S.P Kurdukar, J.:— This batch of three appeals and several other connected Writ Petitions were heard together since they raise common questions of law under section 4 of the Maharashtra Ownership Flats (Regulation of the Promotion of Construction, Sale, Management and Transfer) Act, 1963 and the Maharashtra Apartment Ownership Act, 1970, and in particular liability to pay stamp duty under entry 25 of Schedule I of the Bombay Stamp Act, 1958. Appeals Nos. 395 of 1991, 396 of 1991 and 551 of 1991 are filed by the State of Maharashtra and others impugning the interim order passed by the learned Single Judge in the respective writ petitions. All these Writ Petitions are admitted. Mr. Bhandari, learned counsel appearing for the respondents - writ petitioners, took strong exception to the maintainability of these appeals. We will deal with this argument little later after we set out the necessary facts.
2. At the outset it may be stated that in all these writ petitions the agreements for sale were entered into between the Builders-Developers and the Purchasers of the flats. All these agreements for sale which were executed in terms of section 4 of the Maharashtra Ownership Flats (Regulation of the Promotion of Construction, Sale, Management and Transfer) Act, 1963 — hereinafter referred to as “MOF” Act are required to be registered under section 17(1) of the Indian Registration Act. The Registering Authority thereafter impounded the documents (Agreements for sale) and sent them to the Superintendent of Stamps under the Bombay Stamp Act, 1958 for appropriate action (see Exh. C). Issue raised in all these writ petitions is as to whether such agreements for sale can be subjected to payment of stamp duty in terms of section 32-A read with Entry 25, Schedule I of the Bombay Stamp Act, 1958.
3. The agreements for sale or agreements of sale in all these matters are almost identical incorporating relevant and material clauses provided under section 4 of the mof act. Some of the clauses were although deleted and substituted by new clauses but substratum of these agreements remains the same in terms of section 4 of the mof act.
4. For the purpose of this judgment we may set out the averments contained in Writ Petition No. 3693 of 1991, out of which Appeal No. 395 of 1991 arose. Parties will be hereafter referred to by their original description in writ petition:
5. This Writ Petition is filed by the two petitioners. Second petitioner is the wife of first petitioner (Respondents 1 and 2 respectively in this appeal). The first respondent is the State of Maharashtra. The second respondent is the Assistant Director, Town Planning, Stamp and Valuation, Bombay. The third respondent is the Sub-Registrar of Assurances, Bombay and the fourth respondent is the Superintendent of Stamps, Bombay (appellants in this appeal). It is averred by the petitioners that on 8th October, 1987 they entered into an agreement for sale of the flat with one Century Enterprises to purchase a flat No. 1301 in Bhawani Complex Building. ‘C’, Bhawani Shankar Road, Bombay-400028. The agreement for sale is annexed to this petition (Exh. A). We will refer to the various terms contained in this agreement at appropriate stage when we deal with the said agreement. This agreement was executed in terms of section 4 of the mof act with certain modification. It was lodged for a registration on 3rd of November 1987 in terms of section 4 of the MOF Act read with section 17(1) of the Indian Registration Act, 1908. The receipt of lodging is at Exh. B. The consideration under this agreement was shown at Rs. 3,75,000/-. Registration fee of Rs. 3,750/- was paid in addition to copying fee and postal charges. The Sub-Registrar of Bombay vide his letter issued sometime in February 1988 communicated to the first petitioner that the said document was impounded and has been sent to the Superintendent of Stamps, Bombay. The petitioner was directed to do needful in the matter in the Stamp office. The Assistant Director of Town Planning, Stamp and Valuation in exercise of his powers issued a communication on 9-3-1990 in the prescribed Form-I under Rule 3(1) of the Bombay Stamp Act (Determination of True Market Value of Property) Rules, 1981, to the petitioners informing them that he has received a reference from the Collector under sub-section (1) of section 32-A of the Bombay Stamp Act, 1958 — hereinafter referred to as “the Act”, for determination of the true market value of the property which is the subject matter of the instrument of agreement to sell and for determination of proper stamp duty on the said agreement. Petitioners were further informed that he has reason to believe that the market value of the property has not been truly and fully set forth in the instrument and the reasons therefor are set out in annexure to the said show cause notice. The Assistant Director of Town Planning, Stamp and Valuation, accordingly called upon the petitioners to submit their representation if any in writing within thirty days from the date of service of this show cause notice showing that the market value of the property has been truly and correctly set forth in the instrument. The first petitioner was also called upon to produce all relevant records within a period of thirty days. If no such representation is received within the said period the matter will be disposed of on the basis of available facts. In the Annexure, two queries were formulated:
(1) the price in the Deed is less than the current market value, and (2) by showing less price in the Deed attempt is made to save stamp. The first petitioner showed cause through his advocate's reply dated 26th October, 1990 (Exh. E). In this reply the petitioner challenged the legality and validity of the proposed action of the Assistant Director, Town Planning. In substance it was stated that the document in question is only an agreement of sale and no right, title and interest passed on to the petitioners so as to call it as a conveyance and/or instrument. Section 32-A of the Act has no application and consequently document is not liable for any stamp duty under entry 25 of Schedule I of the Act. The agreement of sale was executed under section 4 of the mof act and in terms of the said provision it was mandatory to register the same under section 17(1) of the Indian Registration Act. The provisions of the Bombay Stamp Act do not apply and consequently it cannot be the subject matter of the show cause notice. Action of impounding the document is illegal. The authority has no power to determine the nature of the document. Entry 25 of Schedule I of the Act applies to conveyance. The agreement of sale is not a conveyance. The amended provisions of the Act do not apply retrospectively. Explanation to Entry 25 in Schedule I of the Act to treat the agreement to sell as deemed conveyance is illegal. Various other contentions were taken in this reply and we will deal with all these contentions at appropriate place. The petitioner, therefore, stated that the show cause notice is illegal and without authority of law and it be withdrawn/quashed.
