Telangana High Court
Mohammed Rafeeq vs Mohammed Shafeeq Ahmed on 5 October, 2023
THE HON'BLE THE CHIEF JUSTICE ALOK ARADHE
AND
THE HON'BLE SRI JUSTICE N.V. SHRAVAN KUMAR
CIVIL REVISION PETITION No.4181 of 2014
ORDER:(Per the Hon'ble the Chief Justice Alok Aradhe) Mr. Ghamshyamdas Mandhani, learned counsel for the applicant.
Mr. G. Ramachander Reddy, learned counsel for the respondent.
2. With the consent of the parties, the matter has been heard finally.
3. In this petition under Article 227 of the Constitution of India the petitioner has assailed the validity of order dated 25.08.2014 passed by the trial Court by which agreement dated 28.10.2011 executed between the petitioner and the respondent has been held to be insufficiently stamped and the petitioner has been directed to pay the stamp duty on the value of the construction, namely, an amount of ::2::
Rs.74,47,749/- and penalty thereon, less stamp duty already paid.
4. The facts giving rise to filing of this petition briefly stated are that the petitioner is the proprietor of M/s.
M.R.Constructions, which is engaged in the construction of civil works. The respondent is the owner of open site measuring 457.5 square yards situated at L.B. Nagar, Warangal. The respondent proposed construction of a residential building on the aforesaid site. The parties thereupon entered into an agreement for construction of building on 28.10.2011.
5. Admittedly, the agreement contains an arbitration clause. However, the dispute between the parties arose. Thereupon, the petitioner invoked the arbitration clause and filed a petition under Section 11 of the Arbitration and Conciliation Act, 1996. In the course of the aforesaid proceedings, the petitioner produced the agreement dated 28.10.2011 executed between the parties. The respondent raised an objection on the ground that the aforesaid agreement is not properly stamped and the same is ::3::
insufficiently stamped in terms of Article 6-B of Schedule I-A of the Indian Stamp Act (hereafter referred to as "the Act").
6. The trial Court thereupon by order dated 25.08.2014 held that the document in question is insufficiently stamped and directed its impounding. The petitioner was directed to pay stamp duty on the value of the construction being Rs.74,47,749/- and penalty thereon, less stamp duty already paid. In the aforesaid factual background, this revision petition has been filed.
7. Learned counsel for the petitioner submitted that the agreement in question is not a development agreement and the petitioner does not have any right, title or interest in terms of the subject matter of the agreement. It is further submitted that the petitioner is an Engineer and therefore he has been assigned the job of construction under the agreement. It is also submitted that the agreement falls under Article 6(C) of Schedule I-A of the Act and proper stamp duty of Rs.100/- has been paid. The Commercial Court erred in not appreciating the aforesaid aspect of the ::4::
matter. It is contended that the constructed area has not been sold to the petitioner under the agreement.
8. On the other hand, learned counsel for the respondent has supported the order passed by the trial Court.
9. We have considered the submissions made on both sides and perused the record.
10. Before going further, it is apposite to take note of Article 6-B of Schedule I-A of the Act, which is extracted below:
"6. AGREEMENT or MEMORANDUM OF AN AGREEMENT not otherwise Provided for:
(A) Where the value -
(i) does not exceed Rs.5,000/- Ten Rupees
(ii) exceeds Rs.5,000/- but Twenty Rupees does not exceed Rs.20,000/-
(iii) exceeds Rs.20,000/- but Fifty Rupees does not exceed Rs.50,000/-
(iv) exceeds Rs.50,000/- One hundred rupees (B) If relating to construction of Five rupees for every a house or building including one hundred rupees or a multi-unit house or building part thereof on the or unit of apartment/flat/ market value or the portion of a multi-storeyed estimated cost of the building or for development/ proposed construction/ sale of any other immovable development of such property. Property as the case may be, as mentioned in the agreement or the value arrived at in accordance with the schedule of rates prescribed by the ::5::
Public Works Department authorities Whichever is higher.
(C) In any other case 100 rupees."
11. The agreement dated 28.10.2011 executed between the parties is titled as "agreement for construction of building".
The relevant extract of the terms and conditions of the agreement reads as under:
"WHEREAS the ENGINEERS/CONTRACTORS is desirous of carrying out CIVIL WORKS for the proposed RESIDENTIAL BUILDING at survey No.11-23-1153/A. WHEREAS the ENGINEERS/CONTRACTORS has approached the OWNER expressed his willingness to carry out the Construction works as desired by the OWNER.
Whereas the ENGINEERS/CONTRACTORS has assured the OWNER that they have necessary experience, Technical skill, manpower, material infrastructure to carry out and complete the work as desired by the OWNER.
Where as the OWNER accepted the experience of the CIVIL WORKS of ENGINEERS / CONTRACTORS and decided to entrust the construction works to M/s. MR CONSTRUCTIONS who shall be ENGINEERS/ CONTRACTORS for the above said RESIDENTIAL BUILDING of having Ground Floor + 3 but construction G + 2 Floors only (Total 9 flats +1 watch man room + Ishops), where as the approximate slab areas for execution shall be as per Plans, (Annexure-1).
Where as the ENGINEERS/CONTRACTORS has agreed to complete the above said construction with in 365 days from the date of contract agreement as per drawing, as per the terms and conditions and specifications mentioned in the below. (Annexure-2) & (Annexure-3) (A copy of the agreement kept at site and may be refereed to when ever necessary).
