Judgment
1. Delay condoned. Leave granted. What should be the stamp duty payable on the lease agreement executed between Appellant 1 and the respondent entitling the latter to collect toll tax is the question which arises for consideration in this appeal filed against the order passed by the Division Bench of the Uttarakhand High Court whereby the writ petition filed by the respondent was disposed of in terms of the judgments of the Allahabad High Court in Tajveer Singh v. State of U.P (1997) 29 All LR 687 and of the Uttarakhand High Court in Writ Petition No. 1020 of 2004 (M/B), Naresh Agarwal v. State of Uttaranchal.
2. The respondent participated in the auction held by the Executive Engineer, Construction Division, PWD, Haldwani (Appellant 2 herein) for grant on lease collection of toll tax for using Haldwani Bypass Road, 14 km (Kathgodam) Gaula bridge. The bid of Rs. 22 lakhs given by the respondent was accepted by the competent authority. Thereafter, the lease agreement dated 24-3-2006 was executed between the Governor of Uttaranchal (now Uttarakhand) through the Commissioner, Kumaon Division and the respondent whereby the latter was given exclusive right to collect toll from the vehicles using the road and Gaula bridge.
3. As a condition for execution of lease, a communication dated 25-2-2006 was sent by Appellant 2 to the respondent requiring him to deposit stamp duty of Rs. 2,20,400. However, instead of depositing the stamp duty, the respondent filed Writ Petition No. 204 (M/B) of 2006 for quashing the notice issued by Appellant 2 and also for issue of a direction to the appellants to charge stamp duty in accordance with the judgments in Tajveer Singh case (1997) 29 All LR 687 and Naresh Agarwal case by asserting that the contract executed between the parties was only a security bond and stamp duty was payable as per Article 57 of Schedule I-B of the Stamp Act, 1899 (for short “the Act”), as amended by the State of U.P and as applicable to the State of Uttarakhand.
4. The Division Bench of the High Court disposed of the writ petition by recording a cryptic order, which reads thus:
“By means of this writ petition, the petitioner has prayed for writ of certiorari quashing the order dated 25-2-2006 (Annexure 2) passed by Respondent 2 and further a writ of mandamus commanding the respondent not to demand/realise stamp duty on the earnest money/security deposit the money of contract as demanded on the basis of the Government instructions and the respondents may be directed to demand stamp duty in pursuance of the direction in Tajveer Singh v. State of U.P (1997) 29 All LR 687 as well as the judgment passed by this Hon'ble Court in Writ Petition No. 1020 of 2004 (M/B), Naresh Agarwal v. State of Uttaranchal.
2. A Division Bench of this Court has also followed the aforesaid judgment, which is referred in the prayer clause of the present writ petition. The controversy raised in the writ petition is squarely covered by the aforementioned judgment as submitted by the learned Additional Chief Standing Counsel. Therefore, the writ petition is disposed of in terms of the aforementioned judgment of the Hon'ble Allahabad High Court.”
5. The learned counsel for the appellants invited our attention to the contents of the lease agreement dated 24-3-2006 to show that the respondent was given exclusive right to collect the toll from 31-3-2006 to 30-3-2007 against the consideration of Rs. 22 lakhs and argued that stamp duty on such lease is payable under Article 35 of Schedule I-B of the Act and not under Article 57 thereof. In support of this argument, the learned counsel relied upon the judgments of the Special Bench of the Allahabad High Court in Banney Khan v. Chief Inspector of Stamp AIR 1976 All 475 and a Division Bench of the Andhra Pradesh High Court in Uppalapati Durga Prasad v. Executive Engineer (R&B) (2001) 4 Andh LT 228.
6. The learned counsel then submitted that stamp duty was demanded from the respondent keeping in view the terms of the lease agreement, which enabled him to collect toll tax and not on the security given by him for due performance of the contract and the Division Bench of the High Court committed a serious error by disposing of the writ petition in terms of the judgments in Tajveer Singh case (1997) 29 All LR 687 and Naresh Agarwal case.
