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Judgment
T. Raja, J.—The Petitioner has filed the present writ petition seeking issuance of writ of certiorarified mandamus to call for the records of the
1st Respondent dated 22.02.2010 passed in Letter No. 68443/P1/05 and quash the same and to direct the Petitioner not to collect the stamp duty
u/s 2(24) r/w Article 58(a)(ii) of the Stamp Act on the documents bearing No. 4240 of 2002, registered at the office of Sub-Registrar,
Thirupathur.
Mr. M.K. Kabir, learned Senior counsel appearing for the Petitioner submitted that though the Petitioner is a Religious and Charitable Institution
registered under the Societies Registration Act, it is engaged in more charitable works, therefore, it is a charitable trust. Whileso, one another
Trust, namely, Christukula Ashram, Tirupathur, Vellore District, which is also a Religious Charitable Trust, registered as a Trust, is a Ashram
running an Orphanage in order to help the destitute children and also deserted children, who are deserted by the parents. The very purpose of the
Ashram is to dedicate its lives to selfless service to the sick and poor, especially among the villages and also to establish institutions and to realise
the said purpose, the trust has started and established the Ashram under the name of Christukula Ashram with an object more particularly specified
in the Rules and Regulations. The Trust has got property and money, which shall be held by the Trust, of which the Truestees shall be appointed by
the Sevaks and there shall be five trustees and out of five trustees, three trustee shall be from Sevaks of the Ashram and two persons outside the
Ashram. The Trust deed says further that if at any time, the Ashram Sevaks find themselves unable to run one or both of these institutions, they
may discontinue either one or both of them for such time as they deem fit. If at any time the Ashram becomes discontinued or dissolved, three
lakhs reserved for the hospital and half lakh reserved for the school shall be handed over to the National Missionary Society of India (hereinafter
referred to as ""N.M.S."") to be used as detailed in Section X.
Further, he contended that when a public charitable and religious trust is unable to carry on its activities in furtherance to its objects, safe
provision is made in the Deed itself to handover the management of the trust to another trust/society having similar objectives. The purpose is to
ensure that the charitable institution should not be dissolved, but charity should continue to reach the beneficiaries, who are the public at large. Only
in view of the difficulties faced by the trustees as per the conditions stipulated in the trust deed, for the reason that the trustees have become weak
in view of their old age, it was decided to give effect to the objective and purpose of the trust by handing over the management of the trust to
another trust having the similar objectives. On that basis, when the management or the trusteeship was handed over to another trust or society
having similar objectives, the said handing over of the management or the trusteeship would not constitute transfer of immovable property within the
meaning of conveyance, but would fall under Article 62(e) of the Stamp Act, because the transfer of Trusteeship is in pursuant to the object of the
trust and in consonance to the provisions of the Income Tax Act without involving selling of properties of the trust and appropriate the sale
consideration and as such, the maximum duty payable is Rs. 30/-. But in the present case, Rs. 90+210 were paid as duty, but, surprisingly, the
registering authority after registering the same, demanded a sum of Rs. 70,000/-vide letter No. 1670/A1/1999, dated 26.04.2001, without even
giving full particulars, viz., under what provision, the said amount of Rs. 70,000/-was calculated. After the payment of Rs. 300/-(90+210), though
the document was released on 31.10.2002, by notice dated 04.06.2004, a further sum of Rs. 21,16,779/-consisting of Rs. 19,16,779/-towards
duty and Rs. 1,53,000/-of penalty, were demanded. The said demand is arbitrary and suffers from the vice of non-application of the provision of
the Act.
