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1995 DIGILAW 488 (KAR)

RAJASEKHAR v. BANGALORE DEVELOPMENT AUTHORITY

1995-09-29

KUMAR RAJARATNAM, RAJENDRA BABU

body1995
RAJENDRA BABU, J. ( 1 ) THIS Petition is filed under Article. 226 of the Constitution for a direction to the respondents not to insist upon the petitioner to produce stamp paper of value of Rs. 47,510/- to execute lease-cum-Sale agreement and further direct the respondents to put the petitioner in possession of the house No. 200 in Rajamahal Vilas II Stage with immediate effect. The further prayer made by the petitioner is for a declaration that Article 5 (d) to the Schedule to the Karnataka Stamp act, 1957 (for short the Act) is not applicable to Lease-cum-Sale Agreement executed under the bangalore Development Authority (Allotment of Buildings under Self-Financing Housing scheme) Rules, 1982 (for short the Rules) or in the alternative to declare the said provision as ultra vires the powers of the State Legislature. ( 2 ) THE petitioner applied for allotment of a house under the Rules. A house was allotted to the petitioner. Though originally at the time of allotment the cost was estimated at Rs. 2,85,000/-, subsequently it was enhanced to Rs. 4,75,000/ -. The petitioner has paid the entire sum of Rs. 4,75,000/- to the first respondent and requested for handing over the possession of the house to him. However, the petitioner was called upon to execute Lease-cum-Sale agreement on a stamp paper of Rs. 47,510/- and if Lease-cum-Sale agreement is not executed within 45 days from the date of intimation, the allotment of house would be cancelled by the first respondent. At that stage the petitioner approached this Court and this Court stayed the cancellation of the allotment made in favour of the petitioner. ( 3 ) THE Act has been amended in the year 1981 introducing a provision thereto so that a transaction of Lease-cum-Sale in connection with an allotment of a building site with or without building thereon should be stamped as a Conveyance for a market value equal to the security deposit. It is contended that the provision is contrary to the Rules framed under the Bangalore development Authority Act, 1976. It is contended that the provision is contrary to the Rules framed under the Bangalore development Authority Act, 1976. ( 4 ) IT is urged that under Rule 10 of the Rules no title is passed to the allottee till the expiry of ten years from the date of Lease Agreement; that the building allotted should be deemed to have been leased to the allottee until the lease is determined or the building is conveyed; that under rule 11 of the Rules the Lease Deed has to be executed only on expiry of the period of ten years from the date of Lease Agreement provided in the meanwhile the lease has not been cancelled; that Rule 12 of the Rules carrying out additions or alterations without prior written permission from the Authorities and Rule 17 of the Rules prohibits additions, alterations and alienations of the building. It is therefore contended that in view of these restrictions respondent No. 1 cannot insist upon the petitioner to produce the papers of stamp value of Rs. 47,510/- for executing the lease-cum-Sale Agreement. It is urged that the instrument in question is not a Conveyance and the condition imposed by respondent No. 1 to cancel the sale transaction would indicate that it is not a Sale Deed at all, but it is merely an allotment. The further restriction that the vendee has to obtain permission of the vendor to carry out the alteration of the building would not be in consonance with the ingredients of the sale. Hence, to equate a Lease-cum-Sale with all the accompanying conditions set out in the Agreement cannot be compelled to be stamped under article 20 of the Act. Both Article 5 (d) of the Act and Rules cannot hold the same field. ( 5 ) IT is also urged that under the Self Financing Housing Scheme the allottee makes the initial deposit. Rules also provides for mode of payment and the building is constructed out of the funds provided by the allottee and in such circumstances it is not permissible to value the building for the purpose of determining the stamp duty payable thereof. The allottee is made to pay stamp duty on the money payable by him for the purpose of construction of the building. It is therefore contended that it is not permissible to call upon the petitioner to pay stamp duty on the building. The allottee is made to pay stamp duty on the money payable by him for the purpose of construction of the building. It is therefore contended that it is not permissible to call upon the petitioner to pay stamp duty on the building. The petitioner also contends that the B. D. A.- first respondent should adjust the registration fee of Rs. 5,000/- paid along with the application by the allottee at the time of execution of the Leas cum-Sale Agreement ( 6 ) IN order to correctly understand or appreciate the arguments advanced on behalf of the petitioner it is necessary to refer to the relevant provisions of the Act. Article-5 in Schedule to the Act deals with agreement or memorandum of an agreement and the proper stamp duty payable thereon. Article 5 (d) provides for payment of stamp duty at the same rate as a conveyance under Article 20 for a market value equal to the security deposit and the amount of average annual rent reserved under such agreement, if such transaction relates to lease-cum-Sale in connection with the allotment of a building site with or without building thereon effected by the Bangalore Development Authority. The petitioner is challenging the validity of this provision on the basis that the said provision is not in conformity with the Rules framed by the first respondent. ( 7 ) IN AIR1986 SC 515 , (1984 )2 Complj853 (SC ), 1985 (4 )ECC111 (SC ), 1999 (110 )ELT3 (SC ), [1986 ]159 ITR856 (SC ), 1984 (2 )SCALE853 , (1985 )1 scc641 , [1985 ]2 SCR287 Indian Express Newspapers (Bombay) Private Ltd, and Ors. v. Union of India and Ors. it has been clearly held that a subordinate legislation does not carry the same degree of immunity which is enjoyed by a statute passed by a competent legislature and the validity thereof could be questioned on the ground that it is contrary to some other statute. ( 8 ) THE contention advanced on behalf of the petitioner that the stamp duty will have to yield to the Rules framed under the B. D. A. is plainly contrary to the law stated above. A Rule will have to be in conformity with the law under which it is made and also in conformity with the other statutes. ( 8 ) THE contention advanced on behalf of the petitioner that the stamp duty will have to yield to the Rules framed under the B. D. A. is plainly contrary to the law stated above. A Rule will have