1

AFR

Reserved

Chief Justice's Court

Civil Misc. Writ Petition No.51979 of 2005

Vinayendra Nath Upadhyay Vs. State of U.P. & others

Connected with

Civil Misc. Writ Petition No. 51985 of 2005

Vinayendra Nath Upadhyay Vs. The State of U.P. & others

And

Civil Misc. Writ Petition No. 51986 of 2005

Vinayendra Nath Upadhyay Vs. The State of U.P. & others

And

Civil Misc. Writ Petition No. 51987 of 2005

Vinayendra Nath Upadhyay Vs. The State of U.P. & others

And

Civil Misc. Writ Petition No. 51990 of 2005

Vinayendra Nath Upadhyay Vs. The State of U.P. & others

And

Civil Misc. Writ Petition No. 51991 of 2005

Vinayendra Nath Upadhyay Vs. The State of U.P. & others

And

Civil Misc. Writ Petition No. 51992 of 2005

Vinayendra Nath Upadhyay Vs. The State of U.P. & others

And

Civil Misc. Writ Petition No. 51995 of 2005

Vinayendra Nath Upadhyay Vs. The State of U.P. & others

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Hon'ble F. I. Rebello,CJ.

Hon'ble V. K. Shukla,J.

Hon'ble A.P. Sahi,J.

This reference raises issues involving the power of the State

to impose and realise Additional Stamp Duty on an instrument of

lease executed for a contract to realise toll in respect of two

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bridges in the district of Allahabad over the river Ganges, namely

Lal Bahadur Shastri Bridge and Chandra Shekhar Azad Bridge.

The imposition of this Additional Stamp Duty is under the

provisions of Section 39 (1) of the U.P. Urban Planning and

Development Act, 1972 read with the Indian Stamp Act 1899.

The petitioners in all the writ petitions have assailed the

orders of the Addl. Collector (Finance & Revenue), Allahabad,

under Section 31 of the 1899 Act as also the revisional orders

passed by the Chief Controlling Revenue Authority under Section

56 (2) of the Act, upholding the said imposition.

A learned single Judge of this Court, while proceeding to

hear the writ petitions, took notice of a Division Bench judgment

of this Court relied upon by the petitioners in the case of M/s Bilal

Ahmad Sherwani and Kishori Lal Vs. State of U.P. and others,

AIR 1992 All. 181, and upon a request made by the learned

Standing Counsel for reconsideration of the said judgment, came

to the conclusion that the Division Bench appears to have not been

apprised of the issue whether a toll is a benefit arising out of land

and, therefore, immovable property. The learned single Judge was

of the opinion that the contention advanced by the learned

Standing Counsel requires a consideration in view of the

observations made in the referring order dated 7.2.2006 and

accordingly a request was made to Hon'ble the Chief Justice for

constituting a larger Bench as the learned single Judge found

himself to be bound by the decision of the Division Bench

aforesaid.

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The matter was placed before Hon'ble the Chief Justice, who

vide order dated 31.3.2006, constituted a larger Bench of three

Hon'ble Judges presided over by Hon'ble the Chief Justice to hear

the matter. Accordingly, the reference has been placed before us

for answering the doubt expressed by the learned single Judge and

for an authoritative pronouncement on the issues raised.

Before embarking upon the matter any further, we may

clarify that even though the questions to be answered have not

been formally framed by the learned single Judge, yet in order to

analyse the issue, we propose to frame the questions and answer

them accordingly. Upon analysis of the pleadings and the gist of

the order of reference dated 7.2.2006 of the learned single Judge,

the following questions, to our mind, arise that need to be

answered:-

(1)Whether an instrument of lease executed for the right to

collect toll on a bridge executed would amount to an

instrument conveying or transferring immovable property

subject to imposition of Additional Stamp Duty as defined

under Section 39 of the U.P. Urban Planning &

Development Act, 1973?

(2)Whether the words “immovable property” incorporated in

Section 39 of the U.P. Urban Planning and Development

Act, 1973 carry the same meaning and connotation as

assigned to them in Section 2 (16) of the Indian Stamp Act,

1899 while defining the term “lease” thereunder and

consequently includes within its fold any instrument by

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which tolls of any description are let?

(3) Whether the decision of the Division Bench in the case of

M/s Bilal Ahmad Sherwani and Kishori Lal Vs. State of U.P.

and others, AIR 1992 All. 181, does not lay down the law

correctly and requires any re-consideration as referred to by

the learned single Judge?

Learned counsels Sri Navin Sinha Senior Advocate on

behalf of the petitioners assisted by Sri R.C. Singh and Sri M.C.

Chaturvedi learned Chief Standing Counsel for the State have

been heard. They have advanced their submissions, the petitioners

contending that no such additional Stamp Duty is leviable and the

respondent State supporting the said levy. There are however

certain undisputed areas which need be mentioned at the very

outset.