In his further submission, he added that a trustee is not the owner of the property, but merely holds and manages the property for the benefit of
the beneficiaries specifically provided in the deed. Therefore, there is no transfer of ownership, but only handing over the management of the
property to be managed by a different set of trustees or organization having similar objectives and as the basic and fundamental element in a trust is
that the ownership does not vest with the trustees, a transfer of trusteeship cannot attract duty under conveyance or settlement, but only would fall
under Article 62(e) of the Stamp Act. Again, it was contended that in any event, since the trustees of the Ashram in view of their old age, virtually
rendered themselves unable to run the Ashram, for the reason that the administration of the Ashram would end up in failure of the objectives sought
to be achieved by the trust and in the larger interest of the students, who are orphanage students taking food and education from the Ashram, the
Trusteeship and the management of the trust itself is transferred for the effective administration of the Ashram, to another society having similar
objectives and on the transfer of the management of the trust, if a religious charitable society is taxed to remit an exorbitant and unreasonable
quantum of stamp duty on a wrong presumption that there is an element of conveyance, then the very object of the trust itself would get defeated
and this would result in closing down of the trust intended for the benefit of the public and it is for the reason, the impugned order claiming a sum of
Rs. 24,02,694/-will amount to dissolve the Ashram or closing down the Ashram and on that basis, he sought for setting aside the impugned order.
Per contra, Mr. S. Sivashanmugam, learned Government Advocate appearing for the Respondents, while objecting the argument advanced by
the learned Senior counsel for the Petitioner, submitted that the contention of the Petitioner that the deed contemplated the transfer of office of
Trusteeship and the administration of the trust is not tenable, in as much as the immovable property belonging to Christukula Ashram has been
transferred by the said deed in favour of the N.M.S./the Petitioner herein.
Secondly, it was contended that the Petitioner is not the beneficiary of the Transferor Trust, because the claim of the Petitioner that the properties
are held for the benefits of the beneficiaries is not correct. Even the Accountant General has observed that the said deed is to be classified as
settlement u/s 2(24) of the Indian Stamp Act, 1899 and the stamp duty shall be levied under Article 58(a)(ii) of Schedule I to the Indian Stamp
Act, 1899. Only based on the observation of the Accountant General, the Petitioner was directed to pay the deficit stamp duty under a notice
dated 04.06.2004 issued by the 2nd Respondent with a clear indication to the Petitioner that if he fails to pay the deficit stamp duty, action will be
initiated u/s 33(A) of the Indian Stamp Act. As the Petitioner has failed to pay the deficit stamp duty, the 2nd Respondent commenced enquiry u/s
33(A) of the Act by issuing a show cause notice dated 14.09.2009 in proceedings No. 3617/B1/2004, as to why the deficit stamp duty of Rs.
24,02,694/-shall not be collected from the Petitioner. On receipt of the show cause notice, the Petitioner has also sent a detailed representation
dated 23.09.2004 against the said notice of the 2nd Respondent, but the 2nd Respondent, after considering the representation of the Petitioner in
detail with reference to the provisions of the Act, passed the final order dated 16.11.2004 rejecting the claim of the Petitioner and to pay the deficit
stamp duty of Rs. 24,02,694/-. In the said order, he was also informed that he can make an appeal to the Chief Controlling Revenue Authority u/s
33(A)(3) of the Act. In pursuant to the said order, the Petitioner has also preferred an appeal and the Appellate Authority has also considered the
case of the Petitioner in accordance with law.
In his further submission, it was contended that the Government of Tamil Nadu issued an order in G.O. Ms. No. 224, Commercial Taxes
Department, dated 11.12.2003 making a proviso that 50% of the stamp duty reduction granted to gift or settlement for charitable or religious
purpose, shall be allowed only in cases where the trust is approved u/s 80(g) of the Income Tax Act, 1961. Therefore, it is not open to narrow or
whittle down the operation of the Act by accepting the arguments advanced by the Petitioner.
Heard the learned Counsel appearing on either side and perused the materials available on record.
