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Gujarat High Court · body

2019 DIGILAW 830 (GUJ)

State of Gujarat v. Vijaybhai Zinabhai Prajapati

2019-10-01

A.J.SHASTRI, VIKRAM NATH

body2019
ORDER : VIKRAM NATH, J. 1. This group of Letters Patent Appeals since arising out of similar controversy and challenging the common judgment and order dated 10.08.2018, passed by the learned Single Judge, as per the request, we deem it proper to deal with these Letters Patent Appeals by present common judgment and order. Since the facts are almost similar, while dealing with these appeals, Letters Patent Appeal No. 1687 of 2019 is treated by us as a lead matter. Accordingly, the facts are taken out of it. 2. The background of the facts which has given rise to these appeals is that the original petitioners have executed a sale deed on 18.05.2012, which came to be registered and numbered as 4601. At the time of execution of sale deed, the original petitioners were shown as partners of one of the Partnership Firm named as Shiv Shakti Developers and the said sale deed was for an amount of Rs. 2 crores, requiring the payment of stamp duty of Rs. 9,81,000/- which has already been paid and to that fact along with the sale deed certificate of stamp duty has also been issued. Pursuant to this sale deed, with regard to the land in question, in the name of partnership along with the names of the petitioners being partners came to be mutated in revenue record, particularly, in Village Form No. 6 as well as Village Form No. 7. Later on, it was realized by the petitioners that execution of sale deed has inadvertently been registered in the name of partnership firm instead of their own personal names. The correction deed was executed on 05.07.2019, which was registered and numbered before the registering authority as 6534 since there is no actual transfer and it was correction of change in names, merely, the name of the partnership firm, came to be deleted and partners individual names are incorporated. It is the case of the opponents - original petitioners that notice came to be issued under Section 33 of the Bombay Stamp Act, 1958 which provides for examination and impounding of the instrument and the said notice came to be received individually by the original petitioner no. 2 - Vijaybhai Zinabhai Prajapati, whereas original petitioner nos. 1 and 3 have not received the same till date. 2 - Vijaybhai Zinabhai Prajapati, whereas original petitioner nos. 1 and 3 have not received the same till date. The respondent - authorities, later on, passed an order that the petitioners were supposed to pay a further stamp duty as mentioned in Article 20 of the Schedule-I of Bombay Stamp Act, 1958 and accordingly, the petitioners were directed to pay a further stamp duty of Rs. 9,79,900/- and additionally payment of Rs. 49,000/- in view of Section 39 (1) (b) of the Bombay Stamp Act, 1958 totalling around the recovery to the extent of Rs. 10,28,900/-. The said ex-parte order stated to have not been received by the petitioners and it is only when came to know about on 29.10.2013, the petitioners deposited 1/4th amount of the said recovery to the extent of Rs. 2,44,975/- with Reference fee of Rs. 100/- and then after securing copy of the order dated 17.12.2013, the appeal came to be filed before the appellate authority, according to the petitioner well within time. The case of the original petitioners that petitioner no. 1 was handling the entire issue with regard to the said property and unfortunately on 02.05.2013 he passed away and it is thereafter only that the petitioners came to know about the fact. Resultantly, when notice for recovery was issued to the extent of Rs. 10,28,900/- along with 15% interest as well as 5% surcharge and consequently again under the provisions of the Bombay Land Revenue Code, left with no other alternative, the petitioners rush down to this Court by way of original petition. The following are the reliefs claimed in one of the petition being Special Civil Application No. 4483 of 2014. "(A) Your Lordships may be pleased to Admit and allow this petition; (B) Your Lordships may be pleased to issue a writ of mandamus or a writ of certiorari or a writ in the nature of mandamus or a writ in the nature of certiorari or any other appropriate writ, order or direction, quashing and setting aside the impugned Order dated 7.8.2013 passed by the Additional Collector, Stamp Duty, Valsad (Annexure-C) as well as the Order dated 29.1.2014 passed by the Chief Controlling Revenue Authority, Gujarat State (Annexure-B) as well as the recovery notice dated 5.2.2014 issued by the Collector, Stamp Duty, Valsad (Annexure-A) and further be pleased to direct the respondents to refund the amount Rs. 2,45,075/- deposited by the petitioner at the time of filing of the appeal in the interest of justice; OR in the alternative (C) Your Lordships may be pleased to issue a writ of mandamus or a writ of certiorari or a writ in the nature of mandamus or a writ in the nature of certiorari or any other appropriate writ, order or direction, quashing and setting aside the impugned Order dated 7.8.2013 passed by the Additional Collector, Stamp Duty, Valsad (Annexure-C) as well as the Order dated 29.1.2014 passed by the Chief Controlling Revenue Authority, Gujarat State (Annexure-B) as well as the recovery notice dated 5.2.2014 issued by the Collector, Stamp Duty, Valsad (Annexure-A) and further be pleased to remand the matter to the respondent No. 2 to register the Appeal and decide the same in accordance with law; (D) Pending admission, hearing and final disposal of this petition, Your Lordship be pleased to stay the operation and/or implementation and/or execution of the impugned