Bombay High Court
M/S. Jasubhai Business Services vs State Of Maharashtra on 14 December, 2011
Author: G.S.Godbole
Bench: G.S.Godbole
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srj
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELLATE JURISDICTION
WRIT PETITION NO.6623 OF 2007
M/s. Jasubhai Business Services ]
Pvt. Ltd. (Formerly Excel Realtors Limited) ]
a private limited company incorporated ]
under the Companies Act, 1956 having its ]
registered office at 26, Maker Chambers VI, ]
2nd floor, Nariman Point, Mumbai 400 021. ] .. Petitioner
V/s.
1 State of Maharashtra ]
Mantralaya, Mumbai.
2 The Chief Controlling Revenue
]
]
Authority, Maharashtra State, Pune. ]
3 The Collector of Stamps ]
Raigad, Alibaug. ]
4 City and Industrial Development ]
Corporation of Maharashtra Limited ]
(CIDCO), a company incorporated ]
under the provisions of Companies ]
Act, 1956 and having its registered ]
nd
office at Nirmal, 2 Floor, Nariman ]
Point, Mumbai 400 021. ] .. Respondents.
WITH
WRIT PETITION NO.4866 OF 2002
WITH
CIVIL APPLICATION NO.78 OF 2008
AND
CIVIL APPLICATION NO.472 OF 2008
IN
WRIT PETITION NO.4866 OF 2002
1 Balmer Lawrie & Company Limited ]
a public limited company incorporated ]
and registered under the Companies ]
Act, 1913 and having its Registered ]
Office at 21, Netaji Subhash Road, ]
Calcutta-700 001 and having their ]
Corporate Office at 5, J. N. Heredia ]
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Marg, Ballard Estate, Mumbai 400 038. ]
2 Mr. Naveen Prasad Singh ]
Director, Age: 54, Occ: Service, ]
a Shareholder of Petitioner No.1 ]
Company, having his office at No.5, ]
J. N. Heredia Marg, Ballard Estate, ]
Mumbai 400 038. ] .. Petitioners.
V/s.
1 The Chief Controlling Revenue ]
Authority, an Officer of the State of ]
Maharashtra having his office at New ]
Administrative Building, Ground Floor, ]
Opp: Council Hall, Pune - 1. ]
2 The Joint District Registrar & Collector ]
of Stamps, Raigad, Alibag.
ig ]
3 The State of Maharashtra ]
through its Revenue & Forest ]
Department and having its office at ]
Mantralaya, Mumbai 400 032. ] .. Respondents.
WITH
WRIT PETITION NO.7643 OF 2007
M/s. Jasubhai Business Services ]
Pvt. Ltd. (Formerly Excel Realtors Limited) ]
a private limited company incorporated ]
under the Companies Act, 1956 having its ]
registered office at 26, Maker Chambers VI, ]
2nd floor, Nariman Point, Mumbai 400 021. ] .. Petitioner
V/s.
1 State of Maharashtra ]
Mantralaya, Mumbai. ]
2 The Chief Controlling Revenue ]
Authority, Maharashtra State, Pune. ]
3 The Collector of Stamps ]
Raigad, Alibaug. ]
4 City and Industrial Development ]
Corporation of Maharashtra Limited ]
(CIDCO), a company incorporated ]
under the provisions of Companies ]
Act, 1956 and having its registered ]
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office at Nirmal, 2nd Floor, Nariman ]
Point, Mumbai 400 021. ] .. Respondents.
Mr. Chirag Balsara with Mr. Ranjit Shetty, Mr. Luckyraj Indorkar, Mr.
Shailesh Poria and Mr. Amit Iyer i/b. M/s. Hariani & Co., for the Petitioner
in Writ Petition Nos.6623 of 2007 and 7643 of 2007.
Dr. Biren Saraf with Mr. Shilpan Gaonkar, Mr. Amol Bavare, Mr. Zoeb
Cutlerywala i/b. M/s. Udeshi Udwadia & Berjis, for Petitioner in Writ
Petition No.4866 of 2002.
Mr. V. G. Sonpal, AGP for Respondent Nos.1 to 3 in all the matters.
Mr. G. S. Hegde i/b. M/s. G. S. Hegde & Associates for Respondent No.4
in Writ Petition Nos.6623 of 2007 and 7643 of 2007.
CORAM : G.S.GODBOLE,J.
DATED : 14th DECEMBER, 2011.
JUDGMENT:-
1 Heard Mr. Chirag Balsara, for the Petitioners in Writ Petition No.6623 of 2007 and Writ Petition No.7643 of 2007, Dr. Biren Saraf, for the Petitioner in Writ Petition No.4866 of 2002 and Mr. Vinal Sonpal "A"
Panel, Counsel for the Respondent-State and its Officers, and Mr. Hegde for CIDCO.
2 Since the facts involved in all these Writ Petitions and the question of law which is raised in all these Writ Petitions is common and since all these Writ Petitions have been argued together, they are being ::: Downloaded on - 09/06/2013 18:00:25 :::
-4- 3-wp-4866-2002-group disposed off together by this common Judgment.
Facts in Writ Petition No.6623 of 2007 3 In this case, City and Industrial Development Corporation (herein after referred to as "CIDCO") has issued an invitation for tenders for lease of plots of land for Residential-cum -Commercial uses situated at Kharghar, Navi Mumbai. The Petitioner submitted its bid and emerged as the highest bidder having agreed to pay a lease premium of Rs.4,29,83,500/-. The Agreement To Lease was executed between CIDCO and M/s. Excel Ltd. (the earlier name of the Petitioner) on 2nd November, 1995 in which the full ad valorem stamp duty payable for a lease was not paid. Possession of the land was handed over to the Petitioner by executing the receipt dated 2nd November, 1995. Draft of the Lease Deed to be executed in future, was annexed to the Agreement. Thereafter, the Collector of Stamps, Raigad issued a notice for deficit payment of stamp duty. Ultimately, after adjudication and after hearing the Petitioner, the order was passed by the Collector on 6th October, 1998 in which it was held that stamp duty of Rs.30,08,935/- was payable and the deficit stamp duty was Rs.30,08,915/-. Aggrieved by this order, the Petitioner filed an appeal before the Inspector General of Registration and Controller of Stamps being the Chief Controlling Revenue Authority being Appeal ::: Downloaded on - 09/06/2013 18:00:25 :::
-5- 3-wp-4866-2002-group No.149 of 1998. By the impugned Judgment and Order dated 9th March, 2007, the Appellate Authority dismissed the said Appeal by holding that the instrument in question was covered by Article No.36 of Schedule I of the Bombay Stamps Act, 1958. Aggrieved by this Order, this Writ Petition has been filed.
Facts in Writ Petition No.7643 of 2007 4 After following a due process for inviting bids for tenders, the Agreement To Lease Deed dated 2nd November, 1995 was executed after payment of the agreed lease premium of Rs.7,95,34,090/-. Possession of the land was handed over by the possession receipt of the same date. The Collector of Stamps issued a show cause notice and passed an order which is order dated 16th October, 1009 (it is in fact common order for this Petition and Writ Petition No.6623 of 2007). The Collector of Stamps held that the total stamp duty payable was Rs.55,67,505/- and the deficit stamp duty was Rs.55,67,485/-. Aggrieved by this order, the Petitioner filed Appeal No.150 of 1998 under Section 53 (1)(A) of the Bombay Stamps Act, 1958 and by order dated 9th March, 2007, the Chief Controller Revenue Authority, Maharashtra State, Pune dismissed the said Appeal by passing the impugned order holding that the Agreement in ::: Downloaded on - 09/06/2013 18:00:25 :::
-6- 3-wp-4866-2002-group question falls under Article 36 of Schedule-I of the Bombay Stamp Act, 1958.
Facts in Writ Petition No.4866 of 2002 5 This Writ Petition is filed by Balmer Lawrie & Company Ltd.
Even in this case, after inviting the bids, Agreement To Lease was executed on 7th May, 1997. Premium of Rs.12,98,91,027.50 was paid.
Possession was handed over on 6th May, 1997. The Collector of Stamps and Joint District Registrar, Raigad passed an order dated 14th May, 1998 and came to a conclusion that there is a deficit payment of stamp duty to the tune of Rs.90,92,445/-. Aggrieved by this order, an Appeal was filed before the Chief Controlling Revenue Authority, Maharashtra State, Pune under Section 53 of the Act and that Appeal is dismissed by Judgment and Order dated 25th February, 1999. Thereafter, the Writ Petition has been filed on 5th December, 2000.
6 It is not disputed that prior to these Agreements and as on 1st September, 1995, Article 3 had 3 explanations. However, by amendment which came into force on 1st September, 1995, said Explanation III was deleted. Relevant portion of Article 36 of Schedule-I of the Bombay Stamp Act, 1958 read thus:-
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36. LEASE, including an under-lease or sub-lease and any Agreement To Let or sub-let or any renewal of lease-
(a) where by such lease, the rent is fixed and no premium is paid or delivered-
----------------------------
(i) where the lease purports to be for a term [not more than] one year;
Explanation III - An Agreement of lease shall not be chargeable as a lease unless there is an immediate and present demise.
