G. Ramarathnam vs Jayamma and Others

Budihal R.B., J.—1. Heard the arguments of the learned Counsel appearing for the writ petitioner-defendant No. 1 and also the arguments of the learned Counsel for respondents-plaintiffs.

This writ petition is filed by the petitioner requesting the Court to set aside the order dated 19.12.2015 passed by the XVI Additional Judge, Court of Small Causes, Bangalore (SCCH 14) in S.C. No. 1056/2014.

Learned Counsel for the writ petitioner herein during the course of arguments submitted that there was original lease agreement between Muniyappa and defendant No. 1 which was a registered sale agreement which is also not disputed by the other side. He submitted that the said document was produced by the plaintiffs themselves and got it marked. It is also his contention that in respect of the said lease is concerned, shara was entered into on the said document wherein Muniyappa extended the period of lease by receiving a sum of Rs. 22 lakhs from defendant No. 1 and the said shara is signed by the lessor as well as the lessee and also the witnesses therein. When the said shara was going to be marked during the course of trial, the plaintiffs raised objections for marking the said shara on the ground that under the Karnataka Stamp Act, after paying the proper stamp duty only, the said shara can be considered by the Court. He also submitted that so far as the shara is concerned, it is only for the extension of the original lease period, which was under a registered lease agreement. It was also submitted that so far as the amount of Rs. 22 lakhs which is paid by defendant No. 1 to Muniyappa is concerned, it was by way of security deposit which is going to be refunded after the expiry of the lease period and therefore, it will not attract the payment of stamp duty. The trial Court without examining this legal aspect has come to the conclusion that the shara which gives the right in respect of the immoveable property regarding extension of the lease period, creates an interest in the property as per Section 107 of the Transfer of Property Act and has wrongly held that the stamp duty is to be paid. Accordingly, it passed the impugned order directing defendant No. 1 to pay the deficit stamp duty at Rs. 18,36,000/-.

Learned Counsel submitted that the order passed by the trial Court is against the provisions of the Karnataka Stamp Act. He also relied upon the decision of this Court in the case of The Chief Controlling Authority v. T.I.I. Ltd. reported in ILR 2003 KAR 4366 to draw the attention of this Court to principle enunciated in the said decision as well as the relevant paragraph-14 The impugned order passed by the trial Court is illegal. Hence, he sought to allow the petition by quashing the impugned order.

Per contra, learned Counsel for the respondents/plaintiffs during the course of his arguments submitted that the plaintiffs have raised a contention regarding the said shara is concerned that it is manipulated with an intention to continue into the said property under the guise that the lease period has been extended. He also submitted that this shara is seriously challenged by the plaintiffs and the shara is also not bearing the date on which date the shara was made. It is also his contention that when under the shara, the further period is extended which is beyond the period of 11 months, under the provisions of the Transfer of Property Act also this shara requires registration by a separate registered document and the parties cannot take advantage that the original lease agreement is the registered document. Therefore the shara extending the lease period require further registration in the matter.

The learned Counsel drew the attention of this Court to the provisions of Section 34 of the Karnataka Stamp Act that when the document is insufficiently stamped, it should be brought to the notice of the Court as to how the document has to be dealt with. He drew the attention to the principle of the said Section with regard to the duty of the Court to collect the duty and penalty over the said document in order to get it validated. He also draw the attention to Sub-clause (b) of Clause (1) of Article 30 of the Karnataka Stamp Act that whatever may be the amount that is called, but the fact that Rs. 22 lakhs said to have been received by Muniyappa as per the contention of defendant No. 1 is for renewal of the lease period. Therefore, interest is created in the immoveable property and for such a shara and for extension of the lease period, as contended by the other side, they have to make payment of necessary stamp duty on the said shara is concerned. Hence, he submitted all the aspects both factual as well as legal have been considered by the trial Court by giving detailed reasoning in its order and ultimately directed defendant No. 1 to pay the amount to the tune of Rs. 18,36,000/-. The impugned order is legal and valid and it does not call for any interference by this Court. In support of his contentions, he also relied upon the decision of this Court in the case of C.K. Ravi Prasanna v. T.K. Gowramma reported in , ILR 2007 Kar. 2807. Hence, he submitted that there is no merit in the writ petition and the same is rejected.

I have perused the grounds urged in the writ petition and also the impugned order passed by the trial Court dated 19.12.2015.

