Vijaybhai Zinabhai Prajapati vs State Of Gujarat on 10 August, 2018

[Cites 30, Cited by 0]

Gujarat High Court

Vijaybhai Zinabhai Prajapati vs State Of Gujarat on 10 August, 2018

Bench: A.J.Desai

      C/SCA/4483/2014                                               CAV JUDGMENT




     IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

           SPECIAL CIVIL APPLICATION                      NO.4483 of 2014
                             WITH
           SPECIAL CIVIL APPLICATION                      NO.4484 of 2014
                             WITH
           SPECIAL CIVIL APPLICATION                      NO.4485 of 2014
                             WITH
           SPECIAL CIVIL APPLICATION                      NO.4486 of 2014
                             WITH
           SPECIAL CIVIL APPLICATION                      NO.4487 of 2014

FOR APPROVAL AND SIGNATURE :


HONOURABLE MR.JUSTICE A.J.DESAI                                         Sd/-

=========================================

1. Whether Reporters of Local Papers may be NO allowed to see the judgment ?

2. To be referred to the Reporter or not ? NO

3. Whether their Lordships wish to see the fair NO copy of the judgment ?

4. Whether this case involves a substantial NO question of law as to the interpretation of the constitution of India, 1950 or any order made thereunder ?

=========================================================== VIJAYBAHI ZINABHAI PRAJAPATI Versus STATE OF GUJARAT ========================================= Appearance :

MR HRIDAY BUCH for the Petitioners.

MR HARDIK SONI, AGP for the Respondents.

========================================= CORAM : HONOURABLE MR.JUSTICE A.J.DESAI Date : 10/08/2018 COMMON CAV JUDGMENT Page 1 of 28 C/SCA/4483/2014 CAV JUDGMENT

1. The petitioners are common in all these petitions and since they have raised common issues, the same were heard together and are being disposed of by this common judgment. In the present group of petitions, the petitioners have challenged the order dated 7.8.2013 passed by the Additional Collector, Stamp Duty, Valsad as well as the order dated 29.1.2014 passed by the Chief Controlling Revenue Authority, Gujarat State as well as recovery notice dated 5.2.2014 issued by the Collector, Stamp Duty, Valsad. The petitioners have also prayed for a direction to the respondents to refund the amounts that were deposited by the petitioner at the time of filing of the appeal.

Following prayers have been made in each petition :-

"Special Civil Application No.4483 of 2014 (A) Your Lordships may be pleased to Admit and allow this petition;

(B) Your Lordships may be pleased to issue a writ of mandamus or a writ of certiorari or a writ in the nature of mandamus or a writ in the nature of certiorari or any other appropriate writ, order or direction, quashing and setting aside the impugned Order dated 7.8.2013 passed by the Additional Collector, Stamp Duty, Valsad (Annexure-C) as well as the Order dated 29.1.2014 passed by the Chief Controlling Revenue Authority, Gujarat State (Annexure-B) as well as the recovery notice dated 5.2.2014 issued by the Collector, Stamp Duty, Valsad (Annexure-A) and further be pleased to direct the respondents to refund the amount Rs.2,45,075/- deposited by the petitioner at the time of Page 2 of 28 C/SCA/4483/2014 CAV JUDGMENT filing of the appeal in the interest of justice;

OR in the alternative (C) Your Lordships may be pleased to issue a writ of mandamus or a writ of certiorari or a writ in the nature of mandamus or a writ in the nature of certiorari or any other appropriate writ, order or direction, quashing and setting aside the impugned Order dated 7.8.2013 passed by the Additional Collector, Stamp Duty, Valsad (Annexure-C) as well as the Order dated 29.1.2014 passed by the Chief Controlling Revenue Authority, Gujarat State (Annexure-B) as well as the recovery notice dated 5.2.2014 issued by the Collector, Stamp Duty, Valsad (Annexure-A) and further be pleased to remand the matter to the respondent No.2 to register the Appeal and decide the same in accordance with law;

(D) Pending admission, hearing and final disposal of this petition, Your Lordship be pleased to stay the operation and/or implementation and/or execution of the impugned Order dated 7.8.2013 passed by the Additional Collector, Stamp Duty, Valsad (Annexure-C) as well as the Order dated 29.1.2014 passed by the Chief Controlling Revenue Authority, Gujarat State (Annexure-

B) as well as the recovery notice dated 5.2.2014 issued by the Collector, Stamp Duty, Valsad (Annexure-A) in the interest of justice;

