Bombay High Court
Audio Visual Centre vs State Of Maharashtra And Ors on 12 October, 2023
2023:BHC-AS:30331
Tauseef 03-WP.4174.2015-J.doc
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELLATE JURISDICTION
WRIT PETITION NO.4174 OF 2015
Audio Visual Centre ...Petitioner
Versus
State of Maharashtra & Ors. ...Respondents
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Mr. K. T. Kukreja a/w. Ms. Chandni Sabnani i/by Mr. Arvind
Manghirmalani for the Petitioner.
Ms. M. S. Bane, AGP for the Respondent (State).
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CORAM : JITENDRA JAIN, J.
RESERVED ON : 7th OCTOBER, 2023.
PRONOUNCED ON : 12th OCTOBER, 2023
Judgment:-
. By this petition under Article 226 of the Constitution of
India, the Petitioner is seeking an appropriate writ against the
Respondents for refund of Rs.20,50,000/- being stamp duty on
sale agreement which was subsequently cancelled.
2. Narrative of the relevant events:-
(i) On 17th April 2006, Petitioner purchased stamp of
Rs.22,50,000/- from ICICI Bank for the purpose of executing
sale deed with Orbit Finance Pvt. Ltd.
(ii) On 18th April 2006, a sale deed was executed between the
Petitioner and Orbit Finance Pvt. Ltd. for the purchase of
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premises being Unit Nos.303 and 304 in the building "Orbit
Plaza" at Prabhadevi, Mumbai for a consideration specifed in
the said deed. As per clause 12 of the sale deed, Orbit Finance
agreed to handover to the Petitioner vacant physical
possession of the premises. However, Orbit Finance could not
handover the possession of the premises and, therefore, a
cancellation deed was executed on 19th October 2006
between the Petitioner and Orbit Finance.
(iii) On 13th April 2007, a refund application was made to the
Respondents for refund of stamp duty paid on sale deed
dated 18th April 2006.
(iv) Thereafter, series of correspondences were exchanged
between the Petitioner and the Respondents under the Right
to Information Act, 2005 as well as under the Stamp Act for
refund of the stamp duty. However, inspite of various internal
communications received by the Petitioner pursuant to the
R.T.I. applications which approved the refund, the
Respondents did not grant the refund on the ground that the
cancellation is not of agreement to sale, but it is of sale deed
and, therefore, provision of Sections 47 and 48 dealing with
refund of stamp duty is not applicable.
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(v) It is on this backdrop that the writ petition is fled for refund
of the stamp duty along with the interest.
3. The Petitioner submitted that the issue is squarely
covered by the decision of this Court in the case of Sanman Trade
Impex Pvt. Ltd. Vs. State of Maharashtra1, wherein on a very
identical situation, the contentions raised by the Respondents
herein have been rejected. The Petitioner, therefore, submitted
that the relief as prayed for be granted.
4. Per contra, on the other hand, the Respondents justifed
the denial of the refund on the ground that sale deed is not
covered by Sections 47 and 48 of the Stamp Act and, therefore,
the application made for refund is rightly rejected. However, the
Respondents did not contest the applicability of the decision
relied upon by the Petitioner in the case of Sanman Trade Impex
Pvt. Ltd. (supra).
5. Heard learned counsel for the Petitioner and the
Respondents and with their assistance have perused the
documents annexed to the petition.
6. In my view, the issue stands squarely covered by the
decision of this Court in the case of Sanman Trade Impex Pvt. Ltd.
1 AIR 2005 Bombay 94
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(supra), wherein on an identical fact situation, the refund
application was rejected on the ground that sale deed is not
covered by the provision of Sections 47 and 48 of the Act. The
Coordinate Bench of this Court after analysing the scheme of the
Act and more particularly Sections 47 and 48 of the Stamp Act by
a detailed order rejected the contention of the Respondents and
allowed the refund application. The relevant paragraph of the
said decision are as under:-
"7. Section 48 deals with the subject of applications for reliefs
under Section 47 of the said Act. Sub-section (1) thereof provides
that application for relief under Section 47 shall be made within a
period of six months from the date of the instrument, when a case
falls under clause (c)(5) of Section 47. Proviso to the said sub-
section provides that in case of an agreement to sale of immovable
property on which stamp duty is paid under Art. 25 of Schedule I,
is presented for registration under the provisions of Registration
Act, 1908 and if the seller refuses to deliver possession of the
immovable property which is the subject matter of such agreement
the application may be made within two years of the date of the
instrument. In other words in cases where the instrument is
covered by Art. 25 of the Schedule I of the said Act, the period of
limitation prescribed for refund is of two years from the date of the
instrument whereas when the instrument happens to be the one
referred to under clause (c)(5) of Section 47, and other than the
agreement covered by the provisions of the proviso to Art. 25 of
Schedule I of the said Act the period prescribed is of six months.
