JUDGMENT
R.M. Lodha, J.
1. This batch of three writ petitions was heard together and is being disposed of by this common judgment as the issue involved is identical arising out of similar facts.
2. In Writ Petition No. 669/1995 it is the petitioners case that they agreed to purchase from respondent No. 4 viz. Mahindra Ugine Steel Co. Ltd. the premises situated in the building known as ‘Bakhtavar’ on plot No. 229, Block No. III, Backbay Reclamation, Nariman Point, Bombay on or about 17-1-1994. The facts relating to the title of respondent No. 4 in respect of the said property have been set out in paragraph 3 of the writ petition. As per the said facts, the respondent No. 1 viz. State of Maharashtra by their letter dated 17-5-1971 invited offers to lease land bearing plot No. 225 (later renumbered as plot No. 229) of Block Til of Backbay Reclamation Scheme inter alia from Bakhtawar Construction Co. Pvt. Ltd. – the builders. The builders made an offer on 22-5-1971 to take the said plot, on lease upon the terms and conditions set out in a Memorandum marked Exhibit “B”. The builders were put in possession and as per the offer made by the builders which was accepted by respondent No. i, 11 plots were agreed to be leased to different parties vide resolution dated 1-3-1972 (Exh. C). The builders constructed the building known as “Bakhtawar” on the said plot and entered into several agreements for sale of premises therein on ownership basis. By virtue of an agreement dated 31-3-1974, respondent No. 4 Mahindra Ugine Steel Co. Ltd. acquired the said premises on ownership basis from the builders. Subsequently, the holders of the several premises including the respondent No. 4 in the building known as “Bakhtawar” registered themselves as a Co-operative society- respondent No. 3 herein. It is petitioners case that till date no lease has been executed by respondent No. 1 in favour of respondent No. 3 co-operative society. As already indicated above, by an agreement dated 17-1-1994, the respondent No. 4′ agreed to sell the said premises to petitioners for an aggregate consideration of Rs. 45 crores. It appears from the pleadings made in the writ petition that the entire purchase price was paid by the petitioners to respondent No. 4 after obtaining necessary approval from the Income-tax Authorities under Chapter XX-C of the Income-tax Act and the petitioners and respondent No. 4 filed a transfer form duly executed by the petitioners and respondent No. 4 for transfer of the said premises in favour of the petitioners. The respondent No. 3 – co-operative society duly transferred the share certificate No. 3 (for shares bearing distinctive Nos. 11 to 15) in favour of the petitioners. It is petitioners case that on the said agreement and the transfer form, no stamp duty was affixed as there was no conveyance relating to immovable”‘ property contemplated under entry No. 25(b) of Schedule I of the Bombay Stamp Act, 1958. It appears that by the letter dated 21-3-1995 the respondent No. 2 viz. the Collector and Superintendent of Stamps, Bombay called upon the members of respondent No. 3 — co-operative society including the petitioners to furnish to him certain data in the enclosed proforma. The requisite information was furnished by the petitioners to respondent No. 2 vide Exhibits “F” and “G” respectively. On 29-3-1995 the petitioners received demand notice calling upon them to pay the stamp duty of Rs. 4,99,99,980/- being shortfall after adjusting Rs. 20/- as the agreement is on a stamp paper of Rs. 20/-. The petitioners were called upon to, pay a penalty of Rs. 8,99,99,960/- which was imposed on the petitioners by the said demand notice dated 29-3-1995. Accordingly, the petitioners were directed to pay the total amount of Rs. 13,49,99,940/- within 7 days from receipt of notice failing which the petitioners were informed that the said amount would be recovered as the land revenue. The said demand notice dated 29-3-1995 is impugned in the present writ petition. It appears that on 28-3-1995 the respondent No. 2 passed an Order holding that the instrument in question was not properly stamped and impounded the same. By the said Order, the respondent No. 2 demanded the deficit stamp duty of Rs. 4,99,99,980/- and levied penalty of twice the amount of stamp duty evaded. The said Order dated 28-3-1995 (Exhibit I) is also impugned in the present writ petition.
