IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED:30.09.2011 Coram: THE HONOURABLE MR. JUSTICE T.S.SIVAGNANAM W.P. No.21871 of 2008 and M.P.1/2008 S.A.Kovil Nadar .. Petitioner vs. 1.Inspector General of Registration, Government of Tamil Nadu, Office of Registrar General, Chennai – 600 028. 2.The Sub-Registrar, In the Cadre of District Registrar, Office of the Sub Registrar, Purasawalkam, Chennai – 600 007. .. Respondents Prayer: Writ Petition filed under Article 226 of the Constitution of India, praying for the issuance of Writ of Certiorarified Mandamus to call for the records of impugned order passed by the first respondent in Pa.Mu.No.44329/P1/2006, dated 09.05.2008 and quash them as illegal and direct the respondent to return the document in P.No.135/2006 pending with the second respondent without demanding excess stamp fees . For Petitioner : Mr.K.Doraisamy Senior counsel for Mr.K.R.A.Muthukrishnan For Respondents : Mr.R.Lakshmi Narayanan G.A. For RR1&2 O R D E R The prayer in the writ petition is for issuance of a writ of Certiorarified Mandamus, to quash the order passed by the first respondent dated 09.05.2008 and direct the respondents to return the pending document bearing P.No.135 of 2006, without demanding excess stamp duty. https://hcservices.ecourts.gov.in/hcservices/ 2. The case of the petitioner is that he is the owner and in possession of ¼th undivided share in the land and building in plot No.1-1 at Vyasarpadi Cooperative Industrial Estate, Chennai-600031, measuring an extent 3 grounds 1090 sq. ft. The other three co-owners are the three daughters-in-law of the petitioner. The petitioner executed a settlement deed 28.06.2006, settling ¼th undivided share in the said property in favour of his three sons. It is stated that the settlement was intended to retain the property within the family and the petitioner is also the partner of the partnership firm M/s.Shri.Balaji Aluminum Rolling Mills. The document was presented for registration before the second respondent and the second respondent by proceedings dated 17.07.2006, informed the petitioner that the stamp duty on the document in question has to be paid in terms of Article 58 (a) (ii)(A) of Schedule I to the Stamp Act and demanded additional stamp duty of 1,50,000/- together with penalty of Rs.500/- and in all Rs.1,50,500/-. This stamp duty was in addition to Rs.10,000/- which was remitted by the petitioner as stamp duty at the time of presentation of the document. The petitioner treated the said proceedings as a show cause notice and submitted his explanation on 24.07.2006. In the explanation, the petitioner stated that the settlement deed has nothing to do with the partnership firm and there is no transfer of property of the firm in favour of any third party and the settler is one of the partner, who own ¼th undivided share in the property and the same has been settled in favour of his three sons jointly and that the second respondent misconstrued the settlement deed to be a transfer without considering the fact that the property remains within the family itself. 3.Further, it was contended that levy and demand of stamp duty under Article 58 (a)(ii)(A) of the schedule I to the Stamp Act is erroneous and the very purpose of the settlement deed within the family member itself is sought to be defeated. The second respondent after considering the petitioner's explanation dated 24.07.2006, passed an order on 31.07.2006, observing that as per the recitals of the document, the petitioner has settled the property of the partnership firm in favour of his three sons and therefore, the same cannot be treated as a settlement deed and the stamp duty is payable under Article 58(a)(ii)(A) of the Act. Against the order passed by the second respondent dated 31.07.2006, the petitioner preferred an appeal before the first respondent and the first respondent by order dated 09.05.2008, confirmed the order passed by the second respondent and dismissed the appeal. The said order passed by the first respondent dated 09.05.2008, is impugned in this writ petition. 4. The learned Senior counsel appearing for the petitioner after reiterating the contentions raised in the writ petition, submitted that a bare reading of Article 58 states that if the instrument of settlement is in favour of a member or members of a family, which has been defined to include son, the stamp duty payable is as a bottomary https://hcservices.ecourts.gov.in/hcservices/ bond and the order passed by the respondents demanding stamp duty Article 58(a)(ii)(A) is erroneous and that the respondents failed to note that the settlement deed is nothing to do with the partnership firm and there is no transfer by the partnership firm in favour of any third party and the petitioner owns ¼th undivided share in the property and he has settled the same in favour of his three sons jointly and the finding rendered by the respondents are misconceived. The learned Senior counsel further submitted that the stamp duty could be demanded only under Article 58(a)(i) of Schedule I to the Stamp Act and therefore, the question of demanding deficit stamp duty and penalty is erroneous. 