M/s Shweta Infrastructure and Housing (I) Pvt. Ltd. v. State of Maharashtra and ors.

13. Mr. Bhushan Deshmukh, learned counsel for the Petitioner would submit that at the time of registration of the subject instrument, stamp duty has been accepted under Article 25 being the Article for conveyance and the instrument being an agreement for sale would fall under the definition for conveyance as well as the proviso to Section 48(1) of the Stamp Act.

14. He draws this Court’s attention to the various clauses in the said instrument to submit that it is an agreement for sale and not a development agreement. He would submit that, if the agreement is read as a whole it can be seen that: a. The title/ nomenclature of the instrument is Agreement for Sale. b. The Recital (IV) of the instrument inter alia states that the vendor being one of the parties are writing the instrument as they want to sell the property which came to the knowledge of the Purchaser. c. The operative part of the agreement starts from the terms and conditions, as per the operative clause (II) it is mentioned that the consideration for the transfer of the above property is Rs.51,51,50,000/- (Rupees Fifty One Crores Fifty One Lakhs Fifty Thousand only). The said Clause further reads that the property is agreed to be purchased for the consideration ….. d. Operative (V) states that the Purchaser i.e. the first party (Petitioner ) has paid the amount of Rs.1,51,50,000/- (Rupees One Crore Fifty One Lakhs and Fifty Thousand only) prior to the execution of the instrument and the balance of Rs.50,00,00,000/- (Rupees Fifty Crores only) is to be paid on or before 30th April 2017, whereafter the second party being the Vendors are to execute conveyance/sale deed of the property in favour of the Purchaser i.e. the first party i.e. the Purchaser being the Petitioner. e. Operative (VII) further states that the property is sought to be purchased by the first party and it is for the said transaction the Agreement of Sale is executed for the purchase of the property by the first party i.e. the Purchaser.

15. He submits that the above clauses clearly demonstrate that the transaction contemplated is of an absolute sale and not grant of development rights as alleged.

16. With respect to the clauses relied upon by the Respondents to submit that the said instrument/document is a Development Agreement, it is submitted that clauses VIII to XII only disclose the parties’ intentions about the transaction contemplated in the instrument. The intention disclosed by the parties is that transaction under the instrument is for a sale. The reference to development in the said instrument is in the nature of a disclosure as to what the Purchaser wishes to do on the property, post acquisition. The rights granted for development are only a facility to the Purchaser to obtain approvals by the time the sale is concluded. Such a condition does not alter an Agreement for Sale into a Development Agreement.

17. It is further submitted by Mr. Deshmukh that the said instrument in Paragraph XIII clearly records that the Vendors have not handed over the possession of the property to the Purchaser i.e. the first party and the possession continues with the Vendors i.e. the second party. Clause XIX further records that the liability of the taxes on the property till the possession is handed over continues with the Vendors i.e. the second party and first party shall only be liable to pay the taxes after the possession is handed over. Clause XXI elaborates on the fact regarding the intention of the parties to the transaction which states that the transaction under the instrument is a transaction of sale.

18. On the other hand, Ms.V.S.Nimbalkar, learned AGP submits that the instrument is a Development Agreement and not an Agreement for Sale. She draws my attention to clauses VIII to XII of the instrument in support of her contention. She submits that under clause (VIII), it is provided that the Purchaser is desirous of developing the property as per the sanctioned plans. It further goes on to state that such right for development has been granted by the Vendor to the Purchaser i.e second party to the first party. The said clause further permits all works required to be undertaken for the purpose of development. In clause (IX) it is provided that the Purchaser is entitled to obtain permission from Nashik Municipal Corporation for development. In addition to that whatever other permissions that may be required for the development of the property, the first party i.e. the Purchaser is entitled to do so. That clause (X) provides that the Purchaser is entitled to mortgage the property. Clause (XI) stipulates that the Purchaser is given all rights for carrying out the development and to ensure that the Purchaser does not face any difficulty in developing the property. That the Purchaser/first party has been given Power of Attorney which Power of Attorney is subject to the provisions of Clause XVII of the said instrument.

19. She further submits that the Power of Attorney dated 30th September, 2014 accompanying the Development Agreement was alive and in force on the date of application for refund and therefore, it cannot be said that the said instrument claimed as Agreement for Sale was in effect cancelled. It is only after the application was rejected by the Respondents that the Power of Attorney was cancelled on 2nd January, 2020 and registered.

