Full Judgment Text
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 44
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 4367 OF 2000
M/s. Residents Welfare
Association, Noida .......Appellant(s)
Versus
State of U.P. & Ors. ....Respondent(s)
JUDGMENT
TARUN CHATTERJEE,J.
1. This appeal by special leave is directed against
the judgment and order dated 27th of May, 1999
of the Division Bench of the High Court of
Allahabad in Writ Petition No 38748 of 1997
whereby, the Division Bench of the High Court
had dismissed the Writ Petition filed by the
appellants above named.
1
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 44
2. The relevant facts leading to the filing of this
appeal, as emerging from the case made out by
the appellant may be summarized as follows:-
New Okhla Industrial Development Area (in
short "Noida") allotted lands to several Co-operative
Housing Societies by execution of lease deeds with
such Co-operative Group Housing Societies in
respect of the lands allotted to them. The said lease
deeds contain various restrictions on the transfer of
leasehold rights which, interalia include:
1) Restrictions on the transfer without prior consent
of the Noida authorities by transfer
memorandum.
2) Construction of buildings on such leasehold
lands had to be made within a stipulated period
from the date of allotment failing which the
leases of the respective Co-operative housing
societies were liable to be resumed by the Noida
authorities.
2
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 44
3. The lease deeds also contained another clause,
which stipulated that such lease deeds must be
compulsorily registered with the sub-Registrar. It
may be clarified that Noida is the lessor, the co-
operative societies are the lessees, members of the
cooperative societies are sub-lessees and the
present appellants are the assignees.
4. The appellant is the Resident Welfare
Association, Noida, (hereinafter called the
"Association"). The members of the association
executed various agreements for transfer of
leasehold rights with the co-operative societies and
its members from 1988 onwards. Each of the
agreements for transfer of leasehold rights entered
into by the members of the association with the
lessees and the sub-lessees were registered with the
Office of the Sub-Registrar, Noida. It may be kept
on record that from 1984 to June 1997, Noida
3
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 44
authorities were injuncted by the Civil Court from
issuing transfer memorandums for grant of
permission for transfer of leasehold rights. The
order of injunction was operative from 1988 and
continued almost throughout the State of UP till
July 1997. It may also be kept on record that the
agreements for transfer of leasehold rights were
denoted as agreements of sale. The various
transactions entered into by the members of the
association may be categorized in three different
heads:
1) By the agreements of transfer entered into and
possession taken over on payment of most or all
of the consideration due and such agreements
being duly registered with the Office of the Sub-
Registrar, Noida on payment of stamp duty
charges at half of the stamp duty payable on a
conveyance for the consideration set forth in the
agreement in accordance with Article 5 (b)(1) of
Schedule 1-B to the UP Stamp Act,
4
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 5 of 44
2) By the agreements entered into and possession
not taken under the agreements, but later the
said agreements were duly registered with the
Sub-Registrar, Noida,
3) In both the above mentioned categories, the
agreements for transfer were either for a plot of
land on which construction was made thereafter
by the assignees (members of the association) of
the leasehold property out of their own funds or
the agreements for a plot of land along with the
building constructed thereon. Thus in some
cases, as noted hereinabove, the plots were
purchased along with small construction which
was later demolished and the assignees
constructed new building after obtaining new
sanction plans using their own funds.
5. On 1st of July, 1997, a public notice was
issued advertising that Noida authorities shall issue
transfer memorandums with respect to the transfer
5
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 6 of 44
of plots in question upon terms and conditions
including payment of transfer premium. Upon
issuance of the said notice, various members of the
association applied for and obtained transfer
memorandums from Noida authorities after
complying with the conditions thereof and making
payments of the prescribed premium. One of the
conditions, namely condition no. 4 of the transfer
memorandum issued by the Noida authorities
required the lessees of the demised premises to
execute a regular deeds of transfer with the
assignees and to get the same registered with the
Sub-Registrar, Noida. A copy of the same was
required to be filed with the Noida authorities
within a period of 60 days failing which, the Noida
authorities would be entitled to cancel such transfer
and impose a penalty for revalidation of the transfer
memorandum. It is at this stage appropriate that
condition no. 4 of the transfer memorandum may
be produced for the proper understanding of the
6
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 7 of 44
dispute in this case:
"The transferee will submit a certified copy
of transfer deed to be duly registered with
Office of the Sub-Registrar, Noida within
60 days from the date of issue of this
memorandum. This transfer deed is
required to be signed by the person who
has signed the transfer application. The
transferee of the transfer deed executed
by power of attorney holder of the
transferor after 30th September 1997 shall
be liable to pay additional transfer charges
as per policy of the Authority. If the
transferor/transferee fails to execute and
register the transfer deed within 60 days
from the date of this memorandum then
this transfer memorandum shall be
required to be revalidated subject to
payment of penalty at transferring rate
applicable from time to time (present
penalty for delay in executing transfer
deed is Rs. 10/- per day for actual period
of delay over and above the given period
of 60 days)"
6. In compliance with the above stated condition
of the transfer memorandum, some of the members
of the association executed the relevant transfer
deeds with the lessees. It appears that these
transfer deeds were in essence and in reality deeds
for transfer of the lease by way of assignments by
7
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 8 of 44
the original lessees in favour of the members of the
association. Prior to submitting the documents for
registration, enquiries were made as to the stamp
duty payable on which the officials of the
respondent no. 3 informed that the stamp duty to
be fixed on the documents should be as applicable
to conveyance under Article 23 of the Schedule 1-B
of the Stamp Act, on the basis of the current market
value of the plot along with the constructed portion
thereon and for which reference to the present
notified rates for Noida would be taken, as
indicative of the market value.
