Madras High Court
P.V.Mahadevan vs The Head Of The Registration Department on 16 October, 2012
IN THE HIGH COURT OF JUDICATURE AT MADRAS Dated:16.10.2012 Coram The Honourable Mr. JUSTICE K.VENKATARAMAN W.P.No.25899 of 2011 & M.P.Nos.1 and 2 of 2011 P.V.Mahadevan 71, Shivas Apartments, Flat No.6, 28th Cross Street, Indira Nagar, Chennai 600 020 ... Petitioner -Vs.- 1.The Head of the Registration Department - cum - the Chief Revenue Controlling Authority 420, Santhome High Road Chennai 600 028. 2.The District Registrar (In the cadre of Assistant Inspector General of Registration) South Chennai, Saidapet, Chennai 600 015. 3.The Joint Sub Registrar No.1 Sub Registrar's Office Railway Station Road Saidapet, Chennai 600 015. ... Respondents Writ Petition has been filed under Article 226 of the Constitution of India praying for the issuance of a writ of Certiorarified Mandamus calling for the records relating to the proceedings of the Head of the Department cum the Chief Revenue Controlling Authority, Chennai, the first respondent herein made in Pa.Mu.No.15952/P1/2010 dated 28.5.2011 in confirming the proceedings of the District Registrar (Admn.) (in the cadre of Assistant Inspector General of Registration), South Chennai, Saidapet, Chennai-15 the second respondent herein made in No.14579/Aa1/09 dated 25.01.2010 quash the same and direct the respondents herein to release the registered settlement deed presented by the petitioner vide document No.P.251/05 dated 25.09.2005 before the Joint Sub-Registrar-I, Saidapet, the third respondent herein by accepting the stamp duty already paid for registering settlement and without making any further demand of duty within a short date that may be fixed by this Court. For Petitioner : Mr.K.Rajkumar For Respondents : Mr.R.Vijayakumar, A.G.P. O R D E R
The present writ petition has been laid challenging the impugned proceedings of the first respondent dated 28.05.2011 in confirming the proceedings of the second respondent dated 25.01.2010 and consequently, direct the respondents to release the registered settlement deed presented by the petitioner on 25.09.2005 before the third respondent by accepting the stamp duty already paid for registering the settlement deed without insisting further duty.
2. The short matrix of the matter is set out here under:
(a) The petitioner was the owner of Plot No.472, 28th Cross Street, Indira Nagar, Chennai measuring an extent of 3791 square feet which he has bought from the Tamil Nadu Housing Board through a registered sale deed on 18.04.2001. He entered into a joint venture agreement with one M/s.VAS Housing, Chennai on 21.02.2003 who happens to be a promoter for converting his land into residential units. The neighbouring land owner one Mrs.Jyothiraj who owns plot no.471-A also gave the plot to the same developer for putting up residential units.
(b) The promoter decided to combine both the land belonging to the petitioner as well as his neighbour to put up construction. The agreement enables the promoter to give undivided share in the land to each and every one of the buyer in proportion to the area of the flats they buy, leaving apart an extent of 2161 sq.ft of land in the petitioner's plot to his share of undivided share. The balance extent of land alone was taken by the promoter for allotting to others.
(c) The petitioner after selling one flat retained two flats and its corresponding share of undivided share of 1400 sq.ft. Out of the total construction put up by the promoter, an extent of 3541 sq.ft of constructed flat area was allotted to the petitioner. Thus, the petitioner retained 2161 sq.ft of undivided share of land and got 3541 sq.ft of constructed area.
(d) In pursuant to the agreement referred to above, the petitioner became the owner of flat nos.3, 6 and 11 and got possession of the same. The petitioner decided to settle two flats viz., flat no.6 and 11 together with its respective undivided share of land owned by him in favour of his son and daughter. Accordingly, he has executed a settlement deed dated 25.09.2005 in their favour. The petitioner has paid a sum of Rs.10,000/- as stamp duty for the registration of the settlement deed as envisaged under Article 58(a)(i) of the Indian Stamp Act, 1899 (herein after called as the Act).
(e) The Joint Sub-Registrar No.I, the third respondent herein, after registering the document has impounded the same by treating the document as gift deed under Section 33 of the Act and not as settlement as per Section 2(24)(b) of the Act and referred the matter to the second respondent. In pursuant to the same, the second respondent issued a show cause notice calling upon the petitioner to show cause as to why a sum of Rs.3,90,000/- should not be collected as additional stamp duty from the petitioner.
(f) The petitioner replied to the said show cause notice stating that the document registered by the petitioner in favour of his son and daughter shall be treated only as a settlement deed and the stamp duty that has been paid by the petitioner is absolutely in accordance with the Act. However, in spite of the said reply, no order came to be passed by the second respondent and hence, the petitioner was constrained to move before this Court by filing a writ petition in W.P.No.12758 of 2009 to quash the said show cause notice.
