Calcutta High Court
Primarc Srijan Projects Llp & Ors vs Howrah Mills Company Limited on 29 March, 2023
OD-7
IN THE HIGH COURT AT CALCUTTA
(Ordinary Original Civil Jurisdiction)
COMMERCIAL DIVISION
IA No. GA/1/2018
(Old No. GA/2464 of 2018)
In CS/186/2018
PRIMARC SRIJAN PROJECTS LLP & ORS.
Vs.
HOWRAH MILLS COMPANY LIMITED
BEFORE :
The Hon'ble JUSTICE KRISHNA RAO
Heard On : 20.02.2023, 28.02.2023 & 16.03.2023.
Order On : 29th March, 2023
Appearance
Mr. Sabyasachi Chowdhury, Adv.
Mr. Paritosh Sinha, Adv.
Mr. Shaunak Mukherjee, Adv.
Mr. Saubhik Chowdhury, Adv.
Mr. Tirthankar Das, Adv.
...for the plaintiff
Mr. Abhrajit Mitra, Sr. Adv.
Mr. Sarvapriya Mukherjee, Adv.
Mr. Sumanta Biswas, Adv.
Mr. Yashvardhan Kochar, Adv.
Mr. Jit Ray, Adv.
Mr. Bikash Shaw, Adv.
...for the respondent.
2
ORDER
The plaintiff has filed the instant suit praying for a decree for an amount of Rs. 11,58,74,242/- along with interest at the rate of 15% per annum from the date of institution of the suit along with other reliefs. On completion of all formalities, the suit was fixed for witness action on behalf of the plaintiff but on 20th February, 2023, the Counsel for the plaintiff submitted that the plaintiff will not adduce any witness and will argue the matter on the basis of the pleadings and the documents relied by the parties.
Mr. Abhrajit Mitra, Learned Senior Counsel representing the defendant taken the point of admissibility of the document i.e. the agreement dated 27th August, 2015 on the basis of which the plaintiff has filed the suit which is not properly stamped.
Mr. Mitra submits that the plaintiff has filed the instant suit on the basis of the agreement entered between the parties on 27th August, 2015 and the said agreement is unstamped. Mr. Mitra relied upon Section 33 read with Section 35 of the Indian Stamp Act, 1899 and submits that agreement is not duly stamped and the same is not admissible in evidence.
Mr. Mitra referring paragraphs 5 (i) to (vi), 10, 13(a) to (g), 14, 22 and 26 and submits that the plaintiff has made out his case totally on the basis of the agreement.
Mr. Mirta further referred Clause 3, 3(b), 3(h), 3(k), 3(l), 6, 7(viii) and 7(x) of the agreement and submits that from the said clauses of the agreement, it is 3 crystal clear that the said agreement is the development agreement with respect of the landed property described in the said agreement.
Mr. Mitra submits that in paragraphs 13 (a) to (g) of the plaint, the plaintiff has described the alleged breaches of the agreement committed by the defendant.
Mr. Mitra submits that as per the averments made in paragraph 14(i) of the plaint, it is crystal clear that the agreement is still alive.
Mr. Mitra submits that objection which relates to deficiency of stamp duty of a document, the Court has to decide the objection before proceeding further.
Mr. Mitra relied upon Schedule 1A(5)(f) and the explanation of the Stamp Duty on Instrument in West Bengal and submits that as per the said provision the document is required to be duly stamped.
Mr. Mitra in support of his submissions has relied upon the following judgments:
a. AIR 1968 SC 1028 (Kollipara Sriramulu (Dead) By his legal Representative -vs- T. Aswatha Narayana (Dead) Through his legal Representatives & Ors.).
b. (2001) 3 SCC 1 (Bipin Shantilal Panchal -vs- State of Gujrat & Anr.).
c. (2009) 2 SCC 532 (Avinash Kumar Chauhan -vs- Vijay Krishna Mishra).4
d. (2020) 4 SCC 358 (Z. Engineers Construction Private Ltd. & Anr. -vs- Bipin Bihari Behera & Ors.).
e. (2020) 4 SCC 612 (Dharmaratnakara Rai Bahadur Arcot Narayinswamy Mudaliar Chattram & Ors. Charities & Ors. - vs- Bhaskar Raju and Brothers & Others).
f. (2021) 4 SCC 379 (N.N. Global Mercantile Private Limited -vs- Indo Unique Flame Limited and Others).
