Reserved Judgment IN THE HIGH COURT OF UTTARAKHAND AT NAINITAL Writ Petition No. 1738(M/S) of 2001 ( Old No. 30884of 1998) 1- Lt. Col. Maharaja Manbandra Shah (deceased) 1/1- Maharaja Manujendra Shah - Petitioner versus State of U.P. through Collector Tehri Garhwal and another - Respondents Mr. U.K. Uniyal, Senior Advocate, assisted by Mr. Sobhit Saharia, Advocate for petitioner. Mr. Sudhir Kumar, Brief Holder for respondents. (Hon’ble B.S. Verma, J. ) By means of this petition the petitioner has sought a writ in the nature of certiorari, quashing the orders dated 25-3-1994 and 6-7- 1998, Annexure Nos. 1 and 2 to the writ petition, passed by respondent No.1 and 2 respectively. Briefly stated the facts of the case, giving rise to this writ petition, are that order dated 14-10-1978 was passed by District Judge, Tehri Garhwal in O.S. No. 11 of 1978, arising out of the award published and declared by the Arbitrator Sri P.H. Ramchandani dated 28-2-1978 in the matter of arbitration between Lt. Col. Maharaja Manbendra Shah and State of U.P. During the pendency of the writ petition Lt. Col. Maharaja Manbendra Shah has died and he was substituted by petitioner No. 1/1 Maharaja Manujendra Shah. After passing the award the petitioner filed an application U/S 14 read with Section 17 of the Arbitration Act, in the Court of District Judge Tehri for making the said award a Rule of the Court. The state of U.P. filed objections under Section 30 of the Act. The learned District Judge was pleased to dismiss the objections of the State of U.P. in Misc. Case No. 17 of 1978 (T) with costs by order dated 14-10-1978. However the learned District Judge did not make the said award a Rule of the Court, on the subsequent objections of the State that the Award was not duly stamped and by a separate order of the same date passed in Suit No. 11 of 1978, the District was pleased to impound the same and forwarded the Award to Collector under Section 38 of the Indian 2 Stamp Act for determining the stamp duty and penalty on the said Award. The Collector Tehri after receipt of the reference, pursuant to the direction dated 14-10-1978 proceeded under Section 40 of the Act to decide whether the stamp duty is paid in accordance with law or not. Vide order dated 25-3-94 the Collector came to the conclusion that the property of Narendra Nagar Palace and land of Simlasu Estate, including the building like Seesh Mahal, Gol Kothi and orchard etc is personal property of Majaraja and the stamp duty has to be paid as per value of the property and stamp duty has to be paid as per provision of Article –12 of schedule 1-B of the Stamp Act. Aggrieved by the said order the petitioner preferred revision No. 1 of 1993-94 before the Commissioner, Garhwal Mandal, which was dismissed by the learned Commissioner vide judgment and order dated 6-7-1998. Further aggrieved by the above orders passed by the learned Collector as well as learned Commissioner, the petitioner has filed this writ petition alleging that the judgment and orders passed by courts below holding that stamp duty is payable in the personal properties of the petitioner under Article 12 (1-B) of the Indian Stamp Act are illegal and ultravires. The conclusion of the respondents that the award is liable to be stamped according to the market value of the properties is also illegal. The award dated 28-2-1978 has been passed regarding the pre-existing rights of the petitioner on the personal properties as per the merger agreement between the petitioner and the Union of India. The award did not create new rights of the petitioner on the properties. The State/respondent filed counter affidavit and denied the stand taken by the petitioner that no stamp duty is payable on the property in dispute and alleged that the award was not sufficiently stamped and hence the lower court passed the impugned order which is just, legal and valid. I have heard learned counsel for parties and perused the entire record. 3 Perusal of record shows that State of Tehri was a sovereign State before independence and on independence of the nation, the then ruler of Tehri decided to merge the State in the dominion of India and accordingly an agreement of merger was executed between the then rule of the State and the dominion of India. Under the agreement, certain properties were declared to be the personal properties of the ruler of the Tehri State. It was further provided in the agreement that in case of dispute between the parties as to any term of the agreement, same shall be referred to an arbitrator for decision which shall be binding on parties. A dispute arose between the parties regarding vesting and extent of the properties situated at Narendra Nagar, Tehri. The matter was referred to the Secretary for decision in terms of agreement as an arbitrator. The arbitrator gave his award which was filed in the court of District Judge, Tehri for making it a Rule of the Court. The Central Government filed objection against the award which were rejected by the District Judge, Tehri. However the District Judge, while