7 Section 2(n) of the Bombay Stamps Act, 1958 defined the term lease as under:-
"(n) "lease" means a lease of immovable [or movable(or both)] property, and includes also,-
(i) a Patta;
(ii) a Kabulayat, or other undertaking in writing not being a counterpart of a lease to cultivate, occupy or pay or deliver rent for immovable property;
(iii) any instrument by which tolls of any description are let;
(iv) any writing on an application for a lease intended to signify that the application is granted;
[(v) a decree or final order of any Civil Court in respect of a lease:-
Provided that, where subsequently an instrument of lease is executed in pursuance of such decree or order, the stamp duty, if any, already paid and recovered on such decree or order shall ::: Downloaded on - 09/06/2013 18:00:25 :::
-8- 3-wp-4866-2002-group be adjusted towards the total duty leviable on such instrument;]
8 The statement of objects and reasons dated 4th October, 1995 indicates the reasons as to why these explanation was amended. The relevant portion of the said Act read thus:-
"2 Some of the important provisions which are proposed to be made are explained as follows:-
Bombay Stamp Act, 1958.
(ii) to provide for levy of appropriate stamp duty on instruments relating to lease of land and its timely collection."
9 Mr. Chirag Balsara advanced the following submissions:-
(i) It was submitted that since the Act is a Taxing statute, it must be strictly interpreted and if there is an ambiguity, then the benefits is to be given to the assessee. It was submitted that Agreement To Lease and Agreement of Lease stand on a different footing. It was also submitted that Agreement To Let and Agreement To Lease also stand on a different footing. It was submitted that Explanation III was to ensure that an Agreement To Lease is excluded and merely because the explanation is deleted, there is no legal consequence. According to him, explanation was inserted by way of abundant caution and, hence, there is no legal effect of the amendment. Mr. Chirag Balsara drew my attention to the recital in the invitation for tenders (Exhibit A) and it was contended that under ::: Downloaded on - 09/06/2013 18:00:25 :::
-9- 3-wp-4866-2002-group clause 4 it was provided that only after the lease premium has been paid in full and after all other requirements are satisfied, the Applicants will be entitled to sign the Agreement To Lease which enables the Applicants to enter upon the land, submit building plan and commence construction on the land but Lease Deed was to be executed only after completing the entire construction and obtaining Occupancy Certificate. Reliance was placed on clause 5 of this Invitation to Submit Tenders containing that the benefit could not be transferred. By relying upon various clauses of the letter of acceptance from CIDCO dated 11th August, 1995, it was submitted that the rights were not allowed to be transferred and that only upon payment of entire lease premium, Agreement was to be executed. It was submitted that only a license has been created.
(ii) Referring to the Agreement dated 2nd November, 1995, it was submitted that the nomenclature of the Agreement as "Agreement To Lease" is wrong and in fact, Agreement is an Agreement granting license.
Relying on sub-clauses (c), (d) and (e) of the recital of the Agreement, it was submitted that what was created was only a license, that there was no present demise and, therefore, the impugned orders were erroneous.
Relying on clauses 2 and 3(d), 5(a) and 5(b), it was submitted that there was a time limit of twelve months to commence construction and four ::: Downloaded on - 09/06/2013 18:00:25 :::
- 10 - 3-wp-4866-2002-group years to complete the construction. The CIDCO had retained rights of entering the land which clearly shows that the instrument is actually one of license. It was submitted that since there was a power to resume land, only the license had been created. Relying on clauses 7 and 8 of the Agreement, it was submitted that grant of lease was contemplated only in future and even the format of the lease had been finalized. Relying on the possession receipt, it was submitted that the possession was not exclusive possession. Relying on the form of lease annexed to the Agreement, it was submitted that only after completion of the entire construction, a lease will be created and, hence, there was no present demise and all that was done was to create a license.
(iii) Criticizing the Judgments of the Collector and the Chief Controlling Revenue Authority, it was submitted that the authorities were required to read the entire instrument as whole and were thereafter require to ascertain whether the instrument is an Agreement To Lease. It was submitted that the Supreme Court had an occasion to consider an identical Agreement in the case of ICICI v/s. State of Maharashtraa, in and identical Agreement has been construed to be an Agreement merely creating a license and not creating a lease or making a present demise. It was submitted that since the Supreme Court has already held that Article a 2000(1) BCR page 35 ::: Downloaded on - 09/06/2013 18:00:25 :::
- 11 - 3-wp-4866-2002-group 36 is not attracted to the same Agreement, the authority has no jurisdiction to take a contrary view. It was further submitted that the Appellate Authority has wrongly distinguished the Judgment of the Supreme Court in the case of ICICI v/s. State of Maharashtra as also earlier Judgment in the case of The State of Maharashtra and Others v/s. Atur India Pvt. Ltd b. It was submitted that the definition of lease is inclusive definition and in view of the binding precedents of the Supreme Court, it could not have been held by the authorities that the instruments in question are chargeable with ad valorem stamp duty. It was ultimately submitted that Explanation III of Article 36 had nothing to do with the Agreement To Lease but referred to the term "Agreement of Lease" and once the Supreme Court held that the document is either a license or Agreement To Lease, the Explanation III will have to be considered only as a clarificatory explanation. It was, therefore, submitted by deleting the Explanation III of Article 36, the legislature had never interpreted that a document of a mere Agreement to Lease shall be stamped as lease.
According to Mr. Balsara, the Judgments in the case of State of Maharashtra v/s. Atur India Ltd. and ICICI Ltd. v/s. State of Maharashtra, were a complete answer to the impugned orders.
10 Dr. Biren Saraf, learned counsel appearing for the Petitioner
b 1995 (2) BCR page 31 (SC)
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in Writ Petition No.4866 of 2002 has taken me through the letter of allotment dated 30th January, 1997, Agreement To Lease dated 7th May, 1997, possession receipt of even date, the order of Collector dated 14th May, 1998 and the Appellate order under Section 53 passed on 25th February, 1999. Apart from relying on the aforesaid two Judgments, in the case of ICICI Ltd. v/s. State of Maharashtra and State of Maharashtra v/s. Atur India Pvt., Ltd., relied upon by Mr. Chirag Balsara, Dr. Saraf relied upon the Judgment of Privy Council in Hemanta Kumari Debi v/s. Midnapur Zamindari Co.c and it was contended that unless there is an actual and present demise, a document of Agreement of Lease also does not require registration and, consequently, does not require payment of stamp duty. Dr. Saraf relied upon the Judgment of Division Bench of this Court in the case of Re Maneklal Manilald and it was contended that the Privy Council Judgment in the case of Hemanta Kumari Debi (supra) and the principle laid down therein was also applicable to the provisions of Indian Stamp Act. He invited my attention to Article 35 of the Indian Stamp Act which is para-materia Article 36 of the Bombay Stamp Act, 1958 save and except the explanation. Dr. Saraf relied upon the Judgment of the learned Single Judge (Coram: D. R. Dhanuka J.) in the case of Makers Development Services Pvt. Ltd. v/s. V. c AIR 1919 page 79 d AIR 1928, BCR-553 ::: Downloaded on - 09/06/2013 18:00:25 :::
- 13 - 3-wp-4866-2002-group P. Deshpande, Superintendent of Stamps & Otherse. It was contended that unless a document created present demise and an immediate interest in the land, it cannot be termed as "Agreement of Lease" so as to attract the ad valorem stamp duty. In respect of deletion of Explanation III, Dr. Saraf relied upon the Judgment of the Supreme Court in the case of Raja Bhanu Pratap Singh v/s. The Assistant Custodianf and more particularly referred to the observations made in paragraphs 6, 7 and 8 of the said Judgment. It was submitted that merely because the Explanation III is deleted, that does not have any consequence since Explanation III dealt with Agreement of Lease and not with Agreement To Lease. He submitted that an Agreement To Lease is even otherwise not chargeable for stamp duty. Dr. Saraf also relied upon the Judgment of the Supreme Court in the case of Madanlal Fakirchand Dudhediya v/s. Shree Changdeo Sugar Mills Ltd. and Othersg in support of his submission and referred to the observations made on page 1552 to the effect that provisos are often inserted "to allay fears" or to remove mis-apprehensions. According to Dr. Saraf, therefore, the insertion or deletion of Explanation III will have no legal consequence. It was lastly urged that since an identical Agreement has been interpreted by the Supreme Court in the case of ICICI Ltd. v/s.
State of Maharashtra(supra), this Court should not and can not take a e 1994 Mah. L. J. 1356 f AIR 1966, SC-245 g AIR 1962, SC-1543 ::: Downloaded on - 09/06/2013 18:00:25 :::
- 14 - 3-wp-4866-2002-group contrary view about the interpretation of a similar document and since the document is already held to be an Agreement merely creating license, the impugned Judgments and Orders are liable to be quashed and set aside.