Originally the transferor of trust, namely, Christukula Ashram, Tirupathur, Vellore District, a registered trust, was established as a religious and
charitable trust, by having its headquarters at Tirupattur, North Arcot District, with an object to form a fellowship, or fellowships, of Christ''s
disciples in which unmarried men of all countries and colours, communities and denominations may have a place and be bound together by the love
of Christ, even as the name ""Christukula"" (Family of Christ). To carry out the objectives, the Ashram had undertaken health service through well
equipped hospital established in the Ashram and it has also established educational institution by admitting poor students and orphanage. The
membership on the Ashram is also regulated through admission procedure and the Ashram consisted of two Sevaks/original founders and three
others duly elected from among the eligible persons on the unanimous decision of the existing Sevaks. In order to be eligible, a person shall:
i. be a Christian ii. whole heartedly accept the Basis, Aim and Object of the Ashram.
iii. he shall vow to remain in the Ashram for his life time, or at lest for 10 years with the intention to renew his vow for life.
iv. be of at least 25 years of age, be physically fit and shall ordinarily have completed at least the School Final Examination or other equivalent.
v. he should have served as a Bala Sevak for at least 3 years and have shown growth in love, humility and in sharing the burdens and
responsibilities of the Ashram Family.
vi. he should be unmarried and shall get freed from family responsibilities and should not own any private property or money.
Sevaks shall receive no salary, but they shall have their personal necessities and other expenditure provided from the Ashram Trust as God
supplies.
The deed had also specified clearly the method of management of trust. It states that the management of the Ashram shall vest in the Sevaks. If
the number of Sevak exceeds seven, they may elect out of their number five or seven members to constitute the Committee of Management. The
Ashram property and money shall be held by a Trust of which the trustees shall be appointed by the Sevaks. The Trust deed further says that if at
any time, the Ashram Sevaks find themselves unable to run one or both of these institutions on a voluntary basis, they may discontinue either one or
both of them for such time as they deem fit. If at any time the Ashram becomes discontinued or dissolved, three lakhs reserved for the hospital and
half lakh reserved for the school shall be handed over to the N.M.S/the Petitioner herein, to be used as detailed in Section X, which is extracted as
under:
X DSSOLUTION
During the life time of the Founders the Ashram shall not be dissolved except at their joint decision.
1 If one of the Founders is dead the surviving Founder may carry on the work of the Ashram. If he is unable to do so and desires that the Ashram
should be dissolved, he will follow the procedure indicated below for dissolution.
2 The question of continuing the Ashram or of dissolution may arise under any of the following circumstance.
(a) If after the death of both the founders the number of persons serving as Sevaks is so reduced that there are less than two Sevaks for a period
of two years and at the end of that time there are no Bala Sevaks who are eligible and fit for admission as Sevaks within the following year, or
(b) There is continued disagreement among the Sevaks for a period of three years, so that the life and work of the Ashram is hindered and the
practical working of the services is rendered difficult or impossible.
If the Ashram is dissolved, the whole of the property movable and immovable then existing together with the three and a half lakhs of rupees
(intended to be set apart for the endowment of the hospital and school) and any other monies remaining in the hands of the Trustees or with the
Treasurer of the Ashram shall be handed over to the National Missionary Society. It is the desire of the Founders that in this case the N.M.S. shall
endeavour to carry on the hospital and the school either themselves or through a special committee or committees appointed for the purpose and
that the three lakhs of rupees be used as Endowment for the running of the Hospital and the half lakh of rupees be similarly used for the carrying on
of the school, with such developments or modifications as the Society consider desirable.
If the N.M.S. by itself finds that it is not practicable to continue one or both of these institutions as channels of Christian love and service, it should
invite the co-operation of other Christian body or bodies to carry on the institution or institutions with the endowment or endowments ear-marked
for them. If this also proves impossible, the N.M.S. shall be free to use the property and money as it seems best to them for the extension of
Christ''s Kingdom.
