1. BOT Concession Agreement for road construction and toll collection — Dispute over classification as lease under Transfer of Property Act and Indian Stamp Act — Stamp duty liability. (Para 1 , 3 )
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SUPREME COURT OF INDIA
VIKRAM NATH, AHSANUDDIN AMANULLAH, JJ.
M/s. Rewa Tollway P. Ltd. – Appellant
Versus
The State Of Madhya Pradesh & Ors. – Respondents
Civil Appeal No.8985 Of 2013 With Civil Appeal No.8989 Of 2013, Civil Appeal No.8986 Of 2013, Civil Appeal No.8990 Of 2013, Civil Appeal No.8988 Of 2013, Civil Appeal No.8987 Of 2013, Civil Appeal No.8991 Of 2013, Civil Appeal No.8992 Of 2013, Civil Appeal No.8993 Of 2013, Civil Appeal No.8995 Of 2013, Civil Appeal No.8996 Of 2013, Civil Appeal No.8994 Of 2013.
Decided On : 19-07-2024
Advocates:
For Appellant(s) Mr. B. K. Satija, AOR Mr. Sanjay Kapur, AOR Mr. Surya Prakash, Adv. Mr. Arjun Bhatia, Adv. Mr. Devesh Dubey, Adv. Ms. Divya Singh Pundir, Adv. Ms. Mahima Kapur, Adv. Mrs. Shubhra Kapur, Adv. Ms. Isha Virmani, Adv. Mr. Kunal Verma, AOR Mr. Prafulla Kumar Behera, Adv. Mr. S. S. Nehra, AOR Mr. Neeraj Dutt Gaur, Adv. Mr. Vikrant Nehra, Adv. Ms. Sundri, Adv. Ms. Charu Singhal, Adv. Mr. Chetan Sharma, Adv. Mr. Sudhir Agarwal, Adv. Mr. Deepak Mishra, Adv. Dr. K S Bhati, Adv. Mr. N. P. Verma, Adv. Mr. Deepak Jyoti Ghildiyal, Adv. Mr. K K Mishra, Adv. Dr. Shilpa Bagade, Adv. Mr. Rajendra Verma, Adv. Mr. Sanjay Singh, Adv. Mr. R K Gupta, Adv. Mr. Arun Dagar, Adv. For Respondent(s) Mr. Saurabh Mishra, A.A.G. Ms. Ankita Choudhary, A.A.G. Mr. Sunny Choudhary, AOR Mr. Ashiesh Kumar, AOR
For Appellant(s) Mr. B. K. Satija, AOR Mr. Sanjay Kapur, AOR Mr. Surya Prakash, Adv. Mr. Arjun Bhatia, Adv. Mr. Devesh Dubey, Adv. Ms. Divya Singh Pundir, Adv. Ms. Mahima Kapur, Adv. Mrs. Shubhra Kapur, Adv. Ms. Isha Virmani, Adv. Mr. Kunal Verma, AOR Mr. Prafulla Kumar Behera, Adv. Mr. S. S. Nehra, AOR Mr. Neeraj Dutt Gaur, Adv. Mr. Vikrant Nehra, Adv. Ms. Sundri, Adv. Ms. Charu Singhal, Adv. Mr. Chetan Sharma, Adv. Mr. Sudhir Agarwal, Adv. Mr. Deepak Mishra, Adv. Dr. K S Bhati, Adv. Mr. N. P. Verma, Adv. Mr. Deepak Jyoti Ghildiyal, Adv. Mr. K K Mishra, Adv. Dr. Shilpa Bagade, Adv. Mr. Rajendra Verma, Adv. Mr. Sanjay Singh, Adv. Mr. R K Gupta, Adv. Mr. Arun Dagar, Adv. For Respondent(s) Mr. Saurabh Mishra, A.A.G. Ms. Ankita Choudhary, A.A.G. Mr. Sunny Choudhary, AOR Mr. Ashiesh Kumar, AOR
The main legal point established in the judgment is the classification of the Concession Agreement as a lease under the TP Act and IS Act, and the determination of stamp duty payable on the amount spent by the lessee.