(g) This Court by order dated 20.07.2009 directed the second respondent to pass final orders within a period of two weeks. Finally, the second respondent passed an order on 25.01.2010 directing the petitioner to pay a sum of Rs.3,90,000/- as deficit stamp duty. Aggrieved over the said order, the petitioner preferred an appeal before the first respondent. The first respondent by his proceedings dated 28.05.2011 rejecting the appeal and therefore the petitioner is before this Court challenging those orders.
3. The learned counsel appearing for the petitioner contended that the petitioner has executed the settlement deed in favour of his son and daughter and hence the stamp duty payable for such deed should be as per Article 58(a)(i) of the Act. While so, the respondents cannot treat the document as gift deed as per Article 33 of the Act. He has further contended that the petitioner has retained an extent of 2161 sq.ft of land out of 3791 sq.ft that belongs to him, while entering into an agreement with the promoter for construction of the flats. The promoter thought it fit to develop the adjacent land also and hence, after entering into an agreement with the adjacent land owner, he combined both the lands to put up construction and the petitioner was allotted three flats, two of which were settled in favour of the petitioner's son and daughter. Therefore, the learned counsel appearing for the petitioner strenuously contended that the settlement deed executed by the petitioner in favour of his son and daughter shall be construed as a settlement deed and the stamp duty for such deed can be only as per Article 58(a)(i) of the Act and not otherwise. He has further added that both the first and the second respondent have not considered the matter in proper perspective and hence, their orders are liable to be set aside.
4. Counter affidavit has been filed on behalf of the third respondent containing the following facts:
(a) The fact that the petitioner's property and the adjacent property was handed over to the developer for putting up the construction are not disputed. The petitioner has executed a deed of settlement in favour of his son and daughter settling 700 sq.ft of undivided share of land each, out of the total extent of 7799 sq.ft together with two flats. The deed has been signed by the neighbour. The respondent kept the document pending registration and impounded the same under Section 33 of the Act treating it as settlement in favour of non-family member attracting stamp duty at 8% on the market value of the property settled as per Article 58(a)(ii) of Schedule I to the Indian Stamp Act, 1899.
(b) The second respondent who is the collector notified under Section 2(9) of the Indian Stamp Act, 1899 r/w section 40, after affording an opportunity to the petitioner, ordered that the settlement deed in question is chargeable to duty as per Article 58(a)(ii) of Schedule I of the Indian Stamp Act and directed the petitioner to pay a deficit stamp duty of Rs.3,90,000/- together with penalty. The petitioner aggrieved over the same has filed an appeal before the first respondent who has confirmed the order of the second respondent.
5. The learned Additional Government Pleader appearing for the respondents contended that the deed executed by the petitioner in favour of his son and daughter has to be considered as settlement in favour of non-family members, since the land owned by the petitioner alone was not developed, but the land belonging to the adjacent land owner was also developed together with the land owned by the petitioner and the construction was put up therein. The adjacent land owner has also signed the settlement deed as witness. Since the settlement deed in favour of the petitioner's son and daughter relates not only with the land owned by the petitioner but also the land owned by the neighbour and a joint construction has been put up, it shall be treated as a settlement in favour of non-family members and hence, it attracts stamp duty as per Article 58(a)(ii) of Schedule I of the Act.
6. I have carefully considered the submissions made by the learned counsel appearing for the petitioner and the learned Additional Government Pleader appearing for the respondents.
7. The above extracted pleadings would show that the petitioner who is the owner of Plot No.472, 28th Cross Street, Indira Nagar, Chennai measuring an extent of 3791 sq.ft., has given the said property to a promoter for putting up flats. The promoter not only developed the plot owned by the petitioner, but also the plot owned by the adjacent owner one Mrs.Jothiraj. As per the agreement between the petitioner and the promoter, the petitioner has retained 2161 sq.ft of land and the remaining land was allotted to the promoter. Further, the petitioner was given three flats, viz., Flat No.3, 6 and 11. Out of the said three flats, two flats viz., Flat No.6 and 11 have been settled by the petitioner in favour of his son and daughter. The second respondent who construed that the settlement has not been made within the family members, in view of the fact that the promoter has not only developed the plot owned by the petitioner but also the land owned by the adjacent owner had directed the petitioner to pay the stamp duty as per Section 58(a)(ii) of the Act. The same was confirmed by the first respondent also.
