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PETITIONER:

HANUMAN VITAMIN FOODS PVT. LTD. & ORS.

Vs.

RESPONDENT:

THE STATE OF MAHARASHTRA & ANR.

DATE OF JUDGMENT: 20/07/2000

BENCH:

M B Shah, J. & S.N. Variava, J.

JUDGMENT:

S. N. VARIAVA,J.

This Civil Appeal is against the Judgment dated 16/17th February,

1989. The questions raised in this Appeal are:- (a) whether

transfer of shares in a Co-operative Society is subject to levy

of stamp duty under the Bombay Stamp Act, 1958 and (b) whether

the State Legislature has legislative competence to levy stamp

duty on transfer of shares. Briefly stated the facts are as

follows: The 1st Appellant was a member of Dalamal Tower

Promises Co- operative Society Ltd. As such member the 1st

Appellant was the holder of 5 shares each bearing distinctive

Nos. 711 to 715. As such member the 1st Appellant was in

occupation of office premises No. 904 on the 9th floor of the

building known as Dalamal Tower situated at 211, Nariman Point,

Bombay 400 021. By an Instrument dated 31st March, 1986 the 1st

Appellant transferred in favour of Appellants Nos. 2, 3, 4, 5

and 6 the said 5 shares for a consideration of Rs. 9,46,900/-.

The said Instrument of Transfer, inter alia, set out that the

Dalamal Tower Premises Co-operative Society Ltd. was the owner

of the building Dalamal Tower; that the 1st Appellant was a

member of the said society holding the said 5 shares; that one

of the incidents of membership was that the member had a right to

occupy specific Office premises in the building Dalamal Tower and

as such the 1st Appellant had a right to occupy premises No. 904

on the 9th floor of the Dalamal Tower, which Office premises

admeasured 557 Sq. ft. of built up area. The Instrument went

on to state that for a consideration of Rs. 9,46,900/- paid by

the transferees to the transferor, the transferor transferred the

said 5 shares to the transferees and that the transferees

accepted the said shares.

By a letter dated 23rd April, 1986 the Advocates of the 1st

Appellant forwarded the instrument of transfer to the

Superintendent of Stamps for adjudication under the provisions of

Bombay Stamp Act, 1958. In the said letter the Advocates stated

that, in their opinion, the instrument of transfer was wholly

exempted from duty, but that it was sent for adjudication by way

of abundant caution. By a reply dated 22nd May, 1986 the

Superintendent of Stamps informed the Advocates for the 1st

Appellant that the document for adjudication was a conveyance of

property chargeable with stamp duty under Article 25(b)(i) of the

Bombay Stamp Act on the present market value of the said

property. By the said Letter the Superintendent of Stamps

requested for details regarding premises No. 904 in Dalamal

Tower and also called for a valuation report and other relevant

documents.

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The Appellants, therefore, filed Writ Petition 1820 of 1986 in

the High Court of Judicature at Bombay to have the said letter

quashed. They also sought directions against the Superintendent

of Stamps and the State of Maharashtra to desist and forbear from

charging, demanding or recovering stamp duty on the said form of

Transfer of shares, or from proceeding on the basis that the form

of Transfer of shares was not duly stamped and, thus, liable to

be impounded. The Appellants contended that the instrument of

transfer was a document transferring the shares held in a body

corporate and was thus not within the purview of the Bombay Stamp

Act, 1958. They also contended that the levy of stamp duty on

transfer of shares in a co- operative society fell exclusively

within Entry 91 of List I of the Seventh Schedule to the

Constitution of India. The Appellants contended that it was

beyond the legislative competence of the State as it did not fall

within Entry No. 63 of List II of the Seventh Schedule to the

Constitution of India.

By the impugned Judgment dated 16/17th February, 1989, the

Petition was dismissed on the ground that the instrument of

transfer amounted to a conveyance of property and was chargeable

with stamp duty under Article 25(b)(i) of the Bombay Stamp Act,

1958. By the said Judgment the argument regarding lack of

legislative competence was also rejected.

The question whether or not a transfer of shares in a

Co-operative Society is subject to levy of stamp duty on the

basis that it is a conveyance has already been answered by this

Court in the case of Veena Hasmukh Jain and Another v. State of

Maharashtra and Ors., reported in (1999) 5 SCC 725. In this case

it has already been held that such agreements would be covered by

Article 25 of the Bombay Stamp Act, 1958. It is held that stamp

duty would be leviable as if it is a conveyance. This Court has

held that these are in effect agreements to sell immovable

property as the possession of such property is transferred to the

purchaser before or at the time of or subsequent to the execution

of the agreement. It is held such an agreement to sell must be

deemed to be a Conveyance. It is fairly conceded that this

Judgment fully covers question (a) set out hereinabove.

As question (a) is already answered by the above mentioned

Judgment in Veena's case, in our view, question (b) does not

survive. As seen above stamp duty is sought to be levied under

Article 25, Schedule I of the Bombay Stamp Act. The stamp duty

is being levied not on transfer of shares but on the basis that

the agreement is a conveyance. There is no dispute that there is

legislative competence in the State Government to levy stamp duty

on a conveyance of property. Question No. (b) has been raised

on the footing that the instrument of transfer is a form of

transfer of shares. Now that it is held that such an instrument

is not an instrument of transfer of shares, but it is, in fact, a

conveyance question (b) no longer survives.

In this view of the matter, the Appeal does not survive. The

same stands dismissed. There will be no order as to costs.