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2017 DIGILAW 2028 (ALL)

Awdhesh Trading Co. v. State of U. P.

2017-08-30

B.AMIT STHALEKAR

body2017
JUDGMENT : B. Amit Sthalekar, J. Heard Sri S.D. Yadav holding brief of Sri V.S. Parmar, learned counsel for the petitioner and Sri Sanjay Goswami, learned standing counsel for the State-respondents. 2. The petitioner is seeking quashing of the orders dated 31.1.2005 and 30.6.2005 arising out of proceedings under the Indian Stamp Act, 1899 (hereinafter referred to as 'the Act 1899') for deficiency of stamp duty. 3. Briefly stated the facts of the case are that the petitioner which is a registered company entered into an agreement dated 31.3.2003 with the U.P. Power Corporation Limited, Banda on Stamp Paper of Rs. 100/- for completion of certain works. On an allegation that there was deficiency of stamp duty, proceedings were initiated against the petitioner under Section 47 A/33 of the Act. The Collector, Stamps/Parganadhikari, Banda by his order dated 31.1.2005 determined the deficiency of stamp duty against the petitioner at Rs. 6700/-. Aggrieved by the order of the Collector, Stamps the petitioner filed Stamp Appeal which has also been dismissed by the Additional Commissioner, Chitrakoot Dham Division, Banda vide his order dated 30.6.2005. 4. The submission of the learned counsel for the petitioner is that the stamp duty has been charged on the security amount which is being withheld with the U.P. Power Corporation Limited although this amount is only a security amount which is ultimately to be refunded to the petitioner subject to completion of the work performed as per para 2.9 of the terms and conditions of the Contract. 5. According to the petitioner, stamp duty is chargeable under Article 5 (C) of Schedule 1 B of the Act, 1899 which reads as under:- "5. Agreement or memorandum of an agreement- (a)............... (b)................ (b-2)............... (c) If not otherwise provided for [one hundred rupees]" 6. The respondents on the other hand submitted that stamp duty is chargeable under Article 40 (A) of Schedule 1 B treating it to be mortgage deed. 7. This controversy is no longer res integra having been settled by a Division Bench of this Court in the case of 2005 (98) RD 662, M/s Strong Construction Through its Partner Shesh Nath Singh v. State of U.P. through Finance Secretary, Revenue and Finance Government of U.P., Lucknow and others wherein it has been held the word 'Engage' is relevant in the context in which the said expression is used in the statute. Execution of an 'agreement' by a contractor and submission of security to ensure completion of contract work, has no trace of 'engagement' within the expression "performance of an engagement" employed in section 2(17) of the Act. Security required in the instant case, clearly falls under Section 57 (b) Schedule 1-B of the Act. 8. Paras 22, 23, 25, 26, 27 and 28 of the said judgment reads as under:- "22. To appreciate rival contention/s and ready reference, relevant provisions of the Stamp Act are reproduced. "2(17) " Mortgage-deed" - " Mortgage-deed" included every instrument whereby, for the purpose of securing money advanced, or to be advanced, by way of loan, or on existing or future debt or the performance of an engagement, one person transfers, or creates to, or in favour of, another , a right over or in respect of specified property;" "SCHEDULE 1-B (STAMP DUTY CM INSTRUMENTS UNDER THE INDIAN STAMP, ACT, 1899, As AMENDED UP-TO- DATE IN ITS APPLICATION TO UTTAR PRADESH) Description of Instrument Proposed Stamp-duty 1 to 12 Fifty rupees 12-A Bank Guarantee, Guarantee deed executed by a Bank as a security to secure the due performance of a contract or the due discharge of a liability for every Rs. 1,000 or part thereof. 13 to 39 The same duty as a Conveyance (No.23 clause (a) ) for a consideration equal to the amount secure by such deed. 40. Mortgage-deed not being an agreement relating to Deposit of Title-deeds, Pawn or Pledge (No. 6), Bottomry Bond (No. l6), Mortgaged of a Crop (No. 4l), Respondentia Bond (No. 56) or security Bond (No. 57). (a) When possession of the property or any part of the property comprised in such deed is given by the mortgagor or agreed to be given. The same duty as a Bond (No.15) for amounts secured by such deeds. (b) When possession is not given or agreed to be given as aforesaid. Explanation........... (Ten rupees) (c) When a collateral or auxilary or additional or substituted security, or by way of further Assurances for the above-mentioned purpose where the principal or primary security is duly stamped for every sum secured not exceeding Rs. 1,000. and for every Rs. 1,000 or part thereof secured in excess of Rs. l,000. Exemptions ............. 41 to 56 ............ 57. 1,000. and for every Rs. 1,000 or part thereof secured in excess of Rs. l,000. Exemptions ............. 41 to 56 ............ 57. Security Bond or Mortgage deed executed by way of security for the due execution of an office, or to account for money or other property received by virtues thereof, or executed by a surety to secure the due performance of a contract or the due discharge of a liability. (a)................. (b) in any other case. 23. According to the learned Standing counsel case of the petitioner falls within the ambit of the expression performance of the engagement ..................... 24. Expression 'engage' as per Blacks Law Dictionary, apart from other meanings, defined to employ or involve one self to take part in. 25. In our considered opinion, above definition (quoted from Dictionary) of the word 'Engage' is relevant in the contest in which the said expression is used in the statute, Execution of an 'agreement' by a contractor and submission of Security to ensure completion of contract work, has no trace of 'engagement', within the expression "performance of an 'engagement' employed in Section 2(17) of the Act. Security required in the instant case, clearly falls under Section 57(b) Schedule 1-B. 26. We are in full agreement with the view taken by this Court. We are not inclined to take a view-different than the view expressed in earlier Division Bench judgments of this Court noted earlier. 27. We are of considered view that the Insistence on the part of the respondents/State not to demand Stamp Duty on 'security deposit' under Article 57(b) Schedule 1-B ignoring High Court judgment (as noted above) is breach of declaration of law by High Court amounting to abuse of power and to over-retch 'rule of law' which cannot be approved. In the circumstances, it may constitute contempt of Court. State is bound by law declared by High Court, and expected not to harass its subjects and compel the petitioners to run to this Court particularly when State Government has all the means and resources to have taken guidance and expert legal opinion as it has large contingent of State counsels and above all Advocate General. 28. State is bound by law declared by High Court, and expected not to harass its subjects and compel the petitioners to run to this Court particularly when State Government has all the means and resources to have taken guidance and expert legal opinion as it has large contingent of State counsels and above all Advocate General. 28. Uncalled for insistence and causal approach in issuing impugned orders-without justifying on any valid ground on record before us ignoring that similar orders have been set-aside/over-ruled by this Court in the past shows that State Authorities casually spend public money on frivolous litigation and burden Courts with uncalled for State sponsored litigation." 9. Sri Sanjay Goswami, learned Additional Chief Standing Counsel could not dispute the proposition of law settled by the Division Bench of this Court in the case of M/s Strong Construction Through its Partner Shesh Nath Singh (supra). 10. In this view of the matter, the impugned orders dated 31.1.2005 and 30.6.2005 are quashed. 11. The writ petition stands allowed. 12. In case any amount has been deposited by the petitioner towards deficiency of stamp duty under the interim orders of this court, the same shall be refunded to him by the respondents within a period of two months from the date of receipt of a certified copy of this order.