Stamp Act, 1899 – s.27– Andhra Pradesh Act (8 of 1988) – Proviso to s.27 added – Andhra Pradesh (Amendment) Act, 1971 – s.47A – Transfer of Property Act, 1882 – s.8 – ‘immovable property’– Exigibility of the plant and machinery to stamp duty under the Act – Second respondent auction purchased the property, at a bid of Rs.8.35 crores, consisting of land, building, civil works, plant & machinery and other assets – On the basis of direction given in C.A. No. 1203 of 2004 at the instance of the second respondent, the Official Liquidator was accorded permission to execute the sale deed in favour of the first respondent (nominee of the second respondent) – Sale deed executed in favour of the first respondent – Respondents 1 & 2 applied for registration of the sale deed on the basis that the land and building had to be registered with the value thereof being shown as Rs.1,01,05,000/ – First appellant informed the first respondent that due to some reasons registration was kept pending – Respondents 1 and 2 challenged the said communication – Second appellant-District Registrar directed the first respondent and the Official Liquidator to deposit stamp duty besides penalty – Writ petition filed by Respondents 1 & 2, Single Judge of High Court remitted the matter to the second appellant – Division Bench inter alia directed the Sub-Registrar to consider the respondents’ request for registration of the lands and buildings purchased by them and determine its value on the date of presentation of the document for registration, collect the stamp duty and registration fees thereupon – Held: From a reading of the Recital Clause in conjunction with s.8, Transfer of Property Act, the intention of the parties become self-evident that the vendor intended to convey, all things, which inter alia stood attached to the earth – Mere fact that there is no express reference to plant and machinery in the Recital Clause cannot mean that the interest in the plant and machinery which stood attached to the land, which was scheduled, was not conveyed to the first respondent – Sum of Rs.8.35 crores was unambiguously indicated as the total sale consideration for the asset sold to the first respondent, comprising of land, building, civil works, plant and machinery and current assets, etc – However, first respondent took out the value of the land, building and civil works and shown it at Rs.10105000/-, indicating only the said amount as value – This was to tide over the liability to stamp duty for what was actually, in law, conveyed to the first respondent – Effort of respondents 1 & 2 was to avoid payment of the stamp duty as due in law – Division Bench erred in not noticing the true purport of the sale deed in conjunction with s.8, 1882 Act and definition of the word ‘immovable property – The sale deed operated to convey the rights over the plant and machinery as well, which was comprised in the land scheduled in the sale deed – In the nature of the transaction, and what was actually sold by the Official Liquidator, plant and machinery, such as would answer the description of immovable property, must also be found part of the property for the purpose of the stamp duty and other charges as per law – First respondent is liable in law as vendee to pay the stamp duty – Impugned judgment set aside – Judgment of the Single Judge restored subject to the modification that the direction to the second appellant to give the benefit of GoMS dtd.07.02.2001 is set aside – Second appellant will ascertain the value of plant and machinery – It will also go into the question, whether the first respondent would be entitled to the benefit of the exemption of stamp duty, etc., as claimed and make available the exemption, if entitled in law – Registration Act, 1908 – General Clauses Act, 1897.
Andhra Pradesh Amending Act (8 of 1988) – Proviso added to s.27, Stamp Act, 1899; s.47A – Held: Proviso to s.27 does empower the Officer to inspect the property, make local inquiries in the facts, call for connected records, examine them and satisfy that the provisions of s.27 are complied with – s.27 provides that the consideration, if any, and the other facts and circumstances, affecting the chargeability of any instrument or the amount of duty, must be fully and correctly set forth – Equally, s.47A, empowers the Registering Officer to deal with undervalued instruments. Transfer of Property Act, 1882 – s.8 – Held: s.8 declares that in the absence of an express or implied indication, a transfer of property passes to the transferee all the interests, which the transferor was capable of passing in the property and in the legal incidents thereof – Such incidents includes, inter alia, where the property is land, all things attached to the earth – When the property is machinery attached to the earth, the movable parts thereof also are comprehended in the transfer.