Mr. Sabyasachi Chowdhury, Learned Advocate representing the plaintiff submits that the defendants have admitted the agreement and by relying upon the same set up, their counter claim praying for specific performance.
Mr. Chowdhury submits that the plaintiff no. 1 has pointed out defaults committed by the defendants and the loss suffered by the developer and the said communication was duly received by the defendants which the defendants have admitted the receipt of the said letter in the written statement.
Mr. Chowdhury submits that again in the month of June, 2016, the plaintiff No.1 had pointed out the breaches committed by the defendant including failure to produce No-Objection Certificate from the State Bank of India and the said letter is also admitted by the defendant in the written statement.
Mr. Chowdhury submits that on 9th May, 2017, meeting between the plaintiff No.1 and the defendants were held and the terms for performance of the said Memorandum of Understanding amended by the said minutes of the meeting and future course of action was agreed upon by the parties. The said 5 minutes of meeting is also admitted by the defendant in their written statement.
Mr. Chowdhury submits that on 18.05.018, the plaintiff no. 1 had sent a letter to the defendant calling upon the defendant for return of Rs.
11,58,74,242/- including interest @ 15% per annum and the defendant has also admitted with regard to receipt of the claim made by the plaintiff.
Mr. Chowdhury relied upon Schedule 1A (5) (e) of the Stamp duty on instruments in West Bengal and submits that as per the said provision, proper stamp duty is Rs. 10 and the agreement is prepared in the Rs. 100 Indian Non-
Judicial Bond Paper and as such no further stamp is required to be paid.
Mr. Chowdhury submits that the defendants have admitted the agreement by making a counter claim in the suit and now the defendants cannot question for admission of the said agreement.
Mr. Chowdhury submits that in the minutes of meeting dated 09.05.2017 the defendants have agreed that in case, the defendant failed to bring the permission for Housing Loan as well as sanctioned plan for the said premises within 30 days from the date hereof then the Memorandum of Understanding shall automatically stands cancel without any further negotiation and in case of cancellation, the defendant will return 7 crore + expenses upto tune of Rs. 1 crore required by the plaintiff in the project along with interest @ 15 % per annum within 90 days from the cancellation.6
Mr. Chowdhury submits that the plaintiff has made the claim in terms of minutes of the meeting dated 9th May, 2017 wherein the defendant has agreed with the claim of the plaintiff and the Minutes of the Meeting cannot be stamped.
Mr. Chowdhury submits that the defendant has admitted the claim of the plaintiff in the Minutes of the Meeting dated 9th May, 2017 and as such no further proof is required and accordingly the plaintiff is entitled to get the decree as prayed for.
Interpretation of Section 33 and 35 of Stamp Act, 1899 is under consideration. The undisputed fact of the matter is that the plaintiff and the defendant entered into a basic understanding on 27th August, 2015 and subsequently on 9th May, 2017, Minutes of the Meeting was entered between the parties.
Indisputably the basic agreement entered between the parties on 27th August, 2015 is made in the Rs. 100 Non-Judicial Bond Paper.
The Indian Stamp Act, 1899 was enacted to consolidate and amend the law relating to stamps. "Convenience" has been defined in Section 2 (10) to mean :
"2. (10) Conveyance.--'Conveyance' includes a conveyance on sale and every instrument by which property, whether movable or immovable, is transferred inter vivos and which is not otherwise specifically provided for by Schedule I;"7
"Receipt" has been defined in Section 2 (23) of the Act to mean:
"2. (23) Receipt.--'Receipt' includes any note, memorandum or writing--
(a) whereby any money, or any bill of exchange, cheque or promissory note is acknowledged to have been received, or
(b) whereby any other movable property is acknowledged to have been received in satisfaction of a debt, or
(c) whereby any debt or demand, or any part of a debt or demand, is acknowledged to have been satisfied or discharged, or
(d) which signifies or imports any such acknowledgement, and whether the same is or is not signed with the name of any person;"
"Stamp" has been defined in Section 2(26) to mean:
"2. (26) 'Stamp' means any mark, seal or endorsement by any agency or person duly authorised by the State Government, and includes an adhesive or impressed stamp, for the purposes of duty chargeable under this Act."
