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TMI Blog2010 (2) TMI 1326X X X X Extracts X X X X X X X X Extracts X X X X ..... .V. Infrastructure Engineers Pvt. Ltd. v. State of M.P. and Ors. The Petitioner is a Company engaged in construction of roads, etc. Respondent No. 3/M.P. Rajya Setu Nirman Nigam Ltd. (hereinafter referred to as MPRSNN ) is a Company incorporated and registered under the Companies Act. State Government has authorized MPRSNN for reconstruction, strengthening, widening and rehabilitation on Badnawar-Badnagar-Ujjain-Dewas Road project of approximately length of about 106 kms. on Build, Operate and Transfer basis vide order dated 1-2-2001. NIT was issued by MPRSNN inviting the bids, letter of acceptance was issued on 25-4-03 requiring execution of Concession Agreement within 30 days. Concession agreement dated 31-7-03 was executed. A show-cause notice was served upon the Petitioner by Revenue Officer, Collector (Stamps), Ujjain which required to produce original copy of the agreement. Petitioner had submitted that notice is vague. In order to point out the correct position, Petitioner at his own submitted reply-cum-representation (P-4). Collector thereafter passed the impugned order against the Petitioner on 31-3-2004 purporting to exercise power under Section 48-B of Indian Stamp Act d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Respondent Nos. 1 and 2 have filed their return in W.P. No. 3041/2004, R.V. Infrastructure Engineers Pvt. Ltd. v. State of M.P. and Ors. which has been adopted in all the petitions. In nutshell the case of Respondent Nos. 1 and 2 is that as document is an instrument as defined under Section 2(16) of the Indian Stamp Act. Section 3 provides that the instrument shall be chargeable with duty of the amount indicated in the Schedule. Article 33 of Schedule 1 -A has been amended in State of M.P. vide Act No. 12 of 2002. The provisions clearly specifies that duty chargeable is 2% on the amount likely to be spent on the agreement under the lease by the lessee. Any agreement by which right to collect tolls is given in lieu of amount spent by the lessee in construction of roads, bridges, etc. under BOT Scheme, it chargeable to stamp duty at the rate of 2%. Though the agreement was titled as Concession Agreement, but in fact same was an Agreement to Lease. The right was transferred to Petitioner to collect tolls for fifteen years in lieu of amount worth Rs. 49.30 crores which would be spent in construction, strengthening and rehabilitation of Badnawar-Badnagar-Ujjain-Dewas Road. The order p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y stamp duty on such transactions, later on amendment has been brought by the Legislature, the agreements have been executed subsequently. The date for chargeability should be the date of issuance of NIT or the date of acceptance of the bid. 7. Shri R.D. Jain, learned Advocate General appearing with Shri P.K. Kaurav, learned Deputy Advocate General for Respondent Nos. 1 and 2/State has submitted that the transaction amounts to lease under Section 105 of the T.P. Act. Right to collect toll has been given for fifteen years under the agreement. Section 3(26) of the General Clauses Act is applicable for the purpose of understanding the meaning of immovable property . He has also referred to Section 3 of the T.P. Act. Learned Advocate General has also submitted that right to realize the benefit arising out of the land has been given under the agreement. The road is immovable property , right to enjoy the property has been given for fifteen years. He has also referred to various clauses of the agreement. Consideration has been paid in advance then right has been given to recover by collection of toll. Construction of roads, operation and financing has to be done by the Concessionaire. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ii) there has to be consideration of a price paid or promised, or of money, a share of crops, service of any other things of value. 12. The Indian Stamp Act, Section 2(16) defines lease . Section 2(16) is quoted below: (16) Lease means a lease of immovable property and includes also-- (a) a patta; (b) a kabuliyat or other undertaking in writing; not being a counterpart of a lease, to cultivate, occupy or pay or deliver rent for, immovable property; (c) any instrument by which tolls of any description are let; (d) any writing on an application for a lease intended to signify that the application is granted. 13. The definition is inclusive, it specifically includes, a patta, kabuliyat or other undertaking in writing, not being a counter part of a lease for the purposes enumerated in Section 2(16). Section 2(16)(c) provides that any instrument by which tolls of any description are let is a lease. Section 2(16)(d) provides any writing on an application for a lease intended to signify that the application is granted. 