to be in conformity with the law under which it is made and also in conformity with the other statutes. Therefore, the contention advanced on behalf of the petitioner that the Act will have to be struck down or that it is not applicable to Lease-cum-Sale Agreement cannot be accepted and that contention is rejected. ( 9 ) IF the Act has used any expression that the stamp duty payable on an instrument is on the basis of the nature of the transaction without describing the document, it would have been possible for us to interpret the Lease-cum-Sale Agreement and thereafter find out what is the stamp duty payable and under which description this particular instrument would fall. No such option is available on the | language of Article 5 (d) of the Act. Article 5 (d) clearly states with regard to agreement relating to a transaction of Lease-cum-Sale in connection with the allotment of a building site with or without building thereon effected by the B. D. A. Therefore, the stamp duty is payable only under Article 5 (d) in relation to the Lease-cum-Sale Agreement and under no other statute. Thus, the contention advanced on behalf of the petitioner that Article 5 (d) of the act is not available to the Lease-cum-Sale Agreement executed by the first respondent cannot therefore be accepted. ( 10 ) FOR the very reasons stated earlier, the argument that Lease-cum-Sale Agreement cannot be stamped as provided under Article 5 (d) is not correct. The contention advanced on behalf of the petitioner that under the terms of the deed certain amount has to be paid in one manner or the other also does not stand to reason because the legislature in this case has not left any scope for interpretation and it has clearly set out what the nature of the document is and the stamp duty payable thereon. In order to levy duty as provided under Article 20 for a Conveyance is only a measure or a rate of duty. That does not necessarily mean that such an agreement must amount to a Conveyance. In order to levy duty as provided under Article 20 for a Conveyance is only a measure or a rate of duty. That does not necessarily mean that such an agreement must amount to a Conveyance. The power to levy stamp duty is available to the State and is a tax. At what rate the tax will have to be levied and in respect of what transaction is left to the discretion of the legislature. It is unknown in law that merely on the harshness of a particular levy, the provisions of law thereto have been struck down unless it can be shown that such levy discriminates by making classification, which is unreasonable and arbitrary, No such argument is put forth in this case. All that is stated is that memorandum of Agreement of Lease-cum-Sale could not be equated to a Conveyance. Therefore, with this position in law that even an Agreement or a memorandum of agreement relating to a transaction of Lease-cum-Sale Agreement in connection with the allotment of a building site with or without building effected by the first respondent is to be classified as an agreement attracting duty as provided under Article 5, it is not open to the petitioner to question the same on the basis that the terms of the lease would not amount to conveyance and therefore such duty cannot be levied. When the legislature has the power to levy duty on different types of documents, it is the discretion of the legislature to levy duty at different rates on different types of documents. If in the opinion of the legislature such duty has to be paid on different transactions the wisdom cannot be questioned by the Courts. Therefore, the contention advanced on behalf of the petitioner is plainly misconceived. The petitioner appears to have proceeded on the basis that it is only in cases of Conveyance certain duties will have to be paid as provided under Article 20 and an agreement or memorandum of agreement should, not be equated with an instrument of Conveyance. When the Act specifically provides for the rate at which the duty has to be collected, in respect of this very transaction an interpretation of that agreement is not available. When the Act specifically provides for the rate at which the duty has to be collected, in respect of this very transaction an interpretation of that agreement is not available. All that has to be seen is whether the rate of duty demanded is in order or not Rate of duty demanded is not in dispute because the petitioner has paid the entire consideration of Rs. 4,75,000/- under Lease-cum- Sale Agreement and that amount will be held by the first respondent by way of security until completion of the lease period. ( 11 ) THE petitioner contends that a perusaf of Agreement would make it clear that the first respondent has to execute the sale deed of the building at the cost of the lessee/vendee and the stamp duty payable thereon attracts duty under Article 20 of the Act. ( 12 ) THE second Proviso to Article 20 reads: "provided further that in any case where a lease-cum-sale agreement is executed and is stamped with the advalorem stamp required for such agreement under item (d) of Article 5 and in furtherance of such agreement a conveyance is subsequently executed, the duty on such conveyance shall not exceed rupees ten or the difference of the duty payable on such conveyance and the duty already collected on the security deposit under item (d) of Article 5, whichever is greater. " the aforesaid Proviso makes it clear that if conveyance is executed pursuant to Lease-cum-Sale agreement referred to in Article 5 (d), the duty on such Conveyance shall not exceed Rs. 10/- or the difference of duty payable on such Conveyance and the duty already collected on the security deposit under Article 5 (d) whichever is greater. Therefore, it is clear that the petitioner will not have to pay stamp duty once over again when the Sale Deed has to be executed under the terms of the Lease-cum-Sale Agreement. If the petitioner has to pay stamp duty by way of Conveyance at one stage or the other, at what stage the duty will have to be collected is also in the discretion of the legislature and if the legislature prescribes, such duty shall be collected at the earliest point of time of the transaction, no exception can be taken thereof. ( 13 ) IN the result, we find no merit in this Petition and it is liable to be dismissed. ( 13 ) IN the result, we find no merit in this Petition and it is liable to be dismissed. However it is made clear that if the petitioner pays the stamp duty within a period of two months from today, the respondents shall execute the Lease-cum-Sale Agreement and get the same registered as provided under the relevant Rules and take such further consequential action as is necessary. ( 14 ) SUBJECT to what is stated above, this Petition is dismissed.