TERMS AND CONDITIONS FOR CONSTRUCTION OF BUILDING: (Annexure-2) ::6::
• The Contractor work will be started with in 8 days from the execution of Agreement Bond.
• The Construction of building will be completed with in 365 days, depending on the site conditions, and availability of materials and man power, if any delay is caused only due to unforeseen reasons such as Unfavorable climatic conditions, strikes, and bunds etc. • All the required tools and plants, machinery and employment and building hoist, baskets (iron), spades and crowbars, Scaffolding with rope shall be arranged by the ENGINEERS / CONTRACTORS.
• Any changes/Additions during the construction must be approved or agreed by the owner/ENGINEERS/ CONTRACTORS with the mutual written understanding of the work & cost only.
• The structural capability of the building is designed as ground plus three floors only.
• If the owner wants to go by Vaastu, he will have to get the plan approved from the Vaastu Consultant on his own cost finalized plan. From any quarter No advices are entertained during the construction period.
• Municipal dealings and charges are to be paid by the owner. In any manner.
• Any work related to furniture of cupboards is not included in the rates. And landscaping or greenery is also not included in the rates.
• The owner will pay any existing plants cutting, demolishing of existing building and compound wall if any including disposal of spoil on his own cost through carting from building area.
• Electrical fans, water heater, fancy lighting fixtures and any fixtures other then mentioned specifications are not included in turn-key projects.
• The owner has to provide electricity, bore well with motor & plastic pipe for curing, and provide water for ::7::
construction purposes; the facility of water fit for construction should be procured by the owner's responsibility. If any fire fittings, fire service charges are paid by owner.
• The owner will pay all power (electrical) and water bills. On his own accord.
• The OWNER will make the Payment as per schedule of progress of work as envisaged in the annexure.
• The security guard/watch and ward will be maintained by the ENGINEERS /CONTRACTORS during span of contract period only.
• Any work outside of main building like compound wall, compound gate & ramp, lighting on compound, pump sets, electrical service connection, municipal water connection, Arch, ceiling patty, (ceiling galtha), grooves, full elevation are not included in turn-key projects.
• Above works will be executed separately if payments as per present market rates are made.
• The ENGINEERS/CONTRACTORS if the progress is not completed with in the schedule period a fine of 2% will be imposed to the tune of left over work.
• The stage of work completed, and then the OWNER will pay the amount very next day. If fails, for payment, a fine of 2% will have to be paid by the owner, for the withheld amount.
• If any disputes arise regarding municipal plans, set backs, neighbours, land purpose etc. to be solved by the owner.
• If any disputes arises regarding quality, material and time or in any way can be referred to Arbitrator shall be final and binding on both the parties. The Jurisdiction of the Arbitrator and legal proceeding will be in the Warangal and language will be in English.
• The ENGINEERS / CONTRACTORS will use Standard/ISI materials. If owner intends premium/high quality items, the owner has to pay difference of cost.
::8::
• If the work was stopped at any stage/ due to any reason, by the owner he has to clear the amount for the work done with out any delay.
• If the owner fails to pay the installments as per the schedule, agreed by him the contractor will stop the work, and for the delay the contractor will not be held responsible, and the owner will be held responsible for the hike in materials and labor during the span of delay.
• If the cost of materials and labours increases sharply and the cost of construction goes up by 5% during the period of construction, the owner has to pay the inflation amount.
• The owner has to pay all building Iron & wood works (exp: doors, windows, ventilators, grills, glass, shops shutter, compound gates and fitting and fixtures, including all material, labour charges tools and plants & transportation complete etc.) on his own accord."
12. Thus, it is evident that under the aforesaid document parties have entered into an agreement for construction of a building.
13. Article 6-B of Schedule I-A of the Act provides for levy of stamp duty for the following two types of agreements:
(1) Agreement or memorandum of an agreement in relation to construction of a house or building including a multi-unit house or building or unit of apartment/flat/portion of a multi-storeyed building.
::9::
(2) An agreement or memorandum of an agreement for development/sale of any other immovable property.
14. In the aforesaid two types of agreements, the stamp duty has to be paid @ Rs.5/- for every Rs.100/- or part thereof on the market value or the estimated cost of the proposed construction/development of such property as the case may be as mentioned in the agreement.
15. The agreement dated 28.10.2011 executed between the parties clearly falls in the first type of agreement. Therefore, the trial Court has rightly held that the document is not sufficiently stamped under Article 6-B of Schedule I-A of the Act.
16. It is pertinent to note that a Constitution Bench of the Hon'ble Supreme Court in N.N. Global Mercantile (P) Limited vs. Indo Unique Flame Limited 1 has held that in case arbitration agreement is an unstamped agreement, the same is not enforceable in law within the meaning of Section 2(h) read with Section 2(g) of the Indian Contract Act. It has 1 (2023) 7 SCC 1 ::10::
further been held that such a document, if produced, is required to be impounded under Section 33 of the Act.
17. Therefore, we do not find any ground to interfere with the order dated 25.08.2014 passed by the trial Court. However, the petitioner is granted liberty to pay the deficit stamp duty and penalty on the aforesaid agreement. Needless to state that after levy of stamp duty and penalty, the petitioner shall be at liberty to take recourse to such remedy as may be available in law.
18. Accordingly, the civil revision petition is disposed of.
As a sequel, miscellaneous petitions, pending if any, shall stand closed.
____________________ ALOK ARADHE, CJ __________________________ N.V. SHRAVAN KUMAR, J Date: 05.10.2023 ES