20. She would without prejudice also submit that even if the amended proviso is applied, even then the application deserves to be rejected in as much as the Power of Attorney dated 30th September, 2014 was still in force even after the date of registration of the Cancellation Deed cancelling the instrument entitled Agreement for Sale. The Power of Attorney was cancelled on 2nd January, 2020, was not considered by the Respondent No.2 while passing the order dated 12th December 2019, after which an appeal under section 53(1A) of the Stamp Act was filed before the said Respondent who rejected the same as not maintainable.

21. Ld. AGP submits that under proviso to section 48(1) of the Stamp Act the development agreement is not covered. The section only covers an agreement for sale. Learned AGP further submits that Petitioner has sought to apply the amended proviso to Section 48(1) whereas since the date of the instrument is 29th September, 2014, the unamended proviso will apply and in which case Petitioner is clearly time barred. She submits that Petitioner has filed the refund application beyond the period of the limitation of 2 years from the date of registration of the main instrument as per the earlier proviso. Her case is that the proviso as it stands has been amended with effect from 24th April, 2015, whereas the agreement had been entered into on 29th September, 2014, which is prior to the coming into effect of the amended proviso. She submits that even if the extended time limit pursuant to the new proviso was available to Petitioner, the same may not be applicable as the power of attorney had been cancelled only on 2nd January, 2020, which is beyond the period of 5 years.

22. The counsel for Petitioner as well as Respondents have argued the matter at length and also submitted detailed written submissions in the matter.

23. The controversy that is subject matter of this petition is whether the subject instrument is an agreement for sale or a development agreement and whether or not in the facts and circumstances noted above, Petitioner’s claimed for refund would fall under the new proviso to section 48(1) of the Stamp Act.

24. To appreciate the controversy and its genesis it would be apposite to set forth the relevant sections 47 and 48 of the Stamp Act as well as Article 5(g-a) (i) and Article 25 of Schedule-I of the Stamp Act:-

25.

CONVEYANCE (not being a transfer charged or exempted under Article 59)– On the true market value of the property which is the subject matter of the Conveyance,– (a) if relating to movable property

(i) within the limits of any

Municipal Corporation or any Cantonment area annexed to it or any urban area not mentioned in sub-clause (ii). 5 per cent. of the market value of the property.

(ii) within the limits of any Municipal Council or

Nagar Panchayat or Cantonment. area annexed to it, or any rural area within the limits of the Mumbai Metropolitan Region Development Authority, or the Influence Areas as per the annual statement of rates published under the Bombay Stamp (Determination of True Market Value of Property) Rules, 1995. 5 per cent. of the market value of

(iii) within the limits of any Gram panchayat area or any such area not mentioned in sub-clause (ii). 4 per cent. of the market value of

(c) if relating to both movable and immovable property.

The same duty as is payable under clauses (a) and (b). (d) * * * (da) if relating to the order of the High Court under section 394 of the Companies Act, 1956 or the order of the National Company Law Tribunal under sections 230 to 234 of the Companies Act, 2013 or confirmation issued by the Central Government under sub-section (3) of section 233 of the Companies Act, 2013 in respect of the amalgamation, merger, demerger, arrangement or reconstruction of companies (including subsidiaries of parent company) or order of the Reserve Bank of India under section 44A of the Banking Regulation Act, 1949 in respect of amalgamation or reconstruction of Banking Companies and every order made by the Board for Industrial 10 per cent. of the aggregate of the market value of the shares issued or allotted in exchange or otherwise and the amount of consideration paid for such amalgamation. and Financial Reconstruction under section 18 or 19 of the Sick Industrial Companies (Special Provisions) Act, 1985, in respect of sanction of Scheme specified therein or every order made by the National Company Law Tribunal under section 31 of the Insolvency and Bankruptcy Code, 2016, in respect of approval of resolution plan. Provided that, the amount of duty, chargeable under this clause shall not exceed, –

(i) an amount equal to 5 per cent.

of the true market value of the immovable property located within the State of Maharashtra of the transfer or company; or

(ii) an amount equal to 0.[7] per cent, of the aggregate of the or allotted in exchange or otherwise and the amount of consideration paid, for such amalgamation, whichever is higher: Provided further that, in case of reconstruction or demerger the duty chargeable shall not exceed,–

(i) an amount equal to 5 per cent.

of the true market value of the immovable property located within the State of Maharashtra transferred by the Demerging Company to the Resulting Company; or

(ii) an amount equal to 0.[7] per cent, of the aggregate of the or allotted to the Resulting Company and the amount of consideration paid for such demerger, whichever is higher. (e) * * * Exemption Assignment of copyright under the Copyright Act, 1957 (XIV of 1957). Provided that, the provisions of section 32A shall apply mutatis mutandis to such agreement which is deemed to be a conveyance as aforesaid, as they apply to a conveyance under that section: Provided further that, where subsequently a conveyance is executed in pursuance of such agreement of sale, the stamp duty, if any, already paid and recovered on the agreement of sale which is deemed to be a conveyance, shall be adjusted towards the total duty leviable on the conveyance.

