The writ petition is directed against the order of the Collector dated 7.4.2006 passed in proceedings under the Indian Stamp Act, 1899 (hereinafter referred to as the Act) and the revisioinal order thereto dated 27.6.2011 passed by the Chief Controlling Revenue Authority (hereinafter referred to as the CCRA).
The solitary question which falls for consideration in this writ petition is whether the four instruments in question are chargeable to stamp duty as transfer of lease by way of assignment under Article 63 or as a conveyance of sale under Article 23(a) or as a lease/Sub-lease under Article 35 of the Schedule 1-B of the Act.
Before making an attempt to answer the above question, it would be profitable to narrate in brief certain facts giving rise to the present writ petition.
The land of about 17 Bigha 10 Biswa situate in village Madhugarhi, District Hathras is the subject of the above four instruments. The absolute owner of the said land is one Thakur Sri Krishna Chandra Ji Maharaj who leased out the aforesaid land vide lease deed dated 14.7.08 in favour of Lala Har Charan Das and Purshotam Das. The said lease hold rights were purchased by Smt. Shakuntala Devi in auction in Execution Case No. 14 of 1974. On the death of Smt. Shakuntala Devi, as per her Will the said lease hold rights in the said land devolved upon her heirs, who raised some constructions over it. The heirs of aforesaid Smt. Shakuntala Devi, vide four separate instruments No. 6490, 6491, 6492 and 6495 of 14/24-12-01 transferred their leasehold rights in the said land in favour of the petitioner. The said instruments were duly registered and the Sub-registrar charged stamp duty on then in accordance with Article 63 of Schedule 1-B of the Act by treating them to be transfer of lease by way of assignment.
Subsequently, on complaint being made by one Shyam Bihari Sharma on 9.1.2002 a report was submitted by the Sub-registrar on 22.1.2002 assessing market value of the aforesaid land as Rs.5,34,30,000/- and deficiency in stamp duty of Rs.1,11,70, 500/-. Accordingly, he recommended to the Assistant Commissioner, Stamp on 5.1.2002 to determine the deficiency in stamp duty on the above instruments as per the market value in accordance with the Article 35(a)(vi) of Schedule 1-B of the Act. In pursuance of the above complaint and the report, Stamp Case No.61, 62, 63 and 64 of 2002 were initiated against the petitioner under Section 47-A of the Act.
In the proceedings a report of valuation was submitted by the Tehsildar assessing the market value of the aforesaid land as Rs.3,48,10,000/-. A report was also submitted by the Public Works Department (PWD) on 25.6.2002 regarding the valuation of the constructions (Malva) situate over it and the land covered by the construction to be Rs.1,59,10,036/- by applying the rate of Rs.3,000/- per square yard.
The Collector, Hathras (Mahaya Nagar) decided all the four cases by a common order dated 26.8.02 and treated the instruments to be lease deed and accordingly determined the deficiency in stamp duty on the basis of the above reports. The order of the Collector was challenged by the petitioner by means of a Stamp, Revision No. 189 of 2002-03. The revision was allowed in part by the CCRA, Allahabad vide order dated 25.3.2004 and the order of the Collector was set aside. The matter was sent back to the Collector for reconsideration in the light of the observations made in revision. In the second round, after remand a fresh inspection report was submitted on 8.7.05. Thereafter, Collector again by a common order dated 7.4.06 determined the deficiency in stamp duty by treating the instruments to be conveyance of sale according to Article 23(a) of Schedule 1-B of the Act and in the alternative to be lease under Article 35(a) (vi) of Schedule 1-B of the Act. The said order of the Collector was assailed by means of four separate revisions which were dismissed by the CCRA on 28.6.2011. Thus, the present writ petition has been preferred assailing the above two orders and the determination of deficiency of in stamp duty.
I have heard Sri M.K. Gupta, learned counsel for the petitioner, Sri Nimai Das, learned Standing Counsel and Sri O.P. Singh, Senior Advocate assisted by Sri Rajesh Kumar Dubey, for the applicant Sanjay Sharma, who claims himself to the highest bidder in the auction held for the sale of the above land for realizing the deficient stamp duty.
The applicant aforesaid is ex facie not a necessary party. He has not perfected his rights in the land in question. He is a bidder consequential to determination of deficiency in stamp duty and its realization, who has no locus in connection with the aforesaid deficiency in respect of the instruments in question.
However, as Sri O.P. Singh, learned Senior Advocate, insisted for being heard, he has been given audience without a formal order of impleadment of the above applicant as the respondent in the writ petition.
The submission of Sri M.K. Gupta, learned counsel for the petitioner is that all the four instruments in question are transfer of lease by way of assignment and are covered by Article 63 of Schedule 1-B of the Act. Therefore, stamp duty on all of them is payable as per the rate prescribed for conveyance under Article 23(a) of Schedule 1-B of the Act on the consideration and not on the market value.
Sri Nimai Das, learned Standing Counsel has defended the impugned orders by contending that the instruments are absolute sales or are at best lease deeds and as such stamp duty is chargeable as per the market value. He has further submitted that there is absolute sale at least in respect of the constructions situate over part of the land.
The above controversy has acquired significance as on a plain reading of Article 63 of Schedule 1-B of the Act demonstrates that stamp duty on an instrument transferring lease by way of assignment covered therein is chargeable not on the market value of the property but upon the consideration mentioned at the rate of duty applicable on conveyance as mentioned in Article 23 of Schedule 1-B of the Act.