Headnote:
lease - toll collection - TP Act, IS Act - The court discussed the applicability of the Transfer of Property Act and the Indian Stamp Act in the context of toll collection under the Build, Operate & Transfer (BOT) Scheme. The court upheld the Concession Agreement as a lease under the TP Act and IS Act, and clarified the stamp duty payable on the amount spent by the lessee.
Fact of the Case:
The case involved a dispute over the classification of a Concession Agreement for toll collection under the BOT Scheme as a 'lease' under the Transfer of Property Act and the Indian Stamp Act. The High Court had dismissed the writ petitions challenging the demand for stamp duty, leading to the appeals before the Supreme Court.
Finding of the Court:
The Supreme Court upheld the High Court's decision, concluding that the Concession Agreement constituted a lease under the TP Act and IS Act. The court also clarified the stamp duty payable on the amount spent by the lessee, directing the Revenue Officer to recalculate the demand and refund any excess amount paid by the appellants.
Issues: The main issues revolved around the classification of the Concession Agreement as a lease, the applicability of stamp duty, and the interpretation of the TP Act and IS Act. The court also addressed the doctrine of legitimate expectation and promissory estoppel in the context of the legislative amendments.
Ratio Decidendi: The court's decision was based on the interpretation of the TP Act and IS Act, as well as the application of the doctrine of legitimate expectation and promissory estoppel. The court clarified the stamp duty payable on the amount spent by the lessee and directed the Revenue Officer to recalculate the demand.
Final Decision: The appeals were partly allowed, upholding the Concession Agreement as a lease and directing the recalculation of stamp duty by the Revenue Officer. The court also provided directions for refunding any excess amount paid by the appellants and the deposit of any deficit in stamp duty.
Legal Category Hierarchy
- constitutional law
- administrative law
- taxation law
- property law
Table of Contents
2. Whether BOT agreement is a lease or license — Validity of stamp duty amendment — Applicability of promissory estoppel and legitimate expectation against legislative action. (Para 5 , 6 , 7 , 9 , 10 , 11 , 12 , 13 , 14 )
3. BOT agreements satisfy lease ingredients under TP Act and IS Act — Legislative amendments override prior executive clarifications — Stamp duty applies only to lessee's expenditure. (Para 18 , 19 , 20 , 21 , 22 , 23 , 24 , 25 , 26 , 27 , 28 , 29 , 30 , 31 , 32 , 33 )
4. Promissory estoppel and legitimate expectation cannot be invoked against the exercise of legislative power — BOT agreements for toll collection constitute leases under the Indian Stamp Act. (Para 24 , 25 , 27 , 28 , 29 )
5. Appeals partly allowed — Demand based on total project cost set aside — Direction to re-calculate stamp duty based on amount spent by the lessee. (Para 34 , 35 )
6. Does a BOT agreement for road construction and toll collection constitute a lease?
Yes, such agreements satisfy the ingredients of a lease under Section 105 of the Transfer of Property Act and the wider definition under Section 2(16) of the Indian Stamp Act, which specifically includes instruments letting tolls. (Para 16 , 28 , 29 )
7. Can the doctrine of promissory estoppel be invoked against the State for legislative amendments?
No, promissory estoppel cannot be invoked against the exercise of legislative power. A prior executive decision does not bar the legislature from enacting laws or policies in the larger public interest. (Para 24 , 25 , 27 )
8. What is the legal effect of the doctrine of legitimate expectation in administrative and legislative actions?
It is a procedural safeguard ensuring fairness and the right to a hearing, but it does not create an absolute enforceable legal right, especially when public interest or policy changes justify the deviation. (Para 20 , 21 , 22 , 23 , 27 )
9. On what amount is stamp duty chargeable for BOT agreements where toll rights are given in lieu of construction costs?
Stamp duty is chargeable only on the amount likely to be spent under the agreement by the lessee, not on the total project cost including contributions from the lessor or other stakeholders. (Para 31 , 32 , 33 , 34 )
JUDGMENT :
Vikram Nath, J.