Chapter II of the Act provides for stamp duties. Section 3, which is the charging Section reads as under :
"3. Instruments chargeable with duty.--Subject to the provisions of this Act and the exemptions contained in Schedule I, the following instruments shall be chargeable with duty of the amount indicated in that Schedule as the proper duty therefor, respectively, that is to say--
(a) every instrument mentioned in that Schedule which, not having been previously executed by any person, is executed in India on or after the first day of July, 1899;8
(b) every bill of exchange payable otherwise than on demand, or promissory note drawn or made out of India on or after that day and accepted or paid, or presented for acceptance or payment, or endorsed, transferred or otherwise negotiated, in India; and
(c) every instrument (other than a bill of exchange or promissory note) mentioned in that Schedule, which, not having been previously executed by any person, is executed out of India on or after that day, relates to any property situate, or to any matter or thing done or to be done, in India and is received in India:
Provided that no duty shall be chargeable in respect of-- (1) any instrument executed by, or on behalf of, or in favour of, the Government in cases where, but for this exemption, the Government would be liable to pay the duty chargeable in respect of such instrument; (2) any instrument for the sale, transfer or other disposition, either absolutely or by way of mortgage or otherwise, of any ship or vessel, or any part, interest, share or property of or in any ship or vessel registered under the Merchant Shipping Act, 1894, or under Act 19 of 1838, or the Indian Registration of Ships Act, 1841 (57 and 58 Vict., Section 60, 10 of 1841), as amended by subsequent Acts. (3) any instrument executed, by, or, on behalf of, or, in favour of, the Developer, or Unit or in connection with the carrying out of purposes of the Special Economic Zone.
Explanation.--For the purposes of this clause, the expressions 'Developer', 'Special Economic Zone' and 'Unit' shall have meanings respectively assigned to them in clauses (g), (za) and (zc) of Section 2 of the Special Economic Zones Act, 2005."
The other provisions contained in the said Chapter deal with the mode and manner of payment, etc."
The other provisions contained in the said Chapter deal with the mode and manner of the payment, etc. Chapter III of the Act provides for adjudication with regard to proper stamps, whereas Chapter IV deals with instruments not duly stamped. Section 9 33 casts a duty upon every person who has authority to receive evidence and every person in-charge of a public office before whom, the instrument is produced, if it appears to him that the same is duly stamped, to impound the same. Sub-Section (2) of Section 33 of the Act lays down the procedure for undertaking the process of impounding.
Section 35 provides that an instrument shall be inadmissible in evidence if the same is not duly stamped in the following terms :
"35. Instruments not duly stamped inadmissible in evidence, etc.--No instrument chargeable with duty shall be admitted in evidence for any purpose by any person having by law or consent of parties authority to receive evidence, or shall be acted upon, registered or authenticated by any such person or by any public officer, unless such instrument is duly stamped:
Provided that--
(a) any such instrument shall be admitted in evidence on payment of the duty with which the same is chargeable or, in the case of an instrument insufficiently stamped, of the amount required to make up such duty, together with a penalty of five rupees, or, when ten times the amount of the proper duty or deficient portion thereof exceeds five rupees, of a sum equal to ten times such duty or portion;
(b) where any person from whom a stamped receipt could have been demanded, has given an unstamped receipt and such receipt, if stamped, would be admissible in evidence against him, then such receipt shall be admitted in evidence against him on payment of a penalty of one rupee by the person tendering it;
(c) where a contract or agreement of any kind is effected by correspondence consisting of two or more letters and any one of the letters bears the proper stamp, the contract or agreement shall be deemed to be duly stamped;
(d) nothing herein contained shall prevent the admission of any instrument in evidence in any proceeding in a criminal court, other than a proceeding under Chapter XII or 10 Chapter XXXVI of the Code of Criminal Procedure, 1898 (5 of 1898);
(e) nothing herein contained shall prevent the admission of any instrument in any court when such instrument has been executed by or on behalf of the Government or where it bears the certificate of the Collector as provided by Section 32 or any other provision of this Act."
