District Registrar (General), Ernakulam and Sub Registrar (Sub Registry Office), Ernakulam v M/S P.J.L. Clothing Pvt. Ltd.

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT:** ## **THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN** **THURSDAY, THE 26TH DAY OF OCTOBER 2017/4TH KARTHIKA, 1939** ## **W.P(C).No.32050 of 2009 (A)** **--------------------------------------** **PETITIONER(S):-** **---------------** **1. THE DISTRICT REGISTRAR (GENERAL), ERNAKULAM, KOCHI-16.** **2. THE SUB REGISTRAR (SUB REGISTRY OFFICE), ERNAKULAM.** **BY GOVERNMENT PLEADER SMT.A.C.VIDHYA.** **RESPONDENT(S):-** **---------------** **M/S.P.J.L. CLOTHING PVT.LTD.,** **A COMPANY INCORPORATED UNDER THE COMPANIES ACT,1956 AND HAVING THEIR REGISTERED OFFICE AT 27, REGHUVANSHI ESTATE, SENAPATI BAPAT MARG, LOWER PAREL, MUMBAI-400013, REPRESENTED BY ITS ASSISTANT MANAGER, PRASANT NAMBIAR, AGED 34, S/O.GOPALAN NAMBIAR, RESIDING AT KRISHNA PRIYA, ANCHAMPEEDIKA, KANNUR.** **BY ADV. SRI.K.V.JAYACHANDRAN.** **THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 03-10-2017, THE COURT ON 26-10-2017 DELIVERED THE FOLLOWING:-** **W.P(C).No.32050 OF 2009-A** **-------------------------** ## **APPENDIX** **PETITIONER(S)' EXHIBITS:-** **-------------------------** **EXHIBIT P1 THE TRUE COPY OF THE ORDER OF THE DISTRICT REGISTRAR. EXHIBIT P2 THE TRUE COPY OF THE JUDGMENT DATED 18.8.09 IN CMA.114/08.** **RESPONDENT(S)' EXHIBITS:-------------------------** **NIL.** **Vku/-** **[ true copy ]** “C.R.” ## K. Vinod Chandran, J ------------------------------------------ ## W.P.(C).No.32050 of 2009-A -----------------------------------------Dated this the 26[th] day of October, 2017 ## **JUDGMENT** Whether the deed executed in favour of the respondent was a lease for 9 [nine] years or of an indefenite period, was the question raised before the District Court in the context of the adjudication with respect to the stamp duty leviable under the Kerala Stamp Act, 1959 [for brevity “Stamp Act”]. 2. The short facts to be noticed are that the respondent entered into a lease with the owner of a building, bearing door No.40/8814 of Kochi Corporation taking on rent approximately 900 square feet carpet area in the ground floor of the building at the rate of Rs.1,00,000/- [Rupees one lakh] per month for a period of 9 years with a periodic increase of 15% in every 3 years. A dispute arose insofar as a condition in the deed which enabled the lessee to continue in occupation even after the expiry of the period; if the security deposit of Rs.10,00,000/- [Rupees ten lakhs] was not refunded. The condition also enabled interest at the rate of 18% on the security amount from - 2 - WP(C) No.32050 of 2009 the date of expiry of the lease agreement, which did not carry any interest during the period of agreed lease of 9 years. 3. Stamp duty was paid as per Article 33(a)(iii) of the Schedule to the Stamp Act, of Rs.1,87,700/- determining the same on the basis of a lease of 9 years. The Sub Registrar refused to register the document treating it to be undervalued and referred it to the District Registrar (General)/Collector [for brevity “Collector” or “District Registrar”] for reason of his opinion that the stamp duty leviable was under Article 33(a)(viii) of the Schedule to the Stamp Act. The stamp duty leviable, according to the Sub Registrar, was Rs.5,80,313/-. The District Registrar concurred with the same. The said order was challenged before the District Court under Section 45B of the Stamp Act, which reversed the order of the District Registrar; impugned herein. 4. The first challenge made against the order is that an appeal is not maintainable for reason of the proceedings having not been taken under Section 45B of the Stamp Act. The said defence was raised before the District Judge also, who negatived the same. The contention raised was on the premise that Section 45B mandated - 3 - WP(C) No.32050 of 2009 registration of a document even if it is undervalued before reference to the Collector. Hence, the proper course which should have been taken by the Sub Registrar on presentation of the document and on an opinion of undervaluation; was to register the document and then refer it to the Collector. An adjudication is also provided under Chapter III of the Stamp Act, wherein no appeal is provided therefrom. However, in view of Section 45B, the Sub Registrar before whom the document was presented could not have sought for an adjudication. The proper procedure would have been to register the document and then refer it to the Collector. An order of adjudication made by the Collector under Chapter III could have also been challenged before this Court under Article 226 of the Constitution of India. 5. Here, no fault can be found on the person who presented the document for registration, since it was incumbent upon the Sub Registrar to register the document and then refer it to the Collector. Having not done so, there can be no defence raised by the Government that an appeal would not lie due to the default of the servant of the Government. This Court does not find any reason to interfere with the said finding of the District Judge. - 4 - WP(C) No.32050 of 2009 6. What remains is the consideration as to the actual stamp duty leviable. The lease was obviously for a period of 9 years with a specific condition permitting continuance of the lessee; on the failure of the lessor to refund the security amount. The lease then could have been extended for an indefinite period. If the security amount was declined to be paid after the expiry of the lease period, then the lessee could have continued in the premises on the same conditions as in the deed, with enhancement of lease rent at the rate of 15% in every 3 years. The lessee would also have been entitled to 18% interest on the security deposit. Though this may not result in a “perpetual” lease being found, it has to be found that the Article does not refer to a perpetual lease and refers to a lease of “ indefinite” period. Article 33 (a)(viii) is extracted hereinbelow: ## “THE