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Judgment
Satish K. Agnihotri, J.—By way of this petition, the Petitioners seek to quash the order dated 14-7-2003 (Annexure P/6), and orders dated 26-11-2002 and 20-2-2003 (Annexure P/5). Further, a direction to the Respondents to renew the agreement of the Petitioners for a further period of 30 years according to the provisions of law. The Petitioners also seek a direction to the Respondents to take nominal charges towards rent instead of Rs. 250/-
The indisputable facts, in nutshell, as projected by the Petitioners, are that the Nagar Panchayat, Chhuikhadan, issued an advertisement in the year 2000 inviting applications for auction of 21 proposed constructed shops at Chhukhadan weekly market for a period of three years. The proposed Government rate was Rs. 75,000/- or more depending on the size of the shop. The successful bidder was required to deposit 50% of the amount within three days and remaining 25% amount, thereafter and last instalment of 25% amount before delivery of the shop. In the tender form, there was a condition that after delivery of the shop the auction purchaser would enter into a lease agreements (Annexure P/3 colly).
According to the Petitioners, the Petitioners were the highest bidders in the auction process and accordingly, they deposited the requisite amount and executed agreement with the Respondent authorities, as is evident from Annexure P/2. Thereafter, the Petitioners have been paying the rent without any default. On account of some audit objection, -the Collector of Stamps, Rajnandgaon issued a notice to the Petitioners, directing them to deposit the stamp duty at the rate of 7 1/2% on the value of the lease deed in lieu of 4%.
In response to the said notice, the Petitioners submitted their reply stating that the lease period was for a period of three years and according to the provisions of the Indian Stamp Act, 1899 (hereinafter referred to as ''the Act, 1899''( they were required to pay stamp duty @ 4% of the value of the deed. After receipt of the response, the Collector without applying his mind in its true perspective passed the order dated 20-2-2003 (Annexure P/5) directing the Petitioners to deposit the stamp duty at the rate of 7 1/2% treating the auction amount as premium by bringing the agreement within the framework of clause (c) under Article No. 35 of Schedule 1-A of the Act, 1899.
Being aggrieved by the said order, the Petitioners preferred an appeal before the Board of Revenue, which was dismissed by order dated 14-7-2003 (Annexure P/6). Thus, this petition.
Shri Tripathi, learned Counsel appearing for the Petitioner, would submit that the order passed by the Respondent authorities are illegal, arbitrary and contrary to provisions of the Act, 1899. Before passing the impugned orders, the Collector as well as the Board of Revenue have not applied their mind injudicious manner and passed the non-speaking and unreasoned order. The Collector ought to have appreciated the facts that the lease period was only for a period of three years and under these circumstances, the Petitioners are required to pay only 4% of the stamp duty instead of 7 1/2%. The stamp duty of 7 1/2% were required to be deposited only in a case where the lease period was more than five years. The Petitioners have not paid premium on allotment of the shops.
On the other hand, Shri Thakur, learned Counsel appearing for the State, would submit that admittedly, the Petitioners have obtained shops from the Respondent No. 3 in an open public auction on payment of price/premium as per the terms and conditions of the auction. Thereafter, agreements were entered into between the Petitioners and the Respondent No. 3. The Petitioners were let out the shops by the Respondent No. 3 on auction on payment of premium as well as monthly rent for three years. Thus, the stamp duty payable was on the instrument which was specified in clause (c) of Article 35 of Schedule 1-A of the Act, 1899. Clause (c) of Article 35 of Schedule 1-A of the Act, 1899 clearly stipulates that the stamp duty at the rate of 7.5% would be chargeable on the amount of premium/advance. In addition to 7.5%, the Petitioners were also liable to pay a duty at the rate of 4% under Sub-clause (ii) of clause (a) of Article 35. Thus, there is no irregularity, illegality in the order passed by the Collector of Stamps and thereafter, confirmed by the Board of Revenue.
Having considered the submissions advanced by the learned Counsel for the parties, perusing the pleadings and documents appended thereto, it is evident that in the terms and conditions of auction (Annexure P/l), the minimum security amount was specified to the tune of Rs. 15,000/- for qualifying to participate in the auction. Thereafter, the auction amount was to be paid 50% within three days from the acceptance of the offer of the Respondent No. 3, 25% within a period of 5 days and remaining 25% at the time of handing over of the shops. It was further stated that if the amount was not paid regularly, there would be a surcharge of 10%. Further, if the rent is not paid for a period of three months continuously, in the fourth month, a surcharge may be imposed at the rate of 15%. The period of agreement was for a period of three years. Each agreement executed between the allottee of the shops and the Respondent No. 3 clearly mentions the price of the shop and payment on rent on the terms and conditions of the auction. It was clearly specified that it has to be executed on payment of duty under the provisions of the Act, 1899.
Thereafter, several lease deeds were executed for allotment of shops on rent wherein it was specifically mentioned that the lease agreement was for a period of three years. In the case on hand, the Petitioners were required to make the payment of auction amount i.e. value of the shops and rent thereon on monthly basis and the agreement was for a period of three years.
