Gujarat High Court
Gokuldham Developers vs State Of Gujarat on 20 April, 2020
Author: Bhargav D. Karia
Bench: Bhargav D. Karia
C/SCA/18165/2016 CAV JUDGMENT
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 18165 of 2016
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE BHARGAV D. KARIA
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1 Whether Reporters of Local Papers may be allowed to
see the judgment ?
2 To be referred to the Reporter or not ?
3 Whether their Lordships wish to see the fair copy of the
judgment ?
4 Whether this case involves a substantial question of law
as to the interpretation of the Constitution of India or any
order made thereunder ?
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GOKULDHAM DEVELOPERS & 1 other(s)
Versus
STATE OF GUJARAT & 3 other(s)
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Appearance:
MR MIHIR JOSHI, SENIOR ADVOCATE, MR PARTH H BHATT, MS DHARA
P BHATT(7530) for the Petitioner(s) No. 1,2
MR DHAWAN JAYSWAL, AGP for the Respondent(s) No. 1,2,3,4
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CORAM: HONOURABLE MR. JUSTICE BHARGAV D. KARIA
Date : 20/04/2020
CAV JUDGMENT
1. By this Petition, under Articles 226 and 227 of the Constitution of India, the Petitioners have prayed for the following reliefs:
Page 1 of 25 Downloaded on : Tue Feb 16 05:35:09 IST 2021 C/SCA/18165/2016 CAV JUDGMENT"(A) Your Lordship may be pleased to admit and allow the present petition;
(B)Your Lordship may be pleased issue a writ of certiorari or a writ, order or direction on the nature of certiorari or any other appropriate writ, order or direction to quash ad set aside the order of the Respondent No.2 dated 07.05.2016 as well the recovery notice dated 07.06.2016 issued by the Respondent No.3 and order dated 15.04.2010 issued by the Respondent No.4.
(C) Your Lordship be pleased to direct the Respondents to refund an amount of Rs.76,71,345/- (Rupees Seventy six lakh seventy one thousand three hundred and forty five), being the amount of stamp duty illegally levied by the Respondent No.4 vide its order dated 15.04.2010.
(D) Pending admission, hearing and final disposal of this petition, YOUR LORDSHIP may be pleased to stay the operation, implementation and execution of the impugned order dated 07.05.2016 issued by Respondent No.2 and the notice to pay the deficit stamp duty issued by the Respondent No.3 dated 07.06.2016;
(E) Ad-interim relief in terms of Paragraph (D) above be granted;
(F) Any other and further reliefs, which this Hon'ble Court deems fit and proper in the facts and circumstances of the present case, may be granted in favour of the Petitioners and against the Respondent Company."
2. The brief facts giving rise to this Petition are as under:
2.1. The land bearing final plot no.293/1 of the T.P. Scheme No.3, admeasuring 22365 sq. meter situated at Mouje Vejalpur Taluka City in the registration district of Ahmedabad, was put to auction by the Ahmedabad Urban Development Authority (AUDA). M/s.
Parsvanath Developers Ltd., New Delhi was the highest bidder. The AUDA transferred the said parcel of land for a period of 99 years by executing registered lease deed dated 7th February 2007 in favour of M/s. Parsvanath Developers Ltd.
As per the terms of the lease deed, M/s.
Parsvanath Developers Ltd. had obtained rights to develop the said land and to further sub-lease the Page 2 of 25 Downloaded on : Tue Feb 16 05:35:09 IST 2021 C/SCA/18165/2016 CAV JUDGMENT land and/or sale the construction thereon to any third party.
2.2. It is the case of the Petitioner that a Development Agreement was executed between the M/s. Parsvanath Developers Ltd. and the Petitioner No.1 which is a partnership firm comprising of two partners: (1) Safal Realty Pvt. Ltd., and (2) Goyal & Company (Const.) Pvt. Ltd. on 30th March 2010. As per the terms of the Development Agreement the Petitioners were permitted to develop residential and commercial properties or any other development, however, ownership of leasehold rights remained with the M/s. Parsvanath Developers Ltd. A Power of Attorney was also executed in favour of the two partners of the Petitioner firm by M/s. Parsvanath Developers Ltd. authorizing them to carry out or perform any activity as provided in the Development Agreement.
2.3. The Petitioners submitted the Development Agreement and the Power of Attorney, both executed on 30th March 2010 was presented for registration in the office of the Sub-Registrar, Ahmedabad-04 (Paldi) on 7th April 2010 by affixing stamp duty of Rs. 98,00,000/- on the Development Agreement and Rs. 100/- on the Power of Attorney. The Development Agreement was registered at sr. no. 4852 and the Power of Attorney was registered at sr. no. 4854.
2.4. The Sub-Registrar impounded both the documents Page 3 of 25 Downloaded on : Tue Feb 16 05:35:09 IST 2021 C/SCA/18165/2016 CAV JUDGMENT and sent the same to the Dy. Collector for adjudication of appropriate stamp duty as per the provisions of the Gujarat Stamp Act, 1958 (for short, the "Act").
