SUPREME COURT OF INDIA
Prasad Technology Park Private Limited
Vs
Sub-Registrar
Civil Appeal No.7305 of 2005
(S.B.Sinha and P.K.Balasubramanyan)
08/12/2005
S.B. SINHA, J.
1. Leave granted.
2. Whether execution of a supplementary agreement entered into by and between
the Appellant and the Third Respondent herein would amount to a transfer so as
to attract stamp duty payable in terms of Article 5(d) of the Schedule appended
to the Karnataka Stamp Act, 1957, consequent upon the change of the name of the
erstwhile company to the Appellant Company is the question involved in this
appeal.
3. The basic fact of the matter is not in dispute. One "Prasad Garments
Pvt. Ltd." was a company registered under the Companies
Act, 1956. On or about 05.03.1999, it entered into a lease-cum-sale
agreement with the Third Respondent herein upon payment of premium of a sum of
Rs.14,49,453, which amounted to 99% of the tentative cost of the land and one
yearly rent of 966/- for a period of eleven years computed from 25.06.1997. The
name of the said company, however, was changed to "Prasad Technology Park
Pvt. Ltd."
4. The Appellant presented the said instrument for registration before the
First Respondent herein on a stamp paper of Rs.100/-. The First Respondent,
however, was the opinion that the stamp duty on the total amount of the
original lease deed as mentioned in the lease deed dated 05.03.1999 was
required to be paid. In response to a notice served in this behalf on the
Appellant, a show cause was filed contenting that the supplementary agreement
is merely a deed of rectification. The said contention was, however, rejected
by the Deputy Commissioner of Stamps by an order dated 26.10.2000, holding:
"As per the above said amendment, the original document since the
changes in the legal effect of the instrument and hence the Supplementary
agreement document in question subjected to the entire material alteration. In
this regard, it held in the similar cases in 1939 (2) MIJ 683, 50 LW 746
1936 AIR(Rang) 136, 1939 AIR(Cal) 181, the honourable courts held
(recorded in the Krishnamurthy's Indian Stamp Act, or VII Edition's page 133 in
Note 9). Therefore, in the present "Amendment or Supplementary Agreement",
it is opined that the Fixed Deposit and annual rent as per Appendix 5(d), it is
required to pay entire stamp fee. Hence, the following order: *
ORDER
No. DR. I /47/00-01 Dated 26.10.2000
Taken into consideration of all the above said points, I the Deputy Commissioner
of Stamps, exercising my power vested under Section 39 of the Karnataka Stamps
Act, 1957, the present Document of "Supplementary Agreement" vide
P.24/2000-01 dated 5.3.99 original document of Lease-cum-Sale Agreement
mentioned Fixed Deposit of Rs.14,49,593.00 and Annual rent of Rs.966-00
totaling to Rs.14,50,559.00 as per the Appendix 5(d) has to pay Stamp fee of
Rs.1,45,100.00 along with fine of Rs.5.00, totaling to Rs.1,45,105.00 hereby
directed to make payment." *
5. Aggrieved by and dissatisfied therewith, a writ petition was filed by the
Appellant before the Karnataka High Court, which came to be dismissed by reason
of an order dated 11.08.2003 passed by a learned Single Judge opining:
"..But unfortunately for the petitioner the supplementary agreement
sought to be registered as entered into between the 3rd respondent Lessor and
the petitioner Lessee with the terms of the lease being the same as had been in
the earlier lease deed that had come to be executed in favour of the
petitioner-company in its earlier name as evidenced by the agreement dated 5th
March 1999. These terms are sought to be incorporated into the subsequent
agreement which is known as supplementary agreement dated 24th April,
2000." *
6. The Appellant herein preferred an intra court appeal there-against, which
was also dismissed by the impugned judgment, stating:
"In the instant case, earlier the name of the appellant-Company was
Prasad Garments Pvt. Ltd., which is now changed to Prasad Technology Park Pvt.
Ltd. On account of change of name of the Company, a supplementary agreement was
entered into between the M/s Karnataka Industrial Areas Development Board and
the appellant-Company. So far as the argument of non-payment of stamp duty is
concerned, the same is not acceptable. It cannot be said that the supplementary
lease agreement is also an instrument under which the appellant-Company claims
certain leasehold rights from the Board, and therefore, it is liable to pay the
stamp duty and cannot escape payment of stamp duty. The learned Single Judge
having found no illegality in the order of the 2nd respondent, considering the
material on record and case laws relied on, by a detailed order, has dismissed
the writ petition. *
In our view, the appellant-Company cannot escape its liability to pay the
stamp duty under the supplementary agreement since- there is transfer of
interest in the Company, which the appellant-Company can claim under the 3rd
respondent..." *
7. Mr. S.K. Kulkarni, the learned counsel appearing on behalf of the Appellant,
at the outset, drew our attention to the definition of instrument as contained
in Section 2(1)(j) of the Karnataka Stamp Act, 1957 and would submit that
having regard to the fact that no element of transfer was involved in execution
of the said supplementary agreement, Article 5(f)(i) of the Appendix appended
thereto would be attracted and not Article 5(d) thereof as has been held by the
Deputy Commissioner of Stamps.