7. Challenging this decision of the Sub-Registrar,
a Writ Petition was filed before the Allahabad High
Court. In the Writ application, the appellant raised
the following issues:
1) Whether the relevant date for
determination of the market value of
property would be the date of
agreement to sell, when the
consideration was frozen, or the date of
8
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 9 of 44
presentation of the documents of
transfer for registration?
2) Whether the stamp duty could be levied
on the buildings that have been
constructed after getting possession of
the lands and whose cost has been
borne entirely by the members of the
association?
8. The Division Bench of the High Court decided
the aforesaid two questions and it was held inter-
alia, as follows:
1) As far as the leasehold land is
concerned, it can only be the subject
matter of assignment and not absolute
sale by the very nature of the land and
therefore both Articles 23 and 63 of the
Schedule of the Indian Stamp Act would
be applicable.
2) Whether the association or its members
constructed the buildings was a
question of fact, which the High Court in
the exercise of its jurisdiction under
Article 226 of the Constitution was not
in a position to determine.
3) If the Constructions were made after the
possession was delivered to the
members of the association, stamp duty
could not be levied on the buildings so
constructed, as they were not the
subject matter of transfer between the
sub-lessees and assignees.
4) Market value of the lands could not be
calculated on the date of agreement to
9
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 10 of 44
sell but the same can be calculated on
the date of execution of the conveyance
deed.
9. Based on the aforesaid findings, the Division
Bench of the High Court rejected the Writ
application of the appellant.
10. Feeling aggrieved by the judgment of the
Division Bench of the High Court, the association
had filed this special leave petition, which on grant
of leave was heard in the presence of the learned
counsel for the parties.
11. We have heard the learned counsel appearing
for the parties and have carefully examined the
materials on record. Having done that the pivotal
questions that need to be decided in this appeal, as
were decided by the High Court are as follows:
1) Whether the condition precedent to pass
an order under section 47 A of the
Stamp Act, as amended by the State of
10
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 11 of 44
Uttar Pradesh (in short U.P.), was
present in the instant case?
2) Whether the said documents were
deeds of assignment falling under
Article 63 of the Schedule 1-B of the
Stamp Act, as applicable to the State of
UP or they were deeds of conveyance,
as defined in section 2(10) of the Stamp
Act to which Article 23 would be
applicable?
3) Whether the document dated 22nd of
November, 1997, is a deed of
assignment or it is a conveyance to
which Article 23 applies and if so,
whether the order dated 22nd of
November, 1997, passed by the Sub-
Registrar purporting to make a
reference under Section 47 A of the
Stamp Act, as applicable to the State of
UP is not legal and without jurisdiction?
4) Whether the relevant date for
determining the consideration entered in
the document would be the market
value of the property on the day of
entering into the agreement for sale and
not the date of presentation of the
documents for registration?