2.5. The Dy. Collector, by order/certificate dated 21.04.2010, certified that stamp duty of Rs. 98,00,000/- paid on the Development Agreement registered at sr. no. 4852 was proper and appropriate being 1% of the total consideration mentioned therein as per Article 5(ga) of the Schedule I to the Act as prevalent in the year 2010.
2.6. However, the Dy. Collector by order dated 15.04.2010 adjudicated the stamp duty on the irrevocable Power of Attorney and held that the stamp duty should be paid under Article 45(f) of the Schedule I to the Act and directed the Petitioners to pay the stamp duty at the rate of 4.9% of the market value of the property, amounting to Rs. 76,71,195/-. The Dy. Collector also imposed a penalty of Rs. 250/- upon the Petitioners and therefore the total amount payable by the Petitioners amounted to Rs. 76,71,345/-. The Petitioners paid the said amount and therefore the Dy. Collector stamp valuation issued a certificate dated 22.04.2010 under Section 41 of the Act.
2.7. It is the case of the Petitioners that the Respondent No.2, the Chief Controlling Revenue Page 4 of 25 Downloaded on : Tue Feb 16 05:35:09 IST 2021 C/SCA/18165/2016 CAV JUDGMENT Authority, Gandhinagar, after about a period of 6 years, issued a show cause notice to the Petitioners, informing that the office of the Comptroller and Auditor General (CAG) has raised an objection regarding the stamp duty paid on the Development Agreement registered at sr. no. 4852 of 2010 dated 30th March 2010 and therefore, the order of the Dy. Collector dated 21.04.2010 was taken into revision under Section 53A of the Act and called upon the Petitioners as to why deficit stamp duty of Rs. 2,93,78,905/- on the Development Agreement should not be collected from the Petitioners.
2.8. It is the case of the Petitioners that an authorized representative of the Petitioners remained present before the Respondent No.2 on 16.02.2016 and tried to explain the nature and purpose of the Development Agreement. The Petitioners also filed written submissions dated 20.02.2016 with a request for further hearing. However, the Respondent No.2 did not accede to the request of the Petitioners and passed the impugned order dated 07.05.2016, holding that as the entire consideration was paid by the Petitioners and the possession of the land was also transferred to the Petitioners and the Petitioners were given right to develop and create third party rights, the stamp duty as prescribed under Article 45(f) of the Schedule I to the Act would be applicable, i.e. stamp duty payable as if the Development Agreement is a conveyance.
Page 5 of 25 Downloaded on : Tue Feb 16 05:35:09 IST 2021 C/SCA/18165/2016 CAV JUDGMENT2.9. The Respondent No.3 issued notice dated 07.06.2016 calling upon the Petitioner to pay deficit stamp duty amounting to Rs. 94,99,970/-. The Petitioners also preferred an application dated 13.07.2016 before the Respondent No.2 under Section 54 of the Act. To refer the matter to the High Court of Gujarat for proper adjudication of stamp duty. However, the said application was rejected by order dated 29.08.2016. Being aggrieved and dissatisfied, the Petitioners are before this Court challenging the impugned order dated 07.05.2016 as well as recovery notice dated 07.06.2016 and order dated 15.04.2010 issued by Respondent No.4 with consequential reliefs.
3. Learned Senior Advocate, Mr. Mihir Joshi, assisted by Learned Advocate Mr. Parth Bhatt for the Petitioners submitted that the Development Agreement was entered into with a sole object and purpose of obtaining development rights over the said parcel of land. The Petitioners were granted exclusive and irrevocable license to enter upon the land and develop the same with a specific agreement that the said Development Agreement should not be construed as a sale or a part performance under Section 53A of the Transfer of Property Act, 1882.
3.1. It was submitted that on perusal of the terms and conditions of the Development Agreement, it is apparent that the Petitioners had paid an amount Page 6 of 25 Downloaded on : Tue Feb 16 05:35:09 IST 2021 C/SCA/18165/2016 CAV JUDGMENT of Rs. 95,00,00,000/- so as to develop and market the construction to be put up by the Petitioners. Reference was made to the following terms and conditions of the Development Agreement:
"3. The Owner hereby irrevocably grants exclusive development rights in respect of the Land along with such ancillary and incidental rights as set forth in this Agreement to develop the Land, and hereby authorizes the Developer to develop and construct the Project on the land, market and dispose of the same as the Developer may deem fit and proper, subject to and in accordance with the other terms and conditions as stated hereafter.
4. The owner hereby grants to the Developer, an exclusive and irrevocable license to enter upon the Land and develop the same in terms of this Agreement. Accordingly, the Owner hereby delivers actual, physical, and vacant possession of the Land to the Developer from the date of execution hereof.
5. Subject to Clause-4 above, the Owner further agrees to irrevocably and exclusively permit and authorize the Developer, and its Representatives to enter upon the Land for executing and implementing the Project in accordance with this Agreement. The Owner hereby agrees and acknowledges that the Owner shall not revoke the permission/ license so granted, as the Developer will be incurring expenses for construction based on the assurances and permission granted by the Owner.
