Karnataka High Court
Bagmane Developers Pvt Ltd vs The Regional Commissioner on 27 January, 2025
Author: Hemant Chandangoudar
Bench: Hemant Chandangoudar
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NC: 2025:KHC:3934
WP No. 52706 of 2019
C/W WP No. 2665 of 2020
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 27TH DAY OF JANUARY, 2025
BEFORE
THE HON'BLE MR JUSTICE HEMANT CHANDANGOUDAR
WRIT PETITION NO. 52706 OF 2019 (GM-ST/RN)
C/W
WRIT PETITION NO. 2665 OF 2020 (GM-ST/RN)
IN WP No. 52706/2019:
BETWEEN:
BAGMANE DEVELOPERS PVT. LTD.,
(FORMERLY KNOWN AS BAGMANE
CONSTRUCTIONS PVT (LTD),
REGISTERED OFFICE AT 'A' BLOCK,
LAKE VIEW BUILDING,
BAGMANE TECH PARK,
NO.66/1-4, C.V.RAMAN NAGAR,
BANGALORE-560093,
REPRESENTED BY ITS DIRECTOR,
SRI. D.V.RAMAKRISHNA.
...PETITIONER
(BY SMT. VAISHALI HEGDE, ADVOCATE)
AND:
1. THE REGIONAL COMMISSIONER
BENGALURU DIVISION, 2ND FLOOR,
Digitally
signed by R BMTC BUILDING, K.H.ROAD,
HEMALATHA SHANTHINAGAR, BENGALURU-560027.
Location:
HIGH 2. THE DISTRICT REGISTRAR AND DEPUTY
COURT OF COMMISSIONER OF STAMPS,
KARNATAKA SHIVAJINAGAR REGISTRATION DISTRICT,
4TH FLOOR, MONARCH CHAMBERS,
NO.122/2, INFANTRY ROAD,
BANGALORE-560001.
3. THE SUB-REGISTRAR
OFFICE OF THE SUB-REGISTRAR
OF MAHADEVAPURA,
MAHADEVAPURA, BANGALORE.
...RESPONDENTS
(BY SRI. M.R. PATIL, HCGP)
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NC: 2025:KHC:3934
WP No. 52706 of 2019
C/W WP No. 2665 of 2020
THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND
227 OF THE CONSTITUTION OF INDIA, PRAYING TO, QUASH THE
ORDER DATED 14.10.2019 PASSED BY THE R-1 IN APPEAL VIDE
ANNX-A AND THE ORDER DATED 24.08.2017 PASSED BY THE
RESPONDENT NO.2 IN CASE NO.DUS:MDP:07:2017-18 VIDE
ANNEXURE-B AND ETC.
IN WP NO. 2665/2020:
BETWEEN:
PRESTIGE ESTATE PROJECTS LTD.,
(A COMPANY INCORPORATED UNDER
THE COMPANIES ACT, 1956),
REP. BY ITS EXECUTIVE DIRECTOR-LEGAL,
SRI. T.ARVIND PAI, REGISTERED OFFICE AT
THE FALCON HOUSE, NO.1,
MAIN GUARD CROSS ROAD,
BANGALORE-560 001.
...PETITIONER
(BY SMT. VAISHALI HEGDE, ADVOCATE)
AND:
1. THE REGIONAL COMISSIONER
BENGALURU DIVISION,
2ND FLOOR, BMTC BUILDING,
K.H.ROAD, SHANTHINAGAR,
BENGALURU-560 027.
2. THE DISTRICT REGISTRAR AND
DEPUTY COMMISSIONER OF STAMPS,
SHIVAJINAGAR REGISTRATION DISTRICT,
3RD FLOOR, 'TRIUMPH TOWERS',
NO.48, CHURCH STREET, BANGALORE-560 001.
3. THE SUB-REGISTRAR
SHIVAJINAGAR, BANGALORE-560 001.
