JUDGMENT Hon’ble B.K. Narayana, J.—The instant writ petition has been filed by the petitioners against the order dated 26.5.1993 passed by the Additional Collector and District Magistrate (Revenue & Finance), Lucknow, respondent No. 2 by which the petitioners were required to pay Rs. 1,45,000/- as deficiency in stamp duty and the order dated 20.6.1994 passed by the Chief Controlling Revenue Authority, respondent No. 1 rejecting the revision of the petitioners filed against the order dated 26.5.1993 by means of which the petitioners were also required to pay Rs. 1,45,000/- as penalty. 2. According to the petitioners M/s. Giriraj Udyog Ltd. executed a lease-deed in favour of the petitioners on 4.2.1992 in respect of the building of lessor namely Hindustan Steel Re-rolling Mill for a period of five years on a monthly rent of Rs. 3,000/- and an interest free security deposit of Rs. 10 lacs which was to be refunded to the lessee by the lessor after termination of the lease. 3. The petitioners paid Rs. 15,660/- as stamp duty on the instrument of the lease valued at Rs. 1,08,000/-, total amount of rent for three years. 4. Upon a reference received from the Sub-Registrar in which it was submitted that there was fraudulent evasion of stamp duty by the petitioners in collusion with the Incharge Sub-Registrar with regard to the payment of stamp duty on the instrument of lease, the Additional District Magistrate (Revenue & Finance), Lucknow, issued a notice to the petitioners purporting to be under Section 3/19-A read with Sections 33/40 of the Indian Stamp Act calling upon the petitioners to appear before him on 2.3.1993 and to submit their explanation. Upon receiving the show-cause notice dated 3.2.1993 the petitioners filed their objections before the respondent No. 2 on 22.3.1993, copy whereof has been annexed as Annexure-5 to the writ petition and prayed that the notice issued against the petitioners may be withdrawn. In their objections, the petitioners submitted that the requisite stamp duty on the instrument in question in accordance with the relevant rules has been paid and the proceedings initiated against the petitioners under the Stamp Act were absolutely illegal. 5. The respondent No. 2 by order dated 26.5.1993, copy whereof has been annexed as Annexure-2 to the writ petition, adjudged a deficiency of stamp duty of Rs. 1,45,000/- on the instrument of lease holding that stamp duty was payable on the amount of Rs. 5. The respondent No. 2 by order dated 26.5.1993, copy whereof has been annexed as Annexure-2 to the writ petition, adjudged a deficiency of stamp duty of Rs. 1,45,000/- on the instrument of lease holding that stamp duty was payable on the amount of Rs. 10 lacs advanced by the petitioners to their lessor as security. 6. The petitioners preferred a revision against the order of the respondent No. 2 under Section 56 of the Indian Stamp Act before the respondent No. 1 which was also dismissed by him by his order dated 20.6.1994, copy whereof has been annexed as Annexure-1 to the writ petition. The respondent No. 1 affirmed the order passed by respondent No. 2 and rejected the submission of the petitioner that the amount offered as security cannot be treated as `money advanced in addition to the rent reserved’ for the purpose of deciding the stamp duty payable and held that the security amount fell within the ambit of Article 35(c) of Schedule 1-B of the Stamp Act and was liable to stamp duty under the said Article. The respondent No. 1 further illegally imposed a penalty of Rs. 1,45,000/- on the petitioner. 7. Learned counsel for the petitioners has assailed the impugned orders passed by the respondents No. 1 and 2 mainly on the ground that the respondent No. 2 clearly erred in treating the security amount of Rs. 10 lacs as `money advanced in addition to the rent reserved’ for the purpose of adjudging deficiency in stamp duty on the instrument of lease by placing reliance upon Article 35(c) Schedule 1-B of U.P. Stamp Act which could not be applied to the facts and circumstances of the present case. The learned counsel for the petitioners submitted that where the lessee under a lease-deed has made a deposit with the lessor as security for proper management of estate and to indemnify lessor in case of loss etc., it cannot be treated as a `premium’ or `fine’ or `money advanced’ and it can only be construed as `security bond’. 