R.C Jain, J.:— This Second appeal is directed against the judgment and decree dated 17.8.79 passed by the Additional District Judge, Delhi thereby allowing the First Appeal filed by the respondent against the dismissal of his suit.

2. Briefly started the relevant facts giving rise to the appeal are that the respondent herein had filed a suit for permanent injunction against the appeIlant-MCD for restraining them from recovering a duty of Rs. 1505/- on the transfer of shop No. 57, Old Rajinder Nagar, New Delhi levied under the provisions of Section 147(2)(b)(i) of the Delhi Municipal Corporation Act, 1957 (hereinafter referred to as the Act) asking its payment by means of a notice. The said levy and demand of the duty was stated to be illegal, ultra vires and against the principles of natural justice firstly because no stamp duty was payable under the Indian Stamps Act or was leviable on the transfer of leasehold rights of the property in dispute under the Act and that plaintiff was not afforded an opportunity to raise his objections against the levy of the said duty. The suit was contested by the appellant-Corporation on a variety of grounds viz. being barred by the provisions of Section 169/170 of the Act and also challenging the jurisdiction of the Civil Court to entertain and try the suit in view of provisions of Section 477/478 of the Act.

3. On the pleadings of the parties, the trial court framed the following issues:-

“(1) Whether the demand of the defendant for Rs. 1505/- is illegal, ultravires and without jurisdiction on grounds stated in para 5 of the plaint? OPP

(2) Whether suit is barred in view of sections 169-170 of D.H.C Act? OPD

(3) Whether this court has no Jurisdiction to try the suit? OPD

(4) Whether suit in the present form is not maintainable? OPD

(5) Whether suit is not maintainable in view of sections 477/478 of D.M.C.Act? C

(6) Whether plaintiff is entitled to relief claimed?

4. The learned trial court though held the suit to be maintainable and not barred by the provisions of Sections 169/170 and 477/478 of the Act answered the issue No. 1 against the plaintiff holding that the demand of Rs. 1500/- was legal and justified as the transfer of the suit property was sale of immovable property within the meaning of Section 147(1)(b)(i) of the Act and therefore levy of the duty was legal.

5. The first Appellant Court, however, took a contrary view that the Municipal Corporation of Delhi was not legally entitled to recover the transfer duty from the plaintiff primarily on the parity of reasoning that the Sub-Registrar responsible for the registration of the Transfer Deed had not asked for the payment of such duty at the time of registration of the deed and secondly the said transfer deed was not covered under Section 147 of the Act and therefore MCD is not entitled to levy any duty and raise a demand on the plaintiff. Accordingly the suit of the plaintiff was decreed and the MCD was restrained from recovering the amount of Rs.1505/- as duty on transfer of the property vide Transfer Deed exhibit P-2. Aggrieved by the said judgment, the MCD has come up in the present appeal.

6. The appeal was admitted for hearing by this Court vide an order dated 10.1.80 to consider the following questions of law:-

“(1) Whether the transfer/sale of leasehold rights does not amount to ‘sale of immovable property’ within the meaning of Section 147(2)(b)(i) of the Corporation Act.

(2) Whether the term ‘sale of immovable property’ under Section 147(a)(b)(i) of the Corporation Act is not ‘transfer of property’ within the meaning of Section 5 of the Transfer of Property Act, 1882, and if so, what is its effect?

(3) Whether the transfer of ownership rights and not the leasehold rights amount to sale of immovable property under Section 147(2)(b)(i) of the Corporation Act, and as such transfer of leasehold rights is not liable to transfer duty?”

7. I have heard Shri Maheshwar Dayal, learned counsel for the appellant and Ms. Ratna, learned counsel for the respondent and have given my thoughtful consideration to their respective submissions. At the outset, learned counsel for the appellant-Corporation has placed reliance upon a decision of three Judges Special Bench of this Court in the case of M/s. Sudarshan Talkies (Delhi) Pvt. Ltd. New Delhi v. The Collector of Stamps, New Delhi, AIR (1978) Delhi 112 which ruled as under:-

“The duty leviable, under Section 147 of the Corporation Act is in the form of surcharge leviable under the said Act over and above the stamp duty. The transfer duty is thus assessed independently of the stamp duty. The transfer duty is assessed on the amount of consideration for sale as set forth in the instrument of conveyance. The proceeds so collected are credited to the fund of the Corporation. That being so, a conveyance deed cannot be impounded under Section 33 of the Stamp Act, nor can it be subjected to penalty under Section 40 of the said Act for failure to pay the duty envisaged by Section 147 of the Corporation Act- AIR 1972 Delhi 131 (SB) Rel. on.