Order dated 7.8.2013 passed by the Additional Collector, Stamp Duty, Valsad (Annexure-C) as well as the Order dated 29.1.2014 passed by the Chief Controlling Revenue Authority, Gujarat State (Annexure-B) as well as the recovery notice dated 5.2.2014 issued by the Collector, Stamp Duty, Valsad (Annexure-A) in the interest of justice; 2.1. Similar is the background with regard to the other petitions, hence, without detailing out, it is noticed by us that the petitions came to be tagged together and by common order dated 10.08.2018, the learned Single Judge was pleased to allow the petitions, by common judgment and order. The operative part of the said decision is reproduced herein after:- "30. As stated herein above, neither the interest of the property of the original owners have been transferred to any other person by executing the instrument in question, nor any other person is added by creating new right in his favour. Therefore, in my opinion, the petitions require consideration and hence, the petitions stand allowed. The authorities has failed to demonstrate that by executing Rectification Deed, either the original owners, the partnership firm or the present petitioners who were the partners have gained anything. Therefore, in my opinion, the petitions require consideration and hence, the petitions stand allowed. The authorities has failed to demonstrate that by executing Rectification Deed, either the original owners, the partnership firm or the present petitioners who were the partners have gained anything. The impugned orders dated 7.8.2013 passed by the Additional Collector, Stamp Duty, Valsad as well as the order dated 29.1.2014 passed by the Chief Controlling Revenue Authority, Gujarat State as well as recovery notice dated 5.2.2014 issued by the Collector, Stamp Duty, Valsad are hereby quashed and set aside. The respondents are hereby directed to refund the amounts that were deposited by the petitioners at the time of filing of the respective appeals, within a period of six weeks from today. 2.3. This common judgment and order passed by the learned Single Judge is assailed before us by way of present Letters Patent Appeal filed by the State authorities in which, the learned Assistant Government Pleader, Shri Chintan Dave appearing for the appellant - State has contended that here is a case in which the property has been transferred from partnership firm's name to individual partners' name under the guise of rectification deed. In such a situation, the rectification deed being an instrument falling within the definition is subjected to the payment of stamp duty. There is a transfer of interest from firm's name to individual interest and since the common interest is distinct from individual interest in the property, the instrument is always subjected to payment of stamp duty. To substantiate this contention, the learned Assistant Government Pleader, Shri Dave has referred to a decision in the case of Ramesh Pande & Ors., v. State of Karnataka reported in AIR 1982 (Kar.) 343 and 346. A contention is raised that an error is committed by the learned Single Judge in allowing the petitions. Shri Dave, learned Assistant Government Pleader has further contended that the disputed agricultural non irrigated lands came to be purchased initially on 18.05.2012 by the partnership firm and the said partnership firm was also having PAN card number as well and the said portion of land was holding and consisting joint and common interest of the partners. Shri Dave, learned Assistant Government Pleader has further contended that the disputed agricultural non irrigated lands came to be purchased initially on 18.05.2012 by the partnership firm and the said partnership firm was also having PAN card number as well and the said portion of land was holding and consisting joint and common interest of the partners. Thus, while entering into the transaction of sale, different cheques were issued from the Bank account of partnership firm and as such when the said land belonging to the partnership firm purchased in the firm's name, if to be divested to the individual partners, then such transaction is covered under the definition of 'Instrument' and is a 'Conveyance' as well. When that being so, as per the requirement of statute it is obligatory on the part of the original petitioner to pay requisite amount of stamp and, therefore, the order of recovery which has been passed is just and proper, which ought not to have been disturbed by the learned Single Judge. One additional factor which has been vehemently canvassed before the Court is that this partnership firm i.e. Shiv Shakti Developers came to be dissolved in April, 2014 and that fact having not been brought before the learned Single Judge, the order deserves to be corrected. It has further been contended vehemently that this is nothing but a loss to the public exchequer and as such the orders which were passed by the revenue authorities could not have been interfered with and accordingly, appeals be allowed. No other submissions made before us. 3. Having heard learned Assistant Government Pleader for the appellant - State and having gone through the detailed order which has been passed by the learned Single Judge, we have noticed that original petitioners themselves have created a partnership firm in the name of Shiv Shakti Developers by executing partnership deed on 22.08.2011 and subsequent to the said firm having been established sale deeds have been executed on 18.05.2012 with respect to the lands held by Smitaben Jitendra Motani along with her different family members, at this time, of execution of sale document undisputedly with requisite stamp duties have been paid as required under the provisions of