3. Insofar as Writ Petition No. 69471995 is concerned, it is averred by the petitioners in the writ petition that they agreed to purchase from J. Thomas and Co., the shares of respondent No. 3 society viz, Nariman Bhavan co-operative society limited bearing distinctive Nos. 131 to 135 in share certificate No. 27 and ancillary rights in respect of the entire premises Nos. 36, 37 and 38A on the third floor in the building previously known as “Jolly Maker Chamber No. I” and now known as “Nariman Bhavan” situate at plot No. 227, Block No. III, Backbay Reclamation, Nariman Point, Bombay on 11-6-1988 for an aggregate consideration of Rs. 1,21,12,500/-, At that time the vendors J. Thomas and Co., informed the petitioners about their title in respect of the said premises details of which have been given in paragraph 3 of the writ petition. It appears therefrom that respondent No. 1 – State of Maharashtra vide letter dated 22-2-1971 agreed to allot land bearing plot No. 228 (later renumbered as plot No. 227, Block No. III of Backbay Reclamation Scheme to Paramount Premises Ltd. (‘the builders’). The builders made offer on 26-2-1971 for taking the said plot on lease upon the terms and conditions set out in a Memorandum (Exhibit B). The builders were put in possession of the said plot in the month of June 1971 and respondent No. 1 accepted the builders’ offer under which 11 plots were agreed to be leased to different parties and in that regard resolution dated 1-3-1972 (Exh. C) was passed
by respondent No. 1. The builders constructed building known as “Jolly Maker Chamber No. I” (later on altered to Nariman Bhavan) on the said plot and the builders entered into several agreement for sale of premises on ownership basis. By virtue of agreement dated 30-11-1976 M/s. J. Thomas and Co. acquired the said premises on ownership basis. Subsequently the holders of the several premises including J. Thomas and Co. in the building known as “Nariman Bhavan” registered themselves as co-operative society – respondent No. 3 herein. It is petitioners case that till date no lease has been executed by respondent No. 1 in favour of respondent No. 3 society. The respondent No. 3-society transferred the said shares in favour of the petitioners. The petitioners paid the entire purchase price to J. Thomas and Co. and also obtained necessary approval from Income-tax Authorities under Chapter XX-C of the Income-tax Act and transfer form duly executed by the petitioners and J. Thomas and Co. was forwarded to respondent No. 3 for transfer of premises. It is petitioners case that they did not affix Stamp on the said agreement and transfer form as there was no conveyance relating to immovable property as contemplated under entry No. 25(b) of Schedule I of Bombay Stamp Act. On 15-10-1993 the Deputy Controller of Stamps (Enforcement) required the petitioners to furnish documents and information relating to the transfer of the said premises. Thereafter on 21-3-1995 the respondent No. 2 called upon the members of respondent No. 3 including the petitioners to furnish him certain data in the enclosed proforma. The said information was supplied by the petitioners. On 29-3-1995 the petitioners received demand notice informing the petitioners that the agreement dated 11-6-1988 has been impounded and shortfall of stamp duty of Rs. 12,11,190/- was demanded. A penalty of Rs. 24,22,380/- was also imposed on the petitioners. Thus, the petitioners were called upon to pay total amount of Rs. 36,33,570/-, The said demand notice is impugned in the present writ petition. It appears that on 28-3-1995 the respondent No. 2 also passed an Order holding that the instrument in question was conveyance and as proper stamp duty was not paid on the said instrument, directed the said instrument to be impounded. The petitioners were called upon by the said Order to pay deficit stamp duty of Rs. 12,11,1907 and levied penalty of twice the amount of stamp duty evaded. By way of amendment, the Order dated 28-3-1995 is also impugned by the petitioners.