7. We have considered the argument/submission of the learned counsel. Section 2(16)(c), Articles 35(b) and 57 of Schedule I-B of the Act, which have bearing on the decision of this case read as under:
“2. (16) ‘Lease’.—‘Lease’ means a lease of immovable property, and includes also—
(a) a patta;
(b) a kabuliyat or other undertaking in writing, not being a counterpart of a lease, to cultivate, occupy or pay or deliver rent, for immovable property;
(c) any instrument by which tolls of any description are let;
(d) any writing on an application for a lease intended to signify that the application is granted;
(e) any instrument by which mining lease is granted in respect of minor minerals as defined in clause (e) of Section 3 of the Mines and Minerals (Development and Regulation) Act, 1957.
Schedule I-B
Description of instrument
Proper stamp duty
**
*
35. Lease, including an underlease or sub-lease and any agreement to let or sub-let—
(a)**
*
(b) where the lease is granted for a fine or premium or for money advanced and where no rent is reserved;
(i) where the lease purports to be for a term not exceeding thirty years;
The same duty as a Conveyance [No. 23 clause (a)], for consideration equal to the amount or value of such fine or premium or advance as set forth in the lease.
(ii) where the lease purports to be for a term exceeding thirty years;
The same duty as a Conveyance [No. 23 clause (a)] for a consideration equal to the market value of the property which is subject of the lease.
**
*
57. Security bond or mortgage deed executed by way of security for the due execution of an office, or to account for money or other property received by virtue thereof, or executed by a surety to secure the due performance of a contract or the due discharge of a liability—
(a)**
*
(b) in any other case
One hundred rupees.
**
*
(a)-(e)**
*”
8. The definition of “lease” contained in Section 2(16) consists of two parts. The first part is applicable to any lease with respect to immovable property. The second part, which is inclusive, applies to various kinds of instruments by which a title, or other rights may be conferred upon the lessee for a specified period in respect of immovable property or otherwise. The use of the words “includes also” implies that the definition of lease contained in Section 2(16)(c) is very wide and even if the transaction does not amount to a lease under Section 105 of the Transfer of Property Act, the same may nonetheless be a lease for the purpose of the Act.
9. The acceptance of the argument made on behalf of the appellants will largely depend on the contents of the auction notice dated 27-10-2005 issued by Appellant 2 and the lease agreement executed between the parties, the relevant portions of which are extracted below:
“Auction Notice
This is for the information of the general public that a public auction will be held in Janpad Nainital under Construction Division, Public Works Department by the undersigned or its authorised representative in the office premises on 9-12-2005 at 12.00 for giving on lease collection of toll tax for using Haldwani Bypass Road, 14 km (Kathgodam) Gaula bridge. The tender documents can be collected from the office of the undersigned on any working day between 1-12-2005 to 7-12-2005 on payment of fixed price.
The tender documents can be obtained by post on payment of additional cost of Rs. 100 but the Department shall not be responsible for any delay caused by Postal Department.
The persons interested in participating in auction will be required to fulfil and complete all requisite formalities along with certificates and the tender documents along with requisite certificates/documents will have to be submitted in the office of the undersigned by 3.00 p.m evening on 8-12-2005. A list will be prepared after scrutinising the tender documents. Such persons, who fulfil all the conditions as determined will be allowed to participate in auction on 9-12-2005.
The details concerning auction are as under:
Sl. No.
Road/Name of the bridge
Earnest money
Price of tender docu-ments
Status of bidder
Rs.
Validity of bid
Duration of contract
1
2
3
4
5
6
7
1
Collection of toll tax under Gaula bridge situated at Haldwani Bypass, 14 km (Kathgodam)
4,00,000
— in the trade tax—form of NSC/FDR
30.00
+ 2,00,000
3 months
1-4-2006 or from the date of transfer to 31-3-2007
Note: Other conditions of bid/Rules can be seen in the office of the undersigned.