12. We shall now proceed to deal with the
questions framed by us in this appeal. Let us first
consider the scope of Section 47 A of the Stamp Act
as amended by the State of UP, and the condition
precedent for invocation of Section 47 A of the Act
11
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 12 of 44
which would be necessary for passing an order
under the said Section of the Stamp Act as
applicable to the State of UP. Section 47 A was
substituted by UP Act 38 of 2001 with effect from
20th of May, 2002, whereby a provision has been
made to charge duty as per the market value of the
property valued in case of evasion of the stamp
duty. Section 47 A reads as under:
"47-A. Instruments of conveyance etc., if
undervalued, how to be dealt with:- (1)(a)
If the market value of any property which
is the subject of any instrument on which
duty is chargeable on the market value of
the property as set forth in such
instrument is less than even the minimum
value determined in accordance with any
rules made under the Act, the registering
officer appointed under Indian Registration
Act, 1908, shall, notwithstanding anything
contained in the said Act, immediately
after presentation of such instruments and
before accepting it for registration and
taking any action under section 52 of the
said Act, require the person liable to pay
the deficit stamp duty as computed on the
basis of the minimum value determined in
accordance with the said rules and return
the instrument for presenting again in
accordance with section 23 of the
Registration Act, 1908.
12
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 13 of 44
(b) When the deficit stamp duty required to
be paid under clause (a), is paid in respect
of any instrument and the instrument is
presented again for registration, the
registering officer shall certify by
endorsement thereon, that the deficit
stamp duty has been paid in respect
thereon and the name and the residence
of the person paying them and register the
same.
(c) Notwithstanding anything contained in
any provision of the Act, the deficit stamp
duty may be paid under clause (a) in form
of impressed stamp containing such
declarations as may be prescribed.
(d) If any person does not make the
payment of deficit stamp duty after
receiving the order referred to in clause (a)
and present the instrument again for
registration, the registering officer shall,
before registering the instrument, refer the
same to the Collector for determination of
the market value of such property and the
proper duty payable thereon.
(2) On receipt of a reference under sub
section (1) the Collector shall, after giving
the parties a reasonable opportunity of
being heard and after holding an enquiry
in such manner as may be prescribed by
rules made under this Act, determine the
market value of the property which is the
subject of the instrument and proper duty
payable thereon.
(3) The Collector may suo moto,or on a
reference from any court or from the
Commissioner of Stamps or an Additional
Commissioner of Stamps or a Deputy
Commissioner of Stamps or an Assistant
Commissioner of Stamps or any Officer
authorized by the Board of Revenue in
13
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 14 of 44
that regard, within four years from the
date of registration of any instrument on
which duty is chargeable on the market
value of the property, not already referred
to him under sub section (1), call for and
examine the instrument for the purpose of
satisfying himself as to the correctness of
the market value of the property which is
the subject of such instrument and the
duty payable thereon, and if after such
examination he has reason to believe that
the market value of such property has not
been truly set forth in the instrument, he
may determine the market value of such
property and the duty payable thereon.
Provided that, with the prior permission of
the State Government, an action under this
sub section may be taken after the period
of four years but before the period of eight
years from the date of the registration of
the instrument on which the duty is
chargeable on the market value of the
property.
Explanation- The payment of deficit stamp
duty by any person by any order of the
registering officer under sub section (1)
shall not prevent the Collector from
initiating proceedings on any instrument
under sub section (3).
(4) If on enquiry under sub section (2) and
examination under sub section (3) the
Collector finds the market value of the
property-
a) truly set forth and the document duly
stamped, he shall certify by
endorsement that it is duly stamped
and return it to the person who made
the reference
b) not truly set forth and not truly
stamped, he shall require the payment
14
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 15 of 44
of the proper duty or the amount
required to make up the deficiency in
the same together with a penalty of an
amount not exceeding four times the
amount of proper duty or the deficit
portion thereof.
(4A) The Collector shall also require along
with the deficit stamp duty or penalty
required to be paid under clause (ii) of sub
section (4), the payment of a simple
interest as a rate of one and a half per
mensum on the amount of deficit stamp
duty calculated from the date of execution
of the instrument till the date of actual
payment.
(4B) The amount of interest payable under
sub section (4A) shall be added to the
amount due and also deemed for all
purposes for the amount required to be
paid.
(4C) Where the realization of the deficit
stamp duty remains stayed by any order
of any court or any authority and such
order is subsequently vacated, the interest
referred to in sub section (4A) shall be
payable also for the period during which
the order or stay remained in operation.
(4D) Any amount paid or deposited by, or
recovered from, or refundable to, a person
under the provision of this Act, shall first
be adjusted towards the deficit stamp duty
or penalty outstanding against him, and
the excess, if any shall then be adjusted
towards the interest, if any, due from him
(5) The instrument produced before the
Collector under sub section (2) or sub
section (3) shall be deemed to have come
before him in performance of his function
(6) In case the instrument is not produced
within the period specified by the
15
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 16 of 44
Collector, he may require payment of
deficit stamp duty, if any, together with
penalty on the copy of instrument in
accordance with the procedure laid down
in sub section (2) and (4)."