Section 36 the Act provides that :
"36. Admission of instrument where not to be questioned.--Where an instrument has been admitted in evidence, such admission shall not, except as provided in Section 61, be called in question at any stage of the same suit or proceeding on the ground that the instrument has not been duly stamped."
Section 38 provides for the mode and manner in which the instrument impounded is to be dealt with.
Parliament has, in Section 35 of the Act, advisedly used the words "for any purpose whatsoever". Thus, the purpose for which a document is sought to be admitted in evidence or the extent thereof would not be relevant factor for not invoking the aforementioned provisions.
Indisputably, an instrument was executed. By reason of such an instrument an amount of Rs. 7 crore was paid and fifty percent of the project area was handed over for development.
The Explanation appended to Article 5 (e) and (f) (vi) and Explanation of Schedule 1A of Stamp Duty on Instrument in West Bengal reads as follows : 11
Description of Instruments Proper Stamp-duty "5 . Agreement or Memorandum of an Agreement-
(e) If relating to matters not other wise Rupees ten provided for, except matters relating to cheques, promissory notes, bills of lading, letters of credit, policies of insurance, transfer of shares, debentures, proxies or receipts.
(f) If relating to an agreement giving authority to a promoter or developer, by whatever name called, for construction on, or sale of, or transfer (in any manner whatsoever) of, any immovable property.
(vi) Where the market value of the property exceeds rupees three crore;
Explanation. -- The expression Rupees seventy-five thousand "Agreement or Memorandum of an Agreement", if relating to a sale, shall include an agreement to sell or any memorandum or acknowledgment in relation to transfer or delivery of possession of immovable property with an intent to transfer right, interest in, or title to, such property at any future date.
Exemptions :
Agreement or Memorandum of
Agreement -
(a) for or relating to the sale of
goods or merchandise
exclusively, not being a Note or
Memorandum chargeable under
No. 43 ;
(b) made in the form of tenders
to the Government of India for,
or relating to, any loan.
Agreement to Lease-- See
Lease (No. 35 ).
12
It is not in dispute that possession of 50% of the property has been delivered in favour of the plaintiff and the plaintiff is exercising some work over the said portion. Although the same was not registered, but registration of the document has got nothing to do with the validity hereof as provided for under the provisions of Registration Act, 1908.
This Court noticed herein before that Section 33 of the Act casts a statutory obligation on all the authorities to impound a document. The Court being an authority to receive a document in evidence is bound to give effect thereto.
Section 35 of the Act, however, rules out applicability of such provisions as it is categorically provided therein that a document of this nature shall not be admitted for any purpose whatsoever. If all purposes for which the document is sought to be brought in evidence are excluded, this Court fails to see any reason as to how the document would be admissible for collateral purposes.
The Court has taken support from the decision of the Privy Council in Ram Rattan versus Parma Nand reported in AIR 1946 PC 51 wherein it was held that :
"[That] the words 'for any purpose' in Section 35 of the Stamp Act, should be given their natural meaning and effect and would include a collateral purpose [and that] an unstamped partition deed cannot be used to corroborate the oral evidence for the purposes of determining even the factum of partition as distinct from its terms."13
In the case of Bhaskarabholta Padmanabhaiah versus B. Lakshminarayana reported in AIR 1962 AP 132, it has been held that :
"9. In this case, the learned Subordinate Judge has observed that what the plaintiff was trying to prove was not the division in status but to show that the property was divided under the partition deed. In any case, the fact that the document is inadmissible due to want of being stamped is clear. For, in Ram Rattan v. Parma Nand [(1945-46) 73 IA 28 : AIR 1946 PC 51] Their Lordships of the Privy Council held that the words 'for any purpose' in Section 35 of the Stamp Act should be given their natural meaning and effect and would include a collateral purpose and that an unstamped partition deed cannot be used to corroborate the oral evidence for the purpose of determining even the factum of partition as distinct from its terms."
