Rajasthan High Court - Jodhpur
M/S.Jagmeru Marbles Pvt. Ltd vs State & Ors on 13 July, 2017
Author: Vijay Bishnoi
Bench: Vijay Bishnoi
HIGH COURT OF JUDICATURE FOR RAJASTHAN AT
JODHPUR
S.B. Civil Writ Petition No. 4373 / 1999
M/S.Jagmeru Marbles Pvt. Ltd., Banswara, through its Director,
Shri Gopi Ram son of Shri Hari Ramji Aggarwal, resident of Kushal
Baag Palace, Banswara (Raj.)
----Petitioner
Versus
1. State of Rajasthan through The Secretary, Department of
Finance, Government of Rajasthan, Secretariat, Jaipur
2. Collector (Stamps), Circle Udaipur, Udaipur Camp Banswara
3. Sub-Registrar, Banswara
4. Rajasthan Industrial Development Corporation, Banswara
----Respondents
_____________________________________________________
For Petitioner(s) : Mr Sudhir Sharma
For Respondent(s) : Mr N.S.Rajpurohit
_____________________________________________________
HON'BLE MR. JUSTICE VIJAY BISHNOI
Judgment / Order 13/07/2017 At the outset, learned counsel for the petitioner has submitted that he does not want to press the challenge to the Rule 73 of the Rajasthan Stamp Rules, 1955 as amended vide notification published on 01.03.1997.
In view of the submission made by learned counsel for the petitioner, the challenge to Rule 73 of the Rajasthan Stamp Rules, 1955 as amended vide notification dated 01.03.1997 is dismissed as not pressed.
This writ petition is essentially preferred by the petitioner challenging the validity of the judgment dated 17.09.1999 passed by the Collector (Stamps), Circle Udaipur (2 of 12) [CW-4373/1999] Camp Banswara in Case No.34/99 raising a demand on account of deficiency in stamp duty and imposing penalty on the petitioner in relation to the instrument executed between the Rajasthan Industrial Development and Investment Corporation Limited, (for short 'the RIICO' hereinafter), Jaipur and the petitioner on 22.02.1999.
Brief facts of the case are that plot Nos.43 and 44 situated in RIICO Industrial Area Banswara were given on lease to J.C. Cotton Mills Ltd. for 99 years and rent was fixed as Rs.46.05 per year and Rs.310/- were deposited as development charges. A lease-deed of this effect was executed between the RIICO and J.C. Cotton Mills Ltd. under the Rajasthan Industrial Areas Allotment Rules.
It appears that as those two plots were not being used by J.C. Cotton Mills, the petitioner had applied for leasing out those two plots for the remaining period of lease. Respondent-
RIICO had agreed for giving those two plots on lease to the petitioner for the remaining period i.e. 69 years and a lease-deed of this effect was executed on 22.02.1999 and was presented for registration before the Sub-Registrar on 26.02.1999. A certified copy of the lease agreement is available on record as Annexure-2.
In the lease agreement valuation was shown as Rs.1,11,332/- and stamp duty to the tune of Rs.7841/- and registration fee of Rs.1113/- were paid. The Sub-Registrar was of the opinion that lease agreement (Anexure-2) is undervalued as less stamp duty was paid and, therefore, he had referred the matter to the Collector (Stamps). The Collector (Stamps) decided the reference (3 of 12) [CW-4373/1999] vide Annexure-1 and held that the Annexure-2 cannot be termed as a lease-deed and it is a transfer of lease by way of assignment, therefore, the duty chargeable on the said document is the same as on the conveyance. The Collector (Stamps) vide impugned order has held that stamp duty on the lease-deed (Annexure-2) leviable is Rs.3,42,819/- with the registration fee of Rs.34,282/-
and petitioner was held liable for penalty of Rs.6853/-. As such total Rs.3,75,000/- has been ordered to be recovered from the petitioner.
Learned counsel for the petitioner has submitted that the document lease agreement (Annexure-2) cannot be termed as a conveyance and according to Article 35(iii) of the Stamp Act, 1952, the stamp duty leviable on the document is on the basis of amount of value of the average annual rent reserved and not in accordance with the Article 63 of the Stamps Act, 1952.
Learned counsel for the petitioner has submitted that similar controversy has already been decided by Single Bench as well as Division Bench of this Court in case of M/s Bhilwara Spinners Ltd., wherein it is held that the document such as Annexure-2 cannot be termed as a conveyance and such transactions are clearly covered under Article 35(a)(iii) of the Rajasthan Stamps Act.
