Bombay High Court
Larsen And Toubro Ltd & Ors vs The State Of Maharashtra & Ors on 28 September, 2012
Author: S. C. Dharmadhikari
Bench: S. C. Dharmadhikari
1
wp9032-11-judgment.doc
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELLATE JURISDICTION
WRIT PETITION NO.9032 OF 2011
Larsen and Toubro Ltd & Ors .. Petitioners
versus
The State of Maharashtra & Ors .. Respondents
Mr.R.A.Dada, Sr. Advocate a/w Mr.Zal Andhyarujina, Mr.J.S.Solomon,
Mr.A.J.Solomon, Ms.Soniya Putta, Ms.Shruti Maniar, Mr.Amit Pawar and
Ms.Chetna Karande i/by Solomon and Co for the petitioners.
Mr.A.A.Kumbhakoni, Special Counsel alongwith Mr.Shardul Singh and
Mr.Abhay A. Anturkar with Ms.P.S.Cardozo, A.G.P for the respondents.
CORAM : S. C. DHARMADHIKARI, J.
RESERVED ON : 29th AUGUST 2012.
PRONOUNCED ON : 28th SEPTEMBER 2012.
JUDGMENT:
. On this writ petition on 25th November 2011, notice was issued for final disposal of the writ petition at the stage of admission. Hence, Rule.
The respondents waive service. By consent, rule is made returnable forthwith.
2} By this writ petition under Article 226 and Article 227 of the Constitution of India, the petitioners are seeking a writ of certiorari or a writ, order or direction in the nature of certiorari or any other appropriate ::: Downloaded on - 09/06/2013 19:11:23 ::: 2 wp9032-11-judgment.doc writ, order or direction to quash and set aside an order dated 16 th July 2011 passed by the respondent No.2.
3} It is the case of the petitioners that petitioner No.1 is a company registered under the Companies Act, 1956 having its registered office at L & T House, Ballard Estate, P.O.Box No.279, Mumbai 400 001 and is engaged in the business inter alia of construction, infrastructure development and real estate. The petitioner No.2 is a company registered under the provisions of the Indian Companies Act, 1956.
4} The petitioner No.2 is wholly owned subsidiary of petitioner No.1 and is a Special Purpose Vehicle established by petitioner No.1 for implementing the Seawoods project. The petitioner No.3 is the Director of petitioner No.1.
5} The petitioners submit that the respondent No.1 is the State of Maharashtra. The respondent No.2 is the Chief Controlling Revenue Authority of the Maharashtra State. The respondent No.3 is Joint District Registrar (Class I) and Collector of Stamp of Thane City. The respondent No.4 is Joint District Registrar (Class II) and Collector of Stamp of Thane ::: Downloaded on - 09/06/2013 19:11:23 ::: 3 wp9032-11-judgment.doc City.
6} The petitioners further submit that the City and Industrial Development Corporation of Maharashtra Limited (for short "CIDCO"), a company incorporated under the provisions of the Companies Act, 1956 having its registered office at 2nd Floor, Nirmal Building, Nariman Point, Mumbai 400 021, is the New Towns Development Authority in the area designated for the New Town of Navi Mumbai by the Government of Maharashtra in exercise of its power under sub-section (1) and (3-A) of section 113 of Maharashtra Regional and Town Planning Act, 1966.
7} The petitioners submit that in 2007 the CIDCO had floated a scheme No.GM (IT and SP)/1/2007-2008 and invited bidders for the development of integrated complex at Seawoods Railway Station, Navi Mumbai (hereinafter referred to as the "Seawoods Project"). The petitioners being the highest bidders with Rs.1809 crores, they were successful bidders of the Scheme No.GM(IT and SP)/1/2007-2008 for the Seawoods Project. The CIDCO by its Letter of Allotment No.CIDCO/GM/ (IT and SP)/2008/534 dated 19th March 2008 accepted the petitioners proposal for Seawoods Project and allotted plot to petitioners for ::: Downloaded on - 09/06/2013 19:11:23 ::: 4 wp9032-11-judgment.doc development of the Seawoods Project.
8} The petitioners further submit that pursuant to the above mentioned Letter of Allotment and in order to undertake the Seawoods Project, the petitioners entered into a Development Agreement on 21 st April 2008 with CIDCO. The said Development Agreement laid down the terms and conditions for the development of the Seawoods Project.
9} The petitioners submit that prior to the execution of the Development Agreement, they submitted the said Development Agreement under section 31 of the Bombay Stamp Act, 1958 (hereinafter referred to as the said Act) for adjudication of stamp duty in the office of respondent No.3 on 30th April 2008. The petitioners further submit that respondent No.3 numbered the Adjudication Case as Sr.No358/2008. The respondent No.3 determined the market value of the properties to Rs.18,00,49,50,000/- and informed the petitioners to pay Rs.18,53,50,000/- at the rate of 1% of determined market value of the property under Article 5(g-a) and 5(h)(A)(iv) of the Schedule I of the said Act.
::: Downloaded on - 09/06/2013 19:11:23 ::: 5wp9032-11-judgment.doc 10} The petitioners had already paid the stamp duty of Rs.18,44,00,000/- on the said Development Agreement on 16 th April 2008 and paid the remaining stamp duty of Rs.9,50,000/- on 15 th May 2008.
After payment of full stamp duty by the petitioners, respondent No.3 certified the payment of full stamp duty and put its endorsement/certificate to that effect under section 32 of the said Act on the Development Agreement on 16th May 2008.
11} The petitioners further state that they had submitted an undertaking on 16th April 2008 in the office of respondent No.3 for confirmation of the payment of appropriate stamp duty at the time of execution of the Lease Deed, if any.
12} After payment of the required stamp duty, the petitioners had submitted the Development Agreement for registration in the office of Sub-Registrar, Thane No.9 on 17th May 2008, who in turn registered the said Agreement at Sr.No.1296/2008 on the same day i.e 17th May 2008.
13} The petitioners submit that subsequent to payment of stamp duty and registration, the petitioners commenced the development activities on ::: Downloaded on - 09/06/2013 19:11:23 ::: 6 wp9032-11-judgment.doc the project and have made a payment of amount of Rs.759 crores to CIDCO and expended amounts in excess of Rs.150 crores towards the development works being carried out at the project.
14} The petitioners further submit that the instant project contemplated by the said Development Agreement of 2008 in a way involves great public interest in as much as it envisages the creation of an important public utility in the form of a railway station with ultra modern facilities.
This public utility will play an important role in the new and upcoming town of Navi Mumbai and it will also enhance, both, the quality of life and the value of land for the inhabitants of the town and nearby areas. It will constitute a great improvement upon the existing transport infrastructure. The petitioners submit that the public interest dictates that the development of this project should go on as speedily and smoothly as possible.
