1965 (10) TMI 88 - HC - Indian Laws

Summary

Issues Involved:
1. Whether the deed in question is a release deed falling within Article 44 of the Mysore Stamp Act, 1957, or a conveyance falling under Article 19 of that Act.
2. Determination of the appropriate stamp duty applicable to the instrument.

Issue-wise Detailed Analysis:

Issue 1: Nature of the Deed (Release Deed vs. Conveyance)
1. The petitioner challenged the order of the Revenue Authorities directing him to pay additional stamp duty and penalty on an instrument executed in his favor.
2. The key question referred to the Full Bench was whether the deed is a release deed under Article 44 or a conveyance under Article 19 of the Mysore Stamp Act, 1957.
3. The instrument in question was styled as a deed of release, executed on 12-3-1962.
4. The preamble of the instrument recited the partnership between the first and second parties, the death of the original partner, and the subsequent retirement of the first party.
5. The operative portion stated that the first party relinquished his involvement in the business, leaving it solely to the second party.
6. However, the instrument also included clauses about retaining joint ownership of a piece of land and shared liabilities for taxes.
7. The net effect was that the first party gave up his share in the business for a sum of money, while retaining some interests.
8. The Assistant Commissioner and the Chief Controlling Revenue Authority deemed the instrument chargeable as a conveyance, requiring ad valorem duty.
9. The petitioner's counsel argued it was a release, while the Government Pleader contended it was a conveyance of the first party's undivided interest.
10. The court noted that the substance of the transaction, rather than the specific words used, determines the nature of the instrument.
11. The court referred to previous cases, including Nanjunda Setty v. State of Mysore, which discussed the implications of release deeds and conveyances.
12. The court also examined definitions under the Mysore Stamp Act, noting that 'conveyance' includes any transfer of property inter vivos not otherwise provided for in the Schedule.
13. The court concluded that the instrument could be construed as a conveyance due to the transfer of property for a sum of money.

Issue 2: Appropriate Stamp Duty
1. Section 6 of the Mysore Stamp Act states that an instrument falling under multiple descriptions in the Schedule should be charged with the highest duty applicable.
2. Assuming the instrument could be construed as a release, it would still be chargeable as a conveyance if it fits that description and attracts a higher duty.
3. The stamp duty for a release under Article 44 was Rs. 15, while for a conveyance under Article 19, it was Rs. 915.
4. The court cited similar cases, including decisions from the Madras High Court and English courts, supporting the view that such transactions are chargeable as conveyances.
5. The court emphasized that the transaction involved the sale of an undivided interest for a sum of money, meeting the requirements of a sale.
6. The court concluded that the instrument should be regarded as a conveyance under Article 19, making it unnecessary to consider if it could also be a release under Article 44.
7. Consequently, the instrument was chargeable with the higher stamp duty applicable to conveyances.

Conclusion:
The Full Bench concluded that the deed in question should be regarded as a conveyance under Article 19 of the Mysore Stamp Act, 1957, and thus subject to the higher stamp duty. The papers were returned to the Division Bench for the disposal of the Writ Petition. Both Hegde and Tukol, JJ., agreed with the judgment.