6. Without waiting for the disposal of the show cause notice on merits, the petitioners have rushed to this Court and filed this writ petition on or about 25-11-1990 under Articles 226/227 of the Constitution challenging the legality and correctness of the notice dated 9-3-1990 (Exh. D) issued by the second respondent, and the letter of the third respondent at Exh. C [see prayer (a).] The petitioners alternatively prayed to strike down the provisions under the bombay stamp act relating to the determination of market value. Explanation I to Entry 25 in Schedule I of the Act and/or sections 33 and 33-A of the Act, are ultra vires the Constitution of India, beyond legislative competence, ex post facto, unauthorised, unjust and bad in law. The petitioners have also prayed for interim order in terms of prayer (c). The learned Single Judge after hearing the parties by his reasoned order dated 8th February, 1991 issued Rule and granted interim order on the same terms granted vide interim order dated 19th September, 1989 passed in connected Writ Petitions Nos. 2556 of 1989 to 2559 of 1989. In addition the learned Single Judge recorded certain undertakings of the petitioners (see page 86 of the compilation).
7. The State of Maharashtra being aggrieved by the above Interim Order passed by the learned Single Judge preferred Appeal No. 395 of 1991. This is how this appeal arises out of Writ Petition No. 3693 of 1990.
8. Mr. Bhandari learned counsel appearing for the writ petitioners (respondents) emphatically challenged the maintainability of the appeal. He urged that the appeal should be dismissed and the writ petitions be remitted back to the learned Single Judge for decision on merits. The learned counsel also challenged the order of the Division Bench dated 9-7-1991 in appeal (Hon'ble C.J and Sukumaran, J.) contending that the Division Bench had no power to constitute a special Bench and refer the writ petitions as well as the appeal under rules 27 and 28 of the original side rules. order dated 9-7-1991 cannot be one under rule 27 of the Original Side Rules. Rule 28 cannot be invoked since the said provision is available only on reference by a Single Judge. Mr. Bhandari also urged that effect of the order dated 9-7-1991 is to take away the vested right of appeal of the petitioners. He therefore requested us that appeal be first disposed of in accordance with law and consequently the writ petition be remitted back to the learned Single Judge for disposal in accordance with law. We, however, do not see any substance in any of these contentions.
9. The learned Chief Justice and K. Sukumaran, J. vide judicial order dated 9-7-1991 directed that not only this appeal but writ petition and other companion writ petitions involving identical issues be heard by a Special Bench. The learned Chief Justice having regard to the public importance and necessity of constituting a special bench ordered that a special bench be constituted to hear these matters expeditiously. In our opinion no prejudice whatsoever is caused to the petitioners. Since the order dated 9-7-1991 is a judicial order it would not be permissible for us to go behind the order. It may also be stated that upon the grievance made by the Government counsel that large number of writ petitions involving identical issues are pending in this Court in which interim orders have been passed whereunder the State Government is deprived of a substantial revenue, the Division Bench presided over by the learned Chief Justice after hearing the parties constituted this Special Bench. We, therefore, find no substance in the preliminary objection raised by Mr. Bhandari.
10. It is not and cannot be disputed that the Court will have to first ascertain as to whether the document in question i.e agreement of sale or agreement to sell is a document conveying right, title and interest in the writ flat in favour of the petitioners. The Court will have also to find out on the material on record as to whether such a document ever contemplates execution of any other conveyance at a latter point of time. We may therefore proceed to examine these contentions with reference to relevant clauses in the document i.e agreement of sale.
11. As indicated earlier the agreement of sale in question is drawn in terms of section 4 of the mof act. According to the petitioners the building in question belongs to Priyadarshani Co-operative Housing Society Ltd. and the ownership thereof vests in the said Co-operative Housing Society. Century Enterprises were the developers and now it is common premise that there is an agreement of sale of writ flat on 8-10-1987 between the petitioners and the said developers.
12. Section 4 of the MOF Act opens with non obstante clause and makes it obligatory on the promoters to enter into a written agreement of safe with each of the persons who take a flat or flats on ownership basis before accepting any money as advance or deposit and such advance payment of money or deposit shall not be more than 20% of the sale price under an agreement.