8. ....
9. ....
10. ....
11. Similarly, even in case where an instrument in relation to
such an agreement is provides with the nomenclature of deed of
sale and purchase of property but after execution thereof the
transferor thereunder is rendered helpless in the matter of giving
effect to the sale of the property agreed upon in the sense that he
fails to deliver actual possession of the property to the purchaser,
certainly in such cases, also it would amount to total failure of
intended purpose within the meaning of the said expression under
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clause (c)(5) of Section 47 unless, the evidence produced before
the Collector discloses that the claim for refund is either bogus or
is made with sole intention to defraud the Government in relation
to revenue or for any other purposes.
12. The expressions "the stamp used for an instrument executed"
and "totally fails of the intended purpose" disclose that the
"purpose" spoken of in sub-clause (5) of clause (c) of Section 47 of
the said Act relates to the utility of the stamps for the matter for
which the same was required to be used. Once the transferor fails
to comply with the conditions in the agreement for sale and to
deliver the possession of the property, obviously the instrument is
rendered ineffective and useless, unless of course, the transferee
seeks for specifc performance of such agreement. Otherwise, the
purpose having failed, the party investing the money for purchase
of the stamp in relation to the spoiled stamp papers, would be
entitled to claim refund of the stamp duty, albeit, subject to other
conditions specifed in the said Act and the said Rules.
13. Undoubtedly, explanation (1) to Art. 25 of the Schedule I of
the said Act provides that when an agreement to sale an
immovable property is accompanied with the delivery of
possession of the immovable pro-perty, which is the subject matter
of the agreement, would be deemed to be a conveyance of the
property and, therefore, would require the payment of the stamp
duty accordingly. In other words, even if an instrument is drawn
with the nomenclature as agreement for sale but once it discloses
delivery of possession of immovable property to the purchaser
thereunder, the transaction would partake the nature of
covenance and would be deemed to be a deed of sale and, therefore,
would warrant stamp duty payable on a deed of sale in relation to
such property.
14. Considering the provisions of law referred to above, the
contention on behalf of the respondent that payment of entire
consideration price under the deed dated 27 th March, 2003 would
render the instrument to be a deed of conveyance and not an
agreement and, therefore, would not be entitled to claim refund
under Section 48(1) read with 47(c)(5) is totally devoid of
substance. Clause (c)(5) of Section 47 nowhere distinguishes
between agreement of sale and the deed of sale. It applies to all
instruments irrespective of the fact whether it is deed of sale or a
mere agreement for sale. What it provides is that the instruments
should be rendered ineffective and unenforceable in the sense that
the purpose for which it was executed should "totally fail". Once
the party is able to establish that the purpose for which
instrument was executed has totally failed, certainly the case
would fall within the parameters of the provisions comprised
under Section 47(c)(5) of the said Act. Indeed, this is also clear
from plain reading of Section 48(1) along with proviso thereof. In
fact clause 1 of Section 48 does not distinguish between the sale
deed and agreement for sale. Such a differentiation is to be found
only under the proviso to the said clause. Explanation 1 to Art. 25
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of Schedule I of the said Act nowhere provides that the mere
payment of entire consideration amount would transform the
agreement for sale into deed of sale. On the contrary it specifcally
refers to delivery of possession and not the payment therefor. In
other words, even under the agreement for sale with part payment
of consideration, if the possession of property is delivered, it would
warrant stamp duty which is payable in respect of conveyance of
such property in view of provisions of law contained in explanation
1 of Art. 25 of Schedule I of the said Act.
15. In any case, as already observed above, it is immaterial
whether it is an agreement or deed of sale. It may be relevant only
for the purpose of considering period of limitation to claim refund
in case of agreement of the notice covered by proviso to Art. 25 of
Schedule I of the said Act, the period of limitation would be of two
years as per the proviso to Section 48. However, it would restrict to
period of six months in other cases. Undisputedly in the case in
hand claim for refund was made on 19 th July 2003 whereas the
instrument in question was drawn and was presented for
registration on 27th March, 2003. In other words, claim was made
within a period of six months as provided under Section 1 of
Section 48.
16. It is pertinent to note that order dated 4 th Dec. 2003 as well
as the order dated 28th May 2004 speak of claim for refund being
outside the scope of the said Act. Neither the order passed by
respondent No. 2 nor the one passed by respondent No. 3 discloses
as to how the claim for refund is outside the scope of the said Act.
