Important point
For the purpose of levy of stamp duty, real and true meaning of the instrument must be ascertained.

Headnote:Karnataka Stamp Act, 1957—Article 5(d) of Schedule—Transfer of Property Act, 1872—Section 105—‘Supplementary’ agreement entered into between appellant and third respondent—Question whether it amounted to transfer so as to attract stamp duty—Execution of supplementary agreement became necessary consequent upon change in name of appellant Company—Only a restrictive covenant was amended in terms whereof appellant was permitted to carry on business of Technology Park instead of manufacture of readymade garments as originally provided in lease deed—Supplementary agreement was neither a deed of lease nor a deed of sale, Article 5(d) of the Act had no application—For purpose of levy of stamp duty, real and true meaning of instrument must be ascertained— High Court was not correct in holding that appellant was liable to pay stamp duty.
       Held : The Appellant indisputably was permitted by the Third Respondent herein to establish a software park. The execution of supplementary agreement, it has categorically been stated, became necessary consequent upon the change in the name of the company. By reason of such supplementary agreement although it was permitted to establish a software park but by reason thereof no fresh transaction was entered into. We have noticed hereinbefore that in terms of the aforementioned agreement dated 05.03.1999, the land in question was demised for a period of eleven years with effect from 25.06.1997 on payment of premium fixed thereunder as also on yearly lease rent stipulated thereby. The said lease indisputably was governed by Section 105 of the Transfer of Property Act. By reason of the supplementary agreement, a restrictive covenant has been amended in terms whereof the Appellant herein was permitted to carry on the business of a Technology Park instead of manufacture of readymade garments/leather garments. Only because the name of the company was changed, the same would not mean that a fresh transaction took place. Having regard to the change in the name of the company, the Appellant’s name was sought to be substituted in the original agreement. The period of the lease, the quantum of the premium paid and other terms and conditions remained unaltered except the restriction contained in clause 2(q) of the said deed, was removed. By reason of mere change of user from carrying on one business to another, it is trite, a fresh transaction does not take place. The terms and conditions of the lease can be changed by mutual consent. Unless the essential ingredients thereof as contained in Section 105 of the Transfer of Property Act are not altered, it cannot be said that the parties to the contract entered into a fresh transaction. The Third Respondent merely reserved unto itself a right of reentry on expiry of the said period of eleven years. It could in terms of the covenant of the lease also extend the period of tenancy or terminate the same. Unless the lease itself came to an end, the third respondent did not have any right to re-convey the property. By reason of mere change in the name of the company “Prasad Garments Pvt. Ltd.” the erstwhile lessee also cannot be held to have transferred its leasehold interest in favour of the Appellant herein. (Paras 10 and 11)
       Execution of an instrument which would attract payment of stamp duty in terms of Article 5(d) of the Act must involve transfer of the property or otherwise a right or liability may inter alia be created, transferred etc., as envisaged in Section 3 thereof. Once it is held that the supplementary agreement is neither a deed of lease nor a deed of sale within the meaning of Section 105 or Section 54 of the Transfer of Property Act, as the case may be, Article 5(d) of the schedule to the Act will have no application. If Article 5(d) has no application, indisputably the residuary clause contained in Article 5(f)(i) would have. The Appellant admittedly paid the stamp duty in terms thereof. It is now well settled that for the purpose of levy of stamp duty, the real and true meaning of the instrument must be ascertained. (Paras 13 and 14)

Judgment

S.B. Sinha, J.—Leave granted.

2. Whether execution of a supplementary agreement entered into by and between the Appellant and the Third Respondent herein would amount to a transfer so as to attract stamp duty payable in terms of Article 5(d) of the Schedule appended to the Karnataka Stamp Act, 1957, consequent upon the change of the name of the erstwhile company to the Appellant Company is the question involved in this appeal.

3. The basic fact of the matter is not in dispute. One “Prasad Garments Pvt. Ltd.” was a company registered under the Companies Act, 1956. On or about 05.03.1999, it entered into a lease-cum-sale agreement with the Third Respondent herein upon payment of premium of a sum of Rs. 14,49,453, which amounted to 99% of the tentative cost of the land and one yearly rent of 966/- for a period of eleven years computed from 25.06.1997. The name of the said company, however, was changed to “Prasad Technology Park Pvt. Ltd.”.

4. The Appellant presented the said instrument for registration before the First Respondent herein on a stamp paper of Rs. 100/-. The First Respondent, however, was of the opinion that the stamp duty on the total amount of the original lease deed as mentioned in the lease deed dated 05.03.1999 was required to be paid. In response to a notice served in this behalf on the Appellant, a show cause was filed contenting that the supplementary agreement is merely a deed of rectification. The said contention was, however, rejected by the Deputy Commissioner of Stamps by an order dated 26.10.2000, holding :

“As per the above said amendment, the original document, since the changes in the legal effect of the instrument and hence the Supplementary agreement document in question subjected to the entire material alteration. In this regard, it held in the similar cases in AIR 1939 Cal. 181, AIR 1936 Rang. 136, 50 LW 746 (1936) 2 MLJ 683, the honourable courts held recorded in the Krishnamurthy’s Indian Stamp Act, or VII Edition’s page 133 in Note 9). Therefore, in the present “Amendment or Supplementary Agreement”, it is opined that the Fixed Deposit and annual rent as per Appendix 5(d), it is required to pay entire stamp fee. Hence, the following order:

ORDER

No.DR.I/47/00-01

Dated 26.10.2000

Taken into consideration of all the above said points, I the Deputy Commissioner of Stamps, exercising my power vested under Section 39 of the Karnataka Stamps Act, 1957, the present Document of “Supplementary Agreement” vide P.24/2000-01 dated 5.3.99 original document of Lease-cum-Sale Agreement mentioned Fixed Deposit of Rs. 14,49,593.00 and Annual rent of Rs. 966-00 totaling to Rs. 14,50,559.00 as per the Appendix 5(d) has to pay Stamp fee of Rs. 1,45,100.00 along with fine of Rs. 5.00, totaling to Rs. 1,45,105.00 hereby directed to make payment.”

5. Aggrieved by and dissatisfied therewith, a writ petition was filed by the Appellant before the Karnataka High Court, which came to be dismissed by reason of an order dated 11.08.2003 passed by a learned Single Judge opining :

“....But unfortunately for the petitioner the supplementary agreement sought to be registered as entered into between the 3rd respondent Lessor and the petitioner Lessee with the terms of the lease being the same as had been in the earlier lease deed that had come to be executed in favour of the petitioner-company in its earlier name as evidenced by the agreement dated 5th March 1999. These terms are sought to be incorporated into the subsequent agreement which is known as supplementary agreement dated 24th April, 2000....”

6. The Appellant herein preferred an intra court appeal there-against, which was also dismissed by the impugned judgment, stating:

“In the instant case, earlier the name of the appellant-Company was Prasad Garments Pvt. Ltd., which is now changed to Prasad Technology Park Pvt. Ltd. On account of change of name of the Company, a supplementary agreement was entered into between the M/s Karnataka Industrial Areas Development Board and

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Judicial Analysis

SupremeToday

2005 Supreme(SC) 1584

Important point For the purpose of levy of stamp duty, real and true meaning of the instrument must be ascertained.

Cases Referred (1)

Judicial Analysis

Important point
For the purpose of levy of stamp duty, real and true meaning of the instrument must be ascertained.