Special Civil Application No.4484 of 2014 (A) Your Lordships may be pleased to Admit and allow Page 3 of 28 C/SCA/4483/2014 CAV JUDGMENT this petition;

(B) Your Lordships may be pleased to issue a writ of mandamus or a writ of certiorari or a writ in the nature of mandamus or a writ in the nature of certiorari or any other appropriate writ, order or direction, quashing and setting aside the impugned Order dated 7.8.2013 passed by the Additional Collector, Stamp Duty, Valsad (Annexure-C) as well as the Order dated 29.1.2014 passed by the Chief Controlling Revenue Authority, Gujarat State (Annexure-B) as well as the recovery notice dated 5.2.2014 issued by the Collector, Stamp Duty, Valsad (Annexure-A) and further be pleased to direct the respondents to refund the amount Rs.2,59,775/- deposited by the petitioner at the time of filing of the appeal in the interest of justice;

OR in the alternative (C) Your Lordships may be pleased to issue a writ of mandamus or a writ of certiorari or a writ in the nature of mandamus or a writ in the nature of certiorari or any other appropriate writ, order or direction, quashing and setting aside the impugned Order dated 7.8.2013 passed by the Additional Collector, Stamp Duty, Valsad (Annexure-C) as well as the Order dated 29.1.2014 passed by the Chief Controlling Revenue Authority, Gujarat State (Annexure-B) as well as the recovery notice dated 5.2.2014 issued by the Collector, Stamp Duty, Valsad (Annexure-A) and further be pleased to remand the matter to the respondent No.2 to register Page 4 of 28 C/SCA/4483/2014 CAV JUDGMENT the Appeal and decide the same in accordance with law;

B) as well as the recovery notice dated 5.2.2014 issued by the Collector, Stamp Duty, Valsad (Annexure-A) in the interest of justice;

Special Civil Application No.4485 of 2014 (A) Your Lordships may be pleased to Admit and allow this petition;

(B) Your Lordships may be pleased to issue a writ of mandamus or a writ of certiorari or a writ in the nature of mandamus or a writ in the nature of certiorari or any other appropriate writ, order or direction, quashing and setting aside the impugned Order dated 7.8.2013 passed by the Additional Collector, Stamp Duty, Valsad (Annexure-C) as well as the Order dated 29.1.2014 passed by the Chief Controlling Revenue Authority, Gujarat State (Annexure-B) as well as the recovery notice dated 5.2.2014 issued by the Collector, Stamp Duty, Valsad (Annexure-A) and further be pleased to direct the respondents to refund the amount Rs.3,00,200/- deposited by the petitioner at the time of filing of the appeal in the interest of justice;

Page 5 of 28 C/SCA/4483/2014 CAV JUDGMENT

B) as well as the recovery notice dated 5.2.2014 issued by the Collector, Stamp Duty, Valsad (Annexure-A) in the interest of justice;

Special Civil Application No.4486 of 2014 (A) Your Lordships may be pleased to Admit and allow this petition;

Page 6 of 28 C/SCA/4483/2014 CAV JUDGMENT

(B) Your Lordships may be pleased to issue a writ of mandamus or a writ of certiorari or a writ in the nature of mandamus or a writ in the nature of certiorari or any other appropriate writ, order or direction, quashing and setting aside the impugned Order dated 7.8.2013 passed by the Additional Collector, Stamp Duty, Valsad (Annexure-C) as well as the Order dated 29.1.2014 passed by the Chief Controlling Revenue Authority, Gujarat State (Annexure-B) as well as the recovery notice dated 5.2.2014 issued by the Collector, Stamp Duty, Valsad (Annexure-A) and further be pleased to direct the respondents to refund the amount Rs.6,65,250/- deposited by the petitioner at the time of filing of the appeal in the interest of justice;

Page 7 of 28 C/SCA/4483/2014 CAV JUDGMENT

B) as well as the recovery notice dated 5.2.2014 issued by the Collector, Stamp Duty, Valsad (Annexure-A) in the interest of justice;

Special Civil Application No.4487 of 2014 (A) Your Lordships may be pleased to Admit and allow this petition;

(B) Your Lordships may be pleased to issue a writ of mandamus or a writ of certiorari or a writ in the nature of mandamus or a writ in the nature of certiorari or any other appropriate writ, order or direction, quashing and setting aside the impugned Order dated 7.8.2013 passed by the Additional Collector, Stamp Duty, Valsad (Annexure-C) as well as the Order dated 29.1.2014 passed by the Chief Controlling Revenue Authority, Gujarat State (Annexure-B) as well as the recovery notice dated 5.2.2014 issued by the Collector, Stamp Duty, Valsad (Annexure-A) and further be pleased to direct the respondents to refund the amount Rs.2,45,075/- deposited by the petitioner at the time of filing of the appeal in the interest of justice;