On the other hand in the case of absolute sale Article 23 of Schedule 1-B of the Act is applicable and the rate mentioned therein is to be applied on the market value of the property.
Similarly, in the case of a lease falling under Article 35(a)(vi) of Schedule 1-B of the Act also market value is relevant and stamp duty as conveyance is chargeable. Therefore, in both the above situations determination of market value is important.
Thus, the short question is to find out whether the above instruments are instruments of sale, lease/sub-lease or transfer of lease by way of assignment.
Sale and lease/sub-lease are the two modes of transfer of immovable property. Transfer of lease by assignment is not a transfer of immovable property covered under the Transfer of Property Act. In a sale ownership rights in the property are transferred absolutely whereas in the lease the transfer is of possession and right to use the property for a particular period or even in perpetuity but the ownership is retained by the owner and is not transferred. In a sub-lease the lessee further lets out the property and realises rent from the sub-lessee. On the other hand in transfer of lease by way of assignment a lease holder assigns whatever rights he possess under a lease for the reminder of the period in favour of a third party without keeping any right therein reserved for himself thus bringing the assignee in direct contact with the original lessor. The assignee does not acquire absolute ownership right in the property but only the lease hold rights of the lessee. The assignee is simply clothed with the rights of his principle.
In the instant case, the absolute owner of the property is Thakur Sri Krishna Chandra Ji Maharaj Trust. It had only leased out the aforesaid land and it is the said lease hold rights which were purchased by Smt. Shakuntala Devi in the auction which ultimately devolved upon her heirs who have transferred the same by means of the aforesaid instruments. In short, the transfer is of the lease hold rights only meaning that it is a transfer of lease by way of assignment.
The authorities below have held the aforesaid instruments to be an absolute sale of property on two grounds. First the property was purchased by Smt. Shakuntala Devi in auction through court as an absolute owner and secondly, the instrument at places refers to ownership being transferred.
Both the above grounds for holding the instrument to be conveyance of sale covered by Article 23(a) of Schedule 1-B of the Act are completely misplaced. When it is not disputed that the original owner of the property is Thakur Sri Krishna Chandra Ji Maharaj Trust and it was only leased out in perpetuity by it in the year 1908 in the absence of any document showing that the original owner had parted with the ownership, it cannot be said that Smt. Shakuntala Devi had purchased absolute rights in the sale. Merely, for the reason that she had purchased the property in auction sale, it is misconceived to accept that she had acquired absolute rights which were ultimately transferred by the instruments in question.
The instruments no doubt at places refers about transfer of ownership but the same is in connection with the constructions existing on the land. The constructions were raised by the lease holders and as such they were the owners of the same. In executing the instruments, the word ownership in respect of the constructions has been used. As far as the land is concerned the ownership never vested with the lease holders and could not have been transferred. In view of above, the instruments in question are composite transfer of absolute rights in the constructions (Malva) and instruments of transfer of lease of land by way of assignment.
It is pertinent to note that the instruments were duly registered and were treated to be transfer of lease by way of assignment covered by Article 63 of Schedule 1-B of the Act by the Sub-registrar. On the initiation of proceedings on a complaint, the Collector held otherwise but the order of the Collector was set aside by the CCRA vide order dated 25.3.2004 with a clear finding that the original owner of the land in question is Thakur Sri Krishna Chandra Ji Maharaj Trust. The trust had leased out the land to the predecessor of the present lease holders in the year 1908. The same lease hold rights have been transferred in favour of the petitioner. The lease holders could not have transferred any better rights than which were held by them and therefore, there is no absolute sale of the land in favour of the petitioner. He thus held that the instruments in question are covered by Article 63 of Schedule 1-B of the Act. The matter was remanded to the Collector with the above observation. The said order of the CCRA became final and therefore it was not within the domain of the Collector to have gone beyond the above conclusion drawn by the CCRA in holding otherwise and in treating the instruments to be the conveyance of sale or alternatively lease deeds covered by Article 35(a) (vi) of Schedule 1-B of the Act more particularly when the CCRA had directed the Collector to follow the observations made in his order in redeciding the matter.
In view of above, also the Collector as well as the Revisional Authority both fell in error in treating the instruments to be conveyance of sale or lease deeds.
A similar controversy had arisen before the Supreme Court in the case of Resident Welfare Association Noida Vs. State of Uttar Pradesh 2009 (14) SCC 716. In the said case a lease deed was executed by the lessor Noida in favour of a Cooperative Society and its members, who were described as lessees and sub-lessees respectively. The members of the society i.e. sub-lessees further entered into agreements transferring their rights to third party. Such an instrument executed by the members i.e. sub-lessees was held to be an assignment of the lease hold rights which were for the purpose of mere enjoyment of the property and not transfer of ownership and was held to be covered by Article 63 of Schedule 1-B of the Act. It was also held that as under Article 63 of Schedule 1-B stamp duty is payable on the consideration mentioned in the instrument the market value of the property is not determinable and as such Section 47-A of the Act would not come into play.
The above decision of the Supreme Court squarely covers the controversy at hand. No contrary decision has been cited.
Accordingly, I hold that the instruments in question are transfer of leases by way of assignment which are chargeable to stamp duty as per Article 63 of Schedule 1-B of the Act and a reference under Section 47-A of the Act in respect thereof is bad in law.
The impugned orders dated 07.04.2006 and 27.6.2011 passed by S.D.O. and CCRA are quashed. Let a writ of certiorari be issued accordingly.
The writ petition is therefore allowed but with no order as to costs.
Order Date :- 03.07.2012 piyush