IMPORTANT POINT
Release deed by which a partner or partners release their rights and interest in partnership in favour of remaining partners or Firm does not amount to conveyance and stamp duty cannot be demanded on that basis.

Rajan Roy, J.—Heard Shri Manish Singh along with Shri Azhar Ikram, learned counsel for the petitioner and Shri Jagdish Prasad Maurya, learned Additional Chief Standing Counsel for the State.

2. This is a writ petition under Article 226 of the Constitution of India challenging an order passed by the Additional District Magistrate, Finance and Revenue under Section 47-A read with Section 33/38 of the Indian Stamp Act, 1899 (For short ‘‘the Act, 1899’) as amended for its application to the State of U.P. as well as the revisional order passed under Section 56 of the said Act, 1899, affirming the same.

3. The facts of the case in brief are that a partnership Firm in the name and style M/s Onkar Rice Mills was in existence since prior to independence. The partnership was at Will. Shri Ram Autar and Shri Ram Tirath were two of the 7 partners of the said Firm. Movable properties were purchased by the Firm in the name of these two partners on 15.06.1964 and they were made part of the capital pool of the partnership Firm about which there is no dispute. On 13.09.1994 out of the seven partners four, namely, Shri Sita Ram, Shri Jai Bhagwan, Shri Ram Autar and Shri Atul Kumar retired and a retirement deed to this effect was executed, a copy of which is annexed as Annexure No. 6 to the writ petition. Consequently, the Firm was reconstituted with 3 continuing/remaining partners and 5 new partners and a deed to this effect was executed on 14.09.1994 a copy of which is also annexed as Annexure No. 7 to the writ petition.

4. Consequent to the aforesaid events an alleged release deed dated 21.11.1994, a copy of which is annexed as Annexure No. 8 to the writ petition, was executed by the retiring partners. The release deed (Dast Bardarinama) contains the details of the property measuring 1 acre 9 decimal and building situated thereon in respect of which the retiring partners were relinquishing their claims, rights and interests as already mentioned in the retiring deed.

5. On a perusal of the release deed conjointly with the two sale deeds dated 15.06.1964, copies of which are also annexed as Annexure No. 2 and 3, the Court finds that the properties mentioned in the release deed were the same which were purchased on 15.06.1964.

6. It appears that some audit objections were raised by the Office of the Accountant General Allahabad, U.P. with regard to stamp duty paid on the release deed @ Rs.190, accordingly, the matter was referred by the Deputy Registrar to the Collector/ A.D.M., Lakhimpur Kheeri under Section 38 and 47-A of the Indian Stamp Act, 1899 as applicable to the State U.P., whereupon, notices were issued to the petitioner treating the deed to be a conveyance deed and liable to be Stamped accordingly. Objections were filed by the petitioner stating that the deed in question was not a conveyance deed but a release deed, therefore, referable to Article 55 of Schedule- I-B of the Act, 1899 as applicable to the State of U.P. and not to Article 23(a) of Scheduled-I-B of the Act, 1899.

7. Ultimately, the A.D.M., Finance and Revenue/ Collector, Stamps passed an order dated 27.02.1998 in case No. 719/96-97 holding that in view of Article 23 Schedule I-B read with the definition of conveyance in Section 2(10) of the Act, 1899 the deed in question was a conveyance deed upon which stamp was payable accordingly as per Article 23(a) of Schedule I-B and not Article 55. Consequently, the market value of the property was determined at Rs.2,38,62,000/- and deficiency of stamp was determined at Rs.29,82,560/-.

8. Being aggrieved the petitioner herein filed a revision before the Commissioner under Section 56 of the Act, 1899. The said revision was dismissed on 31.07.2003 and the order of the A.D.M., Finance and Revenue was affirmed.

9. Being further aggrieved the petitioner herein filed this writ petition before this Court on 11.08.2003 chal