14. Section 52 of the Indian Easements Act, 1882 defines license thus: License defined.-- Where one person grants to another, or to a definite number of other persons, a ri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urmah Shell Oil Storage and Distributing Co. of India Ltd., 1933 ALJ 749, the use and occupation of the land were transferred to the landlord company, they were to erect on the part of the land a building or other structure of the substantial and permanent character and when the transaction was to be terminated the Railway Administration had the right to re-enter upon, retake and absolutely retain the possession of the said land, use and occupation were certainly transferred to the Oil Company. Right of inspection was available with the Railways. It was held in the circumstances that it would not be mere licence within the scope of Section 52 of the Easement Act as a licence does not confer exclusive possession and enjoyment. The intention of the parties to an instrument must be gathered from the terms of the agreement examined in the light of the surrounding circumstances. A recital that agreement does not create a tenancy is not decisive. Crucial test is not the nomenclature of the document but whether instrument is intended to create or not to create an interest in the property. Transfer of right to enjoy the property is the test for determination whether disputed right is lease ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts arising out of immovable property. Grant of khas possession of the land for a certain period and for a fixed price payable on yearly basis or for raising and taking minerals from inside the land is a lease not a licence. 23. When we consider the agreement in question, it is apparent that Concessionaire/Petitioner is entitled to make reconstruction, strengthening, widening and rehabilitation of a section of Road Project of considerable length and its operation and maintenance to be executed through a Concession on Build, Operate and Transfer (BOT) basis. Clause 2 of the Concession Agreement entered into on 31st July, 2003 provides that Concessionaire or Company include its successor and permitted substitutes whereas license is personal in nature. In Clause 2(a) the aforesaid works of reconstruction, strengthening, widening and rehabilitation Road Project and its operation and maintenance to be executed through a Concession of Build, Operate and Transfer (BOT) basis has been provided. Clause 2(e) provides for design, engineering, financing, procurement, construction, operation and maintenance of the Project Highway. The tender document Volume v. (A) in Clause 1.1.41 provides for E ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned in Clause 1.1.103. The toll date means the Commercial Operations Date of the Project Highway from which date the Concessionaire is entitled to collect the toll/fee. 26. The agreement for collection of toll is for fifteen years is not disputed. It has to commence from the date of completion of the contract and that right has been given in the document itself, no separate agreement on a future date is required to be executed. On completion of construction of road, the document in question itself authorizes the Concessionaire to collect the toll of a period of fifteen years. The transaction is that of lease. In Juthika Mulick (Smt.) and Anr. v. Dr. Mahendra Yashwant Bal and Ors. (1995) 1 SCC 560, the Apex Court has laid down that one of the essential attributes of a lease is that transfer must be made for a certain time expressed or implied or in perpetuity. What is the meaning of fixed period has also been discussed by the Apex Court in the aforesaid decision. Maxim certum est quod certum reddi potest , i.e., sufficiently certain which can be made certain is applicable in such cases. 27. There is a price paid in every case, beside there is subsidy also. When we consider another p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inition of lease given under Section 2(16) of the Indian Stamp Act, the definition is inclusive. The collection of tolls is clearly provided to be a lease, thus, the agreement fulfills the (sic) of Section 2(16) also and it has to be treated as lease not as a (sic) word include is very generally used in interpretation clauses in order (sic) the meaning of words or phrases. The words or phrases comprehend not only natural import but also the things which the interpretation clause declares that they shall include. Clause 1.1.45 provides that tolls has to be collected as prescribed under the Indian Tolls (MP) Amendment Act, 1932. Under Section 2 of Indian tolls (MP) Amendment Act, 1932 toll collection is also a lease. Section 2 of Indian Tolls (MP) Amendment Act, 1932 is quoted below: Power of State Government to lease levy of tolls.