5.The learned Government Advocate by relying upon the counter affidavit submitted that the settlement deed executed by the petitioner in favour of his sons and presented for registration before the second respondent was treated as a pending document No.P.135/06 and impounded the same treating it as settlement chargeable under Article 58(a)(ii)(A) of schedule I of the Stamp Act and impounded under Section 33(1) of the Stamp Act, since the document is not duly stamped. It is further submitted that the firm continuous to exist and the property of the firm even if distributed among family members is chargeable to stamp duty under Article 58(a)(ii). Therefore, it is contended that the order passed by the first respondent confirming the order of the second respondent is valid. 6.Heard the learned Senior counsel appearing for the petitioner and the learned Government Advocate for the respondents and perused the materials available on record. 7.The question which falls for consideration in this writ petition is as to whether a deed of settlement executed by one of the partners of a registered partnership firm in respect of ¼th undivided share in the property owned by the firm, in favour of his sons who are not the partners, should be charged to stamp duty under Article 58(a) (i) or Article 58(a)(ii)(A) of Schedule I of the Stamp Act. Before we examine the question it would be necessary to see as to who is/are the owner/s of the property in question. 8. M/s. Shri.Balaji Aluminum Rolling Mills, a partnership firm, within the meaning of the Indian Partnership Act 1932, consisting of its partners Thiru.S.A.Kovil Nadar, Smt.V.Janet Jebam, Smt.A.Pushpa and Smt.Jeba Pakkiyamani purchased the property in question from the Vyasarpadi Cooperative Industrial Estate Ltd, by sale deed dated 09.11.1993, registered as document No.2751 of 1993 on the file of the Sub-Registrar, Purasavakkam. Thus, it is evident that the owner of the property is the partnership firm and constituted by its four partners of whom the petitioner is one of the partners. Further, from the sale deed it is seen that the partnership firm was a member of the cooperative society and the property in question was allotted to the https://hcservices.ecourts.gov.in/hcservices/ firm, by an order of allotment dated 09.05.1997 and a lease-cum-sale agreement was entered into between the society and the partnership firm on 09.05.1997 and the firm having paid the full sale consideration, the sale deed was executed in the name of the partnership firm represented by its four partners. Hence, we can safely conclude that the registered owner of the property is the firm represented by its four partners. 9. As noticed above, it is not in dispute that the petitioner is also one of the partners of the firm. The petitioner claiming himself to own ¼th of undivided share in the property executed the settlement deed dated 28.06.2006, in favour of his sons. The fact that the settlees in the document are the sons of the writ petitioner/settler is not in dispute. The petitioner presented the document, by paying stamp duty of Rs.10,000 and insisted that it should be chargeable to stamp duty under Article 58(a)(i) as it is an instrument of settlement in favour of members of a family. This was negatived by the respondents by the impugned orders and they demanded deficit stamp duty by charging the document under Article 58(a)(ii)(A). 10. Section 2(24) of the Act defines settlement to mean any non- testamentary disposition in writing of movable or immovable property made for the purpose of distributing property of the settler among his family or those for whom he desires to provide or for the purpose of providing for some person dependent on him. The language of Section 2 (24)(b) is clear as it uses the expression “property of the settler”. Therefore to bring a document within the definition of Section 2(24) (b) of the Act it is essential that the property shall be the property of the settler and in my view an absolute property of the settler. 