M/S Maheshwari Filling vs State Of Raj And Anr

Avneesh Jhingan, J

This writ petition is filed seeking quashing of order dated 22.04.2015 passed by the Rajasthan Tax Board, Ajmer (for short ‘the Board’) accepting the revision filed by the State.

The brief facts are that on 11.03.2002 respondent No.2 M/s Indian Oil Corporation Limited executed lease deed in favour of the petitioner. The lease deed was registered by the Sub Registrar

Masuda, District Ajmer. An objection was raised by the audit that the valuation of the property was Rs.38,41,992/- and the requisite stamp duty was not paid. Reference made under Section 51 of the Rajasthan  Stamp  Act,  1998  (for  short  ‘the  1998  Act’)  was dismissed  by  the Collector vide order  dated  29.12.2009.  The revision filed by the State against the order of the Collector was accepted by the Board vide order dated 29.12.2009.

The dispute is with regard to interpretation of the condition in the lease deed that as to whether the lease deed was executed only for a period of fifteen years for monthly rent of Rs.7500/-.

The relevant condition of the lease deed is quoted :-

“PROVIDED ALWAYS AND IT IS AGREED AND DECLARED that at the expiration or the said term of 10 years this lease will be automatically and without any further act or any of the parties hereto be renewed for further term of 10 years of 10 years from the expiration of last mentioned term give to the Lessors one calender month’s previous notice of their intention not to take any renewed lease. The renewed lease will be on the same rents, convenants, conditions and agreements including the present convenant for renewal.”

Learned counsel for the petitioner contends that the lease was only for fifteen years and the Collector (Stamps) rightly dismissed the reference. Reliance is placed upon the decisions of Supreme Court in (i) State of U.P. and Ors. Vs. Lalji Tandon (Dead) reported in [(2004)1 SCC 1], (ii) Hardesh Ores Pvt. Ltd. Vs. Hede and Company reported in [(2007)5 SCC 614] and (iii) M/s. Essar Oil Limited Vs. State of Rajasthan & Ors. in S.B. Civil Writ Petition No.14406/2017 of this Court decided on 04.09.2017.

As per contra, there is automatic renewal of the lease and no act was to be done by the parties for further renewal.

Article 23 (i) and 35 (a) of the Second Schedule to the Rajasthan Stamp Law (Adaptation) Act, 1952 (for short ‘the 1952 Act’) in force at the relevant time are reproduced:-

Description of Instrument

Proper Stamp Duty

Conveyance as defined by

section 2 (10):

(i)  if  relating  to  immovable

Eleven  percent

of  the

market

property.

value of the property.

(ii)  if  relating  to  movable

Half (0.5) percent of the market

property.

value of the property.

Lease—including and under

lease,  or  sub  lease  and  any

agreement to let or sub let—

(a) Where, by such lease, the

rent is fixed and no premium is

paid or delivered—

(i) Where the lease purports to

The same duty

as on

a Bond

be  a  term  for  less  than  one

(No.15) for

the whole

amount

year.

payable under such lease.

(ii) Where the lease purports to

The   same   duty   as   on

a

be for a term of not less than

conveyance

(No.23)

for

a

one  year  but  not  more  than

consideration

equal

to

the

twenty years.

amount or value of the average

(iii) Where the lease purports to be for a term in excess of twenty years or in perpetuity or where the term is not mentioned.

rent of two years.

The same duty as on a conveyance (No.23) on the market value of the property which is the subject matter of the lease.

Schedule stipulates that in case the lease deed is for more than twenty years the stamp duty shall be same as on conveyance and is to be calculated on the market value of the property.

The lease deed initially was for fifteen years, commencing from 11th March, 2002 and the Collector (Stamps) relying upon this dismissed the reference. There cannot be quarrel with the proposition that the document has to be read as a whole and the term of renewal of lease deed cannot be ignored. The condition of renewal reproduced above appears to have some typographical mistake, be that as it may, has to be given an interpretation. As per the condition of renewal, on expiry of the term without any further act of the parties the deed shall be automatically extended for ten years. The option is only with the lessee to put the lessor to one month notice before the expiry of term that lessee does not intent to renew the lease. The renewal is to be on the same rent, covenants, conditions and agreement including the term of renewal as agreed between the parties initially. In other words, no fresh lease deed was to be executed. The renewal was automatic requiring no act on part of either of the party.

The condition of renewal in fact is a lock-in period for the lessee. There is no right with lessor for not to renew the lease. The lessee has one opportunity at end of every term to give one month notice prior to the expiry of the initial term or extended term of the lease, for not intending to renew the lease.

The findings of Collector (Stamps) that:- (i) the lease was for fifteen years; (ii) prior permission of the lessor was required for renewal; (iii) that renewal of the lease would be with the consent of both the parties and that to on the new terms and conditions, are against the terms & conditions of lease deed. On wrong factual aspects it was concluded that in case the parties decide to renew lease deed the stamp duty would be paid on the new lease deed. As per the language of renewal term, no act is to be done by the parties, renewal is automatic and on the same terms and conditions.

The case law relied upon does not enhance the case of the petitioner. In the case of Lalji Tandon (Dead) (supra) the issue dealt with was as to whether as per the terms and conditions of

agreement the renewal was to be made once only. It was held that in view of incorporation of the renewal clause in the lease deed, renewal could not have been denied.

In Hardesh Ores Pvt. Ltd. (supra) the Court was dealing with the issue as to whether in the garb of prayer of injunction, the relief of specific performance could be claimed for saving limitation.

In M/s. Essar Oil Limited (supra) the earlier decision of this Court in Essar Oil Ltd & Anr. Vs. DIG Registration and Collector (Stamps) & Anr in S.B. CWP No.11420/2019 decided on 11.05.2017 was relied upon. The court came to the conclusion that the lease period was of nineteen years eleven months and though there was condition of automatic renewal but either of the party was at liberty to refuse renewal by giving three months notice.

In case in hand, there is automatic renewal and that to without any act of the parties i.e. there is no need for fresh lease deed. The terms and conditions are to remain same, including the renewal clause. The lessor has no option for not renewing the lease. On reading of lease deed as a whole the picture emerges that for renewal no act is to be done and lease deed is for more than twenty years.

The order of the Board quashing the order of the Collector dismissing the reference is upheld. The writ petition is dismissed.