Admittedly the dispute between the parties is only in respect of the shara that is said to have been entered into on the original lease agreement on the last page. The said shara reads as under:

"SHARA (RENEWAL OF LEASE DEED)

"I, Muniyappa, the lessor herein, has this day received a sum of Rs. 22,00,000/- (Rs. Twenty Two Lakhs Only) by cash from the existing lessee G. Ramarathna, for extension of lease period, for further 20 years from 05.03.2006, pertaining to the leased premises in Belimutt road, Cottonpet, Bangalore-2, vide corporation No. 140/145, Commonly known as "SUPER TALKIES" which I have entered into lease deed previously on 20th June 1974, for a period of 40 years, and at present, I am in need of funds for legal necessities, I have this day renewed this Lease period for 20 years period form 05.03.2006, for the above said amount, which is hereby duly acknowledges by cash before the witness. I, the lessor hereby agree and undertake to incur and repay the entire renovation charges of the said Talkies borne by the lessee, at the time of termination of this Deed of lease, or at the time of vacating the premises, by the Lessee. If the existing period may extend for further period the lessor hereby agree and undertake to extend the existing the existing lease period for further period on expiry of existing period."

Therefore looking into the shara that was entered into on the lease agreement is concerned, as it is rightly submitted, this is so far as extension of lease for a further period of 20 years from 5.3.2006 pertaining to the leased premises. Therefore, the submission of the learned Counsel for the respondents-plaintiffs that this is beyond the period of 11 months and though the actual period of extension is mentioned as 20 years, it will be for a period of 14 years. But it is the contention of the learned Counsel for the writ petitioner-defendant No. 1 that as per the decision of this Court stated supra and looking into paragraph-14 of the said decision, it is in the nature of security deposit or advance amount. Therefore, this is not the premium fixed in the nature of rent in respect of the property is concerned. The relevant paragraph-14 of the decision of this Court stated supra reads as under:

"14. In view of the above said reasoning the inevitable conclusion would be that amount reserved under Clause 3.2 of lease deed in the present case is not money advanced in addition to rent reserved and does not attract duty under Article 30(c) of schedule to the Act and accordingly, we give our opinion to the questions referred as follows:

Q. No. 1: The duty paid on the amount reserved under clause 3.2 of lease deed dated 18.10.1996 as refundable Security Deposit under Article 47 of schedule to the Act is appropriate.

Q. No. 2: The amount reserved as refundable Security Deposit under clause 3.2 of lease deed dated 18.10.1996 is not money advanced in addition to rent reserved and does not attract duty under Article 30(c) of schedule to the Act.

Q. No. 3 The amount received under clause 3.2 of lease deed dated 18.10.1996 having been charged on the basis of ten years lease for the purpose of calculating an average annual lease amount for payment of stamp duty cannot be levied with duty again as the instrument does not attract the provisions of Article 30(c) of the schedule to the Act.

The reference is answered accordingly. A copy of this order under the seal of the Court and signature of the Registrar shall be sent to the Chief Control Officer of Revenue Authorities as required under section 56(2) of the Karnataka Stamp Act."

Perusing the shara, it reveals that there is no specific mention so far as the amount is concerned and whether this amount is received by way of premium or by way of advance amount or as security deposit, but in this connection, if the provisions of Article 30(1)(b) of the Karnataka Stamp Act is considered, it is mentioned that the duty is payable whether the amount is in the nature of advance or premium or whatever name it is called. Therefore, the trial Court taking this aspect into consideration and also the decision relied upon by defendant No. 1 and discussing about the application of the said decision to the case and the facts and circumstances, ultimately held that when the said shara is going to create an interest in the immoveable property and the extension of period or renewal of the period is exceeding the period of 11 months, then it requires compulsory registration of the said shara under a separate document.

Looking into the reasons adopted by the trial Court in its order, it has given a detailed reasoning discussing the matter and taking the contention of both sides as well as principle laid down in the decision relied upon by the learned Counsel for the parties before it. Looking into the aspects of the matter, I do not find any illegality in the impugned order nor there is any perversity or capricious view in the conclusion arrived at by the Court below in giving such direction to defendant No. 1 to make payment. Hence, there is no valid and justifiable ground for this Court to interfere with the impugned order passed by the trial Court. Accordingly, writ petition is hereby rejected.