Bombay High Court
Goisu Realty Private Limited vs State Of Maharashtra And 3 Ors on 5 October, 2020
Author: B. P. Colabawalla
Bench: B. P. Colabawalla
Judgment-WPL 2880/2020
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
Dhanappa
I. Koshti ORDINARY ORIGINAL CIVIL JURISDICTION
Digitally signed by
Dhanappa I. Koshti
Date: 2020.10.07
11:32:22 +0530
WRIT PETITION (L) NO.2880 OF 2020
Goisu Realty Private Limited
a company incorporated under the
Companies Act, 2013, having its
registered office at Office No. R18,
Dextrus, A-802, Crescenzo, C/38-39,
G-Block, Bandra-Kurla Complex,
Mumbai, Maharashtra - 400 051. ... Petitioner
Vs.
1. State of Maharashtra
Revenue and Forest Department,
Mantralaya, Fort, Maharashtra - 400 032.
2. Inspector General of Registration
and Controller of Stamps, Chief Controlling
Revenue Authority,
having its address at Ground Floor,
Opp. Vidhan Bhavan, New Administrative
Building, Pune, Maharashtra - 411 001.
3. Collector of Stamps, Andheri
having its office at 1st Floor,
MMRDA Building, Bandra-Kurla Complex,
Mumbai, Maharashtra 400 051.
4. Joint Sub-Registrar, Andheri 2,
having its address at Family Court Building,
Ground Floor, Bandra-Kurla Complex,
Bandra (East), Mumbai, Maharashtra-400 051. ... Respondents
Mugdha 1/17
Judgment-WPL 2880/2020
Mr. V. Sridharan, Senior Counsel a/w Mr. Gopal Machiraju & Mr. Sriram
Sridharan, for the Petitioner.
Mr. Manish Upadhyay, AGP for the Respondents-State.
CORAM: B. P. COLABAWALLA J.
(Through Video Conferencing)
DATE : 5TH OCTOBER, 2020
ORAL JUDGMENT :-
1. Rule. Respondents waive service. With the consent of parties, rule made returnable forthwith and heard finally.
2. By this Writ Petition, the Petitioner seeks to challenge the order dated 13th August, 2020 (for short the "impugned order"), passed by Respondent No.3 (Collector of Stamps, Andheri). The impugned order has sought to stamp an instrument of Lease dated 9th June, 2020 (for short the "said Lease Deed"), executed between the Petitioner and the Mumbai Metropolitan Region Development Authority (for short "MMRDA") in the same manner as an instrument of conveyance. The Lease was in respect of plot No.C-65, admeasuring 12,486 sq. mtrs., bearing CTS No.4207/C/65, situated at Village Kolekalyan, Taluka Andheri, Mumbai Suburban District (for short the "said property") owned by the MMRDA. This Lease was for a period of 80 years commencing from 9th June, 2020. It is the contention of the Mugdha 2/17 Judgment-WPL 2880/2020 Petitioner that the impugned order is ex-facie and patently illegal and is a result of complete non-application of mind and is, therefore, liable to be set aside.
3. The Petitioner is a company incorporated under the Companies Act, 2013 and is engaged in the business of real estate development. Respondent No.1 is the State of Maharashtra and Respondent No.2 is the Inspector General of Registration and Controller of Stamps and the Chief Revenue Controlling Authority appointed under the Maharashtra Stamp Act, 1958 (for short the "Stamp Act"). Respondent No.3 is the Collector of Stamps, Andheri, who has passed the impugned order and Respondent No.4 is the Joint Sub-Registrar, within whose jurisdiction the aforesaid Lease Deed dated 9th June, 2020 is required to be registered under the provisions of the Registration Act, 1908.
