Madras High Court
K.Arokiya Raj vs The Joint Sub Registrar-I on 7 January, 2021
Author: S.S.Sundar
Bench: S.S.Sundar
W.P.No.28162 of 2017
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 07.01.2021
CORAM
THE HONOURABLE MR.JUSTICE S.S.SUNDAR
W.P.No.28162 of 2017
K.Arokiya Raj ... Petitioner
vs.
The Joint Sub Registrar-I,
Chennai North SRO,
Waltax Roax, Chennai. ... Respondent
Prayer: Writ Petition filed under Article 226 of the Constitution of
India praying for issuance of a Writ of Mandamus, to direct the
respondent to assign registration number to the petitioner's
pending document Receipt No.P201700043, dated 27.07.2017 and
to release the original deed of dissolution, dated 24.07.2017 by
considering the petitioner's representation, dated 19.09.2017.
For Petitioner :Mr.N.Manokaran
For Respondent : Mr.B.Kannan
Government Advocate
****
ORDER
This Writ Petition is filed for issuance of a Writ of Mandamus to direct the respondent to assign registration number 1/12 https://www.mhc.tn.gov.in/judis W.P.No.28162 of 2017 to the petitioner's pending document Receipt No.P201700043, dated 27.07.2017 and to release the original deed of dissolution, dated 24.07.2017 by considering the petitioner's representation, dated 19.09.2017.
2.Heard Mr.N.Manokaran, learned Counsel appearing for the petitioner and Mr.B.Kannan, learned Government Advocate appearing for the respondent.
3.Brief facts that are necessary for the disposal of this Writ Petition are as follows:
3.1.The petitioner has started a partnership firm on 17.12.2015, which is registered as Doc.No.2276/IV/2015, to carry on business on Retail Petroleum Products in the name and style of “M/s.JRT Agencies”. It is stated that the partnership firm was also duly registered in compliance with the provisions of the Indian Partnership Act, 1932.
3.2.It is further stated that the petitioner's partner is none 2/12 https://www.mhc.tn.gov.in/judis W.P.No.28162 of 2017 else than his maternal uncle's wife. It is stated that due to some misunderstanding, the partners have decided to resolve the disputes. Since the petitioner's partner, one Mrs.E.Nimmi Madeline, decided to retire from the partnership firm with effect from 24.07.2017, a deed of dissolution was executed on 24.07.2017. As per the deed of dissolution, the petitioner's partner agreed that the petitioner can carry on business as a sole proprietor upon payment of a sum of Rs.50,00,000/- under three demand drafts, dated 24.07.2017 drawn in favour of the petitioner's partner.
3.3.It is also his case that the respondent has directed the petitioner to pay the stamp duty of Rs.50,000/- applying Article 46(B)(ii) of the Schedule I to Indian Stamp Act under the pretext that the dissolution involves partition of immovable properties and the petitioner had paid the stamp duty of Rs.50,195/-.
3.4.However, the respondent, after collecting the stamp duty under Article 46(B)(ii) of the Act, refused to register the document and did not hand over the document under the pretext of 3/12 https://www.mhc.tn.gov.in/judis W.P.No.28162 of 2017 treating the deed of dissolution, dated 24.07.2017, as a deed of conveyance. Aggrieved by the same, the petitioner has come forward with the above Writ Petition.
4.The learned Counsel for the petitioner submitted that after the registration, the respondent has no reason to retain the original document. Relying upon a few judgments of this Court, he has also stated that the respondent is bound to release the original document after completion of registration formalities. It is also stated that the petitioner had paid the stamp duty, as directed by the respondent at the time of receiving the document for registration and that therefore, for extraneous reasons, the respondent has refused to return the document.
5.Counter affidavit has been filed by the respondent inter alia contending that the deed of dissolution, dated 24.02.2017 contains the clause that the petitioner should carry on business, as sole proprietor by paying a sum of Rs.50,00,000/- to the other partner and that therefore, the operative portion of the document indicates that one of the partners had transferred her share to the 4/12 https://www.mhc.tn.gov.in/judis W.P.No.28162 of 2017 petitioner and that therefore, the document is a deed of conveyance. It is also pointed out in the counter affidavit that the document is required to be registered with the stamp duty as per Article 55-D(ii) of the Indian Stamp Act and that therefore, the respondent had impounded the document under Section 33 of the Indian Stamp Act by referring the same to the District Registrar, who is notified as Collector under Section 2(9) read with Section 40 of the Stamp Act to take necessary action, as to the nature of the instrument and to collect the stamp duty.