The word ''premium'' is defined in P. Ramanatha Aiyar''s, Advanced Law Lexicon, 3rd Edition, 2005 (pg. 3686), as under:
"Premium" defined, Act 4, 1882, Section 105. The price paid or promised in consideration of a lease of immoveable property is called the premium [T.P. Act (4 of 1882), Section 105]
"Premium" also includes any like sum, whether payable to the intermediate or a superior landlord; and any sum (other than rent) paid on or in connection with the granting of a tenancy is presumed to have been paid by way of premium except insofar as other sufficient consideration for the payment is shown to have been given. Halsbury 4th Edn., Vol. 5, para 169, p. 85.
''Premium'' means a sum of money paid as consideration for grant of lease. It represents capitalized rent in fact is the difference between the actual rent and the rent which might otherwise be obtained by the lessor. Gobind Ram and Another Vs. Rajphul Singh and Others, 9. [Transfer of Property Act, 94 of 1882), Section 60 and East Punjab Urban Rent Restriction Act, 1949 Section 7(1)]
In stock broking, premium is the value above the original cost or price, as of shares or stock, as opposed to discount, which is the value below the original cost.
Further, in the Law Lexicon, Edition : 2005, Volume 2, (page 2056) the word ''premium and rent'' has been defined as under:
Premium and Rent.- The difference between a premium and a rent, in the context, lies in the fact that premium is a sum paid in consideration of the conveyance implied in the lease and is quantified in lump, whether it is paid outright or by installments over a period told to be paid at a certain time. But, a rent, while it is also in consideration of lease, is in lieu of the enjoyment which the lessee has and particularly as consideration therefore. The another feature of rent is, it is payable as and when it accrues unlike a premium the liability for which arises at the time the contract is entered into vide Transfer of Property Act, 1882, Section 108, Stamp Act, 1899, Section 16.
In Section 105 of the Transfer of Property Act, 1882 (for short ''the T.P. Act''), the word ''premium'' has been defined as under:
Lease defined.- A lease of immovable property is a transfer of a right to enjoy such property, made for a certain time, express or implied, or in perpetuity, in consideration of a price paid or promised, or of money, a share of crops, service or any other thing of value, to be rendered periodically or on specified occasions to the transferor by the transferee, who accepts the transfer on such terms.
Lessor, lessee, premium and rent defined.- The transferor is called the lessor, the transferee is called the lessee, the price is called the premium, and the money, share, service or other thing to be so rendered is called the rent.
The Supreme Court, in Commissioner of Income Tax, Assam etc. Vs. The Panbari Tea Co. Ltd., defined the word ''premium'' under the provisions of Section 105 of the Act, 1882 as under:
u/s 105 of the Transfer of Property Act, a lease of immovable property is a transfer of a right to enjoy the property made for a price paid time, express or implied or in perpetuity, in consideration of a price paid or promised, or of money, a share of crops, service or any other thing of value, to be rendered periodically or on specified occasions to the transfer by the transferee, who accepts the transfer on such terms. The transferor is called the lessor, the transferee is called the lessee, the price is called the premium and the money, share, service or other thing to be so rendered is called the rent. The section, therefore, brings out the distinction between a price paid for a transfer of a right to enjoy the property and the rent to be paid periodically to the lessor. When the interest of the lessor is parted with for a price, the price paid is premium or salami. But the periodical payments made for the continuous enjoyment of the benefits under the lease are in the nature of rent. The former is a capital income and the latter a revenue receipt. There may be circumstances where the parties may camouflage the real nature of the transaction by using clever phraseology. In some cases, the so-called premium is in fact for advance rent and in others rent is deferred price. It is not the form but the substance of the transaction that matters. The nomenclature used may not be decisive or conclusive but it helps the Court, having regard to the other circumstances, to ascertain the intention of the parties.
A Full Bench of the High Court of Andhra Pradesh in Vinay Construction and Development Company, Hyderabad Vs. Inspector General of Registration and Stamps, Andhra Pradesh, Hyderabad and Another, , has considered the word ''premium'' as under:
As can be seen from these decision, particularly the pronouncements of the Full Benches of the Madras High Court, the word "price", which is called "premium" in Section 105 of the Transfer of Property Act is money only and not any valuable consideration. The amount agreed to be invested in the construction of a building as consideration of the lease is, therefore, not premium within the meaning of Article 31(c) of the Stamp Act.
Having considered the above definitions and provisions of the T.P. Act, the value of shops which was determined on auction and on payment of the said amount, the Petitioners were allotted the shops on lease, subject to payment of rent on monthly basis. The price of the shop payable by the successful bidder in auction comes within the definition of ''premium''. Thus, the contention of the Petitioners that the Petitioners had not paid any premium and the shops were allotted on rent for a period of three years, is not correct. Thus, the payment of stamp duty comes under Article 35(c) of the Schedule 1-A of the Act, 1899.