6. Nothing contained herein shall be construed as delivery of possession in part performance of any agreement of sale, under Section 53-A of the Transfer of Property Act, 1882, and/or such other applicable law for the time being in force and/or transfer or parting with the possession, of the Lease Hold Rights of the Land of and under the Lease.
7. The Owner hereby agrees not to disturb, interfere with or interrupt or have any right to do any act or deed which tends to have the effect of interrupting the construction and development activities carried out by the Developer and/or commit any act or omission that may result in stoppage or delay of the construction activity to be undertaken pursuant to this Agreement or which either renders the Developer incapable of performing its obligations under the Agreement or increases the burden of the Developer in performing its obligations under this Agreement, or which adversely affects the Project.
8. The Owner agrees not to enter into any arrangement of any nature whatsoever with any person other than the Developer concerning the Lad or alienate or in any manner encumber the Land.
9. The Developer, for making available the Land and Development Rights thereof to it by the Owner has agreed to pay or contribute to the Owner the sum of Rs.95.00 Crores (Rupees Ninety Five Crores only) to be paid as follows:-
(a) Rs.46.00 Crores (Rupees Forty Six Crores only) paid on or before the execution hereof, payment and receipt whereof, the Owner do hereby admit and acknowledges. Such payment is made subject to other provisions and subject to representations and warranties and covenants on the part of the Owner.
(b) Rs.49.00 Crores (Rupees Forty Nine Crores Only) to be paid within a period of Seven days from the date thereof. Such payment also Page 7 of 25 Downloaded on : Tue Feb 16 05:35:09 IST 2021 C/SCA/18165/2016 CAV JUDGMENT will be made subject to other provisions and subject to representations and warranties and covenants on the part of the Owner."
Referring to the above clauses of the Development Agreement, it was submitted that the Dy. Collector-Stamp Valuation has rightly issued the certificate/order dated 21.04.2010 by considering the stamp duty payable on the Development Agreement as per Article 5(ga) of the Schedule I to the Act.
3.2. It was submitted that Respondent No.2 has passed the impugned order only on the basis of the objection raised by the office of the CAG contrary to the provision of Article 45(f) of the Schedule I to the Act. It was therefore submitted that if the interpretation as sought to be given by Respondent No.2 is allowed to sustain, then it would lead to a peculiar situation where the same amount of stamp duty would be levied on two instruments pertaining to the same transaction, resulting into the impugned order being contrary to Section 4 of the Act.
3.3. It was submitted that Respondent No.2 failed to appreciate that Article 45(f) of the Schedule I to the Act would be applicable to the Power of Attorney which has been executed giving power to a particular person to sell an immovable property in lieu of consideration. However, the Development Agreement executed on 30th March 2010 is not a Power of Attorney but it is an agreement giving an Page 8 of 25 Downloaded on : Tue Feb 16 05:35:09 IST 2021 C/SCA/18165/2016 CAV JUDGMENT authority to the Petitioners to develop the said parcel of land.
3.4. It was submitted that order dated 15.04.2010 passed by the Dy. Collector to levy stamp duty on the Power of Attorney between the parties under Article 45(f) of the Schedule I to the Act is also not legal and valid though the Petitioners have paid the stamp duty as demanded.
3.5. It was further submitted that Respondent No.2 failed to take into consideration that AUDA is still the owner of the land in question, whereas, the Petitioners have been given powers only to construct upon the said land by the lessee Parsvanath Developers Ltd. and therefore, Article 45(f) of the Schedule I to the Act would not be applicable in the facts of the present case.
3.6. Learned Senior Advocate further submitted that Respondent No.2 has wrongly applied Article 20 of the Schedule I to the Act by considering the Development Agreement as conveyance contrary to the terms of the Development Agreement without considering the provisions of Article 5(ga) of the Schedule I to the Act.
3.7. Reliance was placed on the decision of the full bench of the Delhi High Court in the case of In re Hamdard Dawakhana (Wakf), Delhi, reported in AIR 1968 Del 1 (FB), wherein the Delhi High Court has held as under:
Page 9 of 25 Downloaded on : Tue Feb 16 05:35:09 IST 2021 C/SCA/18165/2016 CAV JUDGMENT25. It is trite to say that every bond is an agreement. So is the case with a mortgage or sale or exchange. But what we have to see is whether that agreement has acquired the character of a "bond". We have already noticed the relevant clauses in the instruments in question.
There is no dispute that under those instruments one of the parties thereto had obliged itself to pay money to others.
26. The distinction between an "agreement" and a "bond" is well brought out by the decision of the Calcutta High Court in Gishorne & Co. v. Subal Bowri. Therein Garth, C.J. Observed:-
"I am of opinion that the instrument in question is not a bond within the meaning of the Stamp Act of 1869; and that it requires (so far as I can see) an eight-anna stamp only.
The definition of a bond in s. 5 of the Act is precisely what we understand by a bond in England, and it is an obligation of a different character from a convenant to do a particular act, the breach of which must be compensated in damages.