13. Before the introduction of Section 47 A in the
Stamp Act, there was no provision under the said
Act empowering the revenue authorities to make an
enquiry regarding the valuation of the property
conveyed for the purpose of determining the duty
chargeable, if, the registering authorities were of the
view that the valuation shown in the document was
undervalued. This was reflected through the
decision in Himalaya House Company vs. Chief
Controlling Authority & another, AIR 1972 SC
898, whereby this court held that the stamp duty
was chargeable as conveyance under Article 23 and
the Collector (Stamps) was not entitled to charge
stamp duty on a document presented for
registration except on the consideration set forth in
the document. Pursuant to this judgment, several
16
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 17 of 44
States amended the Stamp Act. The State of UP also
introduced an amendment by way of Section 47 A,
which has been quoted herein above. Thus, the
object underlying Section 47 A of the Indian Stamp
Act is to neutralize the effect of under valuation of
immovable property under registered instrument of
sale or exchange or gift or partition or settlement.
From a bare perusal of sub-section (1) of Section 47
A of the Act, it is clear that if the market value of
any property, which is the subject matter of an
instrument on which stamp duty is chargeable, as
set forth in the instrument, is less than even the
minimum value determined in accordance with the
rules made under this Act, the registering officer
shall request the person to pay the deficit stamp
duty and present the instrument again for
registration. At the same time, it should be kept in
mind that it is not enough for the authorities for the
purpose of invoking Section 47 A that the
consideration amount stated in the instrument of
17
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 18 of 44
sale is less than the prevailing market value but
they must be satisfied that there is an attempt of
under valuation. It is pertinent to mention that if
the registering authority finds that the market value
of the property presented for registration is higher
than the one shown in the document, in that case,
the registering authority after presentation of such
instrument and before accepting the document for
registration would ask the person liable to pay the
required stamp duty, to pay the deficit amount as
computed on the basis of the minimum value
determined in accordance with the rules and return
the instrument for presenting the document again
in accordance with Section 23 of the Registration
Act. Again a close look at Sub-Section (2) of Section
47 A reveals that in case such an officer has reason
to believe that the market value of the property has
been under valued, he shall refer the same to the
Collector but only after registering the same.
Even for the sake of argument, if we assume that
18
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 19 of 44
Section 47 A is applicable in the present case, then
also it is apparent that in the current scenario, the
registering authority could not register the said
instrument before referring it to the Collector which
has been mandated under the Act. For the further
illustration of this point, we may refer to the
decision of this Court in State of Punjab vs.
Mahavir Singh, (1996) 1 SCC 609, where this
Court has categorically held that whenever a
document is presented for registration, the Sub-
Registrar is required first to register the document
and then make a reference under Section 47 A if he
deems fit and proper.
14. Before we proceed further to ascertain whether
Section 47 A would at all be applicable in the
present case at our disposal, we have to first
establish whether the alleged documents were
deeds of assignment falling under Article 63 of the
Schedule 1-B of the Stamp Act as applicable to the
19
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 20 of 44
State of UP, or they were deeds of conveyance, as
defined in Section 2(10) of the Stamp Act to which
Article 23 would be applicable. It is only after this
question is properly answered, that we can proceed
to answer whether Section 47 A would be applicable
in the present case.
15. The learned counsel for the appellant
contended that since Article 63, Schedule 1-B of the
Act is a specific provision that deals with transfer of
lease by way of an assignment; it should be
excluded from general provisions. This Article is the
charging provision for such transfers. It provides for
the duty to be charged which is equal to
conveyances as provided in Article 23 of the said
Schedule, the only distinguishing factor being that
in the former, the rate of duty would be according to
the consideration mentioned in the deed, while the
later states the exact duty chargeable. The learned
counsel also contended that for application of
20
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 21 of 44
Article 23, it is necessary that there is a
conveyance. It was also contended by him that the
main condition for registration of an instrument is
that it must be chargeable to duty on the market
value and the same is possible in case of an out
right sale. In case of lease, only partial rights are
transferred and the right of reversion remains with
the lessor whereas in case of sale, there is an
absolute transfer of ownership. Therefore, we have
to establish whether the documents presented for
registration were, in fact, an out right sale or a deed
of lease. The learned counsel appearing on behalf of
the respondent no 4. (i.e. being the Noida
authorities) contended that the deed was a
composite deed of assignment and sale owing to
which both Articles 23 and 63 would be applicable.
The Division Bench of the High Court in its
impugned judgment also agreed to this contention.