8. The question that now arises for consideration is whether the settlement deed executed by the petitioner in favour of his son and daughter has to be construed as a settlement made between the family members and the stamp duty shall be payable as per Section 58(a)(i) of the Act or that it shall be construed as Gift deed requiring the petitioner to pay the stamp duty as per Section 58(a)(ii) of the Act. Before deciding the said issue, it would be useful to extract the definition of the settlement deed as envisaged under Sub-Clause (24)(b) of Section 2 of the Act and the same is usefully extracted here under:
"2. Definitions.- In this Act, unless there is something repugnant in the subject of context,-
(1) ...
...
(24) Settlement.- "Settlement" means any non-testamentary disposition, in writing, of movable or immovable property made-
(a) ...
(b) for the purpose of distributing property of the settlor among his family or those for whom he desires to provide, or for the purpose of providing for some person dependent on him;"
9. Section 122 of the Transfer of Property Act defines GIFT which is extracted here under:
"122. "Gift" defined.- "Gift" is the transfer of certain existing movable or immovable property made voluntarily and without consideration, by one person, called the donor, to another, called the donee, and accepted by or on behalf of the donee."
10. The essential element of gift are:
(a) Transfer of existing movable or immovable property
(b) Transfer of the same voluntarily
(c) Without consideration
(d) By favour to Donee
(e) It should be accepted by or on behalf of the Donee
11. I am of the considered view that the document executed by the petitioner in favour of his son and daughter has to be construed only as a settlement deed and not as a gift deed. It cannot be construed as a gift deed as concluded by the respondents 1 and 2. The only reasoning given by the respondents 1 and 2 is that the promoter has not only developed the land of the petitioner but also the adjacent land belonging to someone else. However, they failed to see that the petitioner retained 2161 sq.ft., of undivided land out of 3791 sq.ft., land owned by him. Thus, only an extent of 1630 sq.ft., of land was alone taken over by the promoter. The petitioner was allotted three flats on the construction put up by the promoter and only two flats have been settled by the petitioner in favour of his son and daughter.
12. Clause 3 of the agreement of joint venture and development entered into between the petitioner and the promoter makes this position very clear which is usefully extracted here under:
"3. In consideration for the PROMOTER agreeing to construct and complete in all respects and deliver to the OWNER or his nominees, 3 Nos. of self contained flats (with an aggregate super built up area of 3541 sq.ft) one in the first level, one in the second level and one in the fourth level with 4 covered car parking space and the proportionate undivided share of land of 2166 sq.ft out of the total extent of land to be retained by the OWNER, which is described in the Schedule hereunder, subject to the terms and conditions contained in this Agreement. The OWNER hereby agrees to transfer, sell or convey 1625 sq.ft of undivided share in the Schedule mentioned land to the PROMOTER or to his nominee or nominees either in full or in parts under one or more Sale Deeds with the right to construct the flats thereon."
13. No doubt, the promoter not only developed the land of the petitioner but also the adjacent plot owned by the neighbour. But that does not mean, what is settled on the petitioner's son and daughter are the flats owned by the third parties. In fact, the settlement deed was signed by the petitioner and not by the neighbour whose property was also developed. She has signed only as a witness, perhaps by way of abundant caution.
14. When the petitioner settles the undivided land kept for himself, while handing over the rest of the land owned by him to the promoter for joint development, it shall be treated as a settlement deed as envisaged under Section 2(24)(b) of the Act. Therefore, it attracts stamp duty as envisaged under Article 58(a)(i) of the Act, which reads as follows:
"58. Settlement-
(a) Instrument of (including a deed of dower)-
(i) If the instrument of settlement is in favour of a member or members or a family, [One rupee for every Rs.100 or part thereof of the market value of the property which is under settlement, subject to the maximum of Rs.10,000:]"
15. Thus, Article 33 of the Indian Stamp Act, 1899 will have no play to the document in question.
16. In fact, though the settlement deed has been executed by the petitioner, still he retained two flats and has been paying the property tax and he reserves the right for his life and only after his life time, the property will go to his son and daughter.
17. In view of the above stated position, I am of the considered view that the impugned order of the first respondent dated 28.05.2011 and the order of the second respondent dated 25.01.2010 are liable to be set aside and accordingly set aside and the writ petition stands allowed. Further, the respondents are directed to return the settlement deed to the petitioner after duly registering the same by accepting the stamp duty paid by the petitioner as per Article 58(a)(i) of the Act. The said exercise has to be carried out by the respondents within a period of one month from the date of receipt of a copy of this order. Consequently, connected miscellaneous petitions are closed. However, no order as to costs.
pgp To
1.The Head of the Registration Department
- cum - the Chief Revenue Controlling Authority 420, Santhome High Road Chennai 600 028.
2.The District Registrar (In the cadre of Assistant Inspector General of Registration) South Chennai, Saidapet, Chennai 600 015.
3.The Joint Sub Registrar No.1 Sub Registrar's Office Railway Station Road Saidapet, Chennai 600 015