Whether a penal clause is attached to such a covenant or not, the remedy for the breach of it is in form and substance a suit for damages, and by s. 74 of the Indian Contract Act, the English rule with regard to liquidated damages is abolished, and the plaintiff in such a suit has no right under any circumstances to claim the penalty itself as such. He can only recover such compensation, not exceeding the amount of the penalty as the Judge at the trial considers reasonable; but he is entitled to that compensation whether he proves an actual damages or not.
"The remedy upon a bond is very different. The plaintiff in the case of a simple money-bond recovers the sum named in the bond, or in the case of a bond conditioned for the performance of conventants he recovers the actual damage which he can prove that he has sustained. In either case not only is the bond a contract of a different from and nature from a convenant with a penal clause, but the remedy upon it, and thp amount recoverable for the breach of it, is also different."
27. The test laid down by the learned Chief Justice, for distingushing a "bond" from an "agreement, is: In the former case in the event of breach, the party to the instrument, who had obliged to pay money to the other, is liable to pay the sum stipulated, in the instrument. In the latter case, the quantum of damages has to be fixed by the Court If we apply that test to the facts of the present case, it is clear that the liability of Hamdard Dawakhana is fixed. Its liability is to pay the same stipulated. There is no question of damages in this case.
28. In the Collector of Rangoon V. Maung Aung Ba, the Lower Burma Chief Court accepted the ratio of the decision referred to earlier. But on the facts of that case, their Lordships came to the conclusion that the instrument that was before them, was an agreement, as I the said case the aggrieved party could have claimed only damages and not any specific sura of money.
29. We are unable to agree with Mr.R.L.Aggrawal that: the Culcutta High Court in Linotype and Machinery Co. and Windsor Press, took a different view of the law. In that case, the Court was alled upon to consider whether the instrument before them was a ""conveyance" or an "agreement". The instrument before them was a hire purchase agreement. After examining the various clauses in that instrument, the Court came to the conclusion that the same did not evidence any transfer of, property and, therefore, it cannot be considered as a "conveyance", Their Lordship were not called upon to decide Page 10 of 25 Downloaded on : Tue Feb 16 05:35:09 IST 2021 C/SCA/18165/2016 CAV JUDGMENT whether the instrument in question could have been considered as a "bond " or not. Hence, they held that the instrument before them was an "agreement". In re Dhampur Sugar Mills Ltd, the Court quoted, with approval, the decision of Garth, C.J. reported in Gisheren & Co., referred to earlier. Therein, the Court was considering an instrument under which the Dhampur Sugar Mills, Ltd, had agreed to pay certain commission and allowances to one Kumar Murli Manohar, its Managing Agent. The "agreement" or to a "bond". On a reading of the various clauses in that instrument, the Court came to the conclusion that the instrument in question evidenced an "agreement" and not a "bond". But in so doing, they did not depart from the rule laid down by Garth C.J.noticed earlier.
30. For the reasons mentioned above, we are of the opinion that the instruments marked Annexures A and B in the letter addressed to this Court by the Chief Controlling Revenue Authority, Delhi, fall within the scope of section 25(b) of the Act, and consequently, they are chargeable to duty under Article-15, Schedule I-A, of the Act, as "bond". No costs.
It was therefore submitted that on perusal of the various clauses of the Development Agreement, there is no transfer of property and therefore it cannot be considered a 'conveyance'.
3.8. It was also submitted that the Respondent No.2 has not dealt with the submissions made by the Petitioners wherein it was specifically contended that the sale deeds of the units of different commercial premises constructed on the land are signed as transferors by Parsvanath Developers Ltd. and the Petitioner No.1, which shows the continuing interest of Parsvanath Developers Ltd. Reference was also made to various clauses of the Development Agreement, more particularly, clause Nos. D, 4, 6, 21, 23, 29(i), 30, 38(ii), 40 and 51 to point out that Parsvanath Developers Ltd. has not conferred any ownership to the Petitioner No.1 and as such the Development Agreement was rightly held to be liable for stamp duty under Article 5(ga) of the Schedule I to the Act by the Dy.
Page 11 of 25 Downloaded on : Tue Feb 16 05:35:09 IST 2021 C/SCA/18165/2016 CAV JUDGMENTCollector.
4. On the other hand, Learned Assistant Government Pleader Mr. Dhawan Jayswal for the Respondents submitted that during the course of audit inspection by the office of the CAG, an audit objection was raised with regard to deficit stamp duty to be collected on consideration of the covenants of the registered Development Agreement which are as good as that of conveyance transferring the title in favour of the Petitioner No.1.
4.1. It was further submitted that the Power of Attorney and the Development Agreement are required to be read together and on conjoint reading of the same, there is a transfer of possession with consideration so as to attract Article 45(f) of the Schedule I to the Act which provides that where there is a consideration and authorization of sale of immovable property, the stamp duty will be leviavle as per Article 20 of the Schedule I to the Act.