The covenant, on which this additional duty is sought to be

levied, is a lease deed recording an agreement relating to the right

of the petitioners to collect toll over the bridges in question. The

instrument has been registered as such. The petitioners have paid

Stamp Duty that was charged on the said instrument including the

additional Stamp Duty under dispute.

The Stamp Duty about which there is no dispute between the

parties is that which has been charged for registering the

instrument under Schedule 1-B, Article – 35(b) read with

Explanation-4 and Article 23 of the Indian Stamp Act, 1899. Thus

there is absolutely no quarrel over the imposition of Stamp Duty

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on the instrument treating it to be a transaction of lease as defined

under Section 2(16)(c) of the 1899, Act. The petitioners do not

dispute the imposition of Stamp Duty to the aforesaid extent.

The doubt expressed by the learned Single Judge in the

reference order arose when the petitioners relying on the judgment

of a Division Bench of this Court in the case of M/s Bilal Ahamd

Sherwani and Kishori Lal Vs. State of U.P. and others [AIR (1992)

Allahabad 181) contended that the imposition of 2% additional

Stamp Duty under Section 39 of the U.P. Urban Planning and

Development Act, 1973 was illegal and the State had no authority

to levy the same. The learned Single Judge felt bound by the

judgment of the Division Bench but on first principles expressed

his doubt about the correctness of the said Division Bench and

accordingly referred the matter to be resolved by a Larger Bench.

The petitioners contend that the definition of the word 'lease'

as contained in Section 2(16) of the Indian Stamp Act, 1899 does

not include within its fold every immoveable property by way of

fiction nor does it include every immoveable property as

understood generally in terms of the Transfer of Property Act and

also the U.P. Urban Planning and Development Act, 1973. They

contend that the word 'immoveable property' as contained in

Section 39 of the U.P. Urban Planning and Development Act, 1973

is not inclusive of the definition of lease as contained in the Stamp

Act, 1899 inasmuch as the word 'includes' as contained in Section

2(16) of the 1899 Act only gives an extended meaning to the word

lease, and not to the words immoveable property. It is submitted

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on their behalf that the word 'lease' is not synonymous with the

word 'immoveable property' as contained in the 1973 Act and,

therefore, the additional Stamp Duty as sought to be levied under

the 1973 Act would not apply to a lease which has been

incorporated through an extended meaning in Section 2(16) of the

Stamp Act, 1899.

Sri Sinha learned counsel for the petitioners has urged that

the first part of the definition of the term lease as used in Section

2(16) of the 1899 Act is not a lease defining collection of toll to be

immoveable property. It includes the instrument of collection of

toll as a lease only under a fiction created thereafter and is by itself

not an instrument connoting transfer of immoveable property. He

therefore, submits that this definition does not allow the provisions

of Section 39 of the 1973 Act to be invoked for such instruments

in order to levy additional Stamp Duty @ 2%.

Sri Sinha has relied on judgements to contend that even

otherwise the right to collect toll to the petitioners is only creating

an agency in favour of the petitioners to realise the toll on behalf

of the State Government and nothing more. He submits that it is

not a profit arising out of land so as to include it within the

meaning of immoveable property and the instrument so executed

in favour of the petitioners would not amount to any instrument of

transfer of immoveable property.

The contention advanced is that it is the right of the public at

large to passover the bridge and in lieu thereof the Government is

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collecting toll. The petitioners are mere agents to collect the said

toll on behalf of the Government and are not earning any profit out

of land. Even if the bridge is embedded in the earth, the same

would not be included within the term immoveable property. He

submits that the judgement in the case of M/s Bilal Ahmad

Sherwani (supra) lays down the law correctly and therefore, the

reference made by the learned Single Judge deserves to be

rejected.

Sri M.C. Chaturvedi learned Chief Standing Counsel

disputing the aforesaid proposition submits that the word 'means'

as used in Section 2(16) of the Stamp Act, 1899 includes all

transactions of immoveable property and the extended meaning of

the said terminology has been explained so as to include other

instruments as defined therein. He therefore submits that the word

'includes' gives an extended meaning to the terminology of

immoveable property and the same would equally apply while

defining immoveable property as contained in Section 39 of the

1973 Act.

He submits that the splitting of Section 2(16) of the 1899

Act, as attempted by the petitioners, on the strength of the

Division Bench judgment in the case of M/s Bilal Ahmad

Sherwani (supra) is misplaced, inasmuch as, the Division Bench

judgment has incorrectly restricted the inclusive definition of

immoveable property, and even otherwise upon a perusal of the

definition of the word 'lease' as contained in Section 105 of the

Transfer of Property Act, the word 'immoveable property' as used

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in Section 2(6) of the Registration Act, 1908 and the meaning

assigned to the words immoveable property in Section 3(26) of the

General Clauses Act, 1897, leave no room for doubt that the

extended meaning of the word immoveable property as contained

in the Stamp Act, 1899 would be the same as understood in

Section 39 of the 1973 Act.