Page 8 of 28 C/SCA/4483/2014 CAV JUDGMENT

B) as well as the recovery notice dated 5.2.2014 issued by the Collector, Stamp Duty, Valsad (Annexure-A) in the interest of justice;"

2. As far as the challenge to the applicability to the order dated 29.1.2014 passed by the Chief Controlling Revenue Authority, Gujarat State is concerned, the same has been passed rejecting the appeal filed under Section 53 (1) of the Gujarat Stamp Act, 1958 on the ground of having no power to condone the delay Page 9 of 28 C/SCA/4483/2014 CAV JUDGMENT in preferring the appeals, which was preferred challenging the order dated 7.8.2013 passed by the Additional Collector, Stamp Duty, Valsad.

3. The issue with regard to the powers of Appellate Authority under the Stamp Act to condone the delay in preferring the appeal was raised and simultaneously, the order dated 7.8.2013 passed by the Additional Collector, Stamp Duty, Valsad was challenged, the matter came to be admitted and rule was issued. During the pendency of the present writ petitions, the issue with regard to the powers of Appellate Authority under the Stamp Act to condone the delay in preferring the appeal came to be decided by the Full Bench vide judgment and order dated 13.3.2015 in Special Civil Application No.18542 of 2014 with Special Civil Application No.13530 of 2014. It was held by the Full Bench that the provisions are of mandatory in nature and delay cannot be condoned by any authority or by the Court. However, it was clarified that the Court can examine the merits of an order of the matter by exercising its power under Article 226 of the Constitution of India.

4. In view of the above position of law, this Court has decided to examine the legality and validity of the order dated 7.8.2013 passed by the Additional Collector, Stamp Duty, Valsad by which the petitioners have been asked to pay additional stamp duty as well as fine in all these petitions.

5. The facts emerge from the record are as under :-

6. That all the three petitioners created a partnership firm, namely, Shivshakti Developers by executing Partnership Deed Page 10 of 28 C/SCA/4483/2014 CAV JUDGMENT on 22.8.2011. The partnership amongst the three petitioners was created to construct residential apartments, row houses etc. in the name of Shivshakti Township.

7. Shivshakti Developers through its partners executed different Sale Deeds for different lands from one Smitaben Jitendra Motani along with her different family members for the consideration referred in the Sale Deeds. The Sale Deeds were executed on 18.5.2012 for different considerations for different piece of land. The Sale Deeds - Conveyances were executed by affixing appropriate stamp duties under the provisions of the Gujarat Stamp Act, 1958 (hereinafter referred to as 'the Stamp Act'). The same was registered with the competent Authority under the provisions of Registration Act, 1908.

8. The petitioners, who are partners of Shivshakti Developers executed "Rectification Deeds" on 30.3.2013 rectifying the mistake committed while executing the Conveyance on 18.5.2012 that though the properties were jointly purchased by the partners of Shivshakti Developers, the Sale Deeds were executed in the name of Shivshakti Developers. The said Rectification Deeds were executed by the present petitioners and the original owner/s of each property with regard to each transaction. The Rectification Deeds were submitted to the authority to correct / rectify the mistake in the Conveyance Deeds.

9. Having received the Rectification Deeds, a notice came to be issued to the petitioners at the instance of Additional Collector, Stamp Duty asking them to explain why each Rectification Deed should not be treated as a 'conveyance deed', defined under the Stamp Act and why such deeds should not be Page 11 of 28 C/SCA/4483/2014 CAV JUDGMENT charged as per the provisions of the Stamp Act. The petitioners responded to the notice and were heard by the Additional Collector, Stamp Duty.

10. After considering the submissions of the petitioners and examining the documents in question, the Additional Collector, Stamp Duty came to the conclusion that each rectification deed is required to be treated as conveyance as defined under the Stamp Act since the name of the owner has been changed from Shivshakti Developers to the name of the petitioners. It was held that each Rectification Deed is required to be affixed stamp duty at the same rate which was originally used when the property was sold to Shivshakti Developers.

11. The said decision was challenged by way of filing appeals which were time barred and the same were rejected on the same ground. The question of powers to condone the delay has been decided by the Full Bench as stated herein above. Therefore, this Court has to examine the legality and validity of the order dated 7.8.2013 of the Additional Collector, Stamp Duty.