...RESPONDENTS
(BY SRI. M.R.PATIL, HCGP)
THIS WRIT PETITION IS FILED UNDER ARTICLES 226
AND 227 OF THE CONSTITUTION OF INDIA, PRAYING TO,
ISSUE A WRIT OF CERTIORARI OR SUCH OTHER
APPROPRIATE WRIT OR ORDER OR DIRECTION QUASHING
THE ORDER DATED 21.10.2019 PASSED BY THE 1ST
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NC: 2025:KHC:3934
WP No. 52706 of 2019
C/W WP No. 2665 of 2020
RESPONDENT IN STP (APPEAL) NO.17/2017-18 VIDE
ANNEXURE-A AND THE ORDER DATED 13.11.2017 PASSED BY
THE 2ND RESPONDENT IN CASE NO. DUS:SGN:37:2016-17 VIDE
ANNEXURE-B AND ETC.
THESE PETITIONS, COMING ON FOR PRELIMINARY
HEARING, THIS DAY, ORDER WAS MADE THEREIN AS UNDER:
CORAM: HON'BLE MR JUSTICE HEMANT CHANDANGOUDAR
ORAL ORDER
The facts involved in W.Ps. No. 52706/2019 and 2665/2020 are common and hence, are considered together and disposed of accordingly. The facts involved W.P. No. 2665/2020 are considered as the main petition for convenience.
2. The petitioner is a developer, seeking a Writ in the nature of Certiorari to quash the order dated 21.10.2019 passed by respondent No. 1 - Regional Commissioner in appeal bearing STP(A) No. 17/2017-18, thereby affirming the order dated 13.11.2017 passed by the respondent No. 2 - District Registrar and Deputy Commissioner of Stamps, in case no. DUS:SGN:37:2016- 17, seeking a payment of deficient stamp duty charges to the tune INR 7,92,02,205/-, on the grounds that through the subject instrument of transfer the landlord has not only conveyed an undivided interest in the land in favour of the petitioner-developer, but also the super built up area and the car parks.
3. The petitioner contends that pursuant to the execution, between the petitioner-developer and landlord, of registered JDA- GPA dated 26.04.2010, and a separate agreement dated 04.11.2010 identifying the super built up area falling to their respective shares, the landlord had executed a sale of undivided -4- NC: 2025:KHC:3934 WP No. 52706 of 2019 C/W WP No. 2665 of 2020 share of 45% of the Schedule C property in favour of the petitioner, vide a deed of sale dated 07.01.2017, against the payment of a consideration of a sum of INR 16,55,04,690/-, which was allegedly as per the prescribed guidance value. The said JDA-GPA further obliged the petitioner to develop the Schedule C property into a residential apartment building (including the share of the landlord), at the sole expense of the petitioner.
4. Subsequently, the petitioner presented the said sale deed for registration before the respondent No. 3 - jurisdictional Sub-Registrar, Shivajinagar, Bengaluru, alongwith the demand drafts of INR 1,71,83,165 /- towards the stamp duty and INR 30,68,500/- towards registration fee. Subsequently, respondent No.3 suspects undervaluation of the market value of the property, and makes an entry in Form 1-A under Rule 3A of Karnataka Stamp (Prevention of Undervaluation of Instruments) Rules, 1977, and refers the matter to respondent No. 2, assigning the said instrument with pending No. P-5960/2016-17.
5. Thereafter, the respondent No. 2 upon conducting an inquiry under Rule 4 of the said Rules, observed that it was found upon spot inspection that there was a standing structure and corresponding car parks for the apartments falling to the 45% share of the petitioner-developer. Therefore, in absence of a specific encumbrance certificate / chakkubandi in relation to the super built up area developed in the standing structure and the corresponding car parks, the same could not be treated as an independent asset, and therefore the inclusion of 45% of the super built up area and the corresponding car parks were integral in the computation of the market value of the Schedule C property of the sale deed.
