PETITIONER: STATE OF MAHARASHTRA Vs. RESPONDENT: ATUR INDIA PVT. LTD. DATE OF JUDGMENT11/02/1994 BENCH: MOHAN, S. (J) BENCH: MOHAN, S. (J) VENKATACHALLIAH, M.N.(CJ) CITATION: 1994 SCC (2) 497 JT 1994 (1) 640 1994 SCALE (1)532 ACT: HEADNOTE: JUDGMENT:
The Judgment of the Court was delivered by
MOHAN, J.- The respondent is a company incorporated under
the Companies Act. It carries on business of construction
of multi-storeyed buildings and selling tenements therein on
ownership basis in accordance with the provisions of
Maharashtra Ownership Flats (Regulation of the Promotion of
Construction, Sale, Management and Transfer) Act, 1963.
2.In the year 1968, the Government of Maharashtra started
reclamation work in the area known as Backbay Reclamation
area abetting Bombay City on the Cuffee Parade and Nariman
Point. The object of reclamation was to provide for
construction of multi-storeyed buildings. The reclaimed
land was divided into five blocks; each was given a number;
for Block No. 5, the appellant (State of Maharashtra) issued
the invitation to the public to make offers for purchase of
plot of land for putting up multi-storeyed buildings. The
plots and structures were to be given on 99 years’ lease at
specified rates.
3.Pursuant to the advertisement, the respondent offered
to secure the plot. It made an offer along with the letter
dated December 15, 1970 in respect of Plot No. 46, Block No.
V, Backbay Reclamation Estate, measuring 2500 square metres.
The respondent also filed a questionnaire as required to be
filled in accordance with the advertisement in which it was
clearly mentioned that the offer was as promoter.
4.On January 1, 1971, the Collector of Bombay informed
the respondent that the State Government had accepted the
tender for lease of the plot at the rate of Rs 2225 per sq.
metre. The respondent was also called upon to make
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payment of security deposit of Rs 75,000. This was complied
with. A guarantee bond was also furnished for a sum of Rs
3,04,000. A cheque of Rs 300 was deposited towards the cost
of preparation of agreement. In the letter dated February
23, 1971, it was stated, drawing the attention to the answer
in the questionnaire that the respondent was acting as a
promoter and the lease might be granted in favour of
cooperative society.
5.Thus, it was made clear that the company will be acting
as the promoter and builder for the aforesaid scheme. The
lease of the plot will be taken in the name of cooperative
housing society. A specific request was made to the
Collector to make necessary provision for grant of lease in
the name of the cooperative society. On March 16, 1971, the
Collector of Bombay informed the respondent that the
Government had sanctioned the lease of the plot in favour of
respondent as promoter of the cooperative society.
6.On June 21, 1972, the respondent informed the Collector
that it had agreed to sell the plots in the buildings and
the purchasers of the said flats would form a cooperative
society under the name of Basant Cooperative Housing Society
Limited. The respondent informed the Government that the
cooperative society was registered. On July 30, 1974, the
building was completed and completion certificate was
obtained. The Collector sent a reply dated December 13,
1977 informing the respondent.
7.On receipt of this letter, a request was made that a
deed of lease be prepared in the name of the Navrang Basant
Cooperative Housing Society Ltd. at the earliest
convenience. As the Secretary, Revenue Department, Ministry
of Revenue & Forests Department did not respond to the
request, another letter was written on February 17, 1978
relating to the demand for execution of lease. On July 25,
1980, the Collector of Bombay informed the respondent that a
direct lease deed in respect of Plot No. 101 will be
executed in the name of cooperative housing society provided
the respondent being the confirming party subject to
charging of premium under the following terms:
“(a) Amount equal to the stamp duty chargeable
on a document between the original allottee
and the Government.
(b)Amount equal to the stamp duty
chargeable on document of assignment by the
original allottee to the cooperative society,
company etc. had the lease deed been executed
with the original allottee.
(c)50 per cent of the unearned income i.e.
50 per cent of the difference between the
valuation of the land at the time of the
original allotment and at the time of
transfer. In case the lease deed is to be
executed with cooperative society the date of
transfer for the purpose of determining the
value of the land for purposes of calculating
the unearned income should be the date on
which the society has been registered. In the
case of companies etc. also the same criteria
should be applied provided the company is
registered on a date later to the date of
original allotment. Otherwise the date on
which request for execution of
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lease in the name of such company etc. is made
or the date on which the transfer has taken
place.