4. In Writ Petition No. 695/1995 it is petitioners case that on 31-1-1992 the petitioners agreed to purchase shares of respondent No. 3 – Mittal Court Premises Co-operative Society limited from Mittal Co-owners bearing distinctive Nos. 2001-2005 in share certificate No. 401 and ancillary rights in respect of office premises consisting of : (1) Ground floor bearing office No. 5/C admeasuring 4747 sq. ft. built up, (2) basement No. 11 beneath it admeasuring 2649 sq. ft. built up and car parking space Nos. 124 and 125 in the building known as “Mittal Court” situate at plot No. 224, Block No. III, Backbay Reclamation, Nariman Point, Bombay. The vendors-Mittal Co-owners informed the petitioners about their title in respect of the said premises details of which have been given in paragraph 3 of the writ petition, What transpires therefrom is that respondent No. 1 viz. State of Maharashtra agreed to allot land bearing plot No. 224 of Block III of Backbay Reclamation Scheme to Mittal Builders and/or Maliram Mittal (‘builders’) by way of lease upon the terms and conditions set out in a
Memorandum (Exh. A). The builders were put in possession of the said plot. The respondent No. 1 accepted, the builders offer by forma! resolution dated 1-3-1992 under which 11 plots bearing plot Nos. 224 (which was then numbered as plot No. 228) were agreed to be leased to different parties. The builders constructed the building in Mittal Court on the said plot and entered into several agreements for sale of premises therein on ownership basis. By virtue of an agreement dated 1-4-1978 the Mittal Co-owners acquired the said premises on ownership basis. Subsequently the holders of the several premises including Mittal Co-owners in the building known as ‘Mittal Court’ registered themselves as co-operative society. It is petitioners case that till date no lease has been executed by respondent No. 1 in favour of respondent No, 3 — co-operative society. The petitioners claim to have paid the entire purchase price to the Mittal Co-owners after necessary approval from the Income-tax Authorities under Chapter XX-C. The petitioners and Mittal Co-owners filed a transfer form duly executed by them for transfer of the said premises in favour of the petitioners (Exh. D). On the basis thereof, the respondent No. 3 society transferred the shares in petitioners name. It is petitioners case that they did not affix stamp duty on the said agreement of transfer form as there was no conveyance relating to immovable property as contemplated under entry 25(b) of Schedule I of Bombay Stamp Act. By letter dated 21-3-1995 respondent No. 2 called upon the respondent No, 3 including the petitioners to furnish to him certain data in the enclosed proforma. The petitioners furnished the said information to respondent No. 2. On 29-3-1995 the petitioners received demand notice informing the petitioners that the instrument in question has been impounded for not paying the requisite stamp duty. According to respondent No. 2, there was shortfall of Rs. 83,95,200/- in payment of stamp duty. The respondent No. 2 also imposed penalty of Rs. 1,67,90,300/- and directed the petitioners to pay total amount of Rs. 2,51,85,570/- within seven days of the receipt of demand notice failing which the petitioners were intimated that the amount would be recovered as land revenue. It appears that on 28-3-1995 the respondent No. 2 passed an Order holding that the instrument was not properly stamped and hence stands impounded. The respondent No. 2 worked out stamp duly payable on the instrument and called upon the petitioners to pay shortfall of stamp duty of Rs. 83,95,190/- and also penalty of twice the amount of stamp duty evaded. The said Order dated 28-3-1995 is also impugned in the writ petition.
5. Before us are identical instruments in all the three matters. The question, we are called upon to decide, is whether the said instruments are conveyance within the meaning of Article 25(1) (b) and Explanation appended thereto and accordingly entail stamp duty on the consideration of transfer.
6. Mr. Kotwal, learned senior counsel appearing for the petitioners contended that by the instruments in question the shares of the co-operative society only have been transferred by the vendors and unless transfer of the said shares was coupled with the transfer of right, title and interest in the immovable property, it cannot be said that there was conveyance of right, title or interest in the immovable property. The learned senior counsel urged that as no lease deed has been executed in favour of the concerned co-operative society by the State of Maharashtra, no right or title in the property was created in favour of the society
and, therefore, the vendors could not have conveyed right, title or interest in the said property to the petitioners and, therefore, instruments in question did not entail the stamp duty. In support of his submission Mr. Kotwal relied upon the judgment of the Apex Court in State of Maharashtra and ors. v. Atur India Pvt. Ltd. .
7. The learned Assistant Government Pleader, on the other hand, justified the impugned notices and the Orders whereby the instruments in question have been held to be conveyance within the meaning of Article 25(1 )(b) and the Explanation appended thereto. The learned A.G.P. relying upon the judgment of the Apex Court in Hanuman Vitamin Foods Pvt. Ltd. and ors. v. Stale of Maharashtra, submitted that the transfer of shares in cooperative society is subject to levy of stamp duty on the basis that it is conveyance. According to the learned A.G.P. in view of the judgment of the Apex Court in Hanuman Vitamin Foods Pvt. Ltd. the submissions of the learned senior counsel have no merit.