25. Section 2(g) of the Stamp Act defines “Conveyance” as under. “(g) Conveyance includes,-

(i) a conveyance on sale,

(ii) every instrument,

(iii) every decree or final order of any Civil Court.

(iv) every order made by the High Court under section 394 of the Companies Act, 1956 or every order made by the National Company Law Tribunal under sections 230 to 234 of the Companies Act, 2013 or every confirmation issued by the Central Government under sub-section (3) of section 233 of the Companies Act, 2013, in respect of the amalgamation, merger, demerger, arrangement or reconstruction of companies (including subsidiaries of parent company); and every order of the Reserve Bank of India under section 44A of the Banking Regulation Act, 1949, in respect of amalgamation or reconstruction of Banking Companies; and every order made by the Board of Industrial and Financial Reconstruction under sections 18 or 19 of the Sick Industrial Companies (Special Provisions) Act, 1985, in respect of sanction of Scheme specified therein or every order made by the National Company Law Tribunal under section 31 of the Insolvency and Bankruptcy Code, 2016, in respect of approval of resolution plan, by which property, whether movable or immovable, or any estate or interest in any property is transferred to, or vested in, any other person, inter vivos, and which is not otherwise specifically provided for by Schedule I.”

26. A perusal of the definition of Conveyance indicates that for the purposes of stamp duty under the Stamp Act, it covers an agreement for sale of immovable property and even a development agreement as the same would be an instrument by which property, movable or immovable (immovable in this case), or any estate or interest in any property is transferred to or vested in any other person, inter vivos and which is not specifically provided in Schedule I to the Stamp Act.

27. It is also apparent that Article 5 (g-a)(i) covers within its scope, a development agreement with respect to immovable property and that the proper stamp duty would be the same duty as is leviable under clauses (b) or (c), as the case may be, of Article 25, on the market value of the property. In the case at hand, it is not in dispute that the stamp duty paid on the instrument under consideration was paid under Article 25 of Schedule I to the Stamp Act.

28. A perusal of Section 48(1) quoted above indicates that the limitation prescribed for filing an application for refund of stamp duty is contained in section 48. Under Proviso to section 48(1), if the instrument of the Petitioner is an agreement for sale of immovable property on which stamp duty is paid under Article 25 of Schedule I, is registered under the Registration Act and thereafter such agreement is cancelled by a registered cancellation deed for whatsoever reason before taking possession of the immovable property in question within a period of five years from the date of the agreement for sale, then the application for relief/refund can be made within 6 months from the date of registration of Cancellation Deed.

29. The dates and events are not in dispute. The instrument/document entitled Agreement for Sale was entered into on 29th September, 2014 and registered on the same date after paying a stamp duty of Rs. 3,09,09000/-. The Power of Attorney is dated 3rd November, 2014. The Deed of Cancellation of the instrument in question was executed on 24th June, 2019 and registered on the same day, i.e. within 5 years of the date of registration of the subject instrument as required under the proviso to section 48 (1). On the very next day i.e. on 25th June, 2019, Petitioner filed an application for refund of stamp duty paid on the said instrument i.e. within six months as required under

30. No doubt that the subject instrument /document has been entered into on 29th September, 2014 i.e. prior to the date of coming into force of the amended proviso to section 48(1) which was on 24th April, 2015. However, from the plain language of the said section 48(1) it is clear that the application for relief is to be made within a period of six months of the date of the instrument in cases mentioned in clause c(5) of section 47. Clause c(5) of section 47 refers to cases where by reason of the refusal of any person to act under the same or to advance any money intended to be thereby secured or by the refusal or non acceptance of any office thereby granted totally fails of the intended purpose, then an application can be made to the Collector for refund. That as the said instrument had to be cancelled by a Cancellation Deed as admittedly, the Petitioner could not honour its commitment of completing the transaction and making payment of balance consideration of Rs. 50 crores to the members of Khatib family, the case would squarely fall within the provisions of Section 47(c)(5) of the Stamp Act quoted above.

