IN THE HIGH COURT OF KERALA AT ERNAKULAM
OP.No. 10606 of 2000(K)
1. J.THOMAS & COMPANY
... Petitioner
Vs
1. THE DISTRICT REGISTRAR
... Respondent
For Petitioner :SRI.M.PATHROSE MATTHAI (SR.)
For Respondent :GOVERNMENT PLEADER
The Hon'ble MR. Justice P.N.RAVINDRAN
Dated :09/07/2010
O R D E R
P.N.RAVINDRAN, J.
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O.P.No.10606 of 2000
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Dated this the 9th day of July, 2010
JUDGMENT
The petitioner is a company incorporated under the Companies
Act, 1956. It is carrying on business in a building erected on the lands
leased out by the Cochin Port Trust. The Cochin Port Trust had leased
out a parcel of land, 50.04 cents in extent, to the petitioner. The said
lease expired on 3-6-1994. Thereupon, a fresh lease was granted in
respect of the very same parcel of land and two lease deeds were
executed on 12-11-1998 covering the period from 3-6-1994 to 31-12-
1995 and the period from 1-1-1996 to 2-6-2024. In the lease deed
dated 12-11-1998 relating to the period from 3.6.1994 to 31.12.1995
the annual rent payable was fixed at Rs.27,458/-. It was also recited
that the lessee has paid an amount of Rs.27,458/-, representing one
year’s rent in advance. In the second lease deed dated 12-11-1998
relating to the period from 1-1-1996 to 2-6-2024 the annual rent
payable was stipulated as Rs.54,944/-. It was also stipulated that the
lessee (the petitioner) has deposited with the lessor an advance
amount equivalent to one year’s rent viz. Rs.54,944/-. It was further
stipulated that the rent shall be paid on a half yearly basis on or before
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the 30th of June and 31st of December every year for the period
January to June and July to December respectively. There is a further
stipulation that if the lessor decides to increase the rate of rent
applicable to the land falling in category III of the Willington Island
Land Use Plan the lessee will have the right to increase the lease rent
at the beginning of every block of seven years starting from 1st
January 1996 by an amount not exceeding 100% of the then existing
rent and that in addition to such revision, the rent payable by the
lessee every year shall be increased by 5% of the existing rent.
2. Both the documents were presented for registration before
the Sub Registrar, Cochin, the competent registering authority. In
respect of the lease deed dated 12-11-1998 covering the period from
1-1-1996 to 2-6-2024 the petitioner had paid the sum of Rs.34,450/-
as stamp duty and in respect of the other lease deed the sum of
Rs.2,160/- was paid as stamp duty. When the documents were
presented for registration, the Sub Registrar impounded the
documents under section 33 of the Kerala Stamp Act, 1959 and
forwarded them to the District Registrar, Ernakulam as required under
section 37(2) of the Act. The District Registrar, after examining the
documents, came to the conclusion that the documents have not been
properly stamped. Thereupon Ext.P1 notice dated 30-6-1999 was
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issued informing the petitioner that the stamp duty payable on the
lease deed relating to the period from 1-1-1996 to 2-6-2024 is
Rs.4,56,617/-. The petitioner was called upon to show cause why the
sum of Rs.4,22,137/- being the deficit stamp duty and penalty should
not be realised from them. A similar notice of even date was issued to
the petitioner in respect of the lease deed relating to the period from
3.6.1994 to 31.12.1995. By that notice the petitioner was informed
that the proper stamp duty payable on the said lease deed is
Rs.5,137/- and the petitioner was called upon to show cause why the
deficit stamp duty of Rs.2,977/- and penalty should not be recovered
from them.