15} The petitioners submit that thus it is evident that this Development Agreement is subject to large number of conditions precedent, reciprocal obligations and receipt of various approvals and provisions, which may or may not happen to fructify this Agreement leading to demise and ::: Downloaded on - 09/06/2013 19:11:23 ::: 7 wp9032-11-judgment.doc execution of lease. Therefore, until the demise and execution of lease the Development Agreement remains a Development Agreement.
16} The petitioners further submit that on 24 th February 2011, petitioner No.1 has received notice from respondent No.2 informing that Adjudication Cases No.358 of 2008 and 1296 of 2008 is taken for review under section 53-A of the said Act and it has been observed by the respondent No.2 that the necessary stamp duty has not been paid in the above referred Adjudication Cases i.e on the said Agreement. The Notice stated that the said Development Agreement is found to be deficit with stamp duty of Rs.73,94,00,000/-.
17} The petitioners submit that after initial inquiry and the documents collected from the office of the respondent No.2, petitioner No.1 learned that respondent No.4 has made written complaint to respondent No.2 and claimed that the said Development Agreement dated 21 st April 2008 has been misclassified under the said Act and due to which loss had been caused to the government revenue. The respondent No.4 claimed that the said Development Agreement should be classified as an "Agreement to Lease" and not as a "Development Agreement" under the said Act. The ::: Downloaded on - 09/06/2013 19:11:23 ::: 8 wp9032-11-judgment.doc respondent No.2 on receipt of complaint from the respondent No.4 and in exercise of powers conferred on him by section 52A of the said Act, has suo moto initiated the proceeding with a view to examine whether the said Agreement is deficit in stamp duty or not.
18} The petitioners submit that petitioner No.1 received a letter from office of respondent No.2 on 10th September 2011 containing the judgment of respondent No.2 dated 16th July 2011 in matter of review of Adjudication Case No.358 of 2008. In the said order, respondent No.2 has treated the said Agreement dated 21 st April 2008 between petitioner No.1 and CIDCO as Agreement to Lease and not as a Development Agreement and classified under Article 36 of Schedule I of the said Act. In the said order, respondent No.2 has stated that they found the Development Agreement deficit with stamp duty of Rs.64,69,25,000/- and asked the petitioner No.1 to pay the deficit stamp duty within 30 days.
19} The petitioners further submit that petitioner No.1 on 29 th September 2011 received the demand notice from respondent No.3 for payment of stamp duty of Rs.64,69,25,000/- according to order dated 16 th July 2011 of respondent No.2.
::: Downloaded on - 09/06/2013 19:11:23 ::: 9wp9032-11-judgment.doc 20} It is this order and the demand notice which is subject matter of challenge in this writ petition. Mr.Dada, learned senior counsel appearing on the behalf of the petitioners submitted that the issue raised in the writ petition is whether there was any power conferred in the respondent No.2 to re-assess the stamp duty payable on the document. Secondly and more importantly, whether a document can be assessed and stamped under Article 36 to Schedule I of the Bombay Stamp Act 1958 as a 'Agreement to Lease' merely because it envisages execution of a Lease Deed at a future date and does not constitute an immediate and present demise.
21} Mr.Dada submits that the petitioner has already paid significant amount of stamp duty on the Development Agreement. The petitioner has paid this sum of Rs.18,53,50,000/- based on the adjudication of the instrument in question. The adjudication has been done by respondent No.3 in accordance with the directives of the State Government as set out in the registration manual. Merely because a different view of the instrument is possible does not mean that the respondent No.2 should exercise the powers under section 53A of the Bombay Stamp Act and interfere with the adjudication by respondent No.3. If the adjudication is ::: Downloaded on - 09/06/2013 19:11:23 ::: 10 wp9032-11-judgment.doc not stated to be based on any mistake of fact or law nor is it proved to be vitiated by such illegality or irregularity resulting in serious loss and prejudice, then, there was no occasion for the respondent No.2 to have passed the impugned order.
22} Mr.Dada submits that the impugned order, therefore, is ex-facie unsustainable and deserves to be quashed and set aside. Mr.Dada then submits that when the instrument of documents was adjudicated and registered in May 2008, Article 5(g-a) of Schedule I of the said Act has stipulated that an Agreement with a developer by whatever name called for construction of development of or sell or transfer in any manner whatsoever of any immovable property shall be adjudicated as stipulated therein. By amendment of the Act vide Maharashtra Act No.16 of 2008 with effect from 5th June 2008 and subsequent to the execution of the said document, the Article was amended and the duty on the instrument or agreement covered thereby is leviable in consonance with clauses (b), (c) or (d), as the case may be, of Article 25 on the market value of the property. Mr.Dada then invited my attention to Article 36 of Schedule I and submitted that when the subject document was executed, adjudicated and registered, Article 36 still would read as pointed out by the ::: Downloaded on - 09/06/2013 19:11:23 ::: 11 wp9032-11-judgment.doc petitioners before the Authorities. The petitioners by pointing out the relevant recitals of the Agreement and particularly clause 3.2(c) and clause 3.2(d) of the Agreement submitted that the document perused as a whole makes it evident that nature of rights granted by CIDCO to the petitioners are limited at this stage. The petitioners are licensee of the land for the purpose of development. The petitioners have right to use the project site for the purpose of implementing the project but the ownership of the project site continues to be with CIDCO. The petitioners have been assigned right to enter into Agreement to Sell the built up area for commercial facility till the execution of the Lease Deed in their favour.
However, execution of the Agreement to Sell has to be ratified by the lease in favour of the petitioners and that will be only after the petitioners fulfill all conditions in clause 5.21 of the Agreement. It is only upon execution of the Lease Deed that the petitioners shall have the right to further sub-let/ licence the commercial facility, except certain executed commercial portion. Therefore, clause 5.21 itself would make it clear that the petitioners rights are limited and would be limited even after the further documents are executed in their favour. The Agreement is thus subject to several conditions precedent, reciprocal obligations and receipt of various approvals and provisions, which may or may not happen.
::: Downloaded on - 09/06/2013 19:11:23 ::: 12wp9032-11-judgment.doc Therefore, there is no present demise in favour of the petitioners. Until the demise and execution of lease, the Agreement in question remains a Development Agreement. The petitioners, therefore, pointed out that the Development Agreement does not attract payment of stamp duty under Article 36 of Schedule I of the Act.
23} Mr.Dada submits that unless there is immediate and present demise, Article 36 of Schedule I of the Act will not be applicable. Mr.Dada relies upon the judgment of the Hon'ble Privy Council in the case of Hemanta Kumari Debi vs. Midnapur Zamindari Co reported in A.I.R 1919 Privy Council 79. Mr.Dada also relies upon a judgment of the learned single Judge of this Court in Re. Indian Stamp Act, 1899 reported in A.I.R 1952 Bombay 199. Mr.Dada thereafter relies upon the following decisions of the Hon'ble Supreme Court:
(1) (1994) 2 Supreme Court Cases 497 - State of Maharashtra and others vs. Atur India Pvt Ltd; (2) (1999) 5 Supreme Court Cases 708 - ICICI vs. State of Maharashtra. ::: Downloaded on - 09/06/2013 19:11:23 ::: 13 wp9032-11-judgment.doc 24} Mr.Dada, therefore, submits that just as in ICICI's case (supra), the
Hon'ble Supreme Court concluded that if the document on the face of it is an Agreement to create a lease in future, then, it is not chargeable to stamp duty as a lease would be. It still remains an Agreement and which does not create a lease nor any interest in the land in favour of the parties like the petitioners. Once this authoritative pronouncement of the Hon'ble the Supreme Court concludes the issue, then, Mr.Dada would submit that the petition deserves to succeed.