12. Pursuant to the notice issued by this Court, the respondent No.3 i.e. The Collector (Stamp Duty), Valsad has filed affidavit-in-reply and opposed grant of any relief as prayed for.

13. Mr. Hriday Buch, learned advocate appearing for the petitioners would submit that Shivshakti Developers is a Partnership Firm and a Partnership Deed was executed on 22.8.2011. The Partnership Deed was executed amongst three persons, namely, Vijay Zinabhai Prajapati, Jitendra Shantilal Motani and Bhavik Dolatrai Mehta (petitioners herein). By taking me Page 12 of 28 C/SCA/4483/2014 CAV JUDGMENT through the Sale Deeds executed on 18.5.2012, he would submit that the names of above referred three partners are shown as purchasers of the property. However, the same has been shown as if the property is being purchased by Shivshakti Developers. The vendor in each petitions is common i.e. Smitaben whereas joint vendors for each property are her family members. The stamp duty which is required to be affixed on the said conveyance was properly applied and at no point of time, the authority raised any dispute with regard to the value of the property. Accordingly, the document was registered with the concerned Authority. He would further submit that when the present petitioners who had jointly purchased the property found that a mistake has been committed by them by referring the purchaser i.e. Shivshakti Developers, they executed Rectification Deeds with the same vendors with regard to each property on 30.3.2013 and the property was not intended to be purchased by Shivshakti Developers but the same was intended to be jointly purchased by the present petitioners. By taking me through the Rectification Deeds dated 30.3.2013, he would submit that a request was made to delete the name of the 'partnership firm' as a vendee and the same would be replaced by showing the names of the present petitioners. He would further submit that neither the size of the property is changed nor there is change of hands, if the Rectification Deed is perused. Since it was a rectification deed, stamp of Rs.100/- was applied on the same.

14. He would further submit that Rectification Deed cannot be treated as a Conveyance as defined under Section 2 (g) of the Stamp Act since the immovable property is not transferred to / or vested in any other person than the present petitioners as well as the said Rectification Deed could be treated as inter-vivos transfer.

Page 13 of 28 C/SCA/4483/2014 CAV JUDGMENT

Mr. Buch would further submit that only because the name of the purchaser i.e. Partnership Firm is changed in the name of the original partners, the same cannot be treated as transfer of property as defined under the Transfer of Property Act. In support of his submissions, he has relied upon the decision of the Hon'ble Supreme Court in the case of Prasad Technology Park (P) Limited v. Sub-Registrar and others, (2006) 1 SCC 473. He would further submit that even the Rectification Deed cannot be treated as an instrument as defined under Section 2 (l) of the Stamp Act since by executing the said Deed, neither any right or liability is created, transferred, extended, extinguished etc.

15. He would further submit that Partnership Firm is not a distinct legal entity and, therefore, the partners of firm are co- owners of the property of the firm and, therefore, in the present case, when partners of Shivshakti Developers (A Partnership Firm) have sought some clarification with regard to the property purchased jointly in the name of Partnership Firm, the Authority cannot and should not have treated such a document as Conveyance and ought not to have asked the petitioners to affix the stamp as per Article 20 of the Schedule-I to the Stamp Act. In support of his submissions, he has relied upon the decision of the Hon'ble Supreme Court in the case of V. Subramaniam v. Rajesh Raghuvandra Rao, (2009) 5 SCC 608.

16. He would further submit that there was no ill-intention on the part of the petitioners to rectify the name of the purchasers of the property since there was no gain to any of the Partners who have ultimately purchased the property in their joint name or the original vendor. He would further submit that if the petitioners who were partners of Shivshakti Developers, would have dissolved Page 14 of 28 C/SCA/4483/2014 CAV JUDGMENT the Partnership, the distribution of the assets of the partnership firm would not have treated as transfer of Firms / Assets. Dealing with such a situation with regard to applicability of Income Tax Act, the Hon'ble Supreme Court in the case of M/s. Malabar Fisheries Company, Calicut v. Commissioner of Income Tax, Kerala, (1979) 4 SCC 766 has held that such distribution cannot be taxed since it is not a transfer of assets of the partnership firm. He would further submit that Partnership Firm has neither bought any new property or relinquished right qua part of the property or has changed any of the partners by executing Rectification Deed and, therefore, the respondent authority ought not to have treated the Rectification Deed as a conveyance and ought not to have asked the petitioners to pay the deficit stamp duty under Article 20 of Schedule-I of the Stamp Act. In support of his submissions, he has relied on the decision of the Hon'ble Supreme Court in the case of S. V. Chandra Pandian and others v. S. V. Sivalinga Nadar and others, (1993) 1 SCC 589. He would submit that it has been held by the Hon'ble Supreme Court that the Partnership Firm is compendium of certain persons. However, upon dissolution of the said partner, share of individual person would be given to him and the same cannot be treated as a transfer.