13. Section 4(1A) further provides that the agreement shall be in the prescribed form and to contain, inter alia, particulars as specified in clause (a) and to such agreement there shall be attached the copies of the documents specified in clause (b). Particulars to be contained in the agreement are set out in clause (a)(i) to (x) and copies of documents to be attached to such an agreement are set out in clause (b)(i) to (iii). It is not disputed that agreement in question is in compliance with these provisions in all material respects. It is therefore not necessary to set out the particulars contained in clauses (a) and (b) of sub-section 1-A of section 4 of MOF Act. We may therefore straightway refer to some of the terms in the agreement which would be decisive to conclude as to whether the agreement in question is merely an agreement for sale or virtually a conveyance without any further obligation on promoter to execute a conveyance of sale later on. Agreement is at Exh. A. Clause (ii) of the said agreement refers to the Development Agreement dated 20-9-1982 entered into between the developer Century Builders and the Priyadarshani Co-operative Housing Society. That agreement is not before the Court. We are told that under this Development Agreement certain rights were given to the developers in respect of some flats to sell.
14. What follows from clause (x) is relevant for our purposes. We may narrate substance of some of the relevant clauses. In clause (x), it is recited that the Builders have commenced the construction of the entire Housing Complex and have completed Building ‘A’ and Building ‘B’ and Building ‘C’ is about to be completed. The writ flat is in Building ‘C’. It further recites that Builders have sold and allotted on ownership basis the flats, shops, garages, car parking and other premises in the Building ‘A’ and on some of the floors of Building ‘B’ and Building ‘C’ and now have become entitled to dispose of and allot 8 flats pursuant to the arrangements recorded in the aforesaid agreement in the form of letter dated 26th September, 1984, in view of the default committed by the Owner in making payment of the instalments and other amounts payable as per clauses Nos. 4(a) and 4(b) of the above agreement dated 20-9-1982.
15. Clause (xii) recites that the Purchaser has agreed to acquire from the builders flat No. 1301 on 13th floor in ‘C’ Building at the price and on the terms and conditions hereinafter mentioned.
16. We may now set out the terms and conditions contained in the agreement:
17. Para 3 recites that the Purchaser hereby agrees to purchase and acquire from the Builders flat No. 1301 on 13th floor admeasuring about 473 sq. ft. carpet area for the price of Rs. 3,75,000/- out of which a sum of Rs. 2,00,000/- has been paid by the Purchaser to the Builders as earnest money and balance of Rs. 1,75,000/- will be paid in the manner given below:—
(i) Rs. 1,65,000/- on or before 20th October, 1987; and
(ii) Rs. 10,000/- within 3 days from the date of letter intimating to the Purchaser about the completion of the building and offering to give possession of the premises to the purchaser.
18. Time for payment of instalments shall be the essence of the contract. If the purchaser commits defaults in making payment of any of the aforesaid amounts on their respective due dates, the builders shall be at liberty to terminate this agreement, in which event the amounts paid by the Purchaser to the Builders under this Agreement shall stand forfeited to the Builders. However, option is also reserved by the Builders to regularise on payment of interest at 24% on such defaulted amounts. It is also stated in this paragraph that upon termination of this agreement, the Purchaser shall cease to have any right, claim or demand in respect of the premises agreed to be purchased by him nor shall the Purchaser be entitled to claim specific performance of this agreement and/or compensation or damages.
19. In paragraph 7, it is stated that subject to the purchaser making full payment of all amounts due and payable by him under this agreement and subject to force majeure, possession of the said premises is expected to be delivered by the Builders to the Purchaser on or before the 30th November, 1987.
20. It is pertinent to note that the agreement is dated 8th October, 1987 and possession to be handed over by 30th November, 1987. Time factor of payment and handing over possession is less than two months.
21. In paragraph 8, the Purchaser was obliged to pay a sum of Rs. 7,500/- as security deposit for the payment of proportionate share of taxes and other outgoings and an undertaking of the Purchaser was recorded that he would pay Rs. 250/- for legal charges, costs and expenses of the builders in connection with repairing, engrossing and printing of this agreement.
22. In paragraph 10, a further obligation is also cast upon the purchaser that he shall take possession of the flat within seven days of the builders giving written notice.
23. Paragraph 12 recites that the Purchaser after getting possession shall maintain the said premises at his own costs in a good and tenantable repair and condition and shall not do or suffer to be done anything in the said premises or to the said building, its staircases and common passages or terrace or balconies etc. It is further provided that the purchaser shall not change, alter or make any additions or alterations in or to the said premises or to the said building or any part thereof without obtaining the previous permission in writing of the Builders.
24. In paragraph 13, purchaser has agreed that in the event of any amount by way of premium, development tax, betterment charges or any other tax or payment of a similar nature or security deposit for water connection becoming payable to the State Government or Municipal Corporation of Greater Bombay by the Builders the Purchasers agree to pay in proportion to the area of the said premises to the Builders. The Builders' decision in this behalf will be final.
25. Paragraphs 14 and 15 are heavily relied upon by Mr. Bhandari and, therefore, we reproduce the same in verbatim:
“14. Nothing contained in these presents is intended to be nor shall it be deemed to be a grant, demises, conveyance, assignment or transfer in law of the said property premises or the building thereon, or any part thereof to the purchaser by the builder.