25} Lastly, Mr.Dada relies upon judgment of a learned single Judge of this Court in the case of M/s.Jasubhai Business Services vs. State of Maharashtra and Ors (Writ Petition No.6623 of 2007 alongwith companion matters) decided on 14th December 2011. Mr.Dada submits that a similar controversy was dealt with in that judgment and, therefore, the writ petition be allowed in those terms.
26} Additionally and without prejudice, Mr.Dada submits that the petitioners have furnished an undertaking on 16 th April 2008 in the office of respondent No.3 for confirmation of the payment of appropriate stamp duty at the time of execution of the Lease Deed, if any. Mr.Dada on ::: Downloaded on - 09/06/2013 19:11:23 ::: 14 wp9032-11-judgment.doc instructions submits that an affidavit-cum-undertaking of the petitioners in the same terms would also be filed in this Court which would reiterate the petitioners undertaking to pay required stamp duty as may be due and payable under the law. For all these reasons, it is submitted that the petition be allowed.
27} On the other hand, Mr.Kumbhakoni, learned Special Counsel appearing on behalf of the respondents submitted that what has been overlooked in all such and even this case, is that the definition of the term "lease" as appearing in section 2(n) of the said Act is distinct and different from the Transfer of Property Act, 1882. If that definition is read properly and entirely, it would be evident that the test of "present demise" is not required to be satisfied in this case. Further, section 2(l) of the said Act is equally important. The deletion of the explanation in the Article in question has some meaning and significance. Therefore, both definitions and the distinction therein, is important. If in this backdrop, the present case is seen, it would be clear that the word "Lease Deed" is defined in the Agreement in question. Clause 3.2 of this Agreement and sub-clauses (a) to ( c) would show that 60% of the lease premium as stipulated in the document has been paid. Equally, possession has been handed over. The ::: Downloaded on - 09/06/2013 19:11:24 ::: 15 wp9032-11-judgment.doc balance sum is to be paid before execution of Lease Deed. In such circumstances, the present demise is created. If that is so, then, there is no substance in any of the contentions raised by Mr.Dada. Mr.Kumbhakoni, therefore, submits that none of the decisions will be of any assistance to Mr.Dada. The Authority has not committed any error in holding that the instrument under construction creates a right in the property. Therefore, this document is nothing but a lease. It is covered by Article 36 of the Schedule I to the Act and requires to be assessed for the purposes of stamp duty in terms thereof. There is no other conclusion possible and, therefore, the writ petition be dismissed.
28} The judgments cited by Mr.Dada have no application because in none of them including the State of Maharashtra vs. Atur India Pvt Ltd and ICICI vs. State of Maharashtra, has the Court noted the definition of the term "lease" as appearing in the Bombay Stamp Act, 1958. For all these reasons, he submits that these judgments cannot assist the petitioner. The petition, therefore, deserves to be dismissed.
29} For properly appreciating the rival contentions, it would be necessary to refer to the notice which has been issued to the petitioner ::: Downloaded on - 09/06/2013 19:11:24 ::: 16 wp9032-11-judgment.doc No.1 in this case. That notice, a copy of which is at Annexure G to the writ petition, is issued in Adjudication Cases No.358 of 2008 and 1296 of 2008. These cases were taken under review by resorting to section 53-A of the said Act and what has been alleged is that the petitioners have not paid the stamp duty in accordance with law. Therefore, it is proposed to review the adjudication and what has been then set out is the details of the case, the instrument and the market value and the stamp duty which has not been paid and is alleged as deficit, namely, Rs.73 crores 94 lakhs.
30} On this, what the petitioners pointed out is that they were successful bidders of the scheme for development of integrated complex at Seawoods Railway Station, Navi Mumbai (for short "Seawoods Project"). The CIDCO by its letter dated 19 th March 2008 accepted the bid of the petitioners for development of the Seawoods Project and the petitioners are required to develop (a) railway terminal and
(b) integrated commercial complex on the project site. That is how the Development Agreement was executed on 21 st April 2008 with CIDCO.
Pursuant to the adjudication under section 31 of the said Act by the Stamp Office, Thane and in terms of the computation communicated, the petitioners paid stamp duty of Rs.18,53,50,000/-. That stamp duty has ::: Downloaded on - 09/06/2013 19:11:24 ::: 17 wp9032-11-judgment.doc been accepted on 16th May 2008 and on the Development Agreement.
Thereafter, the Development Agreement was registered. Thus, this is nothing but a Development Agreement and what the instrument in question would show is that no lease or interest is created in any manner in favour of the petitioners.
31} As is evident and clear in law, the stamp duty is a fiscal measure enacted to secure revenue for the State on certain classes of instruments.
It is not enacted to arm a litigant with a weapon of technicality to meet the case of his opponents. The stringent provisions of the Act are conceived in the interest of the revenue. [AIR 1969 Supreme Court 1238 -
Hindustan Steel Ltd vs. M/s.Dilip Construction Company - para 5 at page 1240).