4.2. Reliance was placed on the following averments made in the Affidavit-in-Reply filed on behalf of Respondent No.4:
"15. It is further submitted that the petitioner herein has also challenged the order dated 15.04.2010 passed by the Competent Authority whereby, the same is in relation to the Instrument No.4854 dated 30.03.2010 i.e. registered power of attorney whereby, it is most respectfully submit that the same cannot be challenged directly before this Hon'ble High Court as the alternate remedy is available with the petitioner and therefore, on the ground of defective clause and as cumulative effect thereof, the present petition is required to be dismissed.Page 12 of 25 Downloaded on : Tue Feb 16 05:35:09 IST 2021 C/SCA/18165/2016 CAV JUDGMENT
16. In view of the aforesaid facts and circumstances, more particularly, the provisions of Bombay Stamp Act, more particularly, Article-20 and 45(f) the instrument in question being Instrument No.4852 of 2010 nature and the ingredients of the said instrument is equivalent to that of conveyance and power of attorney more particularly, in the nature of Article-45(f) i.e. with consideration and authorization to sale the immovable property, the Competent Authority has rightly passed the impugned order and thereby this Hon'ble Court may not intervene in the impugned orders ad communication."
4.3. Reliance was placed on the audit objection raised by the office of the CAG, which reads as under:
"PART II CURRENT AUDIT (A)MAJOR IRRERGULARITIES Para 1:-Subject:-Short levy of stamp duty and registration fees due to misclassification of documents-"Conveyance"
treated as "Development Agreement"-(532) Document No.& Date 4852 dated 30/3/2010 Name of Land Owner Parsvanath Developers Limited Name of Developer Gokuldham Developers Description of property T.P.No.3, FP-292/1, Vejalpur, Ahmedabad Areas in sq,mtrs. 22365Sq.mtrs.
Document styled as Development Agreement Amount of SD levied Rs.98,00,000/- Amount of RF levied Rs.30/-
Stamp duty leviable on 'development agreements' is covered under Article 5(ga), 45(f) and 45(g) of Schedule I of Bombay Stamp Act, 1958. Under Article 45(f) of the Schedule-I, power of attorney when given for consideration and authorising the attorney to sell any immovable property, stamp duty shall be leviable at the rates specified under Article 20 of Schedule-I. Whereas under Article 5(ga) or 45(g) agreement or power of attorney when given to a promoter or developer, by whatever name called for construction on or development of or sale or transfer (in any manner whosoever) of any immovable property stamp duty at the rate of 1% will be leviable.
Thus, such power of attorney when given to a promoter or a developer by whatever name called for consideration transferring the possession of any immovable property, it should be classified under Article 45(f), whereas when the power is not given to a promoter or a developer for consideration, it should be covered under Article 45(g). Stamp Page 13 of 25 Downloaded on : Tue Feb 16 05:35:09 IST 2021 C/SCA/18165/2016 CAV JUDGMENT duty and registration fees are leviable accordingly in respective cases. Thus payment of consideration to landowner by the developer is the deciding factor for classifying such document under Article 5(ga) 45(f) or Article 45(g). Such instrument of power of attorney will require compulsory registration under clause (b) and (c) of sub-Section (1) of Section 17 of Registration Act, 1908.
During test check of records of Sub Registrar-4, Paldi, Ahmedabad it was noticed in above document No.4852 dated 30.3.10 executed between Parshvanath Developer (Owner) and Gokuldham Developer (Developer) for developing the land TP Scheme No.3 of Vejalpur bearing plot No.293/1 admeasuring 22365 sq.mtrs. was registered as development agreement and duty at one per cent was levied. Audit noticed that document was registered and impounded under section 33 and sent to Dy. Collector (VoP) for determining the proper stamp duty leviable. The DC (VoP) has also certified that the instrument is duly stamped. The recitals of document interalia contained the following (1) As per clause 9 "The Developer, for making available the Land and development Rights thereof to it by the owner has agreed to pay or contribute to the owner the sum of Rs.95 crores.
(2) As per clause 30 "The owner hereby agrees and acknowledge that the owner has delivered the original title deed to the Developer as aforesaid with intent to create an equitable mortgage in favour of the Developer to secure the payment made/being made by the Developer to the owner under clause (9) above and to secure the developer's right, interest and authorities under the Agreement and to also to secure due and proper observance and performance of terms, condition and obligation by the owner on its parts herein. The Owner undertakes also to give legal mortgage to such form as the Developer as it sole discretion may require.
(3) Under clause 35, the power to sell the property was given to the Developer.
(4) As per clause 41 of instrument developer arrange payment regarding taxes of the land to the concerned authority from its own source.
(5) As per clause 47, full payment of the cost of land was made to owner of land and owner agrees to execute irrevocable power of attorney in favour of developer.