It is to be noted that in case of spoiled instrument within the
meaning of the said expression under Section 47 of the said Act, it
is the matter of right for the parties to claim refund of the stamp
duty. Being so, the authorities empowered to deal with such claims
and to pass order in relation to such claim, are also necessarily
required to pass a reasoned order. The order on the face of it
should disclose reason for the rejection of the claim. Merely stating
that a claim is outside the scope of the said Act, cannot, under any
circumstances be said to be disclosing the reason for rejection of
the claim. It was necessary for the authorities to disclose as to how
the claim for refund happens to be beyond the scope of the said
Act. Learned A.G.P. tried to explain the same by contending that
the instrument was a conveyance and not an agreement and,
therefore, it did not fall within the provisions of Section 48(1) of
the said Act. However, as already seen above, arguments in that
regard are totally devoid of any substance. No other explanation
was sought to be given as to how the authorities found the claim
beyond the scope of the said Act. It is really surprising that while
collecting stamp duty it was collected under the said Act and when
the party approached for refund of the same, the claim was sought
to be rejected on the ground that it falls beyond the scope of the
said Act. The lower authority having committed such mistake by
order dated 4th Dec. 2003, at least the appellate authority was
expected to give proper reason if at all there is any, for rejecting
the claim and not to just endorse the totally unsustainable order
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passed by the lower authority.
17. In the case in hand undoubtedly the instrument dated 27 th
March, 2003 disclosed the condition relating to delivery of
possession of the fat after expiry of one month from the date of
execution of instrument. The instrument also disclosed the
purpose of purchase of the fat being in the occupation of the
customer of the petitioner company. Undoubtedly, the occupant of
the fat refused to vacate the same and the transferor company,
therefore, could not deliver the possession of the fat to the
petitioner company. It is not the case of the respondent that the
claim for refund is bogus or false or there has been any
misrepresentation of facts by the petitioner in relation to the claim
for refund. Under these circumstances, the application having been
made within the prescribed time, the petitioners are entitled for
refund of the stamp duty in accordance with the provisions of law.
18. As regards the decisions sought to be relied upon by the
learned Advocate for the petitioner, it is to be noted that the
decision of the Division Bench in the case of Kotak Mahindra
Finance (supra) the same was on the point of liability to pay stamp
duty and it was not in relation to the refund claim. Undoubtedly, it
was held that the transfer of shares in cooperative society does not
amount to transfer of merely movable property but amounts to
conveyance of immovable property as the same amounts to
agreement for sale of immovable property along with the transfer
of shares in the society. The decision of the Apex Court in the case
of Veena Jain (supra) was also on the point that whether there is
specifc time for handing over the possession without executing
conveyance and in such event, the document would fall within the
scope of explanation 1 of Art. 25 of Schedule I to the said Act and,
therefore, would attract then duty as if it is a conveyance.
19. For the reasons stated above, the petition succeeds. The
impugned orders are hereby quashed and set aside and the
respondents are directed to refund the stamp duty in accordance
with the provisions of law, also bearing in mind Rule 22A of the
said Rules within a period of four weeks. Rule is made absolute in
the aforesaid terms with no order as to costs."
7. It is also important to note that various information
obtained by the Petitioner under the Right to Information Act,
2005 also supports the case of the Petitioner that the offcers of
the Respondents themselves have accepted that the Petitioner is
entitled to the refund of the stamp duty.
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8. It is also relevant to note Explanation-I to Article 25 of
the Schedule to the Stamp Act, which provides that where in the
case of agreement to sell an immoveable property, the possession
of any immoveable property is transferred or agreed to be
transferred to the purchaser before or after or at the time of
execution of such agreement, then such agreement to sell shall be
deemed to be a conveyance and stamp duty thereon shall be
leviable accordingly. If that be so, then the Respondents are not
justifed to contend that when it comes to provision of Sections 47
and 48 of the Stamp Act, what is covered is only agreement to sell
and not the sale deed. The Respondents cannot blow hot and cold
by contending that when it comes to payment of stamp duty, they
would treat the document as sale deed/conveyance but when it
comes to the refund of the stamp duty on that very document
they would deny the refund by contending that sale deed is not
covered by Sections 47 and 48 of the Stamp Act, but what is
covered is agreement to sell. In my view, for the purpose of
Sections 47 and 48 read with Explanation-I to Article 25, the
agreement to sell for all the three provisions should be read
harmoniously and document treated as conveyance under Article
25 Explanation-I would for the purpose of refund should be read
as agreement to sell.
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9. In view of above, the issue being squarely covered by the
decision of Coordinate Bench of this Court, the petition is allowed
in terms of following order:-
ORDER
(i) Respondents are directed to refund a sum of Rs.20,50,000/- (22,50,000 - 10%) being the amount of stamp duty refundable under sections 47 and 48 of the Bombay Stamp Act, 1958 along with interest at 6% per annum from 19th October 2006 till the date of payment.
(ii) Petition is allowed. No order as to costs.
[JITENDRA JAIN, J.] Signed by: Tauseef Farooqui Designation: PA To Honourable Judge Date: 12/10/2023 14:38:35 9 of 9