32} Equally, another principle for the application of the Act is that it does not apply to the transaction but to the document recording transaction. What is meant is that for stamp duty, it is to be seen as to which transaction is effected or intended, to determine the character of the document but the stamp duty is to be paid on the document and not on the transaction [see Life Insurance Corporation of India vs. Dinanath ::: Downloaded on - 09/06/2013 19:11:24 ::: 18 wp9032-11-judgment.doc Mahadeo Tembhekar - 1976 Maharashtra Law Journal 369 and Sakharam Shankar and others vs. Ramchandra Babu - 5 Bombay Law Reporter 28 (F.B)]. In this behalf, the observations and conclusions in the judgment of this Court in the case of Dinanath Tembhekar (supra) are pertinent and read as under:
"3 The principle on which the liability under fiscal statutes like Stamp Act is cannot be disputed. The interpretation has to be according to strict letter of the law and not only in case of doubt but in case of beneficial interpretation favouring the subject, the rule is to tend in favour of the subject rather than the exchequer. There being no equity in the matters of taxing statutes, the Court adheres and follows this path to substantially advance the cause of the disputes. See A.V.Fernandez v. State of Kerala (A.I.R 1957 SC 657); Ramo Swarup v. Foti (A.I.R 1933 All. 321); Firm of Chunilal v. Firm Mukalal (A.I.R 1968 All. 164); R.D.Sethna v. Mirza Mohamed (9 B.L.R 1934) and Santdas Moolchand v. Sheodayal (1970 Maharashtra Law Journal 419). Turning with these principles to apply to the provisions of section 2(n) which defines lease for the purpose of Stamp Act, the ground may be clear by referring to the purposes of the Act itself. It is under Entry 63, List II, i.e the State List of Seventh Schedule of the Constitution, that the State Legislature has enacted the provisions of the Stamp Act with a view to collect stamp duty ::: Downloaded on - 09/06/2013 19:11:24 ::: 19 wp9032-11-judgment.doc in respect of documents. Reference to the preamble itself shows that the nature of duty is payable on documents or instruments and not on mere transaction. Provisions of section 3 in Chapter II makes the instruments chargeable with duty as contained in the schedules appended to the Act and reference to other provisions like sections 4 to 6 emphasizes that it cannot be the intention of the Legislature to collect duty on transactions. There is a clear distinction in the legal affairs of men which can be taken note of in that transactions may be effected having legal effects without resort to formal inscribing of them in the shape of documents or instruments. Sometimes by the instruments the legal rights may stand conveyed and sometimes without it. Instruments may be inscribed and executed just to witness the completed transactions and similarly instruments or documents may come in existence with a view to create rights and obligations in future. There may be executed, executory as well executable instruments which may take the formal shape of agreements or which may be spelt out by the documents that pass between the parties. Question in each case while applying the provisions of fiscal statutes like the Stamp Act is a question of fact to be determined taking into account all the relevant circumstances, the nature of transaction and its legal effect, leaning always in case of doubt to favour the subject from the tax law.
4 Section 2(n) of the Bombay Stamp Act which has to be ::: Downloaded on - 09/06/2013 19:11:24 ::: 20 wp9032-11-judgment.doc applied to the present case is peculiarly worded and it defines "lease" as meaning "a lease of immovable property" and then proceeds to include certain other instruments like (i) a patta,
(ii) a Kabulayat, or other undertaking in writing not being a counter-part of the lease to cultivate, occupy or pay or deliver rent for immovable property; (iii) any instrument by which tolls of any description are let; and (iv) any writing on an application for a lease intended to signify that the application is granted. Resort to such an inclusive definition clearly shows that but for the inclusions the instruments mentioned in clauses (i) to (iv) would not be within the meaning of the term "lease" as contemplated by the definition itself. Being the provision in Stamp Act which deals with instruments, the primary definition of the word "lease" would mean that it must be an instrument creating a lease of immovable property. If there is no instrument or document the question of application of the definition does not arise. The lease of immovable property by itself postulates a transfer of a right to enjoy such property made for a certain time or in perpetuity in consideration of a price paid or promised or in consideration of money, share of crops, service or any other thing of value to be rendered periodically or on specified occasions by the lessor to the lessee. The legal concept of lease is contemplated by section 105 of the Transfer of Property Act and that shows that there are three basic requirements to make any transfer a lease. Firstly it is a right of enjoyment of immovable property which is the subject matter of transfer.::: Downloaded on - 09/06/2013 19:11:24 ::: 21
wp9032-11-judgment.doc Secondly it is in consideration, either paid or promised, or to be rendered periodically by the lessee to the lessor. Thirdly it is a transfer either for certain time or in perpetuity. If these three incidents are available in a transaction between the parties, i.e between transferor or lessor and transferee or lessee and they effect the demise of the immovable property there comes into existence the lease of immovable property. Under the provisions of the Transfer of Property Act there are several types of lease contemplated and several of them do not require any instrument to validly create rights to enjoy the property. It is only when the lease of immovable property is from year to year or for any term exceeding one year or reserving a yearly rent, the law requires that the lease has to be made by a registered instrument (see section 107 of the Transfer of Property Act). It follows excepting in the cases of section 107 of Transfer of Property Act there can be a lease for shorter durations or reserving rent for shorter periods of the immovable property under which the right to enjoy such property is transferred by the lessor to the lessee.
5 Therefore, the question is whether the demise is created by the document in question or in other words whether it is a lease transferring right of enjoyment in favour of the lessee."
33} In the instant case, what has been executed in favour of the ::: Downloaded on - 09/06/2013 19:11:24 ::: 22 wp9032-11-judgment.doc petitioners, is a Agreement dated 21 st April 2008 by the CIDCO. That Agreement records that the Corporation is declared as the New Town Development Authority in the area designated as New Town of Navi Mumbai. With a objective to leverage the commercial potential of the project site, the Corporation intends to develop an integrated complex offering commercial, retail and office space and hospitality services, and a modern Seawoods Railway Station. The Corporation carried out a competitive bidding process and had received proposals from eligible bidders including the developer (the petitioners). The petitioners requested by its proposal to grant development rights and a lease for the parcel of land around the Seawoods Railway Station in Nerul Node of Navi Mumbai, which is more particularly described in Schedule I to the Development Agreement. After examining this proposal, the petitioners were issued a letter of allotment. The Corporation has consented to grant to the petitioners, development rights on the project site for purpose of construction and maintenance of the commercial facilities and for the construction and handover of the railway facilities. The railway facilities shall be constructed on the specified railway facilities land and the commercial facilities shall be constructed on the project site excluding the railway facilities land. The Corporation granted to the petitioners, the ::: Downloaded on - 09/06/2013 19:11:24 ::: 23 wp9032-11-judgment.doc right to construct and maintain commercial facilities in the air space above the railway facilities. The petitioners-developer has also been granted a conditional right to enter into an Agreement to Sell the built up area over the project site in proportion to the lease premium payments made by the petitioners in accordance with the terms and conditions of this Agreement. The lease rights shall be granted to the developer through the Lease Deed for the entire project site except the railway facilities land.
However, the petitioner shall be granted selling rights for the commercial facilities constructed in the air space above the railway facilities. Such lease rights as well as selling rights shall be granted to the petitioners-
developer only on the execution of the Lease Deed (see recital "E" at page
40). Thereafter, the Agreement sets out certain definitions, including the term "Lease Deed". It is defined to mean the Lease Deed to be executed between the parties for the entire project site except the railway facilities land and the air space as provided in Schedule 9 of the Agreement.