4. The facts in the present case are really undisputed. The MMRDA is the owner of the said property. On 8th March, 2019, MMRDA issued an advertisement with the information that it proposes to invite bids, inter alia, for transferring the said property by way of lease, as per the terms and conditions stipulated in that regard. Pursuant to this advertisement, an E-Tender dated 4th May, 2019 was floated by Mugdha 3/17 Judgment-WPL 2880/2020 MMRDA. The reserve price (i.e. the minimum price fixed by MMRDA), was Rs.3,44,448/- per sq. mtr. of built-up area, which aggregated to Rs.2238,91,20,000/-. On 6th June, 2019, the Petitioner submitted its bid for taking on Lease the said property for an auction price equal to the reserve price. The Petitioner was the sole bidder. The bid of the Petitioner was scrutinised and the tender was concluded on 12th June, 2019. Thereafter, the MMRDA, at its 148th meeting held on 8th July, 2019, by Resolution No.1507, approved allotment of the said property to the Petitioner on a leasehold basis, as per the terms and conditions mentioned therein. The premium fixed by MMRDA for Lease of the said property was equal to the reserve price of Rs.2238,91,20,000/-. This entire lease premium has admittedly been paid by the Petitioner to the MMRDA on the dates, which are more particularly set out in the Lease Deed.
5. On the execution of the Lease Deed, on 10th June, 2020, the Petitioner paid an amount of Rs.100,75,10,400/- towards the stamp duty under Article 36(iv) read with Article 25(b) of Schedule I and Section 2(na) of the Stamp Act. Thereafter, on 12th June, 2020 the Petitioner filed Adjudication Case No.ADJ/1100900/224/2020 before Respondent No.3, under Section 31, for adjudication of stamp duty payable on the Lease Deed. According to the Petitioner, it had paid the Mugdha 4/17 Judgment-WPL 2880/2020 correct amount of stamp duty and, therefore, requested that the Lease Deed be appropriately endorsed under section 32 of the Stamp Act.
6. Though, the Stamp Authorities accepted the amount of Rs.2238,91,20,000/- as the true market value of the said property, it calculated the stamp duty at 5% of 100% of the market value of the said property, instead of calculating it at 5% of 90% of the market value as per Article 36(iv). In fact, this was put forth before the Stamp Authorities by even filing written submissions on behalf of the Petitioner. However, as stated earlier, the stamp authorities were of the opinion that stamp duty ought to be paid at 5% of 100% of the market value of the said property and not at 5% of 90% (of the market value of the said property), and hence, proceeded to pass the impugned order dated 13th August, 2020, under which, the Petitioner was asked to make an additional payment of stamp duty of Rs.11,19,45,600/-. It is this order that the Petitioner challenges in the present Writ Petition.
7. In this factual backdrop, Mr. Sridharan, the learned Senior Counsel appearing on behalf of the Petitioner, submitted that there is no dispute that the market value of the said property for the purposes of the Stamp Act is Rs.2238,91,20,000/-. He further submitted that the entire consideration/lease premium has already been paid by the Mugdha 5/17 Judgment-WPL 2880/2020 Petitioner to MMRDA. This, according to Mr. Sridharan, is the largest direct investment made in the State of Maharashtra. He further submitted that there is no dispute that the rate of stamp duty is to be calculated at 5%. He submitted that the only dispute in the present case was whether the stamp duty of 5% ought to be calculated on the basis of 90% of the market value or 100% of the market value of the said property. According to Mr. Sridharan, the position in law is very clear that the stamp duty of 5% (in the present case) has to be calculated on the basis of 90% of the market value of the said property. In support of this submission, he relied upon Article 36 (iv) of Schedule I of the Stamp Act read with Article 25(b) thereof. Relying upon these provisions, Mr. Sridharan submitted that there was no scope for the stamp authorities to levy stamp duty at the rate of 5% on 100% of the market value of the said property. Mr. Sridharan further submitted that this issue is no longer res integra and is covered by the decision of this Court (Nagpur Bench) in the case of M/s. Ambuja Cements Limited V/s. The State of Maharashtra & Ors. [Writ Petition No.976 of 2015, decided on 4th June, 2020]. Mr. Sridharan, therefore, submitted that the Writ Petition be allowed and the impugned order be set aside.