8. Learned counsel for the petitioners next submitted that the security amount of Rs. 10 lacs which was tendered by the lessee to the lessor cannot be treated as `money advanced’ within the meaning of Article 35(c) Schedule 1-B of U.P. Stamp Act. 8. Learned counsel for the petitioners next submitted that the security amount of Rs. 10 lacs which was tendered by the lessee to the lessor cannot be treated as `money advanced’ within the meaning of Article 35(c) Schedule 1-B of U.P. Stamp Act. The relevant provision of the above Article runs as under : Description of instrument Proper stamp duty 35. Lease—including and under lease and any agreement to let or sub-let— (c) Where the lease is granted The same duty as a conveyance for a fine or premium or for money (No. 23), for a consideration equal advanced in addition to rent reserved; to the amount or value of such fine or premium advance as set forth in the lease. In addition to the duty which would have been payable on such lease, if no fine or premium or advance had been paid or delivered : Provided that in a case when an agreement to lease is stamped with ad valorem stamp required for lease, and a lease in pursuance of such agreement is subsequently executed, the duty on such lease shall not exceed fifty rupee. 9. Learned counsel for the petitioners has further argued that since para 11 of the Instrument of lease clearly provides that the amount of Rs. 10 lacs tendered by the lessee to the lessor was liable to be refunded back to the petitioners (lessee) upon termination of the lease, the said amount cannot fall within the meaning of either `fine’ or `premium’ or `money advanced in addition to the rent reserved’ as provided by Article 35(c) of Schedule 1-B of U.P. Stamp Act and no stamp duty was payable thereon. 10. In support of aforesaid contention, learned counsel for the petitioners has placed reliance upon a Full Bench decision of Karnataka High Court in Chief Controlling Revenue Authority v. Chandrashekhar and others, AIR 1985 Kant 61, in which it has been held that where lessee under lease deed has made deposit with lessor as security for proper management of estate and to indemnify lessor in case of loss etc., it cannot be treated as `premium’ or `fine’ or `Bond’. It can be construed as `security bond’. The relevant paras 10 and 13 of the said judgment are as follows : “10. It can be construed as `security bond’. The relevant paras 10 and 13 of the said judgment are as follows : “10. Security deposit is not the same thing as premium or fine, as explained under Section 105 of the T.P. Act, or any money advanced in addition to the rent reserved. We had occasion to deal with the connotation of the terms - “Premium” or “fine” in a reference under the Karnataka Stamp Act in CRC No. 11 of 1981 disposed of by us on 17.8.1984 : (Reported in AIR 1985 Kant 56(SB) wherein this Court held, relying upon several rulings of the Supreme Court, in para 13 of the judgment as follows : “The provisions contained in Section 105 of the Transfer of Property Act read in the light of the decisions of the Supreme Court, cited above, bring about the distinction between a price paid for a transfer of right to enjoy the property and the rent to be paid periodically to the lessor. When the interest of the lessor is parted with for a price, the price paid is the premium or salami. But the periodical payments made for the continuous enjoyment of the benefits under the lease are in the nature of rent. There may be circumstances where the parties may camouflage the real nature of the transfer by using clever phraseology. In some cases the so called premium is in fact advance rent and in others rent is deferred price. It is not the form but the substance of a transaction that matters. The nomenclature used may not be decisive or conclusive. But it helps the Court having regard to the other circumstances to ascertain the intention of the parties. [Vide : Commr of Income Tax, Assam v. Panbari Tea Co. Ltd., AIR 1965 SC 1871 ]. 13. In our considered view, this security deposit does not bear the characteristics of a `premium’ or a `fine’ to fall within Cl. (c) of Article 30 of the Act, namely, lease granted for a fine or premium or for money advanced in addition to the rent reserved.” 11. Learned counsel for the petitioners next submitted the respondent No. 1 has clearly exceeded his jurisdiction in imposing an amount of Rs. 1,45,000/- as penalty upon the petitioners. 12. (c) of Article 30 of the Act, namely, lease granted for a fine or premium or for money advanced in addition to the rent reserved.” 11. Learned counsel for the petitioners next submitted the respondent No. 1 has clearly exceeded his jurisdiction in imposing an amount of Rs. 1,45,000/- as penalty upon the petitioners. 