8. We have bestowed our thoughtful consideration over the matter. From the averments made in each of the writ petitions, it clearly transpires that the petitioners-purchasers agreed to purchase the shares of the concerned cooperative society held by the vendors and the properties held by them on the basis of such shares. There remains no doubt that the vendors acquired the premises in question by virtue of different agreements on ownership basis from the builders and the holders of the several premises including the vendors in the concerned building registered themselves as co-operative society. There is no dispute before us that in all these transactions the petitioners-purchasers had paid the complete consideration of transfer and also obtained possession of the said premises from the vendors. Merely because no lease deed has been executed by the State of Maharashtra in favour of the concerned co-operative society till date, it cannot be said that under the instruments in question the petitioners have only been transferred the shares and not right, title and interest in the said properties. The instruments clearly revealed that the vendors have transferred to the petitioners the shares standing in their name of the concerned co-operative society together with all interest in the property of the said society and all other rights having description attached to or arising out of or incidental to their ownership and holding, save and except some part of premises which is specifically excluded. The transfer form in each case in unmistakable term records the declaration of the vendors that no one else except them have any claim in or title to or charge upon the said shares and all their interest in the property of the society and that upon transfer the transferee viz. the petitioners-purchasers shall hold the said shares together with all interest in the property of the said society. No doubt is left in the circumstances that what has been conveyed by the instruments in question is not only the transfer of shares of the co-operative society but the said transfer of shares is coupled with right, title and interest in the immovable property which the vendors were having in such property on the basis of those shares and by virtue of said transfer of shares the petitioners are entitled to hold right, title and interest in the said property now.
9. In Veena Hasmukh Jain and Anr. v. State of Maharashtra and Ors., the Apex Court in paragraphs 8, 9 and 10 of the report held thus:–
“8. The duty in respect of an agreement covered by the Explanation is leviable as if it is a conveyance. The conditions to be fulfilled are that if there is an agreement to sell immovable property and possession of such property is transferred to the purchaser before the execution or at the time of execution or subsequently without executing any conveyance in respect thereof, such an agreement to sell is deemed to be a “conveyance”. In the event a conveyance is executed in pursuance of such agreement subsequently, the stamp duty already paid and recovered on the agreement of sale which is deemed to be a conveyance shall be adjusted towards the total duty leviable on the conveyance. Now, in the present case, the agreement entered into clearly provides for sale of an immovable property and there is also a specific time within which possession; has to be delivered. Therefore, the document in question clearly falls within the scope of Explanation I. It is open to the legislature to levy duty on different kinds of agreements at different rates. If the legislature thought that it would be appropriate to collect duty at the stage of the agreement itself if it fulfils certain conditions instead of postponing the collection; of such duty till the completion of the transaction by execution of a conveyance deed inasmuch as all substantial conditions of a conveyance have already been fulfilled such as by passing of a consideration and delivery of possession of the property and what remained to be done is a mere formality of execution of a sale deed, it would be necessary to collect duty at a later (sic agreement) stage itself though right, title and interest may not have passed as such. Still, by reason of the fact that under the terms of the agreement, there is an intention of sale and possession of the property has also been delivered it is certainly open to the State to charge such instruments at a particular rate which is akin to a conveyance and that is exactly what has been done in the present case. Therefore, it cannot be said that levy of duty is not upon the instrument but on the transaction. Therefore, we reject the contention, raised on behalf of the appellants in that regard.
9. The learned counsel for the appellants urged that the character of an instrument cannot be determined by reason of a subsequent event to take place such as handing over of possession. But a close examination of the provisions of the Explanation; will make it clear that in the case of an agreement to sell immovable property possession is transferred at any time without executing the conveyance in respect thereof and such an instrument is deemed to be a “conveyance”. The object of the Explanation is clear that if an agreement is entered into and that agreement itself contemplates the delivery of possession of the property within the stipulated time, then such an agreement should be deemed to be a conveyance for the purpose of duty leviable under the Bombay Stamp Act.