3. On receipt of Ext.P1 show cause notice the petitioner
submitted Ext.P2 reply dated 16-7-1999 wherein the petitioner
requested the District Registrar, Ernakulam to inform him of the basis
on which the stamp duty as set out in the notices was arrived at. On
receipt of Ext.P2 letter, the District Registrar sent Ext.P3 letter dated
3-8-1999 informing the petitioner of the basis on which the sum of
Rs.4,56,617/- was determined as the stamp duty payable on the lease
deed dated 12-11-1998 relating to the period from 1-1-1996 to
2.6.2024. Even after receipt of Ext.P3 letter, the petitioner did not file
his objections. The District Registrar thereupon issued Ext.P4 order
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dated 3-11-1999 calling upon the petitioner to pay the deficit stamp
duty of Rs.4,22,137/- together with penalty of Rs.250/-. The District
Registrar also issued Ext.P5 order dated 3-11-1999 demanding
payment of the deficit stamp duty of Rs.2,977/- in respect of the lease
deed relating to the period from 3-6-1994 to 31-12-1995 together
with penalty of Rs.150/-. The Sub Registrar thereupon issued Ext.P6
letter dated 23-3-2000 informing the petitioner that if the amount
demanded in Ext.P4 order is not paid within seven days from the date
of receipt of the said letter, steps will be taken to recover the same
under the Kerala Revenue Recovery Act, 1968. This writ petition was
thereupon filed challenging Exts.P4, P5 and P6 and to restrain the
respondents from taking steps to recover the deficit amount of stamp
duty and penalty. The petitioner contends that the method adopted by
the District Registrar to determine the stamp duty payable on the
aforesaid lease deeds is arbitrary and perverse. It is also contended
that the District Registrar ought to have furnished a copy of the report
submitted by the Sub Registrar to the petitioner before passing Exts.P4
and P5 orders.
4. The District Registrar (General) Ernakulam, the first
respondent in the writ petition, has filed a counter affidavit. It is
contended that the writ petition is not maintainable for the reason that
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an appeal lies to the Land Revenue Commissioner under section 54(1)
of the Kerala Stamp Act, 1959. The first respondent has also justified
the decision taken by him to levy stamp duty as determined in Exts.P4
and P5. In respect of the lease deed dated 12.11.1978 covering the
period from 1.1.1996 to 2.6.2024 it is contended that the average
annual rent was determined taking into account the 100%
enhancement in rent at the beginning of every block of seven years
starting from 1.1.1996. It is contended that in view of the stipulations
in clause 10 of the lease deed the annual rent will stand increased by
100% once in every block of seven years starting from 1.1.1996 and
therefore, the enhanced rent has also to be considered for arriving at
the average annual rent payable by the lessee.
5. When the writ petition came up for hearing on 3-12-2008 this
Court directed the learned Government Pleader to make available a
copy of the report dated 28.1.1999 submitted by the Sub Registrar,
Kochi to the District Registrar, Ernakulam, based on which the orders
impugned in the writ petition had been passed. Pursuant to that
order, the learned Government Pleader has filed a memo dated
20.2.2009 and produced along with it the reports dated 28-1-1999
submitted by the Sub Registrar, Kochi to the District Registrar
(General), Ernakulam, while forwarding the originals of the lease deeds
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to that officer. The Sub Registrar, Kochi, has in his report dated
28.1.1999 stated that the stamp duty payable in respect of the lease
deed dated 12.11.1998 relating to the period 1.1.1996 to 2.6.2024 is
Rs.1,70,588/-. Likewise in respect of the lease deed dated 12.11.1998
in respect of the period from 3.6.1994 to 31.12.1995 the Sub
Registrar had reported that the stamp duty payable on the instrument
is Rs.5,087.50. The petitioner has filed I.A.No.7917 of 2010 and
produced along with it a copy of the lease deed dated 12.11.1998
relating to the period from 1.6.1996 to 2.6.2024 as Ext.P8. The
petitioner has also produced Ext.P9 letter dated 7.6.2000 sent by the
Cochin Port Trust informing them that the advance amount of
Rs.54,944/- is refundable without interest on the termination/
expiration of the lease, whichever is earlier.
6. I heard Sri.M.Pathros Matthai, learned senior counsel
appearing for the petitioner and Smt.Smitha Sukumaran, learned
Government Pleader appearing for the respondents. I have also gone
through the pleadings and the materials on record. The Sub Registrar
had in his report dated 28.1.1999 sent to the District Registrar
(General) Ernakulam in respect of the lease deed relating to the period
from 1.6.1996 to 2.6.2024 stated that the annual rent is liable to be
revised every year by 5% and that calculated on that basis the
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average annual rent will be Rs.5,92,867/- and that if the advance
amount of Rs.54,944/- is also reckoned for the purpose of determining
the consideration for the lease deed, the stamp duty payable on the
instrument will be Rs.1,70,588/-. Likewise he has in his report dated
28.1.1999 submitted in respect of the lease deed relating to the period
from 3.6.1994 to 31.12.1995 stated that the average annual rent will
be Rs.27,500/- and that the stamp duty payable in respect of the said
instrument will be Rs.5,087.50.