The view that the provision of section 147 is in the nature of increasing the stamp duty and consequently any default in the payment of this surcharge would attract all the provisions of the stamp act including “impounding of documents and imposition of penalty” is unwarranted on a plain reading of Section 147.”

8. The learned counsel for the respondent has not disputed the above legal preposition and the authority and competence of the MCD to levy the duty under Section 147 of the Act over and above the stamp duty payable on the registration of a transfer deed and rightly submitted that this is not the question of law for consideration on which this appeal was admitted for hearing. Accordingly, I proceed to consider and answer the above referred questions which are interconnected. In the case In hand, the duty was levied by the appellant-MCD under Section 147(2)(b)(i) of the Act deeming the transfer deed exhibit P-2 dated 16.5.74 as the sale of Immovable property. Section 147 of the Act reads as under:-

147. Duty on transfer of property and method of assessment thereto - (1) Save as otherwise provided in this Act, the Corporation shall levy a duty on transfers of immovable property situated within the limits of Delhi in accordance with the provisions hereafter in this section contained.

(2) The said duty shall be levied -

(a) in the form of a surcharge on the duty imposed by the Indian Stamp Act, 1899 (2 of 1899) as in force for the time being in the Union territory of Delhi, on every instrument of the description specified below, and

(b) at such rate as may be determined by the corporation not exceeding five per cent, on the amount specified below against such instruments:

Description of instrument Amount on which duty should be levied (i) Sale of immovable property The amount of value of the consideration for the sale, as set forth in the instrument (ii) Exchange of immovable property The value of the property the greater value, as set forth in the instrument. (iii) Gift of immovable property The value of the property, as set forth in the instrument. (iv) Mortgage with possession of immovable property, instrument. The amount secured by the mortgage as set forth in the instrument. (v) Lease in perpetuity of immovable property the rent which The amount equal to one-sixth of the whole amount or value of would be paid or delivered in respect of the first fifty years of the lease as set forth in the instrument.

9. Coming to the question whether the transfer/sale of leasehold rights amounts to sale of immovable property or not within the meaning of Section 147(2)(b)(i) of the Corporation Act, it may be noted at once that the plaintiff himself was not the absolute owner of the property in question bearing Shop No. 57, Old Rajinder Nagar, New Delhi and he was simply a lessee of the said shop under a 99 years term of perpetual lease deed executed on behalf of the Govt. of India in his favour. The plaintiff transferred the same vide a transfer deed titled as sale deed dated 16.5.74 (Exh. P-2) on record. The learned counsel for the appellant has heavily relied upon the title of this document which reads “Sale Deed” and certain other recitations where the expressions such as “the Vendor is the exclusive owner and in possession of Government built....” That the Vendor is permitted to sell the said Government built shop...,” That the Vendor for his legal needs and requirements had agreed to sell the said Government built shop...” “Vendor doth hereby sell, convey and transfer all rights, titles and interest of the said shop as well as the leasehold rights of the land under the said shop and thereafter shall become the owners of the said property and shall enjoy all the rights of ownership of the said property....” used in the transfer deed in order to fortify his contention that the transaction effected by means of this deed was nothing but “sale' within the meaning of the Transfer of Property Act.

