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2014 Supreme(Bom) 1419
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
M. S. SONAK, J.
Farida Abubakar Memon – Petitioner
vs.
The Collector of Stamps (Enforcement-II) – Respondent
WRIT PETITION NO.1462 OF 2008
Decided on: 18 July 2014
Advocate Appeared
Mr. Pradeep J. Ramchandani for the Petitioner.
Mr. Niranjan Pandit, AGP for Respondent Nos.1 to 3.
Headnote:Maharashtra Stamp Act, 1958 - Section 4 Applicability of. - When several instruments are used in order to complete a single transaction then Section 4 of Act is applicable. - For the sake of convenience, the parties in terms of sub-section (2) of Section 4 of the said Act have been conferred the liberty to determine for themselves, which of the instrument so employed, for the purpose of sub-section (1), be deemed to be the principal instrument. Sub-section (3) provides that if the parties fails to determine the principal instrument between themselves, then the Officer before whom the instrument is produced may determine the principal instrument. There is a proviso, which governs the entire section, which provides that the duty chargeable on the instruments so determined shall be highest duty which would be chargeable in respect of any of the said instruments so employed.
Maharashtra Stamp Act, 1958 - Section 4 Determination of payment of stamp duty. - Since transaction in question consisting of deed of conveyance and MOU and stamp duty payable in respect of MOU is higher than deed of conveyance hence stamp duty on MOU is payable. - Applying the provisions of Section 4 of the said Act to the facts and circumstances of the present case, it is clear therefore, that the stamp duty payable, even upon the principal instrument as determined by the parties in the present case shall be the highest duty which would be chargeable in respect of the two instruments so employed in the single transaction of sale of the said property. Therefore, although there could be no objection to the parties determining the Deed of Conveyance as being the principal instrument, upon such instrument, the parties would have to pay stamp duty which would be chargeable in respect of the MOU, because admittedly stamp duty payable in respect of MOU would be higher than the stamp duty payable in respect of the conveyance.
Thus construed, there does not appear to be any error in requiring predecessor in title of the petitioners to pay stamp duty upon the MOU at the rate of 10% ad valorem, which admittedly was the rate applicable in respect of the such instrument in the year 1996, which is the year in which the said instrument was admittedly executed. Further the explanation I to Article 25 of Schedule I to the said Act makes it clear that in case of agreement for sale of any immovable property where possession of the immovable property has been transferred at the time of execution of the agreement, such agreement shall be deemed to be conveyance and the stamp duty payable thereon shall be leviable accordingly.
By this petition under Article 226 of the Constitution of India, the petitioners question the following:
(i) Order dated 26 October 2007, issued by the Collector Stamps Duty (Enforcement-II), Mumbai requiring the predecessor in title of the petitioners to pay stamp duty of Rs.5,59,500/and fine of Rs.11,19,000/;
(ii) The judgment and order dated 31 March 2008 passed by the Additional Controller of Stamps, Mumbai, in appeal against the aforesaid order dated 26 October 2007, which requires the predecessor in title of the petitioners to pay an amount of Rs.5,90,500/which includes deficit stamp duty and penalty;
2] As noted above, the Additional Controller of Stamps, Mumbai, in appeal under section 32B of the Maharashtra Stamp Act, 1958 (said Act), has in fact set aside the order dated 26 October 2007 passed by the Collector Stamp Duty (Enforcement-II), Mumbai and reduced the deficit stamp duty and penalty to Rs.5,90,500/, after taking into consideration the stamp duty already paid by the predecessor in title of the petitioners. There is a merger of the order dated 26 October 2007 with the judgment and order dated 31 March 2008. In effect therefore, the challenge in this petition is against the judgment and order dated 31 March 2008 passed by the Additional Controller of Stamps, Mumbai. The same shall hereinafter be referred to as the impugned judgment and order.
3] The predecessor in title of the petitioners vide Memorandum of Understanding (MOU) dated 26 September 1996 agreed to purchase the immovable property, known as 'Madina Mansion', bearing CTS No.1/1125 at Mahim (said property) for consideration of Rs.22,00,000/. Clauses 3 and 4 of MOU, however record that the entire consideration has been paid and the vendor has handed over the possession of the said property to the purchaser. This MOU was executed on stamp paper of Rs.20/. At the relevant time, i.e., in year 1996, had the MOU been treated as conveyance in terms of Article 25 of the 1st Schedule to the said Act, the stamp duty payable thereon would be in the range of 10% ad valorem, which would correspond to approximately Rs.2,20,000/. The explanation 'I' provides that for the purposes of Article 25, where in the case of agreement to sell an immovable property, the possession of any immovable property is transferred or agreed to be transferred to the purchaser before the execution, or at the time of execution, or after the execution of, such agreement then such agreement to sell hall be deemed to be conveyance and stamp duty thereon shall be leviable accordingly.
4] After a period of about ten years, i.e., on 17 July 2006, the predecessor in title of the petitioners entered into a conveyance for the transfer of the said property. This conveyance was executed on stamp paper of Rs.1,10,000/and duly registered with Sub-Registrar of Assurances, Mumbai on 22 August 2006. It is pertinent to note that in the year 2006, the stamp duty payable on conveyance was 5% ad valorem. Accordingly, upon the market value of Rs.22,00,000/, the stamp duty payable was Rs.1,10,000/. 5] It is the case of the petitioners that their predecessor in title had on 28 June 2006 lodged the unexecuted Deed of Conveyance dated 17 July 2006 for adjudication, in order to determine the stamp duty thereon. In the unexecuted Deed of Conveyance, there was a clear reference made to the MOU dated 26 September 1996. The Adjudicating Officer, upon determination of the market value of the said property at Rs.22,00,000/, had determined the stamp duty payable as Rs.1,10,000/, in terms of ad valorem rate applicable in the year 2006. According to the petitioners, such determination is relatable to the provision of section 4 of the said Act, including in particular such subsection (2) thereof, which gives a statutory option to the parties to determine for themselves which of the instruments used in a single transaction of sale, shall, for the purposes of subsection (1), be deemed to be the principal instrument. The