17. Mr. Buch has further relied upon the unreported decision of the Kerala High Court in the case of M. S. Beena W/o M. K. Rajeendran v. District Registrar (General), Kozhikode delivered in Writ Petition (Civil) No.3280 of 2012 dated 26.5.2014. He would further submit that if the rectification is with regard to some mistake committed at the time of execution of the document, the same cannot be additionally stamped. By relying upon the decision in the case of L. Gopal Singh v. Inspector General Stamps and Registration, Hyderabad and others Page 15 of 28 C/SCA/4483/2014 CAV JUDGMENT delivered by the High Court of Judicature, Andhra Pradesh at Hyderabad in Writ Petition No.33717 of 2010 dated 4.6.2012, he would submit that it was held that change of period with regard to lease deed though subsequently changed, but did not extend the period, would not be liable to be additionally stamped. He, therefore, would submit that the impugned order may be quashed and set aside and the present petition may be allowed.

18. On the other hand, Mr. Hardik Soni, learned Assistant Government Pleader appearing for the respondents has vehemently submitted that the authority after giving opportunity of hearing to all concerned, has passed the impugned order in accordance with law which does not call for any interference. He would submit that when the first Sale Deed was executed by the present petitioners, all of them were aware that the property is being purchased by a Partnership Firm, namely, Shivshakti Developers. When the property was registered with the Authority, it was shown in the name of Shivshakti Developers as the purchaser. He would further submit that the petitioners have executed Sale Deeds in the capacity of the partners of the Partnership Firm. He, therefore, would submit that it is not correct to suggest that it was a mistake on the part of the petitioners that though the property was purchased by them jointly, name of Shivshakti Developers, a Partnership Firm was shown as purchaser. He would further submit that the property was purchased by the Partnership Firm whereas by executing the Rectification Deeds, the petitioners have tried to change the ownership of the property. Therefore, it is required to be treated as transfer of the property and is required to be treated as conveyance as defined under the provisions of the Stamp Act. He would further submit that the property which was registered in the year 2012 stood in the name of a Partnership Firm Page 16 of 28 C/SCA/4483/2014 CAV JUDGMENT and if Rectification Deed is accepted, as if the same was a mistake, the ownership of the said property would change and would be treated as jointly held by the present petitioners. Therefore, it is a clear case of transfer of ownership and as defined under the Stamp Act, the same is required to be treated as conveyance and be stamped under Article 20 of Schedule to the Stamp Act.

19. He would further submit that new rights have been created in favour of the present petitioners without paying any stamp by executing a document by giving nomenclature of 'Rectification Deed'. By taking me through the Sale Deed, he would submit that wherever there is a reference of purchaser, the name has been shown as Shivshakti Developers. The petitioners have purchased the property in the capacity of the partners in the said Sale Deed. Therefore, the Rectification Deed cannot be treated as if some minor mistakes are to be corrected. He would submit that the decision relied upon by Mr. Buch in the case of Prasad Technology Park (P) Limited (Supra) is not applicable in the facts of the present case. He would submit that in the said case, only the name of the Company was changed whereas in the present case, the entire entity is changed. He would submit that in the decision in the case of M. S. Beena W/o M. K. Rajeendran (Supra), only the change in the document was with regard to some right and not with regard to the title of the property. He, therefore, would submit that the petitions be dismissed.

20. I have heard learned advocates appearing for the respective parties. It is not in dispute that a partnership firm in the name of Shivshakti Developers came in existence by creating a Partnership Deed dated 22.8.2011. The petitioners herein were the partners who had given the name of the Partnership Firm as Page 17 of 28 C/SCA/4483/2014 CAV JUDGMENT Shivshakti Developers. The Sale Deed in each case was executed on 18.5.2012 where the property was purchased in the name of Shivshakti Developers by showing the names of the present petitioners as its partners. As stated herein above, the common vendor in each petition is Smitaben Jitendra Motani whereas other vendors are her family members. The Sale Deeds were registered with the Authority. It is true that the petitioners have signed the said document as a member of the Partnership Firm, namely, Shivshakti Developers.