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6. It was concluded that the petitioner had suppressed the real nature of the property i.e. the 45% of apartments falling to the share of the petitioner i.e. a total of 13 apartments viz. 5A, 5B, 5C, 6B, 6C, 8B, 8C, 10C, 12B, 12C, 14C, 18B, 25A and corresponding five (5) car parks each, and that the market value of the property was calculated to the tune of INR 150,68, 73, 940/-. Therefore, the respondent No. 2 has passed the impugned order dated 13.11.2017 and bearing Case No. DUS:SJN:37/2016-17 determining the deficient stamp duty as follows, and further directed the payment of the same within 90 days from the receipt of the order:
PÀæ.¸ÀA. «ªÀgÀ ªÀiË®å
1. ¸ÀéwÛ£À ªÀiË®å
Apartment Nos. 5A, 5B, 5C, 6B,
6C, 8B, 8C, 10C, 12B, 12C, 14C,
18B AND 25A UÀ¼À MlÄÖ
¸ÀÆ¥Àgï©®Ö¥ï «¹ÛÃtð 1,08,173 ZÀzÀgÀr
149,06,23,940
CxÀªÁ 10,049,52 ZÀzÀgÀ «ÄÃlgïUÀ¼ÀÄ,
ZÀzÀgÀ «Älgï MAzÀPÉÌ gÀÆ:1,48,318/-
CxÀªÁ ZÀzÀgÀr MAzÀPÉÌ gÀÆ:13,780/-
gÀAvÉ
2. ZÁªÀtÂAiÀÄļÀî PÁgï ¤¯ÁÝt 65, PÁgï
¤¯ÁÝt MAzÀPÉÌ gÀÆ:2,50,000/- gÀAvÉ 1,62,50,000
3. ¸ÀéwÛ£À MlÄÖ ªÀiÁgÀÄPÀmÉÖ ªÀiË®å
150,68,73,940
4. ¸ÀéwÛ£À MlÄÖ ªÀiÁgÀÄPÀmÉÖ ªÀiË®åPÉÌ
¥ÁªÀw¸À¨ÉÃPÁzÀ ±ÀÄ®ÌUÀ¼ÀÄB
¥ÁªÀw¸À¨ÉÃPÁzÀ FUÁUÀ¯Éà ¥ÁªÀw¸À¨ÉÃPÁVgÀĪÀ
|MlÄÖ ±ÀÄ®ÌUÀ¼ÀÄ £ÉÆÃAzÀt ªÉÃ¼É PÉÆgÀvÉ EgÀĪÀ
¥ÁªÀw¹gÀĪÀ ±ÀÄ®ÌUÀ¼ÀÄ
±ÀÄ®ÌUÀ¼ÀÄ
7. ªÀÄÄzÁæAPÀ ±ÀÄ®Ì
5.6% gÀAvÉ 8,43,84,950 1,71,83,165 gÀÆ:6,72,01,785
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NC: 2025:KHC:3934
WP No. 52706 of 2019
C/W WP No. 2665 of 2020
8. £ÉÆÃAzÀt ¦üà 1%
1,50,68,740 30,68,500 gÀÆ:1,20,00,240
gÀAvÉ
9. ¥ÁªÀw¸À¨ÉÃPÁzÀ
gÀÆ:7,92,02,025
MlÄÖ ±ÀÄ®Ì:
7. Subsequently, it is undisputed that the petitioner vide letter dated 12.01.2018 to the respondent No. 3 made the aforementioned payment, under protest, vide three demand drafts.
8. Thereafter, the petitioner prefers an appeal before the respondent No. 1 in STP(A) No. 17/2017-18, which came to be dismissed vide order dated 21.10.2019. Aggrieved, the petitioner has filed the instant petition.
9. Shri K.N. Phanindra, learned Senior Counsel appearing for the petitioner's counsel contended that petitioners under the joint development agreement have constructed a residential apartment building under the above registered JDA- GPA dated 26.04.2010. However, the landlord of the said land on which the residential building is developed had conveyed 45% of the undivided share, right, title, interest and ownership in the land, vide sale deed dated 07.01.2017. Therefore, the impugned orders passed by respondents No. 1 and 2 stating that the market value of the scheduled property contained in the subject instrument of transfer is undervalued, is contrary to the provisions contained in Stamp Act, and that the proper duty under the Stamp Act imposable on the sale deed is INR 1,71,83,165 /- and that the registration fees is INR 30,68,500/-.