7. It is evident from the report submitted by the Sub Registrar
that he has arrived at the annual rent for the purpose of levy of stamp
duty reckoning the advance rental paid by the lessee and also 5%
increase in rent payable every year in respect of the lease deed
covering the period from 1.6.1996 to 2.6.2024 The District Registrar
has, however, taken into account the 100% enhancement in rent at
the beginning of every block of seven years starting from 1.1.1996.
The lease deeds in question disclose that in addition to the rent
reserved to be paid, the lessee has paid an amount equivalent to one
year’s annual rent as advance. The lease deeds in question are
admittedly governed by Article 33 (c) of the Schedule to the Kerala
Stamp Act, 1959. As per the said Article where the lease is granted
for a fine or premium or for money advanced in addition to the rent
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reserved, the proper stamp duty payable is the stamp duty as in a
conveyance (No.21 or 22 as the case may be), for a consideration
equal to the amount or value of such fine or premium or advance as
set forth in the lease in addition to the duty which would have been
payable on such lease if no fine or premium or advance had been paid
or delivered. In the lease deed dated 12-11-1998 relating to the
period from 3.6.1994 to 31.12.1995 the annual rent payable is
Rs.27,458/-. The lessee had also admittedly paid the said sum as
advance. Since the lease is granted for money advanced in addition
to the rent reserved, Article 33(c) of the Schedule to the Kerala Stamp
Act, 1959 is attracted. The land leased out to the petitioner is situated
within the Municipal Corporation limits. Therefore, the stamp duty
payable is as in a conveyance (Article 22 of the Schedule to the Kerala
Stamp Act, 1959). Therefore, the lessee is liable to pay stamp duty as
in a conveyance (Article 22) for the consideration equal to the amount
or value of the advance as set forth in the lease deed in addition to
duty which would have been payable on such lease, if no advance had
been paid or delivered. The lease deed dated 12.11.1998 relating to
the period from 3.6.1994 to 31.12.1995 is for a term exceeding one
year but not exceeding five years and therefore, the stamp duty
payable on such lease is governed by Article 33(a)(ii) which stipulates
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that the duty payable shall be the same duty as in a Bottomry Bond
(Article 14 of the Schedule to the Kerala Stamp Act, 1959). Thus the
stamp duty payable in respect of the lease deed dated 12.11.1998
relating to the period from 3.6.1994 to 31.12.1995 is stamp duty
calculated applying Article 22 for the consideration equal to the
amount of advance stipulated therein and stamp duty on the average
annual rent reserved to be paid under the said lease deed applying
Article 14 of the Schedule to the Kerala Stamp Act, 1959. Though, in
the wake of the decision of the Delhi High Court in Chief Controlling
Revenue Authority, Delhi v. Marshall Produce Brokers Co. Pvt.
Ltd., AIR 1980 Delhi 249, the Government have in letter
No.14586/E3/82/TD dated 24.2.1983 ordered that duty is not
chargeable under Article 35(c) of Schedule 1-A of the Indian Stamp
Act, 1899 on the amount of security deposit/advance, which is
refundable on determination of the lease, in addition to the duty
payable on the rent reserved under Article 35(a) of the Schedule to
the Indian Stamp Act, 1899, in the instant case the lease deed does
not recite that the advance is refundable on the termination of the
lease. The petitioner cannot therefore, be heard to contend that they
are not liable to pay stamp duty on the amount of advance in terms of
Article 33(c) of the Schedule to the Kerala Stamp Act, 1959. I am,
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therefore, of the considered opinion that in respect of the lease deed
dated 12.11.1998 relating to the period from 3.6.1994 to 31.12.1995
the petitioner is liable to pay stamp duty for the average annual rent
reserved therein, applying Article 33(a)(ii) and in addition to that
stamp duty under Article 33(c) in respect of the amount of advance. I
accordingly direct that on the petitioner remitting the requisite stamp
duty calculated on that basis, the Sub Registrar shall make necessary
endorsements on the original of the lease deed dated 12.11.1998,
register it and return the original thereof to the petitioner.