Thereafter, the Agreement has several clauses. Article 2 deals with Grant of Development Rights. Article 3 deals with Project Site in which Article 3.2 is entitled "Rights, Title and Use of the Project Site". That reads as under:
::: Downloaded on - 09/06/2013 19:11:24 ::: 24wp9032-11-judgment.doc "3.2 Rights, Title and Use of the Project Site a. The Developer shall have the right to the use the project site for the purpose of implementing the project in accordance with the provisions of this Agreement and for this purpose, it may regulate the entry into and use of the same by third parties. Provided that the developer shall not disturb the operations of railway station and present entry and exit of the railway commuters to the Seawoods railway station.
b. The ownership of the project site shall be and continue to be of the Corporation.
c. The Developer has been assigned a conditional right to enter into an agreement to sell for the built up area for the commercial facilities till the execution of the Lease Deed. This conditional right shall be granted in proportion to the payment of the Lease Premium Payments made by the developer. Any agreement entered by the developer, to effect such an Agreement to Sell, shall be in consonance with this Agreement.
d. The Agreement to Sell as above shall be ratified by executing the Lease Deed, which shall be entered into between the Corporation and the developer, after the developer fulfills the conditions mentioned under this Agreement in Article 5.21.
e. Subsequent to the execution of the Lease Deed, the developer shall have the right to further sub-
lease/concession/license the commercial facilities except the ::: Downloaded on - 09/06/2013 19:11:24 ::: 25 wp9032-11-judgment.doc commercial facilities developed in the air space or any part thereof to such person/s as it may deem fit and to collect from such persons lease rent, concession fees, license fees, maintenance charges and other amounts.
f. With respect to the commercial facilities developed or to be developed in the air space, the developer shall get selling rights, on executing the Lease Deed with the Corporation."
34} Then comes Article 4, which provides for Project Management Consultant. Article 5 provides for Developer's Obligations and then what is material is Article 5.21 entitled "Request for Lease". Article 6 provides for Corporation's Obligations. Article 7 provides for Lease Premium Payments. Article 8 provides for Indemnity. Article 9 deals with Force Majeure and Article 10 provides for Events of Default and Termination and Consequences upon Termination. Article 11 is dealing with Handback of Railway Facilities. Article 12 deals with Dispute Resolution and Article 13 with Representations and Warranties. Article 14 is entitled "Miscellaneous".
35} Now, what the Authorities seem to hold is that if by the subject document CIDCO has conferred certain right, title and interest in the property in favour of the petitioners with regard to entering an ::: Downloaded on - 09/06/2013 19:11:24 ::: 26 wp9032-11-judgment.doc Agreement to Sell with prospective purchasers, then, clause 3.2 with sub-
clauses ( c) and (d), would make it clear that the right to enter into Agreement to Sell with the purchasers/assignors has been created in favour of the petitioners even before execution of a Deed of Lease. This clearly proves that the current Agreement envisages that execution of the Deed of Lease after completion of structures is, nothing but a formality.
Therefore, reliance is placed on Articles 1, 5 and Article 7. Further, if the consideration is lease premium, then, that itself means that it is paid in furtherance of a lease and not a mere Development Agreement.
Therefore, this is not a case where the right in the property will be created in future. The rights under the instrument in relation to the property have been already created. It is not, therefore, a Development Agreement but an Agreement to Lease. It is, therefore, needed to be charged with stamp duty as under Article 36 of Schedule I of the said Act.
The argument of the petitioners that they have been permitted to enter upon the land/site without creating any present demise in their favour, has been rejected by referring to the terms and conditions. It is held that the terms and conditions of the Agreement are partly in the form of lease and partly in the form of Development Agreement. If the document is taken as a whole and considering its recitals, operative part, future ::: Downloaded on - 09/06/2013 19:11:24 ::: 27 wp9032-11-judgment.doc compliance from both parties, set of obligations, it is clear that the document in question is Agreement to Lease and required to be assessed with stamp duty as is chargeable to lease under Article 36 to Schedule I of the said Act.
36} Therefore, what Article 36 contemplates is lease. This Article in Schedule I reads as under:
Description of Instrument Proper Stamp Duty
36 Lease, including under lease
or sub-lease and any agreement to
let or sub-let or any renewal of
lease,-
where such lease purports to
be -
(i) for a period not exceeding The same duty as is leviable on a
five years. conveyance under clauses (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 The same duty as is leviable on a
years but not exceeding ten years, conveyance under clauses (a), (b),
with a renewal clause contingent *["or (c)"], as the case may be, of
or otherwise. article 25, on 25 per centum of the
market value of the property.
(iii) for a period exceeding ten The same duty as is leviable on a
years but not exceeding twenty- conveyance under clauses (a), (b),
nine years, with a renewal clause *["or (c)"], as the case may be of
contingent or otherwise. article 25, on 50 per centum of the
market value of the property.
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28
wp9032-11-judgment.doc
(iv) for a period exceeding The same duty as is leviable on a
twenty-nine years or in perpetuity, conveyance under clauses (a), (b),
or does not purport for any definite *["or (c)"], as the case may be, of
period, or for lease for a period article 25, on 90 per centum the
exceeding twenty-nine years, with market value of the property.
a renewal clause contingent or
otherwise.
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 instrument 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].
37} A bare perusal of Article 36 would make it clear that it covers instrument or document styled as lease and includes under lease or sub-
lease and any agreement to let or sub-let or any renewal of lease. The term "lease" as defined in section 2(n) of the Bombay Stamp Act, 1958 and which definition has been relied upon by Mr.Kumbhakoni reads as ::: Downloaded on - 09/06/2013 19:11:24 ::: 29 wp9032-11-judgment.doc under:
"2(n) "lease" means a lease of immovable [or movable (or both)] property, and includes also,-
(i) a Patta;
(ii) a Kabulayat, or other undertaking in
writing not being a counterpart of a lease to
cultivate, occupy or pay or deliver rent for
immovable property;
(iii) igany instruments by which tolls of any
description are let;
(iv) any writing on an application for a lease
intended to signify that the application is granted;
(v) a decree or final order of any Civil Court in respect of a lease: Provided that, where subsequently an instrument of lease is executed in pursuance of such decree or order, the stamp duty, if any, already paid and recovered on such decree or order shall be adjusted towards the total duty leviable on such instrument;]"
38} A bare perusal of the same would make it clear that "lease" means a lease of immovable or movable or both property and includes the instruments in clauses (i) to (v). The definition, to my mind, is not distinct than the concept as understood by the Transfer of Property Act, ::: Downloaded on - 09/06/2013 19:11:24 ::: 30 wp9032-11-judgment.doc 1882. Section 105 of the Transfer of Property Act, 1882 defines "lease" as under:
"105 Lease defined.- A lease of immovable property is a transfer of a right to enjoy such property, made for a certain time, express or implied, or in perpetuity, in consideration of a price paid or promised, or of money, a share of crops, service or any other thing of value, to be rendered periodically or on specified occasions to the transferor by the transferee, who accepts the transfer on such terms."
39} When section 2(n) of the Bombay Stamp Act, 1958 defines "lease"
to mean lease of immovable property, it only re-enforces that very concept by which lease is termed as a mode of transfer of property by the Transfer of Property Act, 1882. However, for the purposes of stamp duty in the Bombay Stamp Act, 1958, a lease will also include a patta, a kabulayat or other undertaking in writing not being a counter part of a lease to cultivate, occupy or pay or deliver rent for immovable property, any instruments by which tolls of any description are let, any writing on an application for a lease intended to signify that the application is granted and a decree or final order of any Civil Court in respect of a lease.