His contention is that the distinction sought to be made by

way of interpretation on behalf of the petitioners by taking aid of

the decision in M/s Bilal Ahamd Sherwani's case is misplaced

which proceeds on an incorrect assumption that admittedly there

was no transfer of immoveable property under the instrument. He

contends that by virtue of the extended meaning, there is no

requirement of actual transfer of immoveable property as

understood generally and by fiction the additional duty is leviable

on such instruments. Sri Chaturvedi has also relied on certain

decisions in support of his argument.

In order to appreciate the rival submissions and the doubt

expressed by the learned Single Judge it would be appropriate to

begin with quoting Section 39 (1) of the 1973 Act which is

essential for the understanding of the controversy.

“Section 39(1).Additional Stamp duty on certain transfer of

property.-

(1)The duty imposed by the Indian Stamp Act, 1899, on

any deed of transfer of immoveable property shall, in the case of

an immoveable property situated within a development area, be

increased by two per cent on the amount or value of the

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consideration with reference to which the duty is calculated under

the said Act:

Provided that the State Government may, by notification in

the Gazette, enhance, the aforementioned percentage of the

increase in Stamp duty up to five.”

The aforesaid provision therefore categorically provides that

the duty imposed under the Indian Stamp Act on any deed of

transfer of immoveable property shall stand increased by 2% in the

manner provided therein. The aforesaid definition therefore

requires that any deed of transfer of immoveable property shall be

subjected to the additional duty imposed payable at the time of

registration.

The word 'immoveable property' has not been defined under

the Indian Stamp Act. The same is the position under the U.P.

Urban Planning and Development Act, 1973. The instrument in

relation whereto this dispute has arisen, defines the agreement as a

lease (Patta). The term lease has been defined under the Indian

Stamp Act to mean a lease of immoveable property and to also

include certain other instruments as defined therein. Section 2(16)

of the 1899 Act is quoted below:

Section 2(16) “Lease”. – “Lease means a lease of

immoveable property, and also includes:

(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 immoveable property;

(c)any instrument by which tolls of any description are let;

(d)any writing on an application for lease intended to signify

that the application is granted;

[(e)any instrument by which mining lease is granted in respect

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of minor minerals as defied in clause (e) of Section 3 of the Mines

and Minerals (Regulation and Development) Act, 1957;”]

The definition leaves no room for doubt that any instrument

by which tolls of any description are let, as presently involved is

also a lease. The argument of the petitioners have to be understood

in the light of the above definition as they contend that the

instrument falls within the inclusive definition of the word 'lease'

which is an extended meaning of the word lease that does not

amount to immoveable property.

The term immoveable property used in Section 39 of the

1973 Act does not include within itself expressly an instrument by

which tolls of any description are let. It however, indicates that it

applies to any instrument of immoveable property. The question is

as to whether such instruments which have been included by virtue

of an extended definition under the Stamp Act would also amount

to immoveable property as understood in Section 39 of the 1973

Act. To put it differently, would an instrument of a right to collect

toll amount to a deed of transfer of immoveable property for the

purposes of levying additional duty under the 1973 Act.

The definition under Section 39 of the 1973 Act contains the

words “any deed of transfer of immoveable property”. Every lease

of immoveable property would therefore, also amount to a

transaction as understood under the Indian Stamp Act, 1899. The

purpose and intent of Section 39 of the 1973 Act to our mind is to

read the terminology of immoveable property to include lease in

order to levy Stamp Duty under the Stamp Act 1899. The

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additional duty is being imposed on the instruments presented for

registration even as a lease as defined under Section 2(16) of the

Act. The petitioners also do not dispute the levy of Stamp Duty on

the instrument as a lease. In such a situation, the instrument which

has been presented to be registered as a lease means an instrument

of a transaction relating to immoveable property by fiction of the

provisions of Section 2(16)(c) of the 1899 Act. The instrument by

itself may not amount to a transfer of immoveable property as

understood under the Transfer of Property Act or as suggested by

the State, yet by virtue of the fiction created in relation to

instruments as included under the extended definition, the

additional duty as leviable under Section 39 would also be

applicable as involved in the present context.

The Division Bench in the case of Bilal Ahmad (supra) in

our opinion, proceeded on an assumption of admittedly treating

the instrument not to be a transfer of immoveable property. This in

our view, was an erroneous approach by splitting the definition

clause of the term lease in two parts. The word lease as defined

under the Stamp Act 1899 cannot be segregated from the meaning

of the word immoveable property so as to exclude the instruments

which have been included by way of fiction.