10. It is clear that the object of the Stamp Act is to levy stamp duty on different kinds of instruments. The legislature, in the present case, has chosen to levy a rate of duty equivalent to conveyance in respect of an agreement though the transaction may not have been completed because of certain instruments arising out of such agreement being executed and possession thereof being taken prior to or simultaneous with the documentor subsequently. But in the Explanation, it is not clear that if the document provides that possession has to be taken without execution of the conveyance, certainly it would attract the appropriate duty. If the agreement provides that possession will be handed over on the execution of a conveyance as contemplated under section 11 of the MOF Act, then the Explanation shall not be attracted at all. In the present case, it is clear that in the terms of the agreement, there is no provision made at all for execution of the conveyance. On the other hand, what is submitted is that the provisions of the MOF Act could be applied to the agreement and, therefore, a conveyance could be executed subsequently when it is not clear as to when the conveyance is to be executed and the stipulated time within which the possession; has to be handed over. If that is so, it is clear that the document would attract duty as if it is a conveyance as provided in the Explanation. Thus we find no error in the view taken by the High Court. It is not necessary to examine in these appeals as to whether the instrument in question itself conveys a title or not. Therefore, we uphold the decision of the High Court made in this regard. The appeals are dismissed.”
10. Based on the said judgment, in Hanuman Vitamin Foods Pvt. Ltd. and Ors. vs. State of Maharashtra and Anr., , the Apex Court answered the question in affirmative whether or not transfer of shares in a Cooperative society is subject to levy of stamp duty. In paragraph 6 and 7 of the judgment, the Apex Court ruled thus :–
“6. The question whether or not a transfer of shares in a Co-operative society is subject to levy of stamp duty on the basis that it is a conveyance has already been answered by this Court in the case of Veena Hasmukh Jain v. State of Maharashtra, . In this case it has already been held that such agreements would be covered by Article 25 of the Bombay Stamp Act, 1958. It is held that stamp duty would be leviable as if it is a conveaynce. This Court has held that these are in effect agreements to sell immovable property as the possession of such property is transferred to the purchaser before or at the time of or subsequent to the execution of the agreement. It is held, such an agreement to sell must be deemed to be a Conveyance. It is fairly conceded that this judgment fully covers question (a) set out hereinabove.
7. As question (a) is already answered by the abovementioned judgment in Veena’s case. In our view, question (b) does not survive. As seen above stamp duty is sought to be levied under Article 25, Schedule I of the Bombay Stamp Act. The stamp duty is being levied not on transfer of shares but on the basis that the agreement is a conveyance. There is no dispute that there, is legislative competence in the State Government to levy stamp duty on a conveyance of property. Question No. (b) has been raised on the footing that the instrument of transfer is a form of transfer of shares. Now that it is held that such an instrument is not an Instrument of transfer of shares, but it is, in fact, a conveyance, question; (b) no longer survives.”
11. On the basis of the aforesaid legal position laid down by Apex Court, in the facts and circumstances before us, we have no doubt that the instruments in question are chargeable to stamp duty under Bombay Stamp Act, particularly Article 25(1)(b), Explanation 1 of Schedule I of the said Act as thereby the vendors have conveyed right in favour of the petitioners in immovable property. The transfer of shares of the concerned co-operative society by vendors in favour of the petitioners are not transfer of movable property alone but amount to conveyance of immovable property as they amount to agreement for sale of immovable property as provided in aforesaid provision.
12. Before we close, we may observe that by interim orders in all these three matters, the petitioners have made payment of aggregate stamp duty payable on the instruments in question. The learned A.G.P. conceded before us that under the prevailing Amnesty Scheme on payment of stamp duty by the petitioners on or before 30-6-1995, the penalty leviable on each of the instrument was Rs. 250/-. The learned senior counsel appearing for the petitioners submitted that pursuant to the interim order a penalty of Rs. 250/- has also been paid by the petitioners in respect of each instrument.
13. Accordingly, we do not find any error in the impugned orders and notices to the extent the respondent No. 2 has held that the said instruments were not properly stamped and on the basis of the consideration involved in each of the instruments determined the stamp duty payable under Article 25(1)(b) Explanation 1 and demanded deficit stamp duty. However insofar as imposition of penalty is concerned since as per the prevailing Amensty Scheme the petitioners had paid deficit stamp duty before 30-6-1995, penalty imposed on each of the instruments is reduced to Rs. 250/- and the impugned notices and orders stand modified to that extent. As the payment of reduced penalty has already been made by the petitioners, no further order needs to be passed by us.
14. Rule in all the three Writ petitions is discharged with the aforesaid clarification.
15. No costs.
The parties may be provided ordinary copy of this order duly authenticated by the Court Associate on payment of usual copying charges.