Stamp Act, 1958 and along with the sale deed, certificate of stamp duty also stated to have been given. Later on, these partners have entered into rectification deed on 30.03.2013 and based upon this rectification deed individually, the authorities have summoned the petitioners to pay additional amount of stamp duty. The learned Single Judge, while examining the issue with regard to charge of additional stamp duty has come to the conclusion that the partnership is nothing but compendious name of the persons of each partner is having joint ownership of the property and, therefore, by executing rectification deed, no independent or additional transfer is taking place of the interest. Even if the firm is dissolve, according to their respective share of individual, the partners share will come in the name of each partner according to the proportion fixed and as such this rectification deed cannot be said to be a transfer. 3.1. While coming to this conclusion, the learned Single Judge has also examined the definition of word 'Instrument' as the definition under Section 2(l) of the Stamp Act and found that when there is no change in nature of interest of the liability either created or transferred or extinguished by virtue of rectification deed, the said document is not subjected to any additional amount of stamp duty. Even otherwise, undisputedly, the property in question which was purchased was with the signature of all the three partners and the rectification deed is also by the very same partners and, therefore, in absence of any creation or extinguishment of any interest or actual transfer, the authorities are not justified in levying additional amount of stamp duty. After examining this issue from the concept of partnership and after examining the provisions of Stamp Act, the learned Single Judge has allowed the petitions. We see no infirmity in the reasons which are assigned by the learned Single Judge so much so, we found that while passing the order, even rectification deed is also perused at length by the learned Single Judge and it was found that no possibility of raising any adverse inference against the petitioner and as such relying upon several decisions of the Apex Court, an ultimate opinion is arrived at by the learned Single Judge. After analyzing the various provisions and the decisions, the learned Single Judge clearly found that in fact there is no transfer of assets involved even in sense of any extinguishment of the firm's interest in the partnership assets when distribution takes place upon dissolution. After analyzing the various provisions and the decisions, the learned Single Judge clearly found that in fact there is no transfer of assets involved even in sense of any extinguishment of the firm's interest in the partnership assets when distribution takes place upon dissolution. When that be so, the learned Single Judge clearly found that the stand taken by the authority is not justified in the eye of law. Resultantly, the petitions came to be allowed. The relevant observations and the conclusion arrived at by the learned Single Judge are reproduced below: "28. A partnership firm under the Indian Partnership Act, 1932 is not a distinct legal entity apart from the partners constituting it and equally in law, the firm, as such, has no separate rights of its own in the partnership assets and when one talks of the firm's property or firm's assets all that is meant is property or assets in which all partners have a joint or common interest. If that be the position, it is difficult to accept the contention that upon dissolution the firm's rights in the partnership assets are extinguished. The firm as such has no separate rights of its own in the partnership assets but it is the partners who own jointly in common the assets of the partnership and, therefore, the consequences of the distribution, division or allotment of assets to the partners which flows upon dissolution after discharge of liabilities is nothing but a mutual adjustment of rights between the partners and there is no question of any extinguishment of the firm's rights in the partnership assets amounting to a transfer of assets. Therefore, there is no transfer of assets involved even in the sense of any extinguishment the firm's rights in the partnership assets when distribution takes place upon dissolution. 29. Considering the fact that three partners who intended to correct or rectify the ownership of the properties jointly, I am of the opinion that the authority has committed an error in treating the Rectification Deeds an instrument and treated as conveyance and has erred in ordering the same to be additionally stamped under Article 20 of the Schedule-I to the Act. 30. 30. As stated herein above, neither the interest of the property of the original owners have been transferred to any other person by executing the instrument in question, nor any other person is added by creating new right in his favour. Therefore, in my opinion, the petitions require consideration and hence, the petitions stand allowed. The authorities has failed to demonstrate that by executing Rectification Deed, either the original owners, the partnership firm or the present petitioners who were the partners have gained anything. ….." 3.2. Looking to the reasons and the submissions of learned Assistant Government Pleader Shri Dave, we see no infirmity in the order passed by the learned Single Judge, Accordingly, Letters Patent Appeal being devoid of merit, deserves to be dismissed. This conclusion is also covering other appeals and accordingly the same are also disposed of hereby. 4. Since the main appeals are disposed of, the connected Civil Applications for stay stand disposed of accordingly.