IMPORTANT POINT
Whether a machinery embedded in the earth can be treated as movable or immovable property depends upon the facts and circumstances of each case. The Court considering the said question will have to take into consideration the intention of the parties which embedded the machinery and also the intention of the parties who intend alienating those machinery.

Headnote:(i) Registration Act, 1908-Section 2(6)-Stamp Act-Immovable property-Plant and machinery -When would amount to immovable property?-Test.
       Held : The question whether a machinery which is embedded in the earth is movable property or an immovable property, depends upon the facts and circumstances of each case. Primarily, the court will have to take into consideration the intention of the parties when it decided to embed the machinery whether such embedment was intended to be temporary or permanent. (Para 8)
       In the instant case a Company executed a conveyance deed transferring on an "as is where is" basis and "as a going concern" its fertilizer business of manufacturing, marketing distribution and sale of urea fertilizer. The issue was whether plant and machinery installed for the purpose of the business was immovable property so as to attract Indian Stamp Act.
       Held : A careful perusal of the agreement of sale and the conveyance deed along with the attendant circumstances and taking into consideration the nature of machineries involved clearly shows that the machineries which have been embedded in the earth to constitute a fertiliser plant in the instant case, are definitely embedded permanently with a view to utilise the same as a fertiliser plant . The description of the machines as seen in the Schedule attached to the deed of conveyance also shows without any doubt that they were set up permanently in the land in question with a view to operate a fertilizer plant and the same was not embedded to dismantle and remove the same for the purpose of sale as machinery at any point of time. The facts as could be found also show that the purpose for which these machines were embedded was to use the plant as a factory for the manufacture of fertiliser at various stages of its production. Hence, the contention that these machines should be treated as movables cannot be accepted. Nor can it be said that the plant and machinery could have been transferred by delivery of possession on any date prior to the date of conveyance of the title to the land. (Para 8)
       (ii) Indian Stamp Act, 1899-Sections 27 r/w Section 47A(2)-Valuation by Collector-Agreement to sell fertilizer manufacturing business on as is where is basis-Subsequent conveyance deed-Value of plant and machinery not included in sale consideration - Collector taking into consideration value of plant and machinery also-Plea that plant and machinery were not immovable property and could not be taken into consideration-Not tenable-Plant and machinery permanently embedded on earth-Intention of parties important-Vendor conveyed title not only in regard to land but also entire fertilizer business including plant and machinery standing on land-Authorities justified in taking into consideration value of plant and machineries along with value of land . (Paras 8, 10, 11 and 12)
       (iii) Indian Stamp Act, 1899-Section 27 r/w Section 47A(2)-Valuation by Collector-Collector constituting Enquiry Committee for evaluation-After receipt of report, reconstitution of Committee and finally fixing value thereafter-Constitution and reconstitution of more than one Committee cannot be found fault with . (Para 14)

JUDGMENT

Santosh Hegde, J.-A Deed of Conveyance dated 9.6.1994 executed by a company named ICI India Ltd. in favour of Chand Chhap Fertilizer and Chemicals Ltd. when presented for registration, the concerned Registrar referred the said document under Section 47-A(II) of the Stamp Act to the Collector complaining of the non compliance of Section 27 of the said Act and praying for proper valuation to be made and to collect the stamp duty and penalty payable on the said document. The Collector after inquiry levied a stamp duty of Rs. 37,01,26,832.50 and a penalty of Rs. 30,53,167.50. The said order came to be challenged by the aggrieved party in a revision under Section 56 of the Stamp Act before the Chief Controlling Revenue Authority in Stamp Revision No. 36/95-96 and the said Revisional Authority as per his order dated 4.4.95 partly allowed the challenge and so far as the imposition of penalty was concerned the same was set aside and sightly modified the stamp duty levied by the Collector. Consequent to the order of the Revisional Authority, the appellant herein became liable to pay stamp duty on the said Deed of Conveyance amount to Rs. 36,68,08.887.50. This order of the Revisional Authority came to be challenged before the High Court in Civil Misc. Writ Petition No. 9170/95 which came to be dismissed and as against this order of the High Court of Judicature at Allahabad dated 7.7.1997, the appellant has preferred the above civil appeal.

2. Briefly stated, the facts leading to the controversy in question are as follows:

ICI India Ltd., a company registered under the Companies Act, 1956 executed an agreement of sale dated 11.11.1993 wherein it agreed to transfer on an "as is where is" basis and "as a going concern" its fertilizer business of manufacturing, marketing, distribution and sale of urea fertilizer in favour of Chand Chhap Fertilizer and Chemicals Ltd. (hereinafter referred to as `the CCFCL ) also a company incorporated under the Companies Act, 1956 which company has since been renamed as M/s. Duncans Industries Limited, Fertilizer Division, Kanpur Nagar (the appellant herein) for a total sale consideration of Rs. 70 crores which was termed as "slump price" in the agreement. The said agreement also stated that the vendor would on the "transfer date" transfer the fertilizer business by actual delivery of possession to the CCFCL in respect of such of the estates and properties mentioned in the agreement as were capable of being transferred by actual and/or constructive delivery and in respect of the estates requiring transfer by execution of necessary documents vesting the title thereof in CCFCL, and it was further agreed and declared that the ownership in respect of the assets and properties comprised in the "fertilizer business" to be transferred as per the agreement, would be deemed to be vested in CCFCL on and from the "transfer date" which, according to the agreement means 1.12.1993 or such other date as may be agreed to by and between ICI India and CCFCL. The term "fertilizer business" was defined to mean and include the following other properties:

"(i) Demised land being plot Nos. 2B and 5 and the sub-divided portion of plot No. 2 demarcated and admeasuring in the aggregate an area of 243.4387 acres equivalent to 9,85,159.50 sq. mtrs. Being the unshaded portion shown on the plan annexed hereto together with the buildings and structures thereon forming part of the fertilizer business as on the Transfer Date;

(ii) freehold land and residential building thereon with the name "Chandralok", situate at plot No. 4/284, Parbati Bangla Road, Kanpur comprising 94 residential flats;

(iii) freehold land and residential building thereon with the name "Chandrakala" situate at Navsheel Apartments, 56 Cantonment, Kanpur comprising a Guest House on the ground floor and 3 residential flats on the first floor;

(iv) Plant and machinery relating to the Fertilizer bus

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1999 Supreme(SC) 1428

Cases Referred (3)