8. On the other hand, Mr. Upadhyay, the learned AGP appearing on behalf of the Respondents, submitted that a perusal of Mugdha 6/17 Judgment-WPL 2880/2020 Explanation I below Article 36(iv) clearly reveals that any consideration in the form of premium or money advanced or to be advanced or security deposit, by whatever name called, shall for the purpose of market value, be treated as consideration passed on. Relying upon this Explanation, Mr. Upadhyay submitted that if any consideration in the form of premium or security deposit paid is higher than the market value, then the entire amount of consideration agreed between the parties, needs to be taken into consideration and has to be charged on that basis, namely, at 100%. He, therefore, submitted that the impugned order levying additional stamp duty of Rs.11,94,56,000/- is fully justified and requires no interference by this Court under Article 226 of the Constitution of India.
9. I have heard the learned counsel for the parties at length and I have perused the papers and proceedings in the present Writ Petition along with the affidavit in reply dated 3rd October, 2020 filed by Respondent No.3. Article 25 deals with a conveyance and reads as under:-
25. CONVEYANCE (not being a transfer charged or exempted under Article 59)-
On the [true market value] of the property which is the subject matter of the Conveyance,-
(a) if relating to movable property 3 per cent of the market value of the property;]
(b) if relating to immovable property situated,- Mugdha 7/17 Judgment-WPL 2880/2020
(i) within the limits of any Municipal 5 per cent of the market value of the property. Corporation or any Cantonment area annexed to it or any urban area not mentioned in sub-
clause (ii).
(ii) within the limits of any Municipal Council 5 per cent of the market value of the property. or Nagar Panchayat or Cantonment area annexed to it, or any rural area within the limits of the Mumbai Metropolitan Region Development Authority, or the Influence Areas as per the annual statement of rates published under the Bombay Stamps (Determination of True Market Value of Property) Rules, 1995.
(iii) within the limits of any Grampanchayat area 4 per cent of the market value of the property. or any such area not mentioned in sub-clause (ii)
(c) if relating to both movable and immovable The same duty as is payable under clauses (a) property. and (b).
(da) if relating to the order of the High Court 10 per cent of the aggregate of the market value under section 394 of the Companies Act, 1956 or of the shares issued or allotted in exchange or the order of the National Company Law Tribunal otherwise and the amount of consideration paid under sections 230 to 234 of the Companies Act, for such amalgamation:
2013 or confirmation issued by the Central Provided that, the amount of duty, chargeable Government under sub-section (3) of section 233 under this clause shall not exceed,- of the Companies Act, 2013 in respect of the (i) an amount equal to [5 per cent] of the true amalgamation, merger, demerger, arrangement market value of the immovable property located or reconstruction of companies (including within the State of Maharashtra of the transferor subsidiaries of parent company) or order of the company; or Reserve Bank of India under section 44A of the (ii) an amount equal to 0.7 per cent, of the Banking Regulation Act, 1949 in respect of aggregate of the market value of the shares amalgamation or reconstruction of Banking issued or allotted in exchange or otherwise and Companies. the amount of consideration paid, for such amalgamation, whichever is higher :
Provided further that, in case of reconstruction or demerger the duty chargeable shall not exceed,-
(i) an amount equal to [5 per cent] of the true market value of the immovable property located within the State of Maharashtra transferred by the Demerging Company to the Resulting Company; or
(ii) an amount equal to 0.7 per centum of the aggregate of the market value of the shares issued or allotted to the Resulting Company and the amount of consideration paid for such demerger, whichever is higher.
