Back
2011 Supreme(Mad) 1212
2011 (1) CWC 803, 2011 (4) MLJ 478, 2011 WLR 525
High Court of Judicature at Madras
T. RAJA
The National Missionary Society of India, Rep. by its General Secretary, Chennai
Versus
The Inspector General of Registration, Chennai & Another
W.P.No.7319 of 2010 & M.P.No.1 of 2010
Decided on : 04-03-2011
For the Petitioner:M.K. Kabir, SC for A. Dhiravianathan, Advocate. For the Respondents: S. Sivashanmugam, GA.
The main legal point established in the judgment is that the transfer of management of a trust to another trust with similar objectives does not constitute a conveyance attracting stamp duty under the Indian Stamp Act, particularly when there is no consideration involved and the transfer reflects the intention of the trust author.
Headnote:
Stamp Duty - Religious and Charitable Trust - Indian Stamp Act - Section 2(24) r/w Article 58(a)(ii) - Article 62(e) - Summary of Acts and Sections: The court discussed the provisions of the Indian Stamp Act, particularly Section 2(24) r/w Article 58(a)(ii) and Article 62(e), and emphasized the interpretation of 'settlement' and 'conveyance' in the context of trust deeds and transfer of management. The court referred to Full Bench Judgments to establish that the transfer of management of a trust to another trust having similar objectives does not constitute a conveyance attracting stamp duty, and highlighted the intention of the trust author and the absence of consideration as key factors influencing the decision.
Fact of the Case:
The petitioner, a Religious and Charitable Institution, sought to quash the demand for stamp duty under the Indian Stamp Act on the transfer of management of the trust to another trust. The petitioner argued that the transfer did not constitute a conveyance but fell under a different provision of the Act due to the trust's charitable objectives and the absence of consideration.
Finding of the Court:
The court found that the transfer of management of the trust to another trust with similar objectives did not constitute a conveyance attracting stamp duty under the Indian Stamp Act. The court emphasized the intention of the trust author and the absence of consideration as key factors influencing the decision.
Issues: The issues involved the interpretation of provisions of the Indian Stamp Act in the context of the transfer of management of a Religious and Charitable Trust to another trust, and the determination of whether such transfer constituted a conveyance attracting stamp duty.
Ratio Decidendi: The court's decision was influenced by the interpretation of 'settlement' and 'conveyance' in the context of trust deeds and transfer of management, as well as the intention of the trust author and the absence of consideration. The court referred to Full Bench Judgments to establish the legal principles governing such transfers.
Final Decision: The court allowed the writ petition by setting aside the demand for stamp duty, concluding that the transfer of management of the trust to another trust with similar objectives did not constitute a conveyance attracting stamp duty under the Indian Stamp Act.
1. The petitioner has filed the present writ petition seeking issuance of writ of certiorarified mandamus to call for the records of the 1st respondent dated 22.02.2010 passed in Letter No.68443/P1/05 and quash the same and to direct the petitioner not to collect the stamp duty under Section 2(24) r/w Article 58(a)(ii) of the Stamp Act on the documents bearing No.4240 of 2002, registered at the office of Sub-Registrar, Thirupathur.
2. Mr.M.K.Kabir, learned Senior counsel appearing for the petitioner submitted that though the petitioner is a Religious and Charitable Institution registered under the Societies Registration Act, it is engaged in more charitable works, therefore, it is a charitable trust. Whileso, one another Trust, namely, Christukula Ashram, Tirupathur, Vellore District, which is also a Religious Charitable Trust, registered as a Trust, is a Ashram running an Orphanage in order to help the destitute children and also deserted children, who are deserted by the parents. The very purpose of the Ashram is to dedicate its lives to selfless service to the sick and poor, especially among the villages and also to establish institutions and to realise the said purpose, the trust has started and established the Ashram under the name of Christukula Ashram with an object more particularly specified in the Rules and Regulations. The Trust has got property and money, which shall be held by the Trust, of which the Truestees shall be appointed by the Sevaks and there shall be five trustees and out of five trustees, three trustee shall be from Sevaks of the Ashram and two persons outside the Ashram. The Trust deed says further that if at any time, the Ashram Sevaks find themselves unable to run one or both of these institutions, they may discontinue either one or both of them for such time as they deem fit. If at any time the Ashram becomes discontinued or dissolved, three lakhs reserved for the hospital and half lakh reserved for the school shall be handed over to the National Missionary Society of India (hereinafter referred to as "N.M.S.") to be used as detailed in Section X.
3. Further, he contended that when a public charitable and religious trust is unable to carry on its activities in furtherance to its objects, safe provision is made in the Deed itself to handover the management of the trust to another trust/society having similar objectives. The purpose is to ensure that the charitable institution should not be dissolved, but charity should continue to reach the beneficiaries, who are the public at large. Only in view of the difficulties faced by the trustees as per the conditions stipulated in the trust deed, for the reason that the trustees have become weak in view of their old age, it was decided to give effect to the objective and purpose of the trust by handing over the management of the trust to another trust having the similar objectives. On that basis, when the management or the trusteeship was handed over to another trust or society having similar objectives, the said handing over of the management or the trusteeship would not constitute transfer of immovable property within the meaning of conveyance, but would fall under Article 62(e) of the Stamp Act, because the transfer of Trusteeship is in pursuant to the object of the trust and in consonance to the provisions of the Income Tax Act without involving selling of properties of the trust and appropriate the sale consideration and as such, the maximum duty payable is Rs.30/-. But in the present case, Rs.90+210 were paid as duty, but, surprisingly, the registering authority after registering the same, demanded a sum of Rs.70,000/- vide letter No.1670/A1/1999, dated 26.04.2001, without even giving full particulars, viz., under what provision, the said amount of Rs.70,000/- was calculated. After the payment of Rs.300/- (90+210), though the document was released on 31.10.2002, by notice dated 04.06.2004, a further sum of Rs.21,16,779/- consisting of Rs.19,