11 Mr. Sonpal the learned Advocate appearing for the Respondent very ably advanced his submissions. He brought to my notice the definition of lease in Section 2(7) of the Indian Registration Act, 1908, the definition of lease under Section 105 of the Transfer of Property Act, 1882 and the definition of the lease under Section 2(16) of the Indian Stamp Act. He also drew my attention to the definition of the word "lease"
in Section 2(n) of the Bombay Stamp Act, 1958 and submitted that all the definitions were different and, therefore, for considering the controversy regarding chargeability or otherwise of any instrument which according to the State Government is chargeable as a lease and according to the Petitioners not chargeable as a lease, only the definition of lease under Section 2(n) has to be considered. He submitted that merely because similar facts might exist in the reported Judgments, the facts cannot be treated as precedent and Judgment cannot be read as statute. He submitted that the intention of the parties and nature of the instrument is to be examined in each and every cases independently from the instrument. He submitted that the Registration Act has been enacted for the purpose of ensuring that transfer of property takes place in accordance ::: Downloaded on - 09/06/2013 18:00:25 :::
- 15 - 3-wp-4866-2002-group with the sections provided in the Registration Act and, hence, the definition of lease under the Registration Act can not be relied upon for the purpose of deciding the present controversy. He submitted that the Bombay Stamp Act, 1958 was a statute with the basic aim of collecting the revenue and, hence, the statute is to be considered independently. He submitted that the object of the Registration Act and Transfer of Property Act was to ensure that general public had notice of Transfer of Property and to ensure that relation between lessee and lessor are properly governed whereas the object of the Bombay Stamp Act is to ensure that instrument which are chargeable with duty are property charged. He pointed out that the definition of lease under Section 2(n) of the Bombay Stamp Act, 1958 was very wide and it includes even movable property.
He submitted that under sub-clause (iv) of Section 2(n), in fact writing of an application for a lease and an order intended to signify that the application is granted, will also constitute a lease. He relied upon recital clauses (c) and (d) of the Agreement in Writ Petition No.7643 of 2007 and submitted that from the said Agreement itself, it can be seen that the instrument contained recitals to the effect that their was an application for grant of lease and sanctioning of that application by the owner CIDCO and these recitals themselves were sufficient to hold that the document in question was lease. He submitted that every statute has its own purpose ::: Downloaded on - 09/06/2013 18:00:25 :::
- 16 - 3-wp-4866-2002-group and any other statue can not be looked into for interpreting the other statute. Mr. Sonpal has took me through the commentary of Mulla on Transfer of Property Act. He pointed out that if all terms and conditions which are essential for creation of lease are available in a document, that instrument become a lease even though the actual demise may have been postponed. He submitted that if possession is either given or agreed to be given, then there is immediate demise. He pointed out that undoubtedly the possession of the land had been given to the Petitioners and merely because CIDCO has reserved only its right to enter the property, that did not dilute the fact that possession was handed over to the Petitioner. In support of this submission, he relied upon sub-clauses (b), (c) and (d) of the recitals in the Agreement. He submitted that there is also a transfer of right in the said land. Mr. Sonpal submitted that even though the Agreement was titled as Agreement To Lease, in clause (c) of the recitals, there was a clear reference of application filed by the Petitioner to the Corporation and in clause (d), there was a recital that Corporation has decided to grant a lease of the land in the schedule. Replying to the arguments of the Petitioner that the Agreement in the case of ICICI v/s.
State of Maharashtra(supra) was identical as the Agreements in question, Mr. Sonpal submitted that from the Judgment of ICICI, it is not clearly discernible as to whether all the clauses of the Agreement are same ::: Downloaded on - 09/06/2013 18:00:25 :::
- 17 - 3-wp-4866-2002-group or not. He submitted that merely because some clauses might be similar or identical, the interpretation of the terms of the Agreement in the present case cannot be covered by or controlled by the interpretation done by the Supreme Court in the case of ICICI. He submitted that there is an immediate demise under the Agreement, possession has been handed over with an intention to create a relationship of lessee and lessor and permission is also granted to the Petitioners to construct a building on the land in question. He submitted that the entire agreed lease premium has been paid in advance and that a determined and fixed amount has to be paid as a lease rent. He, therefore, submitted that all the ingredients essential for creation of lease were fulfilled by the said Agreements in question.
12 In support of his submission, Mr. Sonpal relied upon the following Judgments:-
(a) Ratan Kumar Tondon & Others v/s. State of Uttar Pradeshh.
This Judgment was relied upon in support of the submission that even in that case exclusive possession of the land was granted subject to construction of building within the specific period. However, that was the case where the party had admittedly been granted lease government land for 50 years under the Crown Grants Act with a right of renewal. Hence that Judgment may not be applicable.
h (1997) 2-SCC-161
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(b) C. M. Beena and Another v/s. P. N. Ramchandra Raoi This
Judgment was relied upon in support of the submission that user of the words lessee or licensee, lessor or licensor, the rent or license fee are not by decisive of the nature of the right created by the document. The difference between the Lease and License is to be determined by finding the real intention of the parties.
(c) Associated Hotels of India v/s. R.N.Kapoorj, in support of the submission that if the legal possession of a property is handed over to the other party, then, it can be treated as lease.
(d) Trivenibai and another v/s. Lilabaik , in support of the submission that Agreement would operate as a present demise although its terms may commence at a future date.
(e) Mrs. M. N. Clubwala and Another v/s. Fida Hussain Saheb and Othersl, in support of his submission that that intention of the parties is to be ascertained on the consideration of all the relevant provisions in the Agreement.
(f) Qudrat Ullah v/s. Municipal Board, Bareillym which held that it is simple to distinguish the lease and license based on the character of the transaction, terms and the operative intention of the parties. If an interest in immovable property is created entitling the transferee to enjoy his i (2004)3 SCC 595 j AIR 1959-SC-1262 k AIR-1959-SC-620 l (1964)6 SCR-642 m (1974)1 SCC-202 ::: Downloaded on - 09/06/2013 18:00:25 :::
- 19 - 3-wp-4866-2002-group possession, it is a lease.
(g) Board of Revenue and Others v/s. A. M. Ansari and Others n, holding that as to whether a particular transaction creates a lease or license is always a question of intention of the parties which is to be inferred from the circumstances of each case and it is necessary to look to the substance and essence of the Agreement and not to its form.
(h) Smt. Rajbir Kaur and another v/s. M/s. S. Chokosiri and Companyo, holding that one of the twin principal tests by which a lease is distinguishable from the relationship created under a license is the element of the right to exclusive possession involving the transfer of an interest in the property; the other being the 'rent' stipulated for the grant.
(i) Captain B. V.. D'Souza v/s. Antonio Fausto Fernandesp, holding that for ascertaining whether document creates a license or lease, the substance of the document must be preferred to the form.
(j) Delta International Ltd. v/s. Shyam Sunder Ganeriwalla and anotherq, holding that the crucial test in each case is whether the instrument is intended to create or not to create an interest in the property which is the subject matter of the Agreement. If a document is a camouflage for the real transaction which is something different, the veil is required to be removed for determining the true intention and purpose n (1976)3-SCC-512 o AIR-1988-SC-1845 p (1989)3-SCC-574 q (1994) 4 SCC-545 ::: Downloaded on - 09/06/2013 18:00:25 :::
- 20 - 3-wp-4866-2002-group of the document.
(k) Peter Alex D'Souza v/s. Prithi Paul Singhr, holding that in determining whether the Agreement creates lease or license, exclusive possession is of significance.
(l) M/s. Permanand Gulabchand and Co., v/s. Mooligi Visanjis , holding that it is necessary to consider one or more document for the purpose of deciding whether a tenancy has been created, consider the surrounding circumstances including the relationship between the occupants, the course of negotiations and the nature and extent of the accommodation and the intended and actual mode of occupation of the accommodation.
13 Shri Sonpal, therefore, submits that the Agreements in question not only fulfilled the definition of "lease" under Section 2(n) of the Act but there was a transfer coupled with payment of the entire rent and premium coupled with right of constructing the building on the property coupled with an application for Agreement of lease and an order which shows that the principal accepted such application and, therefore, the ingredients of a lease were fully satisfied.
14 The Judgments of the Supreme Court in the case of State of Maharashtra v/s. Atur India (supra) and ICICI Ltd., v/s. State of Maharashtra (supra) were sought to be distinguished by Mr. Sonpal by r AIR-2002 Bombay 471 s AIR-1990 Kerala-190 ::: Downloaded on - 09/06/2013 18:00:25 :::
- 21 - 3-wp-4866-2002-group pointing out that both the Judgments were delivered when Explanation III to Article 36 of the Schedule I of the Bombay Stamps Act was on the statute book. He submitted that in the year 1995, by Amending Act No.16 of 1995 with effect from 1st September, 1995, Explanation III has been deleted. He submits that prior to its deletion, Explanation III reads thus:-
" Agreement of lease shall not be chargeable as a lease unless there is immediate and present demise."
Mr. Sonpal relied upon the statement of Objects and Reasons of the Amending Act and particularly on sub-clause 2 (ii) of the S.O.R. which reads thus:-
" To provide for levy of appropriate stamp duty on instruments relating to lease of land and its timely collection."
(emphasis supplied) He submitted that as the explanation was having an effect of postponing the collection of stamp duty on instruments relating to lease of land, legislature in its wisdom thought it fit to delete the explanation. He submitted that the words used being "instrument relating to lease of land", the legislature intended to make an instrument chargeable for stamp duty whether there was a present demise or not. According to Mr. Sonpal, after the amendment of article 36 by deleting Explanation III, even in a case where there was no present demise and even in a case where the demise was postponed to the future date, the instrument was chargeable as a lease. In respect of the amendment, Mr. Sonpal relied ::: Downloaded on - 09/06/2013 18:00:25 :::
- 22 - 3-wp-4866-2002-group upon the observations in paragraph no.22 of the Judgment of the Supreme Court in the case of Bengal Company Ltd. v/s. State of Bihar and otherst. He submitted that it is a sound rule of interpretation of statues fairly established in England in Heydon's case namely -
(a) what was the common law before making of law;
(b) what was the mischief and for which common law did not provide;
(c) what remedy the Petitioner and the hath relying and ..