SCHEDULE -----------------------------------------------------------------------------------Sl.No. Description of instrument Proper Stamp Duty -----------------------------------------------------------------------------------(1) (2) (3) ------------------------------------------------------------------------------------ **33. Lease –** including an underlease or sub lease and agreement to let or sublet. - 5 - WP(C) No.32050 of 2009 - **a)** Where by such lease the rent is fixed and no premium is paid or delivered. ## xx xxx xxx (viii) where the lease does not The same duty as a purport to be for any conveyance (Sl.No.21 or definite term: 22 as the case may be) for a consideration equal to three times the amount or value of the average annual rent which would be paid be paid or delivered for the first ten years if the lease continued so long”. ## 7. The learned Government Pleader has referred to **AIR** ## **1989 S.C.1834 [** _**Provash Chandra Dalui v. Biswanath Banerjee**_ **],** which interpreted a lease, reduced to writing, which, at the first instance, was for a period of 10 years with a clause for extension for periods of 5 years at an increased lease rent upto 20 years and then a further extension for a period of one year. An issue arose whether the lease would be covered under the Calcutta Thika Tenancy Act, 1949; which excludes _inter ali_ a a lease, the duration of which is expressly stated to be for a period of not less than 12 years. The lessee claimed to be a Thika tenant, since the lease at the first instance was only for a - 6 - WP(C) No.32050 of 2009 term of 10 years. It was contended that even before the expiry of the term, the Thika Act came into force and, hence, there was no question of continuance of the tenancy on the basis of the regular performance of the terms of the agreement by the lessee. The Hon’ble Supreme Court, reading the specific recitals in the deed, which permitted continuance of the lessee for periods beyond the initial period of 10 years, on due performance of the terms and on payment of rent, found it to be indicative of the lease being one having a duration of more than 12 years; especially in the context of the employment of the term “extension” in the deed as distinguished from a “renewal”. Hence, it is not the initial term alone which has to be looked into; but the deed must be read as a whole to harmonize the various provisions. The Hon’ble Supreme Court referred to _**N.E.Railway v. Hastings**_ **, (1900)** ## **AC 260:** “The deed must be read as a whole in order to ascertain the true meaning of its several clauses, and the words of each clause should be so interpreted as to bring them into harmony with the other provisions of the deed if that interpretation does no violence to the meaning of which they are naturally susceptible”. - 7 - WP(C) No.32050 of 2009 8. Examining the subject deed in the background of the above principles, it is to be noticed that though the initial period of lese was 9 years, there was a term which permitted the lessee to continue in occupation after the 9 year period; if the lessor fails to repay the security amount after the expiry of the initial period. The stipulation was of a right to use and occuppy the premises till the refund of the Security Deposit on the lessee continuing to pay the escalated lease rent as originally stipulated; with the security amount earning interest @ 18% from the date of expiry of the lease agreement. Here also, the terms indicate a continuance and not a renewal as such. 9. The learned District Judge, on merits found that the lease is clearly restricted to 9 years. The condition for continuance, interpreted as a perpetual lease or a lease agreement for an indefinite period, falling under Article 33(a)(viii) of the Stamp Act was found to be a wrong interpretation. It was found that the District Registrar had obviously lost sight of the fact of the lessor is liable to pay penal interest at the rate of 18% per annum consequent on the lessor’s failure to repay the security amount after the initial lease period. It is not clear as to how the said fact of interest on security deposit, could - 8 - WP(C) No.32050 of 2009 have any bearing on the issue to be decided. 10. This Court is of the opinion that the finding of the learned District Judge that the lease deed clearly indicates the period of lease to be of 9 years is erroneous. The deed permitted continuance of the lease beyond the period of 9 years on the contingency of refusal of the lessor to pay back the security amount. At the time of registration it cannot be contemplated as to whether the lease would expire within the 9 year period itself. It may or may not expire with the 9 years and the parties to the deed having thought it fit to incorporate a condition by which the lease could be continued for an indefinite period, definitely the lease at the time of registration has to be deemed to be one for an indefinite period. 11. The lease being not for a definite term, definitely the stamp duty payable under Article 33(a)(viii) would be leviable. The order of the District Judge to the extent it upheld the maintainability of the appeal is not interfered with; however, to the extent it set aside the order of the District Registrar is set aside. The respondent would be liable to pay the stamp duty as provided under Article 33(a)(viii) of the Appendix to the Stamp Act. If the instrument has already been - 9 - WP(C) No.32050 of 2009 registered, then proceedings shall be taken for recovery of the balance amounts due as stamp duty from the respondent or from the owner of the building and there shall also be a charge on the property to the extent of the deficient stamp duty. Considering the fact that 9 years have elapsed from the date of lease, irrespective of whether the lease was continued or not the stamp duty shall be levied in accordance with the finding of this Court, under Article 33(a)(viii) of the Schedule to the Stamp Act. The writ petition is allowed. No costs. Sd/K.Vinod Chandran Judge. vku/- [ true copy ]