From the above it is amply clear that the document was required to be classified under article 45(f) as the interest and title or the property is transferred, power to sell the property was given, full payment of the cost of land was made to owner of land and owner agree to execute irrevocable power of attorney in favour of developer. However, the registering authority has classified this as development agreement. This Page 14 of 25 Downloaded on : Tue Feb 16 05:35:09 IST 2021 C/SCA/18165/2016 CAV JUDGMENT resulted in short levy of stamp duty of Rs.3,66,30,000/- and registration fees of Rs.94,99, 970/- aggregating to Rs.4,61,29,970/- as shown below:-"
Amount of consideration Rs.95,00,00,000/-
Area of land 22365 sq.mtrs Rate as per jantri Rs.7000/- Market value of property Rs.156555000/-/- SD leviable @ 4.9% Rs.4,65,50,000/- (95 croresX4.9%) SD levied Rs.99,20,000/- Short levy of SD Rs.3,66,30,000/- RF leviable Rs.95,00,000/-(95 croresX1%) RF levied Rs.30/- Short levy of RF Rs.94,99,970/-
On being pointed out in audit the Sub Registrar replied that after scrutiny of document detailed reply would be furnished to audit.
Final reply is awaited."
4.4. It was therefore submitted that the impugned order passed by Respondent No.2 cannot be said to be erroneous as the same is passed taking into consideration the Development Agreement as well as the Power of Attorney together and deficit stamp duty is calculated after giving set off of the payment made by the Petitioners on both these instruments. It was therefore prayed that no interference is required to be made while exercising powers under Articles 226 and 227 of the Constitution of India.
5. Having heard the learned Advocates of the respective parties and having gone through the material on record, only short question which arises for consideration is whether the Development Agreement and the Power of Attorney executed on 30th March 2010 by Petitioner No.1 are liable to be considered as 'conveyance' as Page 15 of 25 Downloaded on : Tue Feb 16 05:35:09 IST 2021 C/SCA/18165/2016 CAV JUDGMENT provided under Article 45(f) of the Schedule I to the Act for levy of stamp duty under Article 20 of the Schedule I to the Act.
6. It would therefore be germane to refer the following provisions of the Act:
"Section 2(g):-"Conveyance" includes,-
(i) a conveyance on sale,
(ii) every instrument,
(iii) every decree or final order of any civil Court; [***] [(iv) every order made by National Company Law Tribunal under section 232 of the Companies Act, 2013 (18 of 2013) in respect of a scheme for reconstruction of the company or companies involving merger or the amalgamation of any two or more companies and every order made by the Reserve Bank of India under section 44A of the Banking Regulation Act 1949 (10 of 1949) in respect of amalgamation or dissolution of Banking companies, or;] [(v) any writing or letter of allotment in respect of the premises, given to its members or allottee by a co-operative society registered or deemed to have been registered under the Gujarat Co-operative Societies Act, 1961 (Gujarat X of 1962),or a corporation or an association formed and registered under the Bombay Non-Trading Corporation Act, 1959 (Bombay XXVI of 1959) or the Gujarat Ownership Flat Act, 1973 (Gujarat 13 of 19 73) as the case may be.] by which property, whether movable or immovable, or any estate or interest in any property is transferred to, or vested in, any other person, inter vivos, and which is not otherwise specifically provided for by Schedule I;
Section 2(r):-"power of attorney" includes any instrument (not chargeable with a fee under the law relating to Court-fees for the time being in force) empowering a specified person to act for and in the name of the person executing it;"
Article 5(ga):-
Description of Instrument:- Proper Stamp Duty if relating to giving authority Three rupees and fifty paise] for or power to a promoter every hundred rupees or part or a developer, by whatever name thereof of the market value of called, for construction the property which is the subject of or development of, or sale or matter of such agreement :
transfer (in nay manner Provided that the provisions of whatsoever) of, any immovable section 32A shall, mutates property; mutanids, apply to such agreement, memorandum or records thereof as they apply to an Page 16 of 25 Downloaded on : Tue Feb 16 05:35:09 IST 2021 C/SCA/18165/2016 CAV JUDGMENT instrument under that section :
Provided further that if the proper stamp duty is paid under clause (g) of article 45 on a power of attorney executed between the same parties in respect of the same property, then the stamp duty under this article shall be one hundred rupees.
Article 45(f):-
Description of Instrument Proper Stamp Duty
(f)(i) when given for The same duty as is leviable on a consideration and authorising the conveyance under Article 20 for attorney to sell any immovable the amount of the consideration property. or, as the case may be, the market value of the immovable property whichever is greater;
(ii) when authorising to sell or transfer immovable property without consideration or without showing any consideration, as the case may be,
(a) if given to the father, mother, brother, sister, wife, One hundred rupees. husband, son, daughter, grandson, granddaughter;
One hundred rupees.
(b) in any other case. The same duty as is leviable on a conveyance under article 20 for the amount of consideration or, as the case may be, market value of the immovable property whichever is greater.
Article 45(g):-
Description of Insturment Proper Stamp Duty
(g) When given to a promoter or [Three rupees and fifty paise] developer; by whatever name for every hundred rupees or part called, for construction on; or thereof of the market value of development of, or sale or the property which is the subject transfer (in any matter of such power of attorney. manner whatsoever) of, any Provided that the provisions of immovable property.
section 32A shall mutatis Page 17 of 25 Downloaded on : Tue Feb 16 05:35:09 IST 2021 C/SCA/18165/2016 CAV JUDGMENT mutandis apply to such instrument of power of attorney as they apply to a Conveyance under that section : Provided further that when proper stamp duty is paid under clause (ga) of article 5, on an agreement or records thereof or memorandum of an agreement executed between the same parties and in respect of same property, the duty chargeable under this clause shall be rupees one hundred.