(d)Legal expenses i.e. expenses on
preparation of the agreement to lease which
may be done away with plus expenses on
preparation of the lease deed which might have
been entered into which the original allottee
as the case may be.
(e) Registration charges with reference to
(d) above.”
8.The respondent, thereafter addressed several
communications informing the Collector that the assumption
that the company was transferring the leasehold interest in
favour of the cooperative housing society is entirely
misconceived. It was pointed out that right from the
inception, it has been clearly held out that the lease is to
be executed in favour of the cooperative society formed by
the purchasers of the flats. The Collector specifically
agreed to this course. It was further stated that at the
time of offer itself, it was disclosed that the company was
a promoter or builder and the lease was never to be executed
in its favour. Therefore, the Collector refused to pay any
heed to the request made by the respondent to execute the
lease in favour of cooperative housing society without
demanding premises and imposing other conditions on the
assumption that the leasehold rights had to be transferred
by the respondent in favour of cooperative housing society.
9.On February 24, 1983, the Superintendent of Stamps
addressed to the respondent inter alia reciting that by
virtue of certain correspondence between the respondent and
the Government of Maharashtra, the respondent had agreed to
abide by certain terms and conditions of lease to be
executed in respect of Plot No. 101. The letter further
recited that the lease had not been executed by the
respondent. Therefore, the Superintendent claimed that the
agreement arrived at by correspondence between the
respondent and the Government of Maharashtra amounted to
lease falling under Article 36 of the Bombay Stamp Duty Act,
1958. On that basis, a demand for stamp duty for a sum of
Rs 1,86,175 was made. Failing to do so, it was stated that
the same would be recovered as arrears of land revenue. It
was this which led to filing of Writ Petition No. 2494 of
1983 before the High Court of Bombay.
10.The learned Single Judge by judgment dated August 30,
1990 dismissed the petition in the view that Article 36 of
Schedule 1 of the Bombay Stamp Act, 1958 applied to the
case. The demand was legal. In fact, the respondent was
not mere promoter. On the contrary, the respondent was a
nominee of the proposed cooperative housing society.
11.Aggrieved by the same, Appeal No. 1371 of 1990 was
filed before the High Court. The Division Bench by a
judgment dated July 23, 1992 reversed the judgment of the
learned Single Judge. It was found that the correspondence
between the respondent and the Government spelt out an
agreement to lease; but that agreement was not for the
benefit of the respondent but for the cooperative housing
society. It is not open to the State Government (appellant
herein) to refuse to execute lease in favour of the
501
cooperative housing society on the ground that the
correspondence sets out agreement between the Government of
Maharashtra and the respondent herein. Accordingly, the
letter dated February 24, 1983 and the demand contained
therein was quashed. The appeal was allowed and a writ of
mandamus was issued directing the State Government to
execute the lease in favour of Navrang Basant Cooperative
Housing Society Ltd.
12. It is under these circumstances, the present appeal by
special leave came to be preferred.
13. Shri S.K. Dholakia, learned counsel for the State of
Maharashtra should urge that an offer was invited on
November 30, 1970. In Part II of that offer, memo of terms
and conditions for lease of Block V, Backbay Reclamation was
enclosed. Condition No. 7 specifically stated that the use
of he building will be for private residence only.
Condition No. 13 stipulated at the licensee will be put in
possession of the plot on his executing the agreement to
lease. More than this, under Condition No. 15, the licensee
was debarred either directly or indirectly from
transferring, assigning or encumbering or part with interest
under or the benefit of the agreement to lease of any part
thereof in any manner without the previous consent of the
Government in writing. It further stipulated that the
Government will be free to refuse to such consent or grant
it in its absolute discretion. Equally, condition No. 16
stated that the lessee will not assign or part with
possession of the demised premises or any part thereof or
transfer the lessee’s interest therein without the previous
consent in writing of the lessor. having regard to all these
terms, it is clear that there cannot be any assignment of
benefit of contract. On December 15, 1970, the respondent
wrote a letter making this offer. The Government in its
reply dated 1.1971 (sic) had stated that the Government has
been pleased to accept the tender for the lease at the rate
of Rs 2225 per sq. metre. The request for grant of lease in
the name of cooperative society came to be made prior to the
registration of the society. The society was registered on
June 21, 1972. For five years, no action was taken which is
rather strange. If really, the benefit of the contract was
intended for the cooperative society, there is no
justification for maining quiet for these long number of
years. Therefore, as learned Single judge rightly held that
the contention on behalf of the respondent is purely
technical. What remained to be done was mere execution of a
document. us, it is clear the privity of the contract was
between the State of Maharashtra and the respondent, the
cooperative society being nowhere in he picture.