-- It shall be lawful for the State Government to lease the levy of tolls at the rates prescribed under Section 2 of the Indian Tolls Act, 1851, as subsequently amended, upon any public road or bridge by public auction or private contract from year to year or for such longer period not exceeding fifteen years on such terms and conditions as the State Govt. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n which the public road is capable of being possessed since it is used by the public at large, the total control of entry on the road after payment of toll will be with the Concessionaire, it can safely be concluded that he is given the lease not the license. In license normally the right to use is given and possession continues with the owner which is absent in the instant case. Possession has to be given to Concessionaire, the possession will be retransferred back as provided in Clause 9.1(xxv), Clause 10.1(i) and (ii) and Clause 33.1(a) and (b) which are quoted below: 1. (xxv) after receiving vacant possession of the Site or part thereof, ensure that such Site remains free from all encroachments and take all steps necessary to remove encroachments, if any. 1. MPRSNN agrees to observe, comply and perform in addition to and not in derogation of its obligations elsewhere set out in this Agreement, the following: (i) Hand over the physical possession of the Project Site and enable access to the Site, free from Encumbrances, in accordance with this Agreement; (ii) Permit peaceful use of the Site by the Concessionaire under and in accordance with the provisions of this Agreement witho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is entitled to collect the toll/fee under the toll/fee notification and shall be the date notified so by MPRSNN upon completion of full/substantial completion of works of the Project Highway in accordance with this Agreement. Scope of Project.-- The project shall be executed on the Site, described in this document. The scope of the Project shall include performance and execution by the Concessionaire of all detailed design, engineering, financing, procurement, construction, completion, operation, maintenance and transfer of the Project Highway of this Agreement. It shall include reconstruction, strengthening and widening of the existing lane in accordance with the Specifications and Standards for the same and also operation and maintenance as per the Specifications and Standards mentioned under this Agreement as well as details mentioned in the Scope of Project as per Schedule I annexed to this Agreement. It shall also include the performance and fulfillment of other obligations by the Concessionaire under this Agreement. 5. The Fees collected by the Concessionaire or MPRSNN or MPRSNN's nominee pursuant hereto shall be deposited in the Toll Escrow Account and appropriate in ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vided in Clause 6.5 of the tender document and as provided in Clause 25.4.1(i) to (x), the toll has to be utilized for the purposes enumerated in the aforesaid clause first and then remainder has to be retained by the Concessionaire. The liabilities have to be cleared by the Petitioner as per the agreement, thus, the remainder of the toll has to reach to him does not change the nature of the document. It cannot be said that he would not recover the toll and the part of same has to be utilized in the mode prescribed to meet expenditure part as agreed. Profit part has to be retained by the Concessionaire. 22. In W.P. No. 10366/07, Jaora-Nayagaon Toll Road Co. Pvt. Ltd. v. State of M.P. and Ors., Shri Kishore Shrivastava, learned Senior Counsel has in addition referred to Clause 3.1 of the Concession Agreement by which MPRDC has granted to the Concessionaire the Concession quoted therein including the exclusive right, license and authority during the subsistence of this agreement to construct, operate and maintain the Project Highway. He has also relied upon Clause 3.2.1 by which Concessionaire has been given access and license to the site to the extent conferred by the provisions of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ement in accordance with the provisions of Clause 29.3.4. 