-7-NC: 2025:KHC:3934 WP No. 52706 of 2019 C/W WP No. 2665 of 2020 In support, reliance is placed upon the following:
i. State of Maharashtra & Others. v. Reliance Industries Limited & Ors. 2017(10) SCC 713. - Relevant Paras - 1, 7, 34, 52 & 55 ii. Bishan Das and Others v. State of Punjab & Others AIR 1961 SC 1570 - Relevant Paras - 10, 11 & 14 iii. M/s. Laxmi Enterprises v. The Commissioner BBMP and Anr., ILR 2012 KAR 5474 - Relevant Paras 18-25 & 30 iv. Dinkar S. Vaidya v. Ganpat S Gore and Ors. AIR 1981 Bom 190 - Relevant Paras - 37C, 39, 40A, 40B & 45 v. Dattaram Waman Kambli v. Shantaram Bapu Kambli, 2014 SCC OnLine Bom 1356 vi. Sakarchand Chhaganlal v. Controller of Estate Duty, Gujarat, 1968 SCC OnLine Guj 74 - Relevant Paras - 61, 62, 63, 75 & 76 vii. M/s Park View Enterprises and Ors v. State of T.N. and Ors., AIR 1990 Madras 251 - Relevant Paras - 61, 62, 63, 75 & 97.
viii. Atmakur Venkatasubbiah Chetty and Ors. v. Thirupurasundari Animal and Ors., AIR 1965 Madras 185 ix. Smt. Mohini Devi v. The Sub-Registrar - ILR 1999 KAR 2630 - Relevant Para - 20 x. M/s. DNL Enterprises & Ors v. M/s. Chitralekha Thumboochetty & Ors., RFA No. 596/2008 : DD 28.06.2013
- High Court of Karnataka -8- NC: 2025:KHC:3934 WP No. 52706 of 2019 C/W WP No. 2665 of 2020 xi. Blue Fox v. M/s. Chitralekha Thamboochetty & Ors., RP No. 237/2017 : DD 22.06.2017, High Court of Karnataka
10. Per contra, Shri Reuben Jacob, the learned Additional Advocate General (AAG) appearing on behalf of the respondents submitted that in absence of a separate encumbrance certificate, the asset which is the super built up area and the car parks, cannot be treated independently of the indivisible Schedule D property of the subject instrument. Therefore, the impugned demand is squarely accruable under Article 20(2) of the Schedule to the Karnataka Stamp Act, 1957.
10.1. The learned counsel further submitted that the real subject matter of conveyance is not only the undivided share in land but also the super-built up area of 1,08,173 sq.ft along with the closed / covered 65 car parks, and that the petitioner has suppressed the true facts thereby, effecting the amount of stamp duty that would be otherwise payable. Furthermore, the learned counsel submitted that the said sale deed shall be stamped at the conveyance rate on the market value of the property under Article 5
(e)(i) and 41(eb) read with Article 5(f) of the Karnataka Stamp Act, as the cumulative effect of the sale deed and the joint-development and the general power of attorney agreements transfer of not only the 45% undivided share in the plot land, but also the equivalent share in the development and the corresponding car parks.
10.2. In conclusion the learned counsel submitted that contents of the sale deed were false and amounted to suppression of facts.
-9-NC: 2025:KHC:3934 WP No. 52706 of 2019 C/W WP No. 2665 of 2020 10.3. Rebutting the reliance placed by the petitioners on various precedents affirming the concept of dual ownership under the Indian law, the learned counsel contended that they have no application to the case at hand as there is no division of land or the super built up area under the JDA-GPA. On the contrary, cumulative effect of all agreements indicates a proportionate share of profits and that the super built up area along with undivided land and car parks are to be held jointly, and sold jointly. Furthermore, the learned counsel specifically rejected the concept of dual ownership and submitted the same to be irrelevant and unrelated to the levy of stamp duty on the subject sale deed dated 07.01.2017.
11. Heard the learned counsels and perused the material on record.
12. The issue that arises for consideration is, in light of the fact that the subject instrument of transfer had conveyed only 45% of undivided share of schedule C property in favour of the petitioner vide deed of sale dated 07.01.2017, whether the impugned stamp duty levied on 45% of the saleable area of the residential apartment building and corresponding car parks developed on the said property, is sustainable in law?
13. The preceding paragraphs adequately capture the relevant facts till the passing of the impugned order, and therefore, do not require any further elaboration.
14. The subject instrument for registration and levy of stamp duty is a sale deed dated 07.01.2017, executed between the vendor and the petitioner, conveying in favor of the petitioner an
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NC: 2025:KHC:3934 WP No. 52706 of 2019 C/W WP No. 2665 of 2020 undivided 45% share in the land described in Schedule C property. A perusal of the sale deed indicates that, upon apportioning and paying a consideration of INR 16,55,04,690/- to the vendor, the entire saleable super built-up area in Schedule D property was conveyed to the petitioner.