1. By the impugned judgment and order dated 11.02.2010, the High Court of Madhya Pradesh at Jabalpur decided a group of twelve petitions wherein the question involved was whether a transaction where the right to collect tolls is given in lieu of the amount spent by the Concessionaire in the construction of roads, bridges etc. under the Build, Operate & Transfer (BOT) Scheme amounts to a “lease” as contemplated under Section 105 of the Transfer of Property Act, 18821 [TP Act] and Section 2(16) of the Indian Stamp Act, 18992[IS Act]. Further challenge made in the said writ petitions was with regard to the validity of the amendment made in proviso (c) to Clause (C) of Article 33 of Schedule 1(A) as amended by the Indian Stamp (M.P.) Act, 2002, and a further prayer was made to declare Section 48 and 48(B) of IS Act, 1899, as amended by M.P. Act 24 of 1990 as ultra vires.
2. The Division Bench of the High Court, after considering the submissions and the material on record came to the conclusion that the writ petitions were without any merit and accordingly dismissed the same. Aggrieved by the same, these twelve appeals have been preferred.
3. For the sake of convenience, we are referring to the facts of Civil Appeal No.8985 of 2013, which are briefly stated hereunder:
(i) Madhya Pradesh Rajya Setu Nirman Nigam Ltd.3[MPRSNN], (respondent no.3) is a Company incorporated and registered under the Companies Act, 1956. The State of Madhya Pradesh, vide order dated 01.02.2001, authorized MPRSNN for reconstruction, strengthening, widening and rehabilitation of a section of road on Satna-Maihar-Parasimod-Umaria Road Project to be executed through Concession on Build, Operate and Transfer Scheme.
(ii) MPRSNN, vide Advertisement dated 22.04.2002, invited tenders against the aforesaid project pursuant to which the bid of the appellant was accepted. On 8th August, 2002, Letter of Acceptance was issued by the MPRSNN to the appellant for execution of the Concession Agreement within 30 days.
(iii) The IS Act was amended in the State of Madhya Pradesh vide Amendment Act No.12 of 2002 and proviso (c) to Clause(C) was inserted to Entry No.33 of Schedule-1(A), which provided that there shall be levy of stamp duty @ 2% on the amount likely to be spent on the project, on the agreement to lease and right to collect the toll is given. The State of Madhya Pradesh notified the said amendment on 12.08.2002.
(iv) A Concession Agreement was signed on 15.09.2002 on a stamp paper of Rs.100 between MPRSNN and the appellant. A show cause notice dated 26.03.2004 was issued to the appellant intimating that the matter between State of M.P. and the Rewa Tollway Private Ltd. would be listed for hearing on 29.03.2004 before the Collector of Stamps, Bhopal and the appellant was required to produce the original copy of the agreement dated 15.09.2002. The appellant filed a detailed reply dated 25.04.2004 stating that the agreement executed was a Concession Agreement and, as such, it cannot be treated as a lease but as a license at best. The Collector (Stamps), Bhopal vide order dated 30.04.2004 passed an order exercising power under Section 48-B of the IS Act directing recovery of deficit stamp duty amounting to Rs.1,08,00,000/-(Rupees one crore eight lakhs) said to be payable on the Concession Agreement dated 15.09.2002. Thereafter, a recovery notice was issued on 29.05.2004 by the Collector (Stamps), Bhopal to deposit the aforesaid amount within seven days of the receipt of the said recovery notice.
(v) On 6th June, 2004, the appellant challenged the order dated 30.04.2004 by way of a writ petition under Article 226 of the Constitution which was registered as Writ Petition No.2219 of 2004. The High Court vide order dated 03.08.2004 granted interim stay of recovery of any amount pursuant to the impugned order dated 30.04.2004. The High Court, vide judgment and order dated 11.02.2010, dismissed the said writ petition along with eleven other matter