Therefore, various types of writings and instruments which are in the ::: Downloaded on - 09/06/2013 19:11:24 ::: 31 wp9032-11-judgment.doc nature of lease but without being named as such have been brought within the purview of section 2(n) the Bombay Stamp Act, 1958.
40} The other Article which is relied upon in this case is Article 5(g-a) that reads as under:
Description of Instrument Proper Stamp Duty
5 Agreement or its Records or
Memorandum of an Agreement -
......
(g-a) [(i) If relating to giving [The same duty as is leviable on a
authority or power to a promoter or Conveyance under clauses (b), ["or
a developer, by whatever name (c)"], as the case may be, of Article
called, for construction on, 25, on the market value of the
development of or, sale or transfer property]:
(in any manner whatsoever) of,
any immovable property. Provided that, the provisions of
section 32A shall, mutatis
mutandis, apply to such agreement,
records thereof or memorandum, as
they apply to an instrument under
that section:
Provided further that, if the proper
stamp duty is paid under clause (g)
of article 48 on a power of attorney
executed between the same parties
in respect of the same property
then, the stamp duty under this
article shall be one hundred
rupees.]
[(ii) if relating to the purchase of Same duty as is leviable on one or more units in any scheme or conveyance under clauses (a), (b), project by an investor from a ["or (c)"], as the case may be, of developer: Article 25 on the market value of Provided that, on conveyance the unit.] ::: Downloaded on - 09/06/2013 19:11:24 ::: 32 wp9032-11-judgment.doc of property by the person, under an agreement under this sub-clause, to the subsequent purchaser, the duty chargeable for each unit under this sub-clause shall be adjusted against the duty chargeable under Article 25 (conveyance) after keeping the balance of one hundred rupees, if such transfer or assignment is made [within a period of one year] from the date of the agreement. If on adjustment, no duty is required to be paid, then the minimum duty for the conveyance shall be [rupees one thousand].
Explanation.- For the purposes of this sub-clause, the unit shall include a flat, apartment, tenement, block or any other unit by whatever name called, as approved by the Competent Authority in the building plan.
41} To my mind, the Agreement which has been executed between the parties, in this case, envisages development by the petitioners of the facilities and if the recitals are read together and in their entirety, it is evident that so as to have development of the railway station and the commercial facilities, that the petitioners have been granted a conditional right to enter into Agreement to Sell the built up area over the project site. However, there is no lease created in favour of the project site and that would be created only on the execution of the Lease Deed. Thus, ::: Downloaded on - 09/06/2013 19:11:24 ::: 33 wp9032-11-judgment.doc recitals under part "E" in the Agreement, would make it clear that the petitioners shall be granted selling rights for the commercial facilities constructed in the air space above the railway facilities but such lease rights for the entire project site except the railway facilities land and selling rights, shall be granted to the petitioners only on the execution of the Lease Deed. The term "Agreement" has been defined to mean the Development Agreement with its recitals and schedules. The "Air Space" is a term which is defined to mean the space over the railway facilities that is permissible to the developer for the development of commercial facilities as per the Agreement. The Agreement, therefore, envisages commercial facilities which are also defined to mean construction of integrated complex in the air space and at the project site excluding the railway facilities land and includes but is not limited to facilities, services and assets comprised therein which the developer may build, provide, refurbish, modify, demolish, alter or procure for better commercial utilisation of the project site.
42} If the clauses of the parties are understood in this manner, what the Agreement envisages is grant of development rights and parties have taken care to clarify vide Article 2.4 is that "nothing in these presents ::: Downloaded on - 09/06/2013 19:11:24 ::: 34 wp9032-11-judgment.doc contained shall be construed as a demise in law of the project site hereby agreed to be demised or any part thereof so as to confer upon the developer any legal interest therein until the lease hereby provided shall be executed and registered but the developer shall only have authorisation to enter upon the project site for the purpose of performing his obligation in this Agreement." Article 3 entitled as "Project Site" itself envisages handing over of project site and that is to carry out the development work envisaged in the Agreement. Article 3.2, therefore, as reproduced above, cannot be read in isolation as it is only to use the project site for the purpose of implementing the project in accordance with the provisions of the Agreement and for this purpose to enable the petitioners to regulate entry into and use of the same by third parties. The parties have taken care to state and reiterate that no parting of ownership rights in relation to the project site, can take place.
43} The petitioners have been assigned a conditional right to enter into Agreement to Sell of the built up area for the commercial facilities till the execution of the Lease Deed and this right is conditional in proportion to the payment of lease premium payments. The Agreement entered by the developer has to be in consonance with the Development Agreement ::: Downloaded on - 09/06/2013 19:11:24 ::: 35 wp9032-11-judgment.doc executed by the CIDCO in its favour. Equally, such an Agreement has to be ratified by the parties by executing Lease Deed which Lease Deed shall be entered into after the petitioner fulfills the condition mentioned under Article 5.21. The right to create sub-lease/concession/licence of the commercial facilities developed in the air space or any part thereof, can only be upon execution of the Lease Deed. The right to sell the commercial facilities can only accrue on executing the Lease Deed with the Corporation. Therefore, this Agreement cannot be seen as anything but a Development Agreement and the clauses therein enable and facilitate the petitioners-developer to develop the facilities and hand them over as agreed. With a view to develop the railway facilities land that the petitioners are permitted to enter into Agreement to Sell the commercial facilities in air space above the railway facilities land but even that is conditional as stipulated above. In such circumstances, to hold that this Agreement itself creates a lease and must be styled as a Lease Agreement, is difficult to accept. Really speaking, by interpreting the clauses of the Agreement and construing the document itself, the authorities under the Bombay Stamp Act, 1958 have traversed much beyond the powers conferred in them. They have gone ahead and imposed a duty on the transaction. That was clearly impermissible in this case.
::: Downloaded on - 09/06/2013 19:11:24 ::: 36wp9032-11-judgment.doc 44} It is difficult to accept Mr.Kumbhakoni's submission that the test of "present demise" is not to be satisfied in this case as the definition of the term "lease" appearing in section 2(n) of the Bombay Stamp Act, 1958 is distinct from that in the Transfer of Property Act, 1882. For the reasons that are already indicated above and finding that there is no difference between the definitions and rather the Bombay Stamp Act, 1958 does not define the term but adopts the same meaning assigned to it as in the Transfer of Property Act, 1882 and includes writings and instruments styled as lease, this submission is rejected. Therefore, to hold that the definition of the term "lease" as appearing in section 2(n) of the Bombay Stamp Act, 1958 having not been brought to the notice of this Court or the Hon'ble the Supreme Court in the decisions relied upon by Mr.Dada, I cannot be persuaded to take a different view.
