Case: Prasad Technology Park Pvt. Ltd Vs. Sub Registrar

3. The basic fact of the matter is not in dispute. One Prasad Garments Pvt. Ltd. was a company registered under the Companies Act, 1956. On or about 05.03.1999, it entered into a lease-cum-sale agreement with the Third Respondent herein upon payment of premium of a sum of Rs.14,49,453, which amounted to 99% of the tentative cost of the land and one yearly rent of 966/- for a period of eleven years computed from 25.06.1997. The name of the said company, however, was changed to Prasad Technology Park Pvt. Ltd4. The Appellant presented the said instrument for registration before the First Respondent herein on a stamp paper of Rs.100/-. The First Respondent, however, was the opinion that the stamp duty on the total amount of the original lease deed as mentioned in the lease deed dated 05.03.1999 was required to be paid. In response to a notice served in this behalf on the Appellant, a show cause was filed contenting that the supplementary agreement is merely a deed of rectification. The said contention was, however, rejected by the Deputy Commissioner of Stamps by an order dated 26.10.2000, holding:No. DR. I /47/00-01 Dated 26.10.2000Taken into consideration of all the above said points, I the Deputy Commissioner of Stamps, exercising my power vested under Section 39 of the Karnataka Stamps Act, 1957, the present Document of Supplementary Agreement vide P.24/2000-01 dated 5.3.99 original document of Lease-cum-Sale Agreement mentioned Fixed Deposit of Rs.14,49,593.00 and Annual rent of Rs.966-00 totaling to Rs.14,50,559.00 as per the Appendix 5(d) has to pay Stamp fee of Rs.1,45,100.00 along with fine of Rs.5.00, totaling to Rs.1,45,105.00 hereby directed to make payment5. Aggrieved by and dissatisfied therewith, a writ petition was filed by the Appellant before the Karnataka High Court, which came to be dismissed by reason of an order dated 11.08.2003 passed by a learned Single Judge opining:..But unfortunately for the petitioner the supplementary agreement sought to be registered as entered into between the 3rd respondent Lessor and the petitioner Lessee with the terms of the lease being the same as had been in the earlier lease deed that had come to be executed in favour of the petitioner-company in its earlier name as evidenced by the agreement dated 5th March 1999. These terms are sought to be incorporated into the subsequent agreement which is known as supplementary agreement dated 24th April, 20006. The Appellant herein preferred an intra court appeal there-against, which was also dismissed by the impugned judgment, stating:In the instant case, earlier the name of the appellant-Company was Prasad Garments Pvt. Ltd., which is now changed to Prasad Technology Park Pvt. Ltd. On account of change of name of the Company, a supplementary agreement was entered into between the M/s Karnataka Industrial Areas Development Board and the appellant-Company. So far as the argument of non-payment of stamp duty is concerned, the same is not acceptable. It cannot be said that the supplementary lease agreement is also an instrument under which the appellant-Company claims certain leasehold rights from the Board, and therefore, it is liable to pay the stamp duty and cannot escape payment of stamp duty. The learned Single Judge having found no illegality in the order of the 2nd respondent, considering the material on record and case laws relied on, by a detailed order, has dismissed the writ petitionIn our view, the appellant-Company cannot escape its liability to pay the stamp duty under the supplementary agreement since- there is transfer of interest in the Company, which the appellant-Company can claim under the 3rd respondent...

Reasoning: 10. The Appellant indisputably was permitted by the Third Respondent herein to establish a software park. The execution of supplementary agreement, it has categorically been stated, became necessary consequent upon the change in the name of the company. By reason of such supplementary agreement although it was permitted to establish a software park but by reason thereof no fresh transaction was entered into. We have noticed hereinbefore that in terms of the aforementioned agreement dated 05.03.1999, the land in question was demised for a period of eleven years with effect from 25.06.1997 on payment of premium fixed thereunder as also on yearly lease rent stipulated thereby11. The said lease indisputably was governed by Section 105 of the Transfer of Property Act. By reason of the supplementary agreement, a restrictive covenant has been amended in terms whereof the Appellant herein was permitted to carry on the business of a Technology Park instead of manufacture of readymade garments/leather garments. Only because the name of the company was changed, the same would not mean that a fresh transaction took place. Having regard to the change in the name of the company, the Appellants name was sought to be substituted in the original agreement. The period of the lease, the quantum of the premium paid and other terms and conditions remained unaltered except the restriction contained in clause 2(q) of the said deed, was removed. By reason of mere change of user from carrying on one business to another, it is trite, a fresh transaction does not take place. The terms conditions of the lease can be changed by mutual consent. Unless the essential ingredients thereof as contained in Section 105 of the Transfer of Property Act are not altered, it cannot be said that the parties to the contract entered into a fresh transaction. The Third Respondent merely reserved unto itself a right of reentry on expiry of the said period of eleven years. It could in terms of the covenant of the lease also extend the period of tenancy or terminate the same. Unless the lease itself came to an end, the third respondent did not have any right to re-convey the property. By reason of mere change in the name of the company Prasad Garments Pvt. Ltd. the erstwhile lessee also cannot be held to have transferred its leasehold interest in favour of the Appellant herein12. Execution of an instrument which would attract payment of stamp duty in terms of Article 5(d) of the Act must involve transfer of the property or otherwise a right or liability may inter alia be created, transferred etc., as envisaged in Section 3 thereof. Once it is held that the supplementary agreement is neither a deed of lease nor a deed of sale within the meaning of Section 105 or Section 54 of the Transfer of Property Act, as the case may be, Article 5(d) of the schedule to the Act will have no application. If Article 5(d) has no application, indisputably the residuary clause contained in Article 5(f)(i) would have. The Appellant admittedly paid the stamp duty in terms thereof13. It is now well settled that for the purpose of levy of stamp duty, the real and true meaning of the instrument must be ascertained.14. The High Court held that the supplementary lease agreement cannot be said to be an instrument whereunder the Appellant-Company claims certain leasehold from the Board; but having did so, the High Court was not correct in holding that it is liable to pay the stamp duty