15. The Purchaser shall not let, sub-let, sell, transfer, assign or otherwise deal with or dispose of the said premises or his interest or benefit under this agreement till all the dues payable by him to the builders under this agreement have been fully paid up and until previous consent in writing of the Builders in that behalf is obtained by him.”
26. Paragraph 18 is again relevant and it states that the Purchaser shall permit the Builders/Owner/Society and/or its surveyors or agents, with or without workmen at all reasonable times and from time to time to enter into and upon the said premises and every part thereof to view and examine the condition of the said premises and for the purpose of repairing any part of the said building as also for the purpose of maintaining, rebuilding, cleaning, lighting and keeping in good order and condition all services including drains etc.
27. Paragraph 24 which is not provided in the particulars in Clause (a) of sub-section (1A) of section 4 of the MOF Act but is incorporated in the agreement is a default clause and the Builders retain a right to terminate the agreement if the purchaser failed to perform or observe any of the terms and conditions. It further provides that on termination of the agreement the purchase money shall stand absolutely forfeited to the builders and the purchaser shall become a trespasser.
28. In paragraph 26 it was provided that the Builders shall, in respect of any amount remaining unpaid by the purchaser under the terms and conditions of this agreement, have a first charge or lien on the said premises agreed to be acquired by the purchaser.
29. Paragraph 31 is in terms of the agreement under section 4(1a) of the mof act whereunder the Purchaser shall present this agreement at the proper registration office within the time limit prescribed by the Registration Act and the Builders will attend such office and admit execution thereof.
30. On comparison of the particulars of terms and conditions in the executed agreement and particulars of agreement in terms of section 4(1a)(a) of the mof act, it appears to us that some of the new terms and conditions have been incorporated in this executed agreement. Along with this agreement the Builders have provided the necessary annexures in terms of section 4 of the mof act, including the Sketch plan.
31. Mr. Bhandari urged that the agreement in question is only an agreement to sell and not agreement of sale and/or concluded conveyance on sale. He laid much stress on the terms and conditions incorporated in paragraphs 3, 10, 12, 14, 15, 18, 24 and 26 which we have set out hereinabove. According to Mr. Bhandari all these terms clearly indicate that the agreement in question cannot be said to be a conveyance on sale but it is only an agreement to sell depending upon various contingencies and in particular rights reserved by the Builders to terminate the agreement. He therefore urged that agreement in question does not create any right, title and interest in the writ flat in favour of purchasers and if this be so such agreement falls outside the scope of conveyance as defined in the bombay stamp act and consequently no stamp duty as on a conveyance is payable on this agreement.
32. Miss Ankalesaria, learned Govt. Pleader appearing for the State of Maharashtra and others urged that the agreement in question is in effect a conveyance on sale and if one looks at the intention of the parties, it leaves no manner of doubt that under this very agreement that writ flat has been conveyed absolutely to the petitioners. She further urged that on receipt of the entire purchase amount by the developers as per the terms and conditions of this agreement and after getting possession of the writ flat nothing more remains to be performed by either party to complete the transaction. She also laid emphasis on the time factor to impress upon us that within less than two months possession of flat was to be delivered to the petitioners in Writ Petition No. 3693 of 1990 and once the possession is delivered the transaction stands completed under the agreement in question and if this be so, the agreement in question cannot be anything else but a conveyance on sale and it must fall within the definition of section 2(g) of the Act and consequently it is liable for stamp duty under Entry 25 of Schedule I, Explanation 1 of the Act. She also urged that such a concluded transaction which in effect amounts to transfer of right, title and interest in the flat must be deemed to be a conveyance under the amended provisions of article 25 of Schedule I, Explanation I of the Act.
33. Miss Ankalesaria also urged that payment of certain sum as security deposit and legal charges in paragraph 8 of the agreement, payment of brokerage which ordinarily arises after the transaction is concluded, the fact that possession is to be delivered within less than two months are pointers to the concluded transaction. In an agreement of sale ordinarily title is not investigated. Under the document in question there is a transfer of right, title and interest in favour of the purchaser. While construing a document intention of the parties assumes a decisive part. Payment of price and handing over of possession create a vested interest in the purchaser under section 19 of the Transfer of Property Act. Term relating to the maintenance and care of the property under the agreement is another pointer to show transfer of right, title and interest in the writ flat. She further urged that omission to incorporate term of execution of conveyance at a later date unmistakably indicates that the agreement in question itself amounts to conveyance. True intention of the parties assists the Court to determine real nature of the transaction. In support of her submissions she drew our attention to the judgment of the Madras High Court in Chief Controller, Revenue Authorities Board of Revenue, Madras v. R. Thirthalu, AIR 1973 Mad 1 (F.B). On general proposition this judgment supports the contention.