14.In opposition to this, Mr Harish N. Salve, learned
counsel for the respondent would urge that apart from
answering the questionnaire on February 23, 1971, it was
specifically stated that the company proposed to construct
the building on the above said plot and sell the flats on
ownership basis. Thereafter the purchasers of the flats
will form a cooperative housing society to which the rights
of the company including the right of lease of plot will be
transferred. On that basis, the request was made for
granting the lease in the name of the said cooperative
housing society. This was the specific
502
request made to the Collector. On March 16, 197 1, the
respondent received a letter from the Collector stating that
Government has sanctioned the lease of the above plot in
favour of the respondent as promoters of a cooperative
housing society. It was on this basis that the request was
made on June 21, 1972 drawing the attention of the Collector
to the letter dated March 16, 1971 and permission was sought
to transfer the rights, title and interest in favour of
Basant Cooperative Housing Society Ltd. After the formation
of society, on December 13, 1977, the Government sanctioned
the request to transfer the rights, title and interest in
Plot No. 101 to the Basant Cooperative Housing Society.
Therefore, bypassing all these, to merely go by the terms
and conditions of a licence and to contend that what was
granted was a lease and nothing further remained excepting
the execution of a formal lease deed is not correct. When
the tender of the respondent was accepted, it was nothing
more than an agreement to lease. It is open to the
respondent’s society to assign the benefit under that
agreement. If really what was agreed to between the
appellant State and the respondent is nothing more than an
agreement to lease it does not require registration. The
benefit of it can be assigned in favour of the cooperative
society to which the Collector gave his consent and
permitted the transfer. Now to contend that it was an
agreement of lease and therefore, liable to stamp duty
ignores the important fact that throughout the respondent
acted only as promoters with the knowledge and consent of
the appellant. Besides, clause 15, on which reliance is
placed now, was never enforced.
15.A brief analysis of the facts may be made before we go
to the legal aspect.
16.On November 30, 1970, a notice was issued inviting
offers for the lease of various plots from Block V, Backbay
Reclamation Estate which specifically mentioned Plot No. 46
(which is renumbered as Plot No. 101) with which we are
concerned. To the said notice was annexed in Part II, a
memo of terms and conditions for the lease. Clauses 7, 13,
15 and 16 are relevant for our purposes and they are
extracted below :
“7. The user of the building will be for
private residence only.
13.The licensee will be put in possession of
the plot on his executing the agreement to
lease which will be prepared by the Solicitor
to Government Law & Judiciary Department, at
the entire cost of the licensee including
stamp duty and registration charges. The
licensee will have to pay a deposit of Rs 300
towards the professional charges of the
Solicitor to Government.
15.The licensee will not directly or
indirectly transfer, assign, encumber or part
with the interest under or the benefit of the
agreement to lease of any part thereof in any
manner without the previous consent in writing
of the Government. Government will be free to
refuse such consent or grant it, subject to
such conditions including a condition
regarding the payment of premium as Government
may in its absolute discretion think fit.
503
16.The lessee will not assign or part with
possession of the demised premises or any part
thereof or under let or transfer the lessee’s
interest therein without the pervious consent
in writing of the lessor. The lessor will’ be
at liberty to refuse such consent or grant it
subject to such conditions including a
condition requiring payment of premium as the
lessor may in his absolute discretion think
fit.”
But what is necessary to notice is the draft agreement of
licence clearly stated in clause II as under :
“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
contemplated shall be executed and registered
but the licensee shall only have a licence to
enter upon the said land for the purpose of
performing this agreement.
17.On this, the respondent made an offer on December 15,
1970 in the prescribed form duly stamped along with
annexures enclosing the receipt for payment of Rs 75,000 as
earnest deposit. In the questionnaire which accompanied
this offer, it was stated as under :
“The company proposes to sell the flats in the
said proposed building on ownership basis and
the purchasers of such flats will form a
cooperative society or an incorporated body to
whom the property and the rights of the
company will be transferred.”
