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2024 Supreme(Online)(MAD) 15216
HIGH COURT OF MADRAS
N. SATHISH KUMAR, J
CYBERCITY BUILDERS AND DEVELOPERS PRIVATE LIMITED – Appellant
Versus
THE INSPECTOR GENERAL OF REGISTRATION – Respondent
An agreement for a future lease contingent on construction cannot be treated as a lease for the purpose of stamp duty; hence, impounding was invalid.
Headnote:
Stamp Duty - Leave and License Agreement - Indian Stamp Act - Sections 33, 38, 40, 42, 105 - The court determined that the impounding of the leave and license agreement was improper as no lease could exist without an actual building; thus, the petitioner was entitled to the return of the document and refund of stamp duty paid.
Fact of the Case:
The petitioner entered a leave and license agreement for developing a property into a mall. The agreement specified future rent and the construction timeline. The agreement was impounded on grounds of being treated as a lease deed, prompting the petitioner to seek cancellation and refund of stamp duty.
Finding of the Court:
The court found that as there was no existing building at the time of the agreement, the document was not a lease but a contingent agreement. The impounding was ruled invalid and the petitioner was entitled to a refund of the stamp duty paid.
Issues: Whether the leave and license agreement was properly impounded as a lease and if the petitioner was eligible for a refund of the stamp duty paid.
Ratio Decidendi: The court held that impounding was not valid without an existing property to form a lease, thereby establishing that a contingent agreement could not be treated as a lease deed for stamp duty purposes.
Final Decision: The writ petition was allowed, quashing the impugned order and entitling the petitioner to a refund of the stamp duty.
ORDER
Challenge has been made to the impugned proceedings dated
01.12.2023, quash the same and direct the first respondent to return the document bearing No.328/2023 pending on the file of third respondent. 2. It is the case of the writ petitioner that the petitioner company sold land admeasuring an extent of 1 acre 12 cents to the 4th respondent. The 4th respondent entrusted the development of the property into a mall to the petitioner and for that purpose a leave and license agreement was entered into between the petitioner and the fourth respondent. The said leave and license agreement stipulated that the object of th deed was about a future lease on a building which would come up in the future with the lease commencing after completion of Building (Estimated completion time-line is Two years from the date of agreement) at a monthly rental of Rs.1,22,50,000/- for a period of nine years starting from 10.08.2026. According to the petitioner, the building itself is intended to be taken on leave and license has not come into existence and the agreement is only a promise to enter into lease once the buildings are put up. The agreement is only for a future transaction between the petitioner and the fourth respondent. When the said leave and license agreement was presented for registration before the 3rd respondent a sum of Rs.41,300/- was paid towards registration charges and a sum of Rs.4,00,000/- towards stamp duty.
3. The 3rd respondent impounded the leave and license agreement stating that the terms of the agreement were found to be in the form of lease agreement and sought for payment of stamp duty of Rs.1,63,13,725/-. A show cause notice was issued on 04.09.2023 and it was replied on 11.09.2023 pointing out that there did not exist any demised premises and that the premises would come into existence only at a future date and therefore, the deed was not that of a lease deed but a deed of agreement for a future lease. However, the respondent has passed the impugned order and the petitioner has sought cancellation of the document and sought for refund of the amount paid. Challenging the same, this writ petition is filed.
4. In the counter, it is the stand of the second respondent that the leave and license agreement dated 10.08.2023 executed between the petitioner and the fourth respondent for a period of 9 years was presented fore registration on 10.08.2023. The said document provides that the rent payable for the first 3 years is Rs.12,25,000/- and for the second 3 years is Rs.1,40,87,500/- and for the third 3 years is Rs.1,62,00,625/- and advance deposit as Rs.10,00,00,000/-. The third respondent impounded the same as it is not duly stamped. A show cause notice was issued on 04.09.2023 claiming deficit stamp duty and after considering the reply furnished by the petitioner, by order dated 18.10.2023 confirmed the order of the third respondent to the tune of Rs.1,92,59,800/-. The petitioner presented a representation seeking to cancel the document and refund the stamp duty. It is their contention that without exhausting the revision under Section 56(1) of the Indian Stamp Act before the Chief Controlling Revenue Authority cum Inspector General of Registration, thus, this writ petition is not maintainable. The question of canceling the document is not at all envisaged in the statute. According to them, once the document is impounded, the document cannot be returned unless the deficient stamp duty is paid. Thus, opposed this writ petition.
5. Mr.Sharath Chanrdan, learned counsel for the petitioner submitted that the issue is no longer res integra. This Court in the case of Purushotham Nath Rallan vs. Inspector General of Registration reported in 2018 (1) CTC 309 has held that when the document is impounded and the executant is not willing to pay the stamp duty and go for registration, the document should be released. According to him, the said judgment has been upheld by the Division Bench of this Court in W.A.No.1763 of 2019, b
