1961 (4) TMI 130 - HC - Indian Laws

Summary

Issues Involved:

1. Chargeability of proper stamp duty.
2. Classification of the document as a deed of partition or conveyance.
3. Applicability of Section 5 of the Indian Stamp Act.
4. Definition and applicability of "distinct matters" under Section 5.
5. Classification of the document as an instrument of partition.
6. Classification of the document as a deed of dissolution of partnership or release.
7. True nature and character of the document for stamp duty purposes.

Detailed Analysis:

1. Chargeability of Proper Stamp Duty:

The primary issue was the chargeability of the proper stamp duty on a document dated 5-9-1954. The Collector of Madras classified the document as both a deed of partition under Article 38 of Schedule 1-A and a conveyance under Article 19, Schedule 1-A of the Indian Stamp Act, levying a stamp duty of Rs. 3939 and a penalty of Rs. 70. The Board of Revenue agreed with this classification, leading to the reference to the High Court under Section 57 of the Stamp Act.

2. Classification of the Document as a Deed of Partition or Conveyance:

The court concluded that the document could not be treated as either a deed of partition or an instrument of conveyance. The document was unique and did not follow the usual pattern of setting out names, descriptions, preamble, and operative parts. It detailed various financial transactions between two divided brothers, Narasimham and Surayya, without indicating a transfer of property or a division of common assets.

3. Applicability of Section 5 of the Indian Stamp Act:

The court determined that the document represented a multipurpose or multifarious settlement of mutual claims arising from several transactions, thus attracting the applicability of Section 5 of the Indian Stamp Act. Section 5 states that any instrument comprising or relating to several distinct matters shall be chargeable with the aggregate amount of duties with which separate instruments, each comprising or relating to one of such matters, would be chargeable under the Act.

4. Definition and Applicability of "Distinct Matters" Under Section 5:

The court explained that "distinct matters" connotes distinct transactions, even if there is an identity of parties. If the transactions are distinct and separate but embodied in one document, it must be treated as comprising several documents for stamp duty purposes. The Supreme Court's judgment in Member, Board of Revenue v. A. P Benthall supported this interpretation.

5. Classification of the Document as an Instrument of Partition:

The court found that the document did not meet the criteria for an instrument of partition as defined in Section 2(15) of the Stamp Act. The document did not record a division of properties or an agreement to divide properties between co-owners. The various credit and debit entries in the document were related to settlements of accounts and reimbursements, not a division of common assets.

6. Classification of the Document as a Deed of Dissolution of Partnership or Release:

The court analyzed several entries in the document and concluded that they could be treated as instruments of dissolution of partnership or release, rather than a deed of partition. For example, the entries related to the groundnut shop, Mylapore Cafe, and other businesses indicated settlements of accounts and reimbursements rather than a division of assets.

7. True Nature and Character of the Document for Stamp Duty Purposes:

The court emphasized that the true nature and character of the document should be determined based on its recitals, not merely the description given by the parties. The document was found to be a composite one, with parts that could be construed as deeds of dissolution of partnership or release, and other parts as a memorandum of agreement. The court held that the document comprised distinct matters under Section 5 and should be charged with the aggregate stamp duty accordingly.

Conclusion:

The court concluded that the document dated 5-9-1954 was not a deed of partition or conveyance. It was a composite document with parts chargeable as deeds of dissolution of partnership and a memorandum of agreement. The document was chargeable to stamp duty under Article 46-B for the dissolution of three partnerships and Article 5(c) for the memorandum of agreement. The reference was answered accordingly.