E.V.C Binwal
Executive Engineer,
Construction Division, PWD, Haldwani”
“Agreement
This agreement of lease is made today dated 24-3-2006 through Public Works Department between the Hon'ble Governor Uttaranchal ‘hereinafter will be called as lessor’, the first party and the contractor of bridge hereinafter will be called as ‘lessee’, the second party witnessing whereof that in lieu of the toll which has been reserved in this lease later and in consequent upon covenants made by lessee which have been prescribed hereinafter in this lease. Lessor through this lease gives the exclusive right to collect the toll from all those vehicles whether rented or on rent which are described in the Schedule and not exempted of toll but with the condition that lessor will have the right to have the control of the said bridge and its existing places and to run up to the extent of any period. That if in respect of any serious situation in relation to public service or specific need arise, only such officer will be the deciding authority who works on behalf of lessor because of this it was necessary for him to do that and for which the compensation amount have to be paid by Uttaranchal Government, as Government may issue order in each case for utilising for this. Said lessee will have the said right from the midnight 12 o'clock of 31-3-2006 to 31-3-2007 against consideration of Rs. 22,00,000 (Rupees twenty-two lakhs) annual rent in monthly instalments without any deduction in the office of Executive Engineer of concerned division as prescribed in Clause I of the Schedule enclosed with this lease….
Schedule 1
Rs. 22,00,000 which has been reserved through this lease will be paid by the lessee in twelve monthly instalments on first date of each month as per the details given below:
Name of month
Due date
Amount
April 2006
1-4-2006
Rs. 1,83,300
May 2006
1-5-2006
Rs. 1,83,300
June 2006
1-6-2006
Rs. 1,83,300
July 2006
1-7-2006
Rs. 1,83,300
August 2006
1-8-2006
Rs. 1,83,300
September 2006
1-9-2006
Rs. 1,83,300
October 2006
1-10-2006
Rs. 1,83,300
November 2006
1-11-2006
Rs. 1,83,300
December 2006
1-12-2006
Rs. 1,83,300
January 2007
1-1-2007
Rs. 1,83,300
February 2007
1-2-2007
Rs. 1,83,300
March 2007
1-3-2007
Rs. 1,83,700
2. The lessee will deposit the amount equal to three monthly instalment with the Executive Engineer of Construction Division, PWD, Haldwani, hereinafter will be called as ‘Executive Engineer’ and Executive Engineer will keep this amount with him as partial security for fulfilling and compliance with terms and conditions of agreement prescribed in Schedule and out of which he can take such amount as rent which becomes due and payable or can deduct such amounts of penalties from that which may be imposed upon lessee and provision of which has been made hereinafter.”
10. A conjoint reading of the auction notice and the lease agreement makes it clear that tenders were invited from the public for grant on lease collection of toll tax for using Haldwani Bypass Road 14 km (Kathgodam) Gaula bridge and the highest bid of Rs. 22 lakhs given by the respondent was accepted by the competent authority. The monthly amount payable by the respondent was lease money and not a security for due performance of the contract. Such an agreement clearly falls within the ambit of the term “lease” as defined in Section 2(16)(c) read with Article 35(b) of Schedule I-B and not under Article 57 of Schedule I-B, which gets attracted only when a security bond or mortgage deed is executed for due execution of an office or to account for money or other property received by virtue thereof or for due performance of a contract or the due discharge of a liability. Therefore, the demand of stamp duty of Rs. 2,20,400 from the respondent cannot be termed as illegal.