18. On January 1, 197 1, the Collector wrote
to the respondent as under “The Government has
been pleased to accept your tender for the
lease of the above plot at the rate of Rs 2225
per sq. metre.”
19.On February 23, 1971, the respondent
requested the Collector to above the
Government for the issue of necessary orders
for the lease of plot. it was specifically
stated in that letter as under :
“We would also like to inform you that at the
time of making the offer for the above plot,
in the accompanying questionnaire form, we
have stated that the company proposes to
construct the building on the above plot and
to sell the flats on ownership basis and the
flat purchasers shall form into a cooperative
society or an incorporated body to which the
rights of the company including the rights for
the lease of the above plot will be
transferred. As such, the company will be
acting as the promoters or the builders for
the aforesaid scheme and the lease of the plot
will be taken by us in the name of a
cooperative society or an incorporated body to
be formed or constituted hereafter.
In these circumstances, we would request you
that necessary provision for granting lease in
the name of a cooperative society or an
incorporated body as aforesaid, may please be
made in the orders to be passed by the
Government.”
20.Referring to this letter, the Collector in his reply
dated March 16, 1971 stated asunder:
504
“No. SB/CC3/LND 2832 (46)
Office of the Collector of Bombay,
(Survey Branch)
Old Custom House,
Fort, Bombay 1.
Dated 16.3.1971
To
M/s Atur India Pvt. Ltd.,
Civil Engineers,
31 1, Mirabelle,
33 A, New Marine Lines,
Bombay-20.
Gentlemen,
Sub: Lease of Plot No. 46, Block V, B ackbay Reclamation.
Please refer to your letter dated 23.2.1971.
2.Govt. has sanctioned the lease of the above plot in
your favour as promoters of a cooperative housing society or
an incorporated body to be formed by you, on the ground rent
calculated at 6 1/2% per annum on the value of the land at
Rs 2297 per sq. metre subject to the terms and conditions
detailed in the accompanying memo whose terms and conditions
have already been agreed to by you.
3.1 am requesting the Asstt. Solicitor to Government L.
& J. Deptt. to take inhand the preparation of the draft
agreement to lease.
Yours faithfully,
Sd/
Collector of Bombay.
Copy forwarded with compliments to the:
Asstt. Solicitor to Govt. L. & J., Deptt., with reference
to G.R. & R & F Deptt. No. LBL 2570/290652-AI, dated 3rd
March, 1971, please take in hand the preparation of the
draft agreement to lease.
Copy submitted for information to the Secretary to Govt. R
& F Deptt., A-1, Branch Sachivalaya.
Sd/-
Collector of Bombay.”
21. With this letter was enclosed the draft agreement to
lease. On February 16, 1972, the Collector wrote to the
respondent “as you have furnished the required undertaking
on stamp paper, the possession of the above plot may be
deemed to have been handed over to you with effect from the
date of this letter”. On June 21, 1972, the respondent
informed the Collector that it agreed to sell the flats in
the building under construction and the purchasers would
form a cooperative society under the name of Basant
Cooperative Housing Society Ltd. and that the society is
being registered shortly. On that basis, it was requested
to grant permission to transfer the
505
rights, title and interest of the respondent in favour of
Basant Cooperative Housing Society. The building was
completed some time in 1974 and Bombay Municipal Corporation
granted occupation certificate by a letter dated July 30,
1974. On August 8, 1977, the Basant Cooperative Housing
society Ltd. came into being. On December 13, 1977, the
following letter as addressed to the respondent :
“No. SB/CC3/LND-2832 (101)
Collector’s Office,
Survey Branch,
Old Custom House,
Fort,
Bombay.
Dated : 13.12.1977.
To
The Secretary,
M/s Atur India Pvt. Ltd.,
31 1, Mirabelle,
33 A, New Marine Lines,
Bombay-20.
Sub : Lease of Plot No. 101, Block V B.B.R. to M/s Atur
India P. Ltd.,
Sir,
Please refer to your letter No. AI/1 10/7-72/582 dated 21st
June, 1972. Govt. has sanctioned your request to transfer
the rights, title and interest in the Plot No. 101 from
Block V, Backbay Reclamation to the Basant Cooperative
Housing Society Ltd.
Yours faithfully,
Sd/-
For Collector of Bombay.”