34. Miss Ankalesaria also urged that if the document is not registered in accordance with the Indian Registration Act and if the stamp duty is not paid under the bombay stamp act, the purchaser stands to lose not only money but also flat. If according to the petitioner nothing transferred or conveyed to the petitioner, then what is the payment of Rs. 3,75,000/- for? The intention of the parties under this agreement of sale therefore was that this was to operate as a conveyance on sale and a final document transferring right, title and interest in favour of the purchaser. Payment of purchase price is not sine qua non to complete the sale (see Sagaji v. Namdev, 23 Bombay 525, and Hari Chand L. Shama Mal v. Gordhan Das Faqir Chand Vaish, AIR 1957 Punjab 238). Even possession is also not necessary to complete the sale or title. In this behalf she relied upon section 54 of the Transfer of Property Act and the decision of the Punjab High Court in Hari Chand L. Sharna Mal v. Gordhan Das (supra); Ponnayya Goundan v. Muttu Goundan, ILR 17 Madras 146 and Alapati Venkataramiah v. Commissioner Of Income Tax, Hyderabad, Hyderbad, (1965) 3 SCR 567. Under section 19 of the Transfer of Property Act, vested interest is created in favour of purchaser, which becomes absolute on payment of full price and delivery of possession later on completion of the building. All these requisites of a sale are provided under the agreement and, therefore, she urged that agreement in question is a document of conveyance transferring right, title and interest in favour of the purchaser. Creation of lien or charge of vendors provided in Clauses 24 and 26 of the document is consistent with section 55(4)(b) of the Transfer of Property Act and it indicates that the title has been transferred or passed on to the purchaser. The ingredients of section 55 of the Transfer of Property Act are fulfilled in the document itself. If this be so, it must be held that the agreement in question is a conveyance on sale and subject to the payment of stamp duty under the bombay stamp act.
35. At this stage it would be appropriate to set out Explanation I to Article 25 of Schedule I of the Act.
36. Explanation I substituted by maharashtra act 9/90 reads thus:
“Explanation 1 — For the purposes of this article, where in the case of agreement to sell an immovable property, the possession of any immovable property is transferred to the purchaser before the execution, or at the time of execution, or after the execution of such agreement without executing the conveyance in respect thereof, then such agreement to sell shall be deemed to be a conveyance and stamp duty thereon shall be leviable accordingly:
Provided that, the provisions of section 32-a shall apply mutatis mutandis to such agreement which is deemed to be a conveyance as aforesaid, as they apply to a conveyance under the section:
Provided further that, where subsequently a conveyance is executed in pursuance of such agreement of sale, the stamp duty, if any already paid and recovered on the agreement of sale which is deemed to be a conveyance, shall be adjusted towards the total duty leviable on the conveyance.”
37. After considering the submissions, in our opinion, on construction of the agreement in question it must be held that although it has been described as an agreement to sell in effect and for all purposes it is a conveyance falling under section 2(g) of the Act inasmuch as the right, title and interest in the writ flat stands transferred in favour of the purchaser on payment of instalments as provided therein. Assuming that Mr. Bhandari is right that document in question is an agreement of sale only yet such agreement of sale is dutiable under the Act by virtue of Explanation 1 to Article 25 of Schedule I of the Act. There is no clause in the agreement which requires the developers to execute any other deed of conveyance at a later stage and this position militates against the contention of the petitioner. On careful scrutiny of document in question it is difficult to hold that it is a mere agreement of sale and does not create any right, title and interest in them. It may also be stated the every agreement of sale of flat has got to be in terms of section 4 of mfo act. We, therefore, hold that the agreement in question is a conveyance, and whether possession is given on that date or not is not the relevant and decisive factor. Such a document therefore is liable to stamp duty under article 25 in Schedule I of the Act.
38. Mr. Bhandari then challenged the Bombay Stamp (Determination of True Market Value of Property) Rules, 1981 and in particular rule 3 by contending that these rules are beyond the rule making power of the State Government as provided under sections 69 and 70 of the Act (unamended). He also urged that notwithstanding the Maharashtra Act No. 27 of 1985 and 9 of 1988 which amended sections 69 and 70 of the Act still these rules suffer from the same vice. In order to appreciate this contention we may reproduce both these provisions:—
39. The unamended section 69 gave power to State Government to make rules and it reads as under:—
“69. The State Government may make rules for regulating—
(a) the supply and sale of stamps and stamper papers,
(b) the persons by whom alone such sale is to be conducted, and
(c) the duties and remuneration of such persons:
Provided that, such rules shall not restrict the sale of ten naye paise or five naye paise adhesive stamps.”
“70. The State Government may make rules to carry out generally the purposes of this Act, and may by such rules prescribe the fines, which shall in no case exceed five hundred rupees, to be incurred on breach thereof.”
40. Mr. Bhandari urged that section 69 deals with the power of the State Government to make rules relating to vending only. Section 70 is a general rule making power with an object to carry out generally the purpose of this Act. The submission of Mr. Bhandari is that section 70 does not refer to the rule making power for the purpose of provisions of this Act but refers to “purposes of this Act”. This argument is too hypertechnical. The State Government in exercise of power under section 70 of the Act framed the rules and rule 3 reads as under:—
“3. Procedure to be followed by the Collector of the District for determining true market value of property under sections 31 and 32-A. Where any instrument of the nature described in sub-section (3) of section 31, or as the case may be, in sub-section (1) of section 32-A.