A mere reading of the Section X of the Trust Deed clearly goes to show that if the Ashram is dissolved, the whole of the property shall be handed
over to the National Missionary Society. In the present case, all consisting of five trustees held a meeting at the premises of the Ashram and passed
the resolution dated 26.02.1999 stating that in the light of the present age and health condition of the Sevaks and Trustees, it was decided to
transfer the entire property of the Christukula Ashram at Tirupathur, Mahavalam and Courtallam along with the administrator and management
thereof, to the National Missionary Society of India, having its registered office at 207 Peters Road, Royapetta, Chennai, as enshrined in the
Constitution and in fulfilling the Will and pleasure of the founding fathers as well as the present Sevaks and Trustees.
When the conditions in the trust deed clearly says that neither the trustees nor the organizations are empowered to sell the properties of the
Trust and appropriate the sale consideration, the only way for the Christukula Ashram to continue their charitable object is to amalgamate the
Christukula Ashram with National Missionary Society of India as mandated by the deed of trust. Further, as contemplated by the trust deed of the
Ashram, which is merged with another trust, it does not mean that a declaration of Trust or merger of trusts would attract duty under Article 58 of
the Stamp Act. Further, a trustee or trustees is/are only empowered to manage the trust property by virtue of a legal fiction vesting the property in
the trustee. Therefore, a trustee is not the owner of the property, but merely holds and manages the property for the benefit of the beneficiaries as
contemplated in the deed. Hence, I find there is no transfer of ownership, but only handing over of the management of the property to another trust
having similar objectives. This is a basic and fundamental element in a trust and that the ownership does not vest with the trustees, more so, a
transfer of trusteeship cannot attract duty under conveyance or settlement, but only would fall under Article 62(e) of the Stamp Act. Therefore, the
decision of the Respondent demanding a huge amount towards deficit stamp duty is unsustainable in law.
Further, if the Registering Authority knowing pretty well that the handing over of the trust by transferor trust, namely, Christukula Ashram, to
the transferee trust, namely, the Petitioner herein, having the similar objectives to carry out the charitable work in running the Ashram, the
Respondent should have seen that the public charity should not suffer. But ignoring this aspect, demanded a huge amount of Rs. 24,02,694/-,
treating this deed of trustee of the transferor as a gift settlement u/s 2(24) of the Registration Act, is amounting to prevent the running of Ashram by
another trust having the similar objectives.
In this context, it is useful to refer the Full Bench judgment of this Court in the case of the Chief Controlling Revenue Authority, Board of
Revenue v. P.A. Muthukumar AIR 1979 MADRAS 5, wherein it was clearly held that while interpreting the word ''settlement'' in Section 2(24) of
the Indian Stamp Act, the emphasis should be on the intention of the author of the trust to distribute the property among members of his family or
to those who are near and dear to him. Since a trust is an expression of the desire by the author of the trust to vest the property in a body may be
singular in its feature, for that body to administer it for convenience and for an equitable distribution of that estate of the author as per the direction
contained in the deed itself. By executing a trust the property need not be distributed by the author of the trust. But in cases, as in the instant case,
the declaration of a trust may be made only for purposes of equitable administration of the same, so as to preserve it without being wasted as
apprehended by the testator himself. This distinction therefore has to be borne in mind while interpreting an instrument for purposes of imposition of
stamp duty. On that basis, it was held that the instrument in question should not be understood as a deed of settlement within the meaning of
Section 2(24)(b) of the Indian Stamp Act attracting stamp duty under Article 58 of Schedule I of the Indian Stamp Act.
In the present case also, when the property of the one trust is transferred to another trust without any consideration for the benefit of the
beneficiaries as mandated by the testator, such an instrument cannot be treated as settlement and as per the sole intention of the author, namely, the
testator, the instrument in question cannot be understood as deed of settlement within the meaning Section 2(24)(b) of the Indian Stamp Act
attracting stamp duty under Article 58 of Schedule I of the Indian Stamp Act.