Exemption Assignment of copyright under the Copyright Act, 1957 (IXV of 1957) [ [Explanation I.] - For the purposes of this article, where in the case of agreement to sell an immovable property, the possession of any Mugdha 8/17 Judgment-WPL 2880/2020 immovable property is transferred [or agreed to be transferred] to the purchaser before the execution, or at the time of execution, or after the execution of, such agreement then such agreement to sell shall be deemed to be a conveyance and stamp duty thereon shall be leviable accordingly:
Provided that, the provisions of section 32A shall apply mutatis mutandis to such agreement which is deemed to be a conveyance as aforesaid, as they apply to a conveyance under that section:
Provided further that, where subsequently a conveyance is executed in pursuance of such agreement of sale, the stamp duty, if any, already paid and recovered on the agreement of sale which is deemed to be a conveyance, shall be adjusted towards the total duty leviable on the conveyance.] [Provided also that where proper stamp duty is paid on a registered agreement to sell an immovable property, treating it as a deemed conveyance and subsequently a conveyance deed is executed without any modification then such a conveyance shall be treated as other instrument under section 4 and the duty of one hundred rupees shall be charged.] [Explanation II * * *] [Explanation III. - [(i)] For the purposes of clause (da) the market value of shares,-
(a) in relation to the transferee company, whose shares are listed and quoted for trading on a stock exchange, means the market value of shares as on the appointed day mentioned in the Scheme of Amalgamation or when appointed day is not so fixed, the date of order of the High Court; and
(b) in relation to the transferee company, whose shares are not listed/or listed but not quoted for trading on a stock exchange, means the market value of the shares issued or allotted with reference to the market value of the shares of the transferor company or as determined by the Collector after giving the transferee company an opportunity of being heard.] [(ii) For the purposes of clause (da), the number of shares issued or allotted in exchange or otherwise shall mean, the number of shares of the transferor company accounted as per exchange Mugdha 9/17 Judgment-WPL 2880/2020 ratio as on appointed date.]
10. As can be seen from Article 25(b), a conveyance (not being a transfer, charged or exempted under Article 59), if relating to immovable property situated within the limits of any Municipal Corporation or any Cantonment area annexed to it or any urban area not mentioned in sub-clause (ii), then stamp duty would be levied at 5% of the market value of the property.
11. Article 36 deals with a lease and reads as under :-
36 . Lease, including under lease or sub-lease and any agreement to let or sub-let or any renewal of lease,-
Where such leave purports to be -
(i) for a period not exceeding five years. The same duty as is leviable on a conveyance under clause (a), (b) [or (c)], as the case may be, of article 25, on 10 per centum of the market value of the property.
(ii) for a period exceeding five years but The same duty as is leviable on a conveyance not exceeding ten years, with a renewal under clause (a), (b) [or (c)], as the case may be, clause contingent or otherwise. of article 25, on 25 per centum of the market value of the property.
(iii) for a period exceeding ten years but The same duty as is leviable on the conveyance not exceeding twenty-nine years, with a under clause (a), (b) [or (c)], as the case may be renewal clause contingent or otherwise. of article 25, on 50 per centum of the market value of the property.
(iv) for a period exceeding twenty-nine The same duty as is leviable on a conveyance years or in perpetuity, or does not under clause (a), (b) or (c), as the case may be, purport for any definite period, or for of article 25, on 90 per centum of the market lease for period exceeding twenty-nine value of the property.]; years, with a renewal clause contingent or otherwise.
Mugdha 10/17 Judgment-WPL 2880/2020 Explanation I. - Any consideration in the form of premium or money advanced or to be advanced or security deposit by whatever name called shall, for the purpose of market value be treated as consideration passed on.
Explanation II. - The renewal period, if specifically mentioned, shall be treated as part of the present lease.
Explanation III. - For the purpose of this article, the market value, for the instruments falling under section 2(n)(iii) (Toll Agreements) and article 5(g-e) (Hire Purchase agreement), shall be the total contract value and they shall be chargeable to duty same as under clause
(a) of article 25.