11. In Banney Khan case AIR 1976 All 475 the Special Bench of the Allahabad High Court was called upon to consider whether the lease executed between Municipal Board, Ujhani and the appellant authorising the latter to collect toll from the premises known as “New Sabzimandi” was a lease falling under Section 2(16) of the Act was chargeable under Article 35(b) of Schedule I-B. The Special Bench referred to the definition of lease, the judgments of the Full Bench in Burmah Shell Oil Storage and Distributing Co. Ltd. of India, In re AIR 1933 All 735 and the Andhra Pradesh High Court in Panchayat Samithi v. Kethavarapu Kannamma AIR 1973 AP 72 and observed: (Banney Khan case AIR 1976 All 475, AIR p. 477, para 6)
“6. … A casual reading of the definition of ‘lease’ indicates that any instrument by which tolls of any description are let comes within the definition of this term. What is, therefore, to be seen is whether the document is an instrument by which tolls of any description are let. In our opinion the agreement before us comes clearly within the language quoted above. This is a document by which all lands and buildings known as ‘New Sabzimandi’ have been made over by the owners thereof to the applicant for a period of one year. He is entitled to realise fee from occupiers thereof at certain rates in consideration of a sum fixed by public auction. This is ‘letting of tolls’ and the document is covered by Section 2(16)(c) of the Stamp Act. It is needless to say that the word ‘toll’ used in this sub-section means any sum of money which is taken in respect of some benefit, the benefit being the temporary use of land, that is, fares and market tolls. It includes all payments or taxes made by persons who frequent the market for the sale of any commodity or any thing which by practice or custom is expected to be sold in the market. This document is signed both by the lessor and the lessee. Therefore, it can hardly be doubted that it is an instrument by which collection of tolls is let and is lease within the meaning of Section 2(16) of the Stamp Act and is chargeable with stamp duty under Article 35(b) of Schedule I-B of the U.P Stamp (Amendment) Act, 1962.”
12. In Uppalapati Durga Prasad v. Executive Engineer (R&B) (2001) 4 Andh LT 228 a Division Bench of the Andhra Pradesh High Court considered a similar question in the context of an agreement signed by the parties in the matter of collection of toll. While rejecting the argument of the writ petitioner that he was not liable to pay stamp duty under Article 35(b) read with Section 2(16) of the Act, the Division Bench observed: (Andh LT p. 230, para 3)
“3. … On bare reading of the section it becomes clear that all leases with respect to immovable property would be leases in terms of Section 2(16) but in addition to leases of immovable property in other three categories there would also be lease under Category (c) in which any instrument by which tolls of any description are let would be a lease for the purpose of Section 2(16). The instrument by which right to collect toll is conveyed has to be treated as lease for the purposes of the Stamp Act. Right to collect toll will never in any circumstances involve immovable property. Basically toll is collected for using a road or bridge and as such neither the road nor the bridge is leased out, only the right to collection is leased out and this right of leasing out the collection is ‘lease’ for the purposes of the Stamp Act.”
13. In our view, the aforementioned judgments of the Allahabad and Andhra Pradesh High Courts represent the correct legal position on the applicability of Article 35(b) of Schedule I-B of the Act.
14. In Tajveer Singh case (1997) 29 All LR 687 the Division Bench of the Allahabad High Court considered the question whether the amount offered as security for due performance of the contract for construction of drains, culvert, etc. is chargeable under Article 57 of Schedule I-B. The Division Bench relied upon the judgment of the Special Bench in Hindustan Sugar Mills Ltd. v. State of U.P AIR 1972 All 8 and of this Court in Board of Revenue v. A.M Ansari (1976) 3 SCC 512 and held that the stamp duty on such agreement is to be paid under Article 57 of Schedule I-B of the Act, as amended by the State of Uttar Pradesh. The judgment in Tajveer Singh case (1997) 29 All LR 687 was followed by the Division Bench of the Uttarakhand High Court in Naresh Agarwal. These two judgments have no bearing on the issue raised in the writ petition filed by the respondent. Therefore, it must be held that the Division Bench of the High Court committed a serious error by disposing of the writ petition of the respondent by relying upon the judgments in Tajveer Singh case (1997) 29 All LR 687 and Naresh Agarwal case, and that too, without even adverting to the lease agreement executed between Appellant 1 and the respondent.
15. In the result, the appeal is allowed, the impugned order is set aside and the writ petition filed by the respondent is dismissed. The appellants shall now be free to recover stamp duty from the respondent in terms of Notice No. 775 dated 25-2-2006. Since no one has appeared on behalf of the respondent, the costs are made easy.