Article 35 of Schedule 1-A of the Act, 1899, as per State amendment, reads as under:
"35. Lease, including an under-lease or sub-lease and any agreement to let or sub-let-
(a) where by such lease the rent is fixed and no premium is paid or delivered-
(i) where the lease purports to be for a term less than one year; The same duty as a Bond (No. 15) for the whole amount payable or deliverable under such lease.
(ii) where the lease purports to be for a term of not less than one year but not more than five years; The same duty as a Bond (No. 15) for the amount or value of the average annual rent reserved.
(iii) where the lease purports to be for a term exceeding five years but not exceeding ten years; The same duty as a Conveyance (No. 23) for a market value equal to the amount or value of one and half times the average annual rent reserved.
(iv) where the lease purports to be for a term exceeding ten years but not exceeding twenty years; The same duty as a Conveyance (No. 23) for a market value equal to three times the amount or value of the average annual rent reserved.
(v) where the lease purports to be for a term exceeding twenty years but not exceeding thirty years. The same duty as a Conveyance (No. 23) for a market value equal to five times the amount or value of the average annual rent reserved.
(vi) where the lease purports to be for a term exceeding thirty years, but does not exceed one hundred years; The same duty as a Conveyance (No. 23) for a market value equal to eight times the amount or value of the average annual rent reserved.
(vii) where the lease purports to be for a term exceeding one hundred years or in perpetuality; The same duty as a Conveyance (No. 23) for a market value equal to one-fourth of the whole amount of rent value which would be pair or delivered in respect of the first fifty years of the lease.
Sub-clauses (vi) and (vii) of Clause (a) of Article 35 stood as under from 1-8-2000 vide M.P. Act, 11 of 2000 :
"(vi) where the lease purports to be for a term exceeding thirty years, but does not exceed one hundred years; The same duty as a Conveyance (No. 23) for a market value to market value equal to eight times the amount or value of the annual market rent.
(vi) where the lease purports to be for a term exceeding thirty years, but does not exceed one hundred years; The same duty as a Conveyance (No. 23) for a market value to market rent payable in twelve and a half years of the lease.
(vii) where the lease purports to be for a term exceeding one hundred years or in perpetuity , The same duty as a Conveyance (No. 23) for a market value equal to three times the amount or value of the average annual rent which would
be paid or delivered for the first ten years if the lease continued so long.
(b) where the lease is granted for a fine or premium, or for money advanced and where no rent is reserved; The same duty as a Conveyance (No. 23) for a market value equal to the amount or value of such fine or premium, as advanced as set forth in the lease.
[Provided that, where the lease purports to be for a term exceeding 30 years or in perpetuality, the duty on such lease shall be chargeable as a conveyance (No. 23) on the market value of the property leased.] (c) where the lease is granted for a fine or premium, or for money advanced on addition to rent reserved. The same duty as a Conveyance (No. 23) for a market value equal to the amount or value of such fine or premium, or advance as set forth in the lease, in addition to the duty which would have been payable on such lease, if no fine or premium or advance has been paid or delivered : Provided that, in any case, when an agreement to lease is stamped with the ad valorem stamp required for a lease and a lease in pursuance of such agreement is subsequently executed, the duty on such lease shall not exceed ten rupees.
Exemption; Lease - executed in the case of a cultivator and for the purposes of cultivation (including a lease of trees for the production of food or drink) without the payment or delivery of any fine or premium, when a definite term, is expressed and such term does not exceed one year, or when the average annual rent reserved does not exceed one hundred rupees. Explanation.- When a lessee undertakes to pay any recurring charge, such as Government revenue, the landlord''s share of cesses, or the owner''s share of municipal rates or taxes, which is by law recoverable from the lessor, the amount so agreed to be paid by the lessee shall be deemed to be part of the rent."
The Supreme Court, while considering the term ''amenity'' and ''enjoyment'' under the context of real estate, defined the word ''premium'' as price paid or promised for the transfer or a right to enjoy immovable property under the rules. (See : Municipal Corporation Chandigarh and Others Etc. Vs. Shantikunj Investment Pvt. Ltd. Etc., ).
Thus, I unhesitatingly hold that the! allotment of shops was made on payment of premium for a period of three years and further subject to payment of monthly rent.
As regards relief seeking a direction to the authorities to renew, the agreement for a further period of thirty years and charge nominal rent, no direction can be issued firstly; for want of facts and secondly; allotment of the shops to the Petitioners are governed by the terms and conditions of the auction as well as the agreements executed between the Petitioner as well as the Respondent No. 3.
Thus, the Petitioners are liable to pay stamp duty at the rate of 7 1/2% on the premium amount and at the rate of 4% on the lease agreement. Thus, the impugnhed order dated 20-2-2003 (Annexure P/5) passed by the Collector and the order dated 14-7-2003 (Annexure P/6) passed by the Board of Revenue, confirming the order passed by the Collector, is just, proper, and legal and does not warrant any interference by this Court.
The petition is accordingly dismissed. No order as to costs.