12. As can be seen from this provision, a lease, including an under lease or sub-lease and any agreement to let or sub-let or any renewal of lease, where such lease purports to be for different periods, then accordingly stamp duty is calculated as if it is a conveyance under clauses (a), (b) or (c), as the case may be, of Article 25. In the present case, considering that the lease is for a period of 80 years, the same would be governed by Article 36(iv), which clearly stipulates that if a lease is for a period exceeding 29 years or in perpetuity, or does not purport to be for any definite period, or for lease for a period exceeding 29 years, with a renewal clause contingent or otherwise, then the duty leviable would be the same duty as is leviable on a conveyance under Clauses (a), (b) or (c), as the case may be, of Article 25, on 90 per centum of the market value of the property. A plain reading of Article Mugdha 11/17 Judgment-WPL 2880/2020 36(iv) read with Article 25(b) would clearly show that the stamp duty that would be payable by the Petitioner in the present case, would be 5% of 90% of the market value of the said property. This is absolutely clear from the unambiguous language of Article 25(b) read with Article 36(iv). I, therefore, find that Mr. Sridharan is correct in his submission when he submits that the stamp authorities have proceeded on a completely wrong premise to charge stamp duty on 100% of the market value which is clearly contrary to the statute. I must mention that the reliance placed by the statutory authorities on Explanation I below Article 36(iv) is wholly misconceived. Explanation I below Article 36(iv) stipulates that any consideration in the form of premium or money advanced or to be advanced, or security deposit, by whatever name called shall, for the purpose of market value, be treated as consideration passed on. In other words, the premium, that is mentioned in a lease deed or a security deposit mentioned in a lease deed will be treated as a consideration for the purposes of market value. This does not derogate from the fact that in a lease exceeding 29 years, the stamp duty leviable thereon would be as if it is a conveyance under Clauses (a), (b) or (c), as the case may be, of Article 25, on 90 per centum of the market value of the said property. Once Explanation I is read in this context, then the reliance placed by the Respondents on the said Explanation is wholly misconceived.
Mugdha 12/17 Judgment-WPL 2880/2020
13. Strangely, in the impugned order, Respondent No.3 comes to the conclusion that in the present case, as the property is owned by MMRDA, the market value of the said property cannot be decided and, therefore, as mentioned in the impugned order, the amount of Rs.111,94,56,000/- becomes due towards stamp duty which is calculated at the rate of 5% on the total amount of premium of Rs.2238,91,20,000/- (100% of the market value) and thereafter proceeds to levy additional stamp duty of Rs.11,19,45,600/-. I find this approach and reasoning of the stamp authorities to be wholly contrary to law. It seeks to make a distinction between a property owned by the Government or its instrumentality (in the present case 'MMRDA') on the one hand and a private property on the other. In law, there is no such distinction carved out. Thereafter, the logic sought to be used in the impugned order is that since the premium paid is higher than the market value of the said property as per the ready reckoner, stamp duty ought to be levied on the full amount, i.e. 100% and not at 90% as contemplated under Article 36(iv). When I inquired from Mr. Upadhyay to point out any provision in law, which would permit the stamp authorities to make these distinctions, he was unable to do so. I am, therefore, clearly of the view that the order passed by Respondent No.3 Mugdha 13/17 Judgment-WPL 2880/2020 is wholly perverse and contrary to the unambiguous and clear language of Article 36(iv) read with Article 25(b) of the Stamp Act.
14. I must mention that this issue is no longer res integra and has been considered by another learned single Judge of this Court (sitting at the Nagpur Bench) in the case of of M/s. Ambuja Cements Limited V/s. The State of Maharashtra & Ors. [Writ Petition No.976 of 2015, decided on 4th June, 2020]. Though, in the facts of that case, the renewal of lease agreement was for 20 years and, therefore, the same would be covered by Article 36(iii), the ratio of this decision is squarely applicable to the facts of the present case and would not only bind me but also the Respondents herein. The relevant portions of this decision read as under :-
"19. Admittedly in the instant case the renewal lease agreement is of 20 years and therefore the same would be covered by Article 36(iii) of the BSA. Indeed the Chief Controlling Revenue Authority/R-4, in the impugned judgment has held so, and this position is not disputed by anyone. What is disputed by the petitioner and taken exception to is the finding rendered by the respondent no.4, that the stamp duty is required to be paid on the entire consideration and not on 50% of the market value and so also the mode and manner of calculating the market value and not applying Sec.27 of the BSA to the renewal lease.