Whereupon the request was made on February 17, 1978
reiterating the demand to execute the lease in favour of the
society. It was at this stage, the Collector wrote a letter
dated May 25, 1978 demanding stamp duty on the basis that
there was a lease from the Appellant Government to the
respondent and onward to the society and further demanding
unearned increase @ 50% of the difference between the market
value and the price at which allotment was made. On
February 24, 1983, a letter was addressed by the
Superintendent of Stamps to the respondent requiring the
respondent to pay stamp duty. The correspondence was
impounded on the ground that the agreement arrived at by the
correspondence in this case amounted to lease.
22. On a careful examination of these documents, the
following emerge
(i)What was contained in the notice dated
November 30, 1970 was only an offer to lease
of land and the offer was specifically as
promoter which is evident from the answer to
the questionnaire which has been extracted
above.
506
(ii)The appellant stated that it was pleased
to accept the tender of the respondent for the
lease. At that time, the appellant was aware
of the offer of the respondent as promoter.
(iii) Right from February 23, 1971, again and
again the respondent reiterated his position
as promoter.
(iv) A request was made on December 7, 1977
for execution of lease in favour of the
cooperative society. That was specifically
acceded to by the Collector on December 13,
1977.
(v)There was no actual demise on the date
of acceptance of the offer of tender of the
respondent. Even on February 16, 1972, it was
only a case of deemed possession.
23.The notice dated November 30, 1970
contained various clauses requiring the use of
building only for private residence and
debarred from transferring or assigning the
right. Clause 15 was never enforced at any
point of time. If really, that was so, the
appellant would not have agreed to the
respondent’s transferring the rights, title
and interest in favour of the cooperative
society. Therefore, the stand of Mr Harish N.
Salve, learned counsel for respondent that
clause 15 was not enforced, has to be
accepted.
24.The facts mentioned above are clearly
indicative of an agreement to lease and not an
agreement of lease. The distinction between
the two may be seen first with reference to
English law. Woodfall in Law of Landlord and
Tenant,Vol. 1, 28th Edn., 1978 at page 127
states as under:
“A contract for a lease is an agreement
enforceable in law whereby one party agrees to
grant and another to take a lease. The
expressions ‘contract for lease’ and
‘agreement for lease’ is to be preferred as
being more definite, agreement frequently
means one of many stipulations in a contract.
A contract for a lease is to be distinguished
from a lease, because a lease is actually a
conveyance of an estate in land, whereas a
contract for a lease is merely an agreement
that such a conveyance shall be entered into
at a future date.”
(emphasis supplied)
In contradistinction to this, in the case of a lease, there
must be words of demise. On this Woodfall states at page
184 as under:
“The usual words by which a lease is made are
‘demise’ and ‘let’; but any words which amount
to a grant are sufficient to make a lease.
Whatever words are sufficient to explain the
intent of the parties, that the one shall
divest himself of the possession and the other
come into it, for any determinate time,
whether they run in the form of a licence,
covenant or agreement, are sufficient, and
will in construction of law amount to a lease
for years as effectually as if the most proper
and pertinent words had been used for that
purpose; for if the words used are sufficient
to prove a lease of land, in whatsoever form
they are introduced, the law calls in the
intent of the parties, and moulds and governs
the words accordingly.”
507
Again at page 185, it is stated :
“Although no specific words are necessary to
create a lease, yet there must be words used
which show an intention to demise, therefore,
where, on the letting of land to a tenant, a
memorandum was drawn up, the terms of which
were, that he should on a future day bring a
surety and sign the agreement, neither of
which he ever did; it was held, that the
memorandum was a mere unaccepted proposal, and
did not operate as a lease. (Doe d. Bingham v.
Cartwright’)”
25. Hill & Redman in Law of Landlord and Tenant, 17th Edn.,
Vol. 1 at page 1 00 dealing with this aspect of the matter
states as under:
“DISTINCTION BETWEEN LEASE AND AGREEMENT FOR
LEASE
40.(1) A lease is a transaction which as of
itself creates a tenancy in favour of the
tenant.
(2)An agreement for a lease is a
transaction whereby the parties bind
themselves, one to grant and the other to
accept, a lease.
(3)If the agreement for a lease is one of
which specific performance will be granted the
parties are, for most but not all purposes, in
the same legal position as regards each other
and as regards third parties as if the lease
had been granted.
(4)Whether an instrument operates as a
lease or as an agreement for a lease depends
on the intention of the parties, which
intention must be ascertained from all the
relevant circumstances.