(a) is referred to the Collector of the District under sub-section (3) of section 31 or under sub-section (1) of section 31-A for determination of the true market value of the property which is the subject matter of such instrument and the proper duty payable thereon, or
(b) where the Collector of the District on his own prpposes to examine the instrument under sub-section (3) of section 32-A for the purpose of satisfying himself as to the correctness of the market value of the property which is the subject matter of the instrument and the property duty payable thereon, the Collector of the District shall hold an enquiry and for that purpose follow the following procedure, namely:—
(1) xx to (7) xx
Rule 5 provides a reference to the Court by the Collector.
Rest of the rules are not seriously challenged before us.”
41. Sections 69 and 70 underwent a change firstly by Mah. Act No. 27 of 1985 and secondly by Mah. Act No. 9 of 1988. Sections 69 and 70 were substituted for the original sections 49, 70 and 71 by Mah. Act No. 27 of 1985. By the very same amendment, section 32-A was substituted and it was made retrospectively applicable from 4th of July 1980. Again, by further Maharashtra Amendment Act No. 9 of 1988, clause (d) has been inserted, which reads as under:—
“(d) the manner of ascertaining the true market value of immovable property.”
42. Relying upon the unamended provisions of sections 69 and 70 and the amended provisions, Mr. Bhandari urged that if one looks at the show cause notice at Exh. D, it is clear that by Amendment Act No. 9 of 1988, clause (d) has been inserted in section 69 providing the manner of ascertaining the true market value of the immovable property. This insertion clearly indicates that originally when 1981 Rules were framed there was no provision for ascertaining the true market value of the property. Under Rule 3 of 1981 Rules, there is reference to the Collector of the District who was empowered to examine the instrument under sub-section (3) of section 31 or sub-section (1) of section 32-A of the Act for the purpose of satisfying himself as the market value of the property. But under the amended provision it is the true market value which has been provided under clause (d) of section 69. It is, therefore, clear that a specific power was not given in the earlier provision which now came to be added by clause (d) to section 69. Counsel therefore urged that under the impugned show cause notice the authority cannot determine the true market value. The impugned notice at Exh. D is therefore illegal and cannot be sustained and consequently no further proceedings can proceed on such illegal notice. This submission again has no force because section 32-A which came into force by Mah. Act No. 27 of 1985 has provided determination of true market value. Under clause (3) of section 32-A(1) when there is a substantive provision in the Act itself then in our opinion, although rule 3 does not make reference to the true market value will not vitiate the notice Exh. D. This show cause notice was issued in the prescribed form under the rules and such a notice will have to be read in conjunction with the substantive provision contained in section 32-a(3) of the Act.
43. Mr. Bhandari in support of his contention relied upon the decision of the Supreme Court in Himalaya House Co. Ltd., Bombay v. Chief Controlling Revenue Authority , (1972) 3 SCR 332. Facts of this reported judgment are that it was a case where the lessee of a plot of land from Government created a sub-lease and the sub-lessee built a building thereon, consisting of flats, shops and offices. The sub-lessee assigned the rights of occupation of those flats etc. under various agreements. Thereafter, the appellant-company was incorporated and the sub-lessee purported to assign all his rights in the building to the appellant-company. The consideration mentioned in the document was nil and the document bore a stamp of 12 annas. When it was presented for registration, the authority impounded the deed holding that the appellant-company was formed and in respect of persons who had purchased the flats etc. the real consideration for the assignment was made up partly of what was paid by the occupiers of the flats etc. and determined the stamp duty and penalty under section 40 of the Stamp Act, 1899. It is in this context the Supreme Court held that the Legislature had not empowered the revenue to make an independent enquiry as regards-valuation of the rights sought to be assigned. The Supreme Court further held that the question must also be held to be settled by stare decisis. The case before us is clearly distinguishable because section 32-a(3) has provided a procedure for determining the true market value. The Supreme Court decision was under the Indian Stamp Act where no rules have been framed. There is no specific provision under the Indian Stamp Act. In this view of the matter, in our opinion, the decision of the Supreme Court is clearly distinguishable. As far as the power of the State Government is concerned, the Legislature has amended the act and inserted section 32-a and further provided that it shall be deemed to have been substituted from 4th of July 1980. The Legislature intent is therefore clear to give power to the Collector and/or any other authority described therein to determine the true market value. The challenge to the rule making power of the State therefore has no substance.
44. It was then contended by Mr. Bhandari that the notice at Exh. D issued under rule 3(1) of the Rules, 1981 suffers from vagueness and does not make any mention of the Stamp Act. This submission has no substance. It is neither vague nor it can be said that the same was not issued under the bombay stamp act. It was issued by the office of the Assistant Director of Town Planning, Stamp and Valuation, Bombay, and there is reference to section 32-A of the Act.
45. It was then contended by Mr. Bhandari that prior to the amendment Act No. 18 of 1989 which came into force with effect from 1-4-1989, the authority was required to make a reference to the City Court but by the amended provision only internal appeal is provided under the Act and the petitioner is deprived of the reference under the Act. This submission again does not appeal to us and must be rejected.