21. The Rectification Deeds came to be executed on 30.3.2013 by which the present petitioners who were the only partners of Shivshakti Developers requested the Authority to correct the name of the purchaser of the property by deleting the name of the Partnership Firm through its partners (i.e. the present petitioners themselves) and requested to refer the property as if the same has been jointly purchased by them. It appears that the original vendor themselves have agreed for rectification. It is pertinent to note that by executing the Rectification Deed, neither the size of the property is changed nor there is deletion of the name of the partners or addition of any other person. Original 3 partners would have remained joint owners of the properties, if the Authority would have permitted to rectify the mistake.

22. Section 2 (g) and 2 (l) of the Stamp Act reads as under :-

              "(g)      "Conveyance" includes :-

              (i)       a conveyance on sale,

              (ii)      every instrument,

              (iii)     every decree or final order of any Civil Court,



                                     Page 18 of 28
 C/SCA/4483/2014                                            CAV JUDGMENT




        (iv)      every order made by the National Company Law

Tribunal under Section 232 of the Companies Act, 2013 in respect of a scheme for reconstruction of the company or companies involving merger of 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 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 (Guj. X of 1962), or a Corporation of an association formed and registered under the Bombay Non-Trading Corporation Act, 1959 (Bom. XXVI of 1959) or the Gujarat Ownership Flat Act, 1973 (Guj. 13 of 1973) 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; Explanation, - For the purposes of this clause, an instrument whereby a co-owner of any property transfers his interest to another co-owner of the property and which is not an instrument of partition shall be deemed to be an instrument by which property is transferred inter vivos;] "(l) "instrument" includes every document by which any right or liability is, or purports to be created, Page 19 of 28 C/SCA/4483/2014 CAV JUDGMENT transferred, limited, extended, extinguished or recorded, but does not include a bill of exchange, cheque, promissory note, bill of lading, letter of credit, policy of insurance, transfer of share, debenture, proxy and receipt;"

23. In the case of Prasad Technology Park (P) Limited v. Sub-Registrar and others, (2006) 1 SCC 473, the Hon'ble Supreme Court has held in paragraphs 11 to 16 as under :-

"11. The said lease indisputably was governed by Section 105 of the Transfer of Property Act. By reason of the supplementary agreement, a restrictive covenant has been amended in terms whereof the Appellant herein was permitted to carry on the business of a Technology Park instead of manufacture of readymade garments/leather garments. Only because the name of the company was changed, the same would not mean that a fresh transaction took place. Having regard to the change in the name of the company, the Appellant's name was sought to be substituted in the original agreement. The period of the lease, the quantum of the premium paid and other terms and conditions remained unaltered except the restriction contained in clause 2(q) of the said deed, was removed. By reason of mere change of user from carrying on one business to another, it is trite, a fresh transaction does not take place. The terms and conditions of the lease can be changed by mutual consent. Unless the essential ingredients thereof as contained in Section 105 of the Transfer of Property Act are not altered, it cannot be said that the parties to the contract entered into a fresh transaction. The Third Respondent merely reserved unto itself a right of reentry on expiry of the said period of eleven years. It could in Page 20 of 28 C/SCA/4483/2014 CAV JUDGMENT terms of the covenant of the lease also extend the period of tenancy or terminate the same. Unless the lease itself came to an end, the third respondent did not have any right to re-convey the property. By reason of mere change in the name of the company "Prasad Garments Pvt. Ltd." the erstwhile lessee also cannot be held to have transferred its leasehold interest in favour of the Appellant herein.

12. Section 2(1)(j) of the Act, defines 'instrument', to mean : "2(1)(j) "Instrument" includes every document and record created or maintained in or by an electronic storage and retrieval device or media by which any right or liability is, or purports to be, created, transferred, limited, extended, extinguished or recorded;"

13. Execution of an instrument which would attract payment of stamp duty in terms of Article 5 (d) of the Act must involve transfer of the property or otherwise a right or liability may inter alia be created, transferred etc., as envisaged in Section 3 thereof. Once it is held that the supplementary agreement is neither a deed of lease nor a deed of sale within the meaning of Section 105 or Section 54 of the Transfer of Property Act, as the case may be, Article 5 (d) of the schedule to the Act will have no application. If Article 5 (d) has no application, indisputably the residuary clause contained in Article 5 (f)(i) would have. The Appellant admittedly paid the stamp duty in terms thereof.