It is settled proposition of law that if a statute is sought to be

applied by creating a fiction, then such a fiction has to be given

full effect to by the Courts. Any attempt to exclude would

therefore render the very purpose of a fiction redundant. The

legislature will be presumed to be aware of the meaning that it

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sought to assign to the terminology of immoveable property while

enacting Section 39 of the 1973 Act to give it a meaning so as to

levy duty under the Indian Stamp Act 1899. The term immoveable

property therefore utilized in the 1973 Act is clearly relatable to all

the instruments as defined in relation to immoveable property

including the definition of the word lease as contained under

Section 2(16) of the 1899 Act. Any departure from the aforesaid

meaning would therefore do violation to the statute and we would

accordingly approve of the view expressed by the learned Single

Judge while proceeding to make the reference.

The law laid down by the Division Bench in the case of Bilal

Ahmad (supra) does not define the aforesaid provisions correctly

and the same deserves to be overruled.

In our opinion, when the terminology used in Section 39 of

the 1973 Act directly requires it to be understood in relation to the

imposition of duty under the Stamp Act, it is not necessary for this

Court to borrow the meaning of the word immoveable property as

utilized in any other Act and contended on behalf of the State. The

Stamp Duty is leviable under the Stamp Act and therefore the

meaning assigned to the words contained therein have to be

understood for the purpose of additional Stamp Duty under

Section 39 of the 1973 Act.

It is not necessary to borrow any meaning of immoveable

property from any other Act for the reason that the levy of Stamp

Duty is an exercise under the fiscal powers of the State. The

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pecuniary liability of Stamp Duty is therefore in the nature of

compulsory exaction which has to be construed strictly within the

parameters of the meaning assigned in the Act itself. In our

opinion, there is no ambiguity as explained above nor is it

necessary to take aid of the provisions contained in any other Act.

The contention raised on behalf of the petitioners is

that a grant of lease to collect toll cannot be equated with the grant

of mining lease and fisheries rights and collection of market dues,

is founded on the premise that the provisions of Section 3 (6) of

the General Clauses Act read with the provisions of Sections 3, 4,

5, 105 and 107 of the Transfer of Property Act indicate that the

benefits arising out of land is a necessary ingredient in order to

bring it within the definition of immovable property.

This, in our opinion, would be attempting to read into the

definition of immovable property which is not the intendment of

the definition contained in the Stamp Act, 1899 as the term lease

defined therein gives an extended meaning so as to include an

instrument relating to letting of toll as indicated above. We do not

find it necessary to import the meaning of the words 'immovable

property' by deploying the definition of the words 'immovable

property' as suggested on behalf of the petitioners.

The decisions which have been relied upon for the said

purpose, are therefore clearly distinguishable and this aspect of the

matter in Bilal Ahmad's case, in our opinion, has not been

appreciated. The entire purpose of imposing additional stamp duty

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under Section 39 of the 1973 Act is to generate revenue through

levy of a stamp duty on instruments which in our opinion would

also include an instrument registered for letting of toll as defined

under the Stamp Act, 1899. When the rights of the parties are

governed by a written document, it is essential to study and to

follow the terms of such document, just as it is necessary, when a

Court is administering the sections of a Code, that it should study

the exact language of the section before troubling itself about

decided cases or general considerations.

If by virtue of the said fiction, the duty is leviable then the

issue relating to profits arising out of land may not be relevant

inasmuch as the collection of toll through an agent is not a

realisation of profit arising out of land. It is a distinct contractual

right to collect a fee from the public at large on behalf of the

Government. Such an Agent does not exercise any control over

the passage of public at large over the bridge. That right continues

to be regulated by the State Government and not by the Agent

appointed by the State Government. The petitioners only collect

toll from those who passover the bridge in the manner and to the

extent as required by the State Government under the terms of the

covenant which has been registered and on which Stamp Duty has

been paid. There is no right created in favour of the petitioners to

receive profit out of land. It is only the profits or losses that accrue

from collection of toll that is the subject matter of the instrument.

For the reasons aforesaid, we are of the considered view that

the instrument which has been registered is an instrument of lease

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which amounts to an instrument relating to immoveable property

with its extended meaning as contained under Section 2(16)(c) of

the Indian Stamp Act, 1899 and therefore we would answer

questions No. 1 and 2 in the affirmative in favour of the State.

Accordingly, the decision in the case of M/s Bilal Ahmad

Sherwani does not lay down the law correctly and stands

overruled. Question No. 3 therefore stands answered accordingly.

The reference having been answered, let the papers be

placed before the concerned Bench for disposal of the writ

petitions.

Dt 11.02.2011 (F.I. Rebello, CJ.)

Sahu

(V.K. Shukla, J.)

(A.P. Sahi, J.)