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2024 (7) TMI 1069 - SC - Indian LawsLease or not - transaction where the right to collect tolls is given in lieu of the amount spent by the Concessionaire in the construction of roads, bridges etc. under the Build, Operate Transfer (BOT) Scheme - Section 105 of the Transfer of Property Act, 1882 - Section 2(16) of the Indian Stamp Act, 1899 - validity of the amendment made in proviso (c) to Clause (C) of Article 33 of Schedule 1(A) as amended by the Indian Stamp (M.P.) Act, 2002 - Doctrine of legitimate expectation - Doctrine of promissory estoppel. HELD THAT - There are no hesitation in holding that the judgment of the High Court impugned in these appeals does not require any interference. There are no infirmity, much less any perversity warranting any interference by this Court. The High Court has dealt with all aspects of the matter considering not only the stipulations in the Concession Agreement but has also dealt with in detail with the respective arguments advanced by the petitioners before the High Court (the appellants herein) at the same time referring to the statutory provisions, the constitutional provisions as also the case-laws relied upon by the counsel for the parties. However, there is one aspect of the matter which requires clarification which we shall deal with at the end of this judgment. The doctrine of legitimate expectation has been discussed and elucidated upon in several judgment by this Court. The doctrine provides a framework for judicial review of executive actions, policy changes, and legislative decisions. In UOI. VERSUS HINDUSTAN DEVELOPMENT CORPN. 1993 (4) TMI 306 - SUPREME COURT , this Court emphasized that legitimate expectation primarily grants an applicant the right to a fair hearing before a decision that negates a promise or withdraws an undertaking from which an expectation of certain outcome or treatment arises. It does not, however, create an absolute right to the expected outcome. The protection of legitimate expectation is subject to overriding public interest, which means that even if an individual s expectation is reasonable and based on a past practice or representation by the executive or legislature, it can be denied if justified by a significant public necessity. Doctrine of legitimate expectation - HELD THAT - The doctrine of legitimate expectation serves only as a procedural safeguard ensuring fairness in administrative decisions and policy changes. It grants the expectant party the right to a fair hearing and an explanation but does not guarantee the realization of the expected benefit. The government s authority to revise policies in public interest remains paramount, with the judiciary intervening only in cases of arbitrariness, unreasonableness, or lack of public interest. This balanced approach ensures that while individuals can expect consistent treatment based on past practices or promises, the government retains the flexibility to respond to evolving needs and priorities. Doctrine of promissory estoppel - HELD THAT - On the doctrine of promissory estoppel, since it is an equitable doctrine, it only comes into play when equity requires a party be estopped from withdrawing its promise. It has been well settled by this Court in several judgments that the principle of promissory estoppel cannot be invoked against the exercise of legislative power. Promissory estoppel or legitimate expectation can be dealt with on the same status of the executive decision when the prior as well as the subsequent decisions are both taken by the same or similarly placed authorities. Where the executive takes a decision based upon which a party acts and, later on, the executive withdraws that decision to the detriment of the party acting upon the earlier decision, it can be said to be estopped from withdrawing its promise or depriving the party from its legitimate expectation of what had been promised. Whether the Concession Agreement is a lease or a bond or a license? - HELD THAT - The definition of lease as given under the IS Act clearly covers any instrument by which tolls of any description are let and also under Section 105 of the TP Act, all the ingredients of a lease are fulfilled. In the present case, the same reasoning and findings as given by the High Court in great detail after considering the various clauses of the Concession Agreement is not repeated - the finding of the High Court upheld to be clearly justified and based upon a clear understanding of the terms of the concession agreement. There are no perversity at all in the reasoning given by the High Court to uphold the Concession Agreement to be a lease. Once, the stamp duty is payable on the amount spent by the lessee, the demand raised on the whole amount would be unjustified, as such, to the above extent, the demand needs to be set aside with a further direction to the Revenue Officer/Collector (Stamps) of the district concerned to re-calculate the same as observed above and, accordingly, raise the demand. In case, the appellants have deposited the demand raised on the entire project cost then the amount lying in excess with the State would be refunded to them. The appeals stand partly allowed.
