Rajiv Kumar & Another vs State Of U.P. & Others on 17 April, 2017

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Allahabad High Court

Rajiv Kumar & Another vs State Of U.P. & Others on 17 April, 2017

By means of the present writ petition, the orders passed by the stamp authorities dated 6.2.2003 and 31.1.2005 are under challenge. The record transpires that a deed dated 1.11.2000 was executed in favour of the petitioners by one Sri Ashok Kumar Agarwal namely respondent no. 8 with the assertion that he had transferred lease hold right in Plot no. 780 situated in Mauja Datauji Mausuma, Sarojini Naidu Marg, District Firozabad to the petitioners. The petitioners submit that the said deed is an assignment of lease hold rights and absolute ownership rights had not been transferred and as such the same cannot be said to be a 'Conveyance' within the meaning of Article 23 of Schedule 1-B of the Indian Stamp Act.

The said sale deed was impounded by the Sub-Registrar and the deficit stamp duty and penalty was imposed by the order dated 6.2.2003 with the assertion that the document had wrongly been termed as assignment deed with a view to evade the stamp duty. This order was challenged in revision which was also dismissed.

Learned counsel for the petitioners submits that the instrument has wrongly been treated as sale deed and the proceedings under Section 47-A of the Indian Stamp Act, as is applicable in the State of U.P., treating the said document as conveyance is vitiated. It is contended that the instrument would fall under Article 63 of the Schedule 1-B of the Act and the stamp duty payable on the instrument have duly been deposited.

Reliance is placed upon the judgment of Apex Court in the case of Residents Welfare Association, Noida vs. State of U.P. & others reported in 2009 (14) SCC 716.

To test these submissions of learned counsel for the petitioner, it would be necessary to go through the instrument as it is settled law that for the purposes of stamp duty, the nature of transfer must be assessed upon an examination of the terms of the instrument as a whole. Any reference to some other earlier transaction without incorporating the terms and conditions thereof in the instrument, no scrutiny would be relevant. No importance can be given to the nomenclature of the document. Reference may be made to the judgment of Apex Court in the case of Himalaya House Co. Ltd., Bombay vs. the Chief Controlling Revenue Authority reported in 1972 (1) SCC 726 in paragraph '10' which reads as under:-

"10. For the purpose of this case, we shall proceed on the assumption, without deciding, that the charging words in Article 23 of the Stamp Act "where the amount or value of the consideration for such conveyance as set forth therein" do not mean that the Revenue must have regard only to what the parties to the instruments have elected to state the consideration to be, but the duty must be assessed upon the amount or value of the consideration for the transfer as disclosed upon an examination of the terms of the instrument as a whole. We are of the opinion, that the learned Chief Justice and Naik J. were not justified in holding that the Deed of Assignment incorporates into itself the various agreements entered into between Uttamchand and the persons to whom he assigned flats, offices and shops. The only reference to those persons in the Deed of Assignment is in the preamble wherein it is stated "AND WHEREAS the Assignor having erected a building known is Himalaya House on the said piece of land had granted to certain persons the right to occupy flats, offices and shops in the said building AND WHEREAS the Assignee Company has been formed for the better administration of the said building and for the protection of the interests of the persons occupying the flats, offices and shops therein." These clauses merely refer to the earlier transactions. They do not incorporate into the Assignment Deed the earlier agreements with the persons referred to therein. Mere reference to some earlier transactions in a document does not amount to an incorporation in that document, of the terms and conditions relating thereto. From the language used in the Assignment Deed it is not possible to come to the conclusion that the terms and conditions of the earlier transactions have been made a part of that Deed. Further barring one particular agreement, other agreements were not before the Court. Therefore, it is not possible to know what the terms and conditions of those agreements were. Before the terms and conditions of at, agreement can be said to have been incorporated into another document, the same must clearly show that the parties thereto intended ,to incorporate them. No such intention in available in this case."

Paragraphs '40' and '41' of Residents Welfare Association (supra) are also relevant to be noted hereunder:-

"40. Before we part with this aspect of the matter, that is to say, whether the document/instrument was in fact a deed of assignment or an outright sale, we must also keep in mind that the nomenclature to the document of assignment cannot be said to be determining factor in deciding whether a particular deed or document was a lease or a deed of assignment.

