Cost of repairs fall within premium in Article 35(c).

VEERASWAMI, C. J. :- This is a reference under S. 57 of the Indian Stamp Act, 1899, the question being:

"Whether the cost of the repairs, additions and improvements to be effected on the premises by the lessees would fall 'within premium or for money advanced' in addition to rent received."

One Abdul Jameel, the first respondent, who is the owner of premises No. 22 Errabalu Chetty St., G. T. Madras, entered into an agreement of lease with the second respondent in respect of a major portion of the premises on a monthly Tent of Rs. 5000. The lease is dated 22-6-1964 and was, in the first instance, for a period of 20 years with an option to renew it for a further period of 7 years. Clauses 7 and 8, which in effect give rise to this reference read :

"Cl. 7: The lessee shall effect the repairs and make additions and improvements at their own cost, at a cost not less than Rs. two lakhs, such improvements and additions shall also include construction of a building in the vacant plot of land in front of the main building including electric installations and the lessor shall sign all applications which are necessary to be made to the Corporation of Madras for effecting the said repairs, improvements and construction. Clause 8. The improvements and additions so made and effected shall belong to the lessor and form an accretion to the demised premises."

The Revenue at the lower stages was of opinion that these two clauses reserved a premium and it should be subjected to additional duty. Art. 35 of the Stamp Act, as amended in Madras, by clause (a) sub-clause (iv) provides that where the lease purports to be for a period of ten years but not exceeding 20 years, the same duty as a conveyance for a consideration equal to twice the amount or value of the average annual rent reserved should be paid. By clause (c) it is provided that where the lease is granted for a fine or premium, or for money advanced in addition to rent reserved, the document will be chargeable with duty as a conveyance for a consideration equal to the amount or value of such fine or premium. This will be in addition to the duty which would be payable under Art. 35(a)(iv). In view of the Revenue below the stage of the Board of Revenue the document attracted charge under both the clauses. That is how the reference has been made before us.

2. The contention for the Revenue is that the two clauses we have extracted provided for an obligation on the part of the lessees and correspondingly a right in the lessor to have repairs, additions and improvements made at a cost not less than Rs. Two lakhs and that this stipulation amounted to a premium. It seems to us that the answer to the reference really turns on the true effect of the two clauses as to whether they stipulated a premium in consideration of the granting of the lease, or constituted but contractual stipulations contrary to the normal rights and obligations as between a lessor and lessee provided for by S. 108 of the Transfer of Property Act, especially in relation to effecting of repairs and improvements or additions being put up.

3. There is a definition of a lease in the Stamp Act, which, however, does not assist us in the present instance. S. 105 of the Transfer of Property Act defines a lease as one of immoveable property in which there is a transfer of a right to enjoy such property, that it is made for a certain term, express or implied, and in consideration -

"of a price paid or promised, or of money, a share of crops, service or any other thing of value, to be rendered periodically or on specified occasions to the transferor by the transferee"

who accepts the transfer on such terms. The price paid or promised, or money, a share of crops, service or any other thing of value to be rendered periodically or on specified occasions would both form part of the consideration for the lease, but the distinction between a premium

and a rent. In the context, lies in the fact that premium is one paid in consideration of