Issues Involved:
1. Whether the transaction under the Build, Operate & Transfer (BOT) Scheme amounts to a "lease" under Section 105 of the Transfer of Property Act, 1882, and Section 2(16) of the Indian Stamp Act, 1899. 2. Validity of the amendment made in proviso (c) to Clause (C) of Article 33 of Schedule 1(A) by the Indian Stamp (M.P.) Act, 2002. 3. Declaration of Section 48 and 48(B) of the Indian Stamp Act, 1899, as amended by M.P. Act 24 of 1990, as ultra vires. 4. Application of the doctrines of legitimate expectation and promissory estoppel. 5. Determination of the amount spent under the agreement by the lessee for stamp duty purposes. Comprehensive Issue-wise Analysis: 1. Whether the transaction under the BOT Scheme amounts to a "lease": The Supreme Court upheld the High Court's decision that the Concession Agreement under the BOT Scheme qualifies as a "lease" under Section 105 of the Transfer of Property Act and Section 2(16) of the Indian Stamp Act. The Court emphasized that all the ingredients of a lease were present, including the transfer of a right to enjoy the property for a fixed period and for consideration. The definition of "lease" under the IS Act, which includes any instrument by which tolls are let, was also considered. The Court referred to previous judgments, including *Associated Hotels of India Ltd. v. R.N. Kapoor* and *State of Uttarakhand v. Harpal Singh Rawat*, to support its conclusion. 2. Validity of the amendment in proviso (c) to Clause (C) of Article 33 of Schedule 1(A): The Court rejected the appellants' challenge to the amendment, stating that it merely specified the rate of stamp duty applicable to lease deeds under BOT projects, reducing it from 8% to 2% of the amount spent by the lessee. The amendment did not redefine "lease" nor did it interfere with its interpretation. The Court found no merit in the argument that the amendment was arbitrary or violated Article 14 of the Constitution of India. 3. Declaration of Section 48 and 48(B) of the Indian Stamp Act as ultra vires: The Court did not find any reason to declare Section 48 and 48(B) of the Indian Stamp Act, as amended by M.P. Act 24 of 1990, as ultra vires. The provisions were found to be within the legislative competence of the State and did not violate any constitutional mandates. 4. Application of the doctrines of legitimate expectation and promissory estoppel: The Court held that the doctrines of legitimate expectation and promissory estoppel did not apply in this case. It was emphasized that these doctrines cannot be invoked against legislative actions. The Court cited *Hero Motocorp Ltd. v. Union of India* to underscore that there can be no estoppel against the legislature in exercising its legislative functions. The Court also referred to *Union of India v. Hindustan Development Corporation* and *Ram Pravesh Singh v. State of Bihar* to explain that legitimate expectation does not create an absolute right and is subject to overriding public interest. 5. Determination of the amount spent under the agreement by the lessee: The Court clarified that stamp duty should be charged at 2% on the amount spent by the lessee under the agreement, not on the total project cost. The Court directed the Collector (Stamps) to determine the exact amount spent by the lessee and recalculate the stamp duty accordingly. The Court instructed that any excess amount already deposited should be refunded, and any deficit should be paid by the appellants within two months of the fresh demand. Conclusion: The Supreme Court upheld the High Court's judgment, affirming that the Concession Agreement under the BOT Scheme constitutes a "lease" and that the amendments to the Indian Stamp Act were valid. The doctrines of legitimate expectation and promissory estoppel were deemed inapplicable against legislative actions. The Court directed a recalculation of the stamp duty based on the actual amount spent by the lessee, ensuring that any excess payment is refunded and any deficit is paid promptly. The appeals were partly allowed to this extent.
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