(d) the true reason of the remedy.
He submitted that the Amending Act made all the difference and on account of the Amending Act, the Judgments of the Supreme Court in the case of Atur India & ICICI Ltd were clearly distinguishable. Mr. Sonpal further submits that the Judgment of the Supreme Court did not consider the case of a Agreement To Let and have not considered the case of making an application for lease and, therefore, he stated that the decision of the authorities to hold the instrument with ad valorem stamp duty deserves to be upheld.
15 Mr. Sonpal submitted that Clause 2 of the agreement was apparently against the Government/ Revenue and that is the reason why the deletion of the explanation must be considered to be having effect of making the instrument chargeable. He submitted that explanation III was the source of exclusion from the levy of stamp duty and there was no t AIR 1955 SC-661 ::: Downloaded on - 09/06/2013 18:00:25 :::
- 23 - 3-wp-4866-2002-group other source for exclusion. Therefore, the Legislature intended to charge Agreement To Let which does not create an immediate or present demise.
With this intention explanation III was deleted. He submitted that explanation III was removed with the intention of rectifying the earlier mischief where in many cases the parties would enter in to only an Agreement To Lease and will not ultimately enter in a concluded lease-
deed. He submitted that with a view to fill up the gaps and loopholes in the earlier article explanation III was deleted. He submitted that deletion of explanation III is not an empty and futile exercise and logical effect of such deletion is to be given. He submitted that when Legislation has stepped in, the Court must give logical effect to such Legislation.
16 Mr. Sonpal further submitted that any colourable device to take advantage by a crafty drafting of the agreement must be ignored and defeated by the Court. To sum up his submissions he submitted that the salient features of the instrument was the title, which showed that it was an Agreement To Lease; it is synonymous with Agreement To Let; the entire lease premium is paid, there is application for grant of lease and acceptance of the application for the lease, which makes it lease under Section 2(n)(iv) of the Act. That there is contemplation in para 1 to put the lessee in the possession, it is coupled with actual delivery of possession, the lease rent is to start from the date of execution, so also the ::: Downloaded on - 09/06/2013 18:00:25 :::
- 24 - 3-wp-4866-2002-group lease tenure is to start on the date of execution of the lease, the term of lease is fixed for 60 years, the premium is fixed and the rent is also fixed and, therefore, all terms and conditions of the concluded lease has been reduced in to writing and no terms and conditions are pending either to be executed or to be performed and possession is given on the same day.
He, therefore, submitted that all the essential ingredients of lease were actually present in the agreements in question.
17 Referring to para 29 of the judgment of the Hon'ble Supreme Court in the case of Atur India Pvt. Ltd., (supra) he submitted that in that case there was no actual execution of the Agreement To Lease, but only letters had been exchanged and in that context the Hon'ble Supreme Court had held that there is no present demise. He submitted that in Atur India's case there was no agreement actually executed by the parties.
Referring to para 25 of the said judgment, he submitted that intention of the parties was to enter in to a transaction in future and there was no immediate creation of lease.
18 Dealing with the judgment of ICICI Vs. State of Maharashtra (supra) he relied upon paragraph 1 of the Judgment and submitted that Court was conscious of the fact that explanation III was present on the Statute Book on the relevant date when the agreement in ICICI case was executed. He, therefore, submitted that said judgment ::: Downloaded on - 09/06/2013 18:00:25 :::
- 25 - 3-wp-4866-2002-group does not lay down any ratio which can be treated as a binding precedent after deletion of the explanation. He alternatively submitted that the judgment of ICICI (supra) does not really consider various aspects namely the definition of the word 'lease' as given in Section 2, inclusion of the term 'Agreement To Let' in Article 36. Therefore, according to Mr. Sonpal, the judgment of ICICI (supra) is subsilentio. He submitted that CIDCO could not have removed the petitioners from the land without any just and valid reason which shows that a substantive right had been created.
He submitted that specific performance of the agreement was available which indicated that a demise had been created. He submitted that under clause 2 of the agreement there is prohibition against sub-letting, under-
letting, which itself shows that, the document created lease, but only the formality of execution of lease-deed is postponed. He submitted that even a draft of lease-deed which was to be executed in future had been annexed to the agreement which indicated that all the formalities of lease were complete. He submitted that recitals in the agreement, handing over of possession on the date of the agreement, payment of full premium on the date of the agreement, liability to pay rent from the date of the agreement, are all factors which support that there was a present demise.
He submitted that since Bombay Stamp Act, 1958 was fiscal statute; the endeavor of the Court should be to ensure that if a particular instrument ::: Downloaded on - 09/06/2013 18:00:25 :::
- 26 - 3-wp-4866-2002-group is covered by the definition, a person claiming rights under the said instrument must be made liable to pay stamp.
19 He submitted that while drafting a fiscal statute, the Legislature is given wide discretion to tax a particular category of persons/ instruments and not to tax a particular category of persons/ instruments and a very wide discretion is conferred on the Legislature. He submitted that, therefore, even if it is shown that the instrument in question fulfill one part of the definition of lease U/s 2(n), the balance must tilt in favour of the Revenue.
20 Mr. G.S. Hegde, learned advocate appearing for CIDCO submitted that CIDCO was following the procedure of inviting tenders which contemplated submission of bids for becoming lessee. It contemplated applications for being appointed as lessee and order accepting such applications. He submitted that though CIDCO accepts the successful bidders as lessee, the execution of the lease-deed is always postponed and the intention of CIDCO is equally to create a limited right as licensee to enter upon the land, commence and complete the construction thereon. He submitted that there is no immediate or present demise and the demise takes place only if the licensee fulfills condition precedent namely construction of the building in accordance with the sanctioned plan within the stipulated time. He, therefore, submitted that ::: Downloaded on - 09/06/2013 18:00:25 :::
- 27 - 3-wp-4866-2002-group the creation of demise or lease was always contingent upon fulfilling all the conditions of the license agreement. Relying on the clauses of the agreement he submitted that there is no parting of possession and in case the licensee who is given license to enter the land and construct the building does not do so the CIDCO has power to resume the land which itself indicated that there was no present demise. He submitted that the instruments is Agreement To Lease coupled with the license without any present demise. He submitted that CIDCO was instrumentality of the State being a Government Company of the Government of Maharashtra and, therefore, there was no intention to execute any instrument as camouflage or as a device to escape from liability of paying revenue.
21 In re-joinder Mr. Chirag Balsara submitted that the deletion of the explanation is of no consequence. He drew my attention to the definition of the term " Conveyance" under Section 2(g) and pointed out that explanation III was included in article 25 w.e.f. 15.5.1997 and addition of this explanation was challenged in this Court. He submitted that Division Bench of this Court deciding Li-taka Pharma Ltd. Vs. State of Maharashtrau repelled the challenge holding that explanation was added by abundant caution. Mr. Balsara therefore submitted that explanation to Article 36 had merely been added by abundant caution and therefore deletion of the explanation was in-consequential. He submitted u 1996(2)Mh.L.J.156 ::: Downloaded on - 09/06/2013 18:00:25 :::
- 28 - 3-wp-4866-2002-group that prior to its deletion, explanation to Article 36 was only clarificatory in nature. He submitted that Article 36 makes lease chargeable with duty and the explanation only sought to clarify that an Agreement of Lease which did not create a present demise cannot be charged as lease.
Therefore, deletion of the said explanation is immaterial.
22 Dr. Birendra Saraf, learned advocate for the petitioners in Writ Petition 4866/2002 has made following submissions in re-joinder:-.
(a) That the judgment in case of ICICI (supra) is final and binding in so far as it determines the construction of document and charge-ability of the document. Relying on paragraph 6 of the said judgment, he submitted that the Honourable Supreme Court had noticed that the status of ICICI was merely of licensee. Relying on para 8 of the said judgment he submitted that possession was handed over only for the purpose of constructing the building. He submitted that the recitals in the agreement in the present case are absolutely the same as recitals of the instrument considered by the Honourable Supreme Court in the case of ICICI (supra).
He drew my attention to the conclusion in para 9 of the judgment and submitted that despite these recitals, Honurable Supreme Court held that there was no present demise and Article 36 was not applicable. He submitted that entire Article 36 is considered by the Honourable Supreme Court.
::: Downloaded on - 09/06/2013 18:00:25 ::: - 29 - 3-wp-4866-2002-group
(b) He submitted that intention of the parties is relevant only in
two circumstances namely (1) when there is an inter-party dispute like dispute between the landlord and tenant, lessor or lessee, where one party contends that the particular instrument is lease, whereas the other party contends that such an agreement is license. (2) When the document is to be held as camouflage to defeat any law. He submitted that in the present case the instrument in question is an instrument in the form prepared by CIDCO which is instrumentality of the State; therefore, there is no question of the document being camouflage. He submitted that document in fact reflects what is actually written in it.
