2011 (2) TMI 1629 - SC - Indian Laws

Summary

Issues Involved:
1. Determination of the appropriate stamp duty payable on a lease agreement for toll tax collection.
2. Interpretation of the term "lease" u/s 2(16) of the Indian Stamp Act, 1899.
3. Applicability of Article 35(b) versus Article 57 of Schedule I-B of the Indian Stamp Act, 1899.

Summary:

1. Determination of the appropriate stamp duty payable on a lease agreement for toll tax collection:

The primary issue in this appeal was the determination of the stamp duty payable on a lease agreement executed between the Appellant and the Respondent, which entitled the latter to collect toll tax. The Respondent had filed a writ petition challenging the demand for stamp duty of Rs. 2,20,400/- and sought to have it charged in accordance with previous judgments, asserting that the contract was a security bond and stamp duty was payable under Article 57 of Schedule I-B of the Indian Stamp Act, 1899.

2. Interpretation of the term "lease" u/s 2(16) of the Indian Stamp Act, 1899:

The Court examined the definition of "lease" u/s 2(16) of the Act, which includes any instrument by which tolls of any description are let. The Court noted that the definition is broad and can include transactions that do not amount to a lease under Section 105 of the Transfer of Property Act. The lease agreement in question granted the Respondent the exclusive right to collect tolls, which falls within the ambit of "lease" as defined u/s 2(16)(c).

3. Applicability of Article 35(b) versus Article 57 of Schedule I-B of the Indian Stamp Act, 1899:

The Court held that the lease agreement clearly falls within the scope of Article 35(b) of Schedule I-B, which pertains to leases, and not under Article 57, which applies to security bonds or mortgage deeds. The demand for stamp duty of Rs. 2,20,400/- was therefore deemed legal. The judgments in Tejveer Singh's case and Naresh Agarwal's case, which were relied upon by the Respondent, were found to be inapplicable as they dealt with security for due performance of contracts, not leases for toll collection.

Conclusion:

The appeal was allowed, the impugned order was set aside, and the writ petition filed by the Respondent was dismissed. The Appellants were permitted to recover the stamp duty from the Respondent as per the notice dated 25.2.2006. The Court found that the Division Bench of the High Court had erred in disposing of the writ petition based on inapplicable judgments without considering the lease agreement.