7. The facts of the case are not in dispute as the Development Agreement executed by the Petitioner No.1 and Parsvanath Developers Ltd. stipulates the terms and conditions for the development of the land in question. Article 5(ga) of the Schedule I to the Act provides for giving authority or power to a promoter or developer for construction of or development of, or sale, or transfer in any manner whatsoever of any immovable property. On perusal of the Development Agreement as a whole, it transpires that the Development Agreement was executed in favour of the Petitioner No.1 with all rights and liabilities together with possession for a consideration. The irrevocable Power of Attorney in favour of the partners of Petitioner No.1 by Parsvanath Developers Ltd. giving right to various acts, deeds, matters and things under the Development Agreement with regard to development of the land in question and also disposal of the units defined therein read with clause 4 of the Development Agreement which empowers the Petitioners to have access to the land in question Page 18 of 25 Downloaded on : Tue Feb 16 05:35:09 IST 2021 C/SCA/18165/2016 CAV JUDGMENT would amount to transfer of the right to use the land in question together with power to sell the property but it would not amount to transfer of property in any manner as envisaged under Article 20 of the Schedule I to the Act. Moreover, clause 41 of the Development Agreement provides that it would be the sole duty of the Petitioner No.1 to arrange payment regularly of all the taxes pertaining to the land. Similarly, clause 39 of the Development Agreement provides that the profit or income or any benefit or loss or deficiency arising out of the disposal of units of the proposed project would belong to the Petitioner No.1. The Petitioner No.1 is also entitled to raise finance on the security of the land and/or development or the construction that may be put thereon at its own costs and expenses as per clause 28(ii) of the Development Agreement.
8. It is true that Article 45(f) of the Schedule I to the Act provides for levy of stamp duty on the power of attorney as provided under Article 20 of the Schedule I to the Act, if by such power of attorney, the interest and title of the property is transferred, power to sell the property was given and full payment of the cost of the land is paid to the owner of the land. However, in the facts of the case, the Dy. Collector has levied the stamp duty on the Power of Attorney executed in favour of the partners of the Petitioner No.1 applying the provisions of Article 45(f) of the Schedule I to the Act. Such stamp duty is already Page 19 of 25 Downloaded on : Tue Feb 16 05:35:09 IST 2021 C/SCA/18165/2016 CAV JUDGMENT paid by the Petitioners. In such circumstances, considering the Development Agreement executed between the Parties liable to levy of stamp duty under Article 45(f) of the Schedule I to the Act would be contrary to the scheme of the Act. By the impugned order passed by Respondent No.2, stamp duty is levied considering both the instruments as one instrument under Article 45(f) of the Schedule I to the Act, which is not permissible in view of Section 4 of the Act, which reads as under:
"Section 4:-Several instruments used in signal transaction of sale, mortgage or settlement. - (1) Where, in the case of any sale, mortgage or settlement, several instruments are employed for completing the transaction, the principal instrument only shall be chargeable with the duty prescribed in Schedule I for the conveyance, mortgage or settlement, and each of other instruments shall be chargeable with a duty of [one hundred rupees] instead of the duty (if any) prescribed for it in that schedule. (2) The parties may determine for themselves which of the instruments so employed shall, for the purposes of sub- section (1), be deemed to the principal instrument: Provided that the duty chargeable on the instrument so determined shall be the highest duty which would be chargeable in respect of any of the said instruments employed. "
On perusal of the aforesaid provision it is clear that stamp duty is to be levied on the principal instrument only when several instruments are used in a single transaction of sale, mortgage or settlement. Therefore, the approach of the Respondent No.2 to combine both the instruments together and levy the stamp duty as conveyance is not envisaged under the scheme of the Act. It appears that the Respondent No.2 passed the impugned order on the basis of the audit objection without considering the fact that the Dy.
Page 20 of 25 Downloaded on : Tue Feb 16 05:35:09 IST 2021 C/SCA/18165/2016 CAV JUDGMENTCollector levied the stamp duty on the Development Agreement and the Power of Attorney applying the provisions of Article 45(f) of the Schedule I to the Act. However, Article 45(f) of the Schedule I to the Act could not have been applied to the Development Agreement which is governed by Article 5(ga) of the Schedule I to the Act.
9. The contention raised on behalf of the Petitioners that the stamp duty levied on the Power of Attorney under Article 45(f) of the Schedule I to the Act instead of Article 45(g) of the Schedule I to the Act is concerned, it is evident that the Power of Attorney was executed so as to implement the Development Agreement and therefore, Article 45(g) of the Schedule I to the Act would be applicable which provides for giving of power of attorney to a developer for construction on or development of or sale or transfer of any immovable property which is subject matter of development agreement, therefore, the order dated 15.04.2010 passed by the Dy. Collector levying the stamp duty on the Power of Attorney under Article 45(f) of the Schedule I to the Act is also not tenable.