6.Sum and substance, the stand taken by the respondent is that one of the partners relinquished her right, interest and title in the partnership assets by receiving a sum of Rs.50,00,000/- and the instrument is, therefore, chargeable at rate of 7% on the amount received as per Article 55-D(ii) of Schedule I to the Indian Stamp Act, 1899.
7.It is not in dispute that the petitioner had entered into a partnership agreement with his partner by a deed of partnership, dated 17.12.2015 to carry on business in retail petroleum products. 5/12
https://www.mhc.tn.gov.in/judis W.P.No.28162 of 2017 It is the case of the petitioner that due to difference of opinion, a deed of dissolution of partnership firm, dated 24.07.2017 was entered into, whereby, the petitioner's partner had agreed to retire and it was agreed between the parties that the partnership firm shall be dissolved by mutual consent with effect from 24.07.2017. It is also agreed that that the petitioner may carry on the partnership business as a sole proprietor, as he had paid a sum of Rs.50,00,000/- to his partner.
8.At the end of dissolution deed, the parties have declared that the partnership firm had not owned or possessed any immovable properties and there is no transfer of any immovable properties under the deed of dissolution. However, the receipt of a sum of Rs.50,00,000/- by way of three demand drafts is acknowledged by the petitioner's partner for relinquishing her right, title, interest in the dissolved partnership firm, goodwill, fixtures, fittings, book and other debts, benefits of contracts and all effects thereof to be held by the petitioner's use.
9.The learned Government Advocate relied upon Clause-3 6/12 https://www.mhc.tn.gov.in/judis W.P.No.28162 of 2017 of the deed of dissolution, dated 24.07.2017, which reads as follows:
“3.The Second Party hereby acknowledges the receipt of the sum of Rs.50 Lakhs in the manner stated above and in consideration thereof hereby assign and transfers to the First Party all her share and other right, title and interest in the said dissolved partnership, the goodwill, fixtures, fittings, book and other debts, benefits of contracts and all effects thereof to have and to hold the same unto the use of the First Party absolutely and forever.”
10.Having regard to the admitted facts, this Court is unable to countenance the arguments of the learned Government Advocate and the stand taken by the respondent in the counter affidavit. When one of the partners to the partnership firm wish to retire, the partnership firm comes to end. By dissolution of the firm, the partnership come to an end by the deed and the partners of the partnership firm agreed to settle the accounts.
11.The outgoing partner has relinquished her right in the partnership firm upon receipt of a sum of Rs.50,00,000/-, so that the right, title, interest of the retired partner in the dissolved partnership firm along with goodwill, fixtures, fittings, book and other debts, benefits of contracts etc., are transferred to the other 7/12 https://www.mhc.tn.gov.in/judis W.P.No.28162 of 2017 partner.
12.As per Article 46(B), when the dissolution involves partition of movable properties, the document attracts stamp duty at the rate 1% of the market value of the property. It is not in dispute that the petitioner has paid the stamp duty at the rate of 1% of the market value assessed as per the dissolution deed. In the document, there is no transfer of immovable properties. The entire assets, probably after taking accounts, has been shown in the document, so as to enable the petitioner to carry on business, as a sole proprietor. Therefore, this Court finds no reason, as to how the respondent treats the document, as one involving transfer of immovable properties.
13.The learned Counsel for the petitioner relied upon an order of learned Single Judge of this Court in the case of M/s.Sheela Clinic and others vs the Chief Controlling Revenue Authority and another, reported in 2017-5-L.W.99, whereas, similar facts have been dealt with by the learned Single Judge in the following lines:
8/12
https://www.mhc.tn.gov.in/judis W.P.No.28162 of 2017 “12.By any stretch of imagination, the release made out to the 4th petitioner herein can be construed as a deed of conveyance. The reason given by the respondents to invoke Article 55(D)(ii) is not applicable to the facts of this case. The outgoing partner, i.e. the 4th petitioner is a family member and the document had been presented for registration pursuant to the Deed of Retirement dated 30.06.2003. The 1st respondent has completely misinterpreted the word 'release' with 'conveyance'. If any document with regard to parting of money and property in a partnership firm is based on a Deed of Retirement, then, it has got to be construed as only 'Release' and not 'Conveyance'. Based on the Deed of Retirement, the 4th petitioner has a share in the property.