Thus, considering this, it becomes essential for us
to determine the nature of the deed.
21
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 22 of 44
16. "Sale" has been defined under section 54 of
the Transfer of Property Act. Although the Indian
Stamp Act 1899 has not included the definition of
"sale", Section 2, sub-section (10) of the Act defines
"conveyance" as including a conveyance on sale and
every instrument by which property, whether
movable or immovable, is transferred intervivos and
which is not otherwise specifically provided for by
Schedule 1-A or Schedule 1-B, as the case may be.
"Lease" has been defined under section 105 of the
Transfer of Property Act and also in section 2 sub
section (16) of the Indian Stamp Act 1899.
According to section 2 sub section (16) of the Indian
Stamp Act, "Lease" means a lease of immovable
property and includes a Patta, a kabuliyat or any
instrument by which tolls of any description are let,
any writing on an application for lease intended to
signify that the application is granted and finally
any instrument by which mining lease is granted in
respect of minor minerals as defined in clause (e) of
22
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 23 of 44
section 3 of the Mines and Minerals (Regulation and
Development) Act, 1957.
17. From a plain reading of Section 54 and Section
105 of the Transfer of Property Act, there cannot be
any doubt in our mind that in case of a lease, there
is a partial transfer and the right of reversion
remains with the lessor. Whereas in case of a sale,
there must be an absolute transfer of ownership
and not some rights only as in the case of a lease.
Therefore, it is to be considered whether the
document in question, which was presented for
registration, was a partial transfer and accordingly,
it was a lease, or whether it involved any outright
sale therein. As noted herein earlier, a lease deed
was executed by the lessor in favour of the co-
operative societies and its members. It is an
admitted position that the lessor namely Noida
Authorities had entered into the lease agreement
with the co-operative societies and their members,
23
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 24 of 44
being lessees and the sub-lessees respectively, and
the sub-lessees further entered into the agreements
with the assignees (members of the appellant
association). Such being the position, it is amply
clear to us that the document in question presented
for registration before the registration officer was, in
fact, a lease and the transfer to the members of the
association was an assignment of the leasehold
rights. It cannot be doubted that the demised land
was merely an enjoyment of the land and not
transfer of the ownership.
18. In order to appreciate whether a document is a
sale or a lease, reference can be made to the case of
Byramjee Jeejeebhoy (P) Ltd. vs State of
Maharashtra (AIR 1965 SC 590), where this
Court formulated the following principles for
determination of the aforesaid question:
"Such a grant cannot be regarded as a
lease, for a lease contemplates any right
for a transfer of a right in a consideration
24
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 25 of 44
price paid or promised or service or other
things of value to be rendered periodically
or on specified again to the transferor. The
grant does not purport to demise a right of
enjoyment of land. It confers right of
ownership in then land. There is gain no
contractual right reserved. It is specifically
or by implication to determine the right.
The reservation and reversion remained
and remains yearly and runs, years and
profits of all lands determine and property
in the premise is of nature of a restriction
upon the said transfer and does not
restrict the equality of the said. The rent to
be demanded was again not stipulated as
consideration for the grnat of the right to
enjoy the land but expressly in
consideration of grnating freedom from
liability to pay assessment."
[Emphasis supplied]
19. The High Court in the present case decided
that the document given for registration contained a
composite deed of lease as well as a deed of sale.
Therefore, both Article 63 as well as Article 23 of
the said Act would apply. We cannot agree with
these observations of the Division Bench of the High
Court. As mentioned earlier, the said document
consists of a single deed of assignment of lease. The
25
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 26 of 44
Division Bench construed the transfer of the land
as an assignment of lease whereas the transfer of
the building appurtenant thereto to be through a
deed of sale. It appears to us that the High Court
has clearly not interpreted the true essence of the
lease deed executed between the lessor and the
lessees. The learned counsel appearing on behalf of
the appellant has brought to our notice that the
said lease deeds categorically provided that not only
the land but the appurtenants attached thereto are
also governed by its covenants as per para "k" of the
said deed which states that every transfer,
assignment, relinquishment, mortgage or sublet of
the property shall be bound by the covenants of the
deed along with the assignee being answerable to
the Noida authorities in all respects. The appellant
has also brought to our notice that para "g" of the
said deed states that the lessee/ sub lessee would
only be allowed to make any alterations in the
building with the prior permission of the authority
26
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 27 of 44
and would also be liable if any deviations from the
permission obtained is brought to light. Moreover,
the concerned lease deed specifically provides for a
lease of 99 years of the land along with its
appurtenances thereto with the right of reversion.