50.An instrument in proper form (a); by
which the conditions of a contract of letting
are finally ascertained, and which is intended
to vest the right of exclusive possession in
the lessee either at once, if the term is to
commence immediately, or at a future date, if
the term is to commence subsequently is a
lease which takes effect from the date fixed
for the commencement of the term without the
necessity of actual entry by the lessee (b).
An instrument which only binds the parties,
the one to create and the other to accept a
lease thereafter, is an executory agreement
for a lease, and although the intending lessee
enters, the legal relation of landlord and
tenant is not created.”
26. A useful reference may be made to Green v. Bowes-Lyon2.
This ruling clearly brings out the distinction between an
agreement to lease and a lease. At pp. 304-05, it is held
by Pearson, J. as under:
“The defendant’s contention is that the
instrument dated March 19, 1958, that is the
instrument called a reversionary lease, is in
truth an agreement between the landlord and
the tenant ‘for the grant to the tenant of a
future tenancy of the holding on terms and
from a date specified in the agreement’ within
the meaning of Section 28. If that is right
then the defendant’s sub-lease from the
plaintiff was the ‘current tenancy’ referred
to in Section 28, and it continued only until
April 5,
1 (1820)3B&Ald326
2 (1960) 1 All ER301:(1960)1 WLR 176
508
1959, and no longer, and was not, therefore, a tenancy to
which Part 2 of the Act applied. So it was not continued
indefinitely under Section 24. Then on that basis it is
said that the agreement binds the interest of the plaintiff
under para 3(1) of Schedule 6 to the Act of 1954, and that
para 4 of that schedule gives the plaintiff a right to
compensation.
The question in the end is a very simple one : is the
instrument of March 19, 1958, a reversionary lease or is it
an agreement for the grant of a future tenancy?
Having regard to its name and provisions I hold that it is a
reversionary tenancy and not an agreement for the grant of a
future tenancy. It creates an estate and not merely a set
of contractual rights and obligations.
There is a definition of term of years absolute in the Law
of Property Act, 1925, Section 205(1) (XXVII), as a term of
years ‘taking effect either in possession or in reversion
whether or not at a rent’ and so on.
Then it is stated in Woodfall on Landlord and Tenant (25th
Edn.), P. 286, that
‘A lease may be limited to take effect either
immediately or from a future date. It is
provided by the Law of Property Act,
1925, Section 205(1) (XXVII), that “term of
years absolute” includes a term of years
taking effect either in possession or in
reversion.’
At p. 287 of Woodfall on Landlord and Tenant
(25th Edn.) it is stated :
‘Reversionary leases : All leases which are
not to take effect in possession immediately,
but from a future day, are considered as
reversionary leases, within the meaning of
powers to grant leases in possession and not
in reversion. In legal acceptance a lease for
years in reversion, and a future interest for
years, are one and the same : a future lease
and a lease in reversion are synonymous. But
strictly speaking a reversionary lease-is one
granted for a term which is to commence from
or after the expiration or other determination
of a previous lease.’
In my view, this instrument is a reversionary lease which
was granted for a term which was to commence from and after
the expiration of the previous lease, which is the lease
from Mr Rye to Mr Wells, expiring on April 4, 1959, and this
instrument granted is a reversionary lease commencing on
April 5, 1959.
It seems to me that the distinction between the reversionary
lease referred to in Section 65(3) and the agreement for a
future tenancy referred to in Section 28 is the difference
between something which creates an estate and something
which creates merely a set of contractual rights and
obligations.”
27.We will now turn to Indian law. Mulla in The Transfer
of Property Act (7th Edn.) at page 647 dealing with
agreement to lease states as under :
509
“An agreement to lease may effect an actual
demise in which case it is a lease. On the
other hand, the agreement to lease may be a
merely executory instrument binding the
parties, the one, to grant, and the other, to
accept a lease in the future. As to such an
executory agreement the law in England differs
from that in India. An agreement to lease not
creating a present demise is not a lease and
requires neither writing nor registration.
As to an executory agreement to lease, it was
at one time supposed that an intending lessee,
who had taken possession under an agreement to
lease capable of specific performance, was in
the same position as if the lease had been
executed and registered. These cases have,
however, been rendered obsolete by the
decisions of the Privy Council that the equity
in Walsh v. Lonsdale does not apply in India.”
