The classification of a lease deed under the Rajasthan Stamp Act determines its stamp duty requirement; ownership does not transfer under a lease agreement.

21/05/2025 AVNEESH JHINGAN, J:-

1. This petition is filed aggrieved of orders dated 14.06.2005 and 23.02.2007 passed by the Collector (Stamps), Ajmer and the Rajasthan Tax Board respectively holding the lease deed dated

17.09.2003 to be an agreement to sell.

2. Brief facts are that the petitioner - Hindustan Petroleum Corporation Limited (for short ‘HPCL’) took a plot measuring

1505.02 sq. mtrs. on lease in Khasra No.248 in Village Tolamal, Patwar Circle Badgav, Tehsil Kishangarh, Ajmer. The lease deed was for nineteen years. For the first ten years, the rent of Rs.15000/- per month was to be paid and Rs.25,000/- per month for remaining nine years. The lease deed was executed between HPCL and Balbir Singh Arora (hereinafter referred to as ‘lessor’). The lease deed was presented before the Sub-Registrar, Kishangarh on 02.12.2004 for registration. The Registrar classified the documents as agreement to sell with handing over of possession and calculated the stamp duty on commercial basis and created a demand of Rs.61,370/-. The order was upheld by the Board hence, the present petition.

3. Learned counsel for the petitioner submits that the lease deed was for nineteen years and there was no transfer of the ownership. In case of default of payment of rent or breach of conditions, the lease was liable to be cancelled. It is argued that the lease deed was covered under Article 33 of Schedule to the Rajasthan Stamp Act, 1998 (for short ‘1998 Act’) and was wrongly considered under Article 21 of the 1998 Act.

4. Learned counsel for the respondents submits that the rights to sub-lease, give license and usage as per the purpose mentioned in the lease deed were with HPCL and no consent of lessor was required. The contention is that the lessor could not have sold the land before expiry of nineteen years and in case of an intention to sell, the priority was to be given to HPCL.

5. Before proceeding further, it would be relevant to reproduce the relevant clauses of the lease deed:-

“(d) That the lessor shall, on the written request of the Lessee, made before the expiry of the term hereby created and if there shall not at the time of such request, be any existing breach of non-observance of any of the covenants on the part of the Lessee hereinbefore contained, grant to the Lessee a Lease of the demised premises for the further term of 19 years from the expiration of the said term at the rent as actually agreed at that time and containing the like covenants and provisos as are herein contained.

xxx xxx xxx (d) If any rent shall be in arrears for more than 90 days (after being demanded) or if the Lessee shall omit to perform or observe any covenant or condition on the part of the Lessee herein contained and shall continue to breach or omit or neglect to do so for 90 days after receipt of notice thereof by the Lessee, the Lessor may determine the lease by giving a notice of 30 days and the lease shall thereupon determine, but without prejudice to any claim which either parties hereto may have against the other in respect of any breach, non performance of any of the covenants and conditions herein contained.

(e) The Lessee shall be at liberty to determine this agreement by giving to the Lessor three months’ notice in writing expiring at any time during the currency of this agreement.”

6. The ‘Sale’ under Section 54 of the Transfer of Property Act, 1882 (for short ‘1882 Act’) is defined as transfer of ownership for consideration paid or promised to be paid and covers part-

payment.

6.1. The definition of ‘Lease’ under Section 105 of 1882 Act has been adopted in the 1998 Act. The definition in 1882 Act is reproduced below:-

“105. Lease defined.- A lease of immovable property is a transfer of a right to enjoy such property,