12. Learned counsel for the petitioners submitted that no penalty could be imposed upon the petitioners unless the respondents were satisfied on the basis of material on record that there was an intention to evade stamp duty and since in the present case penalty has been imposed by the respondents without recording any finding that the petitioners failed to pay stamp duty on the security amount mentioned in the lease deed with an intention to evade the payment of stamp duty, the imposition of penalty is liable to be set aside by this Court. 13. In support of his contention the learned counsel for the petitioners relied upon a decision of this Hon’ble Court in Smt. Asha Kapoor v. Addl. Collector (F & R) Ghaziabad and others, 2008(2) JCLR 220 (All), wherein it has been held that before imposing penalty, the authorities must record findings based on the relevant material that the purchaser or the person liable to pay stamp duty had concealed the relevant facts in execution of sale-deed, and had intention to evade the payment of stamp duty. These powers cannot be mechanically used in every case. The relevant para 7 of the said decision runs as under : “7. The penalty can be imposed, if there is an attempt to evade the stamp duty. The penalty pre-supposes culpability and an intention to conceal or to play fraud with the authorities. Whereas there is any reasonable doubt with regard to valuation of the property, and nothing material is found to have been concealed by the petitioner in execution of the document, the authorities will loose their discretion to impose penalty. The enhancement of the valuation on the basis of the finding that the property has a potential user as residential or industrial purposes, is subject to appeal. Before imposing penalty, the authorities must record findings based on relevant material that the purchaser or the person liable to pay stamp duty had concealed the relevant facts in execution of sale-deed, and had intention to evade the payment of stamp duty. Before imposing penalty, the authorities must record findings based on relevant material that the purchaser or the person liable to pay stamp duty had concealed the relevant facts in execution of sale-deed, and had intention to evade the payment of stamp duty. These powers cannot be mechanically used in every case.” 14. A perusal of the orders passed by the respondents No. 1 and 2 shows that the contention of the petitioners’ counsel is absolutely correct as neither the respondent No. 1 nor the respondent No. 2 have recorded any finding in their orders that petitioners had not paid any stamp duty on the security amount mentioned in the lease-deed with a deliberate intention to evade the stamp duty. 15. Learned Standing Counsel, on the other hand, submitted that the orders passed by the respondents No. 1 and 2 do not suffer from any illegality or infirmity and, as such, they are not liable to be interfered with by this Court in exercise of its jurisdiction under Article 226 of the Constitution of India. Learned Standing Counsel further submitted that there was ample material before the respondents No. 1 and 2 justifying the conclusion arrived at by them and the stamp duty had been correctly adjudged by the respondents No. 1 and 2. Learned Standing Counsel next submitted that the security amount offered by the petitioners to their lessor has been rightly construed by the respondents No. 1 and 2 as `money advanced in addition to the rent reserved’ for the purpose of adjudging proper stamp duty payable on the instrument of lease. 16. I have heard the learned counsel for the parties and examined the submissions made by them and have perused the record. 17. The relevant para 11 of the lease-deed providing for tendering of security amount reads as hereunder : “11. That the lessee will pay Rs. 10 lacs (rupees ten lacs) to the lessor and out of that amount of Rs. 6 lacs have already been paid by account payee cheque by the lessee to the lessor and balance of Rs. 4,00,000/- will be paid by the lessee within 6 months to the lessor from the date of lease and this amount of Rs. 10 lacs (rupees ten lacs) to the lessor and out of that amount of Rs. 6 lacs have already been paid by account payee cheque by the lessee to the lessor and balance of Rs. 4,00,000/- will be paid by the lessee within 6 months to the lessor from the date of lease and this amount of Rs. 10 lacs will remain with the lessor as security money with the lessor without any interest and on the termination of the lease or vacating the demised premises by the lessee, the said security money shall be refunded to the lessee.” 