Duty chargeable on the deed of lease.

This is a reference under section 57 of the Indian Stamp Act in respect of a document which was the subject-matter of an earlier reference to this Court (Referred Case No. 23 of 1957). The question then referred for decision was whether the document was to be classified as a lease or a mortgage with possession. This Court was of the opinion that the document was not a mortgage with possession, but a lease, and that it also contained a separate agreement for subrogation. The learned Government Pleader then tried to raise the question as to the proper duty leviable on the document on the footing that it was a lease. We refused to answer that question then because that was not the subject-matter of the reference. Now, the Board of Revenue, as the Chief Controlling Revenue Authority, have made a reference of the question as to what is the stamp duty chargeable for the document.

The point for determination is whether the document would fall within Article 30 (c) of Schedule I-A of the Act, that is, the Stamp Act as amended in Madras. That provision is as follows:

“Where the lease is granted for a fine or premium or for money advanced in addition to rent reserved.”

The material recitals in the document, in our opinion, leave no room for doubt that the document, as a lease, falls within the scope of the above provision. We under-stand the word ‘for’ to mean ‘in consideration of. ‘In the preamble to the indenture, we have the following statement:-

Whereas, with a view to discharge subsisting encumbrances on the property, the Lessor applied to the Lessee for an advance of Rs. 75,000 (rupees seventy-five thousand), agreeing to secure unto the Lessee the due repayment of the sum on the property hereunder described by rights of subrogation and also to grant a lease in favour of the lessee, and the latter consented to grant the advance, interest free, subject to terms and conditions hereunder set out."

The first clause in the operative portion of the document makes it abundantly clear that this advance is the consideration for the lease. The very words "in consideration of the sum of Rs. 75,000" are used. Clause 3 provides for the rent of a sum of Rs. 1,750 per month. Clause 4 empowers the lessee to withhold from and out of the monthly rent of Rs. 1,750 a sum of Rs. 750 per month and appropriate the fame in liquidation of the sum of Rs. 75,000 advanced by him. The first covenant mentioned in clause 6 is the covenant to pay the monthly rent reserved, subject to deduction above referred to. There is therefore both money advanced and al:o rent reserved. It is impossible to contend that the document does not fall within the mischief of Article 30 (c) of Schedule 1-A of the Act.

Cases have arisen, in which the lessee pays the rent for one month or for the entire period of the lease in advance, and there is no other additional sum advanced. Even then, this Court has held that the above provision would apply. In Collector of Madras v. Runacres1, the facts were these. Under the terms of the lease of a house, the tenant agreed to pay a monthly rent of Rs. 250 in advance and to deposit with the landlord a month’s rent, which was to be held as security for future payment of rent. It was held that the lease must be stamped under Article 30 (c) of Schedule I-A of the Madras Stamp (Amendment) Act (VI of 1922) (vide also, Reference under Stamp Act2The early decision Reference under Stamp Act Section 463 was relied on by learned counsel for the party. There, by a document purporting to be a lease, certain land was leased for four years at a lent of Rs. 15 per annum. Out of the total rent, it was stipulated that Rs. 50 should be paid in advance and the balance of Rs. 10 at the end of the term. It was held that the payment of Rs. 50 in advance was not payment of a premium or fine within the meaning of Article 39 (c) of the Indian Stamp Act, 1879. It was also held in that case that a document purporting to be a rent agreement, in and by which th