46. It was then contended by Mr. Bhandari that the document in question does not fall in section 32-A(1) of the Act. The submission is that in order to attract the provisions of section 32-a, it must be an instrument of conveyance, exchange, gift, certificate of sale, deed of partition or power of attorney to sell immovable property when given for consideration. This submission will have to be rejected in view of our finding that the agreement in question is a conveyance on sale or an instrument covered by definition under section 2(g) or 2(1) of the Act. The label given to the document in question is camouflege and we have indicated how the agreement in question is an instrument or a conveyance on sale. Under this agreement right title and interest has been transferred to the petitioner in respect of the writ flat.
47. It was then contended by Mr. Bhandari that the agreement in question was lodged for registration by reason of mandatory provisions contained in section 4 of the MOF Act. Section 47 of the Indian Registration Act does not require such agreement to be registered. If this be so the provisions of Bombay Stamp Act have no application and consequently document in question is not dutiable. This contention is without any merit. MOF Act is a special statute. Having regard to sections 4 and 4-a of the mof act, it is clear that every such agreement is required to be registered under section 4 of the mof act. Consequences of non-registration are also provided under section 4-A. This provision, in our opinion, is neither opposed to nor inconsistent with section 49 of the Indian Registration Act and, therefore, section 49 cannot be invoked to nullify the mandatory provisions contained in sections 4 and 4-A of the Act. Section 49 of the Registration Act is a discretionary provision.
48. While assailing the notice, Mr. Bhandari then urged that the agreement in question does not amount to a transfer in terms of section 54 of the Transfer of Property Act and, if this be so then impugned notice is without jurisdiction. This submission again is without any merit.
49. It was then urged by Mr. Bhandari that signatory to notice Ex. D was not authorised to issue such notice under rule 3(1) of the Rules, 1981. Rule 3(1) authorises the Collector of a district to issue notice but whereas the impugned notice is issued by the Assistant Director of Town Planning, Stamp and Valuation. This submission again does not hold any merits by reason of sub-section (6) of section 32-A of the Act. By this provision the Assistant Director, Town Planning, is authorised to issue such notice. It is not the contention of the petitioner that Assistant Director is below the rank of Town Planner as provided under sub-section 6(2) of section 32-A of the Act.
50. It was contended by Mr. Bhandari that under rule 3, notice is required to be given to all the prospective purchasers and, therefore, there is no compliance of rule 3. Admittedly first petitioner is a joint purchaser under the agreement with second petitioner who is not a stranger but wife of the first petitioner. Mr. Bhandari was also unable to make a positive assertion that no notice was issued to the second petitioner. The impugned notice Exh. D therefore does not suffer from non-application of mind as sought to be urged on behalf of the petitioners.
51. It was then urged by Mr. Bhandari that notice Exh. D is at variance with the impounding procedure prescribed under section 37(2) of the Act. This argument need not detain us any longer because petitioners are only at the stage of show cause notice and if there is any procedural lapse they can raise such contention before the authority during enquiry.
52. Mr. Bhandari then urged that Article 25 levies stamp duty on conveyance if it is a concluded transaction. This provision is ultra vires the Constitution of India. Entry 63 in State List in Seventh Schedule read with article 246 provides for stamp duty in respect of documents only. The stamp duty is leviable on instrument only and not on transaction. Explanation I to Entry 25 of Schedule 1 of the bombay stamp act, Mr. Bhandari converts, subverts and perverts agreement to sell into deemed conveyance. Thus this provision to the extent it converts, subverts and perverts agreement to sell immovable property into conveyance or deemed conveyance is ultra vires Articles 14, 19(1)(e) and 300-A of the Constitution of India and beyond the legislative competence of the State. It is unjust, colourable and mala fide and therefore it must be struck down.
53. Miss Ankalesaria appearing for the State of Maharashtra urged that the stamp is on the instrument and not on the transaction. She relied upon the decision of this Court in Hanuman Vitamins Food Pvt. Ltd. v. State of Maharashtra, 1989 Mah LJ 935 : (1989) 2 BCR 460. She then submitted that State Legislature has got power to legislate in respect of all ancillary matters. In support of this submission she relied upon the decision of the Supreme Court in Khazan Chand v. State of Jammu and Kashmir, (1984) 2 SCC 456 : AIR 1984 SC 762. We are unable to appreciate the contention of Mr. Bhandari, how entry 25 in Schedule I of the Act is ultra vires the Constitution of India. It is stamp duty of State and in our opinion the State Legislature is competent to legislate in that behalf. Explanation I to article 25 is intended to cover such agreements of sale.