8. I shall now deal with the lease deed dated 12.11.1998
relating to the period from 1.6.1996 to 2.6.2024. The lease granted
as per the said lease deed is for a term exceeding 20 years but not
exceeding 30 years and therefore, the stamp duty payable on the said
lease deed is in terms of Article 33(a)(v) of the Schedule to the Kerala
Stamp Act, 1959. The said lease deed also evidences deposit of one
year’s rent by the lessee with the lessor as advance. The said lease
deed also does not recite that the money advanced shall be refundable
on the termination of the lease though the petitioner has produced
Ext.P9 letter dated 7-6-2000 wherein the lessor has clarified that the
sum of Rs.54,944/- paid by the petitioner (lessee) as advance deposit
is refundable without interest on the termination or expiry of lease
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whichever is earlier. Ext.P9 letter is dated 7-6-2000. The lease deed
in question was executed on 12.11.1998 and was presented for
registration before the date of Ext.P9. Therefore, in respect of the said
lease deed also the petitioner is liable to pay stamp duty on the
amount of advance. Then the only question is whether the petitioner
is liable to pay stamp duty reckoning the probable increase in rent by
100% at the beginning of every block of seven years. The District
Registrar has taken the stand that the average annual rent has to be
calculated taking into account the 100% increase in rent during every
block of seven years in addition to the increase in the rate of rent at
5% per annum. The Sub Registrar has however, taken the stand that
the annual increase in rent alone need be taken into account.
Clauses 10 and 11 of the lease deed dated 12-11-1998 relating to the
period from 1-1-1996 to 2-6-2024 read as follows:-
“10. It is distinctly agreed between the
parties that notwithstanding anything contained
hereinbefore the Lessor has the right to increase the
base lease rent at the beginning of every block of
seven years starting from First January One
Thousand Nine Hundred and Ninetysix by an amount
not exceeding 100% of the existing rent provided in
the meantime, it is decided to increase the rate of
rent applicable to the land in Category III of the
Willingdon Island land use plan.
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11. In addition to the revision of rent
provided for in clause 10 above, the rent payable by
the Lessee every year shall be increased by 5% of
the then existing rent.”
9. As per clause 10 of the lease deed, the agreement between
the parties is that if the lessor decides to increase the rate of rent
applicable to the land in Category III of the Willingdon Island Land Use
Plan, the lessor shall have the right to increase the base lease rent at
the beginning of every block of seven years by an amount not
exceeding 100% of the existing rent. That stipulation in clause 10 of
the lease deed cannot, in my opinion, be taken into account for the
purpose of determining the average annual rent reserved to be paid
under the lease deed. The revision of rent contemplated in the lease
deed in clause 10 is contingent on the lessor (Cochin Port Trust)
deciding to increase the rate of rent applicable to the land in Category
III of the Willingdon Island Land Use Plan. Even in that contingency it
is not stipulated that the rent will stand increased by 100% in every
block of seven years starting from 1.1.1996. The stipulation in clause
10, in my opinion, only empowers the lessor to increase the base rent
by an amount not exceeding 100% of the existing rent. The lessor
may decide to increase the rent by 10% or 20% or 30% or 40% or
50%. It may even go up by 100%. Therefore, the registering authority
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cannot, in my opinion, determine the average annual rent payable on
the basis that the rent is liable to be increased by 100% in every block
of seven years starting from 1.1.1996. However, the respondents are,
in my opinion, right in the stand taken by them that the annual
increase in the rent contemplated in clause 11 of the lease deed can be
taken into account for determining the average annual rent reserved.
The lease deed dated 12.11.1998 relating to the period from 1.1.1996
to 2.6.2024 is a lease of the land for a term exceeding 20 years but
not exceeding 30 years. Therefore, the stamp duty payable is the duty
as in a conveyance (Article 22 of the Schedule to the Kerala Stamp
Act, 1959) for a consideration equal to three times the average annual
rent reserved. In addition to that since the lease is granted for money
advanced in addition to the rent reserved to be paid Article 33(c) also
applies and therefore in respect of the amount of advance also the
lessee is liable to pay stamp duty as in a conveyance (Article 22 of the
Schedule to the Kerala Stamp Act, 1959).
10. I accordingly direct that in the event of the petitioner
remitting the requisite stamp duty calculated on the above basis, the
Sub Registrar shall make necessary endorsements on the original of
the lease deed dated 12.11.1998, register it and return the original
thereof to the petitioner.
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The writ petition is allowed to the extent indicated above. The
parties shall bear their respective costs.
P.N.RAVINDRAN,
Judge.
ahg.
P.N.RAVINDRAN, J.
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O.P.No.10606 of 2000
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JUDGMENT
9th July, 2010