Disposing of the appeals, the Court
HELD: 1.1 The second respondent was, undoubtedly, the auction purchaser. The auction sale related to the assets of the company, which included the land, the building, the plant and machinery and other assets. The vendee, who under the sale deed is the first respondent, being the nominee of the second respondent. It has 49 been recited in Clause (H) that the vendee has paid the full consideration. More significantly, it is stated therein also that as per the terms of the sale properties have been sold by the vendor to the vendee on ‘as is where is whatever there is basis’. The total sale consideration, it is clear again from the sale deed itself, is Rs.8.35 crores, for the land, building, civil works, plant and machinery and current assets, etc. However, what had been done is an amount of Rs.10105000/- has been taken as the value of the land, building and civil works based on the offer received by the Liquidator, when the assets were put up for sale individually. It is further stated that the purchaser has agreed to pay the stamp duty/registration fees/transfer fees as per the value derived by the Sub-Registrar. This last statement is traceable to order dated 15.06.2004 passed in civil Appeal 1202 of 2004 which we have referred to in paragraph 6. A copy of the said order is enclosed with the sale deed. It is further stated that the 46 acres and a few cents was ‘now’ registered in favour of the vendee. In the Recital Clause, thereafter, what has been purported to be done is that it is shown that the vendors have sold, transferred, conveyed, alienated, assigned to the vendee all the scheduled property. The matter does not end there. The aforesaid recital is followed up with the words ‘along with all the rights, easements, interests, etc., the rights which ordinarily passed on through such sale on and over the said land in favour of the vendee and to hold and enjoy the same as absolute owner. In the Schedule, no doubt, what is mentioned is 46 acres and a little over 71 cents. We have already referred to the conduct of the first and second respondents, which commended itself to the learned Single Judge as conveying the impression that they wanted to repair and maintain the plant and machinery. Furthermore, they have also sought the benefit of the exemption provided under GoMS 103 dated 07.02.2001, which Government Order purported to provide for certain concessions in the form of exemption from stamp duty and registration fee in favour of industrial units. We are in agreement with the view taken by the learned Single Judge that the unit was purported to be operated as a going concern and apparently the first respondent did not intend to dispose of the plant and machinery as scrap. Bearing in mind this context, we proceed to examine the exigibility of the plant and machinery to stamp duty under the Act. [Para 34][1133-C-H; 1134-A-C]
1.2 It is, no doubt, true that what is purported to be conveyed, going by the Recital Clause, is, at first blush, the land as comprised in the Schedule, viz., 46 and odd acres. What is conveyed is immovable property. Immovable property has been defined in the General Clauses Act, 1897 as ‘including land, benefits to arrive out of land and things attached to the earth or permanently fastened to anything attached to the earth’. When it comes to the definition of ‘immovable property’ in the Transfer of Property Act, it has been defined as ‘not including standing timber, growing crops or grass’. In the Registration Act, 1908, immovable property includes, apart from land and buildings, things attached to the earth or permanently fastened to anything which is attached to the earth but not including standing timber, growing crops or grass. Most importantly, we cannot also be oblivious that Section 8 of the Transfer of Property Act declares that in the absence of an express or implied indication, a transfer of property passes to the transferee all the interests, which the transferor was capable of passing in the property and in the legal incidents thereof. Such incidents includes, inter alia, where the property is land, all things attached to the earth. When the property is machinery attached to the earth, the movable parts thereof also are comprehended in the transfer. In the Recital Clause, a proper reading of the same would tend to indicate that what is conveyed is rights over the scheduled property, which, no doubt, is the land, as described in the Schedule but it includes all the rights, easements, interests, etc., i.e., the rights which ordinarily passed on such sale over the land. It is from a reading the said recital in conjunction with Section 8 of the Transfer of Property Act that the intention of the parties become self-evident that the vendor intended to convey, all things, which inter alia stood attached to the earth. The mere fact that there is no express reference to plant and machinery in the Recital Clause cannot mean that the interest in the plant and machinery which stood attached to the land, which was scheduled, was not conveyed to the first respondent. The value of, what was actually purchased, has been expressly set out in the Preamble to the sale deed. The value has been reflected as Rs.8.35 crores. The sum of Rs.8.35 crores had been, in unambiguous terms, indicated as the total sale consideration for the asset sold to the first respondent, comprising of land, building, civil works, plant and machinery and current assets, etc. The first respondent has taken out the value of the land, building and civil works, and shown it at Rs.10105000/-, and then indicating only the said amount as value. This is apparently to tide over the liability to stamp duty for what was actually, in law, conveyed to the first respondent. The Division Bench appears to have proceeded on the basis that the first appellant could not force Respondents 1 and 2 to pay stamp duty on the value of the plant and machinery, when they do not seek its registration. As respondents 1 and 2 had given up their claim for exemption based on the Government Order, the Division Bench accepted the same. The Division Bench overlooked the nature of the transaction, the effect of the auction sale, the property sold and their value, and the fact that the Company Judge had by order dated 15.06.2004 left it open to the authority to determine the liability. The Division Bench did not consider the preambular part. It also failed to bear in mind the power available with the authorities. [Paras 36, 37][1134-F-H; 1134-A-G]
1.3 The effort of respondents 1 and 2 was to avoid payment of the stamp duty as due in law. The Division Bench erred in not noticing the true purport of the sale deed in conjunction with Section 8 of the Transfer of Property Act and the definition of the word ‘immovable property’. Viewed in the context of Duncans Industries Limited and Member, Board of Revenue, as also the other attendant facts, including the contents of the Preambular portion, as also the conduct of the Respondents 1 and 2, it would be clear that the sale deed operated to convey the rights over the plant and machinery as well, which was comprised in the land scheduled in the sale deed. As far as the plant and machinery is concerned, it must, however, be only such plant and machinery, which was permanently embedded to the earth and answering the description of the immovable property as defined. It would appear that such an inquiry was not done to ascertain the same by the appellants. [Para 38][1136-A-C]
Duncans Industries Limited v. State of Uttar Pradesh and others (2000) 1 SCC 633; Member, Board of
Revenue v. Arthur Paul Benthall AIR 1956 SC 35 : [1955] SCR 842 – referred to.