(c) He submitted that the Court will be loathe in accepting the interpretation of the Revenue Officers which would have the result of conferring additional or increased rights in favour of the private party over Land owned by the Government. In other words, he submitted that when the petitioners are not contending that a higher right of lease is created in their favour, if the submission of the Revenue is accepted, that would result in a situation where against the expressed intention and desire of CIDCO and the petitioner, petitioner would be held to be having higher right than the one what is given by the document. He relied upon the judgment of the Honourable Supreme Court in Delta International Ltd. Vs. Shyam Sumdar Ganeriwalla and anotherv and on the v (1994)4 SCC-545 ::: Downloaded on - 09/06/2013 18:00:25 :::
- 30 - 3-wp-4866-2002-group observations in paragraph 16 of the said judgment to the effect that "a contract between the parties is to be interpreted or construed on the well laid principles for construction of contractual terms and the intention of the parties is the meaning of the words they have used and there can be no intention independent of that meaning". He submitted that construction must be to be on the instrument which must be perfectly consistent with the doing of only that act which party had right to do.
(d) He submitted that there was absolutely no pleading that a sham and bogus document had been executed as camouflage to evade the provisions of The Bombay Stamp Act, 1958. Relying on paragraph 19 of the Judgment, he submitted that it would be impermissible to conjuncture or infer that the relationship of lessor and lessee has been created. He submitted that the intention of the parties is the meaning of the words, they have used and there can be no intention independent of that meaning. Relying on the observations in paragraph 20 and 21, he submitted that the parties were educated, both the parties were companies and they were conscious of the nature of the instrument which was being executed. He submitted that exclusive possession is not the sole fact or to establish the relationship of landlord and tenant between the parties, and the word demise is to be construed by finding out what is sought to be conveyed or transferred in the context of all the terms of the ::: Downloaded on - 09/06/2013 18:00:25 :::
- 31 - 3-wp-4866-2002-group document. He submitted that if the privilege of keeping the premises exclusively is granted on certain terms and conditions specifically as license or what is agreed to be an exclusive possession on certain terms and conditions as licensee, then there is no question of holding to the contrary.
(e) He relied upon the judgment of Honourable Supreme Court in Suganthi Suresh Kumar Vs. Jagdeeshanw and submitted that "High Court was bound by the decisions in the case of Atur India (supra) and ICICI (supra) and merely on account of deletion of the explanation III, High Court cannot ignore binding precedent of the Honourable Supreme Court and over-rule the decision of the Honourable Supreme Court on the ground that Supreme Court had laid down the legal position without considering any other point." He submitted that Honourable Supreme Court had in fact and must be deemed to have taken in to consideration Clause (iv) of Section 2(n) of The Bombay Stamp Act, 1958 has also the fact that the word 'Agreement To Let' was always present in Article 36. He therefore, submitted that it was not permissible to take any contrary view.
(f) In respect of deletion of explanation III by the amending Act No.16 of 1995, he submitted that even if the Legislature has used different expressions, like Agreement To Let and agreement of lease, explanation III was really limited only to "agreement of lease" and therefore, deletion of w (2002)2 SCC-420 ::: Downloaded on - 09/06/2013 18:00:25 :::
- 32 - 3-wp-4866-2002-group explanation is inconsequential. He submitted that explanation is not applicable to Agreement To Lease. In the alternative he submitted that assuming that explanation III was applicable even to Agreement To Lease, explanation only included in The Bombay Stamp Act,1958 the law which was always accepted as correct by The Privy Council in the judgment of Hemanta Kumari Debi Vs. Midnapur Zamindari Co. He submitted that the explanation was incorporated only to clarify the existing position of law and hence the deletion was inconsequential. Relying on the judgment of Privy Council in Hemanta Kumari Debi (supra) as also the Division Bench judgment of the Bombay High Court in re Maneklal Manilal (supra), he submitted that if explanation was added by way of abundant caution, then merely on account of its deletion, explanation cannot be held to be creating a liability for the citizens. He drew my attention to para 21 of the Judgment in Atur India (supra).
(g) On the question of interpretation of statutes he relied on judgment of Honourable Supreme Court in Tata Tea Ltd. v/s. State of West Bengal & Othersx which is case relating to the imposition of the agricultural income tax made in the State of West Bengal and Kerala. He drew my attention to the observations in paragraph 35, 38 and 41 of the said judgment. He pointed out that in Kerala Agricultural Income Tax Act 1950, the defining section by explanation stated that agricultural income x 1988 (supp) SCC-316 ::: Downloaded on - 09/06/2013 18:00:25 :::
- 33 - 3-wp-4866-2002-group derived from land used for agricultural purpose by the cultivation of tea leaves means that portion of the income derived from the cultivation, manufacture and sale of tea as is defined to be agricultural income for the purpose of and under the Indian Income Tax Act. By amendment act of 1980 this explanation was deleted and it was argued that this deletion was made with a view to make entire income earned, subject to the levy of the agricultural income tax. The speech of the Finance Minister at the time introducing the bill and the stand of the Government in affidavit was relied upon. He pointed out that these amendments in Kerala Act and West Bengal Act were challenged. He pointed out that Honourable Supreme Court ultimately held that though the explanation was earlier noted by the Supreme Court in the earlier case, the said explanation was in line with the provisions of the Income Tax Act and the Rules but that by itself does not make any difference and even without explanation the position of law would have been the same.
(h) He relied upon the judgment of Privy Council in Union Steamships Company of New Zealand Ltd. Vs. Mary Robiny and pointed out that a mere omission in a later statute of a negative provision contained in an earlier one cannot by itself have the result of effecting a substantive affirmation and it is necessary to see how the law would have stood without the original proviso, and the terms in which the repeated y AIR1920 Privy Council 140 ::: Downloaded on - 09/06/2013 18:00:25 :::
- 34 - 3-wp-4866-2002-group sections are subsequently re-enacted. The real question is whether, with the statute as it now stands, the limitation imposed on the servant is extended to his dependents and successors. He relied upon the judgment of Honourable Supreme Court in the case of State of West Bengal Vs. Kesoram Industriesz . By relying on paragraph 104, 107, he submitted that there is nothing like inherent power to tax, that the power which does not specifically speak of taxation cannot be so interpreted by expanding its width as to include therein the power to tax by implication or by necessary inference. He submitted that in interpreting taxing statute equitable considerations are entirely out of place and taxation statute cannot be considered by any presumption or assumption. Before taxing any person it must be shown that he must be taxed by following clear words used in Section and if the words and ambit are open to two interpretations, benefit of interpretation is given to the Assessee and there is nothing unjust in the tax payer taking advantage if the letter of law fails to catch him on account of Legislatures failure to express itself clearly.
23 I have carefully considered the rival submissions. All the advocates who have appeared have given their assistance and have pointed out not only the provisions of Bombay Stamp Act, 1958 as they presently stand, but also the provisions of that Act which stood prior to its amendment, the provisions of Indian Stamp Act and the relevant z (2004) 10 SCC-201 ::: Downloaded on - 09/06/2013 18:00:25 :::
- 35 - 3-wp-4866-2002-group precedents.
24 At the first blush, it may appear that reading of Article 36 which includes the Agreement To Let, would conclusively tilt the balance of the case in favour of the Revenue / State. There are three sub-divisions namely (1) Agreement To Lease (2) agreement for lease and (3) Agreement To Let. In absence of the judgment in the case of Atur India ( supra ), ICICI (supra), one could have been persuaded to take view that irrespective of the fact as to whether there is any present demise or not, the instrument must become chargeable with stamp duty.
25 It is necessary to note the relevant portion of the Judgment of the Supreme Court in the case of State of Maharashtra v/s. Atur India Pvt. Ltd. (supra) namely paragraphs 24, 27 and 29 reads thus:-
"Paragraph 24:- The facts mentioned above are clearly indicative of an Agreement To Lease and not on agreement of lease. The distinction between the two may be seen first with reference to English law. "Woodfall in Law of Landlord and Tenant, Vol I., 28th Edn., 1978 at page 127 states as under:-
" A contract for a lease is an agreement aforesaid in law whereby one party agrees to grant and another to take lease. The expressions 'contract for lease' and 'agreement for lease' is to be preferred as being more details, agreement frequently means one of many stipulations in a contract. A contract for a lease is to be distinguished from a lease, because a lease is actually a conveyance of an estate in land, whereas a contract for a lease is merely on agreement that such a conveyance shall be entered into at a future date"::: Downloaded on - 09/06/2013 18:00:25 :::
- 36 - 3-wp-4866-2002-group "Paragraph 27:- We will now turn to Indian Law. Mulla in The Transfer of Property Act (7th Edn.) at page 847 dealing with Agreement To Lease states as under:
" An agreement is lease may effect as actual demise in which case it is a lease. On the other hand, the Agreement To Lease may be a merely executory instrument binding the parties, the one, to grant, and the other, to accept a lease in the future. As to such an executory agreement the law in England differs from that in India. An Agreement To Lease not creating a present demise is not a lease and requires neither writing nor registration.