"10. In the result, I agree with the learned Munsif Magistrate that the document is 'an instrument of partition' under Section 2(15) of the Stamp Act and it is not admissible in evidence because it is not stamped. But, I further hold that if the document becomes duly stamped, then it would be admissible in evidence to prove the division in status but not the terms of the partition."
In the case of Sanjeeva Reddi versus Johanputra Reddi reported in AIR 1972 AP 373, it has been held that :
"9. While considering the scope of Section 35 of the Stamp Act we cannot bring in the effect of non-registration of a document under Section 49 of the Registration Act. Section 17 of the Registration Act deals with documents, the registration of which is compulsory and Section 49 is concerned only with the effect of such non-registration of the documents which require to be registered by Section 17 or by any provision of the Transfer of Property Act. The effect of non-registration is that such a document shall not affect any immovable property covered by it or confer any power to adopt and it cannot be received as evidence of any transaction affecting such property or conferring such 14 power. But there is no prohibition under Section 49 to receive such a document which requires registration to be used for a collateral purpose i.e. for an entirely different and independent matter. There is a total and absolute bar as to the admission of an unstamped instrument whatever be the nature of the purpose or however foreign or independent the purpose may be for which it is sought to be used, unless there is compliance with the requirements of the provisos to Section 35. In other words if an unstamped instrument is admitted for a collateral purpose, it would amount to receiving such a document in evidence for a purpose which Section 35 prohibits. There is nothing in B. Rangaiah v. B. Rangaswamy [(1970) 2 AnWR 181] which supports the contention of the petitioner. That was a case as pointed out by Kuppuswami, J., where there were two instruments though contained in one document, one a settlement in favour of the fourth defendant therein and the other a will. It was therefore held that part of the instrument which constitutes a will did not require any stamp and will be admissible in evidence for proving the bequest contained therein. It was for that reason that the learned Judge said that Section 35 of the Stamp Act has no application to a case where one of the separate instruments relating to one such matter would not at all be chargeable under the Act as in the case before him."
In the case of T. Bhaskar Rao versus T. Gabriel reported in AIR 1981 AP 175 it has been held that :
"5. Section 35 of the Stamp Act mandates that an instrument chargeable with duty should be stamped so as to make it admissible in evidence. Proviso (a) to Section 35 of the Stamp Act enables a document to be received in evidence on payment of stamp duty and penalty if the document is chargeable, but not stamped or on payment of deficit duty and penalty, if it is insufficiently stamped. The bar against the admissibility of an instrument which is chargeable with stamp duty and is not stamped is of course absolute whatever be the nature of the purpose, be it for main or collateral purpose, unless the requirements of proviso (a) to Section 35 are complied with. It follows that if the requirements of proviso (a) to Section 35 are satisfied, then the document which is 15 chargeable with duty, but not stamped, can be received in evidence."
"7. It is now well settled that there is no prohibition under Section 49 of the Registration Act, to receive an unregistered document in evidence for collateral purpose. But the document so tendered should be duly stamped or should comply with the requirements of Section 35 of the Stamp Act, if not stamped, as a document cannot be received in evidence even for collateral purpose unless it is duly stamped or duty and penalty are paid under Section 35 of the Stamp Act."
In the present case, the agreement entered between the parties is a development agreement wherein possession of some portion of land is handed over and Rs.7 crore was also paid. The submission of Mr. Chowdhury that as per this agreement final agreement is required to be executed and at the time of final agreement only stamp duty is required to be paid. In the case reported in AIR 1968 SC 1028 (Kollipara Sriramulu (Dead) by his legal heirs -vs- T. Aswatha Narayana (Dead) by his legal representatives), the Hon'ble Supreme Court held that :
"3. We proceed to consider the next question raised in these appeals, namely, whether the oral agreement was ineffective because the parties contemplated the execution of a formal document or because the mode of payment of the purchase money was not actually agreed upon. It was submitted on behalf of the appellant that there was no contract because the sale was conditional upon a regular agreement being executed and no such agreement was executed. We do not accept this argument as correct. It is well established that a mere reference to a future formal contract will not prevent a binding bargain between the parties. The fact that the parties refer to the preparation of an agreement by which the terms agreed upon are to be put in a more formal shape does not prevent the existence of a binding contract. There are, however, cases where the 16 reference to a future contract is made in such terms as to show that the parties did not intend to be bound until a formal contract is signed. The question depends upon the intention of the parties and the special circumstances of each particular case. As observed by the Lord Chancellor (Lord Cranworth) in Ridgway v. Wharton [6 HLC 238, 63] , the fact of a subsequent agreement being prepared may be evidence that the previous negotiations did not amount to a concluded agreement, but the mere fact that persons wish to have a formal agreement drawn up does not establish the proposition that they cannot be bound by a previous agreement."