13. For better appreciation of the case, Article 55(D)(i) of Schedule I relating to stamp duty on instruments under the Indian Stamp Act, 1899, explaining the terms of Release Deed between partners, who are family members, is extracted hereunder:
A release of right by a partner or partners in favor of other partners relinquishing his or their rights over the immovable property when the release is between family members who constitute the partnership or when the property is movable. Three rupees for every rupees hundred or part thereof of the market value of the immovable property which is the subject matter of release.
14. In the light of above discussion, I am of the view that the Release Deed entered into among partners, presented for registration cannot be construed as a Deed of Conveyance. As the 4th petitioner gets the benefit of amount and share in the properties based on the Deed of Retirement, the authorities cannot take the date of presentation of document in respect of the properties in terms of the Deed of Agreement subsequent to the date of Agreement as one of conveyance and demand stamp value as one of 'conveyance' only under Article 55-D(i) of the Schedule I to the said Act.
15. As stated supra, pursuant to the Deed of Retirement, properties have been settled in favour of the 4th petitioner and that the partnership consists of family members. The contention of the respondents that Article 55 D(ii) of Schedule I to the Act and Section 23 of the Act for the purpose of registering the Release Deed may not be correct.
9/12 https://www.mhc.tn.gov.in/judis W.P.No.28162 of 2017
16. The contention of the learned Senior Counsel appearing for the petitioners is also supported by a judgment of a Division Bench of this Court in the case of T.K.Subramaniam Vs. Chief Controlling Revenue Authority (Stamps) and Inspector General of Registration, Madras, reported in AIR 1987 Madras 260, wherein the Division Bench has held that even though the deed was stamped as a released deed, the release deed was not one among the co-owners, because, at the time of execution of the release deed, the releasors were not co-owners with the releasees. Though it has been styled as a release deed, and the authority held the same as conveyance, having perused the deed of dissolution as well as release deed, the Division Bench observed that even though, it cannot, by any stretch of imagination be treated as a conveyance of the properties, because the releasors had no right to the properties at the time of the release, the document cannot be treated as conveyance and stamp cannot be demanded on that basis. The Division Bench further observed that the view taken by the authorities that the document in question is a document of conveyance, is not correct and that the contentions of the appellant therein that it was release deed, was accepted by the Division Bench.
17. Similar view has been taken by another Division Bench of this Court in the decision reported in AIR 1994 Madras 317 = 1994 (1) LW 316 = 1994 (2) MLJ 1 = 1994 Writ L.R. 476 = MANU/TN/0046/1994 (T.T.Meenakshi Achi and others Vs. The District Registrar, Coimbatore and another), in which, the Division Bench of this Court followed the decision of the Apex Court reported in 1966 (3) SCR 400 = MANU/SC/0281/1966 (Narayanappa A. Vs. Bhaskara Krishnappa). The Division Bench held that in case of settlement of interest among the partners, it is settled position of law that there is no transfer of interest, nor there is any conveyance and the document presented cannot be construed to be a deed of conveyance.”
14.In the present case also, it is the case of the respondent that the deed of dissolution involves transfer or conveyance of immovable properties and hence, this Court 10/12 https://www.mhc.tn.gov.in/judis W.P.No.28162 of 2017 following the judgment relied upon by the learned Counsel for the petitioner, is unable to accept the case of the respondent in the counter affidavit refusing to register the document demanding stamp duty by treating the same as a document of conveyance involving transfer of immovable properties.
15.Therefore, the Writ Petition is allowed. The respondent is directed to return the original dissolution deed, dated 24.07.2017 after duly registering the same within a period of two weeks from the date of receipt of a copy of this order. Even if the document is handed over to the Collector for assessment of nature of instrument and the stamp duty payable, the respondent is directed to get the documents from the Collector and hand it over the same to the petitioner after duly registering it without any delay. No costs.
Index :Yes/No 07.01.2021
cmr
To
The Joint Sub Registrar-I,
Chennai North SRO,
Waltax Roax, Chennai.
11/12
https://www.mhc.tn.gov.in/judis
W.P.No.28162 of 2017
S.S.SUNDAR, J.
cmr
W.P.No.28162 of 2017
07.01.2021
12/12
https://www.mhc.tn.gov.in/judis