So it is clear from the above-mentioned provision
that the land along with its appurtenants would be
reversed back to the lessor after the stipulated
period. The alleged document is therefore a transfer
of the assignment of lease and not an outright sale
of its appurtenants. The learned counsel appearing
on behalf of the respondent No.4 (being the Noida
Authorities) had contended that the lessee or the
sub lessee have absolute rights over the buildings
constructed by them and hence the lessor has no
right over them. Therefore, the lessee or the sub-
lessee can transfer such buildings by way of an
outright sale and the same cannot be the subject
matter of an assignment of lease. We are in a
position to accept this submission of the Noida
27
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 28 of 44
Authorities. It is clear from para (b) of section III of
the lease deed executed between Noida and the
sub-lessees that:
"At the time of re-entry the demised
premises shall not have been occupied any
building constructed by the sub-lessee
therein the sub lessee shall within a period
of three months from the date of re-entry,
removes from the demised premises all
erections or buildings, fixtures and things
which at any time and during the said
terms shall be affixed or set up within or
upon the said premises and leave the said
premises in as good a condition as it was
on the date of demise, in default whereof
the same shall become the property of the
lessor without payment of any
compensation to the lessee/ sub lessee for
the land and the building fixtures and
things thereon, but upon the sub lessee
removing the erection buildings, fixtures
and things within the period hereinbefore
specified, the demised premises shall be
re-allotted and the lessee/ sub lessee may
be paid such amounts as may works out
in accordance......."
20. Therefore, the only question which comes to
our mind is that if the lessee or the sub lessee has
an absolute right over the constructions
constructed by him and he can transfer it by an out
28
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 29 of 44
right sale and not through an assignment of lease
as contended by the Noida Authorities, the lease
deed would not have provided for such a clause
wherein the Noida authorities have a right over the
buildings and the appurtenants on the land in case
of any failure of the sub-lessee to remove such
constructions at the time of re-entry. Thus the said
lease deed specifically provides for a right of
reversion to the land and appurtenances thereto
including buildings, on the termination or expiry of
the lease. It is thus clear that the buildings and all
other appurtenants attached to the land become a
part of the assigned transfer through lease and not
a separate sale.
21. Moreover section 3 of the Transfer of Property
Act states that when an immovable property such
as land is transferred by way of assignment of lease,
all appurtenances thereto attached to the earth
29
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 30 of 44
such as buildings and fixtures thereto would also
stand assigned.
22. Accordingly, on a plain reading of the deed of
assignment, we are of the view that the assignees
became liable to the lessor, namely Noida on the
covenants running with the land. In conclusion, we
are, therefore of the view that the deed presented
for registration was a deed of assignment.
23. Before we part with this aspect of the matter,
that is to say, whether the document/instrument
was in fact a deed of assignment or an outright sale,
we must also keep in mind that the nomenclature
to the document of assignment cannot be said to be
determining factor in deciding whether a particular
deed or document was a lease or a deed of
assignment. In Madras Refinery Ltd. vs. C.S. [AIR
1977 SC 500], it was held that in order to decide
whether a particular document is a lease or a deed
of assignment, one has to look at the substance of
30
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 31 of 44
the deed of assignment to the document and not
the nomenclature. Therefore, it must be held that
no importance can be given to the nomenclature to
the document. Although some of the members of
the association had termed the document as a deed
of sale or transfer cum sale deed instead of as a
deed of assignment, it remains as a deed of
assignment as has been noted above by us.
24. Keeping the above position in mind, we,
therefore, would deal with the question as to
whether Article 63 of Schedule 1B of the Stamp Act,
as applicable to the State of UP will apply to the
document in question, or whether Article 23 of the
Stamp Act will be applicable in the present case.
Article 63 deals with transfer of lease by way of
assignment and provides that in such a case, the
duty that would be payable is the same duty that
would be payable in case of conveyance (Article No.
23) for a consideration equal to the amount of
31
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 32 of 44
consideration for the transfer. A plain reading of
Article 63 of the Schedule 1-B to the Stamp Act
would, however, show that the stamp duty
chargeable to a document is not on the market
value of the property but on consideration indicated
in the same. It is only the rate of duty, which is to
be taken from Article 23. Therefore, if Article 63 of
the Stamp Act is to be applied, duty shall be paid
on the consideration of the amount of consideration
shown in the deed itself and not on the market
value of the land or the construction thereon.