Learned counsel for the petitioner has, therefore, prayed that the impugned order passed by the Collector (Stamps) is illegal and contrary to the law laid down by this Court, hence, the same is liable to be set aside.
Learned counsel appearing for the respondents has (4 of 12) [CW-4373/1999] supported the impugned order and prayed for dismissal of the writ petition filed by the petitioner.
The Single Bench of this Court in M/s Bhilwara Spinners Ltd. Gandhi Nagar, Bhilwara & Anr. vs. The Collector (Stamps), Bhilwara District, Bhilwara & Ors., reported in RLW 1998(3) Raj. 1485 has held as under:
"(21). The question which would require consideration in this case is whether the supplementary lease is transfer of a lease by way of assignment by M/s. Rajasthan Spinning and Weaving Mills in favour of M/s. Bhilwara Spinners Ltd. to be charged under Article 63 or it is a lease executed by the State Govt. in favour of the petitioner and thus, is liable to be charged for stamp duty under clause a(iii) of Article 35 of Schedule I on the basis of average annual rent reserved.
The facts admitted are that there was a lease executed by the State Govt. on 22-11 -68 in favour of M/s. Rajasthan Spinning and Weaving Mills Ltd. of plots of land measuring 104 bighas 8 biswas i.e. 56 acres situated in the industrial area, Bhilwara. On a request made by M/s. Rajasthan Spinning and Weaving Mills Ltd., the State Govt. passed an order on 14-7-83 and has granted permission of transfer of leasehold rights in the land, under the Rajasthan Industrial Area (Allotment) Rules, 1959 to M/s. Bhilwara Spinners Ltd. for the remaining period on certain terms and conditions. As a consequence of the order, the lease deed was executed on 25-3-83 between M/s. Bhilwara Spinners Ltd. and the Governor of Rajasthan of the land - 56 acres approximately, for a balance period of 72 years on rent with an option to renew the said lease for a further period of 99 years after the expiry of the "present term of lease.
(5 of 12) [CW-4373/1999] (22). The submission of the learned counsel for the petitioners Mr. S. S. Ray is that the lease in favour of M/s. Rajasthan Spinning and Weaving Mills was surrendered in favour of the State of Rajasthan and thereafter, a lease deed was, executed on 25-3-88 by the State of Rajasthan in" favour of M/s. Bhilwara Spinners Ltd. There is nothing to indicate that M/s. Rajasthan Spinning and Weaving Mills has transferred the lease by way of assignment to M/s. Bhilwara Spinners Ltd. to attract the stamp duty on the amount which is equal to a consideration equal to the market value of the property. After the decision rendered in P.M.C. Kunhiraman Nair v. R. Naganatha lyer, there is no manner of doubt that there can be an implied surrender of the lease. It has been held by the Supreme Court:
"Under clause (f) of Section 111 of the Transfer of Property Act, 1908, implied surrender is a mode for determination of a lease of immovable property. In English Law, delivery of possession by the tenant to a landlord and his acceptance of possession effects a surrender by operation of law. It is also called implied surrender in contradistinction to express surrender which must be either by deed or in writing."
Under the illustration to clause (f) of Section 111 of the Transfer of Property Act, there would be an implied surrender of the former lease if a lessee accepts from his lesser a new lease of the property leased to take effect during the continuance of the existing lease. The said illustration is however not exhaustive of the cases in which there may be an implied surrender of the lease. Just as under the English Law, (6 of 12) [CW-4373/1999] there can be an implied surrender under the law of transfer of property in India, if the lesser grants a new lease to a third person with the assent of the lessee under the existing lease who delivers the possession to such lessee and further the lessee directs to pay rent to a lessor."
(23). In Narotam Lal v. Mohan Lal, it is laid down by the Rajasthan High Court that the term "surrender by operation of law" or "implied surrender" is an expression used to describe all those cases where the law implies a surrender from the unequivocal conduct of both the parties which is inconsistent with the continuance of the existing lease. Such a surrender is valid under Section 111(f) of the Transfer of Property Act.