45} What Mr.Kumbhakoni has emphasised is that if section 2(l) defines the term "instrument" to include every document by which any right or liability is, or purports to be, created, 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, ::: Downloaded on - 09/06/2013 19:11:24 ::: 37 wp9032-11-judgment.doc transfer of share, debenture, proxy and receipt, then, that is indicative of the legislative intent. Therefore, the argument is that with the assistance of the definition of the word "instrument" and "lease", the test of "present demise" is not required to be satisfied in this case. Once again, this argument is difficult to accept. The definition of this term may be a key to understand whole of the Bombay Stamp Act, 1958 as held by the Hon'ble Delhi High Court in the case of Chief Controlling Revenue Authority vs. Smt.Satyawati Sood and others reported in A.I.R. 1972 Delhi 171 but when the specific categories of instruments have been enumerated in the Schedule and some of which are also defined independently, then, it is not possible to ignore the provisions in relation thereto. These provisions are to be found in the Bombay Stamp Act itself. Thus, the Bombay Stamp Act when it defines the term "lease" and imposes stamp duty by specifying the rate in Schedule I to the same, then, by considering only the meaning of the term "instrument" as defined in section 2(l), it will not be possible to ignore the other provisions which are equally substantive in nature. Thus, if specific classes of instruments have been set out with a reference and nomenclature and some of them have been also defined or their common or general meaning has been adopted, then, the definition of the term "instrument" alone cannot be of any assistance and will not be decisive. In ::: Downloaded on - 09/06/2013 19:11:24 ::: 38 wp9032-11-judgment.doc this behalf, the following observations of the Hon'ble Delhi High Court in the above judgment are extremely relevant:
"5 Next, we come to the scheme of the Stamp Act in this respect. Under section 3 of the Stamp Act only the instruments mentioned therein are chargeable with the stamp duties indicated in the Schedule to the Act. The definition of "instrument" in section 2(14) is the most fundamental. It includes two distinct types of documents, namely:- (a) a document by which any right or liability is or purports to be created, transferred, limited, extended, extinguished, and (b) a document by which any such right or liability is only recorded even though the document itself does not create such a right or liability. This definition is a key to the understanding of the whole of the Stamp Act. It shows the legislative intention to make a distinction between an instrument which itself forms a legal transaction creating a right or liability and an instrument which does not itself form such a legal act but is only a subsequent record of an act-in- law. It is well known that while the Transfer of Property Act concerns itself primarily with the transactions or acts-in-law, the Registration Act and the Stamp Act are concerned with the documents or instruments only. Unless there is a document or an instrument, these two statutes do not arise for consideration. How does the distinction made in section 2(14) enable us to construe the provisions of the Stamp Act?::: Downloaded on - 09/06/2013 19:11:24 ::: 39
wp9032-11-judgment.doc One way to use section 2(14) in the construction of the Act would be to regard every instrument included in the Schedule to the Act as being chargeable to duty whether it creates a right or liability or whether it merely records subsequently the creation of such right or liability. Such an approach is not permissible for the following reasons: Firstly, in respect of leases it would run contrary to the scheme of the relevant provisions of the Transfer of Property Act and Registration Act explained above. If the intention of the legislation under those Acts was to regard an oral lease accompanied by delivery of possession as valid, it would follow that those two statutes would not regard the subsequent record of the terms of an oral lease as in any way superseding the previous oral lease. Such a subsequent record would not, therefore, amount to the making of a lease under those statutes. It could not be the intention of the legislature, therefore, that such a subsequent record of a legal transaction of lease should nevertheless be chargeable with stamp duty. Secondly, this is why a subsequent record of a previous legal transaction is specifically made chargeable by the Stamp Act only in a couple of specified instances but not otherwise. The first instance is the definition of "settlement" in section 2(24) which expressly applies not only to an agreement in writing by which such a settlement is made but also to an instrument which merely records the previous making of such settlement. The second instance is Article 5 of the Schedule which expressly applies to agreement or memorandum of an ::: Downloaded on - 09/06/2013 19:11:24 ::: 40 wp9032-11-judgment.doc agreement. This shows that it would apply not only to the written agreement which is contemporaneous with the act-in-
law embodied therein but also to a mere subsequent memorandum of an oral agreement constituting an act-in- law which has already taken place in the past. It is to be noted that under Article 5 it is expressly mentioned that "Agreement to Lease" would be governed not by Article 5 but by Article 35. This would mean that the scheme of Article 5 which makes chargeable not only a contemporaneous agreement but also a subsequent record of it to stamp duty is not applicable to an agreement to lease. We cannot, therefore, construe the entries in the Schedule to the Stamp Act to apply not only to the deeds which created a right or liability contemporaneously but also to the subsequent record of the oral creations of such rights or liabilities except when this is specifically stated in the Act such as in section 2(24) and in Article 5 of the Schedule thereof.
6 The correct approach to the construction of the entries in the Schedule to the Stamp Act would, therefore, be to read those entries as they are or in the light of the definitions given in the Stamp Act. So read, those entries would apply only to the deeds which are contemporaneous with the creation of and intended to create the rights and liabilities but not to the deeds which merely record the previous creation of such rights and liabilities unless otherwise stated in the Act, e.g in section 2(24) and in Article 5 of the ::: Downloaded on - 09/06/2013 19:11:24 ::: 41 wp9032-11-judgment.doc Schedule I."
46} Mr.Kumbhakoni's argument, therefore, that the test of "present demise" is not required to be satisfied, cannot be accepted because there is a clear distinction in law between a lease and Agreement to Lease. It is not necessary to multiply decisions but to refer to this broad concept as has been understood in the Bombay Stamp Act, 1958 itself. In the case of State of Maharashtra and others vs. Atur India Pvt Ltd reported in (1994) 2 Supreme Court Cases 497, the Hon'ble Supreme Court referred to this vital distinction in law and Mr.Dada's reliance on this decision is apposite and appropriate. After referring to the distinction between lease and Agreement to Sell, in paragraphs 24 to 28, including the famous decision in the case of Tiruvenibai vs. Lilabai reported in A.I.R 1959 Supreme Court 620, what the Supreme Court has held is that if the relationship of lessor and lessee between parties has not came to be established and when there was no actual demise on the date of the Agreement, then, it will fall in the category of Agreement to Lease. Mr.Kumbhakoni submitted very vehemently that the definition of the term "lease" as appearing in section 2(n) was not noticed by the Hon'ble Supreme Court and, therefore, this ::: Downloaded on - 09/06/2013 19:11:24 ::: 42 wp9032-11-judgment.doc decision is not applicable to this case. However, his argument overlooks the contents of paragraph 29 of this decision wherein the Supreme Court makes specific reference to section 2(n) which is nothing but the definition of term "lease". Once the Hon'ble Supreme Court's judgment in its Atur India's case has been consistently followed, then, Mr.Kumbhakoni's argument cannot be accepted.