Therefore, it is clear from a reading of Article 63
that it would apply in case of a transfer of lease by
way of an assignment and Article 23 applies in case
of a conveyance by way of sale. Article 63 in clear
terms mentions that in case of an assignment, the
duty that would be payable is the same duty as
conveyance for a consideration equal to the
amount of the consideration for the transfer.
Thus it is clear that the duty is not calculated on
32
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 33 of 44
the market value but on the amount of
consideration mentioned in the deed itself. It is
expedient to have a look at the Stamp Acts as
applicable to the State of Tamil Nadu and Union
Territory of Pondicherry for elaborating our point
made above. From the Stamp Act of Tamil Nadu
and Pondicherry, we find that Article 63 as
applicable to the same provides that in case of
assignment by way of lease, the duty that would be
payable is the duty as a conveyance for a market
value equal to the amount of the consideration
for the transfer. Therefore, it is clear that in these
areas, a clear intention has been expressed that
duty should be payable for a market value equal to
the amount of the consideration for the transfer
whereas if we refer Article 63 as applicable to the
State of UP, it mentions that duty would be payable
for a consideration equal to the amount of the
consideration for the transfer. The legislature
expressly has specified therefore that the stamp
33
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 34 of 44
duty payable in case of an assignment would not be
calculated on the market value of the property but
on the consideration set forth in the deed itself.
25. In view of the above observation, we may note
that it was not open to the registering officer to
embark upon an enquiry into the market value of
the land or the building in view of the fact that it is
only the leasehold rights which are only transferred
by way of assignment by the document/instrument
presented for registration.
26. Section 47 A would be applicable only when
Article 23 is applicable. In case Article 63 applies,
the registration officer does not have any
jurisdiction to enquire into the market value of a
property under Section 47 A of the said Act. It is to
be noted that the power under Section 47 A of the
Act can be exercised in respect of an instrument
presented for registration on which duty must be
34
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 35 of 44
charged on its market value. Thus Section 47 A
applies in case of an outright sale. Since in this
case, the instrument in question is not an out right
sale but a lease hold right, therefore, the question
arises whether the condition precedent mentioned
in the Act has been fulfilled and, if not, the
reference under Section 47 A was invalid. Moreover,
even if we assume that Section 47 A applies in this
case; we have to enquire whether the appellant
intentionally tried to undervalue the property in the
alleged document. At this juncture, it is necessary
to again consider Section 47 A. Section 47 A clearly
provides that when the valuation shown in the
agreement presented for registration is, according to
the authorities, under valued, in that case, the
registering authorities are conferred with the
discretion to hold an enquiry to find out if the duty
chargeable on the market value of the property is
less than even the minimum value determined in
accordance with the rules made under the Act. As is
35
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 36 of 44
evident from the records placed before us, the
appellant could not execute the sale deed because
of the failure of the respondent No.4, i.e. Noida
Authorities, to execute transfer memorandum due
to the orders of injunction passed in pending
litigations before the different courts. Therefore the
appellant cannot be faulted for not executing the
same. We have observed that the consideration
mentioned on the agreement to sell was absolutely
adequate with regard to the market value of the
property at that time and the same was registered
before the registering authority. Moreover, we find
that there are no allegations on record against the
appellant of under-valuation at the time of entering
into the agreement for transfer of the property.
Therefore we do not see any fraudulent intentions
on the part of the appellant to under value the
property in order to evade stamp duty paid thereon.
Since the stamp duty is to be charged on the
consideration mentioned in the document under
36
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 37 of 44
Article 63 of Schedule 1-B of the Act in case of an
assignment of lease, the consideration mentioned
on the document was adequate in respect of the
time when the agreement of the transfer by way of
lease was registered. It would be a different
question that when the said deed is to be executed,
the value of the said property has increased with
the passage of time. The execution of the deed had
not been delayed due to any fault on the part of the
appellant and therefore he cannot be held liable for
intentionally suppressing the value of the property.
Moreover as we have noticed, the appellant did not
make any undue delay in executing the deed after
the Noida Authorities issued the transfer
memorandums. Therefore, considering the above
circumstances, it would be unwise to say that the
appellant had any intention to evade the stamp
duty as specified under the Act. Thus even if
Section 47 A of the Act would have applied, the
registering officer would have no jurisdiction to refer
37
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 38 of 44
it to the Collector since there was never any
intention on the part of the appellant to undervalue
the property.