As to an executory Agreement To Lease, it was at one time supposed that an intending lessee, who had taken possession under an Agreement To Lease capable of specific performance, was in the same position as if the lease had been executed and registered. These cases have, however, been tendered obsolete by the decisions of the Privy Council that the equity in Walsh v. Lonsdale does not apply in India."
"Paragraph 29:- Examining in the light of above, we hold that the notice of the appellant dated November 30, 1970, the offer of the respondent dated December 15, 1970 and the acceptance of the Collector of the tender of respondent for lease dated January 1, 1971 would merely constitute an Agreement To Lease. Clause 13 clearly contemplated that the licensee will be put in possession of plot on his executing the Agreement To Lease. Therefore, it is clear that by the respondent accepting the offer on December 15, 1970, the relationship of lessor and lessee between the appellant and the respondent had not come to be established. Further as pointed out earlier there was no Agreement To Lease. It will not fall under Section 2(n) of the Act in which case, it is not an instrument chargeable to duty and the question of impounding does not arise. Much less, there could be a demand for stamp duty."
26 In the case of ICICI Ltd. v/s. State of Maharashtra (supra), ::: Downloaded on - 09/06/2013 18:00:25 :::
- 37 - 3-wp-4866-2002-group the Supreme Court has observations in paragraphs 1,2,5,6,7,8 and 9 which reads thus:-
ORDER:-- The only narrow question in this appeal is whether in respect of an agreement of lease dated 13.6.1994 executed by the respondents in favour of the appellants, stamp duty under Article 36 of the Bombay Stamp Act, 1958 is payable, Article 36 deals with "lease including an under-lease or sub- lease and any Agreement To Let sub-let or any renewal of lease" Explanation III of Article 36 which was in force at the material time, makes it clear that "an agreement of lease shall not be chargeable as a lease unless there is an immediate and present demise."
"Paragraph 2:- In the present case, the document is on the face of it an Agreement to create a lease in future. It is, however, submitted by the respondents that in substance the document itself creates a lease. The document demises immediately and presents an interest in the land in favour of the appellants. If we examine the agreement under Clause 1 of the agreement of lease, there is a clear provision that during the period of three years from the date of possession, the licensees (as the appellants are described), shall have a license and authority only to enter upon the land for the purpose of erecting a building or buildings for the purpose of housing its offices and no other purpose, and until the grant of a lease, the licensee shall be deemed to be a bare licensee only of the said land at the same rent and subject to the same terms including liability for payment of rates, land revenue and taxes, as if the lease had been actually executed."
"Paragraph 5:- Clause 8 requires that the lease, as and when executed in terms of Clause 7, shall be prepared in duplicate and all costs, charges and expenses in that connection as also in connection with the execution of the agreement and its duplicate shall be paid by the licensee alone."::: Downloaded on - 09/06/2013 18:00:25 :::
- 38 - 3-wp-4866-2002-group "Paragraph 6:- Therefore, there is a clear intention of the parties to execute a document of lease in future. Until such document is executed, the status of the appellants is that of a licensee. In fact, we are informed by the appellants that pursuant to this agreement, a lease has, in fact, now been executed between the parties on 8-4-1999 and stamp duty amounting to Rs.5,45,30,600/- has been paid by the appellants on the document of lease."
"Paragraph 7:- Our attention has been drawn to a decision of this Court in (Associated Hotels of India Ltd. v. R. N. Kapoor), A.I.R. 1959 S.C.1262: 1960(1) S.C.R. 368 where this Court has made a distinction between a lease and a license. Referring to section 105 of the Transfer of Property Act, this Court has observed that it defines a lease of immovable property as a transfer of a right to enjoy such property made for a certain time in consideration for a price paid or promised.
A lease is, therefore, a transfer of an interest in land and the interest transferred is called the leasehold interest. It follows that the lease gets that right to the exclusion of the lessor. Whereas section 52 of the Indian Easements Act defines a license thus:-
"52 Where one person grants to another, or to a definite number of other persons, a right to do, in or upon the immovable property of the grantor, something which would, in the absence of such right, be unlawful, and such right does not amount to an easement or an interest in the property, the right is called a license."
"Paragraph 8:- Therefore, if a document gives only a right to use the property in a particular way or under certain terms, while it remains in possession and control of the owner thereof, it will be a license. In the present case, the licensee has been put in possession only for the purpose of constructing a building or buildings. Under this document, no interest in the land is conveyed in favour of the appellants. The agreement does not create a lease, nor does it demise any interest in land in favour of the appellants. In this connection, a reference may also be made to a subsequent decision of this ::: Downloaded on - 09/06/2013 18:00:26 :::
- 39 - 3-wp-4866-2002-group Court in (State of Maharashtra v. Atur India (P)Ltd.), 1995(2)Bom.C.R.31: 1994(2)S.C.C. 497 where this Court has made a distinction between a lease and an agreement for lease."
"Paragraph 9:- Although it has been contended by the respondents that there is a demise of interest in the land under the said agreement, the agreement does not demise any such interest in the land. Clause 2 expressly sets out that this agreement is not to be construed as a demise in law of the said land so as to give to the licensee any legal interest in the land. Article 36 of the Bombay Stamp Act is, therefore, not attracted to the said document."27
In the case of Hemanta Kumari Debi (supra) the Privy Council has observed thus:-
" ..................... With regard to the first, the Registration Act of 1908 provides that "lease" includes an Agreement To Lease, any by Section 17 enacts that leases must be registered, the penalty for non-registration being imposed by Section 49, which provides that, if no registered, no document shall affect immovable property which it compromise or be received as evidence of any transaction affecting such property. If the document in question can be regarded as a lease within the meaning of this definition it could not be received in evidence.
Their Lordships are of opinion that it cannot be so regarded. An "agreement for a lease" which a lease is by the statue declared to include must in their Lordships' opinion, be a document which effects an actual demise and operates as a lease. They think that Jenkins, C. J., in the case of Panchaman Basu v. Chandi Chavan (1) correctly stated the interpretation of Section 17 in this respect. The present agreement is an agreement that upon the happening of a contingent event at a date which was indeterminate and, having regard to the slow progress of Indian litigation, might be for distant, a lease would be granted. Until the happening of that event it was impossible to determine whether there would be any lease or not. Such an agreement does not, in their Lordships' opinion, satisfy the meaning of the phrase "agreement for a lease" which in the ::: Downloaded on - 09/06/2013 18:00:26 :::
- 40 - 3-wp-4866-2002-group context where it occurs and in the statute in which it is found must in their opinion relate to some document that creates a present and immediate interest in the land. So far, therefore, as this decision depends upon the need for registration of the document as a lease, the Registration Act places no obstacle in the respondent's way."
28 In the case of Re Maneklal Manilal (supra), it has been observed by the Division Bench as follows:-
" It is, therefore, contended that every Agreement To Lease must be stamped with an ad valorem stamp, and when a subsequent lease contemplated by the parties is actually effected, a stamp of one rupee would suffice. The question, therefore, in this reference is whether the document, Ex. 417 is an agreement of lease within the meaning of S.2(16) , Stamp Act. "Lease is also defined in the Indian Registration Act, S2(7) as including:
Both under the Indian Stamp Act and the Indian Registration Act an Agreement To Lease is included in the word "lease" Though the Indian Stamp Act and the Indian Registration Act are not strictly in para materia, it has been held in Chandrashankar v Bai Maan that the two Acts may be read together, and that the definition in the Indian Stamp Act with regard to a composition deed might be accepted in considering the question under the Indian Registration Act. According to the decision of the Privy Council in Hemanta Kumari Debi v. Midnapur Zamindari Co., an Agreement To Lease must be a present demise. It must be a document which effects an actual demise or operates as a lease in present, and not an agreement that in certain contingencies a lease will be granted. So far as the Indian Registration Act is concerned, there is consensus of opinion in the different High Courts as reflected in the decisions in Secretary of State v. Mahomed Yusuf, Panchaman Basu v. Chandi Charan Misra and Swaminatha Mudaliar v. Ramaswami Mudaliar, that an Agreement To Lease must be an actual demise. If this view accepted with regard to the Indian Registration Act can be applied in ::: Downloaded on - 09/06/2013 18:00:26 :::
- 41 - 3-wp-4866-2002-group considering the question under the Indian Stamp Act, it must follow that an Agreement To Lease must amount to an actual demise and not an agreement that in certain contingencies a lease will be granted. In the present document there is no actual demise, but there is an Agreement To Lease the land under certain contingencies which may or may not happen."
29 In the case of Makers Development Services Pvt. Ltd.
(supra), it is held in paragraphs 9 to 11 which reads thus:-
"Paragraph 9:-.............. At the material time, Article 36 of Schedule I stood as at present except for addition of Explanation III thereto which was added as a matter of abundant caution."
"Paragraph 10:- The learned counsel for the Petitioner submits that even prior to insertion of Explanation III in the said article it was always the law of the land as interpreted by the Privy Council and this Court that only such agreement of lease are chargeable as a lease which create an immediate and present demise. The learned counsel for the petitioner has relied upon the ratio of the following judgments in support of his contention:-
(1) Judgment dated 11th February 1994, delivered by the Hon'ble Supreme Court in Civil Appeal No.3570 of 1993; (2) Judgment of Bombay High Court in Reference In re Indian Stamp Act II of 1899, reported in 54 B.L.R. 230. (3) Judgment of Bombay High Court in the case of In re Maneklal Manilal reported in 30 B.L.R. 1396; (4) Judgment of the Privy Council in Hemantakumari Devi vs. Midnapur Zamindari Company reported in 16 B.L.R. 236.
