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TMI Blog2019 (11) TMI 1645X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 is a negative covenant and proclaims that `Nothing in these presents contained shall be construed as a demise in law of the said land hereby agreed to be demised or any part thereof so as to give to the Licensee any legal interest therein until the lease hereby provided shall be executed and registered . The format of the Lease Deed required to be executed in terms of covenants 7 and 8 forms part of the Indenture and a perusal thereof would reveal that after the Town Planning Officer certifies that the buildings and the works have been erected in accordance with law, transfer of leasehold rights in favour of the writ petitioners in respect of the land in question as also the buildings erected thereon is to demise for a period of 60 years. Tested on the anvil of the definition of a lease and a license in the Transfer of Property Act, 1882 and the Indian Easement Act, 1882, a perusal of the two Indentures would show that the respondent No.1 were given a right under the Indentures to occupy the parcel of land referred to in the two Indentures and after obtaining sanction from the competent authorities and the grantor to construct buildings and expressly recorded in the Indent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Indentures came to be noticed by the Collector of Stamps who proceeded to issue a notice to the respondent No.1 on 7th March, 1998 calling upon them to show cause as to why stamp duty not be paid on the Indentures treating the same to be exigible to stamp duty under Article 36 of the Bombay Stamp Act, 1958. 5. The respondent No.1 questioned the basis of the show cause notice, pleading that the Indentures were not a lease and were simply an agreement where right of the respondent No.1 as licensee with a further right to have a lease executed after performing obligations as a licensee under the Indentures and this being the reason to caption the Indentures as an `Agreement to Lease and not an `Agreement for Lease . 6. On 6th October, 1998 the Collector of Stamps decided that the Indentures were exigible to stamp duty under Article 36 and thus not only called upon the petitioners to deposit the stamp duty determined but even pay penalty and interest. The said decision dated 6th October, 1998 passed by the Collector of Stamps was challenged in Appeals before the Chief Controlling Revenue Authority. The appeals were dismissed on 9th March, 2007. This propelled the respond ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e shall be deemed to be premium or money advanced within the meaning of this article even if there is provision to set it off towards any instalment or instalments of rent. Explanation II.- When a lessee undertakes to pay any recurring charge such as Government revenue, landlord s share of cesses, of the owner s share of municipal rates or taxes, which is by law recoverable from the lessor, the amount so agreed to be paid by the lessee, shall be deemed to be part of the rent. 10. Since it would be relevant for our opinion it needs to be noted that Explanations III and IV after Explanations I and II under Article 36 which were deleted on 1st September, 1995 and 1st May, 1994 respectively, read as under:- Explanation III.- An agreement of lease shall not be chargeable as a lease unless there is an immediate and present demise. Explanation IV.- For the purposes of sub-clause (iv) of clause (a), where duty is paid on true market value of the property while executing the original lease deed, then the duty payable on the renewal thereof shall be ten rupees and nothing in clause (c) shall apply to such a lease or renewal thereof. 11. The view taken by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, the covenant under which the interest is proposed to be transferred under the Indentures are set out. The first covenant records that for a period of four years commencing from the execution of the Indenture the Licensee has a license and authority to enter upon the said land for erecting a building or buildings. It is recorded that `until the grant of lease as provided hereinafter, the Licensee shall be deemed to be mere Licensee of the land at the same rent and subject to the same terms including the liability for payment of service charges . Covenant 2 is a negative covenant and proclaims that `Nothing in these presents contained shall be construed as a demise in law of the said land hereby agreed to be demised or any part thereof so as to give to the Licensee any legal interest therein until the lease hereby provided shall be executed and registered . It further proclaims positively that the Licensee shall only have a license to enter upon the said land for the purposes of permitting this Agreement to be taken forward. Covenant 3 obliges the Licensee to get the building plans approved from the Corporation and thereafter commence construction of the buildings. 18. Unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r to a definite number of other persons, a right to do, or continue to do, in or upon the immovable property of the grantor, something which would, in the absence of such right, be unlawful and such right does not amount to an easement or an interest in the property, the right is called a license. 24. Thus, a license only makes an action lawful which without it would be unlawful but does not transfer any interest in favour of the Licensee in respect of the property. A license is therefore treated as a privilege to do something in a property, otherwise not permissible. A cardinal distinction and important feature of a leasehold right is right to possess and enjoy the demised immovable property to the exclusion of the lessor. 25. Tested on the anvil of the definition of a lease and a license in the Transfer of Property Act, 1882 and the Indian Easement Act, 1882, a perusal of the two Indentures would show that the respondent No.1 were given a right under the Indentures to occupy the parcel of land referred to in the two Indentures and after obtaining sanction from the competent authorities and the grantor to construct buildings and expressly recorded in the Indentures is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uiring the principal instrument only to be chargeable for stamp duty. 31. The second arrow in the quiver of the Appellants shot at the respondent No.1 is by referring to the provisions of the New Bombay Disposal of Land Regulations, 1975 which state the manner in which the Corporation can dispose of property placed at its disposal by the Government of Maharashtra and envisages lease to be the only manner under which the Corporation can transfer its interest in the land placed at its disposal by the State of Maharashtra. 32. Suffice it to state in response to the argument, that a license creates no interest in a property. Thus the Indentures in question by granting a license to the respondent No.1, to enter upon the land, develop the same and construct buildings thereon and execute works of a permanent nature are not in the nature of a Lessee. The Indentures recognize that the Corporation can transfer interest in the land only by way of a lease and as so specifically it is stipulated in the Indentures, with the format of the lease to be executed, in futuro pre-agreed. 33. For the reasons above recorded, we concur with the view taken by the learned Single Judge that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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