10. In view of the above fact situation, the decision of the full bench of the Delhi High Court in case of Hamdard Dawakhana (Supra) is in relation to difference between bond and agreement. So far as the facts of this case are concerned, there is no dispute with regard to the nature of Page 21 of 25 Downloaded on : Tue Feb 16 05:35:09 IST 2021 C/SCA/18165/2016 CAV JUDGMENT the instrument.
11. The submissions made on behalf of the Respondents that the provisions of Articles 20 and Article 45(f) of the Schedule I to the Act are applicable to the Development Agreement as the same is equivalent to the conveyance is also not tenable as the Respondent No.2 has applied Article 45(f) of the Schedule I to the Act to the Development Agreement for levy of the deficit stamp duty to consider the same as conveyance. The Development Agreement could not have been considered as power of attorney for levy of stamp duty under Article 45(f) of the Schedule I to the Act.
12. On scrutiny of the various clauses of the Development Agreement, it appears that none of the clause provides for transfer of leasehold rights which are owned by the Parsvanath Developers Ltd. The recitals of the Development Agreement, however, gives absolute power and freedom to the Petitioner No.1 to develop the land in question and sell the units to be constructed thereon together with profit and loss which may arise on such transactions. Thus, in effect, by execution of the Development Agreement, the Petitioner No.1 has purchased the leasehold rights. The Petitioner No.1 has absolute right over the land in question and in that view of the matter, merely stating in clause 6 of the Development Agreement that it would not amount to transfer of property in any Page 22 of 25 Downloaded on : Tue Feb 16 05:35:09 IST 2021 C/SCA/18165/2016 CAV JUDGMENT manner would not make any difference. The Development Agreement has to be read as a whole, so as to find out the real intention between the parties. Therefore the Development Agreement as sought to be interpreted by the Petitioner No.1 to canvass that as there is no transfer of leasehold rights, the Development Agreement would not amount to conveyance, cannot be accepted.
13. In view of specific clause 9 of the Development Agreement which provides for consideration to be paid within 7 days. Similarly, clause 30 provides for handing over of original title deeds relating to the land to the Petitioner No.1 developer with an intent to create an equitable mortgage in favour of the developer to secure the payments made or to be made by the developer to the leasehold rights owner and also to see that the terms and conditions of the Development Agreement are fulfilled. The said clause also provides to authorize the developer to crate mortgage in its favour. As stated hereinabove, clause 28 provides to authorize the developer to raise finance on the security of the land. Clause 47 of the Development Agreement stipulates that upon payment of the entire consideration stated in clause 9, irrevocable Power of Attorney to be executed in favor of the partners of Petitioner No.1. These clauses clearly show that the Development Agreement is nothing but a conveyance as defined under Section 2(g) of the Act which provides for an instrument by which any interest in any Page 23 of 25 Downloaded on : Tue Feb 16 05:35:09 IST 2021 C/SCA/18165/2016 CAV JUDGMENT property is transferred to a person, then it would amount to conveyance, chargeable to stamp duty under Article 20 of the Schedule I to the Act. Thus, though the Respondent No.2 has not happily worded the impugned order so as to specifically hold that the stamp duty on the Development Agreement is liable to levied under Article 20 of the Schedule I to the Act, reference was made to Article 45(f) of the Schedule I to the Act only because the same was mentioned in the audit objection. In fact, the Development Agreement is nothing but conveyance in name and style of 'development agreement'. In such circumstances, stamp duty on the instrument of 'Development Agreement' is rightly held to be liable to be levied under Article 20 of the Schedule I to the Act and not under Article 5(ga) of the Schedule I to the Act. In view of Section 4 of the Act, as the Article 20 of the Schedule I to the Act is applicable to the Development Agreement, irrevocable Power of Attorney executed between the parties would be liable to be stamped at Rs.100/-
and therefore, the Respondent No.2 has rightly given set off of the amount paid by the Petitioners as per the order dated 15.04.2010
passed by the Dy. Collector, wrongly considering the Power of Attorney under Article 45(f) of the Schedule I to the Act for levy of the stamp duty.
14. In view of the foregoing reasons, the Petition fails and is accordingly dismissed. Interim Page 24 of 25 Downloaded on : Tue Feb 16 05:35:09 IST 2021 C/SCA/18165/2016 CAV JUDGMENT relief, if any, stands vacated. Rule is discharged with no order as to costs.
(BHARGAV D. KARIA, J) FURTHER ORDER After the judgment is pronounced, learned advocate Ms. Dhara Bhatt for the petitioners makes a request to stay the operation, implementation and execution of the judgement. Having regard to what has been stated in the judgement, request of the learned advocate is rejected.
(BHARGAV D. KARIA, J) PALAK Page 25 of 25 Downloaded on : Tue Feb 16 05:35:09 IST 2021