14. It is now well settled that for the purpose of levy of stamp duty, the real and true meaning of the instrument must be ascertained. [See The Madras Page 21 of 28 C/SCA/4483/2014 CAV JUDGMENT Refineries Ltd. v. The Chief Controlling Revenue Authority, Board of Revenue, Madras (1977) 2 SCC 308].

15. The High Court held that 'the supplementary lease agreement cannot be said to be an instrument whereunder the Appellant-Company claims certain leasehold from the Board'; but having did so, the High Court was not correct in holding that it is liable to pay the stamp duty.

16. Having regard to the fact that the entity of the Appellant cannot be said to be totally different from Prasad Garments Pvt. Ltd. and as by reason of the supplementary agreement, no fresh transaction has been entered into, the impugned judgment cannot be sustained, which is set aside accordingly. The appeal is allowed. The Appellant shall be entitled to costs."

24. In the present case, the Authority has miserably failed to establish any ill-intention on the part of any of the petitioners in rectifying the name from a Partnership Firm to the partners. As observed in the decision in the case of The Madras Refineries Ltd. v. The Chief Controlling Revenue Authority, Board of Revenue, Madras, 1977 (2) SCC 308, the meaning of the 'instrument' is required to be ascertained. As stated herein above, if the instrument, namely, Rectification Deed is perused, no adverse inference can be drawn against the petitioners that the property is being jointly transferred to the original partners of the Firm with some ulterior motives.

25. In the case of V. Subramaniam v. Rajesh Raghuvandra Rao, (2009) 5 SCC 608, the Hon'ble Supreme Court in paragraph 11 has held as under :-

Page 22 of 28 C/SCA/4483/2014 CAV JUDGMENT

"11. It may be mentioned that a partnership firm, unlike a company registered under the Companies Act, is not a distinct legal entity, and is only a compendium of its partners. Even the registration of a firm does not mean that it becomes a distinct legal entity like a Company. Hence the partners of a firm are co-owners of the property of the firm, unlike shareholders in a company who are not co-owners of the property of the Company."

26. In the case of L. Gopal Singh v. Inspector General Stamps and Registration, Hyderabad and others (Supra), the High Court of Judicature, Andhra Pradesh at Hyderabad has held in paragraph 6 as under :-

"6. The necessity has arisen for the petitioner to seek rectification of the lease deed in the context of the period of lease. Therefore, a deed of rectification, just mentioning the period of 30 years even while keeping other terms of lease in tact, was executed and presented for registration. Respondent No.3 has calculated the stamp duty payable for lease deed for a period of 30 years in respect of the said property at Rs.5,29,335/- and registration fee at Rs.12,295/-. Had the lease deed for a period of 30 years been executed for the first time, there would certainly have been justification for respondent No.3 in levying the entire amount referred to above. The very deed of rectification discloses that there existed a lease deed for a period of 15 years and the rectification has the effect of extending Page 23 of 28 C/SCA/4483/2014 CAV JUDGMENT the term of lease by another 15 years. Respondent No.3, at the most, could have collected the stamp duty and registration charges for the extended period may be in terms of clause (v) of Article 31 of the Act. The reason is that the parameters for determination of the stamp duty on lease deed fluctuate depending upon the duration of the lease. Once the petitioner has paid the stamp duty and registration charges for the lease for a period of 15 years, the same was required to be taken into account. There was no justification for respondent No.3 in collecting the stamp duty for the entire period on the deed of rectification."

27. In the case of S. V. Chandra Pandian and others v. S. V. Sivalinga Nadar and others, (1993) 1 SCC 589, the Hon'ble Supreme Court has held that on dissolution of the Partnership, distribution of residue among partners and distribution of the property cannot be treated as transfer. Paragraph 16 of the said decision reads as under :-

"16. From the foregoing discussion it seems clear to us that regardless of its character the property brought into stock of the firm or acquired by the firm during its subsistence for the purposes and in the course of the business of the firm shall constitute the property of the firm unless the contract between the partners provides otherwise. On the dissolution of the firm each partner becomes entitled to his share in the profits, if any, after the accounts are settled in accordance with Section 48 of the Partnership Act. Thus in the entire asset of the firm all the partners have an interest albeit Page 24 of 28 C/SCA/4483/2014 CAV JUDGMENT in proportion to their share and the residue, if any, after the settlement of accounts on dissolution would have to be divided among the partners in the same proportion in which they were entitled to a share in the profit. Thus during the subsistence of the partnership a partner would be entitled to a share in the profits and after its dissolution to a share in the residue, if any, on settlement of accounts. The mode of settlement of accounts sat out in Section 48 clearly indicates that the partnership asset in its entirety must be converted into money and from the pool the disbursement has to be made as set out in clause (a) and sub-clauses (i), (fi) and