The learned counsel for the Respondent made a faint attempt ::: Downloaded on - 09/06/2013 18:00:26 :::
- 42 - 3-wp-4866-2002-group to distinguish the said judgments. To my mind the Respondents have no answer to the case of the petitioner in view of well settled law in the subject as pointed out by the learned counsel for the petitioner.
"Paragraph 11:- In Civil Appeal No.3570 of 1993, The State of Maharashtra and others vs. Atur India (P) Ltd.(now reported in 1994(2) SCC 497), the Hon'ble Supreme Court made a neat and clear distinction between Agreement To Lease and an agreement of lease. After surveying large number of cases on the subject and noticing the Privy Council judgment in Hemantakumari Debi's case and the earlier judgment of the Hon'ble Supreme Court in Tirvenibai and another vs. Smt. Lilabai, 1959(2) Suppl. SCR 107, the Supreme Court held that the expression "an agreement of lease" must be interpreted to mean a document which created a present and immediate interest in the land" Our High Court has made similar observations in the abovereferred Bombay Judgment. The Privy Council took the same view in the above referred judgment in Hemantakumari Debi's case. Even though the earlier Bombay Judgments were rendered while interpreting Article 35 of Schedule I appended to Indian Stamp Act (II) of 1899, the ratio of the said judgments is clearly helpful to the petitioners. Noting more is required to be discussed in view of the Hon'ble Supreme Court judgment in the case of M/s. Atur India Pvt. Ltd. referred to hereinabove."
30 In the case of Raja Bhanu Pratap Singh (supra), the Supreme Court has considered the effect of deletion of Section 10(2)(n) of the Administration of Evacuee Property Act, 1950 and Rule 22 of the Rules framed under the said Act and it has been held that despite this deletion, the custodian was authorized to exercise power to pay debts of the evacuee person.
31 However, we are dealing with a peculiar case. The parties to
::: Downloaded on - 09/06/2013 18:00:26 :::
- 43 - 3-wp-4866-2002-group
the instrument are contending that the instrument does not create any present demise. One of the parties to the instrument is CIDCO Ltd. which is a company wholly owned and controlled by the Government of Maharashtra. CIDCO is the instrumentality of the State. Normally in case of the dispute between landlord and tenant or lessor or lessee, invariably it is the contention of one of the party that agreement in question is camouflage and the real intention of the parties was to create a relationship different than other than the relationship indicated by the agreement in question. That is not the case here. Here the parties to the agreement are ad-idem and both contend that the instrument only creates license, that there is no present demise, that the possession is not handed over to the petitioners as prospective lessees, but the petitioners are only permitted to enter the land for the limited purpose of carrying on construction of the building. Therefore, in the facts of the present case, where the agreement in so far as its true terms are concerned, is identical to the Agreement which was subject matter of the decision in the case of ICICI (supra). It is difficult to accept the contention of Mr. Sonpal that this agreement creates present demise. It is open to Mr. Sonpal as advocate to try to distinguish judgment of the Honourable Supreme Court in ICICI by contending that the Honourable Supreme Court did not take in to consideration various other clauses of the agreement and the judgment ::: Downloaded on - 09/06/2013 18:00:26 :::
- 44 - 3-wp-4866-2002-group of the Supreme Court shows that only few clauses of the agreement had been taken in to consideration. At this stage, it would be helpful to see that the Honourable Supreme Court has considered the material clauses of the agreement in para 2 to 5 of the said judgment. Honourable Supreme Court was conscious that the document in question was Agreement to create lease. It must be held that the Honourable Supreme Court had, being conscious of the fact that, an Agreement To Let is also included within the Article 36 under the captioned lease, proceeded to hold that unless there is a present demise, it is not permissible to levy stamp duty.
Paragraph 2 of the judgment clearly shows that identical submission as has been canvassed by the Government counsel in court before me, had been canvassed before the Supreme Court. Paragraph (c) extracts Clause 2 of the agreement in that case which is having almost identical wording with clause 2 of the agreement in the present case. The clauses in the agreement in the present case are not identical, however the material portion of the clause 2 is same as clause 2 of the agreement in the case before the Supreme Court. Clause 7 and 8 of the agreement before Supreme Court has also been noticed by the Supreme Court and it appears that form of lease deed to be executed in future was also annexed. In the agreement before Supreme Court also, lease premium had been paid, ground rent had been fixed and the liability to pay ground rent ::: Downloaded on - 09/06/2013 18:00:26 :::
- 45 - 3-wp-4866-2002-group commenced and parties were to execute a Lease Deed as per the deed annexed to the agreement in question. After discussing these clauses Supreme Court has observed thus in para 6 that:-
"Therefore, there is a clear intention of the parties to execute a document of lease in future. Until such document is executed, the status of the appellants is that of a licensee. In fact, we are informed by the appellants that pursuant to this agreement, a lease has, in fact, now been executed between the parties on 8/4/1999 and stamp duty amounting to Rs.5,45,30,600 has been paid by the appellants on the document of lease."
32 In para 7 of the judgment, Supreme Court has noted the law laid down in the case of Associated Hotels of India Ltd. (supra) and thereafter Supreme Court has made following observations in para 8 and 9 which read thus :
"Therefore, if a document gives only a right to use the property in a particular way or under certain terms, while it remains in possession and control of the owner thereof, it will be a licence. In the present case, the licensee has been put in possession only for the purpose of constructing a building or buildings. Under this document, no interest in the land is conveyed in favour of the appellants. The agreement does not create a lease, nor does it demise any interest in land in favour of the appellants. In this connection, a reference may also be made to a subsequent decision of this Court in State of Maharashtra V. Atur India (P) Ltd. where this Court has made a distinction between a lease and an agreement for lease Although it has been contended by the respondents that there is a demise of interest in the land under the said agreement, the agreement does ::: Downloaded on - 09/06/2013 18:00:26 :::
- 46 - 3-wp-4866-2002-group not demise any such interest in the land. Clause 2 expressly sets out that this agreement is not to be construed as a demise in law of the said land so as to give to the licensee any legal interest in the land. Article 36 of the Bombay Stamp Act is, therefore, not attracted to the said document."
33 Though Mr. Sonpal tried to distinguish the judgment of ICICI (supra) by contending that the judgment does not take in to consideration all the clauses of the agreement or that the agreements in this case are different than the one with which we are concerned; I am however afraid that it is impermissible for me, sitting as Judge of the High Court, to hold that the Supreme Court judgment does not lay down a binding precedent.
Mr. Saraf is justified in relying upon the judgment of Suganthi (supra) that it is impermissible for the High Court to overrule decision of the Honourable Apex Court on the ground that the Honourable Supreme Court laid down the legal position without considering certain points. In my opinion this Court cannot question the correctness of the decision of the Honourable Supreme Court, even though the point agitated before the High Court does not appear to have been considered by the Honourable Supreme Court.
34 It is also not possible to accept the submissions of Mr. Sonpal that the judgment of Honourable Supreme Court in State of Maharashtra Vs. Atur India Pvt. Ltd. can be distinguished on the ground that there was no agreement executed in the case of Atur India (supra).
::: Downloaded on - 09/06/2013 18:00:26 :::- 47 - 3-wp-4866-2002-group In fact, in the case of Atur India (supra) there was an application for grant of lease and order / assent accepting such application and according to consent grant lease. Mr. Sonpal submitted that Honourable Supreme Court has not noticed sub-clause (iv) of Section 2(n) which is the definition of the term 'lease'. According to Mr. Sonpal if that definition had been noticed, the decision of the Honourable Supreme Court would have been otherwise. He, therefore, requested that I should take different view. I am afraid that I will not be able to do so. Mr. Saraf pointed out that Honourable Supreme Court had in fact noticed Section 2(n) in para 29 of the Judgment. Merely because the said definition has not been discussed, it would be unsafe to hold that Honourable Supreme Court had not noticed said Section. Though in the case of Atur India (supra) there was no written instrument of lease, the Honourable Supreme Court has held in para 29 that:-
"Examining in the light of above, we hold that the notice of the appellant dated November 30, 1970, the offer of the respondent dated December 15, 1970 and the acceptance of the Collector of the tender of respondent for lease dated January 1, 1971 would merely constitute an Agreement To Lease. Clause 13 clearly contemplates that the licensee will be put in possession of plot on his executing the Agreement To Lease. Therefore, it is clear that by the respondent accepting the offer on December 15, 1970, the relationship of lessor and lessee between the appellant and the respondent had not come to be established. Further as pointed out earlier there was no actual demise on the date of the accepting of tender.::: Downloaded on - 09/06/2013 18:00:26 :::
- 48 - 3-wp-4866-2002-group Therefore, it is only an Agreement To Lease. It will not fall under Section 2(n) of the Act in which case, it is not an instrument chargeable to duty and the question of impounding does not arise. Much less, there could be a demand for stamp duty."