39. Learned Counsel has emphasized that word license has been used on several places in the aforesaid clauses. In our opinion, the use of the word license is not determinative of the nature of the agreement. License which has been granted for various purposes, the word has different connotation at different places. Considering the other terms and conditions being similar in the instant case with the other clauses which we have referred to in various other writ petitions, merely, use of the word license at different places would not change the nature of the agreement. Even if word lease is mentioned or word license is mentioned is not determinative of the nature of document. What is contemplated and conferred under the agreement is right to construct and enjoy the property which is the crux of the matter. Thus, we find no force in the additional submission raised by Shri Shrivastava in W.P. No. 10366/2007. 40. Shri Kishore Shrivastava, learned Senior Counsel has relied upon Clause 6.8 of the tender document, same reads thus: 8. In case of any levy or increase therein of any Stamp Duty or Cess on fees/toll collected by the Con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct. In the instant case, there is actual demise and the Agreement (P-1) operates as a lease. Learned Senior Counsel has also placed reliance on a decision in State of Maharashtra and Ors. v. Atur India Pvt. Ltd. (1994) 2 SCC 497, wherein the Apex Court, in the context of Bombay Stamp Act, 1956, has laid down that lease does not include agreement to lease executable at a future date without immediately bringing into effect a lessor-lessee relationship and actual demise. In case offer is accepted without effecting actual demise, it was an agreement to lease not an agreement of lease . The stipulation debarring transfer or assignment of lease rights was not enforced, it was held that transaction is not covered by the definition of lease under Section 2(n). In the instant case, in our opinion, considering the nature of agreement there is a lease in praesenti to enjoy the property. Right and interest in the property has been created. Learned Senior Counsel has also relied upon a decision of Apex Court in ICICI v. State of Maharashtra and Ors. (1999) 5 SCC 708, in which the Bombay Stamp Act again came for consideration and the deed putting the prospective lessee in possession of land as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e at the rate of two per cent on the amount likely to be spent under the agreement by the lessee 45. The aforesaid entry is inserted by the Indian Stamp (Madhya Pradesh Amendment) Act, 2002 as per Petitioners is ultra vires. We are unable to accept the submissions as firstly we have held that transaction is a lease as contemplated under Section 105 of T.P. Act read with Section 2(16)(c) of the Indian Stamp Act, question of applying the aforesaid entry so as to constitute transaction as a lease does not arise. Purpose of aforesaid entry in Schedule 1 -A is to provide the Stamp Duty which is chargeable on a particular transaction, under the aforesaid entry as amended in State of M.P., the stamp duty is specifically provided for the kind of transaction which is a lease under Section 2(16)(c) of Stamp Act read with Section 105 of the T.P. Act. Entry 33 by itself cannot be said to be a provision defining lease, it only provides for charging rates, with precision. The transaction in question has been mentioned by which it cannot be taken that the Entry 33 of Schedule 1 -A define the lease, but it provides rate of stamp duty for the kind of lease. 46. So as to render aforesaid Article 33 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is covered within the ambit of lease as defined in Section 105 of T.P. Act read with Section 2(16)(c) of Indian Stamp Act. 48. Shri Kishore Shrivastava, learned Senior Counsel has also relied upon decision of Apex Court in Bhopal Sugar Industries Ltd., M.P. and Anr. v. D.P. Dube, Sales Tax Officer, Bhopal Region, Bhopal and Anr. AIR 1964 SC 1037, wherein the Apex Court considered the meaning of retail sale . It has been laid down that consumption by retail dealer himself for his own use falls within definition of retail sale . By extending the meaning, the transaction cannot be taxed. Clause including the transaction by extending the meaning was held to be ultra vires. We have held that Entry 33 (c) of Schedule I of Stamp Act is not extending the meaning of lease, but only prescribes the rate on a particular kind of lease as mentioned therein. 49. Learned Senior Counsel has also relied upon decision of Apex Court in R.M.D.C. (Mysore) Private Ltd. v. State of Mysore AIR 1962 SC 594, in which the Apex Court considered inconsistency between the Central Act, Prize Competitions Act (1955) and the Mysore Lotteries and Prize Competitions Control and Tax Act and held that Mysore Act deals ..... X X X X Extracts X X X X X X X X Extracts X X X X
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