passing the order, observed that the award is not properly stamped and as such the matter was referred to Collector. The Collector passed the order that under Article No. 12 of Schedule 1-B of the Stamp Act as it declares the rights of the petitioner in respect of immovable property and directed to make a valuation of the same for determining the liability of the stamp duty. The revision filed against the order of Collector was upheld. Learned Senior Advocate appearing on behalf of petitioner has submitted that the learned authorities below have committed a mistake of law in passing the impugned order. By the impugned award rights or liabilities in respect of immovable property are neither created, transferred, limited, extended, extinguished or recorded by the pre-existing rights and liabilities of the parties have been recognized and decided, as such the award in question does not fall within the definition of instrument and as such the stamp duty of residuary clause in Article 12 is to apply. The stamp duty already paid is more than sufficient and as such the orders passed by the learned authorities below have been passed without consideration of relevant law and are liable to be quashed. Learned Senior Advocate has placed reliance in the case of Sheikh Mukarramuddin versus Sheikh 4 Rahimuddin and others, reported in AIR 1989 Delhi 268, wherein in para-7 it has been held as under:- “ The award in the case has been accepted by the Court. No illegality or infirmity has been found and by orders made it has been made a rule of the Court with a direction that decree be drawn in terms thereof. It does not by its own force or on its own create any rights but it accepts the legality and validity of the Will. It does not effect partition. Thus it cannot be said that the award is an instrument of partition. Consequently there is no requirement of the decree being drawn on payment of the stamp duty.” Learned counsel also placed reliance on the case of Kashinathsa v. Narsingasa, reported in AIR 1961 S.C. 1077, wherein the Hon’ble Apex Court has observed that- “the true effect of what are called awards, is not by their own force to create any interest in immovable property; they recorded divisions already made and on the facts proved in this case, their validity depends upon the acceptance by the parties. The records made by the Panchas were documents which merely acknowledged partitions already made and were not by law required to be registered.” Provision of stamp duty chargeable on instruments has been made under Section 3 of India Stamp Act, 1899, which is quoted below:- “3. Instruments chargeable with duty-Subject to the provisions of this Act and the exemptions contained in Schedule 1, the following instruments shall be chargeable with duty of the amount indicated in that Schedule as the proper duty therefore, respectively, that is to say- (a) every instrument mentioned in that schedule which, not having been previously executed by any person, is executed in India on or after the first day of July, 1899; (b) every bill of exchange payable otherwise than on demand or promissory note drawn or made out of India on or after that day and accepted or paid, or presented for acceptance or payment, or endorsed, transferred or otherwise negotiated, in India and 5 (c) every instrument (other than a bill of exchange, or promissory note) mentioned in that Schedule, which not having been previously executed by any person, is executed out of India on or after that day, relates to any property situate, or to any matter or thing done or to be done, in India and is received in India; [Provided that, except as otherwise expressly provided in this Act, and notwithstanding anything contained in clauses (a), (b) and (c) of the section or in Schedule I or 1-A, the following instruments shall, subject to the exemptions contained in schedule 1-A or 1-B be chargeable with duty of the amount indicated in schedule 1-A or 1-B as the proper duty therefore, respectively, that is to say- (aa) every instrument mentioned in Schedule 1-A or 1-B which not having been previously executed by any person was executed in Uttar Pradesh- (i) in the case of instruments mentioned in schedule 1-A on or after the date on which the U.P. Stamp (Amendment )Act, 1948, came into force, and (ii) in the case of instruments mentioned in Schedule 1-B on or after the date on which the U.P. Stamp (Amendment) Act, 1952, comes into force; (bb) every instrument mentioned in Schedule 1-A or 1-B which not having been previously executed by any person, was executed out of Uttar Pradesh- (i) in the case of instruments mentioned in Schedule 1-A on or after the date on which the U.P. Stamp (Amendment) Act, 1948, came into force; and (ii) in the case of instruments mentioned in Schedule 1-B, on or after the date on which the U.P. Stamp (Amendment) Act, 1952, comes into force, and relates to any property situated, or to any matter or thing done or to be done in Uttar Pradesh, and is received in Uttar Pradesh]: Provided also that no duty shall be chargeable