41. In Madras Refinery Ltd. V/s. C.S. [AIR 1977 SC 500], it was held that in order to decide whether a particular document is a lease or a deed of assignment, one has to look at the substance of the deed of assignment to the document and not the nomenclature. Therefore, it must be held that no importance can be given to the nomenclature to the document. Although some of the members of the Association had termed the document as a deed of sale or transfer-cum-sale deed instead of as a deed of assignment, it remains as a deed of assignment as has been noted above by us."

The question herein is to ascertain as to whether the deed in question is a deed of assignment of lease hold rights and would fall under Article 63 of Schedule 1-B of the Indian Stamp Act or would be an outright sale so as to be termed as 'Conveyance" and would be covered by Article 23 of Schedule 1-B of the Indian Stamp Act.

In order to answer the said question, it would be relevant to first refer to the meaning of words 'lease', 'sale' and assignment'.

The word 'sale' has not been defined under the Indian Stamp Act, 1899. Section 2 (10) of the Act defines "Conveyance" as including a conveyance on sale and every instrument by which property, whether movable or immovable property is transferred inter vivos and which is not otherwise specifically provided for by Schedule 1-A or Schedule 1-B, as the case may be.

The word 'Sale" has been defined under Section 54 of the Transfer of Property Act, 1882 which reads as under:-

"Sale is a transfer of ownership in exchange for a price paid or promised or part-paid and part-promised."

"Lease" has been defined under Section 105 of the Transfer of Property Act, 1882 and also in sub-section (16) of Section 2 of the Stamp Act, 1899 which read as under:-

"Section 105. 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."

"Section 2(16). "Lease" means a lease of immovable property, and includes also-

(a) a palla; .

(b) a Kabuliyat or other undertaking in writing, not being a counterpart of a lease, to cultivate, occupy, or payor deliver rent for, immovable property;

(c) any instrument by which tolls of any description are let;

(d) any writing on an application for a lease intended to signify that the application is granted;"

There is no definition of word "assign" either under the Transfer of Property Act or under the Indian Stamp Act.

As per the dictionary meaning, the word "assign" means to allocate to someone or to appoint to a particular task or to transfer legal rights or liabilities. The word "assignee" means a person to whom a right or liability is legally transferred. The meaning of "assignment" is an act of transfer of a legal right or liability or a document effecting a legal transfer of a right or liability.

As per the Black's Law Dictionary Ninth Edition, the word "assign" means 'To convey; to transfer rights or property'. The word "assignee" means 'One to whom property rights or powers are transferred by another'. The word "assignment of lease" means 'The rights or property so transferred'.

From the plain reading of Sections 54 and 105 of the Transfer of Property Act and the dictionary meaning of word "assignment", it is gathered that in the case of a lease, there is a partial transfer and the right of reversion remains with the lessor. Whereas in case of sale, there must be an absolute transfer of ownership and not some rights only as in the case of a lease. The assignment of lease, therefore, would be a transfer by the lessee only on the terms and conditions of the lease deed for the remainder period of the lease. As with the assignment, all rights of the lessee are transferred to the assignee, the relationship of lessee with the lessor is severed and the assignee would be entitled to enjoy the property on the terms and conditions of the lease for the remainder of the term of the lease. He would be answerable to the lessor directly. The lease rent or the price periodically which the lessee would have to pay to the lessor now would be payable by the assignee. In case of reversion, the immovable property, subject matter of deed of assignment, would go back to the lessor.

In order to appreciate whether the document is a sale or a lease, it has to be seen whether the demised land was merely an enjoyment of the land or transfer of the ownership. As in case of a sale, there must be an absolute transfer of ownership and not some rights only as in the case of the lease.