35 It is now necessary to consider the effect of deletion of explanation III. Privy Council in the case of Hemanta Kumari Debi (supra) had an occasion to consider the difference between the lease and Agreement To Lease. Honourable Supreme Court has held that 'agreement for lease' to be construed as a lease, must be a document which effects an actual demise and operates as a lease. Honourable Privy Council held that if the Agreement To Lease is an agreement that upon happening of a contingent event at a date which was indeterminate and having regard to the slow progress of Indian litigation, might be far distant, a lease would be granted; until the happening of that event, it was impossible to determine whether there would be any lease or not and such agreement does not satisfy the meaning of the phrase 'agreement for lease'. Mr. Sonpal is justified in pointing out that the definition of the lease under Indian Registration Act, 1908 and under Transfer of Property Act, 1882 and that in Bombay Stamp Act, 1958 are different and I must consider the definition under the Bombay Stamp Act, 1958. It is also true that the definition under Bombay Stamp Act, 1958 even includes the making of an application to grant lease and order accepting such application. However, ::: Downloaded on - 09/06/2013 18:00:26 :::
- 49 - 3-wp-4866-2002-group as stated above, in view of the judgment of Honourable Supreme Court in the case of Atur India (supra) it is impossible for me to take view to the contrary. It is also true that an Agreement To Let is also included within the ambit of Article 36. However as stated above, in view of the law already laid down by the Honourable Supreme Court, it is difficult to take contrary view.
36 In so far as effect of deletion of the explanation III by amending Article 36 by Maharashtra Act 16 of 1995 is concerned, it must be held that the deletion of the explanation is of no consequence. Careful perusal of the explanation indicated that explanation merely stated the legal position as always existed. In a given case, if the parties entered in to an Agreement To Let and there are sufficient indications either from the recitals of the agreement or other surrounding circumstances that there was immediate and present demise made under the agreement, irrespective of the explanation, the instrument would be chargeable with stamp duty. On the other hand, in a given case if the nomenclature of the agreement is 'Agreement To Let' or 'Agreement To Lease' or 'agreement for lease' but there is no present demise, the document will not be chargeable with stamp duty.
37 Mr. Sonpal has no doubt made a very good attempt to convince me to take a view in favour of the Revenue. However, if the ::: Downloaded on - 09/06/2013 18:00:26 :::
- 50 - 3-wp-4866-2002-group entire law as laid down in case of Hemanta Kumari Debi (supra) followed by the Division Bench of Bombay High Court in Maneklal Manilal (supra) is considered, the conclusion is inevitable that the deletion of explanation III will be of no consequence. In case of Maneklal Manilal (supra) the High Court has noticed argument that every Agreement To Lease must be stamped with ad-volorum stamp and when subsequent lease contemplated by the parties is actually effected, stamp of Rs.1/- would suffice. High Court had held that both under Indian Stamp Act and Indian Registration Act, Agreement To Lease is included in the word 'lease' and though the Indian Stamp Act and Indian Registration Act are not directly in para-materia, it has been held that two acts may be read together and that the definition under the Indian Stamp Act with regard to composition deed might be accepted in considering the question under the Indian Registration Act. The High Court had followed the judgment of Privy Council in Hemanta Kumari Debi (supra) and has held that for an Agreement To Lease to be a present demise, it must be a document which effects an actual demise and operates as lease in present and not an agreement that on happening of certain contingencies a lease would be granted. High Court has further held that so far as Indian Registration Act is concerned there was a concurrence of the opinion between different High Courts that even for an Agreement To Lease to ::: Downloaded on - 09/06/2013 18:00:26 :::
- 51 - 3-wp-4866-2002-group require registration, there must be an actual demise.
38 In view of the aforesaid judgment of Division Bench in a reference following the judgment of Privy Council and interpreting Article 36 of the Indian Stamp Act which is para-materia of Article 36 of the Bombay Stamp Act 1958, I find myself unable to agree with the submissions of Mr. Sonpal that the judgments incorporating the provisions of the Registration Act or the Transfer of Property Act have to be ignored.
39 In my opinion no general principle can be laid down and it is not possible to devise straight jacket formula that every document styled as Agreement To Lease or Agreement For Lease cannot be charged with stamp duty. In my opinion every document in question will have to be independently considered by the concerned authorities and only in a case where there is a present demise, document can be charged with the stamp duty.
40 In the facts of the present case one of the parties to the instrument is CIDCO which is instrumentality of the State and has pointed out that every person who desires to become lessee of CIDCO in future is directed to make an application in the prescribed form by filling up tenders and successful tenderer or bidder is expected to sign the agreements in the prescribed form. Since CIDCO which is instrumentality of the State is one of the parties to the instrument in question and since in ::: Downloaded on - 09/06/2013 18:00:26 :::
- 52 - 3-wp-4866-2002-group the facts of this case both the parties are ad-idem that the instruments do not create immediate / present demise, it is not possible to hold that the agreements in question are camouflage as contended by Mr. Sonpal.
Since the instrumentality of the State of Maharashtra has prepared the agreements in printed format, which have to be signed by every bidder, in the facts of this case, it is not possible to hold that the agreement is a camouflage. The agreement is titled as Agreement To Lease. However the petitioners have been referred to as licensee in the agreements. What is created in favour of the petitioners is merely a license with an Agreement to create lease in future dependent upon the contingencies as indicated in the agreement. The contingency is to properly construct a building within stipulated time and if this is not done, option is left with CIDCO either to pardon the default and extend time or to resume the land. Though possession has been handed over to the petitioners, the said handing over of the possession is not of legal possession and in law CIDCO continues to be in exclusive possession of the property. Possession handed over to the petitioners is merely that of licensees. In my opinion agreements in the present case are Agreements To Lease without creation of present demise coupled with immediate license to enter the land and carry on construction. In the peculiar facts of this case where one of the party is CIDCO, I am inclined to take a view that the document in question does ::: Downloaded on - 09/06/2013 18:00:26 :::
- 53 - 3-wp-4866-2002-group not create a present demise and therefore, is not chargeable with ad-
volorum stamp duty which is required to be levied on the Lease as contemplated by Article 36. I must not be taken to have laid down a wider proposition that in other case if a document is styled as Agreement To Lease or Agreement To Let or Agreement For Lease, it is not chargeable with stamp duty. In case of instruments which are executed between two private parties, it would be permissible for the concerned authorities under Bombay Stamp Act, 1958 to consider as to whether the agreement is being used as camouflage so as to avoid immediate payment of stamp duty or with a view to evade from the liability of payment of stamp duty.
Merely on account of the fact that here both the parties to the agreement are ad-idem that the agreements in question do not create present demise in favour of the petitioners, I am inclined to take view that the agreements do not in fact create a present demise in favour of the petitioners.
Petitioners do not get any enforceable right as against the respondents and CIDCO continues to be having the legal possession. In my opinion the agreements in the present case do not create right in favour of the petitioners to exclude CIDCO from the legal and physical possession of the lands in question. In my opinion CIDCO continues to have legal possession of the lands with a right to resume the land and right to exclude the petitioners from the possession of the property since the possession of the ::: Downloaded on - 09/06/2013 18:00:26 :::
- 54 - 3-wp-4866-2002-group petitioners is only that of licensees. The status of the parties would change only after the actual execution of the lease-deed or only after contingency as contemplated in the agreements is fulfilled.
41 Obviously, for these reasons, it would have to be held that in the present case the authorities under the Bombay Stamp Act, 1958 were not justified in levying the ad-volorum stamp duty. It is necessary to clarify that the moment the contingency which is incorporated in the agreement happens or takes place namely the moment petitioners or any of them complete the construction within the stipulated time, agreements in question would become chargeable with the stamp duty according to the rates specified at the relevant time when fresh lease-deed is executed.
Agreement itself contemplates that the parties will enter in to a lease-deed in the format annexed to the agreements.
42 It is necessary to clarify that in the Writ Petition No. 6623/2007 and Writ Petition No.7643/2007 it is admitted position that the agreements in question have been mutually canceled by the petitioners and CIDCO by executing independent deeds of cancellation. It is, therefore, clear that in those petitions contingency which was the event based on which the demise was to take place in favour of the petitioners therein has factually not taken place. In so far as Writ Petition No. 4866/2002 is concerned, it is the case of the petitioners therein that in ::: Downloaded on - 09/06/2013 18:00:26 :::
- 55 - 3-wp-4866-2002-group fact it has complied with its obligation to construct the building on the land in question and that in fact the petitioners are ready to execute the lease-deed in question after the stipulated time period and after the construction of the building. That aspect of the matter will have to be looked in to by the authorities under the Bombay Stamp Act, 1958 and proper stamp duty will have to be levied and recovered in accordance with the market price on the relevant date.
43 Subject to the aforesaid clarification, rule is made absolute in all the petitions with no order as to costs. As logical corollary of the all the petitions being allowed, the sum of Rs.1,00,00,000/- which has been deposited by the petitioners in Writ Petition No.4866/2002 along with accrued interest, if any, will have to be refunded to the petitioners. Order accordingly. Civil Application Nos.78 of 2008 and 472 of 2008 do not survive and are disposed off.
44 At this stage, on the oral request of Mr. Sonpal, execution of the order passed in Writ Petition No.4866/2002 is stayed for a period of 12 weeks.
(G.S.GODBOLE,J.) ::: Downloaded on - 09/06/2013 18:00:26 :::