11.In the preamble of the settlement deed in question it has been stated that the settler is the absolute owner of ¼th undivided share in the property along with his daughter-in-law as partners of the firm Shri.Balaji Aluminum Rolling Mills. However, it was seen that the sale deed was executed in the name of the firm represented by its four partners and undoubtedly the distribution of the partnership asset shall be in accordance with the terms contained in the partnership agreement and the provisions of the Indian Partnership Act. Therefore the claim made by the petitioner that he is the absolute owner of ¼th undivided share in the property in question is factually incorrect. 12. Though the document is titled as a settlement deed by applying the universal rules of interpretation of documents, the document is required to be looked as a whole and the nomenclature of the document cannot be the basis to ascertain as to the exact nature of transaction. The property being owned by the partnership firm represented by four partners cannot be treated to be absolute property of the petitioner/settler and therefore, the document in question though titled as a settlement deed cannot be considered as a https://hcservices.ecourts.gov.in/hcservices/ settlement within the meaning of Section 2(24)(b) for being charged to stamp duty under Article 58(a)(i) and is required to be treated as a settlement under clause (ii) of Article 58(a). 13. The Hon'ble Supreme Court in (2009) 13 SCC 301, S.N.Mathur vs. Board of Revenue, reiterated the principles relating to charging of stamp duty on the following terms:- (i) The object of the Stamp Act is generation of revenue. It is therefore a fiscal enactment and has to be interpreted accordingly. (ii) Stamp duty is levied with reference to the instrument and not in regard to the transaction, unless otherwise specifically provided in the Act. (iii) Stamp duty is determined with reference to the substance of the transaction as embodied in the instrument and not with reference to the title, caption or nomenclature of the instrument. (iv) For classification of an instrument, that is, to determine whether an instrument comes within a particular description in an article in the Schedule to the Act, the instrument should be read and construed as a whole. (v) Where an instrument falls under two or more descriptions in the Schedule to the Act, the instrument shall be chargeable with only one duty, that is the highest of the duties applicable to the different description. But where an instrument relates to several distinct matters, it shall be chargeable with the aggregate amount of duties to which separate instruments would be chargeable. Merely because an instrument answers the definition of a “trust deed” it does not cease to be a settlement deed for the purpose of stamp duty, if it answers the definition of “settlement” also. It is well settled that all trusts are not settlements, and all settlements are not trusts, but a deed of trust can also be a deed of settlement. 14. By applying the above tests laid down by the Hon'ble Supreme Court to the case on hand and after careful perusal of the recitals in the deed of sale dated 09.11.1993 and the recitals in the impugned settlement deed dated 28.06.2006, it has to be held that the document in question namely the deed of settlement shall be chargeable to stamp duty in accordance with Article 58(a)(ii)(A) of the schedule I of the stamp Act as it is a deed of settlement falling under the category “in any other case” Therefore, the contention raised by the petitioner that since the document has been executed in favour of the sons of the writ petitioner cannot be the sole ground for charging the document to stamp duty under Article 58(a)(i) as the stamp duty is required to be determined with reference to the substance of the transaction and not https://hcservices.ecourts.gov.in/hcservices/ with reference to the title, caption and nomenclature of the document and the document should be read and construed as a whole. 15. In that view of the matter, the order passed by the first respondent, confirming the order of the second respondent demanding deficit stamp duty is perfectly valid and justified. Considering the facts and circumstances of the case the penalty imposed is reduced to Rs.5/- (Rupees five only). 16. With the above observation, the writ petition is dismissed. No costs. Consequently, connected miscellaneous petition is closed. Sd/ Asst.Registrar /true copy/ Sub Asst.Registrar pbn To 1.The Inspector General of Registration, Government of Tamil Nadu, Office of Registrar General, Chennai – 600 028. 2.The Sub-Registrar, In the Cadre of District Registrar, Office of the Sub Registrar, Purasawalkam, Chennai – 600 007. +1cc to Mr.K.R.A.Muthukirushnan,Advocater Sr 61344 MRD(CO) km/13.10. W.P. No.21871 of 2008 https://hcservices.ecourts.gov.in/hcservices/