1.4 The proviso to Section 27 of the Act, added by the Andhra Pradesh Amending Act (8 of 1988), does empower the Officer to inspect the property, make local inquiries in the facts, call for connected records, examine them and satisfy that the provisions of Section 27 are complied with. Section 27, undoubtedly, provides that the consideration, if any, and the other facts and circumstances, affecting the chargeability of any instrument or the amount of duty, must be fully and correctly set forth. Equally, Section 47A of the Andhra Pradesh Amending Act (8 of 1988), empowers the Registering Officer to deal with undervalued instruments. [Para 39][1136-D-E]
1.5 In the nature of the transaction, and what was actually sold by the Official Liquidator, plant and machinery, such as would answer the description of immovable property, must also be found part of the property for the purpose of the stamp duty and other charges as per law. [Para 40][1136-H; 1137-A]
1.6 There are two aspects, which remain. Firstly, on account of the default of the appellants to effect service on the second respondent, the SLP stood dismissed. We, however, notice that, at the request of the second respondent, the Company Court ordered that the sale deed be executed in favour of its nominee, viz., the first respondent. The first respondent, accordingly, became the vendee under the sale deed. It is the first respondent, which is liable in law as vendee to pay the stamp duty. Therefore, we would think that the absence of the second respondent, may not affect passing of an order as against the first respondent, which, as the vendee, is the entity liable to bear the liability towards stamp duty. Another aspect is that the matter may have to go back to consider the actual plant and machinery as would answer the description of immovable property as correctly pointed out by the learned Amicus. The passage of time may have its bearing. But it may have to be carried out. As noticed by us, the appellants had also appealed against the Judgment of the learned Single Judge. The Single Judge, it must be remembered, while upholding the Order of the second appellant (District Registrar) in regard to the value of the plant and machinery, had directed deducting the value of the current assets and also directed making available benefits of GoMS 103 dated 07.02.2001. Apparently, Respondents 1 and 2 in the Appeal gave up their claim to the exemption on the basis that they succeeded in having the sale deed registered without having to include the value of plant and machinery before the Division Bench. The stand of the appellants would appear to be that GoMS 103 dated 07.02.2001 applied to new industrial units other than those listed as ineligible under GoMS 9 dated 05.01.2001. It appears to be their case that the subject industry is a mini steel industry and mini steel industry plants were not eligible and the item appears as Item 56 in Annexure 1 to GoMS 9 dated 05.01.2001. Since, the respondents gave up their claim for exemption, the case of the appellants was not gone into by the Division Bench. The second appellant can look into this aspect as well. [Paras 41, 42][1137-B-G]
1.7 The Appeal filed against Writ Appeal No. 1873 of 2005 is allowed. The Appeal filed against the Judgment in Writ Appeal No. 2457 of 2005 is partly allowed. The impugned Judgment is set aside and the Judgment of the learned Single Judge is restored subject to the modification that the direction to the second appellant to give the benefit of GoMS 103 dated 07.02.2001 is set aside. The second appellant will ascertain the value of plant and machinery on the basis of it answering the description of the immovable property as understood in law. The second appellant will also go into the question, whether the first respondent would be entitled to the benefit of the exemption of stamp duty, etc., as claimed while taking a decision and make available the exemption, if entitled in law. The second respondent cannot be made liable under this judgment. [Para 43][1137-H; 1138-A-C]
Himalaya Space House Company Limited v. Chief
Controlling Revenue Authority (1972) 1 SCC 726 : [1972] 3 SCR 332; Chief Controlling Revenue Authority v. Coastal Gujarat Power Ltd. and others (2015) 10 SCC 700 : [2015] 9 SCR 36 – referred to.
As published in the Supreme Court Reports, Supreme Court of India. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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