The court ruled that a development agreement can be classified as a conveyance for stamp duty purposes if it transfers substantial rights and interests in property, emphasizing the importance of the instrument's substance over its form.

JUDGMENT : 

1. The present case raises an important question under the Maharashtra Stamp Act , 1958: How does one distinguish between an instrument of conveyance and a development agreement for the purpose of stamp duty?

2. The petitioner has instituted the present Writ Petition under Article 227 of the Constitution of India, assailing the legality, validity, and propriety of the judgment and order dated 3rd June 2017 passed by Respondent No.2 in the purported exercise of powers conferred under Section 53A of the Maharashtra Stamp Act , 1958 (hereinafter referred to as “the Stamp Act”). By the impugned judgment and order, Respondent No.2 dismissed the appeal preferred by the petitioner, which challenged the earlier order dated 25th February 2016 passed by the Joint District Registrar Class-I and Collector of Stamps (hereinafter referred to as “the Collector of Stamps”). In the said order, the petitioner was directed to remit a deficit stamp duty of Rs.5,84,900/- pursuant to the Audit Objection Report submitted by the Comptroller and Auditor General of India. Furthermore, the petitioner was saddled with a penalty of Rs.11,69,800/-, on the premise that the instrument in question is governed by Article 25 of the Schedule to the Maharashtra Stamp Act , 1958, rather than Article 5(g-a).

3. The material facts and circumstances giving rise to the present Writ Petition, in brief, are set out hereinbelow for the sake of clarity and convenience.

4. The dispute pertains to land bearing Survey No.30/1, admeasuring 3H 27.5R, situated at Village Kune, Taluka Maval, District Pune (hereinafter referred to as “the subject land”). The owner of the subject land had moved an application under Section 44 of the Maharashtra Land Revenue Code, 1966, seeking conversion of the said agricultural land into non-agricultural (NA) use. Pursuant thereto, by order dated 11th October 1999, the Additional Collector, Pune, granted permission for non-agricultural use, subject to certain stipulations set forth therein. In furtherance of the said permission, the owner executed a registered Development Agreement on 21st October 2005 in favour of the petitioner, coupled with a Power of Attorney. Under the said Development Agreement, the petitioner was conferred with the right to develop the subject land against consideration of Rs.11,50,00,000/- (Rupees Eleven Crore Fifty Lakh Only). The petitioner was also empowered to convey and assign the right, title, and interest in the subject land in favour of a developer or its nominee, which might include a cooperative society or association of purchasers, as circumstances required. Simultaneously, the Power of Attorney was duly registered on 21st October 2005. At the material time, the stamp duty of Rs.100/-, being the fixed duty applicable under Article 5(g-a) of the Stamp Act, was paid.

5. In consequence of the Development Agreement and Power of Attorney executed in its favour, the petitioner proceeded to execute sale deeds with various third-party purchasers. However, by a notice dated 24th March 2006, the Comptroller and Auditor General of India, through its Audit Objection, sought an explanation from the petitioner regarding alleged insufficiency of stamp duty. Upon receiving the petitioner’s reply, the said objection was initially withdrawn. Subsequently, on 29th April 2015 and 28th September 2015, the petitioner received fresh notices, wherein a deficit payment of stamp duty amounting to Rs.5,84,900/- and a penalty of Rs.11,69,800/- were demanded, based on the communications issued by the Joint District Registrar.

6. Aggrieved by the said notices and the ensuing demand for deficit duty and penalty, the petitioner preferred an appeal under Section 32A(4) of the Stamp Act before the Joint District Registrar. The petitioner contended that the subject instrument did not, in any manner, transfer ownership rights and was merely in the nature of a Development Agreement, thereby falling squarely within the ambit of Article 5(g-a)