47} Mr.Kumbhakoni submits that judgment in the case of Atur India (supra) and ICICI (supra) have been rendered by the Hon'ble Supreme Court because of Explanation III below Article 36 of Schedule I, which was in force at the material time. That made it clear that Agreement to Lease shall not be chargeable as a lease unless there is an immediate and present demise. Mr.Kumbhakoni submits that this explanation has now been deleted and that has great significance. The deletion of this explanation has some definite meaning. If as in this case 60% of the lease premium is paid, possession is handed over and all that remains to be done is to pay balance sum before execution of Lease Deed, then, there is a present demise even otherwise, is the submission of Mr.Kumbhakoni.
48} Both are difficult to accept because what the explanation clarified ::: Downloaded on - 09/06/2013 19:11:24 ::: 43 wp9032-11-judgment.doc was that an Agreement of Lease shall not be chargeable as a lease unless there is immediate and present demise. Its deletion does not mean that even if there is no immediate and present demise, the Agreement of Lease straightaway can be termed and construed as a lease. What the explanation clarified was if the Agreement does not create an immediate and present demise, then, it will not fall under Article 36 of Schedule I of the Bombay Stamp Act, 1958. The Supreme Court was considering a similar argument in ICICI case. It was argued that the document before the Supreme Court though styled as Agreement for Lease, it, in substance itself creates a lease. It demises immediately and presents an interest in the land in favour of the ICICI. Repelling this argument and relying on the judgment in the case of State of Maharashtra and others vs. Atur India Pvt Ltd reported in (1994) 2 Supreme Court Cases 497, what the Supreme Court has held is as under:
"6 Therefore, there is a clear intention of the parties to execute a document of lease in future. Until such document is executed, the status of the appellants is that of a licensee. In fact, we are informed by the appellants that pursuant to this agreement, a lease has, in fact, now been executed between the parties on 8.4.1999 and stamp duty amounting to Rs.5,45,30,600 has been paid by the appellants on the ::: Downloaded on - 09/06/2013 19:11:24 ::: 44 wp9032-11-judgment.doc document of lease.
7 Our attention has been drawn to a decision of this Court in Associated Hotels of India Ltd v. R.N.Kapoor SCR at p.383 where this Court has made a distinction between a lease and a licence. Referring to section 105 of the Transfer of Property Act, this Court has observed that it defines a lease of immovable property as a transfer of a right to enjoy such property made for a certain time in consideration for a price paid or promised. A lease is, therefore, a transfer of an interest in land and the interest transferred is called the leasehold interest. It follows that the lessee gets that right to the exclusion of the lessor. Whereas Section 52 of the Indian Easements Act defines a licence thus:
"52. Where one person grants to another, or to a definite number of other persons, a right to do, or continue to do, in or upon the immovable property of the grantor, something which would, in the absence of such right, be unlawful, and such right does not amount to an easement or an interest in the property, the right is called a licence."
8 Therefore, if a document gives only a right to use the property in a particular way or under certain terms, while it remains in possession and control of the owner thereof, it will be a licence. In the present case, the licensee has been put in possession only for the purpose of constructing a building or ::: Downloaded on - 09/06/2013 19:11:24 ::: 45 wp9032-11-judgment.doc buildings. Under this document, no interest in the land is conveyed in favour of the appellants. The agreement does not create a lease, nor does it demise any interest in land in favour of the appellants. In this connection, a reference may also be made to a subsequent decision of this Court in State of Maharashtra v. Atur India (P) Ltd where this Court has made a distinction between a lease and an agreement for lease.
9 Although it has been contended by the respondents that there is a demise of interest in the land under the said agreement, the agreement does not demise any such interest in the land. Clause 2 expressly sets out that this agreement is not to be construed as a demise in law of the said land so as to give to the licensee any legal interest in the land. Article 36 of the Bombay Stamp Act is, therefore, not attracted to the said document."
49} This judgment also supports all the arguments of Mr.Dada and to my mind, the deletion of the explanation will not mean that even if there is no present and immediate demise, the Court can proceed to hold that the document or instrument is a lease by itself. In every such case, the document or instrument will have to be read as a whole so as to find out as to whether though styled as an Agreement for Lease, whether it creates a present and immediate demise or interest so as to hold that it is lease by ::: Downloaded on - 09/06/2013 19:11:24 ::: 46 wp9032-11-judgment.doc itself. In the present case, the parties do not use the term "Agreement to Lease" or "Agreement for Lease". They have executed a Development Agreement with creation of lease in future and until that lease is created and further a document executed in that behalf, a conditional right to enter into or execute an Agreement to Sell the commercial portion or property has been granted in favour of the petitioner. It has been clarified that this does not amount to lease of the railway facilities land and equally the commercial facilities or the air space above it. The parties have taken care to clarify that the limited right granted by Article 3.2(c) is subject to ratification by them by executing a Lease Deed. Until then, such Agreement by itself will not create any rights in favour of the transferee claiming through the petitioners. If that is how the parties have understood their arrangement, then, permitting the Authorities under the Bombay Stamp Act, 1958 to style it differently or distinctly so as to impose stamp duty thereon, cannot be permitted as that is travelling beyond and exceeding their powers under the subject enactment. A conditional right to enter into Agreement to Sell will not be complete, as such Agreement will have to be ratified by parties by executing the Lease Deed between them and that is also on fulfilling all conditions stipulated by Article 5.21. Until then, it is an arrangement so as to facilitate ::: Downloaded on - 09/06/2013 19:11:24 ::: 47 wp9032-11-judgment.doc development of the site and generate funds for said development. Beyond that, the parties have not intended to create any other arrangement, leave alone conferring any rights. In such circumstances, accepting Mr.Kumbhakoni's argument would be amounting to brushing aside and ignoring a binding precedent. That is not permissible in law and by rule of precedents.
50} As a result of the above discussion and finding that the petitioners are right in their contentions that the Agreement is an Agreement for Development of the properties subject to a future arrangement of lease, then, the order under challenge cannot be sustained. It will have to be quashed and set aside. By merely paying the lease premium to the extent of 60% and handing over possession, no rights are created much less of a lease. Therefore, the petitioners are right in contending that under the Agreement, no interest in land is transferred. It does not create a lease nor is intended to create any interest in the land or demise it in their favour. It is only for the limited purpose of construction and development of the land that the same has been entered into. That stand of the petitioners find support from the recitals and clauses of the Agreement which have been completely ignored by the Authorities. Based on certain ::: Downloaded on - 09/06/2013 19:11:24 ::: 48 wp9032-11-judgment.doc assumptions and presumptions, they have arrived at a conclusion which is beyond the intentment of the parties under the Agreement in question. All the more, therefore, the order passed cannot be sustained. The impugned order dated 16th July 2011 is, therefore, quashed and set aside. Rule is made absolute in terms of prayer clause (a) but by clarifying that the petitioners shall be bound by their undertaking given to this Court and which has been taken on record.
(S. C. DHARMADHIKARI, J) ::: Downloaded on - 09/06/2013 19:11:24 :::