15. Furthermore, the sale deed states that the petitioner has been put in constructive possession of Schedule D property by placing the petitioner in joint possession of Schedule C property. It also stipulates that the petitioner shall be entitled to seek the transfer of khata(s) in respect of the whole or portions of Schedule D property in its name. Additionally, the sale deed clarifies that nothing contained therein shall affect the rights of the petitioner and the vendors as established under the Joint Development Agreement dated 26.04.2010 and the Agreement dated 04.11.2010.
16. The Agreement dated 04.11.2010, which was executed prior to the subject sale deed, specifically formulates a scheme of ownership for apartments in the super built-up area of the residential development--then still under construction--by providing that intending purchasers of the apartments in the development shall purchase a share proportionate in undivided share in Schedule C property from the vendors, either through nomination by the developer or directly from the vendor. Accordingly, the purchase of an undivided share in Schedule C property entitles the intending purchaser to an apartment of corresponding value in the residential building constructed on Schedule C property.
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17. A careful scrutiny of the subject sale deed reveals that its recitals clearly envisage the purchase of a 45% undivided share in Schedule C property, identifiable as Schedule D property, measuring 20,120.17 sq. ft., by the petitioner. Furthermore, the petitioner and the landlord have formulated a structured scheme for the purchase of residential apartments within the constructed development by intending purchasers, wherein such purchasers acquire an undivided share in Schedule C property, either directly from the vendor-landlord or through nomination by the petitioner- developer, corresponding to the value of the apartment purchased.
18. The learned counsel for the respondent-State however, contends that the above scheme of transfers are an obvious attempt to obviate the payment of stamp duty and therefore, when in substance, the vendor-landlord had transferred the rights in the super built-up area and the corresponding car parks in the development, the subject sale deed transferring merely a percentage of undivided area is a deliberate attempt to undervalue the schedule property and constitutes suppression of fact.
19. The learned Senior Counsel Shri KN Phanindra avers that subject matter of the instrument of transfer subject to stamp duty herein, is that of dual ownership i.e., separate ownership of - land ,and the development constructed thereon. Although, in the instant case, the vendor-landlord has a 55% share in the residential development constructed above the Schedule C property, i.e. only a plot of land.
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20. Therefore, before proceeding any further, it is pertinent to advert to the relevant case laws on the point of dual ownership and its recognition under the law.
21. In the case of the State of Maharashtra & Others. v. Reliance Industries Limited & Ors. 2017(10) SCC 713, the Hon'ble Supreme Court dealt with the issue of part acquisition of the structure (a floor in the buildings belonging to the respondents, respectively) built on lands leased to the petitioners by a public sector undertaking and the state government respectively, under the Land Acquisition Act. The High Court below had quashed the acquisition, sans land, as unsustainable. Allowing the appeal, the Apex Court observed that "the instant matters are of dual ownership", and that where the ownership of the lands vested in the government, the same could not be subject to acquisition proceedings, and therefore, the State could only acquire the structures built thereon. It further observed therein, that "in case entire ownership of the land does not lie with the owner, only the right which is capable of being acquired would be acquired, not something which is non-existent". It further observed that where the value of a particular floor was to be determined, the valuation method of the building does not rigidly mandate the taking into consideration only the market value of the land underneath, and that all aspects of the owners' interest and other bundle of rights are taken into consideration. It further relied
22. A coordinate Bench of this Court in the case of M/s. Laxmi Enterprises v. The Commissioner BBMP and Anr., ILR 2012 KAR 5474, dealt with a challenge posed by the petitioner- lessee to the termination of the tenancy by the lessor-State, and
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NC: 2025:KHC:3934 WP No. 52706 of 2019 C/W WP No. 2665 of 2020 the demolition of the superstructure built thereon, for the purpose of free flow of stormwater. Although this Court dismissed the appeal in public interest, it recognised the concept of dual ownership and observed at Para 18 thereof as follows:
"18. It is well established that unlike in England, in India there can be dual ownership, in the sense, that the land may belong to one person and the buildings thereon may belong to another person. This concept of dual ownership was recognised by the Privy Council in NARAYAN DAS KHETTY vs. JATINDRA NATH ROY CHOWDHRY & ORS.(AIR 1927 PRIVY COUNCIL 135), as under:
"The maxim which is found in English law, viz, "quicquid plantatur solo, solo cedit", has at the most only a limited application in India. There is nothing in the laws or Customs of India a, to show any traces of the existence of nay absolute Rule of Law that whatever is affixed or built on the soil becomes a part of it and is subjected to the same rights of the property as the soil itself."