31. In the instant case, the subject instrument/ document is dated 29th September, 2014, but the Deed of Cancellation of the instrument is dated 24th June, 2019 and the application for refund of the same was made on 25th June, 2019 which is after the date of coming into force of the new proviso to section 48. What is important for application of the proviso is the date of registration of the Cancellation Deed; if the same is before 24th April, 2015 then the old proviso would have applied and if the same is after 24th April, 2015 as in this case then the new proviso applies. The date of the instrument that is cancelled would have no relevance for the application of the new proviso. The said section nowhere suggests that the new proviso would be applicable only to an agreement entered into after coming into force of the said proviso; in fact the said section refers to making of an application for relief under section 47 in the cases mentioned therein for refund of stamp duty. There is also as mentioned earlier no dispute that the stamp duty paid on the subject instrument was paid under Article 25 of Schedule I to the Stamp Act. Also admittedly Petitioner was not put in possession of the said property. I am therefore of the considered view that the application for refund of stamp duty was correctly made by Petitioner under the new proviso to section 48 within time.

32. Upon a query by this Hon’ble Court with respect to the description of said instrument in the registration receipt, it was pointed out by the Learned Counsel for Petitioner that the registration receipt dated 3rd November, 2014 at page no. 28 of the Petition discloses the nature of the Instrument as an “Agreement”(Kararnama). Pursuant to a further query as to how a development agreement was described in a receipt by the Department of Stamps and Registration while registering a Development Agreement, Petitioner has produced a specimen of a receipt in respect of the registration of a development agreement which specifically refers to the instrument as development agreement. Learned counsel for the Petitioner therefore submits that because the Petitioner’s instrument was an agreement and therefore the same was described as an agreement in the receipt and if it had been a development agreement the same would have been referred to as a development agreement, which is not the case here.

33. Learned counsel for the Petitioner has drawn this Court’s attention to the decision of the Nagpur Bench of this Court in the case of M/s Sandeep Dwellers Private Limited Vs. The State of Maharashtra and ors. in Writ Petition No.3622 of 2021 dated 5th May, 2022 (authored by my learned brother Hon’ble Shri Justice Sunil B. Shukre), where the Division Bench of this Court after examining Article 25 of Schedule-I to the Stamp Act as well as Article 5(g-a)(i) of the said Schedule has observed that since the duty on the Development Agreement is the same as is chargeable under Article 25 and even though the Development Agreement has been provided for specifically under Article 5(g-a)(i), ultimately the stamp duty payable on the Development Agreement is as per the duty payable on a conveyance under Article 25 and therefore, the Development Agreement would have to be treated at par with an instrument of conveyance.

34. Paragraph 14 of the said decision is usefully quoted as under:-

35. What emerges from the above discussion is that whether the instrument entitled “Agreement” is a Development Agreement or an Agreement for Sale would not be material in as much as the stamp duty payable on a Development Agreement which has been specifically provided under Article 5(g-a) (i) of Schedule-I to the Stamp Act is as per the duty payable on a conveyance under Article 25 and therefore, the Development Agreement is to be treated at par with an Agreement for Sale or an instrument of conveyance is referred to in the proviso to section 48(1) of the Stamp Act.

36. Having perused the decision in the case of M/s Sandeep Dwellers Private Limited Vs. The State of Maharashtra and ors. (supra) and being in respectful agreement with the said decision, I am of the view that whether the instrument which is subject matter of discussion is a Development Agreement or an Agreement of Sale should not make any difference since the stamp duty that has been paid on the said instrument has admittedly been paid as per Article 25 of Schedule I to the Stamp Act. Therefore, the subject instrument would fall within the proviso to section 48(1) of the Stamp Act; admittedly the said instrument was registered under the provisions of the Registration Act and thereafter it was cancelled by a registered cancellation deed within the said period of 5 years from the date of its execution. The application for refund has also been made within a period of six months from the date of registration of the cancellation deed in accordance with the said proviso. Therefore in my view, it would not be necessary or relevant to decide whether the instrument is a Development Agreement or an Agreement for Sale.

37. Evidently, the Respondent-authorities have neither considered the decision of this Court in the case of M/s Sandeep Dwellers Private Limited Vs. The State of Maharashtra and ors. (supra) nor the Deed of Cancellation of the Power of Attorney and it would be in the fitness of things to remand the matter back to the authorities to consider the same.

38. I am therefore, of the view that the impugned orders deserve to be quashed and set aside. The orders dated 12th December, 2019 and 18th June, 2020 are hereby quashed and set aside. Respondent No.2-CCRA is directed to consider the Petitioner’s application for refund afresh in light of the aforesaid discussion and pass a reasoned, speaking order within a period of 2 months from today after affording an opportunity of hearing to the Petitioner.

39. Writ Petition is allowed in the above terms. No costs. (ABHAY AHUJA, J.) ….