly stamped. The notice having been served, the respondent has entered appearance through it's counsel who resists the writ petition.
2. Learned counsel for the petitioners taking the Court through the contents of the document in question, a copy whereof is at Annexure-D argues that the transaction comprised therein is only an Agreement to secure lease and not the lease as such and therefore, the finding of the court below as to the nature of the document and consequential refusal to admit the same in evidence and further, its impounding is unsustainable.
3. Learned counsel appearing for the respondent per contra vehemently contends that, the trial court in its 3 accumulated wisdom has construed the document in question as being the lease contradistinguished from an Agreement to Lease; such a construing of the said document is supported by the text and context thereof; many a times, the text of the transaction is so made as to avoid the stamp duty and registration, and this being one such case, the matter does not deserve scrutiny in the writ jurisdiction, there being no error apparent on the face of the record.
4. I have heard the learned counsel for the petitioners and the learned counsel for the respondent. I have perused the writ petition papers in general and the subject document, a copy whereof is at Annexure-D in particular; I have adverted to the Rulings cited at the Bar.
5. Section 105 of the Transfer of Property Act, 1882 defines "Lease", "Lessor", "Lessee", "Premium" and "Rent". Lease is a matter of contract between the Lessor and the Lessee, wherein the former delivers the possession and profits of the land to the later for consideration and for a particular period. This section defines a "Lease" as a partial transfer i.e., a transfer of a right of enjoyment of the property for a certain period. The essentials of lease as 4 enlisted in Mulla's THE TRANSFER OF PROPERTY ACT, 11th EDITION at Page 105 are: the parties, the subject matter/immovable property, the demise/partial transfer, the term/period of lease and the consideration/rent. What differentiates a Lease from a mere Agreement to Lease is the demise or transfer of limited interest in the demised property; in an Agreement to Lease, there is no demise proesenti inasmuch as parties agree only to enter into a lease in future.
6. The Apex Court in the case of State of Maharashtra Vs. Atur India Pvt Ltd, after referring to several authors and authorities both of English law and Indian law, has held that where the agreement is only for procuring a lease without affecting an actual demise in the present, of the subject property, it does not partake the character of a "lease" since it is in the nature of an executory Agreement to Lease which requires neither writing nor registration.
7. The subject agreement at paragraph No.2 reads:
"2. The Lessors shall, on completion of the construction and renovations of the said premises, put the Lessees again in possession of the said premises and execute a lease of the 5 said premises in favour of the Lessees on the following terms and conditions......." Paragraph 3 reads:
"3. Until such time as a regular lease deed is executed the parties shall be bound by the terms and conditions set out in these presents."
Going by the definition of lease given under Section 105 of the Transfer of Property Act, 1882, as interpreted by the Apex Court with the aid of English and Indian Authorities, it is difficult to construe the subject document as a lease since it is capable of a suit for specific performance. Nothing therein suggests as to the presence of all the ingredients enlisted by the Editors of Mulla's Transfer of Property Act, which are mentioned in the preceding paragraphs.
8. In the case of K. AMARNATH VS. SMT.
PUTTAMMA ILR 1999 KAR 4634, a Co-ordinate Bench of this Court at Paragraph No.19.1 has stated as under:
"19.1. If an agreement or deed of lease relate to a 'present demise', that is, grants or creates a lease (to 'demise' is to create an estate by way of lease) either from that date or from the future date, it requires Stamp duty as per Article 30 and requires to be compulsorily registered, irrespective of the period of lease being more than or less than one year. On the other hand, an Agreement merely agreeing to grant or create a lease in 6 further, subject to fulfillment of some conditions or happening of some contingencies will be a simple agreement (liable to Stamp duty under the residuary clause in article 5) which does not require registration. The following illustrations will demonstrate the difference: (a) If the instrument (be it a deed of lease or agreement of lease) confirms, grants or crease a lease, either from any past date or from that date it will be an instrument requiring Stamp duty under Article 30 and requiring registration. Thus an instrument executed on 1.1.1999 stating that the lease for a term of 5 years from 1.12.1998 or from 1.1.1999 or from 1.2.1999 is a present demise; (b) if the instrument records an agreement to grant a lease in future subject to a contingency or contingencies, then it is a mere agreement which contingency or contingencies, then it is a mere agreement which does not require a Stamp duty under Article 30 of the Stamp Act, or registration. An instrument which records an agreement to construct a building and then grant a lease by executing a separate deed will be a mere agreement which can be stamped under the residuary clause of Article 5 and may not require registration."
This observation supports the contention of the petitioner/defendant.
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9. The reliance of the learned counsel for the respondent on the immediately preceding paragraph of the said Ruling, may not be justified, although it has some stray sentences that tend to support his case, the correct position of law as to the construction of a document relating to lease having been stated in the above paragraph. For the purpose of levy of stamp duty or requirement of registration, when there is a doubt, as to the nature of the document because of its text and contest, such a doubt ordinarily has to be resolved in favour of a litigant who presses the said document in evidence for substantiating his case. Such a doubt needs to be resolved in favour of the said litigant upholding its admissibility in evidence and against its impounding, since the provisions of Karnataka Stamp Act, 1957 relating to levy of duty/penalty and impounding are in the nature of Taxing Statutes, which ordinarily needs to be construed strictly, subject to all just exceptions.
In the above circumstances, this writ petition succeeds; the impugned order is set at naught; the Court below shall construe the subject document namely LEASE AGREEMENT dated 22.06.1988 has to be an agreement for 8 the grant of lease as contradistinguished, from a lease as such.
Since the ejectment suit is of the year 2012, the trial Court is requested to complete the trial of the same and dispose off it, preferably within an outer limit of six months.
No costs.
Sd/-
JUDGE Bsv