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2002 DIGILAW 329 (RAJ)

Jai Ambe Ganga Chem. v. State of Raj.

2002-02-07

H.S.PUNIA

body2002
PUNIA, Member – This revision petition has been filed under Section 56 of the Indian Stamp Act against the order dated 14.5.2001 passed by Dy Inspector General-cum Collector (Stamps), Hanumangarh whereby he assessed the value of the document in question at Rs. 16,38,0001- and petitioner was ordered to pay deficit stamp duty of Rs. 1,03,480/-, registration fee Rs. 6,3251- and a penalty of Rs. l00/-. (2). The brief facts of the case are that the instrument in question described as Lease-Agreement in respect of an industrial Plot No. A-7 measuring 8027 Sq. Meters situated at Industrial Area, Hanumangarh-I Phase between RIICO as Lessor and petitioner Company as Lessee for a period of 99 years from 1st day of January 1980. This industrial plot was originally allotted to M/s Rajasthan Industries and Partners of the said firm sought permission to transfer the aforementioned industrial plot to the petitioner company, which was allowed by RIICO Ltd. Hanumangarh Junction under RIICO Land Disposal Rules, 1979 and later a permission letter dated 27.10.99 was issued by Asstt. Regional Manager of RIICO. The instrument of lease agreement was executed between the parties on 28.2.2000 and it was presented for registration before Sub-Registrar, Hanumangarh. After registering the instrument of Lease-Agreement, Sub-Registrar, impounded the said instrument and prepared a valuation report with regard to constructions comprised in the said industrial plot, which includes labour quarters, office, shed, toilet and boundary wall along with lease hold rights. The petitioner deposited 40% of the demanded amount of deficit stamp duty and registration fee under protest. Then Sub-Registrar Hanumangarh made a reference under Section 47A(1) of the Stamp Act to Collector (Stamps), Hanumangarh and stated that construction on the plot is old one which is valued at Rs. 20,36,000/-. The Collector (Stamps) registered the case No. 870/2000 and issued notice to the petitioner calling upon the petitioner to show cause as to why the deficit stamp duty and registration fee be not recovered from him. The petitioner submitted his reply on 6.11.2000 and stated that RIICO has transferred only lease-hold rights to the petitioner in respect of the plot in question, because the ownership of the plot vests in RIICO. It was further stated that no other property was conveyed to the petitioner through the instrument of lease and RIICO was not empowered to transfer the structures standing on the plot in question. It was further stated that no other property was conveyed to the petitioner through the instrument of lease and RIICO was not empowered to transfer the structures standing on the plot in question. Therefore, the demand of stamp duty on the superstructure is not justified. (3). After hearing both the parties the learned Collector (Stamps) held that plot No. A-7 was originally allotted to M/s Rajasthan Industries and partners of the said firm sold the plot in question to the petitioner and the lease-agreement has been executed in pursuance of the sale by the partners of the M/s Rajasthan Industries. Regarding superstructures comprised in the plot in question, it was observed that tin shed has been removed and the valuation proposed by the Sub-Registrar in respect of tin shed @ Rs. 235 per sq. feet was not justified. Looking to the nature of constructions being 18 years old depreciation was also allowed and valuation of superstructures was finally determined at Rs. 16,38,000/- and petitioner was directed to pay stamp duty under Article 23 of Schedule I. Hence this revision petition has been filed. (4). The learned counsel for the petitioner has argued that plot in question was initially allotted to M/s Rajasthan Industries in the year 1980 and the partners of the said firm sought permission of the RIICO to transfer the plot in question to the petitioner. M/s Rajasthan Industries was not the owner of the plot and he had only lease hold rights which have been transferred to the petitioner and thereafter fresh lease Agreement has been executed by the RIICO in favour of the petitioner for the remaining period of the lease. Thus, there was no transfer of any property to the petitioners through instrument in question. Thus, no immovable property has been conveyed by the instrument of lease agreement. Hence, the instrument cannot be treated as conveyance deed creating any right in the immovable property in favour of the petitioner Company. Therefore, the learned Collector (Stamps) has erred in holding the instrument of lease-agreement as conveyance deed. He has placed reliance on State of Rajasthan vs. Bhilwara Spinners Ltd. (1). (5). The learned Dy. Hence, the instrument cannot be treated as conveyance deed creating any right in the immovable property in favour of the petitioner Company. Therefore, the learned Collector (Stamps) has erred in holding the instrument of lease-agreement as conveyance deed. He has placed reliance on State of Rajasthan vs. Bhilwara Spinners Ltd. (1). (5). The learned Dy. Advocate has argued that petitioner Company has purchased properties comprised in the plot in question from M/s Rajasthan Industries and the learned Collector has determined the market value of the super-structure comprised in the plot in question because the properties comprised in the said plot stands transferred to the petitioner Company. It is further contended that the ratio decided in the case of Bhilwara Spinners Ltd. is not applicable to facts of the present case. (6). I have considered the rival submissions of the parties and perused the record. (7). The learned Collector (Stamps) has determined the nature of the instrument of lease-agreement as conveyance deed. The definition of conveyance has been given in Section 2(10) of the Indian Stamps Act 1899, which reads as under : ``10. `Conveyance `includes a conveyance on sale and every instrument by which property, whether moveable or immovable, is transferred inter vivos and which is not otherwise specifically provided for by Schedule I. (8). The above definition of `conveyance has been duly considered by Honble High Court in the case of Bhilwara Spinners Ltd., and it was observed that aforesaid provision made it clear; (1) it implies to transfer of properties whether moveable or immovable; (2) that such transfer has to be made inter vivos and not by operation of law; (3) it expressly includes conveyance or transfer of property by sale or other transfer of property and excludes such transfers Which are specifically provided for by Schedule-I. Schedule-I, refers to many transfers like transfer by way of exchange, gift, lease, mortgage, release, surrender of lease under different specified articles. (9). Now it is to be seen whether the instrument of lease agreement