8. Mr. Sanjay R. Hegde, the learned counsel appearing on behalf of the First
and Second Respondents, on the other hand, would submit that having regard to
the fact that the nature of business of the company was also altered inasmuch
as whereas by the earlier instrument the demise of the premises was made only
for the purpose of manufacture of readymade garments and leather garments, the
lessee now has been permitted to establish a software park; the instrument in
question must be held to be one of lease. Our attention, in this behalf, has
been drawn to clauses 2(n) and 2(q) of the original deed of lease, which are as
under:
"2(n) To use the demised premises only for the purpose of Manufacture
of Ready Made Garments or Leather Garments factory/industry and not to use the
demised premises or any part thereof for any other purpose nor for the purposes
of any factory which may be obnoxious, or offensive by reason of emission of
odour, liquid `effluvia', dust, smoke, gas, noise vibrations or fire hazards.
2(q) The Lessee shall not alienate the demised premises or any part thereof or the
building, that may be constructed thereon during the period of lease. The
Lessee may mortgage the right, title and interest in the demised premises in
favour the Government of Karnataka or the Central Government or Corporate
bodies like Life Insurance Corporation of India, Karnataka State Industrial
Investment and Development Corporation, Karnataka State Financial Corporation,
Industrial Finance Corporation of India, Industrial Development Bank of India,
Industrial Credit and Investment Corporation of India, Unit Trust of India,
Trustees of Debentures Stock of Banks to secure moneys advanced by such
Government or bodies for the erection of building, plant and machinery.
However, the Lessee shall obtain the No Objection Certificate from the Lessor
in writing for creation of second and subsequent charges." *
9. Change of the name of a company can be allowed by the Registrar of the
Companies in terms of Section 21 of the Companies Act. Once such a name is
permitted to be changed, a certificate is issued in terms of Section 23
thereof.
10. The Appellant indisputably was permitted by the Third Respondent herein to
establish a software park. The execution of supplementary agreement, it has
categorically been stated, became necessary consequent upon the change in the
name of the company. By reason of such supplementary agreement although it was
permitted to establish a software park but by reason thereof no fresh
transaction was entered into. We have noticed hereinbefore that in terms of the
aforementioned agreement dated 05.03.1999, the land in question was demised for
a period of eleven years with effect from 25.06.1997 on payment of premium
fixed thereunder as also on yearly lease rent stipulated thereby.
11. The said lease indisputably was governed by Section 105 of the Transfer of
Property Act. By reason of the supplementary agreement, a restrictive covenant
has been amended in terms whereof the Appellant herein was permitted to carry
on the business of a Technology Park instead of manufacture of readymade garments/leather
garments. Only because the name of the company was changed, the same would not
mean that a fresh transaction took place. Having regard to the change in the
name of the company, the Appellant's name was sought to be substituted in the
original agreement. The period of the lease, the quantum of the premium paid
and other terms and conditions remained unaltered except the restriction
contained in clause 2(q) of the said deed, was removed. By reason of mere
change of user from carrying on one business to another, it is trite, a fresh
transaction does not take place. The terms conditions of the lease can be
changed by mutual consent. Unless the essential ingredients thereof as
contained in Section 105 of the Transfer of Property Act are not altered, it
cannot be said that the parties to the contract entered into a fresh
transaction. The Third Respondent merely reserved unto itself a right of
reentry on expiry of the said period of eleven years. It could in terms of the
covenant of the lease also extend the period of tenancy or terminate the same.
Unless the lease itself came to an end, the third respondent did not have any
right to re-convey the property. By reason of mere change in the name of the
company "Prasad Garments Pvt. Ltd." the erstwhile lessee also cannot
be held to have transferred its leasehold interest in favour of the Appellant
herein.
Section 2(i)(j) of the Act, defines 'instrument', to mean:
"2(l)(j) "Instrument" includes every document and record
created or maintained in or by an electronic storage and retrieval device or
media by which any right or liability is, or purports to be, created,
transferred, limited, extended, extinguished or recorded;" *
12. Execution of an instrument which would attract payment of stamp duty in terms
of Article 5(d) of the Act must involve transfer of the property or otherwise a
right or liability may inter alia be created, transferred etc., as envisaged in
Section 3 thereof. Once it is held that the supplementary agreement is neither
a deed of lease nor a deed of sale within the meaning of Section 105 or Section
54 of the Transfer of Property Act, as the case may be, Article 5(d) of the
schedule to the Act will have no application. If Article 5(d) has no
application, indisputably the residuary clause contained in Article 5(f)(i)
would have. The Appellant admittedly paid the stamp duty in terms thereof.
13. It is now well settled that for the purpose of levy of stamp duty, the
real and true meaning of the instrument must be ascertained. # [See The Madras
Refineries Ltd. vs. The Chief Controlling Revenue Authority, Board of Revenue,
Madras (relied on).
14. The High Court held that 'the supplementary lease agreement cannot be
said to be an instrument whereunder the Appellant-Company claims certain leasehold
from the Board; but having did so, the High Court was not correct in holding
that it is liable to pay the stamp duty. #
15. Having regard to the fact that the entity of the Appellant cannot be
said to be totally different from Prasad Garments Pvt. Ltd. and as by reason of
the supplementary agreement, no fresh transaction has been entered into, the
impugned judgment cannot be sustained, which is set aside accordingly. # The
appeal is allowed. The Appellant shall be entitled to costs.