10. As against this, the contention of learned counsel for the respondent is that the above referred recitations in the Transfer Deed were illusory and did not reflect the correct factual and legal position with regard to the competence of the respondent to effect sale of a property of which he himself was not the owner and was merely a lessee and therefore could not have passed on a better title in favour of the transferee than that he himself had in the property in question. There appears to be considerable force in this submission because the nature of the transfer deed cannot be determined merely by referring to the title and some of the recitations appearing therein and all the attending facts and circumstances have also to be looked into for the purpose of determining the nature of the document whether it amounted to sale or lease. The Transfer Deed in question contains a recitation to the effect that the respondent was a lessee of the property in question by virtue of a perpetual lease deed dated 27.10.61 issued by the President of India in his favour and therefore he could not acquire ownership rights in the property in question and consequently transfer the same by sale.

11. He could at best transfer the leasehold rights which he possessed in favour of the transferee Smt. Prabha Arora. ‘Sale’ and “Lease' are two distinct modes of transfer of immovable property and have been defined in Sections 54 and 105 of the Transfer of Property Act, as under:-

“54.”Sale” defined.— “Sale” is a transfer of ownership in exchange for price paid or promised or part-paid and part-promised.

Sale how made.— Such transfer, in the case of tangible immoveable property of the value of one hundred rupees and upwards, or in the case of a reversion or other intangible thing, can be made only by a registered instrument.

In the case of tangile immoveable property of a value less than one hundred rupees, such transfer may be made either by a registered instrument or by delivery of the property.

Delivery of tangible immoveable property takes place when the seller places the buyer, or such person as he directs, in possession of the property,”

“105. Lease defined.— A lease of immoveable property is a transfer of a right to enjoy such property, made for a certain time, express or implied, or in perpetuity, in consideration of a price paid or promised, or of money, a share of crops, service or any other thins of value, to be rendered periodically or on specified occasions to the transferor by the transferee, who accepts the transfer on such terms.”

12. It would be seen that the two transactions are distinct and one cannot be confused with the other. The basic difference between ‘sale’ and ‘lease’ is that in a ‘sale’, there is an absolute transfer of all rights in the property sold and no right left in the transferor; in a lease there is a partial transfer or demise and the rights left in the transferor which called the reversion. In this connection, it will be useful to refer to the following passage from Salmond's Jurisprudence:-

“The right of the owner of thing may be all but eaten up by the dominant rights of lessees, mortgagees and other encumbrances. His ownership may be reduced to a mere name rather than a reality. Yet he nonetheless remains the owner of the thing for all the others own nothing more than rights over it.”

13. In the case in hand, the Government was the absolute owner and continued to be the absolute owner of the property in question and as the respondent was merely a perpetual lessee, he could not have acquired the right of absolute ownership in the property in question and consequently could not effect sale of such a leasehold property. The transaction effected by means of Conveyance Deed dated 16.5.74 was, therefore, in essence a perpetual lease and not sale within the meaning of Section 54 of the Transfer of Property Act. The use of expressions “absolute owner”, “sale” etc. in the body of the Conveyance Deed are misleading and cannot effect the real transaction/mode of transfer.

14. Yet another reason which goes contrary to the stand of the appellant-Corporation that the transaction effected through the Deed Exhibit P-2 was sale is that no stamp duty was required to be paid for the transaction of immovable property in the instant case and no such stamp duty has been charged by the Registrar and it is mentioned on the top “the payment of stamp duty was exempt under Schedule-A of Article 63 of the Indian Stamp Act”. This would clearly show that even the Registrar had taken the transaction to be a transfer of perpetual lease and not sale.

15. Having considered the matter in its entirety, this Court is of the considered view that the transfer of property in question was not a ‘sale’ within the meaning of Section 54 of the Transfer of Property Act, 1882 and consequently no duty can be imposed under Section 147(2)(b)(i) of the Municipal Corporation Act, 1958 on such transaction. The transaction of transfer of immovable property effected in the case in hand would at best amount to lease in perpetuity of immovable property within the meaning of Clause (v) of Section 147(2)(b) of the said Act for which much lesser duty has been prescribed. As no notice or demand was raised in accordance with the said Clause, the Corporation was not within its rights to recover the duty deeming the transfer of the property as sale in the present case.

16. In the result, this appeal fails and is hereby dismissed and the impugned Judgment of the learned First Appellate Court dated 17th August, 1979 is hereby upheld. In the face of facts and circumstances of the case, the parties are left to bear their own costs.