In yet another Full Bench judgment of the Madhya Pradesh High Court in the case of Shri Digambar Jain and Others Vs. Sub Registrar,
Stamps, Indore it is held thus:
We are unable to agree with the Revenue-authority on the interpretation of the document in question. From the recitals appearing therein, the
instrument is one declaring the pre-existence of a trust coupled with transfer of management from one set of trustees to another....
... From the recitals in the document, it appears that the Panchas were only making a declaration of a pre-existing trust and were not transferring
their ownership in any specific trust property because they had none. Nor were they creating a trust by executing the deed in favour of the trustees.
It, accordingly, follows that the deed in question does not fall within the definition of the term ''conveyance'', as defined in Section 2(9) of the
Act, because there was no ''transfer'' of any property by the Panchas to the trustees as envisaged in that section. What had been transferred was
only the management of the trust. On a plain reading of the recitals, no other construction is possible than that the instrument merely declares the
existence of trust coupled with the transfer of its management. Such a document can, by no stretch of reasoning, be treated as a conveyance. Even
otherwise, the definition of the term ''conveyance'' as contained in the Section excludes such a document from its purview, because, even as a
transfer, if any, it is ''otherwise specially provided for'' by Schedule I to the Act, viz., by Article 47-A as ''Declaration of Trust'' and was, therefore,
not liable to be stamped as ''conveyance'' under Article 17.
In that view, our answer to the first question is that the deed dated 11th September 1957, executed by the Panchas of Shri Digambar Jain
Terapanthis was a ''Declaration of Trust'' and not a ''Conveyance'' within the meaning of Section 2(9) of the Act. The answer to the first question
answers the second. The stamp duty leviable thereon will, therefore, be governed by Article 47-A of Schedule I to the Indore Stamp Act, 1907,
and not under Article 17 thereof. The trust will be entitled to its costs of these proceedings. Hearing fee Rs. 150.00, if certified. Reference
answered accordingly.
Further, when the transferor Ashram comes forward to merge with another trust having the similar object in the larger interest to continue the
charitable trust, for the reason that the original founders are no more and subsequently, the other living trustees are also in advanced age which
does not permit them to actively manage the affairs of the Ashram and when they acted only as per the terms and conditions prescribed in Section
X of the Trust Deed and if for any reason, the Ashram fails to meet the payment of deficit stamp duty of Rs. 24,02,694/-, it may end up in
defeating the object and the purpose for which the original Ashram was established and this will unnecessarily cause great prejudice to the students
and the beneficiaries of the hospitals, that will, in turn, have a cascading painful effect on the object of the Trust.
Therefore, as per the ratio decided by the above mentioned two Full Bench judgments, when the intention of the author of the original trust of
the Ashram is looked at carefully, the document No. 4240 of 2002, which is merely declaring the existence of trust coupled with transfer of its
management, does not fall within definition of term ""conveyance"", in as much as there is no consideration either precedes the transfer or follows
after such transfer, hence, to my mind, the intention of the author of the original trust of the Ashram if carried out through transfer of management as
per the letter and sprit of the terms and conditions prescribed in Section X of the Trust Deed, such transfer without consideration does clearly
reflect the quintessence of the definition of the word ''settlement'' in Section 2(24)(b) of the Stamp Act, which states that the property should be
distributed among the members of the family of the author of the trust or should be ordained to be given to those near and dear to him. In the
absence of any such clause express or implied to be culled out by necessary implication from out of the instrument to conclude about distribution of
property, either movable or immovable among the settlor''s heirs or relatives, such an instrument cannot be treated as a ''settlement''. Accordingly, I
am of the view that deed dated 01.03.1999 executed by the Ashram, namely, transferor Christukula in favor of the transferee, namely, the
National Missionary Society of India/the Petitioner herein, is a declaration of trust and not of conveyance within the meaning of Section 2(24) of
the Stamp Act. Therefore, the stamp duty demanded in the impugned order is not sustainable in law.
Accordingly, this Court, for the reasons stated above, allows the present writ petition by setting aside the impugned order. No Costs.M.P. No.
1 of 2010 is closed.