(24). There would be an implied surrender when the lesser executes a new lease of some property, at the request of the first lessee. In the present case, a supplementary lease deed was executed on 25-3-88 on the request of the original lessee M/s. Rajasthan Spinning and Weaving Mills Ltd. for the petitioner by the Govt. of the State of Rajasthan, after granting necessary permission for such a transaction vide its order dated 14-7-83. The facts and circumstances, clearly indicate that there was an implied surrender by M/s. Rajasthan Spinning and Weaving Mills in favour of the State Govt. and thereafter, the State Govt. - the lesser has entered into a new lease agreement on 25-3-88 with M/s. Bhilwara , Spinners Ltd. The document dated 25-3-1988 does not in any way indicate that this is a transfer of lease by way of an assignment by M/s. Rajasthan Spinning and Weaving Mills Ltd., Bhilwara in favour of the petitioner, to attract the provisions of Art. 63 of Schedule I of the Rajasthan Stamp Laws Act, 1952 as adopted, to levy a duty on a conveyance for a consideration equal to the amount of consideration (7 of 12) [CW-4373/1999] for transfer or as on conveyance for a consideration equal to the amount of the market value of the property. It is now well settled that the stamp duty is livable on the instrument presented for registration on the basis of the nature of the instrument executed by the parties. It is true that Section 27 of the Stamp Act requires the parties to a document to set forth in the document fully and truly the consideration, if any, and all other facts and circumstances affecting the chargeability of that document with the duty or the amount of the duty with which it is chargeable. But failure to comply, with the requirement of that section is merely punishable under Section 64. (AIR 1972 SC 899 supra).
In the present case, the transaction in question for the purposes of stamp duty is clearly covered under Art. 35 (a)(iii) of the Rajasthan Stamp Act as adopted, and the duty livable is same as on conveyance on the basis of the amount of value of average annual rent.
(25). For the reasons stated above, the Collector (Stamps) was clearly at wrong when he has assessed the stamp duty on the basis of the fact that supplementary lease deed was executed between M/s. Rajasthan Spinning and Weaving Mills Ltd., Bhilwara and M/s. Bhilwara Spinners Ltd. and although the plant, machinery and building are not mentioned in the lease dated 25-3-1988, they were subject-matter, the petitioner is liable to pay stamp duty for transfer of the plant, machinery and building. The order passed by the Collector (Stamps) dated 13-3-1997 levying additional stamp duty and imposing penalty is set aside. The writ petition is allowed. There shall, however, be no order as to costs."
The Division Bench of this Court vide judgment dated 27.11.2000 passed in D.B.Civil Special Appeal No.548/1998, (8 of 12) [CW-4373/1999] State of Rajasthan vs. Bhilwara Spinners Ltd. & Ors. while affirming the above referred judgment of the Single Bench of this Court has held as under:
"In the light of aforesaid principle, it is clear that the RSWM had agreed to transfer its Bhilwara unit which included the lease hold right in the land in question alongwith his other assets which formed part of the Bhilwara unit to its wholly owned subsidiary company BSL. The State Government as lessor has granted permission for such transfer of lease-hold rights in favour of BSL for the land in question as required under the lease deed of 1968. In pursuance of the agreement between the RSWM and BSL to convey its interest in Bhilwara unit with stipulation of transfer of its leasehold rights in absolute, BSL has been put in possession of the land in question after fulfilling condition under lease agreement about which there is no dispute. This part of transaction is between the RSWM and BSL. The instrument in question neither creates any such right in BSL by transfer of any right of RSWM by State in fact, nor it purports to create such rights. By the instrument in question dated 25th March, 1988 lessor has accepted the BSL as its lessee for the remainder of the period and it has agreed to accept the rent directly from him. The assent of the original lessee for the creation of new relationship between the lessor and his envisaged assignee is apparent from the fact that it applied for permission of such transfers and the State Government has agreed to grant such permission with the stipulation that a supplementary lease deed shall be executed by BSL in favour of State Government acknowledging the State Government as its lessor. Thus, the continuance of the existing lease between State of Rajasthan and RSWM become inconsistent with the continuance of new lease between the State of Rajasthan and BSL having come into existence with the assent of the original lessee, the rights of the original lessee stood (9 of 12) [CW-4373/1999] surrendered. The original lease deed Ex. P/2, in favour of RSWM, permission letter dated 14,7.1983 culminating into execution of supplementary lease deed dated 25.3.88 in favour of BSL all relates to only one property namely lease hold rights in the plot in question which originally stood created in favour of the RSWM, now stood created between State Government and BSL vide Ex.P/4 resulting in surrender of lessee's right of the RSWM extinguishing privity of contract between himself and the State Government on coming into existence new privity of agreement between Slate of Rajasthan and BSL. Therefore, the instrument in question which neither refers to any property other than the lease hold rights in the plot in question neither purports to transfer any property other than property in question the lease hold rights in the plot. It even does not convey any of rights of RSWM to BSL through the instrument, but only the effect of creation of new right between the State of Rajasthan and BSL is that existing privity of contract between State of Rajasthan & RSWM which still holds RSWM bound to Stale, is extinguished.