20. In so far as the reason for not following the mandate of Article 36(iii) of the BSA for levying the duty on 50% of the market value is concerned, the reasonings thereof, are found in paras 5.1 to 5.6 of the impugned judgment. A perusal of the same clearly demonstrates that the only reason for holding that the stamp duty is payable on the entire market value so calculated by the Revenue, as stated in para 5.6 is as under:Mugdha 14/17 Judgment-WPL 2880/2020
"5.6 Non-Applicant's contention is that as per Article 25 read with 36 stamp duty is chargeable only on the 50% of market value of property as the lease period is 20 years. The same is not accepted for the main reason that the article 36 provides for the percentage of market value to be taken for calculation depending on period of lease. In the present case, Government Department being party executing document, has determined amount of premium; therefore it does not warrant determination of market value in routine as required otherwise. Thus, the amount predetermined by parties being one of Government Department, the same is taken as market value and the said value as a whole needed to be considered. Therefore, aforesaid contention of Non-Applicant is not accepted as the amount for levy of stamp duty has to be taken at full value of premium as it is the actual amount being paid. The 50% rule can be applied if the market value of property is calculated."
21. The entire reasoning is as lopsided as it can be. On the one hand the respondent no.4 says that the market value is not calculated and therefore the 50% rule cannot be applied and on the other says that the stamp duty is to be levied on the full market value. That apart, there does not appear to be any distinction in Article 36 BSA in respect of a lease or its renewal being executed by a Government Department and one executed by a private party, so as to enable the respondent no.4, to deviate from the rule of charging stamp duty on 50% of the market value. No discretion of whatsoever nature is vested in the Stamp Officer or its appellate Authority in not applying the dictum of Article 36(iii) BSA for determining the stamp duty upon the instrument, that too, on any so called basis of one executed by the Government and one executed by a private party. The language of Article 36 BSA does not permit such power or leeway in the Stamp Officer or his appellate authority. Thus once the nature of the Instrument is clear, and it is held that the Instrument falls within a particular Article, no discretion is vested in the Authorities to vary or change the manner of calculating the stamp duty as is enumerated in the Second Column against the relevant Article. The second Column of Article 36(iii) of the BSA does not depend in what mode or manner the market value is to be calculated. It simply speaks that the proper stamp duty leviable would be 50% on the market value and nothing else. Thus the respondent no.4, clearly erred in law in not applying the mandate of the second column of Article 36(iii) of the BSA on the basis that the document was one executed by the Government and the impugned judgment is not sustainable on this count alone."
Mugdha 15/17 Judgment-WPL 2880/2020
15. As can be seen from the ratio of this decision, the controversy raised in the present Petition is squarely covered by the decision of this Court in the case of M/s. Ambuja Cements Limited (supra). I, therefore, find that the impugned order is wholly unsustainable.
16. I must mention that though in the affidavit in reply the Respondents have raised the plea of an alternate remedy, namely, that the Petitioner has an alternate remedy to file an appeal under Section 32 of the Stamp Act, the same has expressly not been pressed by the learned AGP. I am therefore not dealing with the issue of alternate remedy in any detail, especially considering that there is already a judgment of our Court [in the case of M/s. Ambuja Cements Limited (supra)] that covers the issue raised in this petition and which would be binding on the stamp authorities.
17. In view of the foregoing discussion, rule is made absolute and the impugned order dated 13th August, 2020 passed by Respondent No.3 is quashed and set aside. Considering that the impugned order is now set aside and the stamp duty of Rs.100,75,10,400/- [calculated at 5% on 90% of the market value (Rs.2238,91,20,000/-)] has already been paid, respondent No.4 is directed to admit registration of the Lease Mugdha 16/17 Judgment-WPL 2880/2020 Deed dated 9th June, 2020, executed between MMRDA and the Petitioner, if it is otherwise found in order.
18. The Writ Petition is disposed of in the aforesaid terms. In the facts and circumstances of the case, there shall be no order as to costs.
19. This judgment shall be digitally signed by the Private Secretary/Personal Assistant of this Court. All concerned shall act on production by fax or e-mail of a digitally signed copy of this judgment.
(B. P. COLABAWALLA, J.) Mugdha 17/17