1994 (2) TMI 305 - SC - Indian Laws

Summary

Issues Involved:
1. Legality of the demand for stamp duty under Article 36 of the Bombay Stamp Duty Act, 1958.
2. Validity of the agreement to lease between the respondent and the State Government.
3. Assignment of the lease benefits to the cooperative housing society.
4. Interpretation of the terms and conditions of the lease agreement.

Issue-wise Detailed Analysis:

1. Legality of the demand for stamp duty under Article 36 of the Bombay Stamp Duty Act, 1958:
The Superintendent of Stamps claimed that the correspondence between the respondent and the Government of Maharashtra amounted to a lease under Article 36 of the Bombay Stamp Duty Act, 1958, and demanded stamp duty of Rs. 1,86,175. The Single Judge upheld this demand, but the Division Bench reversed the judgment, quashing the demand and directing the State Government to execute the lease in favor of Navrang Basant Cooperative Housing Society Ltd. The Supreme Court held that the notice, offer, and acceptance constituted an agreement to lease, not an actual lease, and thus, it was not chargeable to stamp duty under Section 2(n) of the Act.

2. Validity of the agreement to lease between the respondent and the State Government:
The respondent made an offer on December 15, 1970, which was accepted by the Collector on January 1, 1971. The offer and acceptance constituted an agreement to lease, not an actual lease. Clause 13 of the terms and conditions stated that the licensee would be put in possession upon executing the agreement to lease, indicating that no actual demise had occurred. The Supreme Court concluded that the agreement to lease did not create a present and immediate interest in the land, and thus, it was not an instrument chargeable to duty.

3. Assignment of the lease benefits to the cooperative housing society:
The respondent consistently acted as a promoter, intending to transfer the lease benefits to a cooperative housing society formed by the purchasers of the flats. This intention was communicated to the Collector on February 23, 1971, and accepted by the Collector on March 16, 1971. The Collector's letter dated December 13, 1977, confirmed the transfer of rights, title, and interest in Plot No. 101 to Basant Cooperative Housing Society. The Supreme Court held that the benefit of the agreement to lease could be assigned in favor of the cooperative housing society, and this assignment was valid.

4. Interpretation of the terms and conditions of the lease agreement:
The terms and conditions of the lease, including clauses 7, 13, 15, and 16, were examined. Clause 15, which debarred the licensee from transferring or assigning the right without the Government's consent, was never enforced. The Supreme Court accepted the respondent's position that the clause was not applicable. The court distinguished between an agreement to lease and an actual lease, citing English and Indian legal principles. An agreement to lease binds the parties to grant and accept a lease in the future, whereas a lease creates an immediate estate in land. The Supreme Court concluded that the agreement between the respondent and the State Government was an agreement to lease, not an actual lease.

In summary, the Supreme Court upheld the Division Bench's decision, quashing the demand for stamp duty and directing the State Government to execute the lease in favor of Navrang Basant Cooperative Housing Society Ltd. The court recognized the respondent's role as a promoter and validated the assignment of the lease benefits to the cooperative housing society.