The instrument in question cannot be instrument of conveyance for transfer of properly other than the property of State Government from State Government to respondent BSL. There was no material or ground for the authorities acting under the Stamp Act to assume it being an instrument of conveyance of property, inter-vivos from RSWM to BSL on any principle of transfer of property from one living person to another living person as a transaction inter-vivos either in the light of the definition of conveyance under Sec. 2(10) of the Indian Stamps Act or the transfer of properly defined under Transfer of Property Act. In our opinion, the transfer of Property inter-vivos under Stamp Duty Act cannot be different and distinct from the transfer of property under Sec. 5 of the Transfer of Property Act. Nexus between the two is clear. Sec. 2(10) refers the conveyance to mean (10 of 12) [CW-4373/1999] transfer of property inter-vivos by way of sale or other methodology not specifically provided under Schedule I of the Act of 1899, and Transfer of Property Act, which deals with the substantive law on transfer of immovable property too envisages transfer of immovable property mean conveying the property from one living person to another living person i.e. transfer inter-vivos.
The authorities under the Stamps Act apparently were labouring under the obsession of the transaction of transfer of a going unit from RSWM to BSL without referring to any instrument, if any executed between the two living person concerned viz. RSWM and BSL creating or purporting to create rights in the properties constituting Bhilwara unit of RSWM in favour of BSL. The question about levy and collect stamp duly in respect of conveyance of any property from RSWM to BSL, could only refer to an instrument of conveyance executed and existing between the said two companies and not to any other instrument. The ground on which the proceedings have been commenced against BSL in respect of instrument dated 25.3.88, in our opinion were non existing and no person reasonably instructed in law vested with authority to exercise under the provisions of Stamp Act could have reason to hold that the instrument dated 25.3.1988 was an instrument of conveyance of Bhilwara unit of RSWM which includes the building, plant and machinery and other fixtures other than lease hold rights in the plot in question from RSWM to BSL. The instrument could have only been confined to any right or liability created or purported to have been created between the parties to instrument in respect of the property or properly mentioned in the instrument. The authorities could not travel beyond the instrument to include interest of persons not parties to instrument or properties not refereed to in the instrument. The exercise of construing the nature of transaction emanating from instrument subjected (11 of 12) [CW-4373/1999] to duty Court only be confirmed to creation of rights, liabilities and obligation created or purported to be created between parties to the instrument and to the properties mentioned in the instrument. If it were to be treated as conveyance, it could be only conveyance from State of Rajasthan to the BSL in the property mentioned in the instrument. It may again be pertinent to recall here that with reference to the reasons stated above that the instrument of conveyance in question should either create some rights in fact or purport to create-rights which it really does not or could not create. Obviously, the instrument in question does not purport to create any right through transfer or conveyance of immovable properly except by creation of lease. It does not purport to transfer the land in question by sale from State of Rajasthan to BSL. In fact, it cannot and does not create any other right between the parties other than the lease in respect of any property other than plot in question inasmuch at no point of time the properly in the building, plant & machinery and fixtures on the land in question in which the lease hold rights were held by the RSWM became part of the ownership of the State of Rajasthan by any mode of conveyance or by operation of law so as to become a part of the land which could be conveyed to the BSI. by State of Rajasthan."
If we come to the facts of the present case, it would be clear that vide Annexure-2 the respondent - RIICO leased out the plot Nos. 43 and 44 to the petitioner. Those plots were earlier leased out to the J.C.Cotton Mills Ltd. for 99 years by the RIICO and later on the same plots were leased out to the petitioner for remaining period i.e. 69 years. The Collector (Stamps) while assessing the stamp duty has taken into consideration the (12 of 12) [CW-4373/1999] constructions existed on the said plots, though the description of such construction has not been mentioned in the lease agreement (Annexure-2).
As per the law laid down by the Single Bench as well as by the Division Bench of this Court in the case of M/s Bhilwara Spinners Ltd. (supra), the building, plants, machinery and other fixtures, other than the land of the plot, cannot be said to have been transferred in favour of the petitioner by execution of the lease-deed (Annexure-2).
In view of the above discussions, this Court is of the opinion that the Collector (Stamps) - respondent No.2 has erred in passing the impugned order as the same is contrary to the law laid down by the Single Bench as well as the Division Bench of this Court in case of M/s Bhilwara Spinners Ltd. (supra).
Hence, this writ petition succeeds and is allowed, the impugned order dated 17.09.1999 passed by the Collector (Stamps), Circle Udaipur Camp Banswara is set aside. There shall be no order as to costs.
(VIJAY BISHNOI)J. m.asif/PS