executed in the present case by RIICO in favour of petitioner Company is the document of lease or assignment of lease or conveyance by way of transfer of property from M/s Rajasthan Industries to the petitioner company. (9). Now it is to be seen whether the instrument of lease agreement executed in the present case by RIICO in favour of petitioner Company is the document of lease or assignment of lease or conveyance by way of transfer of property from M/s Rajasthan Industries to the petitioner company. In the case of Bhilwara Spinners Ltd. initially lease deed was executed by the State Government in favour of RSWM, which set up its factory on the land given on lease and thereafter transferred the complete unit to its subsidiary company BSL, then State Government executed another lease deed in favour of BSL accepting it as lessee for remaining period of 72 years. In these facts of the case it was held that the instrument is a lease deed and stamp duty is chargeable under Article 35(a)(III) of the Rajasthan Stamp Law (Adaptation) Act on the consideration equal to amount of average annual rent reserved and this instrument cannot be treated as conveyance creating interest in or transfer of the property, of RSWM in favour of BSL Company. It was also held that there was an implied surrender of lease by earlier lessee in favour of the State Government and there after the State Government has entered into a new lease agreement with the new lessee. The developments made in the land in question become the part of the land and reverted to the State, still it being not a transaction from the State to the BSL was only a transaction of lease of the land as it stood, which was the property of the State Government. Therefore, lease in question was only liable to duty under Article 35 on the annual rent value. (10). In the light of principle of law enunciated in Bhilwara Spinners Ltd. case, if we examine the facts of the present case- then it is clear and explicit that M/s Rajasthan Industries agreed to transfer its unit to the petitioner, which included the lease hold rights in the plot in question along with its other assets. The RIICO as lesser has granted permission for such transfer of lease hold rights in favour of petitioner for the plot in question for the remaining period of lease. This part of transaction was between M/s Rajasthan Industries and the petitioner Company, but no instrument of transfer of other assets was executed between original lessee and the new lessee. The RIICO as lesser has granted permission for such transfer of lease hold rights in favour of petitioner for the plot in question for the remaining period of lease. This part of transaction was between M/s Rajasthan Industries and the petitioner Company, but no instrument of transfer of other assets was executed between original lessee and the new lessee. The instrument in question is in respect of only lease hold rights which has been executed by the RIICO in favour of the petitioner company, therefore, it neither creates any such right in petitioner for transfer of any right of M/s Rajasthan Industries, nor it purports to create such rights. By the lease agreement in question dated 28.2.2000, registered on 30.3.2000, the RIICO as lessor has accepted the petitioner as its lessee for the remaining period of lease and it has agreed to accept the rent directly from the petitioner Company, no doubt the assent of the original lease for the creation of relationship between the lessor and the petitioner is apparent from the facts narrated above. It does not appear that M/s Rajasthan Industries conveyed his assets, i.e., the superstructures standing on the-plot in question in favour of the RIICO but only lease hold rights stood surrendered in favour of RIICO. And thereafter RIICO has executed another lease agreement in favour of the petitioner, which relates to only lease hold rights in the plot in question. (11). In view of the above discussion and the principle of law enunciated by the Honble Court, the instrument of lease agreement in the present case cannot be. treated as an instrument of conveyance for the transfer of the property other than the lease hold rights from RIICO to petitioner Company. There was no material on record to assume that assets of original lessee have been conveyed to the petitioner Company through instrument in question. Whether the property of M/s Rajasthan Industries stood transferred to the petitioner Company and whether it was a case of evasion of the payment of stamp duty for conveyance of the assets of the Rajasthan Industries in favour of the petitioner Company can be a subject matter of enquiry which is beyond the purview of the instrument in question. Therefore, the learned Collector (Stamps) misconstrued the instrument in question as a deed of conveyance. Therefore, the learned Collector (Stamps) misconstrued the instrument in question as a deed of conveyance. The conveyance of property comprised in plot In question from M/s Rajasthan Industries to the petitioner Company is quite independent of the lease agreement in question and it cannot affect the stamp duty payable on instrument in question as it has been executed by the RIICO only to the extent of lease hold rights in favour of the petitioner Company. It was for the concerned authority to see that evasion of stamp duty may not take place and it could have been ensured while granting permission by the RIICO for transfer of lease hold rights for the plot -in question and it could have also been ensured that a proper document of conveyance should have been executed between original lessee and the new lessee for transfer of assets including superstructures standing on the plot in question. The learned Collector (Stamps) could not assume that assets of original lessee stood transferred in favour of the petitioner by. the instrument in question. (12). In view of the above discussion the transaction in question for the purpose of stamp duty is clearly covered under Article 35(a)(iii) of the Rajasthan Stamp Law (Adaptation) Act and the duty chargeable is the same as on conveyance on the basis of the amount of average annual rent in respect of lease hold rights. Thus the Collector (Stamps) has erred in assessing the stamp duty on the basis of the instrument in question by adding value of the assets of M/s Rajasthan Industries without any mention of the sale of such assets in the instrument in question. (13). Consequently, this revision petition is allowed and the impugned order dated 14.5.2001 passed by the Collector (Stamps), Hanumangarh is hereby quashed. It is hereby clarified that concerned authorities are free to enquire into the matter of transfer of assets of M/s Rajasthan Industries in favour of the petitioner Company and whether there was evasion of payment of stamp duty on the conveyance of properties of M/s Rajasthan Industries. Pronounced in the open Court.