(iii) of clause (b) and thereafter if there is any residue that has to be divided among the partners in the proportions in which they were entitled to a share in the profits of the firm. So viewed, it becomes obvious that the residue would in the eye of law be moveable property i.e. cash, and hence distribution of the residue among the partners in proportion to their shares in the profits would not attract Section 17 of the Registration Act. Viewed from another angle it must be realised that since a partnership is not a legal entity but is only a compendious name each and every partner has a beneficial interest in the property of the firm even though he cannot lay a claim on any earmarked portion thereof as the same cannot be predicated. Therefore, when any property is allocated to him from the residue it cannot be said that he had only a definite limited interest in that 76 property and that there is a transfer of the remaining interest in his favour within the meaning of Section 17 of the Registration Act. Each and every Page 25 of 28 C/SCA/4483/2014 CAV JUDGMENT partner of a firm has an undefined interest in each and every property of the firm and it is not possible to say unless the accounts are settled and the residue of surplus determined what would be the extent of the interest of each partner in the property. It is, however, clear that since no partner can claim a definite or earmarked interest in one or all of the properties of the firm because the interest is a fluctuating one depending on various factors, such as, the losses incurred by the firm, the advances made by the partners as distinguished from the capital brought in the firm, etc, it cannot be said, unless the accounts are settled in the manner indicated by Section 48 of the partnership Act, what would be the residue which would ultimately be allocable to the partners. In that residue, which becomes divisible among the partners, every partner has an interest and when a particular property is allocated to a partner in proportion to his share in the profits of the firm, there is no partition or transfer taking place nor is there any extinguishment of interest of other partners in the allocated property in the sense of a transfer or extinguishment of interest under Section 17 of the Registration Act. Therefore, viewed from this angle also it seems clear to us that when a dissolution of the partnership takes place and the residue is distributed among the partners after settlement of accounts there is no partition, transfer or extinguishment of interest attracting Section 17 of the Registration Act."

28. A partnership firm under the Indian Partnership Act, 1932 is not a distinct legal entity apart from the partners Page 26 of 28 C/SCA/4483/2014 CAV JUDGMENT constituting it and equally in law, the firm, as such, has no separate rights of its own in the partnership assets and when one talks of the firm's property or firm's assets all that is meant is property or assets in which all partners have a joint or common interest. If that be the position, it is difficult to accept the contention that upon dissolution the firm's rights in the partnership assets are extinguished. The firm as such has no separate rights of its own in the partnership assets but it is the partners who own jointly in common the assets of the partnership and, therefore, the consequences of the distribution, division or allotment of assets to the partners which flows upon dissolution after discharge of liabilities is nothing but a mutual adjustment of rights between the partners and there is no question of any extinguishment of the firm's rights in the partnership assets amounting to a transfer of assets. Therefore, there is no transfer of assets involved even in the sense of any extinguishment the firm's rights in the partnership assets when distribution takes place upon dissolution.

29. Considering the fact that three partners who intended to correct or rectify the ownership of the properties jointly, I am of the opinion that the authority has committed an error in treating the Rectification Deeds an instrument and treated as conveyance and has erred in ordering the same to be additionally stamped under Article 20 of the Schedule-I to the Act.

30. As stated herein above, neither the interest of the property of the original owners have been transferred to any other person by executing the instrument in question, nor any other person is added by creating new right in his favour. Therefore, in my opinion, the petitions require consideration and hence, the petitions stand allowed. The authorities has failed to demonstrate Page 27 of 28 C/SCA/4483/2014 CAV JUDGMENT that by executing Rectification Deed, either the original owners, the partnership firm or the present petitioners who were the partners have gained anything. The impugned orders dated 7.8.2013 passed by the Additional Collector, Stamp Duty, Valsad as well as the order dated 29.1.2014 passed by the Chief Controlling Revenue Authority, Gujarat State as well as recovery notice dated 5.2.2014 issued by the Collector, Stamp Duty, Valsad are hereby quashed and set aside. The respondents are hereby directed to refund the amounts that were deposited by the petitioners at the time of filing of the respective appeals, within a period of six weeks from today.

Rule is made absolute to the above extent in each of the petitions.

Registry is directed to place a copy of this judgment in each connected petitions.

Sd/-

(A.J.DESAI, J) SAVARIYA Page 28 of 28

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Gujarat High Court