27. Having decided the aforesaid questions raised
in this case, we now proceed to deal with the
question as to the date of determination of the
consideration mentioned in the document. The
respondents contended that the consideration
mentioned should be the market value of the
property on the date of execution of the deed and
not on the date when the agreement to sell the land
was executed. The appellants on the contrary
argued that the relevant date in order to calculate
the consideration would be the market value on the
date when the agreement to transfer the land was
entered and registered. We have heard the
argument of the parties and referred to various
cases dealing with this matter. In this regard, we
would like to observe that there cannot be a
38
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 39 of 44
straightjacket formula devised for determining the
same. It would depend on the various facts and
circumstances of a particular case. In situations
where the delay is caused on the part of a party
intentionally while executing a deed after entering
into an agreement of sale or lease as the case may
be, the market value should be determined on the
date when the deed is executed and not when an
agreement to sale the property or lease the property
had been registered. But in cases where a person is
not at fault and the delay is caused due to the
lessor as in this case, the market value should be
determined on the date when the agreement to
lease the property was entered. The lessee or the
sub lessee should not suffer due to the inability of
the lessor in handing over transfer memorandums
as is required under the lease. For this, a reference
can be made to the case of S.P. Padmavati vs.
State of Tamil Nadu & Others. [AIR 1997 Mad
296], which is similar to the present case and to
39
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 40 of 44
which we are in respectful agreement where the
property could not be registered due to no fault of
the transferee and where the consideration was
frozen earlier, as in the current case. The Madras
High Court held that the relevant date for
calculation of market value and the stamp duty is
the date on which the consideration was frozen.
28. Since in view of our discussions made herein
above that this was the case of assignment of a
lease which has to be dealt with in accordance with
the provisions under Article 63 of the Schedule 1-B
of the Act which says that the duty shall be charged
as per Article 23 on the consideration mentioned in
the deed and not on the market value. So the
question of determination of the market value does
not arise at all in case of an assignment of lease
which is to be charged as per Article 63 of the Act.
An enquiry under Section 47 A is also not
contemplated under the Act in case of an
40
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 41 of 44
assignment by way of lease unlike Article 23 of
Schedule 1-B of the Act which deals with Stamp
Duty to be levied on deed of sale. It is further
observed by us that Article 63 of Schedule 1-B,
being a specific Article, will have overriding effects
on all the general clauses of the Act. As has already
been mentioned, market value can be truly
determined in case of an outright sale. The present
case does not deal with such a situation.
29. Going by the aforesaid discussions, we are of
the view that the consideration to be mentioned in
the assignment of transfer by way of a lease would
be the market value of the property on the date of
agreement for sale when the property could not be
registered earlier due to no fault of the members of
the associations and when their consideration was
frozen earlier. Concerns can be raised that since
Article 63 of the Act deals with stamp duty to be
levied on the consideration set forth in an
41
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 42 of 44
assignment by way of transfer of lease, and not on
the market value of the property to be transferred, it
can be misused and remedy would not be available
under Section 47 A to determine the market value
of the property. This has to be taken care of by the
concerned Legislature and incorporate suitable
safeguards to prevent such misuse. For this
purpose, reference can again be made to the Stamp
Acts of the State of Tamil Nadu and Union Territory
of Pondicherry as applicable to these areas where it
has been specifically mentioned in Article 63 that in
case of an assignment by way of transfer of a lease,
the duty which would be payable is the same duty
as a conveyance for a market value equal to the
amount of the consideration for the transfer.
Thus it is clear that there is an express intention on
the part of the legislature in these areas to charge
the stamp duty on lease deeds according to the
prevalent market value unlike the Stamp Act as
applicable to the State of U.P. Therefore we cannot
42
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 43 of 44
go beyond that which has been provided under the
statute and decide otherwise. Thus we reiterate that
in the present circumstances, the consideration
would be that which has been mentioned in the
lease deed at the date of the agreement to enter into
the same and there is no scope for looking into the
market value of the property under the provisions of
the Act in case of an assignment by way of a
transfer of lease under Article 63 of the Schedule 1-
B of the Act.
30. Thus accordingly, setting aside the judgment
of the High court we hold that in the instant case
Article 63 of Schedule 1-B of the Stamp Act, as
applicable to the State of U.P., which deals with
transfer of lease by way of assignment will apply to
the documents in question. We also hold that the
consideration to be mentioned in the document
would be the market value of the property on the
date when the agreement was entered into and not
43
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 44 of 44
when it was presented for registration, considering
the peculiar facts of this case.
31. In view of our discussions made herein above,
the appeal is thus disposed of. There will be no
order as to costs.
..............................J.
[ARIJIT PASAYAT]
New Delhi; ...........................
....J.
April 15, 2009. [TARUN CHATTERJEE]
44