Reference may also be made to Byramjee Jeejeebhoy (P) Ltd. vs. State of Maharashtra reported in AIR 1965 Supreme Court 590, wherein the Apex Court formulated the principles for determination of the question as to whether the deed would be a lease or grant for transfer of a right to enjoy land. Relevant paragraph '8' is quoted as under:-

"8. Such a grant cannot be regarded as a lease, for a lease contemplates a demise or a transfer of a right to enjoy land for a term or in perpetuity in consideration of a price paid or promised or services or other things of value to be rendered periodically or on specified occasions to the transferor. The grant does not purport to demise merely a right of enjoyment of land : it confers rights of ownership in land. There is again no contractual right reserved either expressly or by implication, to determine the grant. The reservation of the reversion and reversions remainder and remainders yearly, and rents issues and profits of all the lands hereditaments and profits in the premises clause, is of the nature of a restriction upon the estate transferred and does not restrict the quality of the estate. The rent to be demanded was again not stipulated as Consideration for the grant of the right to enjoy land, but expressly in consideration of granting freedom from liability to pay assessment. The conclusion of the trial Court and the High Court that the villages were not held under a lease within the meaning of S. 2 (d) of Act 47 of 1951 must be accepted."

In the light of the legal principles noted above, in the instant case, it is necessary to find out the true essence of the deed executed between the petitioner and respondent no. 8:-

(1) In first paragraph of the deed in question, it is stated that Sri Ashok Kumar Agarwal i.e. the respondent no. 8 (lessee) got lease hold rights in plot no. 780 situated in Mauja Datauji Mausuma, Sarojini Naidu Marg, District Firozabad from one Mukesh Kumar Agrawal (lessor) vide registered deed dated 18.12.1985.

(2) It is then contended that there was no other co-sharer of the demised land, the deed in question was executed as the executant was in need of money.

(3) The physical possession and ownership rights had been transferred to the petitioner herein in whose favour the deed was executed and from the date of execution of the deed, he would be absolute owner of the property.

(4) It is further mentioned that the demised land did not belong to any Government agency and there was no dispute pending with regard to the said plot in any court of law. Lastly it is stated that an amount of Rs. 40,000/- had been received by the executant towards consideration for transfer of his rights.

A careful reading of the document shows that there was no condition of transfer of partial right in the demised land for the remainder of term of the lease or in perpetuity in consideration of a price paid or promised or services which would have to be rendered periodically or on specified occasions to the lessor or the original transferor i.e. Mukesh Kumar Agrawal.

The terms and conditions of the alleged lease deed dated 18.12.1985 executed by Mukesh Kumar Agrawal, the lessor in favour of the executant namely Ashok Kumar Agrawal lessee have not been incorporated in the deed in question nor there is any mention thereof. The transfer in favour of the petitioner is an absolute transfer of ownership for the consideration paid to the executant. There is no condition of reservation of the right of reversion nor any restriction upon the estate transferred had been put. There is no stipulation in the deed that the consideration was paid for the grant of right to enjoy land for the remainder of the term of the lease.

This Court is, therefore, of the view that the deed presented for registration was a deed of an outright sale and cannot be said to be a deed of assignment of lease hold rights. The same is, therefore, referable to Article 23 of Schedule 1-B of the Indian Stamp Act and would not be treated as a deed of assignment of lease under Article 63 of Schedule 1-B of the Stamp Act. The proceeding undertaken by the stamp authorities, therefore, cannot be faulted with.

As far as the application of the judgment of the Apex Court in Residents Welfare Association (supra) is concerned, in the said case, there was no dispute or doubt that the demised land was transferred vide lease deed executed by Noida in favour of the cooperative societies and its members. It was admitted position that the lessor namely Noida authorities had entered into the lease agreement with the cooperative societies and their members being lessees and the sub-lessees; respectively. The sub-lessees further entered into the agreement with the assignees (members of the appellant association therein). The deed of assignment in favour of the members of appellant association was termed as assignment of lease hold rights after considering the terms and conditions of the lease deed executed between Noida as lessor and the cooperative society and its members as lessees and sub-lessees. It was then held that as under the lease deed, such a clause was there wherein the NOIDA will have a right over the buildings and the appurtenants on the land at the time of re-entry, in case of any failure of the sub-lessee to follow the terms and conditions of the lease deed. A right of reversion to the land and appurtenants thereto including the building, on the termination or expiry of the lease had been reserved. It was thus held that the document of transfer was the assignment of lease and not an outright sale of the land and its appurtenants. Such is not the condition in the present case, neither the terms of the lease has been mentioned nor the right of reversion to the lessor had been reserved in the deed in question, the ratio of abovenoted judgment would not be available to the benefit of the petitioner herein.

The writ petition is, therefore, found devoid of merits and hence dismissed.

Order Date :- 17.4.2017 B.K./-

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Allahabad High Court