The central legal point established was that the character of the amount received as a refundable security deposit, its adjustability against rent, and the applicability of stamp duty provisions under the Karnataka Stamp Act were crucial in determining the duty payable.

( 1 ) THIS is a reference made under Section 54 (1) of the karnataka Stamp Act 1957 (hereinafter called the Act ).

( 2 ) THE essential facts leading up to this reference are as follows : the instrument styled as lease deed dated 18-10-1996 executed by M/s. Golf View homes a registered partnership firm as lessor and M/s. Texas Instruments India Limited as lessee, was presented for registration before Sub-Registrar Bangalore (South) taluk. Said instrument is drawn up on stamp paper of Rs. 21,92,000/ -. Under the said document lessor has leased premises with 1,41,183/- sq. ft. of the built up area for a period of 10 years on monthly rent of rs. 11. 25 per square foot for first 5 years and for next five years rent at escalation of 30%. The lessor received Rs. 3,81,19,410/-- equivalent to rent for 24 months as a refundable security deposit which is repayable by the lessor and will be adjusted in the rental for the last two years of lease period. The rent reserved at agreed rate for the first five years at the rate of Rupees 15,88,308/- per month would come to Rs. 9,52,98,525/-- and for next five years at the rate of rs. 20,64,800/- would come to Rupees 12,38,88,. 024/- and total rent reserved would come to Rupees 21,91,86,549/- and average annual rent would be 2,19,18,655/ - and stamp duty of 10% Rs. 21,91,900/- was paid. Under Article 30 (a) of Schedule to the act and stamp duty of Rs. 100/- was paid on the refundable security deposit under article 47 of the Schedule to the Act. The said document was impounded under Section 33 of the Act on the ground that it was insufficiently stamped and matter was referred to the District Registrar under Section 37 (2) for determination of the correct duty under Section 39 of the Act.

( 3 ) THE Deputy Commissioner of Stamps, bangalore (Urban) District, felt a doubt as to the correct amount of stamp duty to which the document is chargeable and wherefore the statement of a case was drawn up and submitted to Chief Controlling Revenue Authority under Section 53 (2) of the Act. The opinion was rendered on 18-5-1998, holding that the amount of Rs. 3,81,19,410/- deposited as a security deposit adjustable in the rental of the last 2 years of the lease period is to be treated as Advance under article 30 (c) of the Act and deficit stamp duty of Rs. 38,11,940/- is to be paid.

( 4 ) THE claimant desired the matter to be referred to this Court as a statement of case for opinion under Section 54 of the Act and accordingly, this reference is made for seeking for opinion on the following questions: (1) Whether the distinction made by the ccra in the impugned order between Chief controlling Revenue Authority v. M. V. Chandrashekar (1985)1 KLJ 99 (AIR 1985 karnataka 61) and the present case is tenable especially since in the said case the honble High Court of Karnataka has held that in respect of refundable security deposit paid to secure performance by trie lessee of its obligations under the lease deed the appropriate stamp duty to be levied would be the stamp duty payable in respect of a security bond (Article 47), equivalent to rs. 100/ -. In the instant case also, the lessee has deposited a refundable security deposit with the lessor and the mere failure to mention in the lease deed that the security deposit was deposited to ensue the performance of the lessees obligations under the lease deed, will not change the character of the security deposit. (2) Whether the stipulation in the lease deed that the refundable security deposit is adjustable against the rentals for the last two years of the lease period would cause the said sum of Rs. 3,81,19,410/- to partake the character of a premium or money advanced in addition to rent thus attracting stamp duty under Article 30 (c) of the karnataka Stamp Act, 1957, especially since the amount advanced is in the nature of a security deposit and remains as such with the lessor for the first eight years of the lease period and does not take on the char