(emphasis supplied by me)"
22.1. It further placed reliance on another decision of this Court in the case of R.G. Hiremath & Another v. T. Krishnappa, AIR 1978 KARNATAKA 13, and observed that "there may be separation of the ownership of the building from the ownership of the land, and there is no rule of law that whatever is affixed or built on the soil becomes a part of it and is subjected to the same rights of property as the soil itself".
22.2. Furthermore, the Court opined that where a petitioner was put in possession of land for a term lease of 60 years and was
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NC: 2025:KHC:3934 WP No. 52706 of 2019 C/W WP No. 2665 of 2020 further permitted to put up a construction thereon, in absence of any clause in the lease deed positively stating that any building erected on the demised land would be in the ownership of owner- lessor State, "by virtue of the doctrine of dual ownership, the petitioner has become the owner of the building". It further observed that the leasing of the building to third party tenants by the petitioner-lessee did not constitute subletting as the leasehold property was only the land, and therefore, the petitioner could not be evicted from the said land and the building thereon. However, the court opined that the ownership of the building constructed on the demised land shall vest in the lessor-State upon expiry of the lease.
23. The Hon'ble Supreme Court of India in the case of Bishan Das and Others v. State of Punjab and Others, AIR 1961 SC 1570, dealt with the issue of challenge to dispossession of the descendants of the lessee from the dharmshala, temple and shops built on the land leased by the State and deprivation from the enjoyment of the usufructs thereof by the jurisdictional municipality, and observed therein by placing reliance upon the decisions rendered in the cases Thakoor Chunder Parmanick v. Ramdhone Bhuttachrajee (6 Suth WR 228); Beni Ram v. Kundan Lall (26 Ind App 218); and Narayan Das v. Jatindranath (AIR 1927 PC 135) that "a person who bona fide puts up constructions on land belonging to others with their permission would not be a trespasser, nor would the building so constructed vest in owner of the land by the application of the maxim quicquid plantatur solo, solo cedit".
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24. In the case of Dinakar S. Vaidya v. Ganpat S. Gore, 1980 SCC OnLine Bom 137, the High Court of Bombay dealt with the case of eviction of the defendant by the licensor-tenant of the land of the suit property on the purported grounds of default in the payment of rent and unlawful subletting of the suit premises, the High Court opined that "the preferable view would be that the tenants of the structure enjoy irrevocable licence in respect of the land below the structure; but their right vis-a-vis the land is co- extensive only with their right vis-a-vis the structure. If, for any reason their right pertaining to the structure vanishes, their right pertaining to the land will cease to exist". The Court further distinguished between the tenancy of the land and the tenancy of the structure, and concluded that "the land and the structures are two distinct premises and distinct ownership vested in two distinct persons".
25. In the case of Dattaram Waman Kambli (Since Dead, Rep. by LRs) v. Shantaram Bapu Kambli (Since Dead, Rep. by LRs), 2014 SCC OnLine Bom 1356, the High Court of Bombay while dismissing the plaintiff's suit in second appeal for partition in a structure built on land in which he shared equal interest with his defendants-brothers on the grounds that the plaintiff had not contributed anything towards the construction of the structure, it reiterated that the concept of the dual ownership - of land and in the building or the structure standing thereon has been recognised by Court of law in India.
26. In Sakarchand Chhaganalal v. Controller of Estate Duty, Gujarat, 1968 SCC OnLine Guj 74, the High Court of
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NC: 2025:KHC:3934 WP No. 52706 of 2019 C/W WP No. 2665 of 2020 Gujarat relied yet again on the decision rendered in the case of Narayan Das v. Jatindra Nath, AIR 1927 PC 135 and opined that though the land of the plot was allotted to a co-operative housing society, the superstructure built thereon belonged to a member of the Society, lawfully in possession thereof.