28.If it is merely an agreement to lease as to whether it
requires registration has come up for discussion of this
Court in Tiruvenibai v. Lilabai3. At page 111 it was held
as under:
“Before dealing with these points, we must
first consider what the expression ‘an
agreement to lease’ means under Section 2(7)
of the Indian Registration Act, hereinafter
referred to as the Act. Section 2(7),
provides that a lease includes a counterpart,
Kabuliyat, an undertaking to cultivate and
occupy and an agreement to lease. In Hemanta
Kumari Debi v. Midnapur Zamindari Co. Ltd.4
the Privy Council has held that ,an agreement
to lease, which a lease is by the statute
declared to include, must be a document which
effects an actual demise and operates as a
lease’. In other words, an agreement between
two parties which entitles one of them merely
to claim the execution of a lease from the
other without creating a present and immediate
demise in his favour is not included under
Section 2, sub-section (7). In Hemanta Kumari
Debi case4 a petition setting out the terms of
an agreement in compromise of a suit stated as
one of the terms that the plaintiff agreed
that if she succeeded in another suit which
she had brought to recover certain land, other
than that to which the compromised suit
related, she would grant to the defendants a
lease of that land upon specified terms. The
petition was recited in full in the decree
made in the compromised suit under Section 375
of the Code of Civil Procedure, 1882. A
subsequent suit was brought for specific
performance of the said agreement and it was
resisted on the ground that the agreement in
question was an agreement to lease under
Section 2(7) and since it was not registered
it was inadmissible in evidence. This plea
was rejected by the Privy Council on the
ground that the document did not effect an
actual demise and was outside the provisions
of Section 2(7). In coming to the conclusion
that the agreement to lease under the said
section must be a document which effects an
actual demise the Privy Council has expressly
approved the
3 1959 Supp 2 SCR 107: AIR 1959 SC 620
4 LR (1919) 46 IA 240: AIR 1919 PC 79
510
observations made by Jenkins, C.J., in the
case of Panchanan Bose v. Chandra Charan
Misra5 in regard to the construction of
Section 17 of the Act. The document with
which the Privy Council was concerned was
construed by it as “an agreement that, upon
the happening of a contingent event at a date
which was indeterminate and, having regard to
the slow progress of Indian litigation, might
be far distant, a lease would be granted”; and
it was held that ‘until the happening of that
event, it was impossible to determine whether
there would be any lease or not’. This
decision makes it clear that the meaning of
the expression ‘an agreement to lease’ ‘which,
in the context where it occurs and in the
statute in which it is found, must relate to
some document that creates a present and
immediate interest in the land’. Ever since
this decision was pronounced by the Privy
Council the expression ‘agreement to lease’
has been consistently construed by all the
Indian High Courts as an agreement which
creates an immediate and a present demise in
the property covered by it.”
29.Examining in the light of above, we hold that the
notice of the appellant dated November 30, 1970, the offer
of the respondent dated December 15, 1970 and the acceptance
of the Collector of the tender of respondent for lease dated
January 1, 1971 would merely constitute an agreement to
lease. Clause 13 clearly contemplates that the licensee
will be put in possession of plot on his executing the
agreement to lease. Therefore, it is clear that by the
respondent accepting the offer on December 15, 1970, the
relationship of lessor and lessee between the appellant and
the respondent had not come to be established. Further as
pointed out earlier there was no actual demise on the date
of the accepting of tender. Therefore, it is only an
agreement to lease. It will not fall under Section 2(n) of
the Act in which case, it is not an instrument chargeable to
duty and the question of impounding does not arise. Much
less, there could be a demand for stamp duty.
30.It is the benefit of this agreement which is sought to
be assigned in favour of Basant Cooperative Housing Society.
In the narration of facts, we have pointed out as to how
from the beginning i.e. from December 15, 1970 onwards, when
the offer was made by the respondent in answer to a
questionnaire, it was made clear that the offer was made as
a promoter. This position was again affirmed on February
23, 1971 which was accepted by Collector on March 16, 1971.
The letter from the Collector dated December 13, 1977 puts
the matter beyond doubt because the respondent’s request to
transfer the rights, title and interest in Plot No. 101, in
favour of Basant Cooperative Housing Society was sanctioned.
In law, the benefit of such a contract can be assigned.
That is precisely what the respondent did in the instant
case.
5 ILR (1910) 37 Cal 808: 14 CWN 874
511
513