18. Even a most superficial perusal of para 11 of the lease-deed shows that the amount of Rs. 10 lacs upon which the revenue authorities imposed stamp duty of Rs. 1,45,000/- by treating it as `money advanced in addition to rent reserved’, is nothing but an amount offered by way of security by the lessee, as set forth in the lease, to the lessor which was liable to be refunded to the petitioners upon termination of the lease, and as such the petitioners are not liable to pay any stamp duty under Article 35(c) Schedule 1-B of U.P. Stamp Act. 19. Neither the respondent No. 2 nor the respondent No. 1 have given any reason in their orders for holding the security money as money advanced in addition to the rent reserved for the purpose of payment of stamp duty. Law is settled that a decision arrived at by any authority without giving any reason is a totally arbitrary decision. It has been repeatedly held by this Court as well as by the Hon’ble Apex Court that giving of reasons is one of the fundamentals of good administration. Reasons introduce clarity in an order and indicate an application of mind. The respondents ought to have set forth their reasons in their orders, howsoever brief may be, in order to indicate an application of their mind, all the more, when their orders are amenable to further avenue of challenge. 20. Even in respect of administrative orders Lord Denning, M.R. in Breen v. Amalgamated Engg. Union, 1971 (1) All ER 1148, observed that “the giving of reasons is one of the fundamentals of good administration.” In Alexander Machinery (Dudley) Ltd. v. Crabtree, (1974) ICR 120 (NIRC), it was observed that “failure to give reasons amounts to denial of justice. 20. Even in respect of administrative orders Lord Denning, M.R. in Breen v. Amalgamated Engg. Union, 1971 (1) All ER 1148, observed that “the giving of reasons is one of the fundamentals of good administration.” In Alexander Machinery (Dudley) Ltd. v. Crabtree, (1974) ICR 120 (NIRC), it was observed that “failure to give reasons amounts to denial of justice. Reasons are live links between the mind of the decision taker to the controversy in question and the decision or conclusion arrived at.” Reasons substitute subjectivity by objectivity. The emphasis on recording reasons is that if the decision reveals the `inscrutable face of the sphinx’, it can, by its silence, render it virtually impossible for the Courts to perform their appellate function or exercise the power of judicial review in adjudging the validity of the decision. Right to reason is an indispensable part of a sound judicial system, reasons at least sufficient to indicate an application of mind to the matter before Court. Another rationale is that the affected party can know why the decision has gone against him. One of the salutary requirements of natural justice is spelling out reasons for the order made, in other words, a speaking out. The `inscrutable face of the sphinx’ is ordinarily incongruous with a judicial or quasi-judicial performance.” 21. Learned Standing Counsel advanced elaborate arguments defending the impugned orders but failed to show any provision in the Indian Stamp Act under which an amount tendered as `security’ by a lessee to a lessor, which was liable to be refunded to the lessee upon termination of the lease, could be held to be `premium’ or `fine’ or `money advanced in addition to the rent reserved’ and made liable to payment of stamp duty under Article 35(c) of Schedule 1-B of the Stamp Act. 22. In view of the aforesaid discussion, I hold that the amount paid by the petitioners to their lessor as `security’ does not bear the characteristic of a `premium’ or a `fine’ to fall within clause (c) of Article 35 of the Act namely lease granted for a `fine’, `premium’ or `money advanced in addition to the rent reserved’, and as such the petitioners were not liable to pay any stamp duty under Article 35(c) of Schedule 1-B of the Stamp Act on the security amount. The contrary findings recorded by the respondents No. 1 and 2, which are not supported by any reason, are hereby reversed. 23. The imposition of penalty is liable to be set aside on the ground urged by the petitioners’ counsel that neither of the respondents in their orders have mentioned that the petitioners had concealed any material fact in the execution of the lease-deed with a motive to evade stamp duty and unless intention to evade stamp duty is proved, no penalty can be imposed, as held by this Hon’ble Court in the case of Smt. Asha Kapoor (supra). 24. In view of aforesaid, the writ petition succeeds and is allowed. The impugned order dated 20.6.1994 passed by the Chief Controlling Revenue Authority, respondent No. 1 and the order dated 26.5.1993 passed by the Additional Collector and District Magistrate (Revenue & Finance), Lucknow respondent No. 2 are hereby quashed. 25. There will be no order as to costs. ———