27. In the case of M/s. Park View Enterprises and Ors. v. State of TN, AIR 1990 MADRAS 251, the Division Bench of the High Court of Madras while allowing a challenge posed to the amended Indian Stamp Act, 1899 and the Registration Act, 1908, by a petitioner engaged in construction of flats via sale of undivided share of lands to prospective builders, whereby the amended provisions would impose stamp duty on the proposed construction, observed the following :
i. "When a sale deed with a clear intention that only a share in land is conveyed, and that there is no transfer of interest between the parties in relation to the building, if any, found thereon; then the chargeability to stamp duty could be confined only to the market value of the share of the land."
ii. "Registering authorities have no power to compel the parties to such a sale deed to register any agreement entered into between them for constructing a flat/apartment in the building."
iii. "It is only when the parties to an agreement to construct a flat/apartment in a building or the whole building" chooses to present if for registration, the stamp duty as prescribed for registration thereof can be demanded.
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28. In Atmakur Venkatasubbiah Chetty and Ors. v. Thirupurasundari Animal and Ors., AIR 1965 Madras 185, the High Court of Madras whilst allowing the plaintiff's appeal seeking enforcement of a claim for recovery of the balance due on two mortgages laid against the superstructure put up subsequently by the mortgagor-defendants upon the mortgaged properties, on the grounds that the mortgage deeds had specifically provided that the mortgaged lands and then existing buildings as well as any future building(s) erected thereon, along with all fittings, shall remain as a security for the amounts advanced under the mortgages, nevertheless, referred to the decisions rendered in Thakoorchander Pormanick v. Ramdhone Bhuttacharjee (supra), inter alia, and affirmed the concept of dual ownership under the Indian law.
29. A coordinate Bench of this Court in the case of M/s. D.N.L. Enterprises v. Miss Chitralekha Thumboochetty in RFA No. 596/2008 c/w RFA No. 1308/2008 : DD 28.06.2013, dealt with the defendant-lessee's appeal against the landlord-lessor's suit for eviction upon the expiry of the lease period. This Court affirming the decretal of the suit, opined that the lessee under the law of dual ownership was the owner of the structure built on the leased land during the subsistence of the lease. However, upon the expiry of the lease, the defendants-lessee could not claim, in contravention of the expressed recitals in the lease deed, any right over the structure, or continue in possession thereof and further exercise their right to sublease the premises.
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30. A coordinate Bench of this Court in the case of Blue Fox v. Miss Chitralekha Thambuchetty, R.P No. 237/2017 and connected cases: DD 22.06.2017, reiterated the above ratio.
31. In light of the ratios enunciated above, it may be concluded with certainty that, as opposed to the English Common Law, Indian customs and judicial precedents have recognised the concept of dual ownership i.e. vesting of rights, title and ownership of a building, and the land underneath it in distinct persons.
32. Therefore, in the matter at hand, no valid objection can be raised under the law, against the limited conveyance of a percentage of the undivided share in plot of land i.e. Schedule C property, underneath a residential development, then under completion. The petitioner cannot be faulted with, in law, for having elected not to purchase an undivided share in the building, but solely a percentage of the undivided share in the plot of land underneath it.
33. On the issue of levy of stamp duty on instruments, a coordinate Bench of this Court in the case of Smt Mohini Devi v. The Sub-Registrar, ILR 1999 KAR 2630, dealt with the issue of whether the subject instrument therein was a release or conveyance, inter alia, and observed the following:
i. The instrument and not the transaction is subject to stamp duty under the Stamp Act.
ii. There is no legal impediment to a party choosing a particular form of transaction to minimize the stamp duty.
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NC: 2025:KHC:3934 WP No. 52706 of 2019 C/W WP No. 2665 of 2020 iii. It is the substance of the instrument and not the description /title of the instrument which determines the stamp duty.
iv. "The entire document should be read as a whole to find out the true character of the instrument and to decide whether the instrument falls within the ambit of a particular Article."
v. "The contents of the instrument as it stand, and not any extraneous factors or in circumstances, should be considered to decide whether the document is duly stamped, except where the stamp duty for instrument is prescribed with reference to a factor dehors the instrument." This Court further illustrated the above principle by referring to the fact that "earlier, the stamp duty on a sale deed was payable on the consideration set forth in the instrument. After amendment to the Karnataka Stamp Act, 1957 by Act 12 of 1975, amending Article 20, the stamp duty is payable on the market value of the property which is the subject matter if the conveyance and not the consideration set out in the instrument".