in respect of- 6 (1) any instrument executed by or on behalf of, on in favour of, the Government in cases where, but for this exemption Government would be liable to pay duty chargeable in respect of such instrument; (2) any instrument for the sale, transfer of other disposition, either absolutely or by way of mortgage or otherwise, of any ship or vessel, or any part, interest, share a property of or in any ship or vessel registered under the Merchant Shipping Act, 1894, or under Act XIX of 1838, or the Indian Registration of Ships Act, 1841 (X of 1841), as amended by subsequent Acts. [Explanation- Where the amount of duty prescribed in Schedule 1-B contains any fraction of a rupee below twenty-five paise, or above twenty-five paise, but below fifty paise, or above fifty paise, but below seventy-five paise, or above seventy-five paise but below one rupee, the proper duty shall be an amount rounded off to the next higher quarter of a rupee as hereinafter appearing in the said Schedule]. (3) Any instrument executed, by or, on behalf of, or, in favour of, the developer, or unit or in connection with the carrying out of purposes of the special economic zone. Explanation- For the purposes of this clause, the expressions “developer”, “Special Economic Zone” and “Unit” shall have meanings respectively assigned to them in clauses (g), (za) and (zc) of the Special Economic Zones, Act, 2005.] From perusal of above provision it is quite clear that stamp duty becomes chargeable on an ‘instrument’ by reason of Section 3 of Indian Stamp Act. It is the charging section that provides that every instrument mentioned in the Schedule (1) which, not having been previously executed by any person, is executed in India on or after 1st July, 1899, shall be chargeable with the duty of the amount indicated in that Schedule as the proper duty therefore respectively. 7 Learned counsel for petitioner also submitted that the impugned award is not covered by the definition of ‘instrument’ which is chargeable under Section 3 of Indian Stamp Act, as no rights and liabilities have been created by the impugned award. “Instrument” has been defined in sub-clause (14) of Section 2 of Indian Stamp Act, which is quoted below:- “Instrument includes every document and record created or maintained in or by an electronic storage and retrieval device or media by which any right or liability is, or purports to be, created, transferred, limited, extended, extinguished or recorded.” Learned Senior Advocate also submitted that the impugned award does not come in the category of instrument of partition as it accepts the legality and validity of the preexisting rights of petitioner over his personal property. He drew attention towards Article 12 of Schedule 1-B of the Act. Article 12 of above Schedule 1-B says that ‘Award that is to say, any decision in writing by an Arbitrator or Umpire not being an award directing a partition, on a reference made otherwise than by an order of the Court in the course of a suit. Copy of impugned award has been filed with the writ petition as Annexure No.3. By a perusal of the award it shows that rights of private properties of late Maharaja Manbendra Shah were recognized by the award between him and the State. The rights of the petitioner were pre-existing over these properties. The learned Arbitrator has observed in the award that stamp duty charged amounting to Rs. 75/- has been borne by the claimant. By the impugned award no rights or liability was created in favour of the petitioner and under an agreement between the petitioner and the Government after independence an arrangement has been made pertaining to the personal property of petitioner, over which he had pre-existing rights. It is pertinent to mention here that the Arbitrator had demarcated the property mentioned in merger agreement as has been finally accepted by the parties. No new rights have been created in favour of petitioner by the Award. Therefore, I find force in the submissions of learned counsel for the petitioner that the impugned 8 orders, passed by the Collector as well as by the Commissioner holding that the petitioner is liable to pay stamp duty and penalty, are perverse orders and are liable to be set aside. Therefore, in view of foregoing discussion and the observations made in the above cited rulings, it is held that the petitioner was having pre-existing rights over his personal properties and by the impugned award no rights and liabilities have been created in favour of petitioner hence the award does not come in the category of ‘instrument’ over which stamp duty is payable under Section 3 of Indian Stamp Act. The writ petition is allowed. The impugned orders passed Collector as well as by the Commissioner are set aside. It is held that the stamp duty of Rs. 75/- borne by petitioner before the arbitrator is proper and no further stamp duty is payable by the petitioner on the award. The award is sent back to District Judge, Tehri Garhwal to proceed further in the case in accordance with law. ISB (B.S. Verma, J. ) 21-10-2011 9