54. It was then urged by Mr. Bhandari that word “conveyance” defined under section 2(g) of the Act should be understood as is understood under the Transfer of Property Act. Explanation I to Article 25, Schedule I of the Stamp Act transgresses the limits and, therefore, suffers from legislative competence. Words ‘instrument’ and ‘conveyance’ defined under section 2(1) and 2(g) of the Act respectively should be given the meaning which is understood in common parlance. In support of this submission he relied upon the decision of the Supreme Court in State of Madras v. Gannon Dnkerley and Co., AIR 1958 SC 560. A question that fell for consideration before the Apex Court was interpretation of entry 48 in a Constitution relating to the phrase “sale of goods” and imposition of sales tax on construction contracts. While construing phrase “sale of goods” (movable) the Supreme Court held that word sale used in this entry meant when it has resulted in the passing of property in the goods to the purchaser. Hence the words “sale of goods” in entry 48 cannot be construed in its popular sense but must be interpreted in legal sense. This ratio is clearly distinguishable in view of the phraseology used in Explanation I to entry 25 of Schedule I of the bombay stamp act. This decision therefore does not apply to the facts of the present case.
55. Lastly it was urged by Mr. Bhandari that the impugned notice was without hearing the petitioners and, therefore, illegal. This submission again does not appeal to us because the authority has issued only a show cause notice and no order as such has been passed, thereon.
56. Dr. Chandrachud appearing for the petitioner in Writ Petition No. 3020 of 1988 while adopting submissions of Mr. Bhandari further urged that Transfer of Property is in Central List and, therefore, State Government has no power to override Central List. Definition of “transfer” contained in the Transfer of Property Act must override the State Act. There is no merit in this submission. Provisions in the bombay stamp act are in no way inconsistent with provisions under the Transfer of Property Act.
57. Dr. Chandrachud then urged that State has no power to legislate on concurrent list. He also urged that section 33 does not provide for any hearing. As far as this submission is concerned it has no merit because section 33 of the Bombay Stamp Act does not exclude the hearing. In support of his submission, Dr. Chandrachud drew our attention to the decision of this Court in Yeshwant Gajanan Joshi v. Hindustan Petroleum Corporation Ltd., 1988 Mah LJ 455 : AIR 1988 Bom 408. In our opinion whether the document should be impounded or not is a subject matter of show cause notice and the petitioners are being heard by the authority. It therefore cannot be said that no hearing is provided as contended by Dr. Chandrachud.
58. Miss Deepa Buta appearing in Writ Petition No. 99/89 urged that no hearing was given and, therefore, the show cause notice is bad. She sought to draw support from the decision of the Supreme Court in The Scheduled Caste and Weaker Section Welfare Association (Regd.) v. State of Karnataka, (1991) 2 SCC 604 : AIR 1991 SC 1117 and Ponkunnam Traders v. Additional Income Tax Officer, Kottayam, (1972) 83 ITR 508. This submission again does not hold any merit because we are only at the stage of show cause notice.
59. Mr. Desai learned advocate appearing in Writ Petition No. 2087 of 1988 drew our attention to the decision of this Court in Hanuman Vitamins Foods Pvt. Ltd. v. State of Maharashtra, 1989 Mah LJ 935 : AIR 1990 Bom 204. This decision is altogether on a different point although under the bombay stamp act, and, therefore, has no application to the present case.
60. Mr. Sameer Virani appearing in Writ Petitions Nos. 1365/89, 1378/89 and 1379/89 urged that in these cases there is a recital in the agreement that possession to be given after the conveyance is executed in favour of the society (see clause 5). This clause, in our opinion, does not alter the legal position.
61. In Writ Petitions Nos. 2556/89, 2557/89, 2558/89 and 2559/89, Mr. Zaiwala for the petitioners urged that all these writ petitions may be heard along with respective references being Reference No. 2 of 1990, 3 of 1990, 7 of 1990 and 4 of 1990. The issue involved in all these references is identical. All these references were lodged on 15-5-1986 and these references are required to be heard by three Judges. He therefore urged that these writ petitions be tagged on with these references. It may be stated that this Court while passing the interim order on 19-9-1989 at the stage of admission directed the Stamp Authority to consider the contention of the petitioners as to whether reference should be made to this Court. Pursuant to this interim order the Stamp Authority made the above references to this Court. It is not open to the petitioners to keep two separate proceedings alive for substantially identical reliefs, in the same Court. The purpose of these petitioners is served by these references and, therefore, these petitions will have to be dismissed on the ground that the Stamp Authority has already made references which are pending in this Court. We therefore, without recording any finding on other contentions raised in the writ petitions dismiss all these writ petitions on the ground that the references are already made by the Stamp Authority and, therefore, these writ petitions are rendered infructuous. In this view of the matter, rule to stand discharged in each of the petitions being infructuous. All other contentions raised therein are kept open. Interim order in each of these petitions to stand vacated.
62. It is however made clear that we have only decided an issue relating to dutiability of the agreement of sale under the Stamp Act. This order does not preclude the petitioners from filing internal appeals and/or revisions against the order of adjudication of stamp duty etc. if made against the petitioners by the authorities under the Act.
63. In the result, Writ Petitions fail and rule in each petition discharged with costs. Interim order in each petition to stand vacated.
64. In view of our order on writ petitions, above appeals have become infructuous and hence dismissed as infructuous. No order as to costs in all these appeals.
65. Mr. Bhandari, learned counsel orally applies for leave to appeal to the Supreme Court. Leave refused. Certified copy if applied for to be furnished on payment of costs within two weeks.
Order accordingly.