It is not in dispute that development agreement dated 27th August, 2015 was typed on a non-judicial bond paper of Rs. 100. It was also not registered. In this matter, this Court is not concerned with the effect of non-registration of the instrument. There is no doubt or dispute that in terms of Section 33 of the Stamp Act, as amended by the State of West Bengal, a duty is casts upon the authorities concerned including the Courts to impound a document where the instrument produced before it is insufficiently stamped where a deficiency in stamp duty is brought to the notice of the Collector or it otherwise comes to his notice, he may call for the instrument for the purpose of satisfying himself as to the adequacy placed thereon and proceed to deal with the instrument in terms of Section 38 thereof.
It is true that the object of the Stamp Act is to collect revenue and the amendments carried out by the State of West Bengal provides for more stringent steps in that behalf. It may also be true that by reason of Sub-Section (4) of Section 33 of the West Bengal Act, a duty has been cast upon the Court to apply its mind when an instrument having insufficient stamp duty is 17 brought to its notice, but, only thereby Section 36 of the Stamp Act cannot be made inapplicable.
The provision of Sections 33, 35, 38, 39, 40 & 61 of Stamp Act, 1899 is that when a document is tendered in evidence by a party and an objection is raised by the other side that the document is insufficiently stamped, at that stage, the Court assumes the jurisdiction to impound the document as it was obligatory to apply the mind of the Court in accordance with the relevant provisions of the said Act. The object of Section 33 is to protect the revenue and as such the Court or such person, as referred to in the said Section must however, exercise the power envisaged under the said Section if necessary, suo motu, in respect of the raising of objection by any of the party.
The Court has to judicially determine the matter as soon as the document is tendered in evidence and before it is marked as an "exhibit" in the case. Once the document is marked as exhibit in the case and has been used by the parties in examination and cross examination of their witnesses, Section 36 comes into operation. Once a document has been admitted in evidence, it is not open either to the Trial Court itself or to a Court of appeal or revision to go behind that order. In the case on hand, the document in question is not exhibited as the plaintiff without examining any witness argued the matter on merit on the basis of documents mainly the agreement dated 27th August, 2015 but Mr. Mitra, Learned Senior Counsel representing the defendant raised objection which leads to show that the objection as to admissibility as the ground that the instrument is not duly stamped. 18
As per Article 5 (f) of Schedule 1A of the Stamp Duty on Instruments in West Bengal, agreement with respect of promoter or developer is also described. Agreement involved in the present case is also connected with development of the property and thus this Court is of the view that the agreement relied by the plaintiff is not properly stamped and cannot be admitted in evidence.
Though Mr. Chowdhury had argued the matter on merit but Mr. Mitra has raised objection with regard to the deficiency of the stamp duty and thus in view of the judgment reported in (2020) 4 SCC 358 (Z. Engineers Construction Private Ltd. and Another -vs- Bipin Bihari Behera & Ors.), this Court has decided the issue with regard to stamp duty without going into the merit of the matter.
In view of the above, the agreement dated 27th August, 2015 is referred to the Collector for valuation as provided under the Indian Stamp Act, 1899. The merit of the suit will be considered only after obtaining the order of the Collector and upon deposit of the deficit stamp duty and penalty by the plaintiff.
(KRISHNA RAO, J.) Later : Though the matter is a Commercial Division matter but inadvertently the matter is listed before the list of non-commercial matter. Accordingly, the matter is taken in the list of Commercial Division.
(KRISHNA RAO, J.)