34. It may therefore, be reasonably concluded that only recitals and contents of the subject deed are to be considered for determining the leviable duty under the Stamp Act, and any extraneous factor or circumstance to determine the nature of the document and the levy of stamp duty thereon shall be irrelevant and therefore, improper. Any levy of stamp duty upon consideration of any factor over and above the recitals of the subject instrument
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NC: 2025:KHC:3934 WP No. 52706 of 2019 C/W WP No. 2665 of 2020 shall render any levy of stamp duty, invalid and unsustainable in law.
35. In the case at hand, the petitioner-developer has apparently undertaken conscious efforts toward development of the residential building on Schedule C property, and the sale of residential apartments falling to the share of the developer thereon, by choosing a method to minimize the stamp duty ordinarily payable, on conveyances and transfers. The subject instrument i.e. the sale deed dated 07.01.2017 reciting conveyance in favour of the petitioner, of 45% of undivided share in the plot of land of Schedule C property, situated beneath the residential development, against the payment of consideration of INR 16,55,04,690/- is exactly what it purports to be, and is therefore, permissible in law.
36. It is further not in dispute that the sale consideration of INR 16,55,04,690/- received by the vendor-landlord in respect of the conveyance of 45% of the undivided share in the plot of land i.e. Schedule C property is a depreciation of the market value for the plot of land of said property. The respondents contend herein that since the said plot of land of the Schedule C property is situated underneath a residential superstructure, conveyance of only 45% of the undivided share in the said plot of land at the rate of INR 16,55,04,690/- is grossly undervalued.
37. Therefore, in light of the 'legally recognised dual ownership of property - of superstructure and the plot of land beneath the superstructure', and the position of law on the 'levy of stamp duty on instruments and not the transaction' and 'the right of individuals to choose such forms of transaction so as to minimize
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NC: 2025:KHC:3934 WP No. 52706 of 2019 C/W WP No. 2665 of 2020 the stamp duty otherwise payable on execution of subject instruments', the sale deed dated 07.01.2017 executed in favour of the petitioner for the said amount of consideration cannot be faulted with, on account of suppression of facts or misrepresentation.
38. Accordingly, I order the following:
ORDER i. The instant petitions in W.P. No. 2665/2024 and W.P. No. 52706/2019 are allowed.
ii. In W.P. No. 2665/2020, the impugned order dated 21.10.2019, bearing STP(A) No. 17/2017-18 passed by respondent No.1, and the order dated 13.11.2017, in case no.
DUS:SGN:37:2016-17 passed by respondent No. 2 are hereby quashed.
iii. In W.P. No. 2665/2020, the respondent No. 3 is directed to refund forthwith to the petitioner, the entire stamp duty amount of INR 6,72,01,785/- and the entire registration fees amount of INR 1,20,00,240/- that had been paid by the petitioner under demand drafts dated 11.01.2018 pursuant to order dated 13.11.2017. The said exercise shall be completed within three months from the date of receiving this order.
iv. In W.P. No. 52706/2019, the impugned order dated 14.10.2019, bearing STP(A) No. 11/2017-18 passed by respondent No.1, and the order dated 24.08.2017, in case no. DUS:MDP:07:2017-18 passed by respondent No.2 are hereby quashed.
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NC: 2025:KHC:3934 WP No. 52706 of 2019 C/W WP No. 2665 of 2020 v. In W.P. No. 52706/2019, the respondent No. 3 is directed to refund forthwith to the petitioner, the entire stamp duty amount of INR 14,56,72,210/- and the entire registration fees amount of INR 2,61,27,720/- that had been paid by the petitioner under demand drafts dated 10.11.2017 pursuant to the order dated 24.08.2017. The said exercise shall be completed within three months from the date of receiving this order.
Sd/-
(HEMANT CHANDANGOUDAR) JUDGE AC Ct:vh List No.: 19 Sl No.: 3